TABLE OF CONTENTS
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. )
| Filed by the Registrant ý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material | |
| THE BON-TON STORES, 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): | |||||
ý | No fee required. | ||||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
o | Fee paid previously with preliminary materials. | ||||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the | ||||
(1) | Amount Previously Paid: | |||
| (2) | Form, |
| (3) | Filing |
| (4) | Date |
York, PA 17402
www.bonton.com
May 3, 2011
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders to be held at the Company’sCompany's offices, 2801 East Market Street, York, Pennsylvania on Tuesday, June 14, 2011,18, 2013, beginning at 9:00 a.m.
We are using the Securities and Exchange Commission rule that allows companies to furnish proxy materials over the internet. The proxy materials consist of our official notice of meeting, the proxy statement and our 20102012 Annual Report. We are mailing to many of our shareholders a notice that the proxy materials, including our 20102012 Annual Report, are available on our website rather than sending a paper copy of this proxy statement and our 20102012 Annual Report. We believe this electronic proxy process will expedite shareholders’shareholders' receipt of proxy materials, conserve valuable natural resources and reduce the Company’sCompany's costs of printing and distributing proxy materials.
Your vote is important to us. Even if you plan to attend the meeting, please vote your shares by telephone or over the internet, or, alternatively, if you elect to receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the postage-paid envelope provided. Instructions regarding these three methods of voting are contained in our proxy materials. If you attend the meeting, you may continue to have your shares voted as previously indicated or you may withdraw your proxy at the meeting and vote the shares in person.
| Sincerely, | ||
 | ||
Byron L. Bergren Chairman of the Board |
2801 East Market Street
York, PA 17402
www.bonton.com
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of The Bon-Ton Stores, Inc. will be held on Tuesday, June 14, 2011,18, 2013, at 9:00 a.m., at the Company’sCompany's offices, 2801 East Market Street, York, Pennsylvania.
The purposes of the meeting are:
- 1.
- To elect
an eight-membera seven-member Board of Directors for a one-year term;
Shareholders who owned shares of our stock at the close of business on April 15, 201119, 2013 may attend and vote at the meeting. You may vote by telephone or over the internet or, if you elect to receive a paper copy of the proxy card by mail, you may vote by signing, dating and mailing the proxy card in the postage-paid envelope provided. Any shareholder attending the meeting may vote in person, even if he or she has already returned a proxy card or voted by telephone or over the internet.
 | ||
J. Gregory Yawman Vice President, General Counsel and Secretary |
York, Pennsylvania
May
Please vote by telephone or over the internet as instructed on the proxy card or, if you have elected to receive a paper copy of our proxy materials by mail, complete, sign and date the proxy card as promptly as possible and return it in the envelope provided. If you vote by telephone or over the internet, do not return your proxy card.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 14, 201118, 2013
This proxy statement and the Company’sCompany's Annual Report for the fiscal year ended January 29, 2011February 2, 2013 are both available in the Investor Relations section of the Company’sCompany's website at www.bonton.com.
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THE BON-TON STORES, INC.
PROXY STATEMENT
We are providing this proxy statement to solicit your proxy for use at the Annual Meeting of Shareholders (the “meeting”"meeting"), which will be held at 9:00 a.m. on Tuesday, June 14, 2011.18, 2013. The proxy materials, which consist of the 20102012 Annual Report, the Notice of Annual Meeting, this proxy statement and the proxy card, are being made available to our shareholders on or about May 3, 2011.
The Company is furnishing proxy materials over the internet pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”"SEC"). We are mailing to many of our shareholders a notice that the proxy materials are available on our website. The notice provides instructions on accessing the proxy materials and submitting your proxy on-line. The notice also provides instructions for requesting paper copies of the proxy materials, which are available free of charge.
We do not anticipate that any matters will be raised at the meeting other than those described in the Notice of Annual Meeting. If any other matters come before the meeting, your proxies will be authorized to act in accordance with their best judgment.
When your proxy card is signed and returned, or you have submitted your proxy over the internet or by telephone, your shares will be voted in accordance with your instructions. If your proxy card is signed and returned without specifying choices, your shares will be voted “for”"for" the Board nominees, “for”"for" the approval of the compensation of executive officers, “annually” as the frequency of the vote on approval of compensation of executive officers, “for”Named Executive Officers, and "for" ratification of the appointment of KPMG LLP as independent registered public accounting firm and “for” the approval of the amendment of the Company’s Articles of Incorporation to require that directors be elected by the majority of votes cast.
You may revoke your proxy before its exercise by notifying the Secretary of the Company in writing, by delivering a properly executed, later-dated proxy card, by submitting your proxy again over the internet or by telephone or by voting in person at the meeting.
Your proxy is being solicited by the Board of Directors (the “Board”"Board"). We will bear the cost of this solicitation, including the charges of brokerage houses, nominees and fiduciaries in forwarding these materials to beneficial owners. This solicitation may be made in person, by telephone or by other means of communication by our directors, officers or employees.
References in this proxy statement to a year refer to our fiscal year, which is the 52 or 53 week period ending on the Saturday nearer to January 31 of the following calendar year (for example, a reference to 20102012 is a reference to the fiscal year ended January 29, 2011)February 2, 2013).
Shareholders of record at the close of business on April The presence at the meeting, in person or by proxy, of persons entitled to cast a majority of the shareholder votes will constitute a quorum. For Proposal One, the 15, 201119, 2013 are entitled to vote at the meeting. At that time, there were 16,074,27417,396,082 shares of common stock and 2,951,490 shares of Class A common stock outstanding. The common stock and the Class A common stock vote together on all matters. Holders of common stock are entitled to one vote per share and holders of Class A common stock are entitled to ten votes per share. There are no other classes of voting securities outstanding. In the election of directors, shareholders do not have cumulative voting rights.eight nominees receiving a pluralitymajority of the votes cast (that is, the eight nominees receiving the greatest number of votes) will be elected. (A majority of votes cast means that the number of votes cast "for" a director must exceed the number of votes cast "against" that director.) A proxy marked “withhold”"withhold" with
For Proposal Two, an affirmative vote of the majority of the votes cast by shareholders present in person or represented by proxy at the Annual Meetingmeeting and entitled to vote on Proposal Two is required to
approve, on an advisory basis, the compensation of our named executive officersNamed Executive Officers as described in this Proxy Statement.
For Proposal Three, the number of years for the frequency of the advisory vote on compensation of our named executive officers that receives the highest number of votes of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal Three will be the frequency that shareholders approve on an advisory basis.
Because your vote on Proposal FiveTwo is required to approve the amendment of the Company’s Articles of Incorporation to require that directors be elected by a majority of the votes cast.
Abstentions and broker non-votes are counted to determine whether a quorum is present at the meeting but are not counted as a vote in favor of or against a particular matter. A “broker non-vote”"broker non-vote" occurs when a holder of record for a beneficial owner does not vote on a particular matter because the holder of record does not have discretionary voting power as to that item and has not received voting instructions from the beneficial owner.
The rules that guide how most brokers vote your stock have changed.changed over the last several years. The rules provide that brokerage firms or other nominees may not vote your shares with respect to matters that are not “routine”"routine" under the rules. The rules were recently amended tonow provide that the election of directors is no longernot a “routine”"routine" matter. Accordingly, most brokerage firms or other nominees may not vote your shares with respect to the election of directors without specific instructions from you as to how your shares are to be voted. Additionally, asAs required by Section 957 of the recently adopted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”"Dodd-Frank Act"), an advisory votesvote on executive compensation and the frequency of such votes and a vote to amend the Articles of Incorporation areis also considered a non-routine mattersmatter for which brokers do not have discretionary authority to vote shares held by account holders. The ratification and appointment of our independent registered public accounting firm for 20112013 is considered a “routine”"routine" matter under the rules and, therefore, brokerage firms and other nominees have the authority under the rules to vote your unvoted shares with respect to this matter if you have not furnished voting instructions within a specified period of time prior to the meeting.
If you own common stock in your own name, you are an “owner"owner of record.”" This means you may direct the persons named as proxies how to vote your shares. If you fail to return your proxy, the proxies cannot vote your shares at the meeting.
2
- •
- Internet: You can vote over the internet at the internet address shown on your proxy card. Internet voting is available 24 hours a day. If you have access to the internet, we encourage you to vote this way. If you vote over the internet, do not return your proxy card.
- •
- Telephone: You can vote by calling the toll-free telephone number on your proxy card. Telephone voting is available 24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone, do not return your proxy card.
- •
- Proxy Card: You can vote by signing, dating and mailing your proxy card in the postage-paid envelope provided.
- •
- Vote in Person: You can attend the meeting and vote in person.
If a broker, bank or other nominee holds your common stock for your benefit but not in your name, your shares are held in “street"street name.”" In that case, your bank, broker or other nominee will send you a voting instruction form to use in voting your shares. The availability of internet and
telephone voting depends on their voting processes. Please follow the voting instruction form sent to you by your bank, broker or other nominee.
