PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—APRIL17, 2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
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Check the appropriate box: | |
☑ | Preliminary Proxy Statement |
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☐ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material |
Nordstrom, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): | ||
☑ | No fee | |
☐ | Fee paid previously with preliminary materials | |
☐ | Fee amount computed on table | |
1617 Sixth Avenue, Seattle, Washington 98101
[●], 2023
Dear Shareholder,
In 2022, we marked 121 years since John W. Nordstrom opened the downtown Seattle shoe store that would become Nordstrom as we know it today. 121 years may seem like an arbitrary milestone, but in an industry that’s constantly reinventing itself, you learn not to jointake a single day for granted.
Our company has navigated this ever-shifting landscape by focusing on a collective purpose: to help customers feel good and look their best. While we’ve continually sought out new ways to deliver on this promise, the commitment at its core has not wavered — our dedication to customer service unites teams across our business, informs the decisions we make and keeps us May 20, 2020,moving forward toward a common goal.
This focus has proven especially critical in the face of challenges or periods of rapid change, and 2022 was no exception. We started the year with a plan to improve inventory flow, increase the speed and efficiency of our supply chain and sharpen our focus on driving top- and bottom-line growth at 3:00 p.m. Pacific Daylight TimeNordstrom Rack. Thanks to efforts from teams across our business, we did those things — even as we navigated a volatile macroeconomic environment and adjusted to changing consumer habits.
While we’re proud of our people for the 2020 Annual Meetinghard work they put in on behalf of Shareholders via webcast. This year, in responseour customers, our 2022 results fell short of our expectations. As leaders, we take accountability for that, and we are committed to concerns about the potential spread of the novel coronavirus (COVID-19), we have adopted a virtual format for our Annual Meeting to provide a consistent experience to all shareholders regardless of location. We will provide a live webcast of the Annual Meeting at
We are entering 2023 with a clear understanding of how and Answers Aboutwhere we must make progress and are acting with urgency to ensure we do. In addition to continuing to improve the Annual Meeting, beginningcustomer experience, we are focused on page 72 of this Proxy Statement.
We recognize the retail environment is rapidly evolving. Because of this, we have for some time been making investments inare also looking across our business model, which enables usand operations to serve customers across multiple touchpoints
We know that nothing we do would be possible without our teams’ hard work and commitment to our customers. It’s because of more than $500 million in operating expenses, capital expenditures and working capital.
With the support of our culture and the loyalty ofbrand partners, our customers are what have sustained us through tough times. We can’t predict what’s next, butand you, have our commitment thatshareholders, we will do everything we canlook forward to ensureall we’ll accomplish in the long-term success of our Company.
Sincerely,
 | |
 |  |
Erik B. Nordstrom Chief Executive Officer | ||
Peter E. Nordstrom | ||
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| Statement | ||
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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—APRIL17, 2023
1617 Sixth Avenue, Seattle, Washington 98101
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
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WHEN | WHERE | RECORD DATE |
[●], 2023 | [●] | April10, 2023 |
[●] [a/p].m. Pacific Daylight Time |
Items of Shareholders (the “Annual Meeting”) of Nordstrom, Inc. (the “Company”) will be held virtually, via remote communication at
To vote on Wednesday, May 20, 2020 at 3:00 p.m. Pacific Daylight Time for the following purposes:
1 | |
To elect |
| Shareholders and until their successors have been duly elected and qualified | |
2 | To ratify the appointment of Deloitte |
| year ending February3, 2024 | |
3 | To conduct an advisory vote regarding the compensation of our Named Executive |
| Officers | |
4 | To conduct an advisory vote regarding the frequency of future advisory votes on the compensation of our Named Executive Officers |
5 | To approve |
| Plan | |
6 | To approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase |
| Plan | |
7 | To conduct an advisory vote on the extension of the Company’s shareholder rights plan until September19, 2025 |
8 | To transact any other business that may properly come before the Annual Meeting and any adjournment or postponement |
You are eligible to vote before the Annual Meeting, during the live webcast of the Annual Meeting and any adjournment or postponement thereof, if you were a shareholder of record at the close of business on March 11, 2020 (the “Record Date”).April10, 2023. There were 156,346,167 161,423,792shares of the Company’sour Common Stock issued and outstanding as of March 11, 2020.the Record Date. Holders of our Common Stock are entitled to cast one vote per share on each proposal. For further information on how to participate in the meeting, please see Frequently Asked Questions and Answers About the Annual Meeting beginning on page 7288 in the Proxy Statement accompanying this Notice.
YOUR VOTE IS VERY IMPORTANT.
Whether or not you intend to participate virtually in the Annual Meeting via remote communication, you are encouraged to3 | 2023 Proxy Statement |
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
You may vote in advance of the meeting by any of the following methods:
| Online Access the website shown on your proxy card or voting instruction form and follow the instructions. |
| Sign, date and return your proxy card or voting instruction form to the mailing address shown on your proxy card. |
| Toll-free Phone Call the toll-free telephone number shown on your proxy card or voting instruction form and follow the instructions. |
| Scanned QR Code Your proxy card or voting instruction form may contain a QR code that will allow you to vote using your mobile phone. |
Seattle, Washington
[●], 2023
By order of the Board, of Directors,
Ann Munson Steines
Corporate Secretary
If you have any questions or require any assistance regarding our Annual Meeting, please contact our proxy solicitor:
Innisfree M&A Incorporated Shareholders may call toll-free +1 (877) 750-8312 Banks and Brokers may call collect +1 (212) 750-5833 |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE |
| [●], 2023 The accompanying Proxy Statement and the |
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements regarding matters that are not historical facts, and are based on our management’s beliefs and assumptions and on information currently available to our management. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “pursue,” “going forward” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements are detailed in the Company’s 2022 Annual Report and in subsequent filings. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
| 2023 Proxy Statement | 4 |
INDEX OF KEY TERMS
Term | Definition |
2022 Annual Report | Company’s Annual Report on Form |
2025 Corporate Social Responsibility Goals | Our 2025 Corporate Social Responsibility goals at |
AFC | Audit and Finance Committee of the Board |
ASC 718 | Accounting Standards Codification 718, Stock Compensation |
Board | The Board of Directors |
Broadridge | Broadridge Investor Communication Services |
CD&A | Compensation Discussion & Analysis |
CAO | Chief Accounting Officer |
CEO | Chief Executive Officer |
CFO | Chief Financial Officer |
CGNC | Corporate Governance and Nominating Committee of the Board |
Chairman | Our Board Chairman, a non-Executive position |
Common Stock | Nordstrom common stock |
CPCC | Compensation, People and Culture Committee of the Board |
DDCP | Nordstrom Directors Deferred Compensation Plan |
Deloitte | Deloitte & Touche LLP |
Diversity, Inclusion and Belonging Goals | Our Diversity, Inclusion and Belonging goals at nordstrom.com/diversity |
EBIT | Earnings (Loss) Before Interest and Income Taxes |
EIP | Equity Incentive Plan |
EMBP | Executive Management Bonus Plan |
ERG | Employee Resource Group |
ESG | Environmental, Social and Governance |
ESPP | Employee Stock Purchase Plan |
Exchange Act | Securities Exchange Act of 1934 |
FASB | Financial Accounting Standards Board |
GAAP | U.S. Generally Accepted Accounting Principles |
Incentive Adjusted EBIT | Incentive Adjusted Earnings (Loss) Before Interest and Income Taxes (a non-GAAP financial measure) |
Incentive Adjusted ROIC | Incentive Adjusted Return on Invested Capital (a non-GAAP financial measure) |
Investor Relations Website | Our investor relations website, found at investor.nordstrom.com |
IRC | Internal Revenue Code |
Lease Standard | Accounting Standards Update 2018-11, Leases |
LTI | Long-Term Incentives |
NDCP | Nordstrom Deferred Compensation Plan |
NEO | Named Executive Officer |
Notice | Notice of Annual Meeting of Shareholders |
NYSE | New York Stock Exchange |
PEO | Principal Executive Officer |
Plan Trustee | Bank of New York Mellon, as trustee of the Nordstrom 401(k) Plan |
PSU | Performance Share Unit |
Record Date | April10, 2023 |
RSU | Restricted Stock Unit |
SEC | Securities and Exchange Commission |
Semler Brossy | Semler Brossy Consulting Group, LLC |
SERP | Supplemental Executive Retirement Plan |
TC | Technology Committee of the Board |
TSR | Total Shareholder Return |
5 | 2023 Proxy Statement |
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This Proxy Statement wasand the related proxy materials were first mailedreleased to shareholders and made available on or about April 7, 2020. It is furnished in connection with the solicitation of proxies by the Board of Directors of Nordstrom, Inc. to be voted during the Annual Meeting for the purposes set forth in the accompanying Notice of Annual Meeting.
Proposal No. 1 – Election of Directors (page 25) |
Nominee Demographics
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PROXY SUMMARY
Board Attendance | Board Committees Chaired by Women | |
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Board Refreshment | Nominee Age | |
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Relevant Skills and Experience
The nominees possess a balance of leadership experiences, diverse perspectives, strategic skill sets and professional expertise that are essential in furthering our business strategy and objectives, including:
Retail Industry |
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Marketing & Customer Experience |
| Financial Expertise |
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Online Scale & Growth |
| Technology Expertise |
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Risk & Crisis Management |
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Business Transformation |
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The Board recommends a vote FOR each Director nominee.
7 | 2023 Proxy Statement |
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PROXY SUMMARY
Proposal No. 2 – Ratification of Independent Accountants (page 34) |
Qualified and Experienced Independent Auditors
•Deloitte is an independent registered accounting firm that has served Nordstrom for more than 50 years.
•The firm’s expertise and fees are appropriate for the scope of the following methods:Company’s needs.
The Board recommends a vote FOR this proposal.
Proposal No. 3 – Advisory Vote Regarding Executive Compensation (page 70) |
Compensation Aligned with Performance
•Our executive compensation program aligns with our strategy and our pay-for-performance philosophy.
•We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. Approximately 85% of our CEO’s fiscal 2022 target compensation was variable or linked to our financial or market results.
•Our Incentive Adjusted EBIT achievement missed our threshold of $906 million and Incentive Adjusted ROIC missed the threshold of 11.0%, resulting in a 0% bonus payout.
Fiscal Year 2022 Target Compensation
CEO and | Average of all Other NEOs | |||||||
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85% | 73% | |||||||
Performance Based | Performance Based |
The Board recommends a vote FOR this proposal.
| 2023 Proxy Statement | 8 |
PROXY SUMMARY
Proposal No. 4 – Advisory Vote Regarding the Frequency of Future Advisory Votes on Executive Compensation (page 71) |
The Board has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for the Company at this time, and recommends that shareholders vote for future advisory votes on executive compensation to occur every year. At the 2017 Annual Meeting of Shareholders, over 95% of the votes cast approved our Board’s recommendation to hold advisory votes on an annual basis. Furthermore, many elements of our executive compensation program are reviewed and determined annually, including:
•base salary;
•performance-based cash awards under the Company’s Executive Management Bonus Plan; and
•long-term incentive grants under the 2019 Equity Incentive Plan.
Holding an annual advisory vote on executive compensation would continue to closely coincide with these decisions, promote corporate transparency and shareholder awareness of the Company’s compensation policies and practices and also provides the Company with more direct and immediate feedback on our compensation disclosures and practices.
The Board recommends a vote for “1 YEAR” for this proposal.
Proposal No. 5 – Approval of Amended and Restated 2019 Equity Incentive Plan (page 72) |
Shareholders are being asked to approve the Nordstrom, Inc. Amended and Restated 2019 Equity Incentive Plan.
•The Company has granted equity awards to its employees and directors under Nordstrom equity compensation plans since 1977 as part of a long-held approach to pay-for-performance. We believe it is important the Company have the ability to use stock-based compensation to attract and retain key talent, provide employees with a stake in the Company’s success, and align our team with long-term shareholder outcomes.
•Equity compensation is also fundamental to our compensation philosophy and core objectives of paying for performance and aligning the interests of employees with those of shareholders. We believe that equity awards, and the potential they hold for appreciation through an increase in our stock price, support our pay-for-performance philosophy, provide further incentive to our employees to focus on creating long-term shareholder value and create an ownership culture that links employees’ interests with those of our shareholders and our long-term results, performance, and financial condition.
Absent shareholder approval, as a result of the volatility of the price of the Company’s Common Stock, the number of shares remaining available for grant under the EIP may become insufficient to meet the Company’s anticipated needs in 2024 – both with respect to its annual compensatory awards, as well as any potential need to address employee retention concerns. Therefore, we are asking the Company’s shareholders to approve this amendment to the EIP to increase the reserves for issuance by 15,000,000shares, which we expect to last 2-3 years.
The Board recommends a vote FOR this proposal.
Proposal No. 6 – Approval of Amended and Restated Employee Stock Purchase Plan (page 77) |
Shareholders are being asked to approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan. The Board believes that it is in the best interests of the Company and its shareholders to approve the amendment to the ESPP in order to provide current and prospective employees of the Company and participating subsidiaries with the continuing opportunity to acquire equity interests in the Company through the ESPP. Therefore, the Board believes that this amendment to the ESPP will advance the interests of the Company’s shareholders.
Absent shareholder approval, it is anticipated that the reserve of Common Stock available for purchase under the ESPP may be exhausted as soon as 2024, depending on fluctuations in the Company’s stock price. Therefore, we are asking the Company’s shareholders to approve this amendment to the ESPP which will increase the maximum number of shares of Common Stock authorized for issuance under the ESPP by 3,500,000shares.
The Board recommends a vote FOR this proposal.
9 | 2023 Proxy Statement |
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PROXY SUMMARY
Proposal No. 7 – Advisory Vote |
The Board adopted a limited duration shareholder rights plan on September 19, 2022 (the “Rights Plan”) to protect the interests of the Company and all shareholders from the likelihood that any entity, person or group gains control of Nordstrom through open-market accumulation or other means without payment of an adequate control premium. The Board believes that it is in the best interests of the Company and all shareholders to extend the Rights Plan until September 19, 2025, with the Board retaining the ability to terminate the Rights Plan prior to such date if warranted.
As announced at the time of its adoption, the Rights Plan:
•Reduces the likelihood that any entity, person or group gains control of the Company through open-market accumulation or other means without payment of an adequate control premium;
•Helps ensure that the Board has sufficient time to make informed, deliberate decisions that are in the best interests of the Company and all Nordstrom shareholders;
•Applies equally to all current and future shareholders of the Company;
•Was not adopted in response to any specific takeover bid or other proposal to acquire control of the Company; and
•Is not intended to deter offers that are fair and otherwise in the best interests of all of the Company’s shareholders.
While shareholder approval is not required to extend the Rights Plan, the Board is asking shareholders to approve this advisory vote on the extension of the Rights Plan as part of the Board’s commitment to good corporate governance and to ensure that shareholders have an opportunity to voice their feedback on this important matter.
The Board recommends a vote FOR this proposal.
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Board Vote Recommendation | Page Reference (for more detail) | |||
| 1. | Election of Directors | FOR each Director Nominee | ||
| 2. | Ratification of the Appointment of Independent Registered Public Accounting Firm | FOR | ||
| 3. | Advisory Vote Regarding Executive Compensation | FOR | ||
| 4. | Approval of an Amendment to the Nordstrom, Inc. 2019 Equity Incentive Plan | FOR | ||
| 5. | Approval of the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan | FOR | ||
| Name | Age | Director Since | Occupation | Committee Memberships** | Other Public Company Boards | |||||
| Shellye L. Archambeau* | 57 | 2015 | Former Chief Executive Officer of MetricStream, Inc. | Corporate Governance and Nominating, Technology | Verizon, Inc., Okta, Roper Technologies, Inc. | |||||
| Stacy Brown-Philpot* | 44 | 2017 | Chief Executive Officer of TaskRabbit, Inc. | Audit and Finance, Technology | HP, Inc. | |||||
| Tanya L. Domier* | 54 | 2015 | Chief Executive Officer of Advantage Solutions | Audit and Finance, Compensation, People and Culture (Chair) | YUM! Brands, Inc. | |||||
| James L. Donald* | 66 | 2020 | Former Chief Executive Officer of Albertsons Companies, Inc. | N/A*** | Albertsons Companies, Inc. | |||||
| Kirsten A. Green* | 48 | 2019 | Founder and Managing Partner of Forerunner Ventures | Audit and Finance, Technology | ||||||
| Glenda G. McNeal* | 59 | 2019 | President Enterprise Strategic Partnerships of American Express | Compensation, People and Culture, Corporate Governance and Nominating | RLJ Lodging Trust | |||||
| Erik B. Nordstrom | 56 | 2006 | Chief Executive Officer | N/A | ||||||
| Peter E. Nordstrom | 58 | 2006 | President and Chief Brand Officer | N/A | ||||||
| Brad D. Smith* | 56 | 2013 | Executive Chairman and former Chief Executive Officer of Intuit, Inc. | Compensation, People and Culture, Corporate Governance and Nominating | Intuit, Inc., SurveyMonkey | |||||
| Bradley D. Tilden* | 59 | 2016 | Chairman and Chief Executive Officer of Alaska Air Group, Inc. | Audit and Finance (Chair) | Alaska Air Group, Inc. | |||||
| Mark J. Tritton* | 56 | 2020 | President and Chief Executive Officer of Bed Bath & Beyond | N/A*** | Bed Bath & Beyond | |||||
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
| 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||
| FINANCIAL RESULTS | ||||||||||||||||||||
| Net Earnings | $600 | M | $354 | M | $437 | M | $564 | M | $496 | M | ||||||||||
| Earnings Before Interest and Income Tax Expense | $1,101 | M | $805 | M | $926 | M | $837 | M | $784 | M | ||||||||||
| Return on Assets | 6.6 | % | 4.5 | % | 5.4 | % | 6.8 | % | 5.1 | % | ||||||||||
| INCENTIVE COMPENSATION PAYOUTS | ||||||||||||||||||||
| Incentive Adjusted Earnings Before Interest and Income Tax Expense (“Incentive Adjusted EBIT”) | $1,246 | M | $1,076 | M | $952 | M | $909 | M | $808 | M | ||||||||||
| Incentive Adjusted Return on Invested Capital (“Incentive Adjusted ROIC”) | 11.0 | % | 12.4 | % | 10.0 | % | 12.8 | % | 11.2 | % | ||||||||||
| Annual bonus (payout as a % of Target on Incentive Adjusted EBIT measure*) | 0 | % | 80 | % | 96 | % | 89 | % | 44 | % | ||||||||||
| 3-year Total Shareholder Return (“TSR”) percentile ranking within comparator group | 53%ile | 16%ile | 10%ile | 24%ile | 20%ile | |||||||||||||||
| Performance Share Unit (“PSU”) vesting (payout as a % of Target) | 75 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||
| PSU comparator group | Retail | S&P 500 | S&P 500 | S&P 500 | S&P 500 / Internal Measures** | |||||||||||||||
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| GRANT REALIZABLE VALUES | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||
| PSUs (realizable value as a % of grant value) | 0 | % | 0 | % | 0 | % | N/A | 0 | % | ||||||
| RSUs (realizable value as a % of grant value) | 67 | % | 99 | % | 101 | % | 77 | % | 108 | % | |||||
| Stock options (realizable value as a % of grant value) | 0 | % | 0 | % | 5 | % | N/A | 0 | % | ||||||
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Compensation, People and Culture Committee | 37 | |
Compensation Discussion and | 37 | |
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Since its founding, our Company’s leaders and employees have always sought to maintain the highest ethical standards in every aspect of our business. Our corporate governance framework is designed to support this tradition of integrity, trust and unyielding commitment to dodoing the right thing, which has served our customers and shareholders well over the years. Our corporate governance framework, more fully discussed on the following pages, includes the following highlights:
Corporate Governance |
| 9 of 11 Director Nominees are Independent |
| Independent Chairman |
| Regular Executive Session of Independent Directors |
| Committees Comprised Only of Independent Directors | |
| All Audit & Finance Committee |
| Annual Evaluations of Board, Committees and Directors | |
| Authority to Hire Independent Consultants and Experts | |||
Shareholder Rights |
| Annual Election of all Directors |
| Majority Vote Standard for Director Elections |
| Each Share of Common Stock is Entitled to One Vote |
| Shareholders of 10%+ Entitled to Call Special Meetings | |
| Annual Say-on-Pay Advisory |
| Open Communications with Directors | |
| Regular Outreach and Engagement of Shareholders | |||
Compensation |
| Pay-for-Performance Philosophy |
| Stock Ownership Policy for Directors and Executive Officers |
| Executive Compensation |
| Hedging and Pledging Policies | |
| Independent Compensation Consultant Engaged by Compensation, People and | |||
Strategy and Risk |
| Company Strategy Oversight by Board |
| Risk Oversight by Board and Committees Aligned with Company Strategy |
| Regular Risk Management |
| Compensation Program Designed to Reduce Undue Risk | |
| Annual Strategy Planning Meeting |
| Board Oversight of Chief Executive Officer and Management Succession Planning | |
Board Responsibilities, Leadership Structure and Role in Risk Oversight
The Board of Directors (“Board”) oversees, counsels and directs management in promoting the long-termlong-term interests of the Company and our shareholders. The Board’s responsibilities include:
•determining the appropriate structure for the senior leadership of the Company;
•selecting and evaluating the performance of the Chief Executive Officer;
•planning for succession with respect to the position of the Chief Executive OfficerCEO and monitoring and providing input with respect to management’s succession planning for other senior executives;
•reviewing and approving our major financial objectives, our strategic and operational plans and other significant actions;
| 2023 Proxy Statement | 12 |
CORPORATE GOVERNANCE
•monitoring the conduct of our business and the assessment of our business risks to promote the proper management of the business;
•overseeing the management of cybersecurity, including oversight of appropriate risk mitigation strategies, systems, processes and controls; and
•overseeing the processes for maintaining integrity with regard to our financial statements and other public disclosures, and compliance with laws and our CodeCodes of Business Conduct and Ethics.
At this time, the Board believes different people should hold the positions of Chairman of the Board and
The full Board has primary responsibility for oversight of risk management and has assigned to the Board’s standing Committees the task of focusing on the specific risks inherent in their respective areas of oversight. The full Board:
•considers and determines the Company’s risk appetite, which is the amount of risk the organization is willing to accept;
•oversees management’s implementation of an appropriate system to manage risks (i.e., to identify, assess, mitigate, monitor and communicate these risks) and monitors the effectiveness of this process as the business environment changes;
•provides risk oversight through the Board’s committee structure and processes; and
•directly manages directly certain risks, in particular, the risks associated with the Company’s strategic direction, which are reviewed at an annual strategy planning meeting and periodically throughout the year.
The Company has a comprehensive, structured approach to managing risks, which are identified, assessed, prioritized and managed at all levels within the Company through an enterprise risk management process which is aligned with the Company’s strategy. Within this framework, management is responsible for assessing and managing the Company’s exposure to risks.
Through the risk oversight process, the Board: (i)
•obtains an understanding of the risks inherent in the Company’s strategy and management’s execution of the strategy within the agreed risk appetite; (ii)
•accesses useful information from internal and external sources about the critical assumptions underlying the strategy; (iii)
•is alert for possible dysfunctional behavior within the organization which might lead to excessive risk taking; (iv)
•provides input to executive management regarding critical risk issues on a timely basis; and (v)
•encourages open communication and appropriate escalation of reporting of risk throughout the enterprise, striving to ensure that risk management is part of the corporate culture.
The Board’s leadership structure and the collective knowledge and experience of its members promotes a broad perspective, open dialogue and useful insights regarding risk, thereby increasing the effectiveness of the Board’s role in risk oversight.
Board Oversight of ESG Issues
The Board views effective oversight and management of ESG issues and their associated risks as vital to the Company’s ability to execute its business strategy and achieve sustainable long-term growth. The Board coordinates with its Committees to provide active Board and Committee level oversight of the Company’s ESG risks. Specifically:
Our Board views effective | •The Board oversees ESG risks as part of its oversight of the Company’s business, strategy and enterprise risk management. As part of this oversight, the Board and its Committees receive regular reports on ESG-related matters, such as updates on the Company’s progress towards its sustainability and corporate social responsibility goals, status updates on the Company’s Diversity, Inclusion and Belonging Goals, reports on any ESG-related engagements with shareholders, and information on recent ESG developments, so that the Board can ensure that any material ESG risks and opportunities are appropriately integrated into the Company’s long-term strategy. |
13 | 2023 Proxy Statement |
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CORPORATE GOVERNANCE
•The CGNC is charged with direct responsibility for oversight of risks relating to corporate governance, shareholder engagement, corporate social responsibility and sustainability. The work of the CGNC reflects the Company’s commitment to improving the sustainability of our operations and supply chains, including finding ways to continue to reduce our carbon emissions, reduce waste through innovative programs like BEAUTYCYCLE and increase the number of sustainably sourced products we make available to our customers. The CGNC also has oversight over Board effectiveness, including identifying and recruiting Board members with the appropriate skills and experience, including experience with ESG initiatives, to lead our Company into the future.
•The CPCC is charged with providing feedback on the development, implementation and effectiveness of the Company’s policies, strategies and programs relating to human capital management, including but not limited to, talent management, workplace health and safety, cultural initiatives, employee engagement and employee surveys, and diversity, inclusion and belonging initiatives. The CPCC has been integral in allowing the Company to continue adapting to the ever-evolving challenges presented by the pandemic, including overseeing our efforts to offer employees flexible work models, new wellness and mental health resources and to ensure our frontline employees feel supported with the safest possible work environments, all of which have allowed our employees to focus on serving the needs of our customers.
•The AFC is charged with reviewing and discussing with management the risks faced by the Company and the policies, guidelines and process by which management assesses and manages the Company’s risks, including the Company’s major financial risk exposures, which include risks related to ESG matters, and the steps management has taken to monitor, control and manage such exposures. The AFC shall also receive periodic reports from management on the Company’s ESG reporting, data and disclosures and shall discuss with management related controls and procedures.
To learn more about our ESG initiatives, please refer to our most recent corporate social responsibility report and other information available on our website at nordstrom.com/browse/nordstrom-cares. The information contained or referred to on our website is not deemed to be incorporated by reference into this Proxy Statement unless otherwise expressly noted.
Director Independence
A Director is considered independent when our Board affirmatively determines that he or shethe Director has no material relationship with the Company, other than as a Director. Our Board makes this determination in accordance with the standards set forth in our Corporate Governance Guidelines, which are consistent with the listing standards of the New York Stock Exchange (“NYSE”)NYSE and Securities and Exchange Commission (“SEC”)SEC rules. In making this determination, the Board considers existing relationships between the Company and the Director, whether directly or as a partner, shareholder or officer of an organization that has a relationship with
Chairman of the Board and Presiding Director
The Company has a Chairman of the Board who is also an independent Director and who serves as the Presiding Director within the meaning of the listing standards of the NYSE. Currently, BradBradley D. SmithTilden serves as the Company’s
The Chairman of the Board is appointed annually by the Board. As described in the Company’s Bylaws, Corporate Governance Guidelines and Charterthe charter of the Corporate Governance and Nominating Committee,CGNC, the Chairman of the Board:
•presides at meetings of the Board;
•assists in establishing the agenda for each Board and Board Committee meeting;
•serves as the Presiding Director to lead regular executive sessions at each meeting of the Board in which only independent Directors participate;
•calls special meetings of the Board and/or the shareholders;
•provides input and support to the Chair of the Corporate Governance and Nominating CommitteeCGNC on nominees to fill vacant Board seats and the selection of Committee Chairs and membership on Board Committees;
•advises the Chief Executive OfficerCEO and other members of the Executive Teamexecutive team on matters such matters as strategic direction, corporate governance and overall risk assessment; and
•performs such other duties as the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities.
Director Elections
The Company’s Bylaws provide that, in an uncontested election, a Director nominee will be elected if the number of votes cast for the nominee’s election exceeds the number ofother votes cast against thein connection with such nominee’s election.election at a meeting at which a quorum is present. An incumbent Director nominee who fails to receive the requisite votes for election will continue to serve as a Director until the earlier of: (i) 90 days from the date on which the voting results of the election are determined; or (ii) the date
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CORPORATE GOVERNANCE
We received notice from a shareholder stating its intention to nominate two candidates for election to the Board at the Annual Meeting, which notice was later withdrawn. Because the Company received a nomination notice from a shareholder, the election of Directors at the Annual Meeting is deemed to be “contested” pursuant to our Bylaws and directors will be elected by a plurality of votes properly cast.
Management Succession Planning
The Board and management believe that one of their primary responsibilities is to ensure the Company has the appropriate leadership capability to effectively deliver upon its business commitments. The Company’s management is actively engaged and involved in leadership development, having regular discussions of the leadership capabilities of the organization and the attraction, development and retention of critical talent to promote future success. In addition to the Company’s regular review of leadership capabilities, the Board annually conducts a detailed review of the talent strategies for the entire organization and reviews succession plans for senior leadership positions, including that of the Chief Executive Officer.CEO. The Board reviews high-potentialhigh-potential employees, evaluates plans to develop their management and leadership capabilities and sanctions the strategies used to deploy these individuals most effectively. In addition to the annual review, succession is regularly discussed in executive sessions of the Board and in Board Committee meetings, as applicable.
Our entire Board with the oversight of our Corporate Governance and Nominating Committee, is responsible for implementing succession procedures for the
Board Committees and other interested parties may communicate with Directors by contacting the Corporate Secretary’s Office at:
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The Corporate Secretary will relay the question or message to the specific Director with whom the shareholder or interested party wishes to communicate.
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In addition to the responsibilities described below and members of the Committees as of the date of this Proxy Statement are identified inon the following table.
Audit and Finance Committee | |||||||
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As more fully described in its Charter,charter, the primary responsibilityresponsibilities of the Audit and Finance Committee isAFC are to assist the Board in fulfilling its oversight responsibility by by:
•reviewing the Company’s financial statements and discussing:
•evaluating the accounting, auditing and financial reporting processes of the Company;
•managing business and financial risk and the internal controls environment;
•assessing the Company’s compliance with legal and regulatory requirements and ethics programs as established by management and the Board, in conjunction with any recommendations by the Corporate Governance and Nominating CommitteeCGNC with respect to corporate governance standards;
•reviewing the reports resulting from the performance of audits by the independent auditor and the internal audit team;
In addition, the AFC provides financial oversight by:
•evaluating the qualifications, independence and performance of the Company’s independent auditors; and
•assessing performance of the Company’s internal audit team.
•advising on the Company’s capital structure, financial policies, capital investments, business and financial planning and related matters;
•reviewing and discussing the Company’s tax strategies and the implications of actual or proposed tax law changes;
•overseeing the Company’s dividend payment and share repurchase strategies, banking relationships, borrowing facilities and cash management; and
•monitoring the ratings assigned by rating agencies to the Company’s long-term debt.
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CORPORATE GOVERNANCE
The Audit and Finance | The AFC regularly reviews enterprise level risks (including commercial, supply chain and cybersecurity risks), compliance with laws and regulations, and audit results for corporate social responsibility metrics. The AFC also meets privately and separately with the independent registered public accounting firm, the CFO and the Vice President, Internal Audit. In addition to meeting the independence requirement for audit committee members, the Board has determined that each current member of the AFC also meets the financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE. While the members of the AFC are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting, the Board has determined that all AFC members qualify as “audit committee financial experts” under the regulations of the SEC. | |
Compensation, People and Culture Committee |
As more fully described in its Charter,charter, the primary responsibilities of the Compensation, People and Culture Committee are:
•developing the overall compensation philosophy for the Company’s Executive Officers in light of the Company’s goals and objectives. The Executives are referenced in the Executive Officer section beginning on page 35 and include the NEOs shown in the CD&A on page 37 and other business unit presidents and Company executives with responsibility for major organizational functions who report to the CEO or other senior executives; •selecting performance measures aligned with the Company’s business strategy; •administering the Company’s cash and equity-based compensation plans for executives; •annually evaluating the corporate goals and objectives relative to the compensation for executives, and evaluating the executive officers’ performance in light of these goals and objectives; | Our Compensation, People | |
•administering benefit plans, retirement and deferred compensation or other perquisites offered to the Executive Officers and other eligible employees;
•assessing risk taking;relating to compensation; and
•overseeing key talent focuses and initiatives such as diversity, inclusion and belonging.
The CommitteeCPCC has the sole authority to retain such consultants and advisors as it may deem appropriate and to approve related fees and other retention terms. The CommitteeCPCC has retained Semler Brossy, Consulting Group, LLC (“Semler Brossy”), an independent
A consultant from Semler Brossy attends CommitteeCPCC meetings in person or by phone and supports the CommitteeCPCC by providing independent expertise on market practices and trends in executive compensation within the general industry and the peer group defined for such purposes. Additionally, the consultant provides advice regarding the composition of the Company’s peer group and analysis of peer group practices for base salary, performance-basedperformance-based bonus, long-term incentivesLTIs and other compensation elements and advice on management’s proposed levels of executive compensation. Semler Brossy also advises the CommitteeCPCC on compensation program design, including incentive structure, stock ownership guidelines, regulatory requirements related to executive compensation, plans submitted to shareholders for approval, governance responsibilities and such other matters as assigned by the CommitteeCPCC from time to time as necessary to carry out its responsibilities under its Charter.charter.
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CORPORATE GOVERNANCE
Corporate Governance and Nominating Committee |
As more fully described in its Charter,charter, the primary responsibilities of the Corporate Governance and Nominating Committee are:
•evaluating potential nominees for election to the Board for nomination as members ofand determining the Board and its Committees;
Our Corporate Governance | •evaluating possible conflicts of interest of Board members and the Company’s Executive Officers; •approving the Company’s Corporate Governance Guidelines; •establishing the corporate governance standards contained in the Company’s Codes of Business Conduct and Ethics; •advising on policies and practices of the Company in the area of corporate governance; •evaluating and recommending to the Board the form and amount of Director compensation; •performing the annual performance evaluation of the Board, the Directors and each Committee of the Board; and •overseeing succession procedures to be followed in the case of an emergency or the retirement of the CEO. | |
Technology Committee |
As more fully described in its Charter,charter, the primary responsibilities of the Technology Committee are:
Our Technology | •advising on the Company’s technology strategy; •overseeing the Company’s technology acquisition and development process to ensure ongoing business growth; •evaluating the Company’s data management and automation processes and measurement and tracking systems; •reviewing the Company’s technology risk management, including but not limited to •reviewing the efficacy of the Company’s cybersecurity policies, controls and procedures; and •overseeing material technology investments. |
With the oversight of the TC:
•in addition to the Payment Card Industry Data Security Standard (PCI-DSS), Systems and Organization Controls 2 (SOC2) and Sarbanes-Oxley Act (SOX) assessments, the Company’s information security program has been assessed by a third-party advisor each of the last four years to evaluate team maturity and to evaluate any improvements or opportunities;
•the Company delivers training on various information security and privacy topics on an annual basis to all employees, with additional technical security training provided to engineers and technology workers. The Company’s compliance team maintains and delivers the training program and tracks completion against compliance targets; and
•phishing exercises and security awareness campaigns are also designed and delivered periodically throughout the year to all employees.
The TC also regularly reviews any information technology and data security; and
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CORPORATE GOVERNANCE
Board Meetings and Attendance
The Board held seven formal meetings during fiscal year 2022, one of which was devoted principally to Company strategy. During the past fiscal year, the AFC held eight formal meetings and the CPCC, CGNC and TC each held four formal meetings. Each Director attended at least 75% of the aggregate of all formal meetings of the Board and the Committees on which they served during the year and overall attendance at formal meetings, on a combined basis, was 99%. Independent members of the Board met at each formal meeting of the Board in executive session without management present. Directors are expected to attend the Annual Meeting of Shareholders, if practicable. All Directors who were Directors at the time of the 2022 Annual Meeting of Shareholders attended the 2022 Annual Meeting of Shareholders. |
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Director Compensation and Finance Committee held five meetings, the Compensation, People and Culture Committee held four meetings, the Corporate Governance and Nominating Committee held four meetings, and the Technology Committee held four meetings. Each
The Company’s pay-for-performancepay-for-performance philosophy for Director compensation reflects the Board’s belief that payment of a majority of the Director fees in the form of Nordstrom common stock (“Common Stock”)Stock aligns the interests of Directors with the interests of the Company’s shareholders and enhances Director compensation when the Company performs well. The Board believes that the Director fees paid by the Company should be competitive with other companies having similar characteristics.
Non-Employee Director Annual Compensation Elements for | Amount ($)* | |
Director Retainer | 85,000 | |
AFC Chair Retainer | 30,000 | |
CPCC Chair Retainer | 20,000 | |
CGNC Chair Retainer | 15,000 | |
TC Chair Retainer | 15,000 | |
Grant date value of Director Equity Grant of Common Stock | 150,000 | |
Grant date value of | ||
| Chairman of the Board Equity Grant of Common Stock | 200,000 |
* Directors may elect to take some or all of their cash retainer fees in Common Stock.
Our Directors are required to |
Under the Director stock ownership guidelines, Directors |
Changes for 2023 |
No changes were made to Director Compensation beginning in fiscal year 2020 to better align pay with thatcompensation elements for 2023.
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CORPORATE GOVERNANCE
Non-Employee Director Summary Compensation Table |
During the fiscal year ended February 1, 2020, nonemployeeJanuary 28, 2023, non-employee Directors of the Company received the following compensation for their services:
| Name | Fees Earned or Paid in Cash ($)(a)(b) | Stock Awards ($)(b)(c) | All Other Compensation ($)(d) | Total ($) | ||||
| Shellye L. Archambeau | 85,000 | 139,990 | 5,127 | 230,117 | ||||
| Stacy Brown-Philpot | 85,000 | 139,990 | 8,752 | 233,742 | ||||
| Tanya L. Domier | 105,000 | 139,990 | 20,795 | 265,785 | ||||
| James L. Donald* | — | — | — | — | ||||
| Kirsten A. Green | 106,250 | 174,984 | 9,576 | 290,810 | ||||
| Glenda G. McNeal | 106,250 | 174,984 | — | 281,234 | ||||
| Brad D. Smith | 85,000 | 339,989 | 7,072 | 432,061 | ||||
| Gordon A. Smith | 100,000 | 139,990 | 7,563 | 247,553 | ||||
| Bradley D. Tilden | 115,000 | 139,990 | 6,928 | 261,918 | ||||
| Mark J. Tritton* | — | — | — | — | ||||
| B. Kevin Turner | 100,000 | 139,990 | 35,044 | 275,034 | ||||
Name | Retainers | Stock | All Other | Total |
Shellye L. Archambeau* | — | — | 1,622 | 1,622 |
Stacy Brown-Philpot | 100,000 | 149,987 | 21,281 | 271,268 |
James L. Donald | 115,000 | 149,987 | 19,491 | 284,478 |
Kirsten A. Green | 85,000 | 149,987 | 19,375 | 254,362 |
Glenda G. McNeal | 100,000 | 149,987 | 30,452 | 280,439 |
Brad D. Smith* | — | — | 1,051 | 1,051 |
Bradley D. Tilden | 85,000 | 349,987 | 4,862 | 439,849 |
Mark J. Tritton | 105,000 | 149,987 | 15,823 | 270,810 |
Amie Thuener O’Toole | 85,000 | 149,987 | 7,985 | 242,972 |
Atticus N. Tysen** | — | — | — | — |
*Shellye Archambeau and Brad Smith retired from the Board at the end of their respective terms in May 2022 and did not receive director retainers during the fiscal year ended January 28, 2023.
**Atticus Tysen was appointed to the Board on January 3, 2023 and received no compensation in the fiscal year ended January 28, 2023. He received a pro-rata stock award and pro-rata cash retainer in fiscal year 2023 to reflect his service in the quarter prior to the Annual Director payments to be made in May 2023.
The above table does not include Eric D. Sprunk, who was appointed after the fiscal year ended January28, 2023.
(a) FeesRetainers Earned or Paid in Cash
The amounts reported reflect the cash feesretainer paid to each nonemployeenon-employee Director, whether or not such feesretainers were deferred or takendeferred. Stacy Brown-Philpot received $15,000 in cash for service as Common Stock. Ms. DomierChair of the TC. James Donald received $30,000 in cash for service as Chair of the AFC. Glenda McNeal received $15,000 in cash for service as Chair of the CGNC. Mark Tritton received $20,000 in cash for service as Chair of the Compensation, People and Culture Committee. Ms. Green and Ms. McNeal each received $21,250 in cash as a prorated retainer for their mid-year appointments on February 27, 2019. Mr. Gordon Smith received $15,000 in cash for service as Chair of the Corporate Governance and Nominating Committee. Mr. Tilden received $30,000 in cash for service as Chair of the Audit and Finance Committee. Mr. Turner received $15,000 in cash for service as Chair of the Technology Committee and elected to receive his retainer and the $15,000 as Chair of the Technology Committee in Common Stock.
(b) Deferred Compensation Program
Non-employee Directors may elect to defer all or a part of their cash retainers and stock awards under the Nordstrom Directors Deferred Compensation Plan (“Directors Plan”).DDCP. Directors are required to make advance elections to defer the receipt of feesretainers or stock awards, and all deferral elections generally are irrevocable. Directors are also required to make advance elections about the form and timing of distribution of their deferred cash feesretainers or stock awards.
In 2019,2022, cash deferrals could be directed among
During the fiscal year which ended February 1, 2020, Ms. Brown-PhilpotJanuary 28, 2023, Stacy Brown-Philpot deferred 100% of her stock award into the Directors Plan.
(c) Stock Awards
The amounts reported reflect the grant date fair value associated with each Director’s stock awards. Director stock awards are generally made on the first open trading day following the Annual Meeting. Fractional shares are not awarded or paid in cash. Ms. Green and Ms. McNeal each received a prorated stock award having a value of $34,995 for their mid-year appointments on February 27, 2019. In recognition of the significant time and attention in performing the duties required of the position, our Chairman of the Board is annually awarded on the date of the Company’s Annual Meeting, an additional stock award having a grant date fair value of $200,000.
All Directors, their spouses and eligible children may participate in the Company’s employee merchandise discount program. The program provides discounts ranging froma discount of 33% for purchases at Nordstrom stores and Nordstrom.com and 20% for eligible non-management employees up to 33% for eligible managementpurchases at Nordstrom Rack stores, NordstromRack.com and high-performing non-management employees and Directors.our restaurants. A 40% discount is available at certain times of the year on specifiedspecific merchandise. These discounts vary somewhat by sourceThe merchandise discount provided to the Directors is the same as for all other eligible management and type of merchandise or service.high-performing non-management employees. During the fiscal year ended February 1, 2020,January 28, 2023, All Other Compensation consisted only of merchandise discounts for all Directors.
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CORPORATE GOVERNANCE
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended February 1, 2020,January 28, 2023, no member of the Compensation, People and Culture CommitteeCPCC was an employee or officer of the Company or any of its subsidiaries was formerly a Company officer, or had any relationship otherwise requiring disclosure.
Codes of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our Principal Executive Officer, Principal Financial Officer, Principal Accounting OfficerCEO, CFO, CAO and persons performing similar functions. We have also adopted a Directors’ Code of Business Conduct and Ethics that applies to all
Hedging and Pledging Policies
Our policies prohibitinsider trading policy prohibits Directors and Executive Officers (as well as other key insiders and their immediate family members) from engaging in hedging or short sale transactions with respect to the Company’s Common Stock. We also have a policy withWith respect to pledging of Common Stock, whichour insider trading policy also subjects Directors and Executive Officers to a preclearancepre-clearance requirement and other restrictions, including that pledged shares may not be counted toward the Company’s stock ownership guidelines. Employees who are not Executive
Shareholder Engagement
Nordstrom recognizes the value of, and is committed to engaging with, our shareholders, as our relationship with the investment community is an important part of our success. Our engagement efforts allow us to better understand our shareholders’ priorities and provide us with critical input about the issues that matter most to them. These conversations provide invaluable insight into our shareholders’ perspectives, and the Board and its Committees take into account shareholder views and ideas, among other considerations, when making decisions relating to the Company’s business and long-term strategy.
We also conduct outreach throughout the year to ensure we understand and are in compliance withaware of the issues that matter most to our policy.
We plan to follow through with this commitment. We actively pursue solutions to reduce our environmental impact, contribute to the communities we serve,continue engagement and support the rights of workers who create our products. We believe that both transparency and collaboration are key to progress in all of these areas, and we disclose our efforts in an annual Corporate Social Responsibility Report. More information can be found at
Website Access to Corporate Governance Documents
The Charterscharters for each of the standing Committees of the Board, the Company’s Corporate Governance Guidelines, the EmployeeArticles of Incorporation, the Bylaws, the Code of Business Conduct and Ethics and the Director Code of Business Conduct and Ethics, as well as all Company filings made with the SEC, may be accessed on our Investor Relations Website.
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ESG ISSUES
Diversity, Equity, Inclusion and Belonging
Our commitment to fostering a diverse, equitable and inclusive environment is key to our mission of helping our customers feel good and look their best. Over the past several years, we’ve amplified our efforts in this area and set specific ambitions to achieve by the end of 2025, which include:
•Delivering $500 million in retail sales from brands owned by, operated by or designed by Black and/or Latinx individuals;
•Aiming to increase representation of Black and Latinx individuals in people-manager roles by at least 50% on average; and
•Leveraging our internship program and other initiatives to help us reach qualified candidates early in their careers, with an ambition, on average, of at least 50% of participants in these programs coming from underrepresented populations.
To lead and drive this work, we’ve operationalized diversity, equity, inclusion and belonging through consistent reviews with Erik Nordstrom, our CEO, and Farrell Redwine, our Chief Human Resources Officer. In addition, our diversity, equity, inclusion and belonging team serves as a center of excellence within the human resources organization and collaborates with leaders across the business to develop and embed diverse, equitable and inclusive strategies.
Progress toward our diversity, equity, inclusion and belonging ambitions is tracked and reviewed regularly by Nordstrom’s Executive Officers and Board. We’re committed to transparency and periodically report our progress on these ambitions.
To learn more about our ESG initiatives, please refer to our most recent corporate social responsibility report and other information available on our website at investor.nordstrom.comnordstrom.com/browse/nordstrom-cares. The information contained or referred to on our website is not deemed to be incorporated by reference into this Proxy Statement unless otherwise expressly noted.
Driving Equity |
We believe in equity throughout the retail industry and aim to use our resources, influence and platform to foster greater representation of diversity.
As a leader in our industry, we also have a responsibility to welcome a broader base of customers to our stores and find creative ways to serve them on their terms. We’ve committed to delivering $500 million in retail sales from brands owned, operated or designed by Black and/or Latinx individuals by 2025. In 2022, we sold more than $245 million toward that goal, reaching about 250 diverse brands in our assortment. Our intent is to provide a more diverse product offering to a wider swath of consumers and to consciously collaborate with and support emerging brands, finding creative ways to highlight their products in our stores and online. Throughout the year, customers can easily discover and shop these brands on Nordstrom.com through our Black-founded, Latinx-foundedand may be viewedInclusive Beauty categories.
In 2021, we were the first retailer to sign a ten-year agreement with the Fifteen Percent Pledge. By doing so, we committed to growing, by selectinga degree of ten, our purchases from businesses owned or founded by Black individuals by the Corporate Governance itemend of 2030. To help reach this goal, we created #BuyBlack market pop-ups during Black Business Month in 2022 to highlight and make it easy for customers to shop a rotating selection of local Black businesses.
Creating an Inclusive Culture |
We are committed to making Nordstrom a great place for our employees to grow meaningful careers while feeling included and supported and have several internal initiatives underway to facilitate belonging and connection among our teams. One way we do this is through our employee-led, Company-sponsored Employee Resource Groups, which represent a variety of seen and unseen identities.
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ESG ISSUES
In 2022, eight groups served and were led by our employees, providing Company-wide programming to advance understanding and celebrate voices from across our organization:
•AsPIRE (Asian Pacific-Islander Resources for Employees) •Black Employee Network •¡Hola! (Latinx) •NordstromPLUS (LGBTQIA+) •Nordstrom Veterans Group •Parents@Nordstrom •Thrive (Diverse Ability) •Women in Nordstrom | We are committed to making |
We seek to listen to and learn from employees across our organization by cultivating an open-door policy, conducting regular listening sessions and utilizing our annual Voice of the Employee survey. We regularly review survey results against industry benchmarks to hold ourselves accountable as we continue to improve and evolve our workplace environment.
We are committed to creating a culture where employees feel as if they can bring their whole selves to work and achieve their career goals through ongoing growth and development opportunities and fair and transparent performance management and promotion processes.
Strengthening Our Talent Pipeline |
We believe we have a role to play in contributing to the positive change that’s needed to address systemic racial inequity. We have several initiatives in place to improve pathways into fashion and retail for diverse communities as we work toward our 2025 ambitions.
In 2022, we expanded and strengthened our talent pipelines in collaboration with the OneTen Coalition and in partnership with Morehouse College, where we supported the launch of a new product management track. Starting in the Investor Relations drop-down menuspring 2023 semester, Nordstrom leaders and SEC Filings.
We also sponsored Historically Black Colleges and Universities (“HBCU”) Battle of the Brains, a 24-hour hackathon where students from HBCUs across the United States worked to solve real-world problems for large organizations and startups. By joining forces with best-in-class events like HBCU Battle of the Brains, we continue to seek out ways to attract a talented and diverse workforce.
Corporate Social Responsibility
We believe the responsibility | Our values have long served as a north star for our company — they are deeply embedded in the way we do business and guide the decisions we make, the partnerships we form and the causes we support. We believe the responsibility we have to our employees, customers and communities extends well beyond our operations. Our ambition is to make meaningful, positive contributions in the communities where we operate and produce, take responsibility for the impacts of our business, and pursue innovation that raises the bar for social and environmental issues in fashion and retail. We aim to inspire our customers to practice conscious consumption and offer them several ways to do so. | |
Our Corporate Social Responsibility strategy set in 2020 includes five-year goals focused on environmental sustainability, human rights and corporate philanthropy. Within these three categories, we’ve identified specific impact areas and set measurable goals that are integrated into the work of teams across our business. These goals guide us as we work to address areas where our company and industry have the most impact and create positive change. | ||
Taking Care of the Planet |
We are committed to improving the sustainability of our operations and product value chains. To that end, we are setting science-based targets to reduce our contribution to global climate change and are working to minimize plastic and packaging waste in our supply chain.
As we work toward our 2025 sustainability goals, we continue to invest in partnerships and new initiatives that invite our customers, our industry peers and our employees to join in our efforts.
•BEAUTYCYCLE: We expanded our BEAUTYCYCLE program to Nordstrom Rack stores. This program allows us to accept beauty packaging waste materials that typically cannot be placed in curbside recycling bins. Through BEAUTYCYCLE, we took back more than 25 tons of beauty packaging in 2022, compared with 5 tons in 2021. Through the BEAUTYCYCLE program, we aim to take back 100 tons of beauty packaging by 2025.
•Sustainable Style: First introduced in 2019, our Sustainable Style category makes it easy for customers to find consciously manufactured products that align with their values. At the end of 2022, about 5% of our Nordstrom banner digital assortment was comprised of products that qualify for our Sustainable Style category, including products from new brand partners like Allbirds and PANGAIA. Our goal is to bring that number to 15% by 2025.
•Plastic to Paper: In 2022, we began replacing our plastic Nordstrom Rack shopping bags with paper bags in support of our goal to reduce single-use plastic in our value chain by 50%. As stores transition to paper bags, we will make enormous progress on our goal: an 853-ton reduction in plastic use. In addition, we will source half of the new bags from a domestic supplier, reducing associated carbon emissions.
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Respecting Human Rights |
We are committed to creating safe and fair workplaces for the people who make our products. As a part of this, we have rigorous standards in place to protect human rights throughout our value chain and seek to partner with suppliers that share our commitment to producing quality products through ethical business practices. Our Partner Code of Conduct and supporting policies lay the foundation for our supplier expectations, and our partners throughout our value chain are required to adhere to these standards and commitments.
In 2022, we worked with experts to implement a comprehensive process involving both internal and external stakeholders to identify salient human rights risks across our operations. We launched two impact assessments — a corporate human rights impact assessment and a forced labor impact assessment — to better understand our risks. These assessments help us to target effective policies and management processes to protect people and communities across Nordstrom operations. We also hit an important milestone on our journey to invest in women’s empowerment throughout our value chain: almost 50% of Nordstrom Made products were produced in factories that offer women’s empowerment training, bringing us closer to our goal of producing 90% of Nordstrom Made products in factories that invest in women’s empowerment by 2025.
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ESG ISSUES
Investing in Our Communities |
One of our central values in corporate philanthropy is providing basic needs for youth and families in the communities where we are located. In 2022, our employees teamed up with Shoes That Fit and Nike to deliver brand-new shoes to kids across the country. Along with our customers, we exceeded our goal to raise $1 million and donate more than 40,000 pairs of shoes to kids in local communities.
On Giving Tuesday, we launched our holiday giving campaign with our partners Big Brothers Big Sisters and Operation Warm, raising funds with our customers to foster mentoring relationships and to donate more than 20,000 coats to kids who need them most.
Throughout 2022, we donated over $12 million to more than 270 organizations located in the communities where we do business. In addition, our employees gave to over 2,900 nonprofit organizations, which we supported with 100% matching. Together with our customers and our employees, we used our platform to drive about $16 million in nonprofit donations based in the U.S. and Canada.
Awards |
We are humbled to have been recognized over the years for our commitment to providing great service and creating a culture where every customer and employee is welcome, respected and able to be their authentic selves.
In 2022, we were included on Fortune’s list of Most Admired Companies, Newsweek’s America’s Best Customer Service list and Forbes’ World’s Best Employers list. For 17 consecutive years, Nordstrom has scored 100% on the Human Rights Campaign’s Corporate Equality Index, which rates companies on their policies and practices toward the LGBTQ community.
In addition, since launching our BEAUTYCYCLE recycling program in 2020, we have been awarded with Good Housekeeping’s Sustainable Innovation award and Elle’s Green Beauty Star award.
These recognitions are a testament to our incredible people who continue to bring the heritage of service and values to life at Nordstrom.
2022 CORPORATE SOCIAL RESPONSIBILITY HIGHLIGHTS |
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Eleven nominees, recommended by the Company’s Board, will be elected at the Annual Meeting, each to hold office until the
Director Qualifications, |
The Committee reviews the size of the Board, the tenure of our Directors and their skills, backgrounds and experiences in determining the slate of nominees and whether to seek one or more new candidates. The Committee seeks directors with established records of significant accomplishments in
In nominating directorDirector candidates or appointing new Directors, the CommitteeCGNC considers such factors as it deems appropriate, including whether there are any evolving needs of the Board with respect to a particular field, skill or experience.experience, with the goal of assisting the Board in providing oversight of and strategic advice to Company management. These factors may include judgment, skill, experience with businesses and other organizations, the candidate’s experience and skill set relative to those of other members of the Board, and the extent to which the candidate would be a desirable addition to the Board and any Committees of the Board. Board and any other factors the Board deems appropriate. In particular, the Board considers the following important in evaluating candidates for Directors:
DESIRED SKILL | NORDSTROM BUSINESS | WHAT THE SKILL REPRESENTS | ||||
| Retail Industry | We are a leading fashion retailer devoted to helping customers feel good and look their best. | Large national-scale retail company experience. | |||
| Marketing & Customer | As customer expectations change, we must evolve our core value of providing excellent customer service to meet customers on their terms. | Expertise in customer service and background in marketing leadership. | |||
| Online Scale & Growth | Over the past several years, we have made investments to transform into a digital-first business to meet shifting customer expectations. | Experience leveraging online platforms to grow and scale business. | |||
| Risk & Crisis Management | With a large workforce and operations across the United States and Canada, we are subjected to frequent emerging risks and crises. We are committed to accurate and disciplined management of those risks and crises, legal and regulatory compliance, and accurate disclosure. | Experience helping organizations navigate fast-paced and dynamic situations involving emerging risks and crises. | |||
| Business Transformation | In our effort to give customers the most relevant products, we are changing the way we’ve historically thought about our business model – developing and entering into novel arrangements with brands around the world to give our customers more choices than ever before. | Expertise in overseeing the transformation of business in a dynamic, ever-changing industry. | |||
| CEO Experience | With more than 350 retail locations across the United States and in Canada, as well as multiple supply chain facilities and a robust digital presence, we are a large and complex organization. | Experience as a Chief Executive Officer. | |||
| Financial Expertise | We are a large public company requiring complex financial forecasts, reporting and other business considerations. | Ability to understand financial data and use that data to make decisions around business strategy. | |||
| Technology Expertise | We are continually investing in technology to enhance the customer experience. | Demonstrated leadership and expertise relating to digital platforms, information technology, data security, and/or data analytics. | |||
| Diversity, Equity, Inclusion and Belonging | Our commitment to fostering a diverse, equitable, and inclusive environment is key to our mission of helping our customers feel good and look their best. | Demonstrated leadership and experience relating to diversity, equity, inclusion and belonging related matters. |
25 | 2023 Proxy Statement |
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PROPOSAL 1: ELECTION OF DIRECTORS
In addition to these factors, the Committee may also considerconsiders a directorDirector candidate’s diversity of background during the evaluation and selection process of director candidates.nominees. In this context, diversity is broadly construed to mean varied skills, backgrounds and experiences, which include gender and ethnicity, as well as other differentiating characteristics, all in the context of the requirements and needs of the Board at that point in
The Committee will consider the qualifications of directorDirector candidates recommended by shareholders, and evaluate each of them using the same criteria the Committee uses for incumbent candidates. Shareholders who wish to submit nominees for election as directorsDirectors should follow the procedures described on page 71.
Collectively, our Directors bring to our Board a wealth of executive leadership experience derived from their service as senior executives of complex corporations. As a group, they also bring extensive Board experience and a diversity of perspectives on the challenges facing the Company and the retail industry at this time.
The chart below outlines some of the qualifications each Director candidate brings to the Board. However, the lack of a mark in any specific box does not mean that the candidate does not possess that qualification. Instead, the skills and qualifications noted below are those reviewed by the CGNC and the Board in making nomination decisions and as part of the Board succession planning process. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well positioned to provide strategic advice and effective oversight to Company management.
Nominee Characteristics
Director Nominees | |||||||||||||
Stacy | James L. | Kirsten A. | Glenda G. | Erik B. | Peter E. | Eric D. | Amie | Bradley D. | Mark J. | Atticus N. | Totals | ||
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Gender | Female | Male | Female | Female | Male | Male | Male | Female | Male | Male | Male | 4/11 Female | |
Racially/Ethnically | Black | White | White | Black | White | White | White | White | White | White | White | 2/11 Diverse | |
| 2023 Proxy Statement | 26 |
PROPOSAL 1: ELECTION OF DIRECTORS
Our Director Nominees
Information related to the Director nominees is set forth below and on the following pages, including age, and the particular experience, qualifications, attributes or skills that led the Board to conclude that the person should serve as a Director for the Company.
Independent Director Nordstrom Board | |||
 | |||
 | Stacy Brown-Philpot |
Skills and Qualifications Ms. | |
 | ||
Career Highlights •2016 to 2020: Chief Executive Officer of •2013 •2012: Entrepreneur-in-Residence at Google Ventures, the venture capital investment arm of Alphabet, Inc. •Prior to | ||
Other Current Public Boards | Previous Public Boards in Past 5 Years | |
HP, Inc. (since 2015) | None | |
Independent Director Nordstrom Board | |||
James L. Donald Skills and Mr. Donald brings to the | |||
 | ||
Career Highlights •2019 to present: Co-Chairman of the Board for Albertsons Companies, •2019: Chief Executive Officer of Albertsons •2018: President and Chief Operating •2013 •Prior to 2013: Chief Executive Officer of | ||
Other Current Public Boards | Previous Public Boards in | |
Albertsons Companies, Inc. (since 2019) | None | |
Independent Director Nordstrom Board | |||
 | Kirsten A. Green | ||
Skills and Qualifications Ms. Green brings to the Board extensive experience in consumer and | |||
 | ||
Career Highlights •2010 to present: Founder and Managing Partner of •Prior to 2010: Equity Research Analyst at Banc of America Securities; Senior Associate at Deloitte & Touche LLP | ||
Other Current Public Boards | Previous Public Boards in Past 5 Years | |
Hims and Hers Health, Inc. (since 2020) | Northern Star Investment Corp. II (2021 to 2023) Northern Star Investment Corp. IV (2021 to 2023) | |
Independent Director Joined the Board: 2019 Age 62 Nordstrom Board CPCC | |||
Glenda G. McNeal Skills and Qualifications Ms. McNeal brings to the Board extensive experience in business development, innovation and customer relationship management, as well as financial, accounting and senior leadership skills. Ms. McNeal provides unique insights on strategic planning, risk oversight and operational matters. Ms. McNeal’s service on public company boards provides her with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, and assessing risk and overseeing management.
Career Highlights •2017 to present: President Enterprise Strategic Partnerships of American Express, a globally integrated payments company •2011 to 2017: Executive Vice President and General Manager of the Global Client Group of American Express •1989 to 2011: positions of increasing responsibility at American Express •Prior to 1989: Arthur Andersen, LLP; the investment banking firm of Salomon Brothers, Inc. | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
None | RLJ Lodging Trust (2011 to 2022) | ||
| 2023 Proxy Statement | 28 |
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nordstrom Board | |||
 | Erik B. Nordstrom | ||
Skills and Qualifications Mr. Nordstrom has spent more than 40 years with the Company, holding positions of increasing responsibility that have spanned all aspects of the retail business. Through roles in buying, regional management, digital and store operations, he has gained a deep understanding of the customer and the foresight needed to navigate an evolving industry. Throughout his tenure, he has driven critical investments in new capabilities to blend the digital and physical experiences, bringing Nordstrom closer to customers and serving them how, where and when they want to shop. He was recently recognized by Barron’s as one of the top CEOs of 2022. In 2021 Mr. Nordstrom joined the board of directors for The Jim Pattison Group, a diversified holding company and one of Canada’s largest privately held companies.
Career Highlights •2020 to present: Chief Executive Officer of Nordstrom, Inc. •2015 to 2020: Co-President of Nordstrom, Inc. •2014 to •2006 to •2000 to •2000: Executive Vice President and Northwest General Manager •1995 to •1979 to 1995: various other management and sales positions of increasing responsibility | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
None | None | ||
Erik Nordstrom and Peter Nordstrom are brothers, great-grandsons of the Company’s founder and the second cousins of James Nordstrom, Jr., Chief Stores Officer for the Company.
Director Nordstrom Board | |||
Peter E. Nordstrom Skills and Qualifications Mr. Nordstrom has spent more than 40 years with the Company, | |||
 | ||
innovate the customer shopping experience and redefine the role fashion plays in customers’ lives through bold investments in emerging categories and partnerships with both established and new brands and designers. He has led major strategic initiatives that have strengthened Nordstrom’s reputation in the fashion industry and kept the brand relevant, such as building the designer offering, evolving Nordstrom’s mix of brands and categories and bringing in limited distribution brands as exclusive partners. He also hosts The Nordy Pod, Nordstrom’s first podcast, which he launched in 2022.
Career Highlights •2020 to present: President •2015 to 2020: Co-President of Nordstrom, Inc. •2006 to •2000 to •2000: Executive Vice President and Director of •1995 to •1978 to 1995: various other management and sales positions of increasing responsibility | ||
Other Current Public Boards | Previous Public Boards in | |
None | None | |
Erik Nordstrom and Peter Nordstrom are brothers, great-grandsons of the Company’s founder and the second cousins of James Nordstrom, Jr., Chief Stores Officer for the Company.
29 | 2023 Proxy Statement |
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PROPOSAL 1: ELECTION OF DIRECTORS
Independent Director Nordstrom Board | |||
Eric D. Sprunk Skills and | |||
 | |
Mr. | |
 | |||
Career Highlights •2013 to 2020: Chief •2008 to 2015: Executive Vice President of •2001 to •1993 to 2001: Various executive roles at Nike, including Vice/General Manager of America’s Region, General Manager of Footwear Europe, Middle East and •1987 to | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
Bombardier Inc. (2021 to present) | None | ||
General Mills, Inc. (2015 to present) | |||
Independent Director Nordstrom Board | |||
Amie Thuener O’Toole Skills and Qualifications Ms. Thuener O’Toole brings to the Board more than 25 years of finance and accounting experience. Her experience in a variety of senior leadership roles at some of the world’s most innovative companies brings valuable perspectives in finance and accounting matters, including financial planning and reporting, risk assessment, incentive compensation plans and finance advice and support for
Career Highlights •2018 to present: Vice President and Chief Accounting Officer of •2013 to 2018: Vice President and Chief Accountant of Alphabet Inc. •1996 to 2012: Managing Director, Transaction Services of PricewaterhouseCoopers | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
None | None | ||
| 2023 Proxy Statement | 30 |
PROPOSAL 1: ELECTION OF DIRECTORS
Independent Director Nordstrom Board | |||
Bradley D. Tilden Skills and Qualifications Mr. Tilden brings to the Board executive, operational, strategic planning and financial experience, as well as insights with respect to customer rewards programs in the consumer services industry. Mr. Tilden’s | |||
 | ||
Career Highlights •2021 to 2022: Chairman of Alaska Air Group, Inc., an airline holding company comprised of Alaska Airlines, Inc., and Horizon Air, Inc. •2014 to 2021: Chairman and Chief Executive Officer of Alaska Air Group, Inc. •2012 to 2014: President and Chief Executive Officer of •2008 to 2012: President of •2002 to 2008: Executive Vice President of Finance and Planning of Alaska Air Group, Inc. •2000 to 2008: Chief •Prior to 2000: Vice President of Finance at Alaska Air Group, Inc.; PricewaterhouseCoopers | ||
Other Current Public Boards | Previous Public Boards in Past 5 Years | |
None | Alaska Air Group, Inc. (2010 to 2022) | |
Independent Director Nordstrom Board | |||
Mark J. Tritton Skills and Mr. Tritton
Career Highlights •2019 to 2022: President and Chief Executive Officer of Bed Bath & Beyond Inc., an omnichannel retailer selling a wide assortment of domestic merchandise and home furnishings online and through several brand retail storefronts •2016 to 2019: Executive Vice President and Chief Merchandising Officer of Target Corporation, an omnichannel retailer selling everyday essentials and fashionable, differentiated merchandise at discounted prices online and through several brand retail storefronts •2009 to 2016: Executive Vice President and Division President of the Nordstrom Product Group of Nordstrom, Inc. | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
None | Bed Bath & Beyond Inc. (2019 to 2022) | ||
31 | 2023 Proxy Statement |
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PROPOSAL 1: ELECTION OF DIRECTORS
Independent Director Nordstrom Board | |||
Atticus N. Tysen Skills and Qualifications Mr. Tysen brings to the board more than three decades of engineering and information security experience. Mr. Tysen also has a wealth of knowledge and expertise regarding technology, cybersecurity and fraud prevention in the context of a rapidly growing and quickly-changing business. His background will add to the diversity of experience already represented across our Board and help us hone an increasingly important area of focus for the retail industry.
Career Highlights •2021 to present: SVP Product Development, Chief Information Security and Fraud Prevention Officer of Intuit Inc., a global provider of business and financial management solutions •2020 to 2021: SVP, Chief Information Security Officer, Chief Fraud Prevention Officer and Chief Information Officer of Intuit Inc. •2013 to 2020: SVP and CIO of Intuit Inc. | |||
Other Current Public Boards | Previous Public Boards in Past 5 Years | ||
None | None | ||
| 2023 Proxy Statement | 32 |
AUDIT AND FINANCE COMMITTEE REPORT
The following Report of the Company’s Audit and Finance Committee of the Board (the “Audit and Finance Committee”) does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference.
The AFC currently consists of four Directors, each of whom has been determined by the Board to meet the heightened independence requirements under SEC and NYSE Listed Company Rules. In addition, the Board has determined that each member of the Audit and Finance CommitteeAFC is independent from the Company as such term is defined in Sections 303.01(B)(2)(a) and (3) of the NYSE’s listing standards at all times during the fiscal year and that each member was an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K under the Securities Exchange Act of 1934.
The Audit and Finance CommitteeAFC serves in an oversight capacity and is not part of the Company’s managerial or operational decision-makingdecision-making process. As part of its responsibilities for oversight of the Company’s Enterprise Risk Management process, the Audit and Finance CommitteeAFC reviews and discusses Company policies and processes with respect to risk assessment and risk management, including discussions of individual risk areas. Management is responsible for the Company’s internal controls and the financial reporting process. Deloitte, the Company’s independent registered public accounting firm, reports to the Company’s Audit and Finance Committee,AFC, and is responsible for performing an integrated audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with auditing standards generally accepted in the United States of America.
Deloitte and the Company’s internal auditors have full access to the Audit and Finance Committee.AFC. The auditors meet with the Audit and Finance CommitteeAFC at each of the Audit and Finance Committee’sAFC’s regularly scheduled meetings, with and without management being present, to discuss appropriate matters. The AuditAFC has also discussed with the independent auditors the matters required to be discussed under the applicable rules of the Public Company Accounting Oversight Board and Finance Committeethe SEC. The AFC has the sole authority to engage, evaluate and terminate the Company’s independent auditors. The Audit and Finance CommitteeAFC also pre-approvespre-approves all auditing services, internal control-relatedcontrol-related services and permitted nonauditnon-audit services to be performed by the Company’s independent auditors, and periodically reviews whether to request proposals for the engagement of the independent audit firm.
•review of the Company’s audited consolidated financial statements with management;
•review of the unaudited interim financial statements and Forms 10-Q10-Q prepared each quarter by the Company;
•review of the Company’s Disclosure Committee practices and the certifications prepared each quarter in accordance with Sections 302 and 906 of the Sarbanes-OxleySarbanes-Oxley Act of 2002;
•review with management regardingof the critical accounting estimates on which the financial statements are based, as well as its evaluation of alternative accounting treatments;
•receipt of management representations that the Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States of America;
•review, with management, the internal auditors and Deloitte, regardingof management’s assessment of the effectiveness of the Company’s internal control over financial reporting and Deloitte’s evaluation of the Company’s internal control over financial reporting;
•review, with legal counsel and management, regardingof contingent liabilities;
•receipt of the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communication with Audit and Finance CommitteesAFCs Concerning Independence; and
•review, with Deloitte, regarding theirof Deloitte’s independence, the audited consolidated financial statements, the matters required to be discussed by
Audit and Finance Committee | ||||
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Amie Thuener O’Toole, Chair | Stacy | |||
James L. | ||||
Kirsten A. Green | ||||
33 | 2023 Proxy Statement |
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PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board recommends a vote FOR this proposal.
The Audit and Finance Committee,AFC, consistent with NYSE and SEC rules, has appointed Deloitte to be the Company’s independent registered public accounting firm for the fiscal year ending January 30, 2021.February 3, 2024. Deloitte and its predecessors have served as the Company’s independent registered public accounting firm for over 4550 years, including the fiscal year ended February 1, 2020.
Audit Fees
The following table summarizes fees billed or expected to be billed to the Company by Deloitte in connection with services for the fiscal years ended February 1, 2020 and February 2, 2019:
| Fiscal Year Ended February 1, 2020 | Fiscal Year Ended February 2, 2019 | |||||||||||
| Type of Fee | ($) | (%) | ($) | (%) | ||||||||
Audit Fees(a) | 3,281,000 | 87 | 3,657,000 | 83 | ||||||||
Audit-Related Fees(b) | 426,000 | 11 | 581,000 | 13 | ||||||||
Other Fees(c) | 68,000 | 2 | 152,000 | 4 | ||||||||
| TOTAL | 3,775,000 | 100 | 4,390,000 | 100 | ||||||||
Fiscal Year Ended January 28, 2023 | Fiscal Year Ended January 29, 2022 | |||||
Type of Fee | ($) | (%) | ($) | (%) | ||
Audit Fees(a) | 3,658,000 | 89 | 3,411,000 | 86 | ||
Audit-Related Fees(b) | 389,000 | 9 | 465,000 | 12 | ||
Tax Fees(c) | 67,000 | 2 | — | — | ||
All Other Fees(d) | — | — | 68,000 | 2 | ||
TOTAL | 4,114,000 | 100 | 3,944,000 | 100 | ||
(a) Audit Fees
(b) Audit-Related Fees
(c) OtherTax Fees
(d) All Other Fees related primarily to human resources benchmarking services and for the fiscal year ended
Pre-Approval Policy
Consistent with SEC policies regarding auditor independence, the services performed by Deloitte for the fiscal years ended February 1, 2020January 28, 2023 and February 2, 2019January 29, 2022 were pre-approvedpre-approved in accordance with the policies and procedures adopted by the Audit and Finance Committee.AFC. The pre-approvalpre-approval policy is periodically reviewed and updated. It describes the permitted audit, audit-related,audit-related, tax and other services that Deloitte may perform.
Normally, pre-approvalpre-approval is provided at regularly scheduled Audit and Finance CommitteeAFC meetings. However, the authority to grant specific pre-approvalpre-approval between meetings, as necessary, has been assigned to the Chair of the Audit and Finance Committee.AFC. The Chair is responsible for updating the Audit and Finance CommitteeAFC at the next regularly scheduled meeting of any services that were pre-approvedpre-approved between meetings.
The Audit and Finance CommitteeAFC approves proposed services, which incorporates appropriate oversight and control of the Deloitte relationship, while permitting the Company to receive immediate assistance from Deloitte when time is of the essence.
The Committee also reviews on a regular basis:
•a listing of approved services since its last review;
•a report summarizing the year-to-dateyear-to-date services provided by Deloitte, including fees paid for those services; and
•a projection for the current fiscal year of estimated fees.
The policy prohibits the Company from engaging the independent registered public accountants for services billed on a contingent fee basis and from hiring current or former employees of the independent auditor who have not satisfied the statutory cooling-offcooling-off period for certain positions.
| 2023 Proxy Statement | 34 |
EXECUTIVE OFFICERS
The Executive Officers of the Company are appointed annually by the Board following each year’s annual meeting and serve at the discretion of the Board. In addition to Erik Nordstrom and Peter Nordstrom, whose biographical information is provided under Election of Directors on page 22,25, the following are the other Executive Officers of the Company on the filing date of filing of this Proxy Statement.
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 | Teri J. Bariquit | |
Employee since 1986 | ||
Age | ||
Chief Merchandising Officer since August 2019. From 2004 to 2019, Ms. Bariquit served as Vice President and then Executive Vice President, Nordstrom Merchandising Group, where she was responsible for Inventory, Planning, Solutions and Business Integration. In her prior role, she led inventory planning, merchandising strategy, brand programs and business transformation initiatives for both | ||
| Alexis DePree | |
 | Employee since 2020 | |
Age 44 | ||
Chief | ||
 | ||
|  | Michael W. Maher |
Employee since 2009 | ||
Age | ||
Interim Chief Financial Officer and Chief Accounting Officer since | ||
 | |
| James F. Nordstrom, Jr. |
Employee since | |
Age | |
Chief | |
 | |
| Farrell B. Redwine |
Employee since 2016 | |
Age 51 | |
Chief Human Resources Officer since July 2021. In addition, Ms. Redwine has responsibility for the Company’s Diversity, Inclusion and Belonging strategy and co-chairs the Nordstrom Diversity Action Council. Ms. Redwine joined Nordstrom in 2016 as Vice President, Human Resources supporting eCommerce, call centers and stores, and subsequently served as Senior Vice President, Human Resources, overseeing the talent, culture, diversity and total rewards functions for the Company. From 2014 to 2016, Ms. Redwine was a change management consultant and leadership coach. From 2008 to 2013, she was Global Head of Diversity & Talent Management for Barclays Capital. Prior to 2008, Ms. Redwine held various global HR leadership positions with increasing responsibility at several large corporations, including Lehman Brothers, ExxonMobil and Time Inc. | |
35 | 2023 Proxy Statement |
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EXECUTIVE OFFICERS
| Ann Munson Steines |
Employee since 2019 | |
Age | |
Chief Legal Officer, General Counsel and Corporate Secretary since | |
| Kenneth J. Worzel |
Employee since | |
Age | |
Chief Customer Officer since | |
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As previously disclosed by the Company, Nordstrom Canada Retail, Inc., Nordstrom Canada Holdings, LLC and Nordstrom Canada Holdings II, LLC, which are subsidiaries of the Company, have commenced a wind-down of their business operations, obtaining an Initial Order from the Ontario Superior Court of Justice under the Companies’ Creditor Arrangement Act on March2, 2023 to facilitate the wind-down in an orderly fashion. Erik Nordstrom and Michael Maher served as directors and/or officers of such entities.
| 2023 Proxy Statement | 36 |
COMPENSATION OF EXECUTIVE OFFICERS
Compensation, People and Culture Committee Report The CPCC has reviewed and discussed with management the CD&A included in this Proxy Statement. The CPCC believes the CD&A represents the intent and actions of the CPCC with regard to executive compensation and has recommended to the Board that it be included in this Proxy Statement for filing with the SEC. | |||||
Compensation, People and Culture Committee | |||||
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James L. Donald, Chair | Glenda G. McNeal | Mark J. Tritton | |||
Compensation Discussion and Analysis
Table of Contents |
37 | |
40 | |
45 |
This section describes our executive compensation program and the compensation decisions made for our fiscal year 2019 Named Executive Officers.
Erik B. Nordstrom | Chief Executive Officer | |
Michael W. Maher | Interim Chief Financial Officer and Chief Accounting Officer | |
Peter E. Nordstrom | President & Chief Brand Officer | |
Kenneth J. Worzel | Chief Customer Officer | |
Alexis DePree | Chief Supply Chain Officer | |
Anne L. Bramman | Former Chief Financial Officer | |
Edmond Mesrobian | ||
Former Chief Technology & Information Officer |
Executive Summary |
Given the challenging environment, we have been executing with agility since we saw softening trends in late June. We took action to navigate the macroeconomic uncertainty and position our business for success. This included $0.19 per diluted share of charges primarily relatedmanaging expenses to the integration of Trunk Club as part of our marketalign with sales expectations, optimizing product mix and clearing through excess inventory. While this strategy required more markdowns than we had initially planned in addition to debt refinancing costs. We achieved net sales of $15.1 billion compared with $15.5 billion in 2018, and saw a meaningful improvement in top-line trends in the second half of2022, we exited the year relativewith inventory levels down 15% and are positioned for greater agility amidst continuing macroeconomic uncertainty.
While we navigate this ever-shifting landscape, we remain committed to the first half.
Improve Nordstrom Rack Performance: We are committed to delivering profitable growth while improving the customer experience through three key initiatives. The first is increasing our supply of premium brands at Nordstrom Rack by prioritizing 100 nationally recognized strategic brands that help us drive sales and grow market share. We are dedicated to having great brands at great prices ateach of our locations, and these brands are a differentiator for the Rack as many are not widely available in the off-price space.
37 | 2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
These brands accounted for half of Rack sales in 2022, and they make up 60% of our on-order for the first half of 2023. The second is focusing on expanding our reach and convenience for customers through opening new Rack stores. Rack stores are our largest source of new customer acquisition and we have an opportunity to attract more customers and drive profitable growth through a proven model. We opened two new Rack stores in 2022 and have announced plans to open many more in 2023 and beyond. Finally, we aim to drive greater engagement and higher profitability at NordstromRack.com. Our digital capabilities are unique in the off-price space, and we see opportunities to leverage our digital assets to provideincrease engagement with Rack customers. We also continue to optimize our operational model to drive improved profitability. In the third quarter of 2022, we reduced Rack store-based order fulfillment and raised the minimum order amount to receive free ship-to-store delivery on NordstromRack.com.
Increase Inventory Productivity: Better inventory discipline across our operations provides customers with relevant and new assortments from the world’s best brands. Supply chain disruptions and volatility over the past three years had a best-in-class experience. In 2019, we made tremendous progress executing our market strategy, accelerating our sales trends and maintainingsignificant impact on our inventory management and expense discipline, including the following:
Optimize Our Supply Chain: We meaningfully improved customer satisfaction scoresmade significant progress on our supply chain initiatives in many areas of our business and during our two key events
Although there is continued macroeconomic uncertainty heading into 2023, our priorities, along with the year.
Shareholders Support our Compensation Program
Our shareholders approved our Board’s recommendation to hold executive compensation advisory votes on an annual basis so that they may frequently and openly express their views about the compensation of our Named Executive Officers.NEOs. Each year since 2011, more than 90% of the votes cast have been supportive of our compensation programs. Based on the majority of shareholders voting in favor of our executive compensation program last year, weThe CPCC took investors’ sustained support into account as it continued to implement similar compensation policies and programs in fiscal year 2019, with the exception of a return to a mix of performance and time-based vesting of equity incentive awards for fiscal year 2019, as discussed on page 36, and continued to apply the following pay and benefits philosophy.