If you are a participant in The Bon-Ton Stores, Inc. Retirement Contribution Plan (the “401(k) Plan”"401(k) Plan"), your proxy will incorporate all shares you own through the 401(k) Plan, assuming all your shares are registered in the same name. Your proxy will serve as a voting instruction for the trustee of the 401(k) Plan. If you own shares through the 401(k) Plan and you do not vote, the 401(k) Plan trustee will vote your shares in the same proportion as shares for which instructions were received from other shareholders under the 401(k) Plan.
The NASDAQ Stock Market listing standards provide that if more than 50% of the voting power in a company is held by an individual, group or another company, the company is a “controlled”"controlled" company. Bon-Ton is a “controlled”"controlled" company because Tim Grumbacher, Executive Chairmana director and Strategic Initiatives Officer of the Board,Company, is the beneficial owner of shares of common stock and Class A common stock entitled to vote more than 50% of the votes entitled to be cast at the meeting. Mr. Grumbacher has indicated that he will vote “for”"for" each of the nominees for director, “for”"for" the approval of the compensation of the named executive officers, “annually” for the frequency of the advisory vote to approve the compensation of the named executive officers, “for”Named Executive Officers and "for" ratification of the appointment of KPMG LLP and “for” the approval of the amendment of the Articles of Incorporation.LLP. Consequently, the election of each nominee for director, the approval of the compensation of the named executive officers, the annual frequency of the advisory vote to approve the compensation of the named executive officers,Named Executive Officers, and the ratification of the appointment of KPMG LLP and the approvalare assured.
Table of the amendment of the Articles of Incorporation are assured.
3
This table shows owners of 5% or more of the Class A common stock or common stock as of March 11, 2011.15, 2013. Each person listed has sole voting power and sole investment power as to the shares indicated unless otherwise noted.
| | Class A Common Stock | Common Stock(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Address | Number of Shares | Percent of Class | Number of Shares | Percent of Class | |||||||||
Tim Grumbacher | 2,951,490 | 100.00 | % | 4,619,424 | 23.39 | % | |||||||
2801 E. Market Street | |||||||||||||
FMR, LLC | 2,221,409 | (2) | 13.22 | % | |||||||||
82 Devonshire St. | |||||||||||||
Lombard Odier Asset Management (USA) Corp. | 1,619,394 | (2) | 9.64 | % | |||||||||
888 7th Avenue | |||||||||||||
Morgan Stanley | 1,225,501 | (2) | 7.29 | % | |||||||||
1585 Broadway | |||||||||||||
Michael L. Gleim | 994,652 | (3) | 5.92 | % | |||||||||
2801 E. Market Street | |||||||||||||
Gamco Investors, Inc. | 861,500 | (2) | 5.13 | % | |||||||||
One Corporate Center | |||||||||||||
| Class A Common Stock | Common Stock(1) | |||||||||||||||
| Number of | Percent | Number of | Percent | |||||||||||||
| Name and Address | Shares | of Class | Shares | of Class | ||||||||||||
| Tim Grumbacher | 2,951,490 | 100.00 | % | 4,634,982 | 24.39 | % | ||||||||||
| 2801 E. Market Street | ||||||||||||||||
| York, PA 17402 | ||||||||||||||||
| PNC Financial Services Group, Inc. | — | 1,691,614 | (2) | 10.54 | % | |||||||||||
| One PNC Plaza | ||||||||||||||||
| 249 Fifth Avenue | �� | |||||||||||||||
| Pittsburgh, PA 15222 | ||||||||||||||||
| Buckingham Capital Management, Inc. | — | 1,267,841 | (2) | 7.90 | % | |||||||||||
| 750 Third Avenue | ||||||||||||||||
| New York, NY 10017 | ||||||||||||||||
| Michael L. Gleim | — | 1,044,652 | (3) | 6.51 | % | |||||||||||
| 2801 E. Market Street | ||||||||||||||||
| York, PA 17402 | ||||||||||||||||
| Byron L. Bergren | — | 987,123 | (4) | 6.07 | % | |||||||||||
| 331 W. Wisconsin Avenue | ||||||||||||||||
| Milwaukee, WI 53203 | ||||||||||||||||
| Troob Capital Management LLC | — | 894,639 | (2) | 5.57 | % | |||||||||||
| Douglas M. Troob & Peter J. Troob | ||||||||||||||||
| 777 Westchester Avenue, Suite 203 | ||||||||||||||||
| White Plains, NY 10604 | ||||||||||||||||
| Gamco Investors, Inc. | — | 861,500 | (2) | 5.37 | % | |||||||||||
| One Corporate Center | ||||||||||||||||
Rye, NY10580-1435 | ||||||||||||||||
- (1)
- Each share of Class A common stock is convertible into one share of common stock at the holder's option. Accordingly, the number of shares of common stock for each person includes the number of shares of common stock issuable upon conversion of all shares of Class A common stock beneficially owned by such person. Also, the total number of shares of common stock outstanding for purposes of calculating percentage ownership of a person includes the number of shares of Class A common stock beneficially owned by such person.
- (2)
- Based solely on Schedules 13G filed with the Securities and Exchange Commission by: (a) FMR, LLC on February 14, 2013, (b) Lombard Odier Asset Management (USA) Corp. on February 11, 2013 and (c) Morgan Stanley on January 30, 2013, and on Schedule 13D filed with the Securities and Exchange Commission by Gamco Investors, Inc. on March 4, 2009.
- (3)
- Includes (a) 195,523 shares of common stock held by The Grumbacher Family Foundation, a charitable foundation of which Mr. Gleim and Tim Grumbacher are the directors, (b) 668,397 shares of common stock held by trusts for the benefit of Tim Grumbacher's children of which Messrs. Gleim and David R. Glyn are the trustees, and (c) 15,558 shares of common stock held by trusts for the benefit of Mr. Grumbacher's grandchildren of which Beth Elser, Mr. Glyn and Mr. Gleim are the trustees.. Also includes 53,367 shares owned by Cathy Gleim, Mr. Gleim's wife, and 2,300 shares which Mr. Gleim holds as custodian for his grandchildren. Mr. Gleim disclaims beneficial ownership of all shares referred to in this note. Does not include 74,433 Restricted Stock Units ("RSUs") held by Mr. Gleim. RSUs awarded in years prior to 2012 do not confer on Mr. Gleim voting or dispositive control over shares of common stock until one year following termination of his Board service and RSUs awarded in 2012 and thereafter do not confer voting or dispositive control until three months following termination of his Board service, at which time shares of common stock are issued on a one-share for one-unit basis.
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Table of Contents
This table shows, as of March 11, 2011,15, 2013, the holdings of Byron L. Bergren, our Chief Executive Officer through February 6, 2012; Brendan L. Hoffman, our Chief Executive Officer since February 7, 2012; our Chief Financial Officer,Officer; the three other most highly compensated executive officers during 20102012 (collectively, the “Named"Named Executive Officers”Officers"),; each director,director; and all directors and executive officers as a group. Each person listed has sole voting power and sole investment power with respect to the shares indicated unless otherwise noted.
| | Class A Common Stock | Common Stock(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Shares Beneficially Owned | Percent of Class | Shares Beneficially Owned(2) | Percent of Class | |||||||||
Tim Grumbacher | 2,951,490 | 100.00 | % | 4,619,424 | 23.39 | % | |||||||
Michael L. Gleim | — | 994,652 | (3) | 5.92 | % | ||||||||
Brendan L. Hoffman | — | 511,060 | 3.04 | % | |||||||||
Byron L. Bergren | — | 440,756 | 2.62 | % | |||||||||
Anthony J. Buccina | — | 306,944 | 1.81 | % | |||||||||
Stephen R. Byers | — | 206,759 | 1.22 | % | |||||||||
Keith E. Plowman | — | 187,907 | (4) | 1.11 | % | ||||||||
Lucinda M. Baier | — | 10,000 | * | ||||||||||
Philip M. Browne | — | 8,600 | * | ||||||||||
Marsha M. Everton | — | 860 | * | ||||||||||
Todd C. McCarty | — | — | * | ||||||||||
Jeffrey B. Sherman | — | — | * | ||||||||||
All directors and executive officers as a group (14 persons) | 2,951,490 | 100.00 | % | 7,168,719 | (5) | 35.75 | % | ||||||
- *
- less than 1%
- (1)
- See note (1) to Principal Shareholders table.
- (2)
- The shares reflected include both options exercisable within 60 days of March 15, 2013 and Restricted Shares, but exclude RSUs awarded as a component of non-employee director compensation. For awards in years prior to 2012, RSUs do not confer on the non-employee director voting or dispositive control over common shares until one year following termination of Board service and, for awards in 2012 and thereafter, RSUs do not confer voting or dispositive control over common shares until three months following termination of Board service. The
| Class A Common Stock | Common Stock(1) | |||||||||||||||
| Shares | Shares | |||||||||||||||
| Beneficially | Percent of | Beneficially | Percent of | |||||||||||||
| Name | Owned | Class | Owned(2) | Class | ||||||||||||
| Tim Grumbacher | 2,951,490 | 100.00 | % | 4,634,982 | 24.39 | % | ||||||||||
| Michael L. Gleim | — | 1,044,652 | (3) | 6.51 | % | |||||||||||
| Byron L. Bergren | — | 987,123 | 6.07 | % | ||||||||||||
| Anthony J. Buccina | — | 397,207 | 2.45 | % | ||||||||||||
| Stephen R. Byers | — | 241,614 | 1.50 | % | ||||||||||||
| Keith E. Plowman | — | 203,079 | (4) | 1.26 | % | |||||||||||
| Barbara J. Schrantz | — | 184,038 | 1.14 | % | ||||||||||||
| Lucinda M. Baier | — | 10,000 | * | |||||||||||||
| Philip M. Browne | — | 8,600 | * | |||||||||||||
| Shirley A. Dawe | — | 2,500 | * | |||||||||||||
| Marsha M. Everton | — | 860 | * | |||||||||||||
| Todd C. McCarty | — | — | ||||||||||||||
| All directors and executive officers as a group (13 persons) | 2,951,490 | 100.00 | % | 7,610,562 | (5) | 38.77 | % | |||||||||
following table sets forth the number of options exercisable within 60 days of March 15, 2013, and the number of Restricted Shares and RSUs held by each person:
Name | Options Exercisable Within 60 Days of March 15, 2013 | Restricted Shares | Restricted Stock Units | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Tim Grumbacher | — | — | — | |||||||
Michael L. Gleim | — | — | 74,433 | |||||||
Byron L. Bergren | — | — | 23,478 | |||||||
Brendan L. Hoffman | — | 450,000 | — | |||||||
Anthony J. Buccina | 157,019 | — | — | |||||||
Stephen R. Byers | 82,519 | 21,000 | — | |||||||
Keith E. Plowman | 51,019 | 45,000 | — | |||||||
Lucinda M. Baier | — | — | 59,823 | |||||||
Philip M. Browne | — | — | 72,320 | |||||||
Marsha M. Everton | — | — | 72,320 | |||||||
Todd C. McCarty | — | — | 59,900 | |||||||
Jeffrey B. Sherman | — | — | — | |||||||
All directors and executive officers as a group (14 persons) | 297,444 | 547,000 | 362,274 | |||||||
| Options Exercisable | ||||||||||||
| Within 60 Days of | Restricted | Restricted Stock | ||||||||||
| Name | March 11, 2011 | Shares | Units | |||||||||
| Tim Grumbacher | — | — | — | |||||||||
| Michael L. Gleim | — | — | 49,530 | |||||||||
| Byron L. Bergren | 220,000 | 300,000 | 20,259 | |||||||||
| Anthony J. Buccina | 157,019 | 130,000 | — | |||||||||
| Stephen R. Byers | 97,519 | 91,500 | — | |||||||||
| Keith E. Plowman | 61,019 | 87,000 | — | |||||||||
| Barbara J. Schrantz | 49,452 | 118,500 | — | |||||||||
| Lucinda M. Baier | — | — | 38,033 | |||||||||
| Philip M. Browne | — | — | 48,973 | |||||||||
| Shirley A. Dawe | — | — | 48,973 | |||||||||
| Marsha M. Everton | — | — | 48,973 | |||||||||
| Todd C. McCarty | — | — | 38,110 | |||||||||
| All directors and executive officers as a group (13 persons) | 629,646 | 772,000 | 292,851 | |||||||||
- (3)
- See note (3) to Principal Shareholders Table.
- (4)
- Includes 675 shares held in an Individual Retirement Account by Mr. Plowman's spouse. Mr. Plowman disclaims beneficial ownership of these shares.
- (5)
- See notes (1) - (4) above. Includes 6,887 options exercisable within 60 days of March 15, 2013 held by an executive officer not named in this table. Includes 31,000 Restricted Shares held by an executive officer not named in this table. Restricted Shares confer voting rights on the holder but are subject to forfeiture as provided in the Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan and the Amended and Restated 2009 Omnibus Incentive Plan (together, the "Stock Incentive Plan").
5
The Board proposes the following nominees for election as directors to hold office until the 20122014 Annual Meeting of Shareholders and until their respective successors have been elected. Each is currently a director and has agreed to serve if elected. Should a nominee become unable or decline to serve before the meeting, the proxies may vote for a substitute recommended by the Governance and Nominating Committee of the Board, unless the Board reduces the number of directors.
Byron L. Bergren and Marsha M. Everton are not nominees for re-election as directors this year. Mr. Bergren served as President and Chief Executive Officer of Bon-Ton from August 2004 to February 2012, when he retired as President and Chief Executive Officer and was named Chairman of the Board of Directors. He has served as a director since 2004. Ms. Everton has been a director since 2003. The Company thanks Mr. Bergren and Ms. Everton for their service to the Company.
Ms. Baier has been Seniorserved as Executive Vice President of Navigant Consulting, Inc., a specialized, global expert services firm, since February 2013, and became Chief Financial Officer in March 2013. She had been Executive Vice President, Chief Financial Officer and Chief FinancialAdministrative Officer of Central Parking System, Inc., a leading firm in parking management and marketing, from August 2011 to October 2012, having previously served as Senior Vice President and Chief Financial Officer since September 2010. Prior to that, Ms. Baier was Executive Vice President and Chief Financial Officer of Movie Gallery, Inc., a home entertainment specialty retailer, from July 2008 to February 2010. In February 2010, Movie Gallery, Inc. filed for reorganization under Chapter 11 of the Bankruptcy Code. Ms. Baier served from 2006 until July 2008 as Chief Financial Officer of World Kitchen, LLC.
In determining that Ms. Baier should serve as a director of the Company, the Board considered her significant experience as a chief financial officer of a public company, her expertise and background with regard to accounting and financial matters, as well as her expertise in financial and strategic planning, regulatory compliance and reporting and corporate financing.
Mr. Browne has served as Managing Director, Finance and Administration, of Franklin Square Capital Partners, a sponsor and distributor of investment products, since April 2012. Prior to that, he was Senior Vice President and Chief Financial Officer of Advanta Corp., one of the nation’snation's largest credit card issuers in the small business market, from June 1998 to March 2011. In November 2009, Advanta Corp. filed for reorganization under Chapter 11 of the Bankruptcy Code. Prior to that, Mr. Browne was a partner at Arthur Andersen LLP, where he was employed for more than 15 years.
In determining that Mr. Browne should serve as a director of the Company, the Board considered his significant experience as a chief financial officer of a public company, his expertise and background with regard to accounting and financial matters, as well as his expertise in financial and strategic planning, regulatory compliance and reporting and corporate financing.
6
Mr. Gleim has been the Company’sCompany's Lead Director since January 1, 2010. He was Vice Chairman and Chief Operating Officer of Bon-Ton from December 1995 to February 2002. From 1991 to December 1995 he was Senior Executive Vice President of Bon-Ton, and from 1989 to 1991 he was Executive Vice President of Bon-Ton.
In determining that Mr. Gleim should serve as a director of the Company, the Board considered his numerous years of executive leadership with the Company and management experience in the department store industry as well as his expertise in strategic planning, business expansion, financing and corporate governance.
Mr. Grumbacher has beenserved as Executive Chairman of the Board of Directors of Bon-Ton sincefrom February 2005.2005 to February 2012, when he was named Chairman Emeritus and Strategic Initiatives Officer. He served as Chairman of the Board of Directors of Bon-Ton from August 1991 to February 2005. He was Chief Executive Officer of Bon-Ton from 1985 to 1995 and in positions of senior management since 1977.
In determining that Mr. Grumbacher should serve as a director of the Company, the Board considered his numerous years of executive leadership with the Company and management experience in the department store industry as well as his expertise in strategic planning, business expansion, financing and corporate governance and his significant ownership interest in the Company.
BRENDAN L. HOFFMAN—Director since February 2012. Age 44
Mr. Hoffman became President and Chief Executive Officer of Bon-Ton on February 7, 2012. Mr. Hoffman served as President and Chief Executive Officer of Lord & Taylor, a division of Hudson's Bay Trading Company, from October 2008 to January 2012. Prior to that, Mr. Hoffman served six years as President and Chief Executive Officer of Neiman Marcus Direct, where he oversaw the growth of neimanmarcus.com and the launch and growth of bergdorfgoodman.com. Mr. Hoffman has served as a director of Pier 1 Imports, Inc. since January 2011.
In determining that Mr. Hoffman should serve as a director of the Company, the Board considered his current role as President and Chief Executive Officer, his numerous years of executive leadership in the retail department store industry as well as his expertise in strategic planning, business expansion, merchandising, marketing, financing and corporate governance.
Mr. McCarty becamehas served as Senior Vice President, Global Human Resources of Las Vegas Sands Corporation since September 2012. He had been Senior Vice President, Human Resources of The New York Times Company effectivefrom December 31, 2009.2009 to September 2012. Prior to that, Mr. McCarty served as Senior Vice President, Global Human Resources of Readers Digest Association, Inc. from March 2008 to December 2009. In August 2009, Readers Digest Association, Inc. filed for reorganization under Chapter 11 of the Bankruptcy Code. From 2005 to February 2008, he served as Senior Vice President — President—Human Resources of Rite Aid Corporation.
In determining that Mr. McCarty should serve as a director of the Company, the Board considered his many years of experience as a senior executive in the field of human resources, including specialized knowledge which is invaluable in assistingbeneficial to the Board of Directors in its formulation of compensation strategies and objectives.