We Emphasize Variable Pay and Balance Short- and Long-Term Incentives as Well as Incentive Values
In accordance with our pay-for-performancepay-for-performance philosophy, the compensation program for our Named Executive OfficersNEOs is straightforward in design and includes four primary elements: base salary, performance-basedperformance-based bonus, long-term incentives (“LTI”)LTIs and benefits. Within these pay elements, we emphasize variable pay over fixed pay, with at least 70% of each Named Executive Officer’sNEO’s target compensation linked to our financial or market results.results, with the exception of the Interim Chief Financial Officer and Chief Accounting Officer for whom 55% of target compensation is variable, consistent with other similarly leveled executives. The program also balances the importance of these executives achieving both critical short-termshort-term objectives and strategic long-termlong-term priorities. The following graphics represent fiscal year 2022 target direct compensation (excluding benefits) for the Chief Executive OfficerCEO and the President and& Chief Brand Officer, and for the other Named Executive Officers.
CEO and | Average of All Other NEOs | |||||
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85% | 73% | |||||
Performance Based | Performance Based |
Our Variable Pay Reflects Company Performance
Our pay-for-performancepay-for-performance design includes rigorous performance goals and high performance standards. Further, with a substantial portion of pay in the form of Nordstrom stock,Common Stock, pay outcomes align with our shareholders’ interests. This is evidenced by our Named Executive Officers’NEOs’ recent incentive compensation payouts and grant realizable values as of our 2019 fiscal year end 2022, as shown in the table on the following page.
| 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||
| FINANCIAL RESULTS | ||||||||||||||||||||
| Net Earnings | $600 | M | $354 | M | $437 | M | $564 | M | $496 | M | ||||||||||
| Earnings Before Interest and Income Tax Expense | $1,101 | M | $805 | M | $926 | M | $837 | M | $784 | M | ||||||||||
| Return on Assets | 6.6 | % | 4.5 | % | 5.4 | % | 6.8 | % | 5.1 | % | ||||||||||
| INCENTIVE COMPENSATION PAYOUTS | ||||||||||||||||||||
| Incentive Adjusted Earnings Before Interest and Income Tax Expense (“Incentive Adjusted EBIT”) | $1,246 | M | $1,076 | M | $952 | M | $909 | M | $808 | M | ||||||||||
| Incentive Adjusted Return on Invested Capital (“Incentive Adjusted ROIC”) | 11.0 | % | 12.4 | % | 10.0 | % | 12.8 | % | 11.2 | % | ||||||||||
| Annual bonus (payout as a % of Target on Incentive Adjusted EBIT measure*) | 0 | % | 80 | % | 96 | % | 89 | % | 44 | % | ||||||||||
| 3-year Total Shareholder Return (“TSR”) percentile ranking within comparator group | 53%ile | 16%ile | 10%ile | 24%ile | 20%ile | |||||||||||||||
| Performance Share Unit (“PSU”) vesting (payout as a % of Target) | 75 | % | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||||
| PSU comparator group | Retail | S&P 500 | S&P 500 | S&P 500 | S&P 500 / Internal Measures** | |||||||||||||||
| |||
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COMPENSATION OF EXECUTIVE OFFICERS
INCENTIVE COMPENSATION PAYOUTS | 2018 | 2019 | 2020 | 2021 | 2022 |
Annual bonus payout as a % of target on Incentive Adjusted EBIT measure(a) | 89% | 44% | 0% | 128% | 0% |
PSU vesting (payout as a % of target)(b) | 0% | 0% | N/A | 0% | N/A |
(a) For the CEO and the President & Chief Brand Officer actual bonus payouts as a percent of target for fiscal years 2018, 2019, PSU grant results are based on internal measures.2020, 2021 and 2022 were 63%, 47%, 0%, 128% and 0%, respectively.
(b) PSU vesting reflects the performance period ended February 1, 2020.
GRANT REALIZABLE VALUES | 2018 | 2019 | 2020 | 2021 | 2022 |
PSUs (realizable value as a % of grant value) | N/A | 0% | N/A | 0% | 44% |
RSUs (realizable value as a % of grant value) | 64% | 65% | 101% | 38% | 62% |
Stock options (realizable value as a % of grant value) | N/A | 0% | 70% | 0% | 0% |
The one-year performance period was intended only for the 2019 PSU grant.
| GRANT REALIZABLE VALUES | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||
| PSUs (realizable value as a % of grant value) | 0 | % | 0 | % | 0 | % | N/A | 0 | % | ||||||
| RSUs (realizable value as a % of grant value) | 67 | % | 99 | % | 101 | % | 77 | % | 108 | % | |||||
| Stock options (realizable value as a % of grant value) | 0 | % | 0 | % | 5 | % | N/A | 0 | % | ||||||
The PSUs granted on March 9, 2020 were cancelled on August 18, 2020, as discussed in footnote (c) of the Summary Compensation Table, and are not reflected in the above table.
The CPCC reviews these results and other analyses with the goal of ensuring that the NEOs’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the CPCC believes that total direct compensation for our NEOs reflects our pay-for-performance philosophy and is well aligned with shareholder interests.
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2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
Effective Corporate Governance Reinforces Our Compensation Program
Our compensation philosophy for our executive team, including our Named Executive Officers,NEOs, is reflected in governance practices that support the needs of our business, drive performance and align with our shareholders’ long-termlong-term interests. Below is a summary of what we do and don’t do in that regard.
WHAT WE DO | WHAT WE DON’T DO | |||
✓ | Pay |
| Provide employment agreements. | |
| Offer separation benefits to our NEOs who are Nordstrom family members. | |||
✓ | Retain meaningful stock ownership guidelines:Our expectations for ownership align executives’ interests with those of our shareholders, and all |
| Offer | |
✓ | Mitigate undue risk: We have caps on potential |
| ||
Maintain separate change in control agreements. | ||||
| Gross up taxes, except in the case of selected relocation expenses. | |||
✓ | Engage an independent compensation consulting firm: The CPCC’s consultant does not provide any other services to the Company. |
| Reprice underwater stock options. | |
✓ | Apply conservative |
| Issue grants below 100% fair market value. | |
✓ | Limit accelerated vesting: Our equity plan provides for accelerated vesting of equity awards after a change in control only if an executive is involuntarily terminated by the Company without cause or resigns for good reason, a provision referred to as a “double trigger.” |
| ||
Pay dividends on any unearned or unvested equity awards. | ||||
| Permit hedging or short-sale transactions. | |||
✓ | Restrict pledging activity: All Executive Officers are subject to |
| Count pledged shares toward stock ownership targets. | |
✓ | Receive strong shareholder support: Each year since 2011, more than 90% of the votes cast | |||
Framework for |
Our Pay and Benefits Philosophy
•We believe that if our customers win, our employees and shareholders win – our interests are aligned.
•We pay for performance by investing in talent that delivers results and demonstrates the behaviors that drive our success, while not encouraging excessive risk taking.
•We deliver competitive pay and benefits for all jobs and differentiate pay for critical jobs that directly impact our ability to deliver on the roles involved in determining compensation for our Named Executive Officers, ourstrategy.
•We use ofobjective market data and the companies selected for our peer group.
•We provide equal pay and performance
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COMPENSATION OF EXECUTIVE OFFICERS
Our compensation program for Named Executive OfficersNEOs is made up of four primary elements outlined on the following page.table. Each element has its own purpose based on our fundamental premise of pay for performance-for-performance and our pay and benefits philosophy, described on page 29.as previously described. Additional information is provided on the following page in the “About Our Compensation Elements: What We Paid in 2019 and Why” section.
Compensation Element | Purpose | |
Base Salary ( | Reflect scope of the role and individual performance through | |
Performance-Based Annual Cash Bonus ( | Motivate and reward contributions to annual operating performance and | |
LTIs | Promote alignment of executive decisions with Company goals and shareholder interests | |
Benefits (Page | Provide meaningful and competitive |
On an annual basis, the CommitteeCPCC reviews base salary, performance-basedperformance-based bonus target opportunity and long-term incentiveLTI target grant value for each of the Named Executive OfficersNEOs in consideration of the upcoming fiscal year. CommitteeCPCC decisions for fiscal year 20192022 targets are summarized belowin this section and shown as a year over year comparison. The Committee believes these elementsSee LTIs on page 42 for information on special equity grants and CPCC discretion to increase the overall compensation program are meeting2022 LTI grant value for Michael Maher.
Base Salary | Performance-Based | LTI | ||||||
Name | FYE 2021 | FYE 2022 | FYE 2021 | FYE 2022 | FYE 2021 | FYE 2022 | ||
Erik B. Nordstrom | 758,500 | 758,500 | 200 | 200 | 350 | 350 | ||
Michael W. Maher | 441,000 | 525,000 | 50 | 50 | 70 | 70 | ||
Peter E. Nordstrom | 758,500 | 758,500 | 200 | 200 | 350 | 350 | ||
Kenneth J. Worzel | 895,000 | 895,000 | 125 | 125 | 250 | 250 | ||
Alexis DePree | 570,000 | 650,000 | 80 | 80 | 150 | 150 | ||
Anne L. Bramman | 815,000 | 845,000 | 100 | 100 | 200 | 250 | ||
Edmond Mesrobian | 800,000 | 825,000 | 80 | 80 | 150 | 150 | ||
In 2022, the expectationsCPCC approved increases to base salaries for our pay-for-performanceMichael Maher, Alexis DePree, Anne Bramman and payEdmond Mesrobian.
•To maintain his relative market competitiveness, Michael Maher’s base salary increased from $441,000 to $456,435 on March27, 2022, and benefits philosophies.
Base Salary ($) | Performance-Based Annual Cash Bonus (Target Opportunity as a % of Base Salary) | Long-Term Incentives Annual Grant (Target Grant Value as a % of Base Salary)* | ||||||||||||||
| Name | FYE 2018 | FYE 2019 | FYE 2018 | FYE 2019 | FYE 2018 | FYE 2019 | ||||||||||
| Erik B. Nordstrom | 758,500 | same | 200 | same | 350 | same | ||||||||||
| Anne L. Bramman | 775,000 | 800,000 | 90 | 100 | 175 | 200 | ||||||||||
| Peter E. Nordstrom | 758,500 | same | 200 | same | 350 | same | ||||||||||
| Kenneth J. Worzel | 800,000 | 875,000 | 125 | same | 250 | same | ||||||||||
| Edmond Mesrobian | 725,000 | 775,000 | 80 | same | 150 | same | ||||||||||
•To maintain relative market competitiveness, the CommitteeCPCC also approved an increase inthe following base salary increases: Alexis DePree’s base salary increased from $570,000 to $595,000 on March27, 2022 and from $595,000 to $650,000 on June5, 2022, Anne Bramman’s base salary of approximately 3%, effective April 1, 2019,increased from $815,000 to acknowledge performance$845,000 on March27, 2022 and maintain relative market competitiveness for the Chief Financial Officer role. At the same time, to maintain relative market competitiveness for the Chief Financial Officer role, the Committee
•The base salaries of all other NEOs remained unchanged.
The CPCC made no changes to recognize his increased responsibility over data science and product management.
In 2022, the CPCC approved an increase of Anne Bramman’s target LTI grant value as a percent of base salary from 200% to 250% to maintain her relative market competitiveness. The target LTI grant as a percent of base salary of all other NEOs remained unchanged.
Base Salary
The CommitteeCPCC begins its annual review of base salary for the Named Executive OfficersNEOs through discussion with the Chief Executive OfficerCEO and the President and& Chief Brand Officer on the expectations and achievements of each executive during the previous year, as well as their pay history and pay equity with other internal roles. The CommitteeCPCC then references our pay levels
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COMPENSATION OF EXECUTIVE OFFICERS
The opportunity for annual performance-basedperformance-based cash awards under our shareholder-approvedshareholder-approved Nordstrom, Inc. Executive Management Bonus Plan (“Executive Management Bonus Plan”)EMBP is designed to focus the Named Executive OfficersNEOs on the alignment between annual operating performance and long-termlong-term business strategy. The Committee establishes the following criteria in developing the annual bonus arrangements:
In determining the target percentage of base salary,bonus opportunities, the CommitteeCPCC takes into account the mix of pay elements, market pay information for similar roles within our peer group and the internal relationship between roles within the Company.
In support of our pay-for-performancepay-for-performance philosophy, the maximum bonus payout, which is associated with superior performance, is 2.5 times an executive’s target bonus opportunity. This maximum is higher than is common among our retail peers because we believe it is important
For fiscal year 2019,2022, the Named Executive Officers hadCPCC maintained the same financial performance measures and weighting of Incentive Adjusted EBIT, which emphasizes the importance of earnings and its role in driving shareholder value, and Incentive Adjusted ROIC, which ensures our overall performance aligns directly with shareholder returns over the long term. The CPCC retained the ability to differentiate payouts for eligible roles, indicated in the following measures:
Measure and Weighting | Opportunity for Individual Bonus Differentiation | |
CEO and President & Chief Brand Officer | 100% Incentive Adjusted EBIT |
No | ||
Other NEOs | 100% Incentive Adjusted EBIT subject to | Yes, applied after the calculation of outcomes on the financial performance measures |
The following charts show the mix of financial and individual components of the bonus opportunity for the Chief Executive Officer and the President and Chief Brand Officer and for the other Named Executive Officers for fiscal year 2019.
In accordance with our bonus plan,EMBP, Incentive Adjusted EBIT and Incentive Adjusted ROIC achievement used to determine bonus payout may differ from EBIT and Adjusted ROIC, as reported in our 20192022 Annual Report, dueReport. Beginning in fiscal year 2021, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to the exclusionbe more reflective of certain one-time gains or losses. This is the case for 2019 where achievements reflect non-operating related adjustments not included in the financial plan.business performance. Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under GAAP and should be considered in addition to, and not a substitute for, return on assets, net earnings, total
2022 Bonus Measure Outcomes and Payouts
Our Incentive Adjusted EBIT achievement missed our threshold of $906 million and Incentive Adjusted ROIC missed the individualthreshold of 11.0%, resulting in a 0% bonus measures varied.
| Milestones | Total Bonus Payout (as a % of Target) | |||||||||||||
| Named Executive Officer | Bonus Measures | Weight | Threshold (25%) | Target (100%) | Superior (250%) | Result / Payout % | ||||||||
Erik B. Nordstrom and Peter E. Nordstrom | Incentive Adjusted EBIT | 100 | % | $752 | M | $977 | M | ≥$1,202M | $817M/ 47%* | 47 | % | |||
| Subject to Incentive Adjusted ROIC threshold | 10.1 | % | 11.2 | % | ||||||||||
| Anne L. Bramman | Incentive Adjusted EBIT | 67 | % | $752 | M | $977 | M | ≥$1,202M | $808M/ 44% | 71 | % | |||
| Subject to Incentive Adjusted ROIC threshold | 10.1 | % | 11.2 | % | ||||||||||
| Individual Measure | 33 | % | 125 | % | ||||||||||
| Kenneth J. Worzel | Incentive Adjusted EBIT | 67 | % | $752 | M | $977 | M | ≥$1,202M | $808M/ 44% | 62 | % | |||
| Subject to Incentive Adjusted ROIC threshold | 10.1 | % | 11.2 | % | ||||||||||
| Individual Measure | 33 | % | 100 | % | ||||||||||
| Edmond Mesrobian | Incentive Adjusted EBIT | 67 | % | $752 | M | $977 | M | ≥$1,202M | $808M/ 44% | 71 | % | |||
| Subject to Incentive Adjusted ROIC threshold | 10.1 | % | 11.2 | % | ||||||||||
| Individual Measure | 33 | % | 125 | % | ||||||||||
Milestones | |||||
Name | Bonus Measures | Threshold | Target | Superior | Actual |
All NEOs | Incentive Adjusted EBIT | $906M | $1,158M | $1,662M | $524M |
% of Payout | 25% | 100% | 250% | 0% | |
Subject to Incentive Adjusted ROIC threshold | 11.0% | 7.7% | |||
LTIs
Annual grants of equityLTIs under our shareholder-approved equity incentive planshareholder-approved EIP are intended to provide the Named Executive OfficersNEOs with additional incentive to create shareholder value and receive financial rewards. The long-term incentive value that determines the size of the annual grant to Named Executive Officers is expressed as a percentage of base salary as shown on page 33. In establishing the long-term incentiveLTI annual grant value at grant for each Named Executive Officer,NEO, the CommitteeCPCC considers the mix of pay elements, market pay information for similar roles within our peer
In 2022, performance and service-based long-term incentives. The long-term incentive mix for 2019 is composed of performance-based equity (60% of the grant value) and stock options (40% of the grant value) for the Chief Executive Officer and the President and Chief Brand Officer and performance-based equity (60% of the grant value) and restricted stock units (40% of the grant value) for the other Named Executive Officers.
| 2023 Proxy Statement | 42 |
COMPENSATION OF EXECUTIVE OFFICERS
•The PSUs will pay out based on the Company’s communicated forward-looking strategy. Performance share units have a three-year performance cycle, from February 3, 2019 through January 29, 2022, and will result in payout if certain criteria are met. The core measures for the performance share units in this performance cycle, equally weighted, are growth in free cash flowcumulative sales and EBIT margin percentage,% over a three-year performance period ending on February1, 2025. Goals for the PSUs are aligned with the Company’s market share serving as a payout modifier forforward-looking strategy communicated at the award. Each executive’s award provides for the results for two-thirds of the award to be judged over the full three years of the performance cycle, with the remaining one-third to be judged over the first year of the same period.February 2021 Investor Event. The CommitteeCPCC believes that the metrics for these awards appropriatelymeasures reflect the Company’s key areas of strategic focus over the next three yearsyears. The minimum percentage of PSUs that can be earned at the end of the three-year performance cycle is 75% and the structure of these awards appropriately balances the need for long-term performance against the necessity of focusing on shorter-term results in the context of current industry trends.
•The stock options will vest over four years, with 50% vesting at the end ofin year three and 50% in year four, to emphasize the long-term nature of the award.
Michael Maher’s 2022 LTI annual grant mix was composed of 75% RSUs with four-year equal vesting at the end ofand 25% stock options vesting 50% in year three and 50% in year four.
The CPCC retains discretion to approve LTI annual grants above and below the Committee determinedtarget grant value as a percent of base salary in any given year to awardreflect an individual’s contributions to delivering shareholder value. The CPCC used its discretion to modify the 2022 LTI annual grant value as a percentage of base salary from 70% to 90% for Michael Maher to recognize his performance and expected future contributions.
One-Time Equity Awards
At the May 2022 meeting, the CPCC approved special RSU grants which were awarded on May 26, 2022 and vest 50% on June 10, 2024 and 50% on June 10, 2025 to Michael Maher, Alexis Depree and Edmond Mesrobian. To mitigate retention risk, Michael Maher was awarded a grant of $1,200,000. Due to the highly critical role that Supply Chain and Technology play in meeting our ambitions relative to our Closer to You strategy, Alexis DePree and Edmond Mesrobian a restricted stock unit grant to mitigate retention risk. The grantwere awarded grants of 38,520 restricted stock units was made$1,000,000 and $850,000, respectively. Edmond Mesrobian forfeited all unvested equity, including this award, upon his separation on August 26, 2019, the first day of the open trading window following Committee approval, and
EBIT Margin % for Performance Cycle: February 3, 2019 - February 1, 2020 | Percentage of Units that will Vest |
| ≥6.4% | 200% |
| 6.2% | 100% |
| 6.0% | 50% |
| <6.0% | 0% |
Stock Ownership Guidelines Align Executives and Shareholders
To align our executives’ interests with those of Common Stock by our Named Executive Officersshareholders and other Executive Officers is encouraged by management andto ensure that our executives own meaningful levels of Company stock throughout their tenures with the Board andCompany, our stock ownership guidelines were formally established in 2004. Ownership shares are made up of all forms of Common Stock, as well as vested performance share unitsPSUs that are deferred, PSUs with a minimum payout of more than zero and unvested restricted stock units.RSUs. Ownership shares do not include unvested or vested stock options, unvested performance share unitsPSUs with a minimum payout of zero or pledged shares.
The Named Executive OfficersNEOs and other Executive Officers have an annuala share target defined as base salary on each April 1st multiplied by their ownership multiple of base salary divided by a 52-week52-week average closing stock price. The ownership multiples of base salary depend on the executive’s role in the Company and are as shown in the following table for the Named Executive Officers.NEOs. The CommitteeCPCC has assigned these particular multiples to match or exceed market practice, and to represent a significant portion of the overall compensation package to reinforce the alignment of management’s decision-makingdecision-making with shareholder interests. Executives newwill be deemed to be in compliance with the Company have five years to achievestock ownership guidelines once their ownership target. In May 2019,holdings of Common Stock meet or exceed the Committee approved a change to our guidelines such that once the ownership target has been met, executivesthreshold, and will remain in compliance, as long as their shareholdings do not decline belowunless and until the number of shares acquired at the time the target was met. However, a new target will be determined at the time an executive receives a promotion
Under our guidelines, Named Executive OfficersNEOs and other Executive Officers are required to conduct any open market transactions in Common Stock only in accordance with an approved SEC Rule 10b5-110b5-1 trading plan. Theseplan or with pre-clearance from the Chief Legal Officer during an open trading window. Transactions pursuant to SEC Rule 10b5-1 trading plans predetermine the timing, number of shares and price at which an Executive Officer may buy or sell Company shares. The Executive Officers must also achieve and retain a minimum holding of 100% of their ownership targets before they may sell or otherwise dispose of Company shares in the market.
The CommitteeCPCC regularly reviews stock ownership status for the Named Executive Officers. AllNEOs. Each continuing NEO has met his or her respective stock ownership guideline.
Position | Multiple of Base Salary Used to Establish Ownership |
Chief Executive Officer | 10x |
Interim Chief Financial Officer and Chief Accounting Officer | 1x |
President & Chief Brand Officer | 10x |
Chief Customer Officer | 4x |
Chief Supply Chain Officer | 3x |
Former Chief Financial Officer | 4x |
Former Chief Technology & Information Officer | 3x |
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Table of the Named Executive Officers have exceeded their ownership targets.
COMPENSATION OF EXECUTIVE OFFICERS
The Company offers the Named Executive OfficersNEOs a comprehensive program of broad-based,broad-based, leadership and retirement benefits. Their purpose varies by benefit, but in general they enhance total compensation with meaningful and competitive offerings that support healthy lifestyles and contribute to financial security. These benefits are regularly reviewed for consistency with our pay and benefits philosophy, organizational culture and market practices.
Additional information on 20192022 benefits is provided as noted below.
Benefit | ||||
Where to Learn More | ||||
Broad- | •Company contribution to medical, dental and vision coverage; short- and | •For merchandise discount, see All Other Compensation in Fiscal Year | ||
Leadership | •Long-term disability coverage; life insurance | •For | ||
•NDCP, including Company | •See Nonqualified Deferred Compensation beginning on page | |||
•Executive Severance Plan | •See Potential Payments Upon Termination or Change in Control at Fiscal | |||
Retirement | •401(k) match: Company matching contributions are made each pay period an employee contributes to the 401(k) Plan, equal to a dollar for dollar match up to 1% of eligible pay then $0.50 per dollar on the next 6% of eligible pay, up to a maximum of 4% of eligible pay and IRC limits | •See All Other Compensation in Fiscal Year | ||
•Retiree health care (closed to new entrants in 2013; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are participants as they were eligible prior to the closure to new entrants) | •See Potential Payments Upon Termination or Change in Control at Fiscal | |||
•SERP (annual benefit capped for current participants; closed to new entrants in 2012; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are participants as they were eligible prior to the closure to new entrants) | •See Pension Benefits beginning on page |
Changes for 2020
Each year,
theBase Salary
The CPCC determined to increase Alexis DePree’s base salary from $650,000 to $725,000 effective March 26, 2023, to reflect an increase in scope and to maintain relative market competitiveness. The base salaries of recommendations made by the Committee’s compensation consultant, the Committeeall other NEOs remained unchanged.
Performance-Based Annual Cash Bonus
The CPCC determined that the target bonus opportunity as a percent of base salaries and bonus opportunitiessalary for the Named Executive Officers wouldNEOs will remain unchanged for fiscal year 2020.
The 2023 bonus opportunity for fiscal year 2020:
The 2023 bonus opportunity for Erik Nordstrom and Peter Nordstrom have agreedwill remain based on 100% Incentive Adjusted EBIT subject to receive noachievement of the Incentive Adjusted ROIC threshold.
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COMPENSATION OF EXECUTIVE OFFICERS
LTIs
The target LTI grant as a percent of base salary of all NEOs remained unchanged, as did the equity mix and vesting schedules. The CPCC did not use its discretion to modify any NEO target LTI grants for at least2023.
Compensation Governance |
Our Roles in Determining Compensation Are Well-Defined
Compensation, People and Culture Committee
Our CPCC oversees the next six months, beginning March 29, 2020;development and
As part of that oversight, the CPCC ensures the NEOs’ aggregate compensation aligns with shareholder interests by reviewing analyses that include:
•Cash alignment to evaluate the short-term incentive payouts relative to our financial performance.
•Relative pay and performance to compare the percentile rankings of our CEO’s total direct compensation (base salary + performance-based bonus + LTIs) and our Company’s financial performance metrics within our peer group. The total direct compensation of our NEOs within our peer group is also considered.
CPCC Consultant
The CPCC has retained Semler Brossy. A consultant from the firm attends CPCC meetings and in support of the CPCC’s role, provides independent expertise on market practices, compensation program design and related subjects as described on page 16. Semler Brossy provides services only as directed by the CPCC. During fiscal year 2022, Semler Brossy’s services included a review of executive pay programs, a review of the compensation peer group and other pay-related matters specific to the CPCC’s charter.
Management
Our CEO and the President & Chief Brand Officer provide input to the CPCC on the level and design of compensation elements for the NEOs and other Executive Officers, excluding themselves. Our Chief Human Resources Officer attends CPCC meetings to provide perspective and expertise relevant to the agenda. Management supports the CPCC’s activity by providing analyses and recommendations developed internally, or occasionally with the assistance of external consulting firms other than the CPCC’s independent consultant.
Market Data Provides a Reference Point for Compensation
The CPCC believes that knowledge of market practices, particularly those of our peers listed on page 46, is helpful in assessing the design and targeted level of our executive compensation package. In reviewing peer group information, the CPCC uses survey data provided by external consultants, monitors general market movement for executive pay and references proxy statements for specific roles.
While the CPCC considers the 50th percentile (median) of our peer group as a reference, there is no specific percentage of target total direct compensation targeted by the CPCC other than to remain generally competitive with similarly situated peer companies. Target opportunities for individual pay elements vary by executive role based on scope of responsibilities and expected contributions.
Target total direct compensation for 2022 for Erik Nordstrom was below our peer group median, as it has been in previous years. Based on the CPCC’s review of relevant market data and internal pay equity, the CPCC believes the target total direct compensation for the other Named Executive Officers have agreed to reduce their base salaries by 25%, and all other executivesNEOs was within a competitive range of the Company peer group median. Actual pay for the NEOs can exceed our established targets or peer group actual pay through the variable compensation elements when pre-determined performance milestones established by the CPCC are achieved.
Peer Group Companies Represent Our Business
Each year, the CPCC reviews the appropriateness of our peer group for comparison on pay and related practices. Collectively, the peer group companies represent our primary business areas, including our Nordstrom, Nordstrom Rack, in-store and online businesses and private label products. The peer group companies generally meet the following selection criteria:
•fall within the Consumer Discretionary sectors;
•fall within a reasonable range of our size, defined as one-third to three times our revenue and one-fourth to four times our market capitalization;
•share similar talent, operational and/or business characteristics, including a retail-focused business model;
•have agreeda similar or related product focus and place a high value on customer experience;
•are part of our industry group as defined by institutional shareholders and shareholder service organizations; and
•are a public company subject to reduce their base salaries by 10%
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COMPENSATION OF EXECUTIVE OFFICERS
Our peer group used for evaluating compensation for fiscal year 2022 was comprised of the following retail companies:
American Eagle Outfitters, Inc. (AEO) | The Gap, Inc. (GPS) | Tapestry, Inc. (TPR) | ||
Burlington Stores, Inc. (BURL) | Kohl’s Corporation (KSS) | The TJX Companies, Inc. (TJX) | ||
Capri Holdings Limited (CPRI) | Macy’s, Inc. (M) | Ulta Beauty, Inc. (ULTA) | ||
Dillard’s, Inc. (DDS) | Ralph Lauren Corporation (RL) | V.F. Corporation (VFC) | ||
DICK’S Sporting Goods, Inc. (DKS) | Ross Stores, Inc. (ROST) | Victoria’s Secret & Co. (VSCO) | ||
Foot Locker, Inc. (FL) |
During 2022, as part of its annual review of peer companies to be used for compensation comparison purposes, the CPCC determined that Bed Bath & Beyond Inc., The Estée Lauder Companies Inc., Urban Outfitters, Inc. and Williams-Sonoma, Inc. should be removed based on the selection criteria. Additionally, the CPCC determined that American Eagle Outfitters, Inc., Burlington Stores, Inc., DICK’S Sporting Goods, Inc., Ulta Beauty, Inc. and Victoria’s Secret & Co. should be added based on meeting the selection criteria.
Compensation Risk Assessment Supports Integrity of theOur Pay Program
The CommitteeCPCC oversees an extensive review of the Company’s pay-for-performancepay-for-performance philosophy, the composition and balance of elements in the compensation package and the alignment of plans with shareholder interests to ensure these practices do not pose a material adverse risk to the organization. The review is conducted every other year as underlying programs and practices are generally consistent over time. The last review, for fiscal year 2018,2022, concluded with the following perspectives:
•The goals of the Company’s compensation programs are to attract and retain the best talent and to motivate and reward our people in ways that are aligned with the long-termlong-term interests of our shareholders. This has been a long-standinglong-standing objective of our pay-for-performancepay-for-performance philosophy. We believe that the strong alignment of our employee compensation plans with performance has servedwell-served our stakeholders, and in particular, our shareholders well.in particular. The strength of this alignment is regularly reviewed and monitored by the Committee.
•We have systems in place to identify, monitor and control risks, making it difficult for a single individual or a group of individuals to expose the Company to material compensation risk.
•Our compensation program rewards both short- and long-termlong-term performance. Performance measures are predominantly team-orientedteam-oriented rather than individually focused and tied to measurable factors that are both transparent to shareholders and drivers of their shareholder return.
•The compensation program balances the importance of achieving critical short-termshort-term objectives with a focus on realizing long-termstrategic long-term priorities. Strong stock ownership guidelines are in place for Company leaders, and mechanisms, such as an executive clawback policy, exist to address inappropriate rewards.
•The CommitteeCPCC is actively engaged in establishing compensation plans, monitoring these plans during the year and using discretion in making rewards, as necessary.
•The Company has active and engaged oversight systems in place. The Audit and Finance CommitteeAFC and the full Board closely monitor and certify the performance that drives employee rewards through detailed and transparent financial reporting, which is in place to provide strong, timely insight into the performance of the Company.
Based on this review, the CommitteeCPCC believes that the Company’s compensation plans do not encourage risk taking that is reasonably likely to have a material adverse effect on the Company.
Executive Compensation Clawback Policy Applies to Performance-Based Pay
In February 2008, the Board adopted a formal executive compensation clawback policy that applies to any performance-basedperformance-based bonus, equity, equity equivalent or other incentive compensation awarded to an Executive Officer, beginning in that fiscal year. Under that policy, in the event of a material restatement of the Company’s financial results, the Board will review the circumstances that caused the restatement and consider
LTI Grants Are Effective On the First Day of the Open Trading Window
The CPCC approves annual equity-based awards at its annual February meeting, which is typically held approximately three weeks after fiscal year end. Annual grants are customarily effective on the first day of the Company’s next open trading window following CPCC approval. The CPCC may approve one-time equity-based grants to executives on other dates for reasons such as newly hired executives or for retention purposes. Such grants are generally effective on the first day of the Company’s next open trading window following approval by the CPCC.
| 2023 Proxy Statement | 46 |
COMPENSATION OF EXECUTIVE OFFICERS
Termination and Change in Control Provisions are Committee-Directed
Under our Nordstrom, Inc. Executive Severance Plan, eligible Executive Officers, including certain Named Executive Officers,NEOs, are entitled to receive severance benefits upon involuntary termination of employment by the Company to assist in the transition from active employment. To be eligible to participate in the Plan upon involuntary termination, the Named Executive OfficerNEO must have signed a non-competitionnon-competition and non-solicitationnon-solicitation agreement. Prior to his appointment to Interim Chief Financial Officer and Chief Accounting Officer on December 5, 2022, Michael Maher was eligible, and remains eligible, for the Nordstrom, Inc. Executive Severance Plan, subject only to a non-solicitation agreement. Erik Nordstrom and Peter Nordstrom are not currently eligible for separation benefits under the Plan and Anne Bramman has elected not to participate in the Plan. Separation benefits are described in the Potential Payments Upon Termination or Change in Control section beginning on page 57.
As described in the same section, the Named Executive OfficersNEOs are generally not entitled to any payment or accelerated benefit in connection with a change in control of the Company. However, the Named Executive OfficersNEOs are entitled to accelerated vesting of equity if they experience a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control, unlesscontrol. Notwithstanding, if the Committee actssuccessor corporation refuses to preventassume or substitute the award, then the CPCC shall provide for the cancellation of the vested portion of any such acceleration.
Tax and Accounting Considerations Underlie the Compensation Elements
The CommitteeCPCC recognizes the tax and regulatory factors that can influence the structure of executive compensation programs, including:
•Section 162(m) of the Internal Revenue Code (“IRC”),
•FASB ASC 718, Stock Compensation (“ASC 718”),
•Section 409A of the IRC,
the limitations of which primarily relate to the deferral and payment of benefits under the47 | 2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes the total compensation paid or accrued by the Company for services provided by the Named Executive OfficersNEOs for fiscal years ended February 1,January 28, 2023, January 29, 2022 and January 30, 2021. Neither Michael Maher nor Alexis DePree were NEOs in fiscal years 2021 and 2020, February 2, 2019 and February 3, 2018.
| Name and Principal Position | Fiscal Year | Salary ($)(a) | Bonus ($)(b) | Stock Awards ($)(c) | Option Awards ($)(d) | Non-Equity Incentive Plan Compensation ($)(e) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(f) | All Other Compensation ($)(g) | Total ($) | ||||||||
| Erik B. Nordstrom | 2019 | 756,393 | — | 1,592,836 | 1,061,897 | 708,591 | 2,700,516 | 52,070 | 6,872,303 | ||||||||
| Chief Executive Officer | 2018 | 756,393 | — | 2,654,705 | — | 963,144 | — | 77,504 | 4,451,746 | ||||||||
| 2017 | 771,142 | — | 1,760,169 | 616,272 | 1,431,290 | 988,659 | 50,395 | 5,617,927 | |||||||||
| Anne L. Bramman | 2019 | 793,750 | — | 1,549,974 | 1,859,994 | 564,500 | — | 39,912 | 4,808,130 | ||||||||
| Chief Financial Officer | 2018 | 768,889 | 150,000 | 3,562,483 | — | 645,066 | — | 38,716 | 5,165,154 | ||||||||
| 2017 | 504,173 | — | 749,965 | — | 430,384 | — | 316,516 | 2,001,038 | |||||||||
| Peter E. Nordstrom | 2019 | 756,393 | — | 1,592,836 | 1,061,897 | 708,591 | 2,782,378 | 77,355 | 6,979,450 | ||||||||
| President and Chief Brand Officer | 2018 | 756,393 | — | 2,654,705 | — | 963,144 | — | 59,386 | 4,433,628 | ||||||||
| 2017 | 771,142 | — | 1,760,169 | 616,272 | 1,431,290 | 1,030,787 | 40,774 | 5,650,434 | |||||||||
| Kenneth J. Worzel | 2019 | 826,111 | — | 1,999,970 | 2,400,000 | 645,433 | 1,589,618 | 37,080 | 7,498,212 | ||||||||
| Chief Operating Officer | 2018 | 786,875 | — | 3,562,483 | — | 835,167 | 754,441 | 45,813 | 5,984,779 | ||||||||
| 2017 | 762,500 | — | 749,703 | 262,497 | 574,620 | 725,676 | 32,380 | 3,107,376 | |||||||||
| Edmond Mesrobian | 2019 | 743,542 | — | 2,087,450 | 1,304,995 | 420,971 | — | 10,225 | 4,567,183 | ||||||||
| Chief Technology Officer | 2018 | — | — | — | — | — | — | — | — | ||||||||
| 2017 | — | — | — | — | — | — | — | — | |||||||||
Name and Principal | Fiscal | Salary | Bonus | Stock | Option | Non-Equity Incentive Plan | Change in | All Other | Total |
Erik B. Nordstrom | 2022 | 758,500 | — | 1,592,844 | 1,061,890 | — | — | 57,748 | 3,470,982 |
Chief Executive Officer | 2021 | 758,700 | — | — | 3,699,999 | 1,941,761 | — | 44,686 | 6,445,146 |
2020 | 367,419 | — | 1,592,846 | 2,654,740 | — | 1,010,681 | 21,984 | 5,647,670 | |
Michael W. Maher | 2022 | 465,927 | — | 1,497,662 | 99,221 | — | — | 19,301 | 2,082,111 |
Interim Chief Financial | |||||||||
Peter E. Nordstrom | 2022 | 758,500 | — | 1,592,844 | 1,061,890 | — | — | 64,534 | 3,477,768 |
President & Chief Brand | 2021 | 758,700 | — | — | 3,699,999 | 1,941,761 | — | 56,475 | 6,456,935 |
2020 | 367,419 | — | 1,592,846 | 2,654,740 | — | 1,055,774 | 24,849 | 5,695,628 | |
Kenneth J. Worzel | 2022 | 895,000 | — | 1,342,500 | 894,992 | — | — | 32,053 | 3,164,545 |
Chief Customer Officer | 2021 | 892,123 | — | 1,443,737 | 962,494 | 1,427,077 | 1,389,900 | 32,195 | 6,147,526 |
2020 | 764,597 | — | 2,624,977 | 2,374,996 | — | 864,312 | 18,367 | 6,647,249 | |
Alexis DePree | 2022 | 627,115 | — | 1,512,974 | 341,992 | — | — | 17,127 | 2,499,208 |
Chief Supply Chain Officer | |||||||||
Anne L. Bramman | 2022 | 710,385 | — | 1,222,499 | 814,997 | — | — | 128,304 | 2,876,185 |
Former Chief Financial | 2021 | 812,892 | — | 1,319,977 | 879,995 | 1,040,246 | — | 24,679 | 4,077,789 |
2020 | 699,231 | — | 1,999,988 | 1,824,997 | — | — | 14,411 | 4,538,627 | |
Edmond Mesrobian | 2022 | 578,365 | — | 1,569,965 | 479,998 | — | — | 1,741,026 | 4,369,354 |
Former Chief Technology & Information Officer | 2021 | 827,123 | — | 1,394,971 | 929,995 | 815,262 | — | 12,158 | 3,979,509 |
2020 | 677,214 | — | 1,549,973 | 1,374,995 | — | — | 7,917 | 3,610,099 |
(a) Salary
The amounts shown represent base salary earned during the fiscal year. The numbers shown for all fiscal years vary somewhat from annual base salaries due to the fact that our fiscal year ends on the Saturday nearest to January 31
Kenneth Worzel elected to defer 8% and $41,000, respectively,10% of theirhis base salariessalary earned during each of the calendar years 2019year 2022 and 2020calendar year 2023 into the Nordstrom Deferred Compensation Plan (NDCP).NDCP. Anne Bramman elected to defer 10% of her base salary earned during calendar year 2022 into the NDCP. Due to the timing of our fiscal year ends, $63,565$86,058 and $41,000$74,173 were attributed to fiscal year 20192022 deferrals for Kenneth Worzel and Anne Bramman, and Edmond Mesrobian, respectively, as reported in the Fiscal Year 20192022 Nonqualified Deferred Compensation Table on page 52.
Each of the Named Executive OfficersNEOs contributed a portion of their base salary earned during fiscal year 20192022 to the 401(k) Plan.
The amountamounts reported for fiscal year 2018 reflects a discretionary one-time cash payment, approved by2020 reflect the Compensation, Peoplereduced base salaries of the NEOs, as part of the Company’s response to business impacts from the COVID-19 pandemic. Base salaries were reduced from March 29, 2020 to October 3, 2020, as follows: Erik Nordstrom and Culture Committee in March 2018, toPeter Nordstrom received no base salary, while Kenneth Worzel, Anne Bramman in recognitionand Edmond Mesrobian received a 25% base salary reduction.
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Table of her service since joiningContents
COMPENSATION OF EXECUTIVE OFFICERS
(b) Bonus
This column refers to one-time payments not made under the Company in June 2017 as Chief Financial Officer.
(c)
Stock AwardsThe amounts reported reflect the grant date fair value of restricted stock unitsPSUs and performance share unitsRSUs granted during the fiscal year under the 2010 and 2019 Equity Incentive Plans.EIP. The amounts reported are not the value actually received.