JEFFREY B. SHERMAN—Director since March 2013. Age 64
Mr. Sherman has been the President of The Echo Design Group, Inc., a company that designs, manufactures and distributes accessories and home products, since 2010. From 2008 to 2010, he served as President and Chief Executive Officer of Hudson's Bay Trading Company, a retailer with over 600 retail locations in Canada and the United States. Prior to that, Mr. Sherman served as President and Chief Operating Officer of the Polo Retail Group of Ralph Lauren Corporation, as Chief
Executive Officer of Limited Stores and in positions of increasing responsibility for over thirty years with Federated Department Stores, including President and Chief Operating Officer of Bloomingdale's. Mr. Sherman serves on the Board of Directors of United Way, New York City.
Mr. Sherman was recommended to the Board by Mr. Hoffman, the Company's President and Chief Executive Officer. In determining that Mr. Sherman should serve as a director of the Company, the Board considered his numerous years of executive leadership with companies in the department store and retail industries as well as his expertise in strategic planning, business expansion, merchandising, marketing, distribution, brand development and financing.
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Table of Contents
The key documents that constitute our corporate governance framework are our: Each of the committee charters and the Code of Ethical Standards and Business Practices is available on our website at www.bonton.com by clicking on • Articles of Incorporation• Bylaws• Corporate Governance Policies• Audit Committee Charter• Human Resources and Compensation Committee Charter• Governance and Nominating Committee Charter• Executive Committee Charter• Code of Ethical Standards and Business Practices“Investor"Investor Relations,”" then “Corporate"Corporate Governance.”
The Company maintains a Code of Ethical Standards and Business Practices (the “Code"Code of Conduct”Conduct") that sets forth the Company’sCompany's policies and expectations. The Code of Conduct, which applies to every Company director, officer and employee, addresses a number of topics, including conflicts of interest, relationships with others, corporate payments, disclosure policy, compliance with laws, corporate opportunities and the protection and proper use of the Company’sCompany's assets. The Code of Conduct meets NASDAQ’sthe NASDAQ Stock Market's requirements for a code of conduct as well as the SEC’sSEC's definition of a code of ethics applicable to the Company’sCompany's senior officers.
The Board of Directors has determined that each of Messrs. Browne, andGleim, McCarty and Mmes.Sherman and Ms. Baier Dawe and Everton is an “independent”"independent" director as that term is defined in the listing standards of the NASDAQ Stock Market. In determining independence, the Board of Directors carefully reviewed any possible related party transactions between the Company or any of its affiliates and each of the independent directors and determined there were no transactions that would compromise such director's independence. As discussed above, the directors’ independence.
Since 2004, the Company has chosen to separate the roles of Chairman of the Board and Chief Executive Officer. The Company believes that this structure allows the Chairman of the Board to focus on leadership of the Board and to ensure that the Board fulfills its duties and responsibilities while the Chief Executive Officer focuses on leadership of the Company, including its strategic direction, the quality of its management and continuous operational improvement to enhance shareholder value. In addition, beginning January During 1, 2010, the Company instituted the position of Lead Director. The role of the Lead Director is described on page 11.13.2010,2012, the Board of Directors held seventen meetings and took action by unanimous consent without a meeting once.two times. No director attended fewer than 75% of the total number of meetings of the Board and committees on which he or she served while in office.8
The Board has an Audit Committee, a Human Resources and Compensation Committee, a Governance and Nominating Committee and an Executive Committee. Beginning in May 2008 the Board also established, on a temporary basis, the Ad Hoc Leadership Transition Committee. The primary functions of each committee, its members, the number of times the committee met during 2010,2012, and certain other information regarding each committee, are described below.
Audit Committee
The current members of the Audit Committee are Philip M. Browne (Chair), Lucinda M. Baier and Todd C. McCarty. The Board has determined that each of Mr. Browne and Ms. Baier is an “audit"audit committee financial expert”expert" as defined by applicable SEC rules and the listing standards of the NASDAQ Stock Market. The Audit Committee is comprised entirely of “independent”"independent" directors as defined by applicable SEC rules and NASDAQ Stock Market listing standards and operates under a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company’sCompany's website at www.bonton.com.
The Audit Committee appoints and establishes the compensation for the Company’sCompany's independent registered public accounting firm and approves in advance all engagements with the independent registered public accounting firm to perform audit or non-audit services. The Audit Committee oversees (1) the integrity of the Company’sCompany's financial statements, (2) the Company’sCompany's system of internal control over financial reporting and disclosure controls, (3) the Company's compliance with legal and regulatory requirements, (3)(4) the qualification, independence and performance of the Company’sCompany's independent registered public accounting firm and (4)(5) the performance of the Company’sCompany's internal audit function. The Audit Committee also oversees the financial reporting processes of the Company and the audits of the Company’sCompany's financial statements. To assist it in carrying out its responsibilities, the Audit Committee is authorized to retain the services of independent advisors.
The Audit Committee met seven times during 2010.
Human Resources and Compensation Committee
The members of the Human Resources and Compensation Committee (referred to in this proxy statement as the “HRCC”"HRCC") are Marsha M. Everton (Chair), Shirley A. Dawe and Todd C. McCarty.McCarty and Jeffrey B. Sherman. The HRCC is comprised entirely of “independent”"independent" directors, as defined by the listing standards of the NASDAQ Stock Market, and all members are “non-employee directors”"non-employee directors" as defined by applicable SEC rules and “outside directors”"outside directors" as defined by applicable Internal Revenue Service Rules. The HRCC operates under a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company’sCompany's website at www.bonton.com.
The HRCC reviews and evaluates the Company’sCompany's overall compensation strategy to ensure that it promotes shareholder interests, supports the Company’sCompany's strategic objectives and provides for appropriate rewards and incentives for the Company’sCompany's management and employees. The HRCC reviews, evaluates and provides recommendations to the Board regarding the plans, policies and programs relating to the compensation of the Company’sCompany's executive officers, the general compensation
policies of the Company, succession planning, management development, and termination policies and arrangements. In addition, the HRCC reviews and approves the structure of the Company’sCompany's bonus plans, administers the Company’sCompany's stock optionincentive plans and oversees the Company’sCompany's retirement, defined benefit and health and welfare plans.
At the end of each year, the HRCC evaluates the performance of the Executive Chairman of the Board, the President and Chief Executive Officer and the other executive officers of the Company with respect to approved goals and objectives, and establishes the compensation levels for the executive officers, including base pay, annual incentive compensation, long-term incentive plan participation, entrance into an agreement regarding employment and any special or supplemental
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The HRCC may delegate its authority to a subcommittee comprised solely of its members. To assist it in carrying out its responsibilities, the HRCC is authorized to retain the services of advisors. During this past year,2012, the HRCC engaged Meridian Compensation Partners, LLC (“Meridian”("Meridian") to provide counsel on executive compensation matters. The nature and scope of services rendered by Meridian were:
- •
- competitive market pay analyses;
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- ongoing support with regard to market trends impacting compensation and benefit programs;
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- preparation for and attendance at selected HRCC and Board meetings; and
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- other miscellaneous requests that occurred throughout the year.
The HRCC did not direct Meridian to perform the above services in any particular manner or under any particular method. The HRCC has the final authority to hire and terminate the consultant, and the HRCC evaluates the consultant periodically.
(See "Compensation Discussion and Analysis”Analysis" on page 21 for additional discussion of the processes and procedures for the consideration and determination of executive officer compensation.)
During 2010,2012, the HRCC met 13eight times and took action by unanimous consent without a meeting twice.
Governance and Nominating Committee
The current members of the Governance and Nominating Committee (referred to in this proxy statement as the “Governance Committee”"Governance Committee") are Michael L. Gleim (Chair) and, Marsha M. Everton. Mr. Gleim is not an “independent” director as set forth under the NASDAQ Stock Market listing standards.Everton and Tim Grumbacher. As discussed above, the Company is a “controlled company”"controlled company" and, as such, the Company may elect, and has elected,under Rule 5615(c) of the listing standards of the NASDAQ Stock Market, not to have a Governance Committee comprised solely of independent directors. Mr. Gleim provides the Board with valuable insight with respect to both the governance of the Company and the nominations process, and, therefore, the Board believes that he should continue as a member, and Chair, of the Governance Committee.
The Governance Committee reviews, develops and makes recommendations to the Board regarding the Company’sCompany's governance processes and procedures. It also recommends candidates for election to fill vacancies on the Board, including renominations of members whose terms are due to expire. The Governance Committee is also responsible for making recommendations to the Board regarding the compensation of its non-employee members. The Governance Committee operates under
a charter that was adopted by the Board. This charter is posted in the Investor Relations section of the Company’sCompany's website at www.bonton.com.
The Governance Committee met four times during 2010.
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The members of the Executive Committee are Tim GrumbacherByron L. Bergren (Chair), Shirley A. Dawe and Michael L. Gleim.Gleim and Tim Grumbacher. The Executive Committee has the authority to act in place of the Board on specified matters.