The value the Named Executive OfficersNEOs will ultimately receive from their performance share units2022 PSUs will depend on whether the performance requirements are met and the market price of Common Stock at the end of the three year performance cycle. In fiscal year 2022, PSUs were granted to all NEOs, except for Michael Maher who was appointed Interim Chief Financial Officer and Chief Accounting Officer on December 5, 2022. The amounts reported were calculated in accordance with FASB Accounting Standards CodificationASC 718
The value the Named Executive OfficersNEOs may receive from their restricted stock unitsRSUs will depend on whether the time-basedtime-based vesting requirement is met and the market price of Common Stock on the vesting date. In fiscal year 2022, RSUs were granted to Michael Maher, Alexis DePree and Edmond Mesrobian. The amounts reported were calculated in accordance with ASC 718. See column (d) of the Grants of Plan-BasedPlan-Based Awards in Fiscal Year 20192022 table beginning on page 4451 for the number of restricted stock unitsRSUs granted in fiscal year 2019.
(d)
Option AwardsThe amounts reported reflect the grant date fair value of stock options granted during the fiscal year under the 2010 Equity Incentive Plan.2019 EIP. This is not the value received. The Named Executive OfficersNEOs will only realize value from stock options if the market price of Common Stock is higher than the exercise price of the stock options at the time of exercise. The amounts reported were calculated in accordance with ASC 718. See column (e) of the Grants of Plan-BasedPlan-Based Awards in Fiscal Year 20192022 table beginning on page 4451 for the number of stock options granted in fiscal year 2019. No amounts are reported for fiscal year 2018 as the Company did not grant stock options during that fiscal year.
Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 20192022 Annual Report.
(e)
Non-Equity Incentive Plan CompensationThe amounts reported reflect the annual performance-basedperformance-based cash awards under the Executive Management Bonus Plan,EMBP, as described beginning on page 33. The amounts of the cash awards for fiscal year 2019, approved by the Compensation, People and Culture Committee on February 26, 2020, were paid in March 2020.
The amounts reported are the changesincreases in actuarial present value from each fiscal year-end 2018 to fiscal year-end 2019year end for each of the eligible Named Executive Officer’sNEO’s benefit under the Supplemental Executive Retirement Plan (“SERP”).SERP. The present value of the benefit is affected by current earnings, credited years of service, the executive’s age and time until normal retirement eligibility, the age of the executive’s spouse or life partner as the potential beneficiary, and economicactuarial assumptions (discount rate and mortality table used to determine the present value of the benefit).
The present value of Erik Nordstrom’s, and Peter Nordstrom’s benefits increasedand Kenneth Worzel’s benefit decreased from last2021 fiscal year end by $2,700,516$2,790,760, $2,848,930 and $2,782,378,$729,204 respectively. The increasesdecreases were primarily the result of a decreasean increase in the discount rate used to determine the present value of the benefit.benefits. The interest rate used is the same as the discount rate used for financial reporting purposes for the SERP which changed from 4.27%3.19% to 2.97%4.95%. The present value ofNegative values are not reported in the table, so no amounts are shown for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel’s benefit increased by $1,589,618, primarily due to the change in discount rate mentioned above along with increases for final average pay and service.Worzel. Amounts are not reported for Anne Bramman and Edmond Mesrobian becausethe other NEOs, as they are not eligible for the SERP was closedbenefit.
Since decreases in the actuarial present value of pension benefits are required to new entrants priorbe identified in a footnote rather than included in the Summary Compensation Table, the amounts reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings and Total columns for fiscal year 2021 have been updated to when they joinedexclude the Company. Seenegative values of $692,013 and $1,364,580 attributed to the Pension Benefits section beginning on page 50 for more information aboutdecline in the SERP.
The amounts were calculated using the same discount rate and mortality table assumptions as those used in the Company’s financial statements to calculate the Company’s obligations under the SERP. Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 20192022 Annual Report.
Michael Maher, Kenneth Worzel, Anne Bramman Kenneth Worzel and Edmond Mesrobian had account balances in the Company’s nonqualified deferred compensation planNDCP in fiscal year 2019,2022, as shown on page 52.
49 | 2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
(g)
All Other CompensationEach component of all other compensation paid to the Named Executive OfficersNEOs is shown in the table on the following page.
All Other Compensation in Fiscal Year |
The following table below shows each component of “All Other Compensation” for fiscal year 2019,2022, reported in column (g) of the Summary Compensation Table on page 41,48, calculated at the aggregate incremental cost to the Company.
| Broad-Based Benefit | Broad-Based Retirement Benefit | Other | |||||||||||||||
| Name | Merchandise Discount ($)(a) | 401(k) Plan Company Match ($)(b) | Premium on Insurance ($)(c) | Personal Use of Company Aircraft ($)(d) | Expenses in Connection with Relocation ($)(e) | Tax Reim-bursement in Connection with Relocation ($)(f) | Total ($) | ||||||||||
| Erik B. Nordstrom | 36,358 | 13,664 | 2,048 | — | — | — | 52,070 | ||||||||||
| Anne L. Bramman | 24,110 | 13,664 | 2,138 | — | — | — | 39,912 | ||||||||||
| Peter E. Nordstrom | 56,811 | 13,664 | 2,048 | 4,832 | — | — | 77,355 | ||||||||||
| Kenneth J. Worzel | 21,183 | 13,664 | 2,233 | — | — | — | 37,080 | ||||||||||
| Edmond Mesrobian | 7,158 | — | 2,025 | — | 795 | 247 | 10,225 | ||||||||||
Name | 401(k) Plan | Premium on | Severance | Other Benefits | Total |
Erik B. Nordstrom | 5,859 | 2,321 | — | 49,568 | 57,748 |
Michael W. Maher | 12,278 | 1,423 | — | 5,600 | 19,301 |
Peter E. Nordstrom | 9,998 | 2,321 | — | 52,215 | 64,534 |
Kenneth J. Worzel | 14,937 | 2,739 | — | 14,377 | 32,053 |
Alexis DePree | 11,961 | 1,927 | — | 3,239 | 17,127 |
Anne L. Bramman | 10,155 | 2,355 | — | 115,794 | 128,304 |
Edmond Mesrobian | 6,096 | 1,868 | 1,650,000 | 83,062 | 1,741,026 |
(a) 401(k) Plan Company provides a merchandise discount for its employees. The Named Executive Officers were provided a discount of 33% for purchases at Nordstrom full-line stores and Nordstrom.com and 20% for purchases at Nordstrom Rack stores, Nordstromrack.com/HauteLook and our restaurants. A 40% discount is available at certain times of the year on specific merchandise. The merchandise discount provided to the Named Executive Officers is the same as for all other eligible management and high-performing non-management employees of the Company. The amounts reported are the total discount the Named Executive Officers received on their Nordstrom purchases during the fiscal year. The Company provides the same merchandise discount program for its Board of Directors, as described on page 17.
The Company offers a matching contribution on employee 401(k) contributions under the 401(k) Plan to all eligible employees, including the Named Executive Officers.NEOs. The Named Executive OfficersNEOs and all other Company employees, may defer up to 16%50% of their eligible pay (i.e., base salary, performance-basedperformance-based bonus and other taxable wages) into the 401(k) Plan, subject to IRC limits.
Company matching contributions are made each pay period an employee contributes to the matching contribution is discretionary and subject401(k) Plan, equal to change, for calendar year 2019, the Company matched employee contributions for the Plan year,a dollar for dollar match up to 1% of eligible pay then $0.50 per dollar on the next 6% of eligible pay, up to a maximum of 4% of eligible pay. The 2019 calendar year compensation limit for eligible pay was $280,000, as set by the IRS. In 2019, the maximum Company matching contribution for the eligible Named Executive Officers was $11,200 (4% of $280,000).
Contributions under the 401(k) Plan may be directed to any of 12 custom target retirement date funds or to any of 9nine individual investment alternatives, including Common Stock. The Plan also offers a self-directedself-directed brokerage option.
(b) Premium on Insurance
The Company provides life insurance to the Named Executive OfficersNEOs in an amount equal to approximately 1.252 times their base salary and additional disability insurance. The amounts reported are the annual Company-paidCompany-paid premiums.
(c) Severance
In connection with his separation on a business trip on the Company’s aircraft as an additional passenger. Only the direct variable costs (i.e., costs the Company incurs solely as a result of the passenger being on the aircraft) are included in determining the aggregate incremental cost to the Company. When travel does not meet the IRS standard for business travel, the cost of the travel is imputed as income to the executive, which is the Company’s practice to fully disclose. The Company does not reimburse the Named Executive Officers for taxes incurred as a result of the imputed income.
(d) Other Benefits
The amounts reported include a remote work stipend and the total discount the NEOs received on their Nordstrom purchases during fiscal year 2022. Amounts reported for an executive at his level when he relocatedAnne Bramman and Edmond Mesrobian also include lump sum payments of accrued and unused Paid Time Off, which was paid out upon their separation on December 2, 2022 and October 14, 2022, respectively.
The remote work stipend provided to the Company’s headquarters in Seattle. The amount reportedNEOs was the same as for all other employees working remotely, and the merchandise discount provided to the NEOs is the cost incurred bysame as for all other eligible management and high-performing non-management employees of the Company, in fiscal year 2019 related to rental car expense.
Grants of Plan-Based Awards in Fiscal Year 2019
The following table discloses the potential range of payouts for:
•non-equity incentive plan awards granted in fiscal year
•the
number and grant date fair value of•the number, price and grant date fair value of stock options granted under the 2010 Equity Incentive Plan2019 EIP in fiscal year 2019,2022, as described on page 36;42; and
•the number and grant date fair value of restricted stock unitsRSUs granted under the 2010 and 2019 Equity Incentive PlansEIP in fiscal year
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COMPENSATION OF EXECUTIVE OFFICERS
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (b) | Estimated Future Payouts Under Equity Incentive Plan Awards (c) | All Other Stock Awards: Number of Shares of Stock or Units (#)(d) | All Other Option Awards: Number of Securities Underlying Options (#)(e) | Exercise or Base Price of Option Awards ($/Sh)(f) | Grant Date Fair Value of Stock and Option Awards ($)(g) | |||||||||||
| Name and Award | Grant Date (a) | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||
| Erik B. Nordstrom | ||||||||||||||||
Executive Management Bonus | 379,250 | 1,517,001 | 3,792,502 | |||||||||||||
| Performance Share Unit Award | 3/5/2019 | 2/26/2019 | 18,814 | 37,629 | 90,309 | 1,592,836 | ||||||||||
| Stock Option Award | 3/5/2019 | 2/26/2019 | 73,069 | 45.33 | 1,061,897 | |||||||||||
| Anne L. Bramman | ||||||||||||||||
Executive Management Bonus | 200,000 | 800,000 | 2,000,000 | |||||||||||||
| Performance Share Unit Award | 3/5/2019 | 2/26/2019 | 10,985 | 21,970 | 52,728 | 929,990 | ||||||||||
| Stock Option Award | 3/5/2019 | 2/26/2019 | 123,554 | 45.33 | 1,859,994 | |||||||||||
Restricted Stock Unit Award | 3/5/2019 | 2/26/2019 | 14,961 | 619,984 | ||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (b) | Estimated Future Payouts Under Equity Incentive Plan Awards (c) | All Other Stock Awards: Number of Shares of Stock or Units (#)(d) | All Other Option Awards: Number of Securities Underlying Options (#)(e) | Exercise or Base Price of Option Awards ($/Sh)(f) | Grant Date Fair Value of Stock and Option Awards ($)(g) | |||||||||||
| Name and Award | Grant Date (a) | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||
| Peter E. Nordstrom | ||||||||||||||||
Executive Management Bonus | 379,250 | 1,517,001 | 3,792,502 | |||||||||||||
| Performance Share Unit Award | 3/5/2019 | 2/26/2019 | 18,814 | 37,629 | 90,309 | 1,592,836 | ||||||||||
| Stock Option Award | 3/5/2019 | 2/26/2019 | 73,069 | 45.33 | 1,061,897 | |||||||||||
| Kenneth J. Worzel | ||||||||||||||||
| Executive Management Bonus | 258,951 | 1,035,800 | 2,589,500 | |||||||||||||
| Performance Share Unit Award | 3/5/2019 | 2/26/2019 | 14,174 | 28,348 | 68,035 | 1,199,971 | ||||||||||
| Stock Option Award | 3/5/2019 | 2/26/2019 | 159,425 | 45.33 | 2,400,000 | |||||||||||
| Restricted Stock Unit Award | 3/5/2019 | 2/26/2019 | 19,305 | 799,999 | ||||||||||||
| Edmond Mesrobian | ||||||||||||||||
| Executive Management Bonus | 149,148 | 596,594 | 1,491,484 | |||||||||||||
| Performance Share Unit Award | 3/5/2019 | 2/26/2019 | 7,707 | 15,414 | 36,993 | 652,475 | ||||||||||
| Stock Option Award | 3/5/2019 | 2/26/2019 | 86,687 | 45.33 | 1,304,995 | |||||||||||
| Restricted Stock Unit Award | 3/5/2019 | 2/26/2019 | 10,497 | 434,996 | ||||||||||||
| Restricted Stock Unit Award | 8/26/2019 | 8/19/2019 | 38,520 | 999,979 | ||||||||||||
|
| All Other | All Other |
| Grant | ||||||||
Name and Award | Grant Date | Approval Date | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||
Erik B. Nordstrom | |||||||||||||
EMBP | 379,250 | 1,517,001 | 3,792,502 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 52,902 | 70,536 | 105,804 | 1,592,844 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 102,506 | 25.68 | 1,061,890 | ||||||||
Michael W. Maher | |||||||||||||
EMBP | 57,054 | 228,218 | 570,544 | ||||||||||
Stock Option | 3/3/2022 | 2/22/2022 | 9,578 | 25.68 | 99,221 | ||||||||
RSU | 3/3/2022 | 2/22/2022 | 12,842 | 297,674 | |||||||||
RSU | 5/26/2022 | 5/17/2022 | 54,177 | 1,199,988 | |||||||||
Peter E. Nordstrom | |||||||||||||
EMBP | 379,250 | 1,517,001 | 3,792,502 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 52,902 | 70,536 | 105,804 | 1,592,844 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 102,506 | 25.68 | 1,061,890 | ||||||||
Kenneth J. Worzel | |||||||||||||
EMBP | 279,688 | 1,118,750 | 2,796,875 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 44,587 | 59,450 | 89,175 | 1,342,500 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 86,395 | 25.68 | 894,992 | ||||||||
Alexis | |||||||||||||
EMBP | 119,000 | 476,000 | 1,190,000 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 17,037 | 22,717 | 34,075 | 512,995 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 33,013 | 25.68 | 341,992 | ||||||||
RSU | 5/26/2022 | 5/17/2022 | 45,147 | 999,979 | |||||||||
Anne L. Bramman | |||||||||||||
EMBP | 211,250 | 845,000 | 2,112,500 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 40,602 | 54,136 | 81,204 | 1,222,499 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 78,673 | 25.68 | 814,997 | ||||||||
Edmond Mesrobian | |||||||||||||
EMBP | 160,000 | 640,000 | 1,600,000 | ||||||||||
PSU | 3/3/2022 | 2/22/2022 | 23,912 | 31,883 | 47,824 | 719,982 | |||||||
Stock Option | 3/3/2022 | 2/22/2022 | 46,335 | 25.68 | 479,998 | ||||||||
RSU | 5/26/2022 | 5/17/2022 | 38,375 | 849,983 | |||||||||
(a) Grant Date
The grant date is the first business day of the open trading window that falls on or after the Compensation, People and Culture Committee’sCPCC approval of the grant.
(b) Estimated Future Payouts Under Non-Equity Incentive Plan Awards
Although the range of possible cashcolumn heading refers to future payouts, for fiscal year 2019 associated with established levels of2022 performance-based bonuses resulted in no payout for all the NEOs in March 2023, as reported in the Summary Compensation Table on page 48 in column (e) “Non-Equity Incentive Plan Compensation.” For there to be any payout, minimum performance milestones or achievement undermust be met and NEOs must be an active employee on the Executive Management Bonus Plan.last day of the fiscal year, with the exception of retirement, death and disability in which case a prorated amount may be earned. The amounts shown in the “Threshold,”“Threshold”, “Target” and “Maximum” columns reflect the payout opportunity associated with established levels of performance or achievement, based on pay and bonus targets as of March 27, 2022, as discussed beginning on page 33. For there to be any payout, minimum performance milestones or achievement must be met.42.
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COMPENSATION OF EXECUTIVE OFFICERS
(c) Estimated Future Payouts Under Equity Incentive Plan Awards
The numbers shown report the range of potential performance share unit payout for the 2019 grant
(d)
All Other Stock Awards: Number of Shares of Stock or UnitsThe numbers shown report the number of restricted stock unitsRSUs granted to the Named Executive OfficersMichael Maher, Alexis DePree and Edmond Mesrobian in fiscal year 20192022 under the 2010 and the 2019 Equity Incentive Plans. Restricted stock units wereEIP. The RSUs granted on March 5, 20193, 2022 to Anne Bramman, Kenneth Worzel and Edmond Mesrobian whichMichael Maher vest equally over four years, beginning on March 10, 2020.2023. The restricted stock unit grantRSUs granted to Michael Maher, Alexis DePree and Edmond Mesrobian on AugustMay 26, 2019 of 38,520 units2022 vest 50% on June 10, 2024 and 50% on June 10, 2025. The RSUs granted to Edmond Mesrobian
(e)
All Other Option Awards: Number of Securities Underlying OptionsThe numbers shown report the number of stock options granted to the Named Executive OfficersNEOs in fiscal year 20192022 under the 2010 Equity Incentive Plan. The stock option grants to Erik Nordstrom and Peter Nordstrom made2019 EIP. Stock options were granted on March 5, 2019 as part of the annual grant vest3, 2022 and become exercisable in four equal annual installments, beginning on March 10, 2020.2025 and March 10, 2026. The one-time stock option grants to Anne Bramman Kenneth Worzel and Edmond Mesrobian madewere forfeited upon their separations on March 5, 2019 vest and become exercisable 50% on March 10,December 2, 2022 and 50% on March 10, 2023. This one-time stock option award is discussed in the Compensation Discussion and Analysis on page 36.
(f)
Exercise or Base Price ofThe exercise price of the stock options granted in fiscal year 2019on March 3, 2022 of $45.33$25.68 was the closing price of Common Stock on the grant date, March 5, 2019.
(g)
Grant Date Fair Value of Stock and Option AwardsThe grant date fair value of the performance share units, restricted stock unitsPSUs, RSUs and stock options was calculated in accordance with ASC 718.
The reported value for performance share unitsPSUs granted to Erik Nordstrom, Peter Nordstrom, Kenneth Worzel, Alexis DePree, Anne Bramman and Edmond Mesrobian was calculated by multiplying the number of performance share unitsPSUs granted by the fair value of a performance share unitPSU on the date of grant, which was $42.33$22.58 on March 5, 2019.3, 2022. This is not the value received. The actual value the Named Executive Officersthey may receive will depend on whether the performance requirements are metat the end of the three-year performance cycle and the market price of Common Stock at the end of the performance cycle.
The reported value for restricted stock unitsRSUs was calculated by multiplying the number of restricted stock unitsRSUs awarded by the fair value of a restricted stock unitan RSU on the date of grant. The fair value forof the RSU grant on March 5, 20193, 2022 to Michael Maher was $41.44.$23.18. The fair value of the grantRSU grants on May 26, 2022 to Michael Maher, Alexis DePree and Edmond Mesrobian on August 26, 2019 was $25.96. This is not the value received.$22.15. The actual value the Named Executive Officersthey may receive will depend on whether the time-basedtime-based vesting requirement is met and the market price of Common Stock at the time of any vesting.
The reported value of stock options was calculated by multiplying the number of options awarded by the fair value of an option on the date of grant. The fair value for the grantstock option grants on March 5, 2019 to Erik Nordstrom and Peter Nordstrom3, 2022 was $14.53. The fair value for the grant on March 5, 2019 to Anne Bramman, Kenneth Worzel and Edmond Mesrobian has a different vesting schedule and a grant date fair value of $15.05.$10.36. The actual value received by the Named Executive OfficersNEOs may receive will be the number of options exercised multiplied by the difference between the stock price at the future exercise date and the March 5, 2019grant price. The grant price on March 3, 2022 was $25.68. The stock option grants to Anne Bramman and Edmond Mesrobian were forfeited upon their separations on December 2, 2022 and October 14, 2022, respectively.
| 2023 Proxy Statement | 52 |
COMPENSATION OF EXECUTIVE OFFICERS
Outstanding Equity Awards at Fiscal Year-End 2019
The following table provides information on the current holdings of stock options and stock awards by the Named Executive OfficersNEOs as of the fiscal year ended February 1, 2020.January 28, 2023. The table includes vested but unexercised stock options, unvested stock options, unvested restricted stock unitsRSUs and performance share units with
| Option Awards | Stock Awards | |||||||||||||
Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | ||||||||||
Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||
| Name | Grant Date | Exer- cisable | Unexer- cisable (a) | |||||||||||
| Erik B. Nordstrom | 2/25/2011 | 69,637 | — | 42.48 | 2/25/2021 | |||||||||
| 2/22/2012 | 68,244 | — | 49.15 | 2/22/2022 | ||||||||||
| 3/4/2013 | 99,563 | — | 50.26 | 3/4/2023 | ||||||||||
| 3/3/2014 | 60,747 | — | 57.16 | 3/3/2024 | ||||||||||
| 2/24/2015 | 45,996 | — | 75.23 | 2/24/2025 | ||||||||||
| 2/29/2016 | 61,605 | 20,536 | 51.32 | 2/28/2026 | ||||||||||
| 2/29/2016 | 3,174 | 116,994 | ||||||||||||
| 6/7/2016 | 10,838 | — | 40.50 | 6/7/2026 | ||||||||||
| 2/28/2017 | 19,326 | 19,327 | 46.66 | 2/28/2027 | ||||||||||
| 2/28/2017 | 13,816 | 509,258 | ||||||||||||
| 3/6/2018 | 39,158 | 1,443,364 | ||||||||||||
| 3/5/2019 | — | 73,069 | 45.33 | 3/5/2029 | ||||||||||
| 3/5/2019 | 12,543 | 462,335 | ||||||||||||
| Anne L. Bramman | 8/21/2017 | 6,117 | 225,473 | |||||||||||
| 3/6/2018 | 34,474 | 1,270,712 | ||||||||||||
| 3/6/2018 | 20,110 | 741,255 | ||||||||||||
| 3/5/2019 | — | 123,554 | 45.33 | 3/5/2029 | ||||||||||
| 3/5/2019 | 7,323 | 269,926 | ||||||||||||
| 3/5/2019 | 14,961 | 551,462 | ||||||||||||
| Peter E. Nordstrom | 2/25/2011 | 69,637 | — | 42.48 | 2/25/2021 | |||||||||
| 2/22/2012 | 68,244 | — | 49.15 | 2/22/2022 | ||||||||||
| 3/4/2013 | 99,563 | — | 50.26 | 3/4/2023 | ||||||||||
| 3/3/2014 | 60,747 | — | 57.16 | 3/3/2024 | ||||||||||
| 2/24/2015 | 45,996 | — | 75.23 | 2/24/2025 | ||||||||||
| 2/29/2016 | 61,605 | 20,536 | 51.32 | 2/28/2026 | ||||||||||
| 2/29/2016 | 3,169 | 116,809 | ||||||||||||
| 6/7/2016 | 10,838 | — | 40.50 | 6/7/2026 | ||||||||||
| 2/28/2017 | 19,326 | 19,327 | 46.66 | 2/28/2027 | ||||||||||
| 2/28/2017 | 13,794 | 508,447 | ||||||||||||
| 3/6/2018 | 39,158 | 1,443,364 | ||||||||||||
| 3/5/2019 | — | 73,069 | 45.33 | 3/5/2029 | ||||||||||
| 3/5/2019 | 12,543 | 462,335 | ||||||||||||
| Option Awards | Stock Awards | |||||||||||||
Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | ||||||||||
Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||
| Name | Grant Date | Exer- cisable | Unexer- cisable (a) | |||||||||||
| Kenneth J. Worzel | 3/4/2013 | 40,536 | — | 50.26 | 3/4/2023 | |||||||||
| 3/3/2014 | 26,141 | — | 57.16 | 3/3/2024 | ||||||||||
| 2/24/2015 | 20,585 | — | 75.23 | 2/24/2025 | ||||||||||
| 2/29/2016 | 28,542 | 9,515 | 51.32 | 2/28/2026 | ||||||||||
| 2/29/2016 | 1,528 | 56,322 | ||||||||||||
| 6/7/2016 | 23,433 | — | 40.50 | 6/7/2026 | ||||||||||
| 2/28/2017 | 8,232 | 8,232 | 46.66 | 2/28/2027 | ||||||||||
| 2/28/2017 | 6,113 | 225,325 | ||||||||||||
| 3/6/2018 | 34,474 | 1,270,712 | ||||||||||||
| 3/6/2018 | 20,110 | 741,255 | ||||||||||||
| 3/5/2019 | — | 159,425 | 45.33 | 3/5/2029 | ||||||||||
| 3/5/2019 | 9,449 | 348,290 | ||||||||||||
| 3/5/2019 | 19,305 | 711,582 | ||||||||||||
| Edmond Mesrobian | 8/27/2018 | 28,578 | 1,053,385 | |||||||||||
| 3/5/2019 | — | 86,687 | 45.33 | 3/5/2029 | ||||||||||
| 3/5/2019 | 5,138 | 189,387 | ||||||||||||
| 3/5/2019 | 10,497 | 386,919 | ||||||||||||
| 8/26/2019 | 38,520 | 1,419,847 | ||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||
Name | Grant |
| Equity | Option | Option | Number | Market | Equity | Equity | |||||||||||
Exer- | Unexer- | |||||||||||||||||||
Erik B. | 3/4/2013 | 99,563 | — | — | 50.26 | 3/4/2023 | — | — | — | — | ||||||||||
Nordstrom | 3/3/2014 | 60,747 | — | — | 57.16 | 3/3/2024 | — | — | — | — | ||||||||||
2/24/2015 | 45,996 | — | — | 75.23 | 2/24/2025 | — | — | — | — | |||||||||||
2/29/2016 | 82,141 | — | — | 51.32 | 2/28/2026 | — | — | — | — | |||||||||||
6/7/2016 | 10,838 | — | — | 40.50 | 6/7/2026 | — | — | — | — | |||||||||||
2/28/2017 | 38,653 | — | — | 46.66 | 2/28/2027 | — | — | — | — | |||||||||||
3/5/2019 | 54,801 | 18,268 | — | 45.33 | 3/5/2029 | — | — | — | — | |||||||||||
3/9/2020 | 73,703 | 73,704 | — | 26.79 | 3/9/2030 | — | — | — | — | |||||||||||
8/27/2020 | 245,829 | — | — | 14.79 | 8/27/2030 | — | — | — | — | |||||||||||
3/4/2021 | — | 297,619 | — | 35.52 | 3/4/2031 | — | — | — | — | |||||||||||
3/3/2022 | — | 102,506 | — | 25.68 | 3/3/2032 | — | — | — | — | |||||||||||
| 3/3/2022 | — | — | — | — | — | — | — | 52,449 | 966,111 | ||||||||||
Michael W. | 3/4/2013 | 3,250 | — | — | 50.26 | 3/4/2023 | — | — | — | — | ||||||||||
Maher | 3/3/2014 | 2,270 | — | — | 57.16 | 3/3/2024 | — | — | — | — | ||||||||||
2/24/2015 | 2,360 | — | — | 75.23 | 2/24/2025 | — | — | — | — | |||||||||||
2/29/2016 | 3,615 | — | — | 51.32 | 2/28/2026 | — | — | — | — | |||||||||||
3/5/2019 | — | — | — | — | — | 1,426 | 26,267 | — | — | |||||||||||
3/9/2020 | — | — | — | — | — | 4,775 | 87,956 | — | — | |||||||||||
6/1/2020 | 59,136 | — | — | 16.59 | 6/1/2030 | — | — | — | — | |||||||||||
8/27/2020 | — | — | — | — | — | 2,799 | 51,558 | — | — | |||||||||||
3/4/2021 | — | 6,766 | — | 35.52 | 3/4/2031 | — | — | — | — | |||||||||||
3/4/2021 | — | — | — | — | — | 6,453 | 118,864 | — | — | |||||||||||
3/3/2022 | — | 9,578 | — | 25.68 | 3/3/2032 | — | — | — | — | |||||||||||
3/3/2022 | — | — | — | — | — | 12,842 | 236,550 | — | — | |||||||||||
| 5/26/2022 | — | — | — | — | — | 54,177 | 997,940 | — | — | ||||||||||
53 | |||
2023 Proxy Statement |
|
COMPENSATION OF EXECUTIVE OFFICERS
Option Awards | Stock Awards | |||||||||||||||||||
Name | Grant |
| Equity | Option | Option | Number | Market | Equity | Equity | |||||||||||
Exer- | Unexer- | |||||||||||||||||||
Peter E. | 3/4/2013 | 99,563 | — | — | 50.26 | 3/4/2023 | — | — | — | — | ||||||||||
Nordstrom | 3/3/2014 | 60,747 | — | — | 57.16 | 3/3/2024 | — | — | — | — | ||||||||||
2/24/2015 | 45,996 | — | — | 75.23 | 2/24/2025 | — | — | — | — | |||||||||||
2/29/2016 | 82,141 | — | — | 51.32 | 2/28/2026 | — | — | — | — | |||||||||||
6/7/2016 | 10,838 | — | — | 40.50 | 6/7/2026 | — | — | — | — | |||||||||||
2/28/2017 | 38,653 | — | — | 46.66 | 2/28/2027 | — | — | — | — | |||||||||||
3/5/2019 | 54,801 | 18,268 | — | 45.33 | 3/5/2029 | — | — | — | — | |||||||||||
3/9/2020 | 73,703 | 73,704 | — | 26.79 | 3/9/2030 | — | — | — | — | |||||||||||
8/27/2020 | 245,829 | — | — | 14.79 | 8/27/2030 | — | — | — | — | |||||||||||
3/4/2021 | — | 297,619 | — | 35.52 | 3/4/2031 | — | — | — | — | |||||||||||
3/3/2022 | — | 102,506 | — | 25.68 | 3/3/2032 | — | — | — | — | |||||||||||
| 3/3/2022 | — | — | — | — | — | — | — | 52,449 | 966,111 | ||||||||||
Kenneth J. | 3/4/2013 | 40,536 | — | — | 50.26 | 3/4/2023 | — | — | — | — | ||||||||||
Worzel | 3/3/2014 | 26,141 | — | — | 57.16 | 3/3/2024 | — | — | — | — | ||||||||||
2/24/2015 | 20,585 | — | — | 75.23 | 2/24/2025 | — | — | — | — | |||||||||||
2/29/2016 | 38,057 | — | — | 51.32 | 2/28/2026 | — | — | — | — | |||||||||||
6/7/2016 | 23,433 | — | — | 40.50 | 6/7/2026 | — | — | — | — | |||||||||||
2/28/2017 | 16,464 | — | — | 46.66 | 2/28/2027 | — | — | — | — | |||||||||||
3/5/2019 | 79,712 | 79,713 | — | 45.33 | 3/5/2029 | — | — | — | — | |||||||||||
3/5/2019 | — | — | — | — | — | 4,646 | 85,579 | — | — | |||||||||||
3/9/2020 | — | — | — | — | — | 21,889 | 403,195 | — | — | |||||||||||
8/27/2020 | 366,540 | — | — | 14.79 | 8/27/2030 | — | — | — | — | |||||||||||
3/4/2021 | — | 68,915 | — | 35.52 | 3/4/2031 | — | — | — | — | |||||||||||
3/4/2021 | — | — | — | — | — | 31,636 | 582,735 | — | — | |||||||||||
3/3/2022 | — | 86,395 | — | 25.68 | 3/3/2032 | — | — | — | — | |||||||||||
| 3/3/2022 | — | — | — | — | — | — | — | 44,205 | 814,256 | ||||||||||
Alexis | 3/9/2020 | — | — | — | — | — | 10,719 | 197,444 | — | — | ||||||||||
DePree | 3/9/2020 | — | — | — | — | — | 27,953 | 514,894 | — | — | ||||||||||
6/1/2020 | 58,080 | — | — | 16.59 | 6/1/2030 | — | — | — | — | |||||||||||
3/4/2021 | — | 32,649 | — | 35.52 | 3/4/2031 | — | — | — | — | |||||||||||
3/4/2021 | — | — | — | — | — | 15,569 | 286,781 | — | — | |||||||||||
3/3/2022 | — | 33,013 | — | 25.68 | 3/3/2032 | — | — | — | — | |||||||||||
3/3/2022 | — | — | — | — | — | — | — | 17,037 | 313,822 | |||||||||||
| 5/26/2022 | — | — | — | — | — | 45,147 | 831,608 | — | — | ||||||||||
Anne L. | ||||||||||||||||||||
Bramman | 3/5/2019 | 61,777 | — | — | 45.33 | 3/5/2029 | — | — | — | — | ||||||||||
| 2023 Proxy Statement | 54 |
COMPENSATION OF EXECUTIVE OFFICERS
(a) Number of Securities Underlying Unexercised Options: Unexercisable
The following table shows the grant date, vesting schedule and expiration date for all unvested stock options as of the fiscal year ended February 1, 2020.January 28, 2023. On March 5, 2019, Erik Nordstrom and Peter Nordstrom received a stock option grant with a four-yearfour-year vesting schedule of 25% per year. On March 5, 2019, Anne Bramman, Kenneth Worzel and Edmond MesrobianAnne Bramman also received a stock option grant with a four-yearfour-year vesting schedule of 50% after years threeon March 10, 2022 and four.
Grant Date | Vesting Schedule | Expiration Date | ||
3/5/2019 | ||||
25% per year with a remaining vesting date of 3/10/ | 3/5/2029 | |||
3/5/2019 | 50% on 3/10/2022 and 50% on 3/10/2023 with a remaining vesting date of 3/10/2023 | 3/5/2029* | ||
3/9/2020 | 25% per year with remaining vesting dates of 3/10/ | 3/9/2030 | ||
3/ | ||||
50% on 3/10/ |
3/4/2031 | ||||
3/3/2022 | 50% on 3/10/2025 and 50% on 3/10/2026 | 3/3/2032 |
*The expiration date for Anne Bramman’s grant is March 12, 2023, 100 days after her separation.
(b) Number of Shares or Units of Stock That Have Not Vested
The following table shows the grant date and vesting schedule for all unvested restricted stock unitsRSUs as of the fiscal year ended February 1, 2020. The restricted stock unit grants haveJanuary 28, 2023. On March 9, 2020, Michael Maher, Kenneth Worzel and Alexis DePree received a four-yearRSU grant with a four-year vesting schedule of 25% per yearyear. On March 9, 2020, Alexis DePree received an additional RSU grant with the following exceptions: Anne Bramman’s granta three-year vesting schedule of 18,350 units on August 21, 2017 vests 33% after each ofin years one and two and 34% after year three; and Edmond Mesrobian’s grant of 38,520 units on August 26, 2019 vests 33% after each of years one and two and 34% after year three.
Grant Date | Vesting Schedule | |
3/5/2019 | ||
25% per year with a remaining vesting date of 3/10/ | ||
3/9/2020 | 25% per year with remaining vesting dates of 3/10/ | |
3/9/2020 | 33% in years one and two and 34% in the final year with a remaining vesting date of | |
8/27/2020 | 25% on 3/10/2021, 3/10/2022, 3/10/2023 and 3/10/2024, with remaining vesting dates of 3/10/2023 and 3/10/2024 | |
3/4/2021 | 25% per year with remaining vesting dates of 3/10/ | |
3/3/2022 | 25% per year with remaining vesting dates of | |
5/ | 50% on 6/10/ | |
(c) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
The numbers reported are therelate to outstanding performance share unitsPSUs granted in fiscal year 2019. One-third of2022 that have time remaining in their three-year performance cycle, as discussed on page 42. If the performance share units are earnedcycle had ended on the last day of fiscal year 2022, the one-yearminimum percentage of 75% of PSUs outstanding would have been earned, which is reflected in the table.
(d) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
The amounts reported relate to outstanding PSUs granted in fiscal year 2022 that have time remaining in their three-year performance cycle, February 1, 2020, ifas discussed on page 42. If the performance criteria have been met, and two-thirds of the units are earnedcycle had ended on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 performance share units vest when the results have been certified by the Compensation, People and Culture Committee at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one- third of the grant will not pay out. The remaining two-thirds of this
55 | 2023 Proxy Statement |
|
COMPENSATION OF EXECUTIVE OFFICERS
Option Exercises and Stock Vested in Fiscal Year
The following table provides information for the Named Executive Officers on:
Option Awards | Stock Awards | |||||||
Name | Number of Shares | Value Realized | Number of Shares | Value Realized on | ||||
Erik B. Nordstrom | — | — | 13,656 | 322,633 | ||||
Michael W. Maher | — | — | 12,745 | 282,788 | ||||
Peter E. Nordstrom | — | — | 13,656 | 322,633 | ||||
Kenneth J. Worzel | — | — | 44,589 | 1,064,499 | ||||
Alexis DePree | — | — | 46,977 | 1,149,135 | ||||
Anne L. Bramman | 281,657 | 483,943 | 40,613 | 973,087 | ||||
Edmond Mesrobian | 212,207 | 1,198,821 | 42,287 | 911,208 | ||||
(a) Number of Shares Acquired on Vesting
The numbers reported include RSUs that vested during fiscal year 2022 for the NEOs. The amounts also include PSUs that vested for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel of 603, 603 and 509, respectively, which vested on an accelerated basis in fiscal year
(b) Value Realized on Vesting
The amounts reported are the values realized for the RSUs that vested during fiscal year 2022 for the NEOs. The amounts also include the number of shares of Common Stock acquiredwithheld on the vesting of PSUs for Erik Nordstrom, Peter Nordstrom and value realized from performance share units and restricted stock units that vested with respectKenneth Worzel to fiscal year
| Option Awards | Stock Awards | |||||||||||
| Name | Number of Shares Acquired on Exercise (#)(a) | Value Realized on Exercise ($)(b) | Number of Shares Acquired on Vesting (#)(c) | Value Realized on Vesting ($)(d) | ||||||||
| Erik B. Nordstrom | 77,609 | 653,219 | 30,206 | 1,262,481 | ||||||||
| Anne L. Bramman | — | — | 24,311 | 1,007,799 | ||||||||
| Peter E. Nordstrom | 77,609 | 508,215 | 30,188 | 1,261,691 | ||||||||
| Kenneth J. Worzel | — | — | 37,121 | 1,484,605 | ||||||||
| Edmond Mesrobian | — | — | 9,526 | 326,170 | ||||||||
Pension Benefits
The Company’s original Supplemental Executive Retirement Plan (“SERP”)SERP was introduced in the 1980s. Over the years, the plan design changed to better meet the purpose of encouraging designated executives to stay with Nordstrom throughout their careers and rewarding their significant and sustained contribution to the Company’s success by adding to their financial security upon retirement. TheBeginning in 2012, the SERP was closed to new entrants, beginning in 2012.
The Named Executive Officers,NEOs, except Michael Maher, Alexis DePree, Anne Bramman and Edmond Mesrobian, who both joined the Company or moved into an eligible role after the SERP had been closed to new entrants, are eligible for the SERP. The eligible Named Executive OfficersNEOs are entitled to receive their full retirement benefit at age 58. Their full benefit is equal to 1.6% multiplied by final average pay, as described in the following paragraph, and their years of credited service, up to a maximum of 25 years. They may retire early and could receive a reduced benefit if they are between the ages of 53 and57, inclusive, with at least 10 years of credited service and the BoardCPCC approves the early retirement. The early retirement benefit is reduced 10% for each year that their retirement age is less than 58. If they retire after age58, they are entitled to their full retirement benefit, increased with interest of 5% per year, compounded annually, for each full year worked beyond age58, for a maximum of 10 years. The annual SERP benefit is capped at $700,000.
Final average pay is the average base salary and annual performance-basedperformance-based cash bonus of the highest 36 months over the longer of:
•the most recent five years of service; or
•the entire period of service after the executive’s 53
The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% annuity paid to a surviving spouse or life partner after the executive’s death. A surviving spouse or life partner also receives a 50% survivor benefit if the executive dies before retiring. The amount of this survivor benefit depends on the executive’s age and years of credited service at the time of death.
The SERP provides that no benefit will be paid to an executive whose employment is terminated for cause, which includes competitive behavior against the Company, as determined by the Compensation, People and Culture CommitteeCPCC in the exercise of its discretion in accordance with the Plan. The Compensation, People and Culture CommitteeCPCC also has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company.
| 2023 Proxy Statement | 56 |
COMPENSATION OF EXECUTIVE OFFICERS
Information about payment of the SERP benefit related to change in control is provided on page 5663 in footnote (b) to the Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2019Year End 2022 table.