The Executive Committee has the following responsibilities: to propose the Board agendameeting schedule for each year and to refine the agenda prior to each Board meeting, to keep the members of the Board informed of pertinent issues that arise between regularly scheduled quarterly Board meetings and to act as a sounding board for the Company’sCompany's Chief Executive Officer when appropriate. The Executive Committee Charter under which the Executive Committee operates was adopted by the Board and is posted in the Investor Relations section of the Company’sCompany's website at www.bonton.com.
During 2010,2012, the Executive Committee met tennine times.
Ad Hoc Leadership Transition Committee
The Ad Hoc Leadership Transition Committee, which reviews, develops and makes recommendations to the Board regarding Chief Executive Officer succession, was established by the Board in May 2008 and completed its initial charge in November 2008. At the behest of the Board, the Committee was reconstituted in December 2009. The members of the Ad Hoc Leadership Transition Committee are Ms. DaweMichael L. Gleim (Chair), Philip M. Browne and Todd C. McCarty. The Ad Hoc Leadership Transition Committee met sevenfour times during 2010.
In January The Board as a whole has responsibility for risk As of 1, 2010, the Board elected Michael L. Gleim as Lead Director of the Board. The primary duties of the Lead Director are, among other things, to:• work closely with and serve in an advisory capacity to the Chairman, the Chief Executive Officer and the Executive Committee;• assist the Board in assuring that the Board operates in compliance with applicable laws and regulations and the Company’s Charter, By-Laws and corporate governance policies;• establish, in consultation with the Chairman, the Chief Executive Officer and non-employee directors, the frequency, duration, structure and location of Board meetings and review such from time to time, as considered appropriate or as requested by the Board;• assist the Chairman and the Chief Executive Officer in setting Board meeting agendas;• review and assess, in conjunction with the Chairman, the Chief Executive Officer and the relevant committees of the Board, director attendance, performance and the size and composition of the Board and its committees; and• preside at all meetings of the Board at which the Chairman is not present and chair meetings of the Board, without management present, at every Board meeting.oversight, with reviews of certain areas conducted by relevant Board committees that report on their findings to the Board.oversight. The oversight responsibility of the Board and the Board committees is facilitated by management reporting processes designed to provide information to the Board concerning the identification, assessment and management of critical risks and management’smanagement's risk mitigation strategies and practices. These areas of focus include compensation, financial (including accounting, reporting, credit, liquidity and tax), operational, legal, regulatory, environmental, political and strategic risks. The full Board (or the appropriate Board committee), in concert with the appropriate management within the Company, reviews management reports to formulate risk identification, management and mitigation strategies.11
The Governance Committee considers any appropriate recommendations for candidates for the Board. Any candidate recommended for the Board shall, at a minimum, possess a background that includes a solid education, sufficient business, professional or academic experience and the requisite reputation, character, integrity, skills, judgment and temperament and such other relevant characteristics, which, in the Governance Although the Governance Committee does not have a formal written policy regarding diversity in composition of the Board, the Governance Committee does consider the contribution of a candidate to the overall diversity of the Board. Diversity is considered broadly and includes variety in personal and professional backgrounds, experience and skills, geographic location, as well as differences in gender, race, ethnicity and age. Each candidate for Board membership commits to participate fully in Board activities, including active membership on at least one Board committee and attendance at, and participation in, meetings of the Board and the Board committees of which he or she is a member. When considering whether candidates for Board membership have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively, the Governance Committee focuses on the information provided in each of the The Governance Committee will consider shareholder recommendations for candidates for the Board from any shareholder who has been a continuous record owner of at least 3% of the common stock of the Company for at least one year prior to submission of the recommendation and who provides a written statement that the shareholder intends to continue share ownership through the date of the meeting at which directors are to be elected. Any such shareholder recommendation should be sent to the Governance and Nominating Committee,c/o Office of the Secretary, The Bon-Ton Stores, Inc., In addition, the Governance Committee considers potential candidates recommended by current directors, Company officers, employees and others. When appropriate, the Governance Committee may retain executive recruitment firms to assist in identifying suitable candidates. The Governance Committee screens all potential candidates in the same manner regardless of the source of the recommendation. In re-nominating incumbent directors to continue for an additional term, the Governance Committee determines whether the incumbent director is willing to stand for re-election. If so, the Governance Committee evaluates his or her performance in office to determine suitability forCommittee’sCommittee's view, have prepared him or her for dealing with the multi-faceted financial, business and other issues that confront a board of directors of a corporation with the size, complexity reputation and successreputation of the Company. The Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. Candidates for Board membership are reviewed in the context of the current Board composition, the operating requirements of the Company and the long-term interests of the Company’sCompany's shareholders. The Governance Committee seeks to ensure that backgrounds and qualifications of the Company’sCompany's directors, as a group, provide a significant breadth of experience, knowledge and abilities that will assist the Board in fulfilling its responsibilities to shareholders.Director’sDirector's individual work histories set forth on pages 6-7.P.O. Box 2821,2801 East Market Street, York, Pennsylvania 17405.17402. No shareholder recommendations have been received since the June 15, 201012, 2012 shareholder meeting.12
The Company has adopted a policy that encourages Board members who reside in the York area to attend the annual meeting of shareholders. Four of the (then) eight members of the Board attended the 20102012 Annual Meeting of Shareholders.
Any shareholder who wishes to communicate with the Board of Directors or any individual director may do so by directing correspondence, which prominently displays the fact that it is a shareholder-board communication, to such director or directors,c/o Office of the Secretary, The Bon-Ton Stores, Inc., P.O. Box 2821,2801 East Market Street, York, Pennsylvania 17405.17402. Until and unless a procedure is adopted by a majority of the independent members of the Board whereby it may be deemed unnecessary or inappropriate to relay certain shareholder communications to the appropriate parties, all shareholder communications will be relayed to the intended director or directors.
During 2012, Messrs. Grumbacher and Each non-employee director receives both cash compensation and stock compensation comprised of the following: The RSUs issued to directors are distributable after the applicable period following termination of Board service. The current grant documents provide for a period of three months following termination of Board service. One of the In January In February 2012, the Board elected Mr. Bergren as Chairman of the Board. For his service as Chairman of the Board, Mr. Bergren receives a supplemental fee of $170,000 per year. During 2012, in recognition of the significant additional work performed by Ms. Everton as chair of the HRCC in the process of selecting a new Chief Executive Officer and negotiating the terms of such employment, the Board authorized an additional cash payment to Ms. Everton of $20,000. Directors may defer all or any part of their cash compensation into additional RSUs. The following table presents the compensation provided by the Company during Lucinda M. Baier Byron L. Bergren Philip M. Browne Marsha M. Everton Michael L. Gleim Todd C. McCarty The aggregate number of RSUs held by each non-employee director as of February 2, 2013 was: 59,823 held by Ms. Baier In December 2007, the Company adopted guidelines requiring each non-employee director to maintain an equity stake in the Company equal to three times the annual cash retainer paid to the director. This links the Share ownership requirements for 2012 were measured based on the average price of the THE BOARD OF DIRECTORS RECOMMENDS The "RESOLVED, that the compensation paid to the As described in the THE BOARD OF DIRECTORS RECOMMENDS VOTING The Audit Committee has recommended ratification of its appointment of KPMG LLP In making its selection of KPMG, the Audit Committee considered whether the non-audit services provided by KPMG are compatible with maintaining Audit Fees(1) Audit-Related Fees Tax Fees(2) All Other Fees The Audit Committee is responsible for the pre-approval of all audit services and non-audit services performed by the A representative of KPMG is expected to be present at the meeting, will have the opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions from shareholders. THE BOARD OF DIRECTORS RECOMMENDS The Audit Committee is comprised of three independent directors. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting, and rely, without independent verification, on the information provided to them and on the representations made to them by management and the The role of the Audit Committee is to assist the Board in its general oversight of the integrity of the The Audit Committee has reviewed and discussed with management, the internal auditors and KPMG the audited consolidated financial statements, KPMG also provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Annual Report onForm 10-K for the fiscal year ended Members of the Audit Committee: This Compensation Discussion and Analysis ("CD&A") primarily addresses the compensation of the The purpose of this CD&A is to provide shareholders with a description of the material elements of the Company's compensation program for its Named Executive Officers. The CD&A should be read in conjunction with the accompanying compensation tables, corresponding footnotes and narrative discussion, as they provide information and context to the compensation disclosures. The Company's compensation program is designed to balance near-term results with long-term success in alignment with the interests of our shareholders and the achievement of our business strategy. Bon-Ton has a pay-for-performance philosophy that forms the foundation for decisions regarding compensation made by the Company's management and the HRCC. The Company believes that a meaningful portion of each executive officer's compensation must be at risk in order to invest our executive officer in the long-term success of the Company. The framework of our executive compensation programs includes the following governance features: The Company's compensation program and related governance features are complemented by several specific elements designed to align the Company's executive compensation with long-term shareholder interests, including: As described on the following pages, we require that the Company achieve a threshold level of performance to pay an annual cash bonus. Also, our long-term incentive program includes restricted stock awards that vest over time or vest if performance targets are met. These restricted stock grants are designed to align executive officer interests with shareholder interests, which we believe is crucial to our long-term success. Fiscal 2012 was a period during which the Company faced numerous challenges, resulting in our financial performance being below our expectations. Performance thresholds for annual cash incentive compensation and long-term incentive compensation were not met, resulting in no annual bonus payout or vesting of performance-based restricted stock with respect to 2012 results (except where contractually required). In accordance with new SEC proxy rules, at our 2012 Annual Meeting, an advisory vote was held regarding say-on-pay, the approval of the compensation of our Named Executive Officers set forth in the summary compensation table and accompanying narrative disclosure contained in our 2012 Proxy Statement. Executive compensation was approved by our shareholders by an overwhelming margin, with 96% of the votes for approval of Named Executive Officer compensation. In addition, at our 2011 Annual Meeting, the Company provided to its shareholders the opportunity to vote on an advisory basis on the frequency of this say-on-pay vote. The Board of Directors had recommended that such vote be held on an annual basis, and the shareholders overwhelmingly approved such frequency. Following that vote, the Board of Directors determined that it will include an advisory shareholder vote on compensation of Named Executive Officers in its proxy statement annually until the next required vote on the frequency of shareholder voting on executive compensation. We encourage you to read this CD&A for a detailed analysis of our executive compensation program, including information about the 2012 compensation of the Named Executive Officers described in the tables that follow. The designed to reward significant achievement of top performing executive officers and to attract new talent. Based on the foregoing objectives, the HRCC has structured annual and long-term executive compensation to provide incentives to executive officers to achieve the business goals set by the Company and reward them for achieving such goals. In addition, in structuring compensation, especially performance-based compensation, the HRCC In December 2007, the Company adopted share ownership guidelines for our executive officers. The guidelines help ensure that our executive officers maintain an equity stake in the Company, and by doing so, appropriately link their interests with those of other shareholders. Shares beneficially owned, time-based restricted stock and time-based restricted stock units Share ownership requirements for Each of the The The Chief Executive Officer annually prepares a review of his direct reports, including the Other members of management also support the HRCC in its work. Management assists the Chair of the HRCC in establishing the agendas for HRCC meetings and preparing materials for the review of HRCC members in advance of each meeting. With respect to most compensation and benefit matters, including compensation of the The Company competes against a wide range of companies in retaining and attracting executive personnel. Each year, the Company compares salary, annual incentive compensation and long-term equity incentive values for its executive officers against various retail For its comparative analysis, the During 2012, the In addition, in The principal components of compensation for the Base Salary Performance-based Annual Cash Incentive Compensation Promote improvement of the Cash bonus opportunity based on the achievement of certain goals, which may be individual performance goals, Company performance goals or a combination of the two. Where applicable, goals are typically established annually and bonus amounts awarded will vary based on performance. Long-Term Equity Incentive Compensation Promote the achievement of the Reviewed annually and granted, if appropriate, by the HRCC in the form of stock options, restricted stock awards and RSUs. Amounts actually earned by each Perquisites and Other Benefits Provide health and welfare benefits as available to all employees. Additional perquisites and benefits are designed to attract, retain and reward Health and welfare benefits are a fixed component that may vary based on employee elections. Perquisites and other benefits may vary from year to year. Retirement Benefits Provide basic retirement benefits as available to all Company associates and supplemental coverage necessary to retain key executives. Participation in pension plans for certain The HRCC has reviewed a summary, or The base salaries of the Minimum base salaries for Performance-Based Annual Cash Incentive Compensation The Company has an annual incentive For Net income Net sales Adjusted EBITDA(1) The HRCC assigns goals and weightings for each under the Cash Bonus Plan is dependent upon the The HRCC reviewed and established competitive Brendan L. Hoffman Anthony J. Buccina Net sales (50%) Stephen R. Byers Net sales (50%) Keith E. Plowman Net income (90%) The In addition to bonuses that may be awarded under the Cash Bonus Plan, a cash bonus may be awarded at the discretion of the HRCC for extraordinary individual achievement or for other reasons, such as a signing bonus upon joining the Company or an executive extending the term of his or her employment agreement. In 2012, Mr. Hoffman received a signing bonus of $1,000,000 and a minimum performance-based cash bonus of $500,000, both of which were awarded pursuant to the terms of his employment agreement. No extraordinary bonuses were awarded to any of the Long-Term Equity Incentive Compensation Another component of The HRCC has decided that grants made to the The exercise price of options granted by the HRCC is usually set at the closing price of the date and exercise price on the same date as the starting date of a new executive. If the HRCC sets a grant date and option exercise price based on the closing price on the NASDAQ Stock Market on a date in the future, the HRCC confirms that management does not anticipate any material announcements during the period from the HRCC meeting until such future date. No options were granted to the On April 17, 2013, Mr. Hoffman was awarded a grant of 100,000 time-based restricted shares, all of which vest on April 17, 2016. In addition, Mr. Hoffman received a grant of 300,000 performance-based restricted shares Pursuant to an employment agreement dated On April 18, 2011, Mr. Buccina received On April 12, 2010, Mr. Byers was awarded a grant of 11,500 On April 18, 2011, Mr. Byers was awarded a grant of 10,000 time-based restricted shares, all of which vest on April 18, 2014. In addition, Mr. Byers received On April 17, 2012, Mr. Byers was awarded a grant of On April 17, 2013, Mr. Byers was awarded a grant of 15,000 time-based restricted shares, all of which vest on April 17, 2016. In addition, Mr. Byers received a grant of 20,000 performance-based restricted shares which are subject to vesting based on achievement of Company performance goals for 2013 and a grant of 22,500 performance-based restricted shares which are subject to vesting based on achievement of Company performance goals for the cumulative three-year period of 2013, 2014 and 2015. For vesting of restricted shares above the target amount of 15,000 shares, it is an additional requirement that the TSR be a positive number. On April 12, 2010, the HRCC granted Mr. Plowman an award of 30,000 time-based restricted shares, 5,000 of which vested on April 12, 2011 and 25,000 of which On April 18, 2011, Mr. Plowman was awarded a grant of 12,000 time-based restricted shares which vest on April 18, 2014. In addition, Mr. Plowman On April 17, 2012, Mr. Plowman was awarded a grant of On April 17, 2013, Mr. Plowman was awarded a grant of Awards of performance-based restricted stock reflect the The aforementioned awards are reflected in the Perquisites and Other Benefits The Company provides the The Retirement Benefits The contributions to each eligible In connection with an acquisition in March 2006, the Company assumed the Carson Pirie Scott & Co. Pension Plan (the Employment Agreements and Payments Upon Termination or Change in Control As discussed more fully below, the Company has entered into employment agreements with Effective February 7, 2012, the Company With respect to Mr. Buccina, the HRCC and management of the Company determined his services and merchandising expertise would be critical The material terms of the employment agreements with the Under the employment agreements, the Company has agreed to provide severance compensation in the event of a termination, change in control or other triggering Information on these arrangements for the In order to further align The Company prohibits derivative transactions and selling short in the Internal Revenue Code The HRCC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K with Company management and, based on such review and discussion, the HRCC recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. The Human Resources and Compensation Committee Marsha M. Everton, Chair Company management performs an annual risk assessment The HRCC has determined that the Brendan L. Hoffman, President and Chief Executive Officer Byron L. Bergren, President and Chief Executive Officer through February 6, 2012 Anthony J. Buccina, Vice Chairman, President— Merchandising Stephen R. Byers, Executive Vice President, Stores, Visual and Loss Prevention Tim Grumbacher, Strategic Initiatives Officer Keith E. Plowman, Executive Vice President, Chief Financial Officer and Principal Accounting Officer Brendan L. Hoffman Byron L. Bergren Anthony J. Buccina Stephen R. Byers Tim Grumbacher Keith E. Plowman Stock options and awards of restricted stock generally vest over a number of years. Any vested options are usually forfeited 90 days after termination of the The table below provides information regarding grants of options and awards of restricted stock and RSUs made during Brendan L. Hoffman Byron L. Bergren 6/12/12 Anthony J. Buccina N/A Stephen R. Byers N/A Keith E. Plowman N/A Brendan L. Hoffman Byron L. Bergren Anthony J. Buccina Stephen R. Byers Keith E. Plowman The Pension Benefits Table below shows the actuarial present value of accumulated benefits payable to each of our The present value set forth has been calculated for Mr. Buccina assuming he Anthony J. Buccina In connection with the acquisition of Requirements for Retirement Benefits Normal Retirement: Employees who terminate employment with three or more years of service and have attained age 65 qualify for normal retirement. Payment of the full benefit commences as soon as practicable following termination. Mr. Buccina Early Retirement: Employees who have completed three or more years of service and are age 55 or older upon termination are eligible for early retirement. In addition, employees who participated in For an unmarried employee, the normal form of payment is a life annuity. For a married employee, the normal form of payment is a qualified joint and surviving spouse annuity; however, the Calculation of Benefits Effective May 1, 2002, the cash-balance account. Employees with accrued pension benefits as of April 30, 2002, including Mr. Buccina, are considered continued participants under the current Effective May 20, 2006, future accruals in the Brendan L. Hoffman Byron L. Bergren Anthony J. Buccina Stephen R. Byers Tim Grumbacher Keith E. Plowman Brendan L. Hoffman, President and Chief Executive Officer On January 23, 2012, the Company entered into an employment agreement (the "Hoffman Employment Agreement") with Mr. Hoffman providing that he would serve as President and Chief Executive Officer effective February 7, 2012, with a term running through February 7, 2015. Mr. Hoffman's initial base salary under the Hoffman Employment Agreement is $1,000,000 per year and provides that Mr. Hoffman will be paid a signing bonus of $1,000,000 within thirty days following the effective date and $1,000,000 on the first anniversary of the effective date if he is still employed by the Company at that time. The Hoffman Employment Agreement provides that Mr. Hoffman is eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 100% of base salary, with a threshold bonus of 50% of base salary, and a maximum bonus of 200% of base salary. The performance measures to be utilized and the weighting of these performance measures will be determined by the HRCC in its discretion. With respect to fiscal year 2012, the Hoffman Employment Agreement provided that Mr. Hoffman receive a minimum cash bonus of $500,000. The Hoffman Employment Agreement provides that Mr. Hoffman receive a grant of 300,000 restricted shares of the Company's common stock, of which 100,000 shares vested on February 7, 2013 and 100,000 shares vest on each of February 7, 2014 and February 7, 2015, provided that Mr. Hoffman is still employed by the Company on each such date. In addition, Mr. Hoffman received, as performance-based compensation, a grant of 300,000 restricted shares of the Company's common stock, 50,000 of which were subject to vesting based on achievement of Company performance goals for 2012, and 125,000 of which are subject to vesting based on achievement of Company performance goals for each of 2013 and 2014. As the performance goals for 2012 were not attained, the restricted stock award relating to 2012 performance goals was forfeited. On April 17, 2013, Mr. Hoffman was awarded a grant of 100,000 time-based restricted shares, all of which vest on April 17, 2016. In addition, Mr. Hoffman received a grant of 300,000 performance-based restricted shares which are subject to vesting based on achievement of Company performance goals for the cumulative three-year period of 2013, 2014 and 2015. For vesting of restricted shares above the target amount of 200,000 shares, it is an additional requirement that the TSR be a positive number. The Company has agreed to reimburse Mr. Hoffman for reasonable attorney's fees in connection with the negotiation of the Hoffman Employment Agreement of up to $20,000. In addition, the Company has agreed to reimburse Mr. Hoffman for all expenses related to Mr. Hoffman's relocation to Milwaukee, Wisconsin, in accordance with the Company's policy on relocation of senior executives, including additional amounts for the payment of related federal and state taxes. Pending Mr. Hoffman's relocation, the Company has agreed to reimburse Mr. Hoffman for his travel between New York, New York and the Company's offices, stores and facilities, including lodging, up to $75,000 per year. The Company has also agreed to gross up the payments made to Mr. Hoffman for these attorney's fees and travel and lodging expenses. Mr. Hoffman will also be eligible to participate in the Company's health plans and other plans and programs generally available to the Company's employees. In the event of discharge without "Cause" or resignation for "Good Reason" (as such terms are defined in the Hoffman Employment Agreement) during the term of the Hoffman Employment Agreement, Mr. Hoffman will be entitled to receive (1) severance pay equal to the greater of his base salary for the remaining contract term or 200% of his base salary, (2) an amount equal to 24 times the monthly COBRA payment applicable to him as of the termination date, (3) an amount equal to the annual bonus Mr. Hoffman would have received with respect to the fiscal year of termination, prorated based on the number of days employed by the Company during that year, and (4) any unpaid signing bonus amounts. The severance payment will be payable 50% in a lump sum as of the six month anniversary of Mr. Hoffman's termination of employment and 50% in a lump sum as of the one-year anniversary of Mr. Hoffman's termination of employment. The severance payment is contingent on Mr. Hoffman signing and not timely revoking a general release of claims. In addition, in the event of discharge without Cause or resignation for Good Reason, any unvested restricted stock issued pursuant to the Restricted Stock Agreements will automatically vest in full. Upon a "Change of Control" (as such term is defined in the Hoffman Employment Agreement), the vesting of stock options and restricted shares held by Mr. Hoffman shall be governed by the terms of such stock options or restricted shares award. If following a Change of Control Mr. Hoffman is discharged without Cause or resigns for Good Reason within one year following the Change of Control, Mr. Hoffman will receive (1) a severance payment equal to two times his base salary, (2) an amount equal to two times the average annual bonus paid to him during the term of the Employment Agreement, (3) an amount equal to 24 times the monthly COBRA payment applicable to him as of the termination date, and (4) an amount equal to the annual bonus Mr. Hoffman would have received with respect to the fiscal year of termination, prorated based on the number of days employed by the Company during that year. The Change of Control severance payment will be payable 50% in a lump sum as of the six month anniversary of Mr. Hoffman's termination of employment and 50% in a lump sum as of the one-year anniversary of Mr. Hoffman's termination of employment. The Change of Control severance payment is contingent on Mr. Hoffman signing and not timely revoking a general release of claims. Pursuant to the Hoffman Employment Agreement, if the aggregate present value of the "parachute payments" determined under Section 280G of the Internal Revenue Code exceeds three times his "base amount," as defined in Section 280G, the payouts upon a Change in Control shall be reduced to be less than three times his base amount. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Hoffman may be entitled upon certain events and/or a Change in Control, see "Potential Payments Upon Termination or Change in Control" on page 45. The Hoffman Employment Agreement contains a non-solicitation clause that, during Mr. Hoffman's employment and for a period of two years following termination of his employment, prohibits Mr. Hoffman from, directly or indirectly, soliciting, inducing, encouraging, influencing or otherwise causing any customer, employee, consultant, independent contractor or supplier of the Company to change his, her or its business relationship with or terminate employment with the Company. The Hoffman Employment Agreement contains a non-competition clause that, during Mr. Hoffman's employment and for a period of one year following termination of his employment, prohibits Mr. Hoffman from engaging in or being financially interested in any competitor of the Company, other than the passive ownership of less than 2% of any class of securities of a company. The Hoffman Employment Agreement also contains confidentiality provisions relating to the Company's confidential information. Byron L. Bergren, President and Chief Executive Officer through February 6, 2012 Mr. Pursuant to the March 18, 2009 amendment to his employment agreement, Mr. Bergren was granted 200,000 time-based restricted shares of the The employment agreement provided that in the event that Mr. Bergren Mr. Anthony J. Buccina, Vice Chairman, On Mr. The Buccina Employment Agreement provides that Mr. Buccina will be paid a retention bonus of one times base salary ($850,000) provided that Mr. Buccina is employed by the Company at February 15, 2013. As Mr. Buccina completed the term of the Buccina Employment Agreement, he was eligible for and subsequently received the retention bonus. The Buccina Employment Agreement provides that Mr. Buccina receive a grant of Pursuant to a previous employment agreement dated February 1, 2009, the HRCC granted Mr. Buccina 100,000 time-based restricted shares of the On April 18, 2011, Mr. Buccina received The Buccina Employment Agreement provides that in the event of Upon a For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Buccina may be entitled upon certain eventsand/or a Change in Control, see The Buccina Employment Agreement contains a non-competition clause that, during Mr. Stephen R. Byers, Executive Vice On Pursuant to On April On April 17, 2013, Mr. Byers was awarded a grant of 15,000 time-based restricted shares, all of which vest on April The Byers Employment Agreement provides that in the event of Upon a For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Byers may be entitled upon certain eventsand/or a Change in Control, see The Byers Employment Agreement contains a non-competition clause that, during Mr. The Company has entered into agreements and maintains plans that will require it to provide compensation to the Brendan L. Cash Severance Pro-rated Non-Equity Incentive Compensation (Cash Bonus) Value of Accelerated Restricted Stock(4) Continuing Health and Welfare Benefits Life Insurance Total Cash Severance Value of Accelerated Restricted Stock(4) Carson's Pension Plan(5) Continuing Health and Welfare Benefits Life Insurance Total Stephen R. Cash Severance Value of Accelerated Restricted Stock(4) Continuing Health and Welfare Benefits Life Insurance Total Tim Grumbacher—Strategic Initiatives Officer Life Insurance Total Cash Severance Value of Accelerated Restricted Stock(3) Life Insurance Total At Equity compensation plans approved by security holders Stock options Restricted shares Restricted stock units Subtotal Equity compensation plans not approved by security holders Total Executive officers, directors and persons who own more than 10% of the The The Company leases its Oil City, Pennsylvania store from the estate of Nancy T. Grumbacher, Trustee of the 2002 Indenture of Trust of M. Thomas Grumbacher, pursuant to a lease entered into on January 1, 1981. The Oil City lease terminates on July 31, remainder of the current term, which includes a lease renewal