Because the SERP is a nonqualified deferred compensation plan, the Company is not obligated to fund it. However, the Company does set aside funds to assist in the payment of future benefit obligations. If the Company were to become insolvent, participants would be unsecured general creditors, and there is no guarantee
Fiscal Year 2022 Pension Benefits Table |
The following table shows the present value of the accumulated SERP benefit payable to each of the Named Executive Officers,NEOs, based on the number of years of service credited under the Plan to each Named Executive OfficerNEO and actuarial assumptions consistent with those used in the Company’s financial statements2022 Annual Report to calculate the Company’s obligations under the Plan. See the notes to the financial statements contained within the Company’s
| Name | Plan Name | Age (a) | Number of Years Credited Service (#)(b) | Present Value of Accumulated Benefit ($)(c) | Payments During Last Fiscal Year ($) | ||||||||||
| Erik B. Nordstrom | SERP | 56 | 25 | 13,277,382 | — | ||||||||||
| Anne L. Bramman | — | 52 | — | — | — | ||||||||||
| Peter E. Nordstrom | SERP | 57 | 25 | 14,015,296 | — | ||||||||||
| Kenneth J. Worzel | SERP | 55 | 10 | 4,526,502 | — | ||||||||||
| Edmond Mesrobian | — | 59 | — | — | — | ||||||||||
Name | Plan Name | Age | Number of Years | Present Value of | Payments | |||||
Erik B. Nordstrom | SERP | 59 | 25 | 10,805,200 | — | |||||
Michael W. Maher | — | — | ||||||||
Peter E. Nordstrom | SERP | 60 | 25 | 10,857,560 | — | |||||
Kenneth J. Worzel | SERP | 58 | 13 | 6,051,510 | — | |||||
Alexis DePree | — | — | ||||||||
Anne L. Bramman | — | — | ||||||||
Edmond Mesrobian |
|
|
| — | — |
(a) Age
Age is as of February 1, 2020,January 28, 2023, the last day of the fiscal year.
(b) Number of Years Credited Service
Although Erik Nordstrom and Peter Nordstrom each have 40 or more than 25 years of service, the number of years of credited service under the SERP is capped at 25.
(c) Present Value of Accumulated Benefit
Erik Nordstrom, Peter Nordstrom and Kenneth Worzel have met the minimum full retirement age of 58. The eligible Named Executive Officers have met the minimum retirement age58 with at least 10 years of credited service and would be eligible for early retirement with prior approval from the Board. If the Board approved early retirement, Erik Nordstrom, Peter Nordstrom and Kenneth Worzel would be entitled to receive a reducedthe SERP benefit having the present values as of the end of the fiscal year of $11,643,464, $13,197,429 and $3,621,992, respectively. These amounts are reportedshown in the Potential Payments Upon Termination or Changetable.
57 | 2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
Nonqualified Deferred Compensation
The Company offers participation in the Nordstrom Deferred Compensation Plan (“NDCP”)NDCP to eligible employees, including the Named Executive Officers, who meet a minimum compensation threshold.NEOs. Under this Plan, a participant may defer up to 80% of base salary, up to 100% of an annual performance-basedperformance-based bonus earned under the Company’s bonus plan and up to 100% of any vested performance share units,PSUs, less applicable payroll taxes.
Plan participants may direct their cash deferrals to deemed investment alternatives, priced and valued similar to retail mutual funds. As of the end of the fiscal year, the Company offered 18nine deemed investment alternatives. In addition, Plan participants are offered a fixed rate option, which was 4.5%4.36% for calendar year 20192022 and is 4.31%4.18% for calendar year 2020,2023, which is not subsidized by the Company but rather is a rate based on guaranteed contractual returns from a third-partythird-party insurance company provider. With the exception of the fixed rate fund, participants may change their investment allocations among these investment alternatives daily. Gains and losses for cash deferrals are credited to participant accounts daily, based on their investment elections. The deemed investment alternatives for cash do not include Common Stock. Vested performance share unitsPSUs that are deferred into the NDCP remain as stock units until distribution.
Fiscal Year 2022 Nonqualified Deferred Compensation Table |
The following table discloses information on nonqualified deferred compensation for the Named Executive OfficersNEOs under the Company’s NDCP for the fiscal year ended February 1, 2020.January 28, 2023. The Company’s SERP is also a nonqualified plan. Information regarding benefits payable to Named Executive OfficersNEOs under the SERP is provided beginning on pages 50 and 51.
| Name | Executive Contributions in Last Fiscal Year ($)(a) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($)(b) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(c) | ||||||||||
| Erik B. Nordstrom | — | — | — | — | — | ||||||||||
| Anne L. Bramman | 63,565 | — | 1,614 | — | 67,880 | ||||||||||
| Peter E. Nordstrom | — | — | — | — | — | ||||||||||
| Kenneth J. Worzel | 52,174 | — | 35,772 | — | 756,989 | ||||||||||
| Edmond Mesrobian | 41,000 | — | 4,666 | — | 47,487 | ||||||||||
Name |
| Registrant | Aggregate Earnings | Aggregate | Aggregate | ||||||
Erik B. Nordstrom | — | — | — |
| — | — | |||||
Michael W. Maher | — | — | (11,604 | ) | — | 206,219 | |||||
Peter E. Nordstrom | — | — | — |
| — | — | |||||
Kenneth J. Worzel | 86,058 | — | 18,013 |
| — | 992,508 | |||||
Alexis DePree | — | — | — |
| — | — | |||||
Anne L. Bramman | 74,173 | — | 12,696 |
| — | 338,949 | |||||
Edmond Mesrobian | — | — | (33,173 | ) | — | 167,361 | |||||
(a) Executive Contributions in Last Fiscal Year
The amounts reported are the deferrals made during the fiscal year.
(b) Aggregate Earnings in Last Fiscal Year
The amounts include the total interest or other earnings (loss) accrued in fiscal year 20192022 on the entire NDCP account balance, including deferred performance share units.
(c) Aggregate Balance at Last Fiscal Year-End
The amounts shown are the total NDCP balances, including earnings on deferrals, as of February 1, 2020.January 28, 2023.
| 2023 Proxy Statement | 58 |
COMPENSATION OF EXECUTIVE OFFICERS
Potential Payments Upon Termination or Change in Control
The information on the following pages describes and quantifies certain amounts that would become payable under existing compensation plans if the Named Executive Officers’NEOs’ employment had terminated on February 1, 2020,January 28, 2023, the last day of the fiscal year. The amounts are based on each executive’s compensation and years of service as of that date and, if applicable, based on the closing price of Common Stock on January 31, 2020,27, 2023, the last market
Employment Agreements |
The Company does not have employment agreements with any Nordstrom employees, including the Named Executive Officers.NEOs. The Company maintains an executive severance plan to provide certain of the Named Executive OfficersNEOs an appropriate level of
Potential Payments Upon Termination or Change in Control at Fiscal |
The following table shows various termination scenarios and payments that would be triggered under the Company’s compensation plans.
| Name and Potential Payment | Death ($) | Disability ($) | Retirement ($) | Termination without Cause ($) | Qualifying Termination Following a Change in Control ($) | ||||||||||
| Erik B. Nordstrom | |||||||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 2,377,839 | 2,377,839 | 2,069,615 | 2,069,615 | 2,069,615 | ||||||||||
Vested SERP Benefit(b) | 5,582,192 | — | 11,643,464 | 11,643,464 | 11,643,464 | ||||||||||
Life Insurance Proceeds(c) | 948,125 | — | — | — | — | ||||||||||
Retiree Health Care Benefit(d) | 186,896 | 406,906 | 406,906 | 406,906 | 406,906 | ||||||||||
Separation Benefit(e) | — | — | — | — | — | ||||||||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | ||||||||||
Executive Management Bonus(g) | — | — | — | — | — | ||||||||||
| Total Value of Incremental Benefits | 9,095,052 | 2,819,745 | 14,119,985 | 14,119,985 | 14,119,985 | ||||||||||
| Anne L. Bramman | |||||||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 2,968,864 | 2,968,864 | — | — | 2,788,901 | ||||||||||
Vested SERP Benefit(b) | — | — | — | — | — | ||||||||||
Life Insurance Proceeds(c) | 1,000,000 | — | — | — | — | ||||||||||
Retiree Health Care Benefit(d) | — | — | — | — | — | ||||||||||
Separation Benefit(e) | — | — | — | — | — | ||||||||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | ||||||||||
Executive Management Bonus(g) | — | — | — | — | — | ||||||||||
| Total Value of Incremental Benefits | 3,968,864 | 3,003,864 | — | — | 2,788,901 | ||||||||||
| Peter E. Nordstrom | |||||||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 2,376,843 | 2,376,843 | 2,068,620 | 2,068,620 | 2,068,620 | ||||||||||
Vested SERP Benefit(b) | 6,742,418 | — | 13,197,429 | 13,197,429 | 13,197,429 | ||||||||||
Life Insurance Proceeds(c) | 948,125 | — | — | — | — | ||||||||||
Retiree Health Care Benefit(d) | 173,260 | 368,943 | 368,943 | 368,943 | 368,943 | ||||||||||
Separation Benefit(e) | — | — | — | — | — | ||||||||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | ||||||||||
Executive Management Bonus(g) | — | — | — | — | — | ||||||||||
| Total Value of Incremental Benefits | 10,240,646 | 2,780,786 | 15,634,992 | 15,634,992 | 15,634,992 | ||||||||||
| Kenneth J. Worzel | |||||||||||||||
| Continued or Accelerated Vesting of Equity Awards(a) | 3,237,402 | 3,237,402 | — | — | 3,005,196 | ||||||||||
Vested SERP Benefit(b) | 1,847,989 | — | 3,621,992 | 3,621,992 | 3,621,992 | ||||||||||
Life Insurance Proceeds(c) | 1,093,750 | — | — | — | — | ||||||||||
Retiree Health Care Benefit(d) | 193,250 | 425,054 | 425,054 | 425,054 | 425,054 | ||||||||||
Separation Benefit(e) | — | — | — | 1,420,102 | — | ||||||||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | ||||||||||
Executive Management Bonus(g) | — | — | — | — | — | ||||||||||
| Total Value of Incremental Benefits | 6,372,391 | 3,697,456 | 4,047,046 | 5,467,148 | 7,052,242 | ||||||||||
| Edmond Mesrobian | |||||||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 1,736,944 | 1,736,944 | — | — | 2,860,152 | ||||||||||
Vested SERP Benefit(b) | — | — | — | — | — | ||||||||||
Life Insurance Proceeds(c) | 968,750 | — | — | — | — | ||||||||||
Retiree Health Care Benefit(d) | — | — | — | — | — | ||||||||||
Separation Benefit(e) | — | — | — | 1,554,200 | — | ||||||||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | ||||||||||
Executive Management Bonus(g) | — | — | — | — | — | ||||||||||
| Total Value of Incremental Benefits | 2,705,694 | 1,771,944 | — | 1,554,200 | 2,860,152 | ||||||||||
Name and Potential Payment | Death | Disability | Retirement | Termination | Qualifying | |||||
Erik B. Nordstrom | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 429,389 | 429,389 | 322,041 | 322,041 | 966,124 | |||||
Vested SERP Benefit(b) | 5,209,255 | 10,805,200 | 10,805,200 | 10,805,200 | 10,805,200 | |||||
Life Insurance Proceeds(c) | 1,517,000 | — | — | — | — | |||||
Retiree Health Care Benefit(d) | 159,075 | 328,029 | 328,029 | 328,029 | 328,029 | |||||
Separation Benefit(e) | — | — | — | — | — | |||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | 7,314,719 | 11,597,618 | 11,455,270 | 11,455,270 | 12,099,353 | |||||
Michael W. Maher | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 726,172 | 726,172 | — | — | 1,519,134 | |||||
Vested SERP Benefit(b) | — | — | — | — | — | |||||
Life Insurance Proceeds(c) | 1,050,000 | — | — | — | — | |||||
Retiree Health Care Benefit(d) | — | — | — | — | — | |||||
Separation Benefit(e) | — | — | — | 808,662 | — | |||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | 1,776,172 | 761,172 | — | 808,662 | 1,519,134 | |||||
Peter E. Nordstrom | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 429,389 | 429,389 | 322,041 | 322,041 | 966,124 | |||||
Vested SERP Benefit(b) | 5,525,170 | 10,857,560 | 10,857,560 | 10,857,560 | 10,857,560 | |||||
Life Insurance Proceeds(c) | 1,517,000 | — | — | — | — | |||||
Retiree Health Care Benefit(d) | 148,341 | 296,811 | 296,811 | 296,811 | 296,811 | |||||
Separation Benefit(e) | — | — | — | — | — | |||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | 7,619,900 | 11,618,760 | 11,476,412 | 11,476,412 | 12,120,495 |
59 | |||
2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
Name and Potential Payment | Death | Disability | Retirement | Termination | Qualifying | |||||
Kenneth J. Worzel | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 1,433,408 | 1,433,408 | 1,342,933 | 1,342,933 | 1,885,780 | |||||
Vested SERP Benefit(b) | 3,075,526 | 6,051,510 | 6,051,510 | 6,051,510 | 6,051,510 | |||||
Life Insurance Proceeds(c) | 1,790,000 | — | — | — | — | |||||
Retiree Health Care Benefit(d) | 163,725 | 342,065 | 342,065 | 342,065 | 342,065 | |||||
Separation Benefit(e) | — | — | — | 1,043,180 | — | |||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | 6,462,659 | 7,861,983 | 7,736,508 | 8,779,688 | 8,279,355 | |||||
Alexis DePree | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | 1,294,798 | 1,294,798 | — | — | 2,144,562 | |||||
Vested SERP Benefit(b) | — | — | — | — | — | |||||
Life Insurance Proceeds(c) | 1,300,000 | — | — | — | — | |||||
Retiree Health Care Benefit(d) | — | — | — | — | — | |||||
Separation Benefit(e) | — | — | — | 1,321,162 | — | |||||
Disability Insurance Benefit(f) | — | 35,000 | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | 2,594,798 | 1,329,798 | — | 1,321,162 | 2,144,562 | |||||
Anne L. Bramman | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | — | — | — | — | — | |||||
Vested SERP Benefit(b) | — | — | — | — | — | |||||
Life Insurance Proceeds(c) | — | — | — | — | — | |||||
Retiree Health Care Benefit(d) | — | — | — | — | — | |||||
Separation Benefit(e) | — | — | — | — | — | |||||
Disability Insurance Benefit(f) | — | — | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | — | — | — | — | — | |||||
Edmond Mesrobian | ||||||||||
Continued or Accelerated Vesting of Equity Awards(a) | — | — | — | — | — | |||||
Vested SERP Benefit(b) | — | — | — | — | — | |||||
Life Insurance Proceeds(c) | — | — | — | — | — | |||||
Retiree Health Care Benefit(d) | — | — | — | — | — | |||||
Separation Benefit(e) | — | — | — | 1,650,000 | — | |||||
Disability Insurance Benefit(f) | — | — | — | — | — | |||||
Executive Management Bonus(g) | — | — | — | — | — | |||||
Total Value of Incremental Benefits | — | — | — | 1,650,000 | — |
(a) Continued or Accelerated Vesting of Equity Awards
As of the end of fiscal year 2019, the Named Executive Officers2022, Erik Nordstrom, Michael Maher, Peter Nordstrom, Kenneth Worzel and Alexis DePree had outstandingunvested equity awards under our 2010 and 2019 Equity Incentive Plans.EIPs. Treatment of the awards under various termination scenarios is described below.
Stock Options
•Death or Disability
The stock option agreements under the Company’s 2010 Equity Incentive Plan, with the exception of theand 2019 stock option grant agreement,EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, all unvested stock options granted more than six months prior to the termination event will immediately vest. Thevest, with the exception of one-time stock option agreements providegrants. The one-time stock option grant made on March 5, 2019 to Kenneth Worzel provides that if a participant’s employment is terminated by reason of death or disability, vesteda prorated number of the stock options granted will immediately vest based on the number of full months employed. Vested stock options may be exercised by the participant or participant’s beneficiary during the period ending four years after termination, provided the 10-year10-year term of the grant has not expired.
| 2023 Proxy Statement | 60 |
COMPENSATION OF EXECUTIVE OFFICERS
The closing price of Common Stock as of the end of the fiscal year 20192022 was lower than the exercise prices of the unvested stock options that would immediately vest and be exercisable during the earlier of four years after termination or the 10-year10-year term date of the grant. Therefore, no amounts are included in the table.
If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then the post-separationpost-separation vesting and exercise rights will cease immediately and all outstanding vested and unvested options and any shares of Common Stock delivered under such grants will be automatically forfeited.
•Retirement or Termination without Cause
Stock option agreements under the Company’s 2010 Equity Incentive Planand 2019 EIPs for annual grants generally provide that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by reason of retirement or termination without cause, stock options granted more than six months prior to termination will continue to vest and may be exercised during the period ending four years after termination, provided the 10-year10-year term of the grant has not expired. Erik Nordstrom, Peter Nordstrom and Peter
The closing price of Common Stock as of the end of the fiscal year 20192022 was lower than the exercise prices of the unvested stock options that would continue to vest and be exercisable during the earlier of four years after termination or the 10-year10-year term date of the grant. Therefore, no amounts are included in the table for Erik Nordstrom and Peter Nordstrom.
If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then the post-separationpost-separation vesting and exercise rights will cease immediately and all outstanding vested and unvested options and any shares of Common Stock delivered under such grants will be automatically forfeited.
Stock option grants under the Company’s 2010 and 2019 EIPs do not entitled toprovide for any payment or accelerated benefit upon a change in control. In the event of a change of control, with respect to their awards. However, underoutstanding awards shall continue in effect or be assumed, or an equivalent award substituted, by the 2010 and 2019 Equity Incentive Plans,successor corporation. If a Named Executive Officer will generally be entitled to accelerated vesting if the executiveparticipant experiences a qualifying termination (termination by the Company without cause or termination by the executiveparticipant for good reason) within 12 months following a change in control of the Company, unlessthen the Compensation, People and Culture Committee actsunvested stock options will automatically vest in full. Notwithstanding, if the successor corporation refuses to prevent accelerationassume or substitute the award, is of a type which would continue in effect notwithstandingthen the occurrenceCPCC shall provide for the cancellation of the changevested portion of any such award in control.exchange for either an amount of cash (or stock, other securities or other property) and provide for the cancellation of the unvested portion of the award, if any, without payment of consideration. Generally, a change in control occurs upon:
•the merger or consolidation of the Company with or into another entity;
•the sale, transfer or other disposition of all or substantially all the Company’s assets;
•a change in composition of 50% or more of the Board; or
•any transaction as a result of which any person is the “beneficial owner” of securities of the Company representing at least 30% of the total voting power of the Company’s outstanding voting securities.
The closing price of Common Stock as of the end of fiscal year 20192022 was lower than the exercise prices of the unvested stock options that would immediately vest and be exercisable if the Named Executive OfficersNEOs experienced a qualifying termination within 12 months following a change in control of the CompanyCompany. Therefore, no amounts are included in the table.
RSUs
•Death or Disability
The RSU agreements under the 2010 and 2019 EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, all unvested RSUs will immediately vest, with the exception of the one-time RSU grant made on March 9, 2020 to Alexis DePree, the RSU grant made on August 27, 2020 to Michael Maher and the Committee did not actRSU grants made on May 26, 2022 to prevent the accelerationMichael Maher and Alexis DePree. These one-time RSU grants provide that if employment is terminated by reason of death or disability, a prorated number of the awards.RSUs will immediately vest based on the number of full months employed.
61 | 2023 Proxy Statement |
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COMPENSATION OF EXECUTIVE OFFICERS
The amounts in the table for Michael Maher, Kenneth Worzel and Alexis Depree include the values, as of the end of fiscal year 2022, of unvested RSUs that would immediately vest.
If, during the term of any outstanding grant, the participant engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited.
•Retirement or Termination without Cause
The RSU agreements for annual grants under the 2010 and 2019 EIPs generally provide that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by reason of retirement or termination without cause, RSUs granted more than six months prior to termination will continue to vest. Kenneth Worzel qualifies for this continued vesting as of the end of fiscal year 2022 as he has reached the minimum retirement age of 55 with at least 10 years of service.
The amounts in the table for Kenneth Worzel include the values, as of the end of fiscal year 2022, of unvested RSUs for his annual grants that would continue to vest after termination.
If, during the term of any outstanding grant, the participant engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited.
•Qualifying Termination Following a Change in Control
RSU grants under the 2010 and 2019 EIPs do not provide for any payment or accelerated benefit upon a change in control. In the event of a change of control, outstanding awards shall continue in effect or be assumed, or an equivalent award substituted, by the successor corporation. If a participant experiences a qualifying termination (termination by the Company without cause or termination by the participant for good reason) within 12 months following a change in control of the Company, then the unvested RSUs will automatically vest in full. Notwithstanding, if the successor corporation refuses to assume or substitute the award, then the CPCC shall provide for the cancellation of the vested portion of any such award in exchange for either an amount of cash (or stock, other securities or other property) and provide for the cancellation of the unvested portion of the award, if any, without payment of consideration. See the Change in Control paragraph under Stock Options on page 61 for information about when a change in control occurs.
The amounts in the table include the values, as of the end of fiscal year 2022, of unvested RSUs that would vest if Michael Maher, Kenneth Worzel and Alexis Depree experienced a qualifying termination within 12 months following a change in control of the Company.
PSUs
•Death or Disability
The 2019 performance share unit award2022 PSU agreement under the 2010 Equity Incentive Plan2019 EIP provides that if a participant’s employment is terminated before the end of a performance cycle by reason of death or disability, the participant, or participant’s beneficiary, will be entitled to a prorated payment, based on target performance and the number of full months employed during the performance cycle.
The amounts included in the table are based onfor Erik Nordstrom, Peter Nordstrom, Kenneth Worzel and Alexis DePree include the remaining outstanding 2019 performance share units and a payout at 100% (target)values of the prorated number2022 PSUs at a payout of 100% (target) based on termination on the last day of the fiscal year.
If, during the term of any outstanding performance cycle,grant, the executiveparticipant engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then all outstanding vested but not settledany unvested PSUs and any unvested portions of the performance share unit awardsCommon Stock delivered on vesting under such grants will be automatically forfeited.
•Retirement or Termination without Cause
The 2019 performance share unit award2022 PSU agreement under the 2010 Equity Incentive Plan2019 EIP provides that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated before the end of the performance cycle by reason of retirement or termination without cause, the participant will be entitled to a prorated payment, based on athe number of full months employed during the performance cycle, with respect to any performance share units granted more than six months prior to termination that were earned during the performance cycle. Both Erik Nordstrom, and Peter Nordstrom and Kenneth Worzel qualify for this prorated payment upon retirement as of the end of the fiscal year.
The 2019 grant has time remainingamounts in its three-year performance cycle. One-thirdthe table for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel include the values of the prorated number of PSUs at a 75% payout that would have been earned if the end of the performance share units are earnedcycle and retirement dates had both occurred on the last day of the one-year performance cycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 performance share units vest when the results have been certified by the Compensation, People and Culture Committee at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one- third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle.
If, during the term of any outstanding performance cycle,grant, the executiveparticipant engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then all outstanding vested but not settledany unvested PSUs and any unvested portions of the performance share unit awardsCommon Stock delivered on vesting under such grants will be automatically forfeited.
| 2023 Proxy Statement | 62 |
COMPENSATION OF EXECUTIVE OFFICERS
•Qualifying Termination Following a Change in Control
The Named Executive Officers arePSU grants under the 2019 EIP do not entitled toprovide for any payment or accelerated benefit upon a change in control. In the event of a change of control, with respect to their performance share units. However,outstanding awards shall continue in effect or be assumed, or an equivalent award substituted, by the successor corporation. If a Named Executive Officer will generally be entitled to accelerated vesting based on the target
If the performance cycle for the remaining two-thirds of the grant had ended as of the close of fiscal year 2019, the performance payout threshold would not have been achieved and 0%2022, 75% of the number of performance share units outstanding 2022 PSUs would have been earned. Therefore, no amounts for the performance share units are reported in the table.
(b) Vested SERP Benefit
The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% survivor annuity paid to the surviving spouse or life partner for the remainder of their life after the executive’s death, as described in the Pension Benefits section beginning on page 50.
•Death
The amounts shown are the present values of the 50% survivor annuity, payable in semi-monthlyequal installments to the spouse or life partner of the executive, assuming the payments would begin on the date on which the executive would have attained minimum retirement age of 53, or the executive’s actual age, if older, and would continue for the remaining lifetime of the spouse or life partner. There would be no immediate payment of the benefit if the date of death preceded the executive’s earliest retirement age of 53.
•Disability
The amounts shown in the table for the eligible Named Executive OfficersErik Nordstrom, Peter Nordstrom and Kenneth Worzel are the present values of their SERP benefits reducedas they have met the minimum age of 58 with at least 10 years of service and would be eligible for early commencement,their full retirement benefits under the SERP. The amounts payable would be paid in bi-weeklyequal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2019. These Named Executive Officers2022.
•Retirement or Termination without Cause
The amounts shown for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are the present values of their SERP benefits as they have met the minimum retirement age of 5358 with at least 10 years of service and would be eligible for earlytheir full retirement with prior approval frombenefits under the Board. If the Board approved early retirement, theySERP. The amounts payable would be entitled to a reduced SERP benefit,paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as described inof the Pension Benefits section on page 50.
•Qualifying Termination Following a Change in Control
No benefits are paid solely due to a change in control, although a change in control triggers immediate vesting and an obligation for the Company to fully fund accrued benefits through a trust. If an executive was separated from the Company after a change in control, a deferred annuity would be payable upon the executive reaching retirement age. If the separation occurred before the executive’s retirement age, of 58, the benefit would be paid as a reduced early retirement benefit at age 53, or the executive’s actual age, if older. In this case, the requirement for Board approval of the early retirement is waived.
The amounts shown in the table for the eligible Named Executive OfficersErik Nordstrom, Peter Nordstrom and Kenneth Worzel are the present values of their SERP benefits reducedas they have met the minimum age of 58 with at least 10 years of service and would be eligible for early commencement,their full retirement benefits under the SERP. The amounts payable would be paid in bi-weeklyequal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year
The Compensation, People and Culture CommitteeCPCC has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company.
(c) Life Insurance Proceeds
The Company provides life insurance for the Named Executive OfficersNEOs of approximately 1.252 times annual base salary.
(d) Retiree Health Care Benefit
The Company provides continued health care coverage for the eligible Named Executive OfficersNEOs if they separate from the Company after age 55 with at least 10 profit sharing years of service. These benefits include medical, behavioral health/substance abuse, vision, prescription drug and dental coverage. The Named Executive Officerseligible NEOs and their spouses or liferegistered domestic partners and eligible dependents would be covered under the retiree health plan, and the executive and the Company would continue to share in the cost of the insurance premium. Coverage and cost sharing would continue for the surviving spouse or liferegistered domestic partner and eligible dependents after the executive’s death. Effective November 1, 2013, the retiree health plan was closed to new entrants.
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COMPENSATION OF EXECUTIVE OFFICERS
The amounts in the table for the eligible Named Executive OfficersNEOs are the present values of the health care cost that would be payable by the Company if they had separated on the last day of the fiscal year. Erik Nordstrom, Peter Nordstrom and Kenneth Worzel have met the minimum retirement age of 55 with at least 10 profit sharing years of service and would be eligible for retirement. Assumptions used in determining these amounts include a discount rate of 4.33%4.95% and the RP2014PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2018.
An executive who is terminated for cause, as determined by the Company in the exercise of its discretion in accordance with the Plan, is not eligible to receive the retiree health care benefit.
(e) Separation Benefit
Under the Nordstrom, Inc. Executive Severance Plan, Michael Maher, Kenneth Worzel and Edmond MesrobianAlexis DePree are eligible to receive benefits upon involuntary termination of employment by the Company, not for cause. To be eligible to participate in the Plan upon involuntary termination, the eligible Named Executive OfficerNEO must have signed a non-competitionnon-competition and non-solicitationnon-solicitation agreement. Prior to his appointment to Interim Chief Financial Officer and Chief Accounting Officer on December 5, 2022, Michael Maher was eligible, and remains eligible, for the Nordstrom, Inc. Executive Severance Plan, subject only to a non-solicitation agreement.
Erik Nordstrom and Peter Nordstrom are not eligible under the Plan. Anne Bramman has elected not to participate in the Plan. The benefits for eligible and participating employees include:
•lump sum cash payment for severance: 18 or 24 months of base salary for our Executive Officers, depending on their roles. This is reduced by an amount equal to the participant’s gross monthly SERP benefit multiplied by the number of months used to calculate the severance payment, if applicable;
•lump sum cash payment for health coverage: the cost of the Company-paidCompany-paid portion of the employee’s currently elected health coverage for 12 months, unless the employee is eligible for the retiree health care benefit, as described in footnote (d), “Retiree Health Care Benefit”; and
•six months of outplacement services.
| Name | Separation Payment ($) | Company-Paid Portion of Medical Benefits ($) | Cost of Outplacement Services ($) | Total Separation Benefit ($) | ||||||||
| Erik B. Nordstrom | — | — | — | — | ||||||||
| Anne L. Bramman | — | — | — | — | ||||||||
| Peter E. Nordstrom | — | — | — | — | ||||||||
| Kenneth J. Worzel | 1,415,902 | — | 4,200 | 1,420,102 | ||||||||
| Edmond Mesrobian | 1,550,000 | — | 4,200 | 1,554,200 | ||||||||
Kenneth Worzel’s estimated separation payment shown aboveon the following table is reduced by an amount equal to his estimated gross monthly SERP benefit multiplied by the number of months used to calculate his separation payment. No amount is included for the Company-paidCompany-paid portion of medical benefits as he qualifies for retiree health care benefits. No amount is included for the Company-paid portion of medical benefits for Edmond Mesrobian as he is not participating in the Company’s medical benefit plans.
To be eligible to receive any benefits under the Nordstrom, Inc. Executive Severance Plan, the Named Executive OfficerNEO must sign a release in which the executive agrees, among other things, not to disclose to anyone at any time any confidential information acquired during employment with the Company, and not to publish any statement, or instigate, assist or participate in the making or publication of any statement which is disparaging or detrimental in any way to the Company, except in each case as required by applicable law.
The potential separation benefits for the NEOs are shown in the following table, with the exception of Anne Bramman and Edmond Mesrobian who separated prior to the end of the fiscal year, and for whom actual benefits received are shown. Anne Bramman received no separation benefits upon her separation on December 2, 2022. In connection with his separation on October 14, 2022, Edmond Mesrobian received a lump sum cash severance payment equal to 24 months of base salary, in accordance with the terms for involuntary separation without cause under the Nordstrom, Inc. Executive Severance Plan; he received no lump sum cash payment for health coverage as he was not participating in the Company’s medical benefit plans, and he did not choose to utilize outplacement services.
Name | Separation | Company-Paid | Cost of | Total Separation | ||||
Erik B. Nordstrom | — | — | — | — | ||||
Michael W. Maher | 787,500 | 16,962 | 4,200 | 808,662 | ||||
Peter E. Nordstrom | — | — | — | — | ||||
Kenneth J. Worzel | 1,038,980 | — | 4,200 | 1,043,180 | ||||
Alexis DePree | 1,300,000 | 16,962 | 4,200 | 1,321,162 | ||||
Anne L. Bramman | — | — | — | — | ||||
Edmond Mesrobian | 1,650,000 | — | — | 1,650,000 |
(f) Disability Insurance Benefit
The Company provides long-termlong-term disability insurance for the Named Executive Officers.NEOs. The amount reported in the table for each Named Executive OfficerNEO is the long-termlong-term disability benefit provided of up to $
(g) Executive Management Bonus
The performance period under the Executive Management Bonus PlanEMBP is the fiscal year. Therefore, a termination event that occurred on the last day of the fiscal year would not result in any additional or accelerated benefits under this Plan. However, if an employee died, became disabled or retired (after having met certain age and years of service requirements) during the fiscal year, the Compensation, People and Culture CommitteeCPCC would have the sole discretion to determine what amounts, if any, an executive would remain eligible to receive as a performance-basedperformance-based bonus award. Any bonus award would be prorated to reflect the period of service during the fiscal year.
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COMPENSATION OF EXECUTIVE OFFICERS
Pay Ratio Disclosure
SEC Rulesrules require that U.S. publicly traded companies disclose the ratio of their Principal Executive Officer’sPEO’s compensation to that of their median employee. Our Principal Executive Officer (“PEO”)PEO is our Chief Executive Officer,CEO, Erik Nordstrom.
For fiscal year 2019:
•the annual total compensation of
Erik Nordstrom was•the estimated median of the annual total compensation of all employees of our Company, other than
Erik Nordstrom,Based on this information, for 20192022 the ratio of the annual total compensation of Erik Nordstrom, our Chief Executive Officer and PEO, to the median of the annual compensation of all employees was 193
The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio that we have reported.
To identify the median employee, we used the total compensation as reported on the 2019 W-22022 W-2 for all of our U.S. employees, excluding our PEO, and the Canadian equivalent T4 for all of our Canadian employees, who were employed by us on February 1, 2020,January 28, 2023, the last day of our fiscal year. We included full-time, part-time,full-time, part-time, seasonal and temporary employees and did not annualize the compensation for our permanent full-timefull-time and part-timepart-time employees who were not employed with us for the entire fiscal year. We applied a Canadian to U.S. dollar exchange rate to the compensation elements paid in Canadian currency. Similar to other large retail companies, a significant portion of our workforce is employed on a part-timepart-time and seasonal basis. As of the end of fiscal year 2019,2022, approximately 36,50031,000 of our 69,000
After identifying the median employee, we calculated annual total compensation for the median employee using the same methodology we used for determining total compensation for our Named Executive OfficersNEOs as shown in the 20192022 Summary Compensation Table on page 41.48.
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PAY VERSUS PERFORMANCE DISCLOSURE
We are required by SEC rules to disclose the following information regarding compensation paid to our NEOs. The amounts set forth under the headings “Compensation Actually Paid to CEO” and “Average Compensation Actually Paid for non-CEO NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation S-K. Footnote (d) sets forth the adjustments from the Total Compensation for each NEO reported in the Summary Compensation Table.
The following table sets forth additional compensation information for our CEO and our non-CEO NEOs, along with total shareholder return, net earnings and Incentive Adjusted EBIT performance results for fiscal years 2020, 2021 and 2022:
Value of Initial Fixed $100 Investment Based On: | ||||||||
Year (a) | Summary | Compensation | Average | Average | Total | Peer Group | Net | Incentive |
2022 | 3,470,982 | 2,237,191 | 3,078,195 | 1,264,807 | 53 | 118 | 245 | 524 |
2021 | 6,445,146 | 820,766 | 5,165,440 | (534,350) | 61 | 146 | 178 | 666 |
2020 | 5,647,670 | 7,598,410 | 5,122,901 | 7,722,084 | 98 | 141 | (690) | (1,047) |
(a) NEOs included in the compensation columns reflect the following:
Year | CEO | Non-CEO NEOs |
2022 | Erik B. Nordstrom | Michael W. Maher, Peter E. Nordstrom, Kenneth J. Worzel, Alexis DePree, Anne L. Bramman, Edmond Mesrobian |
2021 | Erik B. Nordstrom | Anne L. Bramman, Peter E. Nordstrom, Kenneth J. Worzel, Edmond Mesrobian |
2020 | Erik B. Nordstrom | Anne L. Bramman, Peter E. Nordstrom, Kenneth J. Worzel, Edmond Mesrobian |
(b) Fair value or change in fair value
Compensation Actually Paid (“CAP”) was calculated by beginning with the total amount reported in the Summary Compensation Table (“SCT”) for the applicable year, (i) subtracting the grant date fair value of stock awards reported in the Stock Awards column of the SCT (“Stock Awards”), (ii) subtracting the grant date fair value of option awards reported in the Option Awards column of the SCT (“Option Awards”), (iii) subtracting the actuarial present value of the accumulated benefit under defined benefit plans reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the SCT (“Change in Pension Value”), (iv) adding the change in fair value of stock and option awards for the applicable year and (v) adding the service cost and prior service cost for all defined benefit plans for the applicable year.
Fair value amounts were computed in a manner consistent with the fair value methodology used to account for stock-based compensation in accordance with ASC 718 and for PSUs, adjusted based on the probable achievement at each measurement date. The fair value amounts were calculated using our stock price on the last day of each fiscal year or the date of vesting, as applicable. The service cost and prior service cost for defined benefit plans were calculated using the same methodology as used for our financial statements under GAAP.
(c) Year-end stock price
For the portion of CAP that is based on year-end stock prices, the following prices were used for 2022: $18.42 (16% decrease change from prior year), for 2021: $21.85 (38% decrease change from prior year), and for 2020: $35.45 (4% decrease change from prior year).
(d) Compensation Actually Paid to CEO and non-CEO NEOs
CAP for the CEO and non-CEO NEOs reflects the adjustments from Total Compensation for each respective year reported in the SCT, as shown on the following table. Total Adjustments are calculated using un-rounded numbers and then rounded to the nearest dollar.
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PAY VERSUS PERFORMANCE DISCLOSURE
CEO | 2020 | 2021 | 2022 | |
SCT Total ($) | 5,647,670 | 6,445,146 | 3,470,982 | |
- | Value of stock awards and option awards reported in SCT | 4,247,586 | 3,699,999 | 2,654,734 |
- | Change in pension value and Nonqualified Deferred Compensation reported in SCT | 1,010,681 | — | — |
+ | Year-end value of awards granted in fiscal year that are unvested and outstanding | 7,132,586 | 1,429,354 | 1,485,367 |
+ | Change in fair value of prior year awards that are unvested and outstanding | 155,911 | (3,800,744) | (76,644) |
+ | Fair market value of awards granted this year and that vested this year | — | — | 9,883 |
+ | Change in fair value (from prior year end) of prior year awards that vested this year | (372,946) | 139,177 | (215,375) |
- | Prior year fair value of prior year awards that failed to vest this year | — | — | — |
+ | Service and prior service cost for pension plans | 293,457 | 307,833 | 217,712 |
= | Total Adjustments | 1,950,740 | (5,624,380) | (1,233,791) |
CAP ($) | 7,598,410 | 820,766 | 2,237,191 | |
Non-CEO NEO | 2020 | 2021 | 2022 | |
Average SCT ($) | 5,122,901 | 5,165,440 | 3,078,195 | |
- | Average value of stock awards and option awards reported in SCT | 3,999,378 | 2,657,792 | 2,071,922 |
- | Average change in pension value and Nonqualified Deferred Compensation reported in SCT | 480,022 | 347,475 | — |
+ | Average year end value of awards granted in fiscal year that are unvested and outstanding | 6,928,154 | 1,298,263 | 855,524 |
+ | Average change in fair value of prior year awards that are unvested and outstanding | 296,961 | (4,256,482) | (121,002) |
+ | Average fair market value of awards granted this year and that vested this year | 12,197 | 8,747 | 3,038 |
+ | Average change in fair value (from prior year end) of prior year awards that vested this year | (355,907) | 46,199 | (47,797) |
- | Average prior year fair value of prior year awards that failed to vest this year | — | — | 553,875 |
+ | Average service and prior service cost for pension plans | 197,178 | 208,750 | 122,646 |
= | Total Adjustments | 2,599,184 | (5,699,789) | (1,813,389) |
Average CAP ($) | 7,722,084 | (534,350) | 1,264,807 | |
(e) TSR and Peer Group TSR
Peer Group TSR reflects the S&P Retail Index as reflected in our Annual Report on the Form 10-K pursuant to Item 201(e) of Regulation S-K for the fiscal year ended January 28, 2023. Each year of TSR and Peer Group TSR reflects what the cumulative value of $100 would be, including the reinvestment of dividends, if such amount were invested on February 1, 2020.
(f) Company-Selected Measure
As discussed in the Compensation Discussion & Analysis on page 37, the NEO’s bonus opportunity for 2022 was based 100% on Incentive Adjusted EBIT subject to achievement of the Incentive Adjusted ROIC threshold.
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PAY VERSUS PERFORMANCE DISCLOSURE
Pay Versus Performance Descriptive Disclosure |
We believe the CAP in each of the years reported over the three-year cumulative period are reflective of the CPCC’s emphasis on “pay-for-performance” as the CAP fluctuated year over year, primarily due to stock performance and our varying levels of achievement against pre-established performance goals under our EMBP and PSUs.
The relationship between CAP, TSR and Peer Group TSR is shown below.
The relationship between CAP and Net Earnings is shown below.
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PAY VERSUS PERFORMANCE DISCLOSURE
The relationship between CAP and Incentive Adjusted EBIT is shown below.
Table of Measures Most Important to Last Fiscal Year |
The following table lists our most important performance measures used to link CAP for our NEOs to company performance in 2022. Incentive Adjusted ROIC is used to determine bonus payouts for each of the NEOs as described on page 42 and cumulative sales and EBIT margin % are used to determine 2022 PSU payouts for the NEOs as described on page 42.
Most important performance measures for 2022 | ||
Incentive Adjusted EBIT | ||
Incentive Adjusted ROIC | ||
Cumulative Sales for 2022 - 2024 | ||
Cumulative EBIT margin % for 2022 - 2024 |
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PROPOSAL 3: ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
The Board recommends a vote FOR this proposal.
The Company is providing shareholders with an advisory (nonbinding) vote on the compensation program of our Named Executive OfficersNEOs as disclosed in this Proxy Statement.
At the 2017 Annual Meeting of Shareholders, over 95% of the votes cast approved our Board’s recommendation to hold advisory votes on an annual basis.
In light of this support of the compensation program for our Named Executive Officers andNEOs, the CPCC continues to apply the same pay and benefits philosophy which underlies our pay-for-performancepay-for-performance philosophy.
Compensation Program Highlights
As described in the Compensation Discussion and AnalysisCD&A beginning on page 28,37, our Named Executive OfficersNEOs are rewarded when defined performance milestones are achieved and when value is created for our shareholders. Our Compensation, People and Culture CommitteeCPCC and Board believe that our compensation program is effective in implementing our executive compensation philosophy and establishing a solid link between compensation and shareholder interests. Highlights of our compensation program include the following:
•We deliver the majority of compensation through a pay-for-performancepay-for-performance framework where incentives are based on achieving results. At least
•Each year, the CommitteeCPCC establishes the performance-basedperformance-based bonus measures that focus executives on the most important Company objectives. In
•While the CPCC considers the 50th percentile (median) of our retail peer group when assessing the Named Executive Officers’ targeted levelas a reference, there is no specific percentage of target total direct compensation (base salary + performance-based bonus + long-term incentives). The market information is considered a reference point rathertargeted by the CPCC other than policyto remain generally competitive with similarly situated peer companies. Target opportunities for reviewing competitiveness.
•We maintain meaningful executive stock ownership guidelines so that our executives’ interests, as shareholders, are aligned with our broader shareholder base.
•We have an executive compensation clawback policy that applies to performance-basedperformance-based compensation.
•The Compensation, People and Culture CommitteeCPCC has retained and directs an independent compensation consultant.
•We do not have employment agreements with our executives.
•We do not provide tax gross-ups,gross-ups, except those related to relocation expenses when an executive must move to assume Company responsibilities.
•We do not allow stock option grant repricing or backdating, nor do we grant options below 100% of fair market value.
•We have a derivative and hedging policy that prohibits Directors and Executive Officers (as well as other key insiders and their immediate families) from engaging in hedging transactions with respect to any equity securities of the Company held by them.
•We have restrictions on pledging of Common Stock.
Shareholder Support
We are asking our shareholders to indicate their support for our Named Executive Officers’NEOs’ compensation as described in this Proxy Statement.
This proposal gives our shareholders the opportunity to express their views on the compensation of our Named Executive Officers.NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive OfficersNEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 20202023 Annual Meeting: “RESOLVED, that the Company’s shareholders
Our Board has adopted a policy of annual executive compensation advisory votes. As an advisory vote, this proposal is not binding on the Company. However, our Compensation, People and Culture CommitteeCPCC and Board value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions regarding the Company’s Named Executive Officers.NEOs.
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PROPOSAL 4: ADVISORY VOTE REGARDING THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION PLANS
The following table provides information asBoard recommends a vote for “1 YEAR” for this proposal.
In addition to providing shareholders with the opportunity to cast an advisory vote on executive compensation, we are providing shareholders with an advisory vote on how frequently we should seek an advisory vote on the compensation of our NEOs.
By voting on this Proposal 4, shareholders may indicate whether they would prefer an advisory vote on NEO compensation once every1,2, or 3 years.
The Board has determined that holding an advisory vote on executive compensation every year is the fiscal year ended February 1, 2020 about Common Stockmost appropriate policy for the Company at this time, and recommends that may be issued uponshareholders vote for future advisory votes on executive compensation to occur every year. Many elements of our executive compensation program are reviewed and determined annually, including base salary, performance-based cash awards under the exercise of optionsCompany’s EMBP, and rights that have been or may be granted to employeeslong-term incentive grants under the 2019 EIP. Holding an annual advisory vote on executive compensation would more closely coincide with these decisions, promote corporate transparency and members of the Board under allshareholder awareness of the Company’s existing equity compensation plans.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) (#) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities to be issued as reflected in column (1)) (3) (#) | ||||||
Equity compensation plans approved by the Company’s shareholders (a) | 12,277,735 | (b) | 53 | 11,630,884 | (c) | ||||
Equity compensation plans not approved by the Company’s shareholders (d) | 6,507 | 5 | — | ||||||
| TOTAL | 12,284,242 | 53 | 11,630,884 | ||||||
Shareholders will be able to specify one of four choices for this proposal on the proxy card: 1 year, 2 years, 3 years, or abstain. Shareholders are not being asked to approve or disapprove the Board’s recommendation, but rather to indicate their own choice from among the frequency options. The option of 1 year, 2 years or 3 years that receives the highest number of votes cast by shareholders will be the frequency for future advisory votes on executive compensation that has been selected by shareholders. Because this vote is advisory, it is not binding on the Board or the Company. However, the Board values the opinions of our shareholders and will consider the outcome of the vote when setting the frequency of future advisory votes on executive compensation.
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2023 Proxy Statement |
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The Board recommends a vote FOR this proposal.
Shareholders are being asked to vote on a proposal to approve an amendment to the Nordstrom, Inc. Amended and Restated 2019 Equity Incentive Plan (the “Plan”). The Company has granted equity awards to its employees and directors under Nordstrom equity compensation plans since 1977 as part of a long-heldlong-held approach to pay for performance. All of the Company’s prior plans have expired or were terminated when the Shareholdersshareholders approved the Plan at the 2019 Annual Meeting of Shareholders. The Plan was subsequently amended at the 2020 Annual Meeting of Shareholders to increase the reserves for issuance by the Company by 15,000,000shares to 24,500,000shares (the “Prior Approval”).
As we move forward, we believe it is important the Company have the ability to use stock-basedstock-based compensation to attract and retain key talent, provide employees with a stake in our future recovery andthe Company’s success, for those employees we will be relying on, and align our team with long-termlong-term shareholder outcomes.
Absent shareholder approval, as a result of the volatility of the price of the Company’s Common Stock, the number of shares remaining available for grant under the Plan is nowmay become insufficient to meet the Company’s anticipated needs
Equity compensation is also fundamental to our compensation philosophy and core objectives of paying for performance and aligning the interests of employees with those of shareholders. A significant portion of our employees’ compensation is provided in the form of equity. We believe that equity awards, and the potential they hold for appreciation through an increase in our stock price,
The highlights of the Plan, as amended for this share request, are set forth below. Specifically, the Plan:
•reserves for issuance by the Company 24,500,000 of 39,500,000shares, representing the 9,500,000 24,500,000shares available after the Prior Approval
•requires each share issued as part of a full-valuefull-value award, such as a grant of unrestricted shares, restricted shares, restricted stock units or performance share units, and dividend equivalents to count as 1.6shares for purposes of determining shares remaining available for grant;
•prohibits liberal share recycling as shares not issued as a result of the net settlement of an outstanding stock appreciation right or stock option; shares used to pay the exercise price or withholding taxes related to an outstanding award; or shares repurchased on the open market with the proceeds of a stock option exercise price will not be returned to the 2019 Plan;
•provides for “double trigger” rather than “single trigger” accelerated vesting, meaning awards will be accelerated as the result of a change in control where the participant’s employment is involuntarily terminated without cause or the participant terminates for “good reason” within 12 months following a change of control and with respect to performance-basedperformance-based awards allowallowing for acceleration of vesting at target if actual performance cannot be determined upon a qualifying termination;
•establishes one year as the minimum period for vesting of all awards, provided that the Committee may grant awards that vest in less than one year if the total number of such shares does not exceed 5% of the available shares authorized for issuance under the 2019 Plan;
•prohibits the issuance of dividends or dividend equivalents on stock options and stock appreciation rights and prohibit delivery of dividends or dividend equivalents on all other types of awards unless such awards are earned and vested;
•prohibits the repricing of stock options or stock appreciation rights without shareholder approval;
•subjects all awards to the Company’s clawback policy as described on page 39;46; and
•prohibits the transfer of awards, except in the context of death or as otherwise required by law, or as approved by the Committee.
As of the record date,Record Date, the Company had available for issuance 5,608,098 9,762,653shares under the Plan. In addition, the Plan permits the Company to issue shares if they are forfeited under awards previously issued under two of the Company’s prior (and now terminated) plans: the 2010 Equity Incentive Plan and the 2004 Equity Incentive Plan.
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PROPOSAL 5: APPROVAL OF THE NORDSTROM, INC. AMENDED & RESTATED 2019 EQUITY INCENTIVE PLAN
The following table shows information regarding outstanding options and full-valuefull-value awards as of March 11, 2020April10, 2023 under the 2010 Equity Incentive Plan and the Plan.
| Outstanding Options (#) | Weighted Average Exercise Price ($) | Weighted Average Remaining Years of Contractual Life (#) | Unvested Full Value Awards (#)* | |||||||
| 8,297,627 | 52.31 | 4.26 | 5,814,143 | |||||||
Outstanding Options (#) | Weighted Average | Weighted Average Remaining | Unvested Full Value | |||
8,398,633 | 34.56 | 6.04 | 6,636,085 |
* Includes restricted stock units and performance share units granted at maximum. Each outstanding full value award reduces the shares available for grant under the 2019 Equity Incentive Plan by 1.6shares.
Summary of Plan Terms
The following is a summary of the Plan, a complete copy of which has been filed with the Securities and Exchange CommissionSEC as Appendix B to this Proxy Statement and is also available on the SEC’s website at
Participants |
Eligible participants include the Company’s and its subsidiaries’:
•employees; and
•non-employee directors.
The Plan is broad enough to cover all of the Company’s and its subsidiaries’ full- or part-timepart-time employees and nonemployeenon-employee directors, consisting of approximately 69,00060,000 people as of the Record Date. As of the filing date for this Proxy Statement, a majority of these employees are currently furloughed or scheduled for zero hours as a result of COVID-19, however employees may be called to return to work at any time as circumstances permit. The Company currently grants equity to approximately 665615 eligible employees approximately 525 of our highest-performing salespeople and its nonemployeenon-employee directors.
Purpose |
The purpose of the Plan is to promote the long-termlong-term success of the Company and its subsidiaries and the creation of shareholder value by:
•motivating participants to focus on the Company’s critical long-rangelong-range objectives;
•encouraging the attraction and retention of employees and nonemployeenon-employee directors; and
•aligning participant and shareholder interests through stock ownership.
Administration |
The Committee administers the Plan, except that it may also appoint a secondary Board committee or one or more senior executive officers to administer the Plan with respect to employees who are not considered executive officers under Section 16 of the Securities
Awards |
The types of awards that may be made under the Plan are:
•options to purchase shares of Common Stock;
•stock appreciation rights;
•unrestricted shares of Common Stock;
•restricted shares of Common Stock;
•restricted stock units; and
•performance share units.
Share Limits and Vesting Requirements |
As originally approved, the limit on the number of shares of Common Stock that may be delivered under the Plan through the issuance of any type of award could not exceed (i) 9,500,00024,500,000 plus (ii) any shares currently underlying awards outstanding under the 2010 Equity Incentive Plan and 2004 Equity Incentive Plan but which are forfeited or which expire without exercise during the term of the Plan. If approved by the shareholders, this amendment to the Plan will authorize an additional 15,000,000 for issuance under the Plan.
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PROPOSAL 5: APPROVAL OF THE NORDSTROM, INC. AMENDED & RESTATED 2019 EQUITY INCENTIVE PLAN
The maximum number of shares that are available for grant under the Plan are subject to reduction by 1.6shares for each share that is delivered in settlement of an award of unrestricted shares, restricted shares, restricted stock units, performance share units, dividends and dividend equivalents. When a share is delivered in settlement of one of the foregoing types of awards, the maximum is reduced by 1.6shares and when a share is delivered in settlement of an option or stock appreciation right, the maximum is reduced by one share.
All awards granted under the Plan shall vest no earlier than the first anniversary of the date of grant provided that up to 5% of the authorized shares under the Plan (including all unrestricted shares of Common Stock) may be granted without this limit.
The Plan also sets forth limitsa limit of $750,000 on the number of shares of Common Stocknon-employee Director compensation that maycan be granted pursuant to an award toduring any participant in a single fiscal year as follows. No participant may receive:
Options |
Options may be incentive stock options that qualify for favorable tax treatment for the optionee under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)IRC or nonqualified stock options not designed to qualify for favorable tax treatment. Incentive stock options may only be granted to employees. Each option agreement will specify the type of option and the date or event when all or any installment of the option is to become exercisable. The Company has historically granted nonqualified options with a four-yearfour-year vesting period. The option agreement will also specify the term of the option, provided, however, that the term of an option will in no event exceed 10 years from the date of grant. An option agreement may provide for accelerated exercisability in the event of the optionee’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the optionee’s service.
The exercise price of an option may not be less than 100% of the fair market value of Common Stock on the date of grant. Options may not be repriced.
At the Committee’s discretion, the exercise price of an option may be paid with:
•cash;
•cash equivalents;
•the delivery of outstanding shares of Common Stock;
•the cashless exercise method through a broker;
•a net exercise method through a broker; or
•a combination of these methods.
No dividend or dividend equivalent rights shall accrue or be paid with respect to options.
Stock Appreciation Rights |
Stock appreciation rights may be granted with such terms and conditions as may be determined by the Committee provided, however, that the term of a stock appreciation right may not exceed 10 years from the date of grant. Each grant will be evidenced by a stock appreciation rights agreement, which will specify the number of shares of Common Stock to which the right pertains. The agreement will also specify the exercise price, the date when all or any installment is to become exercisable and the term of the stock appreciation right. The agreement may provide for accelerated exercisability in the event of the optionee’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the optionee’s service. Stock appreciation rights may be awarded in combination with options, and such an award may provide that the stock appreciation rights will not be exercisable unless the related options are forfeited.
At the Committee’s discretion, upon exercise of a stock appreciation right, the participant (or person having the right to exercise the right after his or her death) will receive:
•cash;
•shares of Common Stock; or
•any combination of both.
The exercise price of a stock appreciation right may not be less than 100% of the fair market value of Common Stock on the date of grant. Stock appreciation rights may not be repriced.
No dividend or dividend equivalent rights shall accrue or be paid with respect to stock appreciation rights.
Unrestricted Shares |
Shares not subject to vesting may be awarded for such consideration, consisting of any tangible or intangible property or benefit to the Company, including services performed and contracts for services, as the Committee may determine.
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PROPOSAL 5: APPROVAL OF THE NORDSTROM, INC. AMENDED & RESTATED 2019 EQUITY INCENTIVE PLAN
Restricted Shares |
Restricted shares may be granted with such terms and conditions as the Committee may determine. These restricted shares may be awarded for such consideration, consisting of any tangible or intangible property or benefit to the Company, including services performed and contracts for services, as the Committee may determine.
Each award of restricted shares will be subject to vesting. Vesting will occur, in full or in installments, upon satisfaction of the conditions specified in the restricted share agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company equal or exceed a target determined in advance by the Committee. A restricted share agreement may provide for accelerated vesting in the event of the recipient’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the recipient’s service.
The holders of restricted shares will have the voting, dividend and other rights as set forth in their restricted share agreement, and may have the same voting, dividend or other rights as the Company’s other shareholders provided that any dividends accrued on restricted shares shall be held in escrow by the Company and shall only be paid if and when restricted shares vest, in cash or in shares of unrestricted Common Stock having a fair market value equal to the amount of such dividends. Common Stock distributed to the holder of restricted shares on account of a stock split or stock dividend will be subject to restrictions and risk of forfeiture to the same extent as the restricted shares with respect to which such Common Stock has been distributed.
Restricted Stock Units |
Restricted stock units may be granted with such terms and conditions as the Committee may determine. Each award of restricted stock units will be subject to vesting. Vesting will occur, in full or in installments, upon satisfaction of the conditions specified in the restricted stock unit agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company exceed a target determined in advance by the Committee. A restricted stock unit agreement may provide for accelerated vesting in the event of the recipient’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the recipient’s service.
The holders of restricted stock units will not have voting or dividend rights. Prior to settlement or forfeiture, any restricted stock unit may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right will entitle the holder to be paid an amount in cash or stock equal to the dividends that would have been paid if the restricted stock units had been issued and outstanding shares of Common Stock as of the record date for the payment of dividends, subject to applicable withholding taxes, if and when the restricted stock units vest.
At the discretion of the Committee, settlement of vested units may be made in the form of:
•cash;
•shares of Common Stock (unrestricted or restricted shares); or
•any combination of both.
Performance Share Units |
Performance share units may be granted with such terms and conditions as the Committee may determine. Performance share units are designated in shares of Common Stock.
Each award of performance share units will be subject to vesting. Vesting will occur, in full or in installments, upon satisfaction of the conditions specified in the performance share unit agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company exceed a target determined in advance by the Committee. A performance share unit agreement may provide for accelerated vesting in the event of the recipient’s death, disability or retirement and may provide for expiration prior to the end of the performance period in the event of the termination of the recipient’s service.
A holder of performance share units will have no rights to dividends and will not be entitled to vote such units. Prior to settlement or forfeiture, any performance share unit may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right will entitle the holder to receive, if and when the applicable performance share units vest, an amount in cash or stock equal to the dividends that would have been paid if the performance share units had been settled in shares of Common Stock on or before the record date for any dividends declared on the Company’s Common Stock, subject to applicable withholding taxes.
At the discretion of the Committee, settlement of vested performance share units may be made in the form of:
•cash;
•shares of Common Stock; or
•any combination of both.
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PROPOSAL 5: APPROVAL OF THE NORDSTROM, INC. AMENDED & RESTATED 2019 EQUITY INCENTIVE PLAN
Change in Control |
In the event of a change of control, outstanding awards shall continue in Control
Federal Income Tax Consequences |
The tax consequences of the Plan are complex, and the following discussion deals only with general tax principles applicable to the Plan under federal law.
Incentive stock options are options which under certain circumstances and subject to certain tax restrictions, have special tax benefits for employees under the Internal Revenue Code.IRC. Nonqualified stock options are options which do not receive such special tax treatment.
When the Committee grants an incentive stock option and when the participant exercises an incentive stock option and acquires Common Stock, the participant realizes no taxable income and the Company can claim no deduction. (However, the differences between the fair market value of the shares upon exercise and the exercise price is an item of tax preference subject to the possible application of the alternative minimum tax.) If the participant disposes of the stock before two years from grant or one year from exercise of the incentive stock option (a disqualifying disposition), any gain will be deemed compensation and taxed as ordinary income to the extent of the lesser of:
•the spread between the option price and the fair market value of the stock at exercise; or
•the difference between the sale price and the exercise price.
If a disqualifying disposition occurs, the Company can claim a deduction equal to the amount treated as compensation. If one- and two-yeartwo-year holding periods are satisfied, any gain realized when the shares are sold will be treated as capital gain, and the Company will receive no corresponding tax deduction.
When the Committee grants a nonqualified stock option, the participant realizes no taxable income and the Company can claim no deduction. On exercise of a nonqualified stock option, the participant realizes ordinary income to the extent of the spread and the Company can claim a tax deduction for the same amount.
When the Committee grants a stock appreciation right, the participant realizes no taxable income and the Company can claim no deduction. The cash or fair market value of stock received on a stock appreciation right exercise is taxed to the participant at ordinary income rates. The Company can claim a tax deduction in the same amount at such time.
Upon grant of unrestricted shares, the participant realizes ordinary income equal to the fair market value of the Common Stock on the date of grant and the Company can generally claim a tax deduction for the same amount.
Grants of restricted shares are generally not taxable to participants at the time of grant and the Company generally claims no deduction at that time. The Company receives a deduction and the participant recognizes taxable income equal to the fair market value of the stock at the time the restrictions lapse (i.e., at the time the restricted shares vest), unless the participant elects, within thirty days of notification of the award, to recognize the income on the award date, in accordance with CodeIRC Section 83(b) (an “83(b) election”). If the participant makes an 83(b) election, the Company receives a corresponding deduction at the time of grant. Any dividends received on restricted shares prior to the date the participant recognizes income on the stock are taxable compensation income when received and the Company is entitled to a corresponding tax deduction at such time.
The grant of restricted stock units and performance share units generally does not result in taxable income to the participant. Upon vesting, the number of shares issued or cash paid is treated as ordinary income, and the Company is entitled to a corresponding tax deduction at such time.
New Plan Benefits |
The Committee has full discretion to determine the number and amount of options, stock appreciation rights, unrestricted and restricted shares, and restricted share units and performance share units to be granted to participants, subject to the annual limitations described on pages 62 and 63.participants. Therefore, the benefits and amounts that will be received by each of the Named Executive Officers,NEOs, the executive officers as a group, nonemployeenon-employee directors and all other employees under the Plan are not presently determinable. The fair market value as of the close of trading on March 11, 2020April10, 2023 was $24.03$16.64 per share.
Term, Termination and Amendment |
The Plan will remain in effect until May 29, 2029, unless earlier terminated by the Board. The Board may, at any time and for any reason, amend the Plan. An amendment of the Plan will be subject to the approval of the Company’s shareholders to the extent required by applicable laws, regulations or rules.
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The Board recommends a vote FOR this proposal.
At the Annual Meeting, Shareholders will be asked to approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan (the “Plan”). Shareholder approval of this amendment to the Plan will:
The Plan offers eligible employees the opportunity to acquire a stock ownership interest in the Company through periodic payroll deductions that are applied towards the purchase of Common Stock at a discount from the then-currentthen-current market price.
The Plan was originally adopted by the Board of Directors (the “Board”) in November 1999 and was approved by our Shareholdersshareholders in May 2000. On threeseveral occasions since the original adoption of the Plan, the Board and the Compensation, People and Culture Committee (the “Committee”) have adopted and put before shareholders for approval amendments to the Plan. Those amendments have addressed changes in law applicable to the Plan and have also increased the number of shares of Common Stock which may be purchased under the Plan to a total of 12,600,000 16,100,000shares. As of March 11, 2020,April10, 2023, out of the authorization of 12,600,000 16,100,000shares, there were 1,323,615 1,871,175shares available for future purchase under the Plan. In February 2020,2023, at the recommendation of the Committee, the Board approved the amendment and restatement (collectively, the “Amendment”) of the Plan which, if approved by the Shareholders,shareholders, will increase the aggregate number of shares of Common Stock that may be purchased under the Plan as of the Record Date by 3,500,000shares, to a total of 16,100,00019,600,000 shares.
The primary purpose of the Amendment is to ensure that Nordstrom will have a sufficient reserve of Common Stock available under the Plan to provide eligible employees of the Company and its participating subsidiaries with the continuing opportunity to acquire an ownership interest in the Company through participation in the Plan. In addition, the amendment revises the definition of eligible compensation to remove bonuses and compensation related to vesting of restricted stock units or performance share units and similar items resulting from grants or awards under any stock-based compensation programs. The Committee will determine whether a particular item is included in the definition of eligible compensation. The amended definition provides clarification regarding compensation related to vesting of equity awards that is
The following is a summary of the principal features of the Plan. This summary is qualified in all respects by reference to the full text of the Plan, which has been filed with the SEC, in amended and restated form, as Appendix C to this Proxy Statement.
Summary of the Plan
Shares of Common Stock are offered under the Plan through a series of consecutive offering periods, each with a maximum duration of six months. Offering periods commence each April 1 and October 1. Purchases occur on the last trading day of each March and September.
With certain exceptions, any eligible employee of the Company or of a participating subsidiary on February 1 who remains an employee through April 1 may participate in the offering period commencing April 1, and any employee of the Company or a participating subsidiary on August 1 who remains an employee through October 1 may participate in the offering period commencing October 1. The price at which the employee may purchase the Common Stock is 90% of the closing price for the Common Stock as reported by the New York Stock ExchangeNYSE on the day the offering period terminates. An employee may elect to have up to 15% of his or her compensation withheld for the purpose of purchasing Common Stock under the Plan. As of the last day of each offering period, each participant is deemed to have been granted an option to purchase up to the lesser of (i) 1,000shares or (ii) that whole number of shares determined by dividing the amount of the participant’s compensation withheld during the offering period by 90% of the fair market value of the Common Stock as determined at the end of the offering period.
Unless the participant elects to withdraw prior to the end of an offering period, each participant who continues to be employed as an employee by the Company or a participating subsidiary as of the end of an offering period is deemed to have exercised the option and purchased on such date the number of shares as may be purchased with the amount of his or her payroll deductions at the offering price (subject to the maximum number covered by his or her option). If employees subscribe to purchase more than the number of shares of Common Stock available during any offering, the available shares are allocated on a pro-ratapro-rata basis to subscribing employees.
The Board may at any time amend, suspend or terminate the Plan. However, except in connection with certain reorganizations or recapitalizations of the Company, any increase in the aggregate number of shares of Common Stock issuable under the Plan is subject to approval by a vote of the Shareholders. Moreover, the Plan will automatically terminate on the date on which all shares available for issuance thereunder are sold pursuant to exercised purchase rights.
The Plan is administered by the Committee, which is authorized to make rules and guidelines regarding the administration and interpretation of the Plan and to determine which of the company’s subsidiaries’ employees of the Company may participate in the Plan. All costs and expenses incurred in plan administration are paid by the Company without charge to participants.
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PROPOSAL 6: APPROVAL OF THE NORDSTROM, INC. AMENDED & RESTATED EMPLOYEE STOCK PURCHASE PLAN
Federal Income Tax Consequences |
The Plan is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”),IRC, which provides that the employee does not have to pay federal income tax with respect to shares purchased under the Plan until he or she sells the shares.
If the employee has owned the shares for more than one year and sells or otherwise disposes of them at least two years after the day the offering period commenced, the employee will recognize ordinary income in the year of sale or disposition equal to the lesser of (i) ten percent (10%) of the market price of the shares on the date the offering period commenced or (ii) the excess of the amount realized on the disposition over the price paid. Any additional gain upon the sale or disposition will be taxed as a long-termlong-term capital gain. The Company will not be entitled to an income tax deduction with respect to such sale or disposition.
If an employee sells or otherwise disposes of the shares before he or she has owned them for more than one year or before the expiration of a two-yeartwo-year period commencing on the day the offering period commenced, that employee will recognize ordinary income in the year of sale or disposition equal to the difference between the purchase price and the fair market value of the shares on the date of purchase, and the Company will be entitled to an income tax deduction for the same amount for the taxable year in which such disposition occurs. Any additional gain or loss recognized on the sale or disposition of the stock will be short-termshort-term or long-termlong-term capital gain or loss, depending on how long the employee owned the stock.
New Plan Benefits |
Participation in the Plan is entirely within the discretion of the eligible employees of the Company. As a result, the Company cannot forecast the extent of future participation. Therefore, the Company has omitted the tabular disclosure of the benefits or amounts allocated under the Plan.
Recommendation of the Board of Directors
The Board of Directors believes that it is in the best interests of the Company and its Shareholdersshareholders to approve the Plan in order to provide current and prospective employees of the Company and participating subsidiaries with the continuing opportunity to acquire equity interests in the Company through the Plan, to revise the definition of eligible compensation and to increase the maximum contribution rate from ten percent (10%) of eligible compensation to fifteen percent (15%) of eligible compensation.Plan. Therefore, the Board believes that this amendmentAmendment to the Stock Purchase Plan will advance the interests of the Company’s shareholders. Absent the approval of this Proposal 5,6, it is anticipated that the reserve of Common Stock available for purchase under the Stock Purchase Plan may be exhausted byas soon as 2024, depending on fluctuations in the end of 2020,Company’s stock price, which would, at that time, result in the termination of the Plan.
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PROPOSAL 7: ADVISORY VOTE ON THE EXTENSION OF THE COMPANY’S SHAREHOLDER RIGHTS PLAN UNTIL SEPTEMBER 19, 2025
The Board recommends a vote FOR this proposal.
The Board adopted the Rights Plan on September 19, 2022 to protect the interests of the Company and all shareholders from the likelihood that any entity, person or group gains control of the Company through open-market accumulation or other means without payment of an adequate control premium. The Board believes that it is in the best interests of the Company and all shareholders to extend the Rights Plan until September 19, 2025, with the Board retaining the ability to terminate the Rights Plan prior to such date if warranted.
While shareholder approval is not required to extend the Rights Plan, the Board is asking shareholders to approve this advisory vote on the extension of the Rights Plan as part of the Board’s commitment to good corporate governance and to ensure that shareholders have an opportunity to voice their feedback on this important matter. Although the outcome of this proposal is non-binding, the Board will carefully consider the outcome of this proposal in considering whether to extend the Rights Plan.
Rationale for Extension of the Rights Plan |
On September 19, 2022, the Board adopted a Shareholder Rights Agreement, by and between the Company and Computershare Trust Company, N.A., as rights agent, and declared a dividend of one common stock right for each outstanding share of Common Stock (the “Rights”) to shareholders of record at the close of business on September 30, 2022. See “Summary Description of the Rights Plan” below for more information about the Rights Plan.
The Rights Plan is similar to plans adopted by other public companies and is intended to protect the interests of the Company and all Nordstrom shareholders. As announced at the time of its adoption, the Rights Plan:
•Reduces the likelihood that any entity, person or group gains control of the Company through open-market accumulation or other means without payment of an adequate control premium;
•Helps ensure that the Board has sufficient time to make informed, deliberate decisions that are in the best interests of the Company and all shareholders;
•Applies equally to all current and future shareholders of the Company;
•Was not adopted in response to any specific takeover bid or other proposal to acquire control of the Company; and
•Is not intended to deter offers that are fair and otherwise in the best interests of all shareholders.
The Board adopted the Rights Plan four days after El Puerto de Liverpool, S.A.B. de C.V. (“Liverpool”) disclosed it had acquired 9.9% of the Company’s Common Stock. Liverpool is a retailer operating mid- and high-end department stores in Mexico. While representatives of the Company had occasionally crossed paths with representatives of Liverpool before this date, such as at industry conferences, the Company was unaware that Liverpool was making an investment in the Company until shortly before Liverpool’s disclosure of their ownership stake.
In light of Liverpool’s rapid open-market share accumulation and the uncertainty regarding Liverpool’s intentions towards the Company, among other factors, the Board determined it was appropriate to adopt the Rights Plan. In making this determination, the Board also considered that if either Liverpool or members of the Nordstrom family increased their ownership, their combined ownership could determine the outcome of most shareholder votes if they voted together. The Rights Plan prevents Liverpool and members of the Nordstrom family from increasing their ownership of Common Stock and prevents Liverpool or any other shareholder from forming a “group” with members of the Nordstrom family, in each case except as permitted by the Rights Plan (including increases in beneficial ownership through the exercise of options and the vesting of restricted stock units granted by the Company).
In addition, on March6, 2023, RC Ventures LLC (“RC Ventures”), an investment vehicle of Ryan Cohen, disclosed to the Company that it owned 4.2% of the Company’s common stock and formally requested a waiver from the Rights Plan that would permit RC Ventures to acquire up to 19.9% of the Company’s Common Stock (above the 10% trigger of the Rights Plan). If RC Ventures were permitted to and did acquire 19.9% of the Common Stock, then shareholders other than members of the Nordstrom family, Liverpool and RC Ventures (the “Other Public Shareholders”) would collectively own less than 40% of the outstanding Common Stock.
The Rights Plan will terminate in accordance with its terms on September 19, 2023. The Board believes that it is in the best interests of the Company and all shareholders to extend the Rights Plan until September 19, 2025 for the following reasons:
•Deters a Creeping Acquisition of Control: The Rights Plan reduces the likelihood that any entity, person or group gains control of the Company through open-market accumulation or other means without payment of an adequate control premium. As a result of the Rights Plan, no shareholder can acquire beneficial ownership (as defined in the Rights Plan) of 10% or more of the Company’s Common
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PROPOSAL 7: ADVISORY VOTE ON THE EXTENSION OF THE COMPANY’S SHAREHOLDER RIGHTS PLAN UNTIL SEPTEMBER 19, 2025
Stock, including by forming a “group” with other shareholders with total ownership in excess of that threshold. Likewise, the Rights Plan operates to prevent the Nordstrom family from forming a “group” with other shareholders or acquiring additional shares of Common Stock other than in accordance with the Rights Plan. Under the Rights Plan, Anne E. Gittinger, Bruce A. Nordstrom, Erik B. Nordstrom, James F. Nordstrom and Peter E. Nordstrom and their respective affiliates and associates are collectively “grandfathered,” but they cannot acquire additional shares of Common Stock (including by forming a “group” with shareholders other than these persons) except in accordance with the Rights Plan (including increases in beneficial ownership through the exercise of options and the vesting of restricted stock units granted by the Company).
As of April10, 2023 (or the earlier date set forth under Security Ownership of Certain Beneficial Owners and Management), Liverpool beneficially owned 9.76% of the outstanding Common Stock, and Anne Gittinger, Bruce Nordstrom, Erik Nordstrom, James Nordstrom and Peter Nordstrom beneficially owned 30.23% of the outstanding Common Stock in aggregate. In the absence of the Rights Plan, these persons could freely increase their beneficial ownership, which could result in these persons collectively holding a majority of the outstanding Common Stock.
•Enables the Board to Respond to Unsolicited Acquisition Proposals: The Rights Plan helps ensure that the Board has sufficient time to make informed, deliberate decisions that are in the best interests of the Company and all Nordstrom shareholders. The Rights Plan is not intended to deter offers that are fair and otherwise in the best interests of all Nordstrom shareholders, but does give the Board the ability to defend shareholders against abusive or coercive takeover tactics by a potential acquirer that could be used to gain control of the Company without the acquirer paying all shareholders a fair price for their shares, including a partial or two-tier tender offer that fails to treat all shareholders equally.
•Ensures the Other Public Shareholders Have the Ability to Reject a Merger Proposal: Under Washington corporate law, approval of a merger of the Company generally requires the approval of two-thirds of the votes entitled to be cast on the approval. RC Ventures has stated that, as of March6, 2023, it beneficially owned 4.2% of the outstanding Common Stock and requested an exemption to purchase up to 19.9% of the Company’s Common Stock. If RC Ventures acquired 19.9% of the outstanding shares and RC Ventures, members of the Nordstrom family, and Liverpool all supported a merger of the Company, the merger would only require the support of approximately an additional 10% of outstanding shares to be approved.
The vote on this proposal will inform the Board’s independent decision in the exercise of its fiduciary duties as to whether it is advisable and in the best interests of the Company and its shareholders to extend the Rights Plan. Accordingly, the Board retains the authority to extend the Rights Plan, with or without amending one or more of its provisions, whether or not shareholders approve this proposal. Likewise, even if shareholders approve this proposal, the Board may determine not to extend the Rights Plan or, at any time during the term of the Rights Plan, may determine that the Rights Plan should be terminated, further extended, or otherwise amended.
If the Rights Plan is extended, Erik Nordstrom and Peter Nordstrom would be restricted in their acquisition of additional shares of Common Stock except to the extent such acquisitions were permitted by the Rights Plan.
Summary Description of the Rights Plan |
The Rights. The Rights will attach to any shares of Common Stock that become outstanding after the record date for the Rights Plan and prior to the earlier of the Distribution Time (as defined below) and the Expiration Time (as defined below), and in certain other circumstances described in the Rights Plan.
Until the Distribution Time, the Rights are associated with Common Stock and evidenced by Common Stock certificates or, in the case of uncertificated shares of Common Stock, the book-entry account that evidences record ownership of such shares, which will contain a notation incorporating the Rights Plan by reference, and the Rights are transferable with and only with the underlying shares of Common Stock.
Until the Distribution Time, the surrender for transfer of any shares of Common Stock will also constitute the transfer of the Rights associated with those shares. As soon as practicable after the Distribution Time, separate rights certificates will be mailed to holders of record of Common Stock as of the Distribution Time. From and after the Distribution Time, the separate rights certificates alone will represent the Rights.
The Rights are not exercisable until the Distribution Time. Until a Right is exercised, its holder will have no rights as a shareholder of the Company, including the right to vote or to receive dividends.
Separation and Distribution of Rights; Exercisability. Subject to certain exceptions, the Rights become exercisable and trade separately from Common Stock only upon the “Distribution Time,” which occurs upon the earlier of:
•the close of business on the tenth (10th) day after the “Share Acquisition Date” (which is defined as (a) the first date of public announcement that any person or group has become an “Acquiring Person,” which is defined as a person or group that, together with its affiliates and associates, beneficially owns 10% or more of the outstanding shares of Common Stock (with certain exceptions, including those described below) or (b) such other date, as determined by the Board, on which a person or group has become an Acquiring Person) or
•the close of business on the tenth (10th) business day (or such later date as may be determined by the Board prior to such time as any person or group becomes an Acquiring Person) after the commencement of a tender offer or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person.
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PROPOSAL 7: ADVISORY VOTE ON THE EXTENSION OF THE COMPANY’S SHAREHOLDER RIGHTS PLAN UNTIL SEPTEMBER 19, 2025
An Acquiring Person does not include:
•the Company or any subsidiary of the Company;
•any officer, director or employee of the Company or any subsidiary of the Company in his or her capacity as such;
•any employee benefit plan of the Company or of any subsidiary of the Company or any entity or trustee holding (or acting in a fiduciary capacity in respect of) shares of capital stock of the Company for or pursuant to the terms of any such plan or for the purpose of funding other employee benefits for employees of the Company or any subsidiary of the Company; or
•any person or group that, together with its affiliates and associates, as of immediately prior to the first public announcement of the adoption of the Rights Plan, beneficially owns 10% or more of the outstanding shares of Common Stock so long as such person or group continues to beneficially own at least 10% of the outstanding shares of Common Stock and does not acquire shares of Common Stock (excluding as a result of any unilateral grant of any security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers or employees) to beneficially own an amount equal to or greater than the greater of 10% and the sum of the lowest beneficial ownership of such person or group since the public announcement of the adoption of the Rights Plan plus 0.1% of the then outstanding shares of Common Stock.
In addition, the Rights Plan provides that no person or group will become an Acquiring Person as a result of share purchases or issuances directly from the Company or through an underwritten offering approved by the Board. Also, a person or group will not be an Acquiring Person if the Board determines that such person or group has become an Acquiring Person inadvertently and such person or group as promptly as practicable divests a sufficient number of shares so that such person or group would no longer be an Acquiring Person.
Certain synthetic interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying Common Stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended, are treated as beneficial ownership of the number of shares of Common Stock equivalent to the economic exposure created by the derivative position, to the extent actual shares of Common Stock are directly or indirectly held by counterparties to the derivatives contracts.
Anne E. Gittinger, Bruce A. Nordstrom, Erik B. Nordstrom, James F. Nordstrom and Peter E. Nordstrom and their respective affiliates and associates are deemed to be a “group” purely for purposes of the Rights Plan (even if such persons would not be considered to be part of a group under Regulation 13D of the Securities Exchange Act of 1934, as amended).
Expiration Time. The Rights will expire on the earliest to occur of (a) the close of business on September 19, 2023 (the “Final Expiration Time”), (b) the time at which the Rights are redeemed or exchanged by the Company (as described below) or (c) upon the closing of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement that has been approved by the Board before any person or group becomes an Acquiring Person (the earliest of (a), (b) and (c) being herein referred to as the “Expiration Time”).
Flip-in Event. In the event that any person or group (other than certain exempt persons) becomes an Acquiring Person (a “Flip-in Event”), each holder of a Right (other than such Acquiring Person, any of its affiliates or associates or certain transferees of such Acquiring Person or of any such affiliate or associate, whose Rights automatically become null and void) will have the right to receive, upon exercise, Common Stock having a value equal to two times the exercise price of the Right.
For example, at an exercise price of $94.00 per Right, each Right not owned by an Acquiring Person (or by certain related parties) following a Flip-in Event would entitle its holder to purchase $188.00 worth of Common Stock for $94.00. Assuming that Common Stock had a per share value of $18.80 at that time, the holder of each valid Right would be entitled to purchase 10shares of Common Stock for $9.40.
Flip-over Event. In the event that, at any time following the Share Acquisition Date, any of the following occurs (each, a “Flip-over Event”):
•the Company consolidates with, or merges with and into, any other entity, and the Company is not the continuing or surviving entity;
•any entity engages in a share exchange with or consolidates with, or merges with or into, the Company, and the Company is the continuing or surviving entity and, in connection with such share exchange, consolidation or merger, all or part of the outstanding shares of Common Stock are changed into or exchanged for stock or other securities of any other entity or cash or any other property; or
•the Company sells or otherwise transfers, in one transaction or a series of related transactions, fifty percent (50%) or more of the Company’s assets, cash flow or earning power,
each holder of a Right (except Rights which previously have been voided as described above) will have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right.
Anti-dilution Adjustments. The exercise price payable, and the number of shares of Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution:
•in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Common Stock,
•if holders of the Common Stock are granted certain rights, options or warrants to subscribe for Common Stock or convertible securities at less than the current market price of the Common Stock or
•upon the distribution to holders of the Common Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).
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PROPOSAL 7: ADVISORY VOTE ON THE EXTENSION OF THE COMPANY’S SHAREHOLDER RIGHTS PLAN UNTIL SEPTEMBER 19, 2025
With certain exceptions, no adjustment in the exercise price will be required until cumulative adjustments amount to at least one percent (1%) of the exercise price. No fractional shares of Common Stock will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Common Stock on the last trading day prior to the date of exercise.
Redemption; Exchange. At any time prior to the earlier of (i) the tenth (10th) day following the Share Acquisition Date or (ii) the Final Expiration Time, the Company may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to adjustment and payable in cash, Common Stock or other consideration deemed appropriate by the Board). Immediately upon the action of the Board authorizing any redemption or at a later time as the Board may establish for the effectiveness of the redemption, the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price.
At any time before any Acquiring Person, together with all of its affiliates and associates, becomes the beneficial owner of fifty percent (50%) or more of the outstanding shares of Common Stock, the Company may exchange the Rights (other than Rights owned by the Acquiring Person, any of its affiliates or associates or certain transferees of Acquiring Person or of any such affiliate or associate, whose Rights will have become null and void), in whole or in part, at an exchange ratio of one share of Common Stock per Right (subject to adjustment).
Amendment of the Rights Plan. The Company and the Rights Agent may from time to time amend or supplement the Rights Plan without the consent of the holders of the Rights. However, on or after the Share Acquisition Date, no amendment can materially adversely affect the interests of the holders of the Rights (other than the Acquiring Person, any of its affiliates or associates or certain transferees of Acquiring Person or of any such affiliate or associate).
Miscellaneous. While the distribution of the Rights will not be taxable to shareholders or to the Company, shareholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) or for common stock of the acquiring company or in the event of the redemption of the Rights as described above.
Additional Information. A copy of the Rights Plan has been filed with the Securities and Exchange Commission as an exhibit to a registration statement on Form 8-A and a current report on Form 8-K. A copy of the Rights Plan is also available free of charge from the Company.
This description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Plan, which was filed as an exhibit to a Form 8-K filed by the Company with the SEC on September 20, 2022.
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EQUITY COMPENSATION PLANS
The following table provides information as of the fiscal year ended January 28, 2023 about Common Stock that may be issued upon the exercise of options and rights that have been or may be granted to employees and members of the Board under all of the Company’s existing equity compensation plans.
Plan Category | Number of | Weighted-Average | Number of Securities |
Equity compensation plans approved by the Company’s shareholders(a) | 13,694,556(b) | 38 | 16,321,659(c) |
Equity compensation plans not approved by the Company’s shareholders(d) | 993 | 6 | — |
TOTAL | 13,695,549 | 38 | 16,321,659 |
(a) Consist of the 2010 and 2019 EIP and the ESPP. PSUs and RSUs do not have an exercise price and therefore have been excluded from the weighted average exercise price calculation in column (2).
(b) Includes 44,438 of deferred Director awards and 54,558 related to deferred PSUs.
(c) Includes 13,918,267shares from the 2019 EIP, and 2,403,392shares from the ESPP.
(d) Consist of plans assumed in connection with mergers and acquisitions.
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The following table shows the amount of Common Stock beneficially owned (unless otherwise indicated) by holders of more than 5% of the outstanding shares of Common Stock, by our Directors, by the Named Executive Officers,NEOs, and by all Directors and Executive Officers of the Company as a group. Except as otherwise noted, each of the reporting persons has sole voting and investment power with respect to the shares listed. Except as otherwise noted, all information is as of March 11, 2020.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (#) | Percent of Ownership (%) | |||||
| (a) | Peter E. Nordstrom | 3,372,402 | 2.15 | ||||
| (b) | Erik B. Nordstrom | 3,363,762 | 2.14 | ||||
| (c) | Kenneth J. Worzel | 203,914 | * | ||||
| (d) | B. Kevin Turner | 44,122 | * | ||||
| (e) | Anne L. Bramman | 32,041 | * | ||||
| (f) | Brad D. Smith | 29,072 | * | ||||
| (g) | Gordon A. Smith | 22,097 | * | ||||
| (h) | Shellye L. Archambeau | 22,096 | * | ||||
| (i) | Bradley D. Tilden | 17,101 | * | ||||
| (j) | Tanya L. Domier | 16,381 | * | ||||
| (k) | Stacy Brown-Philpot | 12,744 | * | ||||
| (l) | Edmond Mesrobian | 9,203 | * | ||||
| (m) | Kirsten A. Green | 5,090 | * | ||||
| (n) | Glenda G. McNeal | 5,090 | * | ||||
| James L. Donald | — | — | |||||
| Mark J. Tritton | — | — | |||||
| (o) | Directors and Executive Officers as a group (21 persons) | 8,735,460 | 5.52 | ||||
| Greater than 5% Security Holders | |||||||
| (p) | Bruce A. Nordstrom 1617 Sixth Avenue Seattle, Washington 98101-1707 | 25,241,423 | 16.14 | ||||
| (q) | Anne E. Gittinger 1617 Sixth Avenue Seattle, Washington 98101-1707 | 15,403,460 | 9.85 | ||||
| (r) | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 12,029,304 | 7.69 | ||||
| (s) | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 8,236,770 | 5.27 | ||||
Name of Beneficial Owner | Amount and Nature of | Percent of | |
(a) | Erik B. Nordstrom | 3,539,574 | 2.18% |
(b) | Peter E. Nordstrom | 3,483,992 | 2.15% |
(c) | Kenneth J. Worzel | 725,520 | * |
(d) | Alexis DePree | 133,161 | * |
(e) | Michael W. Maher | 90,692 | * |
(f) | Edmond Mesrobian | 78,761 | * |
(g) | Bradley D. Tilden | 67,198 | * |
(h) | Stacy Brown-Philpot | 33,740 | * |
(i) | Kirsten A. Green | 24,547 | * |
(j) | Glenda G. McNeal | 24,547 | * |
(k) | James L. Donald | 19,457 | * |
(l) | Mark J. Tritton | 19,457 | * |
(m) | Amie Thuener O’Toole | 6,043 | * |
(n) | Atticus N. Tysen | 1,910 | * |
(o) | Eric D. Sprunk | — | * |
(p) | Anne L. Bramman | — | * |
(q) | Directors and Executive Officers as a group (18 persons) | 9,680,877 | 5.98% |
| Greater than 5% Security Holders |
|
|
(r) | Bruce A. Nordstrom | 25,241,423 | 15.64% |
(s) | El Puerto de Liverpool, S.A.B. de C.V. | 15,755,000 | 9.76% |
(t) | Anne E. Gittinger | 15,404,437 | 9.54% |
(u) | BlackRock, Inc. | 9,974,728 | 6.18% |
(v) | The Vanguard Group | 9,420,303 | 5.84% |
*Does not exceed 1% of the Company’s outstanding Common Stock.
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2023 Proxy Statement | 84 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Peter E.Erik B. Nordstrom
Amount and nature of beneficial ownership includes:
•2,600,814shares owned by him directly;
•28,691shares held by him in the Company’s 401(k) Plan;
•667,828shares that may be acquired by him through stock options exercisable within 60 days after April10, 2023;
•42,646shares owned by his wife individually; and
•199,595shares held by a trust of which he is the trustee.
(b) Peter E. Nordstrom
Amount and nature of beneficial ownership includes:
•2,471,488shares owned by him directly, of which 230,000shares are pledged as collateral for loans and are in compliance with the Company’s policy regarding pledging;
•36,860shares held by him in the Company’s 401(k) Plan;
•667,828shares that may be acquired by him through stock options exercisable within 60 days after March 11, 2020;
•175,533shares owned by his wife individually;
•494shares held by his wife in the Company’s 401(k) Plan;
•49,060shares held by trusts of which he is the trustee; and
•82,728shares held by trusts of which he is the trustee, for which he has sole voting and dispositive power and for which he disclaims beneficial ownership.
(c) Kenneth J. Worzel
Amount and nature of beneficial ownership includes:
•88,239shares owned by him directly, of which 457,582 shares are pledged as collateral for loans and are in compliance withdirectly;
•6,310 nonvoting stock units held under the Company’s policy regarding pledging;
•5,326shares held by him in the Company’s 401(k) Plan;
•625,645shares that may be acquired by him through stock options exercisable within 60 days after March 11, 2020;
(d) Alexis DePree
Amount and nature of beneficial ownership includes:
•75,081shares owned by her directly; and
•58,080shares that may be acquired by her through stock options exercisable within 60 days after April10, 2023.
(e) Michael W. Maher
Amount and nature of beneficial ownership includes:
•23,311shares owned by him directly;
•67,381shares that may be acquired by him through stock options exercisable within 60 days after March 11, 2020.April10, 2023.
(f) Edmond Mesrobian
Mr. Mesrobian served as the Company’s Chief Technology and Information Officer until October 14, 2022. The following beneficial ownership information is based on information contained in the last Form 4 filed by Mr. Mesrobian with the SEC prior to October 14, 2022, adjusted to give effect to subsequent transactions through April10, 2023 of which the Company is aware in connection with employment-related equity awards:
•78,761shares owned by him directly.
(g) Bradley D. Tilden
Amount and nature of beneficial ownership includes:
•52,515shares held by a family trust, of which he is a trustee and beneficiary.
•14,683 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events, including his retirement from the Board.
(h) Stacy Brown-Philpot
Amount and nature of beneficial ownership includes:
•3,444shares owned by her directly; and
•30,296 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events, including her retirement from the Board.
(i) Bradley D. Tilden
Amount and nature of beneficial ownership includes:
•24,547shares owned by her directly.
(j) Glenda G. McNeal
Amount and nature of beneficial ownership includes:
•24,547shares owned by her directly.
(k) James L. Donald
Amount and nature of beneficial ownership includes:
•19,457shares held byin a family trust of which he is a trustee and beneficiary.
(l) Mark J. Tritton
Amount and nature of beneficial ownership includes:
•19,457shares owned by herhim directly.
(m) Amie Thuener O’Toole
Amount and nature of beneficial ownership includes:
•6,043shares owned by her directly; and
(n) Atticus N. Tysen
Amount and nature of beneficial ownership includes:
•1,910shares owned by him directly.
(o) Eric D. Sprunk
Mr.Sprunk was appointed on April16, 2023 and naturewill receive a common stock award compensation as described under the caption “Director Compensation and Stock Ownership Guidelines” of this Proxy Statement.
(p) Anne L. Bramman
Ms. Bramman served as the Company’s Chief Financial Officer until December 2, 2022. The following beneficial ownership includes:
•0shares owned by her directly.
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(q) Directors and Executive Officers as a group (21(18 persons)
Collectively, the combined amount and nature of beneficial ownership for the Directors and all Executive Officers include:
•5,918,364shares owned directly, of which 705,977 230,000shares are pledged as collateral for third party obligations;
•218,608shares owned by spouses and trusts of which the respective Director or Executive Officer is a trustee, or a trustee and beneficiary;
•44,979 nonvoting stock units held by participating Directors under the Directors Deferred Compensation Plan;
•6,310 nonvoting stock units held by participating Executive Officers under the Nordstrom Deferred Compensation Plan;
•82,776shares held by participating Executive Officers and their eligible spouses in the Company’s 401(k) Plan; and
•2,682,708shares that may be acquired by the Executive Officers as a group through stock options exercisable within 60 days after March 11, 2020.
(r) Bruce A. Nordstrom
•Pursuant to a Schedule 13G filing made with the SEC, as of December31, 2019,2022, the aggregate amount beneficially owned by Mr. Nordstrom includes:
•24,236,227shares for which he has sole power to vote or to dispose or to direct disposition; and
•1,005,196shares for which he has shared power to vote or to dispose or to direct disposition.
(s) El Puerto de Liverpool, S.A.B. de C.V.
Pursuant to a Schedule 13G filing made with the SEC, as of September 8, 2022, the aggregate amount beneficially owned by El Puerto de Liverpool, S.A.B. de C.V. includes:
•15,755,00shares for which it has sole power to vote or to dispose or to direct disposition.
(t) Anne E. Gittinger
Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2019,2022, the aggregate amount beneficially owned by Ms. Gittinger includes:
•15,404,437shares for which she has sole power to vote or to dispose or to direct disposition.
(u) BlackRock, Inc.
Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2019,2022, the aggregate amount beneficially owned by The Vanguard GroupBlackRock, Inc. includes:
•9,618,987shares for which it has the sole power to vote or to direct the vote; and
•9,974,728shares for which it has sole power to vote or to dispose or to direct disposition; and
(v) The Vanguard Group
Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2019,30, 2022, the aggregate amount beneficially owned by Blackrock, Inc.The Vanguard Group includes:
•48,798shares for which it has soleshared power to vote or to direct the vote;
•159,867shares for which it has shared power to dispose or to direct disposition; and
•9,260,436shares for which it has sole power to dispose or to direct disposition.
Delinquent Section 16(a) Reports
Based upon a review of reports filed with the SEC and written representations that no other reports were required, the Company believes that during the fiscal year ended February 1, 2020January 28, 2023 all of our Directors, Executive Officers and owners of in excess of 10% of Common Stock complied with the filing requirements of Section 16(a) of the Exchange Act, except that Shellye Archambeau and Stacy Brown-Philpot each filed one report on Form 4 was filed late on behalf of Michael Maher relating to a deferred dividend payment to the Director’s Deferred Compensation Plan.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Review and Approval Process
We maintain policies and procedures regarding the identification, review and approval of related party transactions. In compliance with SEC rules, the Corporate Governance and Nominating CommitteeCGNC reviews and approves or disapproves any transaction or series of related transactions in which: (1) the amount involved exceeds $120,000, (2) the Company or any of its subsidiaries is a participant, and (3) a related party (a Director or Executive Officer of the Company, any nominee for director,Director, any greater than 5% shareholders and any immediate family member of such persons) has a direct or indirect material interest. When considering a
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Related Party Transactions
During the fiscal year ended February 1, 2020.
OTHER MATTERS
The Board knows of no other matters that will be presented at the Annual Meeting. However, if any other matters are properly presented at the Annual Meeting or any convening or reconvening of the Annual Meeting upon an adjournment or postponement of the Annual Meeting, it is the intention of the persons named as proxies to vote in accordance with their best judgment.
2024 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION
Requirements and Deadlines for Submission of Proxy
Proposals, Nomination of Directors, and Other Business
of Shareholders
If a shareholder wants the Company to include a shareholder proposal in our Proxy Statement for the 20212024 Annual Meeting of Shareholders pursuant to SEC Rule 14a-814a-8 promulgated under the Securities Exchange Act, of 1934 (“Exchange Act”), our Corporate Secretary must receive the proposal at our principal executive offices no later than December 8, 2020.[●], 2023. Any such proposal must comply with all the requirements of Rule 14a-8.
If a shareholder intends to solicit proxies for a Director nominee other than the Company’s nominees in accordance with Rule 14a-19 promulgated under the Exchange Act for the 2024 Annual Meeting of Shareholders, our Corporate Secretary must receive notice of such intention at our executive offices no later than the close of business on [●], 2024. If the 2024 Annual Meeting changes by more than 30 calendar days from the date of the Annual Meeting, such notice must instead be provided by the later of 60 calendar days prior to the date of the 2024 Annual Meeting or the 10th calendar day following public announcement by the Company of the date of the 2024 Annual Meeting. Any such notice of intent to solicit proxies must comply with all the requirements of Rule 14a-19. The requirements of Rule 14a-19 are in addition to the requirements under our Bylaws with respect to advance notice of Director nominations.
Under our Bylaws, shareholders must follow certain procedures to nominate a person for election as a directorDirector at an annual or special meeting, or to introduce an item of business at an annual meeting. Under these advance-noticeadvance-notice procedures, shareholders must submit the proposed nominee or item of business by delivering a notice to the Corporate Secretary of the Company at our principal executive offices. We must receive notice as follows:
•We must receive notice of a shareholder’s intention to introduce a nomination or proposed item of business (other than a proposal pursuant to Rule 14a-8) for an annual meeting not less than 90 days nor more than 120 days before the first anniversary of the prior year’s meeting. Assuming that the Annual Meeting is held on schedule, weWe must receive notice pertaining to the 20212024 Annual Meeting of Shareholders no earlier than January 20, 2021[●], 2024 and no later than February 19, 2021.
•However, if we hold the 20212024 Annual Meeting of Shareholders on a date that is not within 30 days before or after such anniversary date, we must receive the notice no later than ten days after the earlier of the date we first provide notice of the meeting to shareholders (in the case of proposed items of business) or announce it publicly.
•If we hold a special meeting to elect directors,Directors, we must receive a shareholder’s notice of intention to introduce a nomination no later than ten days following the day on which notice of the annual meeting was mailed to shareholders.
All Director nominations and items of business, other than shareholder proposals made pursuant to Rule 14a-8 under the Exchange Act, must comply with the requirements of the Company’s Bylaws. Our Bylaws provide that notice of a proposed nomination must include certain information about the nominating shareholder, related parties and theeach proposed nominee, as well as a written consent of the proposed nominee to serve if elected. A notice of a proposed item of business must include a description of and the reasons for bringing the proposed business to the meeting, any material interest of the shareholder in the business and certain other information about the shareholder.proposing shareholder and related parties. Any notice (other than a proposal pursuant to Rule 14a-8)14a-8) that is received after the times specified herein for proposed items of business will be considered untimely under Rule 14a-4c14a-4(c) under the Exchange Act. The persons named in the proxy for the meeting may exercise their discretionary voting power with respect to all such matters, including voting against them. All director nominations and shareholder proposals, other than shareholder proposals made pursuant to Rule 14a-8 under the Exchange Act, must comply with the requirements of the Company’s Bylaws. You may obtain a copy of the Company’s Bylaws at no cost from the Company’s Corporate Secretary or online at
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FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
1. | |
Why am I receiving these materials? |
We have delivered printed versions of these materials to you by mail, because you were a shareholder of Nordstrom, Inc.the Company as of March 11, 2020, the Record Date, and were entitled to receive notice of the 20202023 Annual Meeting of Shareholders and to vote on matters that will be presented at the Annual Meeting.
2. | |
What items will be voted on at the Annual Meeting? |
Shareholders will vote on the following matters at the Annual Meeting: | Board | Page Reference (for more detail): | |
Proposal 1 | To elect | FOR each Director | |
Proposal 2 | To ratify the appointment of Deloitte | FOR | |
Proposal 3 | To conduct an advisory vote regarding the compensation of our NEOs | FOR | |
Proposal 4 | To conduct an advisory vote regarding the frequency of future advisory votes on the compensation of our Named Executive Officers | FOR “1 YEAR” | |
Proposal | To approve | FOR | |
Proposal | To approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan | FOR | |
Proposal 7 | To conduct an advisory vote on the extension of the Company’s shareholder rights plan until September19, 2025 | FOR | |
Other | Such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof | ||
3. | |
What is the date and time of the Annual Meeting? |
Date & Time: [●], 2023 at [●] [a/p].m. Pacific Daylight Time Virtual Meeting Access: [●]
This Proxy Statement was first mailed to shareholders on or about April 7, 2020.[●], 2023. It is furnished in connection with the solicitation of proxies by the Board of Directors of Nordstrom, Inc. to be voted during the Annual Meeting for the purposes set forth in the accompanying Notice of Annual Meeting.
4. | |
How do I participate in the Meeting? |
This year’s Annual Meeting will be accessible through the internet. We have adopted a virtual format for our Annual Meeting to make participation accessible for shareholders from any geographic location with internet connectivity. We have worked to offer the same participation opportunities as were provided at the in-personin-person portion of our past meetings while further enhancing the online experience available to all shareholders regardless of their location. The accompanyingThese proxy materials include instructions on how to participate in the meeting and how you may vote your shares of Company stock.
You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on March 11, 2020, the record date,Record Date or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at
Whether or not you participate inplan to attend the Annual Meeting, it is important that your shares be part of the voting process. You may logWe strongly encourage you to vote before the meeting to ensure that your voice is heard. To vote during the meeting, shareholders of record can click on the ballot posted on the virtual meeting site and follow the instructions provided on the ballot. If you are a street name shareholder, you will need to
This year’s shareholdersshareholder question and answer session will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit a question in advance of the meeting at
| 2023 Proxy Statement | 88 |
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
We encourage you to access the Annual Meeting before it begins. Online check-incheck-in will start shortly before the meeting on May 20, 2020. If[●], 2023. Should you have any difficulty accessing the meeting, please call (800)
5. | |
What is a proxy statement, and what is | |
A proxy statement is a document that SEC rules require us to provide you designatewhen we ask you to vote on certain matters at a meeting of our shareholders or when we ask you to sign a proxy designating certain individuals to vote on those matters on your behalf. A proxy is your legal designation of another person to vote yourthe shares that other person is calledyou own at a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. If you vote online or completemeeting of our shareholders. By signing the proxy card enclosed with the materials sent by mailwe provide to give us your proxy,you, you will have designated Anne L. Bramman,designate Michael W. Maher, our Interim Chief Financial Officer and
The Company includinghas retained Innisfree M&A Incorporated (“Innisfree”) to solicit proxies. Under our Board Committee structureagreement with Innisfree, Innisfree will receive a fee of up to $[●]. The Company also agreed to indemnify Innisfree against certain liabilities relating to, or arising out of, its retention. Innisfree will solicit proxies by mail, telephone, facsimile and executive compensation.
6. | |
What is the difference between a shareholder of record and a street name shareholder? |
Many Company shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held as a shareholder of record and those held in street name.
•Shareholders of record:
If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered the “shareholder of record” or a “registered shareholder,” and the•Street name shareholders:
If your shares are held in a stock brokerage account or by a bank, trustee or nominee, you are considered the beneficial owner of shares held in “street name,” and the8. | |
How do I cast my vote? |
We encourage you to vote in advance of the meeting on the internet or by telephone. It is convenient, and it saves us significant postage and processing costs. In addition, when you vote on the internet or by telephone, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. The method by which you vote your proxy will not limit your right to vote at the Annual Meeting if you decide to attend in person.
Shareholders of record:
The internet and telephone voting procedures are designed to verify that you are a shareholder of record by using a control number and allowing you to confirm that your voting instructions have been properly recorded. Internet and telephone voting for shareholders of record are available 24 hours a day. You can vote by any of the following methods:
| ||||||||
Online At https://www.proxyvotenow.com/jwn | ||||||||
| Toll-free Phone Call 1-855-260-7729 (U.S. or Canada) or 1-575-215-3286 | |||||||
| | |||||||
| ||||||||
Sign, date and return | in the envelope provided to [●] |
Street name shareholders:
You may vote by the method explained on the proxy card or theShareholders holding shares invested in the Company’s 401(k) Plan:
If you participate in the Company’s 401(k) Plan, the number of shares of Common Stock in your account as of the Record Date are reflected on your proxy notice and may be voted as previously describedShareholders holding shares purchased through the Company’s Employee Stock Purchase Plan
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FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
9. | |
What does it mean if I receive more than one |
This means that you have multiple accounts holding Nordstrom shares. These may include: accounts with our transfer agent, Computershare; shares held in the Nordstrom 401(k) Plan or purchased through the Employee Stock Purchase Plan;ESPP; and accounts with a broker, bank or other holder of record. Please vote all Notices, voting instruction forms and proxy cards that you receive to ensure that all of your shares are voted.
10. | Why did multiple shareholders at my address only receive one package of proxy materials? |
SEC rules allow us to use a procedure called “householding” to deliver only one copy of our Notice, and for those shareholders that received a paper copy of proxy materials in the mail, one copy of our 2022 Annual Report, to multiple shareholders who share the same address (if they appear to be members of the same family) unless we have received contrary instructions from an affected shareholder. Shareholders who participate in householding will continue to receive proxy cards if they received a paper copy of proxy materials in the mail. By using the householding process, we reduce our printing costs, mailing costs and fees, and reduce the environmental impact of our annual meeting. If you are a shareholder, share an address and last name with one or more other shareholders, and would like to revoke your householding consent, or you are a shareholder eligible for householding and would like to participate, please contact Broadridge, either by calling toll free at (866) 540-7095 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of receipt of the revocation of your consent. A number of brokerage firms have also instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information about householding.
11. | |
What is a quorum and what is the voting requirement to approve each of the proposals? |
We will have a quorum and will be able to conduct the business of the Annual Meeting if at least 78,173,08480,711,896 shares, a majority of the outstanding shares of Common Stock as of the Record Date, are present at the Annual Meeting, either in person or by proxy. Your shares will be counted toward the number needed for a quorum if you: (i) vote on the internet or by telephone; (ii) submit a valid proxy card or voting instruction form; or (iii) in the case of a shareholder of record, attend the Annual Meeting and vote your shares in person.
To elect directorsDirectors and adopt the other proposals, the following votes are required:
Proposal | Vote Required | Discretionary Voting | |
Election of | Plurality of Votes Cast | No | |
Ratification of the | Majority of Votes Cast | Yes | |
Advisory | Majority of Votes Cast | No | |
Advisory vote regarding the frequency of future advisory votes on Executive Compensation | Majority of Votes Cast | No | |
Approval of | Majority of Votes Cast | No | |
Approval of the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan | Majority of Votes Cast | No | |
Advisory vote on the extension of the Company’s shareholder rights plan until September19, 2025 | Majority of Votes Cast | No |
Under Washington corporation law and our Articles of Incorporation and Bylaws, the approval of any corporate action taken at a shareholder meeting is based on votes cast. “Votes cast” means votes actually cast “for” or “against” a particular proposal, whether by proxy or in person. Broker nonvotes (broker nonvotes and discretionary voting are explained in the answeranswers to Question
Washington corporation law does not receiveprovide shareholders any dissenters’ or appraisal rights with respect to the requisite votes, that Director’s term will endmatters to be voted on at the date on which an individual is selected by the Board to fill the position held by such Director or 90 days after the date the election results are determined, whichever occurs first. You may vote “for,” “against” or “abstain”Annual Meeting, and shareholders do not have cumulative voting rights with respect to the election of directors.
The Board recommends a vote FOR each nominee.
•Election of Eleven Directors: Because the Company received a notice from a shareholder stating its intention to nominate two candidates for election to the Board at the Annual Meeting, the election of directors is contested under our Bylaws even though such shareholder subsequently withdrew its notice. As a result, directors will be elected by a plurality of votes cast. A plurality of votes cast means that the eleven nominees receiving the highest number of votes in favor of their election will be elected to our Board. You may vote “for” or “withhold” from any director.
| 2023 Proxy Statement | 90 |
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
•Ratification of the Appointment of Independent Registered Public Accounting Firm:
Under the Company’s Bylaws, the votes cast “for” must exceed the votes cast “against” to ratify the appointment of Deloitte as the Company’s independent registered public accounting firm for the fiscal year ending•Advisory Vote Regarding Executive Compensation:
The votes cast “for” must exceed the votes cast “against” to approve, on an advisory basis, the Company’s executive compensation program. You may vote “for,” “against” or “abstain” on this proposal.•Approval an amendment toof the Nordstrom, Inc. Amended and Restated 2019 Equity Incentive Plan and approval of the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan:
•Advisory Vote on the Extension of these proposals.
The Board recommends a vote of “1 Year” for the following proposal.
•Advisory Vote Regarding the Frequency of Future Advisory Votes on Executive Compensation: A plurality of votes cast means the highest number of “for” votes will be the advisory vote of the shareholders. You may vote “1 Year,” “2 Years,” “3 Years,” or abstain on this proposal.
12. | |
Can I change my mind after I vote? |
Yes, if you are a shareholder of record and vote by proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. You may do this by:
•delivering written notice of revocation to the Corporate Secretary at 1617 Sixth Avenue, Seattle, Washington 98101, Attn: Corporate Secretary that is received on or before 5:00 p.m. Pacific Daylight Time on [●], 2023;
•voting again on the internet or by telephone prior to the Annual Meeting; or
•signing another proxy card with a later date and mailing it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, prior to the Annual Meeting; or
•delivering your proxy or casting a ballot during the meeting.
If you are a street name shareholder, you should contact your bank, broker or other holder of record to revoke your proxy or change your vote.
13. | |
What if I do not return my proxy card or voting instruction form or return my proxy card and do not provide voting instructions? |
•Shareholders of record:
If you are a registered shareholder and do not vote by internet or phone or return your voted proxy card, your shares will not be voted. If you submit•Street name shareholders:
If you are a beneficial owner whose shares are held by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares for the ratification of Deloitte•Shareholders with shares invested in the Company’s 401(k) Plan:
If your vote of shares held through the Company’s 401(k) Plan is not received by 11:59 p.m. Eastern Daylight Time on14. | |
Will abstentions or broker nonvotes affect the voting results? |
If you abstain from voting on a proposal, or if a broker or bank casts a discretionary vote on the ratification of Deloitte but indicates it does not have discretionary authority to vote on aanother proposal, the shares will be counted for the purpose of determining if a quorum is present, but will have no effect on the other proposals to be considered at the Annual Meeting since these actions do not represent votes cast by shareholders.
15. | |
Who will count the vote? |
[●] was appointed by the Board to tabulate the vote and act as Inspector of Election. Information about Broadridge is available at
91 | 2023 Proxy Statement |
|
Table of individual shareholders are kept confidential from the Company’s
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
16. | |
Where can I find the voting results of the Annual Meeting? |
We intend to announce preliminary voting results at the Annual Meeting and publish final results on a current report on Form 8-K8-K within four business days of the Annual Meeting. The Form 8-K8-K will be available online under the “SEC Filings” tab at
17. | How can I communicate with the Board? |
Shareholders and other interested parties may communicate with Directors by contacting the Corporate Secretary’s Office at:
| Telephone: 206-303-2541 | |
| E-mail: board@nordstrom.com | |
| Mail: Nordstrom, Inc. 1617 Sixth Avenue Seattle, Washington 98101 Attn: Corporate Secretary |
The Corporate Secretary will relay the question or message to the specific Director with whom the shareholder or interested party wishes to communicate.
If no specific Director is requested, the Corporate Secretary will relay the question or message to the Chairman. Certain items that are unrelated to the duties and responsibilities of the Board, such as business solicitations, advertisements, junk mail and other mass mailings, will not be relayed to Directors.
The AFC has established procedures to respond to possible concerns about ethics and accounting-related practices. To report your concerns, you may use the Company’s confidential Whistleblower Hotline at:
| Telephone: 1-888-832-8358 | |
| Internet: ethicspoint.com |
Your concerns will be investigated and communicated to the AFC, as necessary.
18. | |
What if I have additional questions that are not addressed here? | |
If you have any questions or require any assistance regarding our Annual Meeting, please contact our proxy solicitor:
Innisfree M&A Incorporated
Shareholders may call Nordstrom Investor Relations at 206-303-3200, e-mail Investor Relations at invrelations@nordstrom.com, ortoll-free +1 (877) 750-8312
Banks and Brokers may call the Corporate Secretary’s Office at 206-373-4381.collect +1 (212) 750-5833
| 2023 Proxy Statement | 92 |
APPENDIX A: RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
Incentive Adjusted ROIC and Incentive Adjusted EBIT
We believe that Incentive Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our business to generate returns over time. In addition, we have incorporated it in our executive incentive measures and we believe it is an important indicator of shareholders’ return over the long term.
Beginning in 2019, income statement activity for adjusted net operating profit and balance sheet amounts for average invested capital are measured under the Accounting Standards Update 2018-11,
We define Incentive Adjusted ROIC as our adjusted net operating profit after tax divided by our average invested capital. Incentive Adjusted EBIT represents net earnings before income tax expense, interest expense and interest income, and contemplates non-operating related adjustments. These metrics are not measures of financial performance under GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial measures. Our method of determining non-GAAPcalculating a non-GAAP financial measuresmeasure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. The financial measures calculated under GAAP which are most directly comparable to Incentive Adjusted EBIT and Incentive Adjusted ROIC are net earnings and return on assets. The following is a reconciliation ofshows the components to reconcile the return on assets calculation to Incentive Adjusted ROIC:
| 12 Fiscal Months Ended | |||||||||||||||||||
| ($ in millions) | February 1, 2020 | February 2, 2019 | February 3, 2018 | January 28, 2017 | January 30, 2016 | ||||||||||||||
| Net earnings | $ | 496 | $ | 564 | $ | 437 | $ | 354 | $ | 600 | |||||||||
| Add: income tax expense | 186 | 169 | 353 | 330 | 376 | ||||||||||||||
| Add: interest expense, net | 102 | 104 | 136 | 121 | 125 | ||||||||||||||
| Earnings before interest and income tax expense | 784 | 837 | 926 | 805 | 1,101 | ||||||||||||||
| Add: non-operating related adjustments | 24 | 72 | 26 | 271 | 145 | ||||||||||||||
| Incentive Adjusted EBIT | 808 | 909 | 952 | 1,076 | 1,246 | ||||||||||||||
| Add: interest income | 10 | 15 | 5 | 1 | — | ||||||||||||||
| Incentive Adjusted ROIC earnings before interest and income tax expense | 818 | 924 | 957 | 1,077 | 1,246 | ||||||||||||||
Add: operating lease interest(a) | 101 | — | — | — | — | ||||||||||||||
| Add: rent expense, net | — | 251 | 250 | 202 | 176 | ||||||||||||||
Less: estimated depreciation on capitalized operating leases(b) | — | (134 | ) | (133 | ) | (108 | ) | (94 | ) | ||||||||||
| Adjusted net operating profit | 919 | 1,041 | 1,074 | 1,171 | 1,328 | ||||||||||||||
| Less: estimated income tax expense | (244 | ) | (248 | ) | (480 | ) | (444 | ) | (512 | ) | |||||||||
| Adjusted net operating profit after tax | $ | 675 | $ | 793 | $ | 594 | $ | 727 | $ | 816 | |||||||||
| Average total assets | $ | 9,765 | $ | 8,282 | $ | 8,055 | $ | 7,917 | $ | 9,076 | |||||||||
Add: average estimated asset base of capitalized operating leases(b) | — | 2,018 | 1,805 | 1,512 | 1,236 | ||||||||||||||
| Less: average deferred property incentives and deferred rent liability | — | (616 | ) | (644 | ) | (644 | ) | (548 | ) | ||||||||||
Less: average deferred property incentives in excess of right-of-use assets(c) | (307 | ) | — | — | — | — | |||||||||||||
| Less: average non-interest-bearing current liabilities | (3,439 | ) | (3,479 | ) | (3,261 | ) | (3,012 | ) | (2,993 | ) | |||||||||
| Add: non-operating related adjustments | — | 4 | 3 | 90 | 623 | ||||||||||||||
| Average invested capital | $ | 6,019 | $ | 6,209 | $ | 5,958 | $ | 5,863 | $ | 7,394 | |||||||||
| Return on assets | 5.1 | % | 6.8 | % | 5.4 | % | 4.5 | % | 6.6 | % | |||||||||
| Incentive Adjusted ROIC | 11.2 | % | 12.8 | % | 10.0 | % | 12.4 | % | 11.0 | % | |||||||||
| 12 Fiscal Months Ended | |||||||||||||||||||
($ in millions) | February 2, 2019 | February 1, 2020 | January 30, 2021 | January 29, 2022 | January 28, 2023 | |||||||||||||||
Net earnings (loss) | $ | 564 |
| $ | 496 |
| $ | (690 | ) | $ | 178 |
| $ | 245 |
| |||||
Income tax expense (benefit) |
| 169 |
|
| 186 |
|
| (538 | ) |
| 68 |
|
| 92 |
| |||||
Interest expense, net |
| 104 |
|
| 102 |
|
| 181 |
|
| 246 |
|
| 128 |
| |||||
EBIT |
| 837 |
|
| 784 |
|
| (1,047 | ) |
| 492 |
|
| 465 |
| |||||
Non-operating related adjustments |
| 72 |
|
| 24 |
|
| — |
|
| (32 | ) |
| 38 |
| |||||
Interest income |
| 15 |
|
| 10 |
|
| 3 |
|
| 1 |
|
| 10 |
| |||||
Operating lease interest(a) |
| — |
|
| 101 |
|
| 95 |
|
| 87 |
|
| 85 |
| |||||
Rent expense, net |
| 251 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Estimated depreciation on capitalized operating leases(b) |
| (134 | ) |
| — |
|
| — |
|
| — |
|
| — |
| |||||
Adjusted net operating profit (loss) |
| 1,041 |
|
| 919 |
|
| (949 | ) |
| 548 |
|
| 598 |
| |||||
Estimated income tax (expense) benefit(c) |
| (248 | ) |
| (244 | ) |
| 416 |
|
| (150 | ) |
| (162 | ) | |||||
Adjusted net operating profit (loss) after tax | $ | 793 |
| $ | 675 |
| $ | (533 | ) | $ | 398 |
| $ | 436 |
| |||||
Average total assets | $ | 8,282 |
| $ | 9,765 |
| $ | 9,718 |
| $ | 9,301 |
| $ | 9,069 |
| |||||
Average estimated asset base of capitalized operating leases(b) |
| 2,018 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Average deferred property incentives and deferred rent liability |
| (616 | ) |
| (307 | ) |
| — |
|
| — |
|
| — |
| |||||
Average deferred property incentives in excess of |
| — |
|
| — |
|
| (276 | ) |
| (232 | ) |
| (197 | ) | |||||
Average non-interest-bearing current liabilities |
| (3,479 | ) |
| (3,439 | ) |
| (3,138 | ) |
| (3,352 | ) |
| (3,185 | ) | |||||
Non-operating related adjustments |
| 4 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Average invested capital | $ | 6,209 |
| $ | 6,019 |
| $ | 6,304 |
| $ | 5,717 |
| $ | 5,687 |
| |||||
Return on assets |
| 6.8 | % |
| 5.1 | % |
| (7.1 | %) |
| 1.9 | % |
| 2.7 | % | |||||
Incentive Adjusted ROIC |
| 12.8 | % |
| 11.2 | % |
| (8.5 | %) |
| 7.0 | % |
| 7.7 | % | |||||
(a)
(b)
Capitalized operating leases is our best estimate of the asset base we would record for our leases that are classified as operating under the previous lease standard if they had met the criteria for a finance lease or we had purchased the property. The asset base for each quarter is calculated as the trailing four quarters of rent expense multiplied by eight, a commonly used method to estimate the asset base we would record for our capitalized operating leases.(c) Estimated income tax (expense) benefit is calculated by multiplying the adjusted net operating profit (loss) by the effective tax rate for the trailing twelve month period. The effective tax rate is calculated by dividing income tax expense (benefit) by earnings (loss) before income taxes for the same trailing twelve month periods.
A-1 | 2023 Proxy Statement |
|
APPENDIX A: RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
(d)For leases with property incentives that exceed the right-of-useright-of-use assets, we reclassify the amount from assets to other current liabilities and other liabilities. As a result of the adoption of the Lease Standard, weThe current and non-current amounts are used to reduce average total assets, as this better reflects how we manage our business.
The following is a reconciliation of net earnings (loss) to Incentive Adjusted EBIT:
12 Fiscal Months Ended | ||||||||||||||||
($ in millions) | February 2, 2019 | February 1, 2020 | January 30, 2021 | January 29, 2022 | January 28, 2023 | |||||||||||
Net earnings (loss) | $ | 564 | $ | 496 | $ | (690 | ) | $ | 178 | $ | 245 | |||||
Income tax expense (benefit) |
| 169 |
| 186 |
| (538 | ) |
| 68 |
| 92 | |||||
Interest expense, net |
| 104 |
| 102 |
| 181 |
|
| 246 |
| 128 | |||||
EBIT |
| 837 |
| 784 |
| (1,047 | ) |
| 492 |
| 465 | |||||
Non-operating related and other adjustments(a) |
| 72 |
| 24 |
| — |
|
| 174 |
| 59 | |||||
Incentive Adjusted EBIT |
| 909 |
| 808 |
| (1,047 | ) |
| 666 |
| 524 | |||||
(a) Beginning in the 12 fiscal months ended January 29, 2022, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to be more reflective of business performance.
| 2023 Proxy Statement | A-2 |
ARTICLE 1.INTRODUCTION
The purpose of the Plan is to promote the long-termlong-term success of the Company and its Subsidiaries. Specific objectives are intended to encourage the attraction and retention of Employees and Nonemployee Directors, focus such individuals’ results on the Company’s critical, long-rangelong-range goals and align such individuals’ interests with those of the Company’s shareholders.
The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute incentive stock options (ISOs), for employeesEmployees only, or nonqualified stock options (NSOs)), stock appreciation rights (SARs), Unrestricted Shares, Restricted Shares, Restricted Stock Units and Performance Share Units.
The Plan replaces the Nordstrom, Inc. 2010 Equity Incentive Plan (as amended and restated February 16, 2017) and the Nordstrom, Inc. 2002 Nonemployee Director Stock Incentive Plan (as amended on November 14, 2007).
ARTICLE 2.ADMINISTRATION
2.1
Committee Composition.The Compensation, People and Culture Committee shall administer the Plan.2.2
Committee Responsibilities.The Committee, in its absolute and sole discretion, shall (a) select the Employees and Nonemployee Directors who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan and (d) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee may delegate its authority hereunder to one or more Subcommittees or Company officers, to the extent permitted under the Code, applicable laws and regulations and any applicable exchange rules; actions taken by any Subcommittee or officers shall be subject to review by the full Committee. The Committee’s determinations under the Plan shall be final and binding on all persons.2.3
Committee for2.4
Compensation Department Powers and Duties. Until such time as the Committee shall modify, revoke or rescind such authority, the Company’s Compensation department, or any successor department within the Company, regardless of name, has the powers and duties set forth below. Determinations made by the Compensation department (or other department) under this Section 2.4 shall be final and binding on all persons, but may, in the Committee’s absolute and sole discretion, be reviewed by the Committee. The powers and duties delegated by the Committee hereunder are to:(a)work with Plan service providers to ensure the effective administration of the Plan;
(b)determine whether a Participant’s disability, as defined by a qualified medical professional acceptable to the Company’s Compensation department (or other department), qualifies as Disability as defined under the Plan; and
(c) perform any and all tasks, duties, and responsibilities delegated by the Company or the Committee.
The Company’s Compensation department has authority to interpret the terms of the Plan and any Award in carrying out the powers and duties as set forth above.
ARTICLE 3.SHARES AVAILABLE FOR AWARDS AND GENERAL VESTING REQUIREMENTS
3.1
Basic Limitation.Shares issued pursuant to the Plan shall be authorized but unissued shares. The aggregate number of Shares available for Awards of Options, SARs, Unrestricted Shares, Restricted Shares, Restricted Stock Units or Performance Share Units granted under the Plan shall not exceed (a)3.2
Additional Shares.If any Shares covered by an Award of Options, SARs, Restricted Shares, Restricted Stock Units or Performance Share Units terminate, lapse or are forfeited or cancelled, or such Award is otherwise settled without the delivery of the full number of Shares underlying the Award, then the Shares covered by such Award, or to which such Award relates, to the extent of any such forfeiture, termination, lapse, cancellation, etc., shall again be, or shall become, available for issuance under the Plan; provided,B-1 | 2023 Proxy Statement |
|
APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
however, that Shares (a) delivered in payment of the exercise price of an Award, (b) not issued upon the net settlement or net exercise of SARs, (c) delivered to or withheld by the Company to pay withholding taxes related to an Award, or (d) purchased in the open market using option proceeds, shall not become available again for issuance under this Plan. Shares that again become available for issuance under the Plan pursuant to this Section 3.2 shall be added to the number of Shares available under Section 3.1 in the same ratios as applied to them at the time they were originally granted (e.g., 1.6 (one point six) Shares for each Share attributable to previously granted Awards of Restricted Shares, Restricted Stock Units or Performance Share Units and 1 (one) Share for each Share attributable to previously granted Option Awards or SARs).
3.3
Additional Shares from Prior3.4
General Vesting Requirements.Awards granted under the Plan shall vest no earlier than the first anniversary of the date of grant. Notwithstanding the previous sentence, the Committee may grant Awards representing up to an aggregate maximum of five percent (5%) of the available Share reserve authorized for issuance under the Plan pursuant to Section 3.1 (subject to adjustment under Section 3.3) without regard to the foregoing minimum vesting requirement.3.5Nonemployee Director Award Limit. Notwithstanding any provision to the contrary in the Plan or in any policy of the Company regarding non-employee director compensation, the sum of the grant date fair value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all equity-based Awards and the maximum amount of cash that may become payable to an individual as compensation for Services as a Nonemployee Director during any calendar year shall not exceed $750,000. The Committee may make exceptions to this limit for Nonemployee Directors in extraordinary circumstances, as the Committee may determine in its discretion, provided that the Nonemployee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving Nonemployee Directors.
ARTICLE 4.ELIGIBILITY
4.1
Awards. Employees and Nonemployee Directors shall be eligible for the grant of Awards of NSOs, SARs, Unrestricted Shares, Restricted Shares, Restricted Stock Units or Performance Share Units.4.2
Incentive Stock Options. Only Employees who areARTICLE 5.OPTIONS
Options granted under the Plan are subject to the following terms and conditions:
5.1
Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an NSO or an ISO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.5.2
Number of Shares.Each Stock Option Agreement shall specify the number of shares of Common Stock subject to the Option, which shall be subject to adjustment in accordance with Article 12.5.3
Exercise Price.Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an Option shall in no event be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.5.4
Exercisability and Term. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable, subject to Section 3.4. The Stock Option Agreement shall also specify the term of the Option; provided that the term shall in no event exceed ten (10) years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s Disability, death or Retirement and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be granted in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.5.5
| |||
2023 Proxy Statement | B-2 |
APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
ARTICLE 6.PAYMENT FOR OPTION SHARES
6.1
General Rule. The entire Exercise Price of shares of Common Stock issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such shares of Common Stock are purchased, except as follows:(a)In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6.
(b)In the case of an NSO, the Committee may at any time accept payment in any form(s) described in this Article 6.
6.2
Stock Swap. To the extent specifically provided in an Option Agreement, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, shares of Common Stock that are already owned by the Optionee. Such shares of Common Stock shall be valued at their Fair Market Value on the date when the new shares of Common Stock are purchased under the Plan.6.3
Exercise/Sale. To the extent that this Section 6.3 is applicable and to the extent so provided in the Stock Option Agreement, all or any part of the Exercise Price and any withholding taxes may be paid by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise program established with a broker; (iii) Net Exercise; (iv) by any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee.ARTICLE 7.STOCK APPRECIATION RIGHTS
SARs granted under the Plan are subject to the following terms and conditions:
7.1
SAR Agreement.Each SAR granted under the Plan shall be evidenced by an SAR Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical.7.2
Number of Shares. Each SAR Agreement shall specify the number of shares of Common Stock to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 12.7.3
Exercise Price. Each SAR Agreement shall specify the Exercise Price; provided that the Exercise Price under an SAR shall in no event be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.7.4
Exercisability and Term.Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable, subject to Section 3.4. The SAR Agreement shall also specify the term of the SAR; provided, however, that the term shall in no event exceed ten (10) years from the date of grant. A SAR Agreement may provide for accelerated exercisability in the event of the Participant’s Disability, death or Retirement and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. SARs may be granted in combination with Options, and such an SAR Agreement may provide that the SARs will not be exercisable unless the related Options are forfeited.7.5
7.6Dividend Rights.
No dividends or dividend equivalent rights shall be paid or accrued with respect to SARS.ARTICLE 8.UNRESTRICTED SHARES
Unrestricted Shares granted under the Plan are subject to the following terms and conditions:
8.1
Unrestricted Shares. Unrestricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the8.2
Payment for Awards. Unrestricted Shares may be granted under the Plan for such consideration consisting of any tangible or intangible property or benefit to the Company as the Committee may determine, including cash, services performed and contracts for services to be performed.B-3 | |||
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
ARTICLE 9.RESTRICTED SHARES
Restricted Shares granted under the Plan are subject to the following terms and conditions:
9.1
Restricted Share Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Agreements entered into under the Plan need not be9.2
Payment for Awards. Restricted Shares may be granted under the Plan for such consideration consisting of any tangible or intangible property or benefit to the Company as the Committee may determine, including cash, services performed and contracts for services to be performed.9.3
Vesting Conditions. Each Award of Restricted Shares shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.If the Participant’s employment with the Company or Subsidiary is terminated before the end of a Performance Cycle for any reason other than Disability, death or Retirement, the Participant shall forfeit all rights with respect to any Restricted Shares that were being earned during the Performance Cycle. The Committee, in its absolute and sole discretion, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any Restricted Shares that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Restricted Share Agreement may provide for accelerated service-basedservice-based vesting in the event of the Participant’s Disability, death or Retirement (provided that, with respect to accelerated vesting in the event of Retirement, such Restricted Share Agreement shall comply with the requirements of Code Section 409A and include specific provisions regarding any tax withholding requirements, as required). Notwithstanding the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control, then unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Restricted Shares for the cash, securities, or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control; or (ii) the Restricted Share Agreement would otherwise continue in accordance with its terms notwithstanding the occurrence
9.4
Voting and Dividend Rights. The holders of Restricted Shares granted under the Plan shall have the voting, dividend and other rights as set forth in their Restricted Share Agreement, and may have the same voting, dividend and other rights as the Company’s other shareholders. Any dividends paid on Restricted Shares shall not be paid at the dividend payment date and shall only be paid if and when Restricted Shares vest, in cash or in shares of unrestricted Common Stock having a Fair Market Value equal to the amount of such dividends. Common Stock distributed in connection with a stock split or stock dividend, and distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Common Stock has been distributed.ARTICLE 10.RESTRICTED STOCK UNITS
Restricted Stock Units granted under the Plan are subject to the following terms and conditions:
10.1
Restricted Stock Units. Restricted Stock Units are designated in shares of Common Stock.10.2
Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Company. Such Restricted Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms of the applicable Restricted Stock Unit Agreement that are not inconsistent with the Plan. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be10.3
Payment for Awards. To the extent that an Award is granted in the form of Restricted Stock Units, no cash consideration shall be required of the Award recipients.10.4
Vesting Conditions. Each Award of Restricted Stock Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Unit Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.If the Participant’s employment with the Company or Subsidiary is terminated before the end of a Performance Cycle for any reason other than Disability, death or Retirement, the Participant shall forfeit all rights with respect to any Restricted Stock Units that were being earned during that Performance Cycle. The Committee, in its absolute and sole discretion, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any shares of Restricted Stock Units that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Restricted Stock Unit Agreement may provide for accelerated service-basedservice-based vesting in the event of the Participant’s Disability, death or Retirement (provided that, with respect to accelerated vesting in the event of Retirement, such Restricted Stock Unit Agreement’s accelerated vesting provisions shall comply with the requirements of Code Section 409A). Notwithstanding anything to the contrary contained in the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control then unless (i) the Committee shall have previously made provision for a cash payment in settlement
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
10.5
Dividend Rights. Shares underlying an Award of Restricted Stock Units shall not be entitled to dividends and shall be entitled to dividend equivalents with respect to such Restricted Stock Units only as set forth under a Restricted Stock Unit Agreement and in compliance with this Section 10.5. If a Restricted Stock Unit Agreement includes rights to dividend equivalents, an amount equal to the dividends that would have been paid if the Restricted Stock Units had been issued and outstanding shares of Common Stock on or before the record date for any declared dividend shall be paid to the holder of such Restricted Stock Units, in cash or stock, subject to applicable withholding taxes, only if and when the Restricted Stock Units vest. Any dividend equivalents payable pursuant to this Section 10.5 shall be paid no later than March 1 of the calendar year after the calendar year in which the underlying Restricted Stock Units vest as provided in the applicable Restricted Stock Unit Agreement.10.6
Form and Time of Settlement of Restricted Stock Unit Awards. Settlement of vested Restricted Stock Units may be made in the form of (a) cash, (b) shares of Common Stock or (c) any combination of both, as determined by the Committee. For the avoidance of doubt, settlement of vested Restricted Stock Units in shares of Common Stock shall not be considered an Award of Unrestricted Shares under Article 8. Methods of converting Restricted Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of shares of Common Stock over a series of trading days. Vested Restricted Stock Units shall be settled in a lump sum before the later of (i) two and one half (21/2) months after the end of the Company’s fiscal year during which all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed or (ii) March 15 following the calendar year in which all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed. Until an Award of Restricted Stock Units is settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Article 12.10.7
Creditors’ Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.ARTICLE 11.PERFORMANCE SHARE UNITS
Performance Share Units granted under the Plan are subject to the following terms and conditions:
11.1
Performance Share Units. Performance Share Units are designated in shares of Common Stock.11.2
Agreement. Each grant of Performance Share Units under the Plan shall be evidenced by an Agreement between the recipient and the Company, shall be subject to all applicable terms of the Plan, and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Performance Share Unit Agreements entered into under the Plan need not be identical. Performance Share Units may be granted in consideration of a reduction in the recipient’s other compensation.11.3
Payment for Awards. To the extent that an Award is granted in the form of Performance Share Units, no cash consideration shall be required of the Award recipients.11.4
Vesting Conditions. Each Award of Performance Share Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Performance Share Unit Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.If the Participant’s employment with the Company or Subsidiary is terminated before the date that Performance Share Units vest, the Participant shall forfeit all rights with respect to any unvested Performance Share Units. However, with respect to Performance Share Units subject to performance-basedperformance-based vesting conditions, the Committee, in its absolute and sole discretion at the time an Award of Performance Share Units is made, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any Performance Share Units that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Performance Share Unit Agreement may provide for accelerated service-basedservice-based vesting in the event of a Participant’s Disability, death or Retirement (provided, in the case of Retirement, that such Performance Share Unit Agreement’s accelerated vesting provisions shall comply with the requirements of Code Section 409A). Notwithstanding anything to the contrary contained in the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control then unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Performance Share Units for the cash, securities, or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control; or (ii) the award of Performance Share Units would otherwise continue in accordance with its terms notwithstanding the occurrence of the Change in Control, such Performance Share Units shall automatically vest upon the date of such Qualifying Termination at such amount as would have been earned if the original payment date of the Performance Shares Units had been the date of the Qualifying Termination, or if such payment is indeterminable then one hundred percent (100%) of such Performance Share Units will vest and any restrictions thereon shall lapse at the time of such Change in Control. In addition, acceleration of vesting may be required pursuant to Article 12.
11.5
Dividend Rights. Shares underlying an Award of Performance Share Units shall not be entitled to dividends and shall be entitled to dividend equivalents with respect to such Performance Share Units only as set forth under a Performance Share Unit Agreement and in compliance with this Section 11.5. If a Performance Share Unit Agreement includes rights to dividend equivalents, an amount equal to the dividends that would have been paid if the Performance Share Units had been settled shares of Common Stock on or before the record date for any declared dividend shall be paid to the holder of such Performance Share Units, in cash or stock, subject to applicable withholding taxes, only if and when such Performance Share Units actually vest and are settled in shares of Common Stock. Any dividend equivalents payable pursuant to this Section 11.5 shall be paid no later than March 1 of the calendar year after the calendar year in which the underlying Performance Share Units vest as provided in the applicable Performance Share Unit Agreement.B-5 | 2023 Proxy Statement |
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APPENDIX B: NORDSTROM, INC.
11.6
Form and Time of Settlement of Units. Settlement of vested Performance Share Units may be made in the form of (a) cash, (b) shares of Common Stock or (c) any combination of both, as determined by the Committee. For the avoidance of doubt, settlement of vested Performance Share Units in shares of Common Stock shall not be considered an Award of Unrestricted Shares under Article 8. Methods of converting Performance Share Units into cash may include (without limitation) a method based on the average Fair Market Value of shares of Common Stock over a series of trading days. Vested Performance Share Units shall be settled in a lump sum by the last day of the calendar year in which all vesting conditions applicable to the Performance Share Units have been satisfied or have lapsed. Until an Award of Performance Share Units is settled, the number of such Share Units shall be subject to adjustment pursuant to Article 12.11.7
Creditors’ Rights. A holder of Performance Share Units shall have no rights other than those of a general creditor of the Company. Performance Share Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Performance Share Unit Agreement.ARTICLE 12.PROTECTION AGAINST DILUTION
12.1
12.2Corporate Transaction. In the event of any reorganization, merger, consolidation, split-up, spin off, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, other similar corporate transaction or event (including the sale, merger or other corporate transaction involving a Subsidiary), the Committee may make any of the adjustments set forth in Section 12.1 above and may also make provision for a cash payment or for the assumption, substitution or exchange of any or all outstanding share-based Awards or the cash, securities or property deliverable to the holder of any or all outstanding share-based Awards, based upon the distribution or consideration payable to holders of the outstanding shares of Common Stock upon or in respect of such event, and may, in its discretion, accelerate the vesting of outstanding Awards. The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash or property settlement and, in the case of Options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess, if any, of the per share amount payable upon or in respect of such event over the grant price of the Award, unless otherwise provided in, or by authorized amendment to, the Award or provided in another applicable agreement with the Participant. With respect
12.3Change in Control.
(a)In the event of a Change in Control, a Participant’s unvested Awards shall not automatically vest, except as otherwise provided by the Committee in an Award Agreement. Instead, except as provided in Section 12.3(b) below, outstanding Awards shall continue in effect or be assumed, or an equivalent Award substituted, by the successor corporation or a parent or subsidiary of the successor corporation (with appropriate adjustments to any ISO,the Awards as set forth in Section 12.1 and 12.2 above). Notwithstanding anything to the contrary contained in the absolute and sole discretionforegoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control, then the unvested Awards held by that Participant automatically shall vest in full upon the date of such Qualifying Termination, with any performance-based awards deemed earned based on Committee’s assessment of performance through the date of the Committee,Qualifying Termination, or if such performance is indeterminable at that time, at the adjustment may be made100% “target” level of performance.
(b)If the successor corporation and its parent in a manner that would causeChange in Control refuse to assume or substitute for an Award as provided in Section 12.3(a) above, then the Option to cease to qualify as an ISO.
ARTICLE 13.AWARDS UNDER OTHER PLANS
The Company may grant Awards under other equity plans or programs. Such Awards may be settled in the form of shares of Common Stock issued under this Plan.
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
ARTICLE 14.LIMITATION ON RIGHTS
14.1
Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee or Nonemployee Director. The Company and its Subsidiaries reserve the right to terminate the Service of any Employee or Nonemployee Director at any time, with or without cause, subject to applicable laws, the Company’s Restated Articles of Incorporation and Bylaws and a written employment agreement (if any).14.2
Shareholders’ Rights. Unless otherwise provided in this Plan or in any Award, a Participant shall have no dividend rights, voting rights or other rights as a shareholder with respect to any shares of Common Stock covered by his or her Award prior to the time when a stock certificate for such shares of Common Stock is issued or, if applicable, the time when he or she becomes entitled to receive such shares of Common Stock by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for normal cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.14.3
Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue shares of Common Stock under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of shares of Common Stock pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such shares of Common Stock related to their registration, qualification or listing or to an exemption from registration, qualification or listing.14.4
Compliance with Code Section 409A. Awards under the Plan are intended to comply with Code Section 409A and all Awards shall be interpreted in a manner that results in compliance with Section 409A, Department of Treasury regulations, and other interpretive guidance under Section 409A. Notwithstanding any provision of the Plan or an Award to the contrary, if the Committee determines that any Award does not comply with Code Section 409A, the Company may adopt such amendments to the Plan and the affected Award (without consent of the Participant) or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary and appropriate to (a) exempt the Plan and the Award from application of Code Section 409A and/or preserve the intended tax treatment of amounts payable with respect to the Award, or (b) comply with the requirements of Code Section 409A.14.5
Clawback Policy. Each14.6
Transferability. Except in the context of death of a Participant, or as otherwise required by law, or as approved by the Committee for no consideration, Awards issued under the Plan may not be transferred to any third party.14.7
Governing14.8No Re-Pricing. Except as otherwise provided in Article 12 above, the terms of outstanding Awards may not be amended to reduce any exercise price associated with such Awards or to cancel any outstanding Awards in exchange for cash, other Awards or other securities with an exercise price that is less than the exercise price of the original Awards without shareholder approval.
ARTICLE 15.WITHHOLDING TAXES
15.1
General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any shares of Common Stock or make any cash payment under the Plan until such obligations are satisfied.15.2
Share Withholding. To the extent that applicable law subjects a Participant to tax withholding obligations, the Committee may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any shares of Common Stock that otherwise would be issued to him or her or by surrendering all or a portion of any shares of Common Stock that he or she previouslyARTICLE 16.FUTURE OF THE PLAN
16.1
Term of the Plan. The Plan, as set forth herein, became effective on the date of shareholder approval, May 23, 2019, and shall remain in effect for a period of ten (10) years unless earlier terminated under Section 16.2.16.2
Amendment or Termination. The Board may, at any time and for any reason, amend, alter or terminate theB-7 | 2023 Proxy Statement |
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
approval under applicable law or stock exchange rules); (c) increase the number of shares of Common Stock authorized to be issued under the Plan; (d) permit the repurchase by the Company of any outstanding Awards with an Exercise Price greater than the then-currentthen-current Fair Market Value of Common Stock; or (e) modify the Plan’s eligibility provisions. No Awards shall be granted under the Plan after the termination thereof.
ARTICLE 17.DEFINITIONS
17.1
17.2
17.3
17.4
“Cause” means as a reason for a Participant’s termination of employment or service shall have the meaning provided in the applicable employment agreement between the Company or a Subsidiary and the Participant, or severance plan covering the Participant, if any, or if there is no such agreement or plan, as applicable, that defines the term, then “Cause”17.5
(a)the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization in excess of fifty percent (50%) of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of such continuing or surviving entity;
(b)the sale, transfer or other disposition of all or substantially all of the Company’s assets;
(c) a change in the composition of the Board as a result of which fewer than fifty percent (50%) of the incumbent Directors are Directors who either (i) had been Directors of the Company on the date twenty-fourtwenty-four (24) months prior to the date of the event that may constitute a Change in Control (the “original Directors”) or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original Directors who were still in office at the time of the election or nomination and the Directors whose election or nomination was previously so approved, but excluding, for this purpose, any such Director whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation; or
(d)any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-313d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least thirty percent (30%) of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this Paragraph (d), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary and (ii) a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
17.6
17.7
17.8
17.9
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
17.10
17.11
17.12
17.13
17.14
17.15
(a)a material diminution in the Participant’s base salary;
(b)a material diminution in the Participant’s authority, duties, or responsibilities;
(c) a material change in the geographic location at which the Participant must perform his or her services to a place that is more than fifty (50) miles from where the Participant was based immediately prior to the Change in Control; and
(d)any other action or inaction that constitutes a material breach by the Company of this Plan with respect to a Participant’s Award.
The event or events described above shall constitute Good Reason only if the Company (or the Parent or Subsidiary employing the Participant) fails to cure such event or events within ninety (90) days after receipt from the Participant of written notice of the event or events which constitutes Good Reason. Such notice must be provided to the Company (or the Parent or Subsidiary employing the Participant) and must provide a reasonably detailed description of the facts that the Participant believes constitute a Good Reason event. Good Reason shall cease to exist for an event on the ninetieth (90
th) day following the later of its occurrence or the Participant’s knowledge thereof, unless the Participant has given written notice to the Company thereof prior to such date.17.16
17.17
X = | Y (A - B) | |||
A |
Where
X=
Y=The number of shares purchasable under this Option or, if only a portion of the Option is being exercised, the portion of the Option being cancelled (at the date of such calculation).
A=The fair market value of one (1) share (at the date of such calculation).
B=The Exercise Price (as adjusted to the date of such calculations).
17.18
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APPENDIX B: NORDSTROM, INC. AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
17.19
17.20
17.21
17.22
17.23
(a)the Company’s shareholder return as compared withto any designated industry or other comparator group;
(b)the trading price of the Company’s common stock;
(c) the results of operations, such as sales, earnings, net income (before or after taxes), cash flow, return on assets, same-storesame-store sales, economic profit, or return on investment (including return on equity, return on capital employed, or return on assets);
(d)earnings before or after taxes, interest, depreciation and/or amortization, and including /excludingincluding/excluding capital gains and losses;
(e)other financial results, such as profit margins, operational efficiency, expense reduction, or asset management goals; and
(f) the internal or external market share of a product or line of products.
Each of the foregoing performance measures may be based on the performance of the Company generally, in the absolute or in relation to its peers, or the performance of a particular Participant, department, business unit, subsidiary, or other segment to which a particular Participant is assigned. The Committee may establish different performance measures and milestones for individual Participants or groups of Participants. For each Participant, each performance measure will be weighted to reflect its relative significance to the Company for the Performance Cycle.
Except as otherwise specified in an individual Award, applicable performance measures shallmay be adjusted to exclude the following items that occur during a given Performance Cycle:
(i) Extraordinary, unusual or non-recurringnon-recurring items of gain or loss;
(ii) Gains or losses on the disposition of a business, a segment of a business, or significant assets outside the ordinary course of business;
(iii)Changes in tax or accounting standards, principles, regulations or laws;
(iv)The effect of a merger or acquisition, including all financial results derived therefrom during the period from the merger or acquisition date through the end of the Performance Cycle in which the merger or acquisition occurred;
(v) Gains or losses due to non-cashnon-cash adjustments which relate to the valuation of long-termlong-term assets rather than current-yearcurrent-year performance (including but not necessarily limited to gain or loss recognized for store closures, lease terminations, pension adjustments and mark to market adjustments); and
(vi)The impact of other similar occurrences outside of the Company’s core, on-goingon-going business activities (including but not necessarily limited to litigation or tax reserves, financing activities, foreign exchange rate fluctuations and restructuring charges).
Except as otherwise determined by the Committee, performance measures comprising Performance Criteria for an Award shall be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles (GAAP), or under a non-GAAPnon-GAAP methodology established by the Committee prior to the issuance of an Award. The method of calculating performance measurements shall be consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report.
17.24
17.25
17.26
17.27
17.28
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17.29
17.30
17.31
17.32
17.33
17.34
17.35
17.36
17.37
17.38
17.39
17.40
17.41
17.42
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SECTION 1.
PURPOSE OF THE PLAN.The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify under Section 423 of the Code. The Plan was originally adopted by the Company’s Board of Directors in November of 1999, and was approved by the Company’s shareholders in May of 2000. The Plan was subsequently amended in several respects and was completely restated in 2005, 2006, 2008, 2011 and 2011.2020. This 20202023 Restatement increases the authorized number of shares of Stock under the Plan, revises the definition of eligible compensation, increases the maximum contribution rate from ten percent (10%) of eligible compensation to fifteen percent (15%) of eligible compensation and incorporates Amendment 2016-1.Plan. The 20202023 Restatement is effective for Offering Periods beginning on and after April 1, 2020.
SECTION 2.
ADMINISTRATION OF THE PLAN.(a)
Committee Composition. The Plan shall be administered by the Committee.(b)
Committee Responsibilities.The Committee shall interpret the Plan and make all other policy decisions relating to the operation of the Plan. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.SECTION 3.
ENROLLMENT AND PARTICIPATION.(a)
Offering Periods.While the Plan is in effect, two Offering Periods shall commence in each calendar year. Offering Periods shall consist of the(b)
Enrollment. Any individual who, on the day preceding the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by completing the enrollment process prescribed for this purpose by the Committee.(c)
Duration of Participation. Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she (1) ceases to be an Eligible Employee, (2) withdraws from the Plan under Section 5(a), or (3) reaches the end of the Offering Period in which his or her employee contributions were discontinued under Section 8(b). A Participant who withdrew from the Plan under Section 5(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (b) above. A Participant whose employee contributions were discontinued automatically under Section 8(b) shall automatically resume participation at the beginning of the earliest Offering Period ending in the next calendar year, if he or she then is an Eligible Employee.SECTION 4.
EMPLOYEE CONTRIBUTIONS.(a)
Frequency of Payroll Deductions. A Participant may purchase shares of Stock under the Plan solely by means of payroll deductions. Payroll deductions, as designated by the Participant pursuant to Subsection (b) below, shall occur during the Offering Period on the Compensation payment date while a Participant is in the Plan.(b)
Amount of Payroll Deductions. An Eligible Employee shall designate in the enrollment process the portion of his or her Compensation that he or she elects to have withheld for the purchase of Stock. Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than one percent (1%) or more than fifteen percent (15%).(c)
Changing Withholding Rate. If a Participant wishes to change the rate of payroll withholding, he or she may do so by notifying the Company using the process prescribed for this purpose by the Committee. The new withholding rate shall be effective as soon as reasonably practicable after such notification by the Company.(d)
Discontinuing Payroll Deductions. If a Participant wishes to discontinue employee contributions entirely, he or she may do so at any time by using the process prescribed for this purpose by the Committee. Payroll withholding shall cease as soon as reasonably practicable after such notification. (In addition, employee contributions may be discontinued automatically pursuant to Section 8(b).) A Participant who has discontinued employee contributions may resume such contributions by using the process prescribed for this purpose by the Committee. Payroll withholding shall resume as soon as reasonably practicable after such notification.SECTION 5.
WITHDRAWAL FROM THE PLAN.(a)
Withdrawal. A Participant may elect to withdraw from the Plan by using the process and timing prescribed for this purpose by the Committee. As soon as reasonably practicable after the effective date of a Participant’s withdrawal, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall be refunded to him or her in cash, without interest. No partial withdrawals shall be permitted.(b)
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APPENDIX C: NORDSTROM, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
SECTION 6.
CHANGE IN EMPLOYMENT STATUS.(a)
Termination of Employment.Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 5(a). A transfer from one Participating Company to another shall not be treated as a termination of employment.(b)
Leave of Absence. For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on an approved leave of absence. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.(c)
Death. In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid in the same manner as his or her final paycheck from the Company. Any shares of Stock held by the broker designated by the Committee pursuant to Section 7(e) shall be paid or delivered to a beneficiary or beneficiaries designated by the Participant pursuant to the relevant rules established by the broker with respect to the brokerage account.SECTION 7.
PLAN ACCOUNTS AND PURCHASE OF SHARES.(a)
Plan Accounts. A Plan Account shall be maintained in the name of each Participant. Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes. No interest shall be credited to Plan Accounts.(b)
Purchase Price. The Purchase Price for each share of Stock purchased at the close of an Offering Period shall be ninety percent (90%) of the Fair Market Value of such share on the last trading day in such Offering Period.(c)
Number of Shares Purchased. As of the last day of each Offering Period, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 5(a). The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account. The foregoing notwithstanding, no Participant shall purchase more than one thousand (1,000) shares of Stock with respect to any Offering Period nor more than the amounts of Stock set forth in Sections 8(b) and 13(a). Any fractional share, as calculated under this Subsection (c), shall be rounded down to the next lower whole share.(d)
Available Shares Insufficient. In the event that the aggregate number of shares that all Participants elect to purchase during an Offering Period exceeds the maximum number of shares remaining available for issuance under Section 13(a), then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase.(e)
Issuance of Stock.Certificates representing shares of Stock purchased by a Participant under the Plan shall be held for each Participant’s benefit by a broker designated by the Committee for the Plan. Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property. A Participant may elect the following with respect to such shares, in accordance with and subject to the process prescribed for this purpose by the Committee:(i)that the Stock certificates be issued to him or her in exchange for the whole shares held within the Participant’s Account, or
(ii)that shares held within the Participant’s Account be transferred to an appropriate broker designated by the Participant.
Each Participant shall be required to notify the Company in the event of the sale or disposition of any of such shares. For purposes of the previous sentence, the term “disposition” shall have the meaning prescribed under Section 424(c)(1) of the Code.
(f)
Unused Cash Balances. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for a fractional share shall be carried over in the Participant’s Plan Account to the next Offering Period. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) above, Section 8(b) or Section 13(a) shall be refunded to the Participant in cash, without interest.(g)
Shareholder Approval. Any other provision of the Plan notwithstanding, no shares of Stock shall be purchased under the Plan unless and until the Company’s shareholders have approved the adoption of the Plan.SECTION 8.
LIMITATIONS ON STOCK OWNERSHIP.(a)
Five Percent Limit. Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or value (determined under Code Section 423) of all classes of stock of the Company or any parent or Subsidiary of the Company. For purposes of this Subsection (a), the following rules shall apply:(i)Ownership of stock shall be determined after applying the attribution rules of Section 424(d) of the Code;
(ii)Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and
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APPENDIX C: NORDSTROM, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(iii)For purposes of applying subsection (ii), each Participant shall be deemed to have the right or option to purchase one thousand (1,000) shares of Stock under this Plan with respect to each Offering Period.
(b)
Dollar Limit. Any other provision of the Plan notwithstanding, no Participant shall purchase Stock with a Fair Market Value in excess of the following limit:(i)In the case of Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased in the current calendar year under this Plan.
(ii)In the case of Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Stock that the Participant previously purchased under this Plan in the current calendar year and in the immediately preceding calendar year.
For purposes of this Subsection (b), the Fair Market Value of Stock shall be determined in each case as of the beginning of the Offering Period in which such Stock is purchased. If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall resume at the beginning of the earliest Offering Period ending in the next calendar year (if he or she then is an Eligible Employee).
SECTION 9.
RIGHTS NOT TRANSFERABLE.The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by the laws of descent and distribution. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 5(a).
SECTION 10.
NO RIGHTS AS AN EMPLOYEE.Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.
SECTION 11.
NO RIGHTS AS A SHAREHOLDER.A Participant shall have no rights as a shareholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the last day of the applicable Offering Period.
SECTION 12.
SECURITIES LAW REQUIREMENTS.Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.
SECTION 13.
STOCK OFFERED UNDER THE PLAN.(a)
Authorized Shares. Effective for Offering Periods commencing on and after April 1,(b)
Antidilution Adjustments. The aggregate number of shares of Stock offered under the Plan, the one thousand (1,000) share limitation described in Section 7(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately by the Committee for any increase or decrease in the number of outstanding shares of Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, any other increase or decrease in such shares effected without receipt or payment of consideration by the Company, the distribution of the shares of a Subsidiary to the Company’s shareholders or a similar event.(c)
Reorganizations. Any other provision of the Plan notwithstanding, immediately prior to the effective time of a Corporate Reorganization, the Offering Period then in progress shall terminate and shares shall be purchased pursuant to Section 7, unless the Plan is assumed by the surviving corporation or its parent corporation pursuant to the plan of merger or consolidation. The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.C-3 | 2023 Proxy Statement |
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APPENDIX C: NORDSTROM, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
SECTION 14.
AMENDMENT OR DISCONTINUANCE.The Board shall have the right to amend, suspend or terminate the Plan at any time and without notice. Any amendment that increases the aggregate number of shares of Stock to be issued under the Plan shall be subject to approval by a vote of the shareholders of the Company within 12 months before, or 12 months after, the Board’s adoption of the amendment. In addition, any other amendment of the Plan shall be subject to approval by a vote of the shareholders of the Company to the extent required by an applicable law or regulation. To the extent an amendment does not require shareholder or Board approval (as described above), the Committee shall have the authority to make technical and administrative amendments to the Plan for the sole purpose of carrying out its administrative responsibilities under the Plan.
SECTION 15.
DEFINITIONS.(a)“
Board” means the Board of Directors of the Company, as constituted from time to time.(b)“
Code” means the Internal Revenue Code of 1986, as amended.(c)“
Committee” means the Compensation, People and Culture Committee of the Board.(d)“
Company” means Nordstrom, Inc., a Washington corporation.(e)“
Compensation” means (i) the total compensation paid in cash to a Participant by a Participating Company, including salaries, wages, incentive compensation, commissions, overtime pay and shift premiums, plus (ii) any(f)“
Corporate Reorganization” means:(i)The consummation of a merger or consolidation of the Company with or into another entity, or any other corporate reorganization; or
(ii)The sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution of the Company.
(g)“
Eligible(i)any individual whose participation in the Plan is prohibited by the law of any country which has jurisdiction over him or her:
(ii)any employee who is covered by a collective bargaining agreement, if the collective bargaining agreement excludes the employee (or the bargaining unit of which the employee is a member) from participation in the Plan;Plan, and
(iii)to the extent permitted by Code Section 423, any individual designated by a Participating Company as an independent contractor, even if the individual later is determined by a court of competent jurisdiction to be a common law employee of a Participating Company.
(h)“
Exchange Act” means the Securities Exchange Act of 1934, as amended.(i)
“Fair Market Value” means, as of any date, the value of the Stock determined as follows: (a) If the Stock is (x) listed on any established securities exchange (such as the New York Stock Exchange or Nasdaq Stock Market), (y) listed on any national market(j)“
Offering Period” means a(k)“
Participant” means an Eligible Employee who elects to participate in the Plan, as provided in Section 3(b). Only Eligible Employees may become Participants in this Plan.
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APPENDIX C: NORDSTROM, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(l)“
Participating Company” means (i) the Company, (ii) each Subsidiary that is a Participating Company as of February 1, 2020, and (iii) each present or future Subsidiary that is affirmatively designated by the Committee as a Participating Company after February 1, 2020. Except as provided in the preceding sentence, no other Subsidiary shall be a Participating Company. The Committee is authorized to change a present or future Subsidiary’s designation as a Participating Company at any time without additional shareholder approval. The Company will maintain a record of all Participating Companies.(m)“
Plan” means this Nordstrom, Inc. Employee Stock Purchase Plan, as it may be amended from time to time.(n)“
Plan Account” means the account established for each Participant pursuant to Section 7(a).(o)“
Purchase Price” means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 7(b).(p)“
Stock” means the Common Stock of the Company, no par value per share.(q)“
Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.C-5 | 2023 Proxy Statement |
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PLEASE VOTE TODAY! SEE REVERSE SIDE FOR THREE EASY WAYS TO VOTE. TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND DATE THE PROXY CARD, AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED PRELIMINARY COPY SUBJECT TO COMPLETION—APRIL 17, 2023 NORDSTROM, INC.
NORDSTROM, INC. YOUR VOTE IS IMPORTANT Please take a moment now to vote your shares of the Company’s Common Stock for the upcoming Annual Meeting of Shareholders. YOU CAN VOTE TODAY IN ONE OF THREE WAYS: 1. Vote by Internet Please access https://www.proxyvotenow.com/jwn, and follow the simple instructions provided. Please note you must type an “s” after http. You will be required to provide the unique control number printed below. OR 2. Vote by Telephone Call toll-free from the U.S. or Canada at (855) 260-7729, on a touch-tone telephone. If outside the U.S. or Canada, call +1 (575) 215-3286. Please follow the simple instructions provided. You will be required to provide the unique control number printed below. CONTROL NUMBER: OR 3. Vote by Mail If you do not have access to a touch-tone telephone or to the Internet, please sign, date and return the proxy card in the envelope provided, or mail to: []. You may submit your proxy by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet vote authorizes the proxyholder(s) to vote your shares in the same manner as if you had marked, signed and returned a proxy card.1. Election of eleven directors to serve until the 2024 Annual Meeting of Shareholders and until their successors have been duly elected and qualified. X TO VOTE BY MAIL, PLEASE DETACH HERE, SIGN AND DATE THE PROXY CARD, AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED Please mark vote as in this exmple FOR AGAINST ABSTAIN THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE BOARD’S NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2, 3, 5, 6, AND 7, AND “1 YEAR” ON PROPOSAL 4. DATED: (Signature if held jointly) (Signature if held jointly) (Title) WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY. BOARD NOMINEES 1A. Stacy Brown-Philpot 1B. James L. Donald 1C. Kirsten A. Green 1D. Glenda G. McNeal 1E. Erik B. Nordstrom 1F. Peter E. Nordstrom 1G. Eric D. Sprunk 1H. Amie Thuener O’Toole 1I. Bradley D. Tilden 1J. Mark J. Tritton 1K. Atticus N. Tysen 2. Ratification of the appointment of Deloitte as the Company’s Independent Registered Public Accounting Firm to serve for the fiscal year ending February 3, 2024. 3. Advisory voter regarding the compensation of our Named Executive Officers. 4. Advisory vote regarding the frequency of future advisory votes on the compensation of our Named Executive Officers. 5. To approve the Nordstrom, Inc. Amended and Restated 2019 Equity Incentive Plan. 6. To approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan 7. Advisory vote on the extension of the Company’s shareholder rights plan until September 19, 2025. OR 3. Vote by Mail – If you do not have access to a touch-tone telephone or to the Internet, please sign, date and return the proxy card in the envelope provided, or mail to: []. You may submit your proxy by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet vote authorizes the proxyholder(s) to vote your shares in the same manner as if you had marked, signed and returned a proxy card. FOR WITHHOLD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 1 YEAR 2 YEARS 3 YEARS ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