determined to be reasonably assured, is approximately Michael L. Gleim, a non-employee Director, received a $50,000 supplemental retirement benefit during Mr. Sherman is President of The Echo Design Group, Inc., which in 2012 supplied certain products to the Company. Payments for purchases by the Company in 2012 totaled $380,049. Shareholder proposals for the If notice of any proposal with respect to a matter to be addressed at the SEC regulations permit the Company to send a single set of proxy materials, which includes this proxy statement, the Annual Report to Shareholders and the Notice of Internet Availability of Proxy Materials, to two or more shareholders that share the same address. Each shareholder will continue to receive his or her own separate proxy card. Upon written or oral request, the Company will promptly deliver a separate set of proxy materials to a shareholder at a shared address that only received a single set of proxy materials for this year. If a shareholder would prefer to receive his or her own copy, please contact Mary Kerr, Vice THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: 0000174781_2 R1.0.0.51160 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report/10-K Wrap is/are available at www.proxyvote.com . THE BON-TON STORES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS June 18, 2013 The shareholder hereby appoints Brendan L. Hoffman and Keith E. Plowman, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of The Bon-Ton Stores, Inc. that the shareholder is entitled to vote at the Annual Meeting of Shareholders to be held at 9:00 a.m. Eastern Time on June 18, 2013, at Bon-Ton's Corporate Office, 2801 E. Market Street, York, PA 17402, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE. PLEASE MARK, SIGN, Bergren areHoffman were employees of the Company and arewere not paid any separate compensation for serving as directors. TheyMessrs. Grumbacher and Hoffman are the only current employees who serve as directors.• a $120,000 annual fee, $50,000 of which is paid in cash (the “annual cash retainer”) and $70,000 of which is paid in RSUs that vest at the end of the current term;• a $20,000 annual cash fee for serving on the Executive Committee;• a $5,000 annual cash fee for serving on each committee (other than the Executive Committee), including the Ad Hoc Leadership Transition Committee; and• a $15,000 supplemental annual fee for each committee chair, including the Ad Hoc Leadership Transition Committee, $10,000 of which is paid in cash and $5,000 in RSUs that vest at the end of the current term.Company’sCompany's non-employee directors, currently Lucinda M. Baier, serves as the Board’sBoard's representative on the committee that oversees the Company’sCompany's retirement contribution plan. For her service on this committee, Ms. Baier receives $1,250 for each meeting attended.As of$5,000 annually. 1, 2010, the Board elected Mr. Gleim as Lead Director of the Board. For his service as Lead Director, Mr. Gleim receives a supplemental fee of $140,000 per year.20102012 to each non-employee director. director: Fees earned
or paid in
cash ($) Stock
Awards
($)(1) Change in
pension value
and nonqualified
deferred
compensation
earnings ($) All other
compensation
($) Total ($) 55,000 70,000 — 5,000 (2) 130,000 110,000 137,200 — 170,000 (3) 417,200 66,250 75,000 — — 141,250 70,000 75,000 — 20,000 (4) 165,000 98,750 80,000 — (5) 140,000 (6) 318,750 61,250 70,000 — — 131,250 portionamounts reported in this column reflect the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic 718,Compensation—Stock Compensation ("ASC 718") for RSUs granted on June 12, 2012 to each non-employee director and on August 23, 2012 to Mr. Bergren as prorated compensation in recognition of his service as a director from February to June 2012. The amounts do not reflect compensation actually received by the non-employee directors. For awards in years prior to 2012, RSUs do not confer on the non-employee director voting or dispositive control over common shares until one year following termination of Board service and, for awards in 2012 and thereafter, RSUs do not confer voting or dispositive control over common shares until three months following termination of Board service. Assumptions used in the calculation of these amounts are included in Note 16 to our audited financial statements included in our Form 10-K filed with the SEC on April 17, 2013.
23,478 held by Mr. Bergren
59,900 held by Mr. McCarty
72,320 held by each of Ms. Everton and Mr. Browne
74,433 held by Mr. Gleim
None held by Mr. Shermanannual fee that was paidBoard.RSUs was increasedrecognition of Ms. Everton's significant additional work performed in 2010 to $70,000 from the previous amountprocess of $60,000. In addition,selecting the grant date for the RSUs was set to coincide with the annual meeting of shareholders each year. With the institutionCompany's new Chief Executive Officer.2010, directorsthe pension value of Mr. Gleim's benefit in the Bon-Ton SERP was a decrease of $6,130.a grant of RSUs with a vesting period of 18 months, and the amountfor Mr. Gleim's service as Lead Director of the grant was adjusted accordingly for 2010.13 Change in Pension Value and Nonqualified Fees Earned Deferred or Paid Stock Compensation All Other In Cash Awards Earnings Compensation Total Name ($) ($)(1) ($) ($) ($) Lucinda M. Baier 55,000 100,000 — 5,000 (2) 160,000 Philip M. Browne 70,000 105,000 — — 175,000 Shirley A. Dawe 85,000 105,000 — — 190,000 Marsha M. Everton 70,000 105,000 — — 175,000 Michael L. Gleim 95,000 110,000 — (3) 140,000 (4) 345,000 Todd C. McCarty 65,000 100,000 — — 165,000 (1)The amounts reported in this column reflect the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718,Compensation — Stock Compensation(“ASC 718”) for RSUs granted on June 15, 2010 and July 8, 2010 to each non-employee director. The amounts do not reflect compensation actually received by the non-employee directors. RSUs do not confer on the non-employee director voting or dispositive control over common shares until one year following termination of Board services. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm 10-K filed with the SEC on April 13, 2011.The aggregate number of RSUs held by each non-employee director as of January 29, 2011 was:38,033 held by Ms. Baier38,110 held by Mr. McCarty48,973 held by each of Mmes. Dawe and Everton and Mr. Browne49,530 held by Mr. Gleim(2)Fees received for Ms. Baier’s service on the Company’s Retirement Contribution Plan Committee.(3)The actuarial valuation of the change in the pension value of Mr. Gleim’s benefit in the Bon-Ton Supplemental Executive Retirement Plan (“SERP”) was a decrease of $4,654.(4)Fees received for Mr. Gleim’s service as Lead Director of the Board.directors’directors' interests with those of other shareholders. Shares of Common Stockcommon stock actually owned and time-based RSUs that are time-based count towards the equity ownership requirement. Each director is required to achieve this share ownership level by the later of five years after joining the Board or five years after adoption of the guideline. Accordingly, each non-employee director standing for election in 2011 must2013, with the exception of Mr. Sherman, was required to meet, and did meet, this guideline by December 2012.All Mr. Sherman will be required to meet this guideline by March 2018.non-employee directors standing for election currently satisfyCompany's common stock during 2010. Share ownership requirements are reviewed annually by the guideline.
VOTING “FOR” "FOR"
THE ELECTION OF
THE NOMINEES LISTED ABOVE14
Table of Contents
APPROVAL, ON AN ADVISORY BASIS, OF COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS recently enacted Dodd-Frank Act provides that the Company’sCompany's shareholders have the opportunity to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company’s named executive officersCompany's Named Executive Officers as disclosed in this proxy statement in accordance with the SEC’sSEC's rules. At the 2011 Annual Meeting, the shareholders voted, on an advisory basis, to approve on an advisory basis the compensation of the Company's Named Executive Officers annually, and the Company determined to present such matter for vote annually. Pursuant to Section 14A of the Securities Exchange Act, the Company is presenting the following “say"say on pay”pay" proposal, which gives shareholders the opportunity to approve or not approve, on an advisory basis, the Company’sCompany's compensation program for named executive officers,Named Executive Officers, as disclosed pursuant to Item 402 ofRegulation S-K, by voting for or against the resolution set out below. While our Board intends to carefully consider the shareholder vote resulting from this proposal, the final vote will not be binding on the Company and is advisory in nature. The Company submits the following proposal:“Company’s named executive officers,Company's Named Executive Officers, as disclosed pursuant to Item 402 ofRegulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”“Executive Compensation”"Executive Compensation" section, the Company’sCompany's executive compensation programs are designed to attract, motivate and retain talented executives. In addition, the programs are structured to create an alignment of interests between the Company’sCompany's executives and shareholders. The Board and the HRCC monitor executive compensation programs and adopt changes to reflect the competitive market in which the Company competes for talent, as well as general economic, regulatory and legislative developments affecting executive compensation. The HRCC will continue to emphasize compensation arrangements that align the financial interests of our executives with the interests of long-term shareholders. Accordingly, we believe that the Company’sCompany's executive compensation programs are appropriately designed and work to ensure that management’smanagement's interests are closely aligned with shareholders’shareholders' interests to create long-term value. Please refer to the section entitled “Executive Compensation”"Executive Compensation" of this proxy statement for a detailed discussion of the Company’sCompany's executive compensation practices and philosophy.“FOR” APPROVAL OF THECOMPENSATION AWARDED TO THE COMPANY’S NAMED EXECUTIVEOFFICERS FOR FISCAL YEAR 201015PROPOSAL THREE
BASIS, OF FREQUENCY OF VOTETO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERSThe Dodd-Frank Act also provides that the Company’s shareholders have the opportunity to indicate how frequently the Company should seek an advisory vote on the compensationAfter careful consideration, the Board has determined that an advisory vote on executive compensation that occurs annually is the most appropriate alternative for the Company, and therefore the Board recommends that shareholders vote for a one-year interval for the advisory vote on the compensation of the Company’s named executive officers.An annual advisory vote on executive compensation will allow shareholders to provide direct input on the Company’s compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with the Company’s policy of seeking input from, and engaging in discussions with, our shareholders on corporate governance matters and our executive compensation philosophy, policies and practices. Therefore, the Board recommends that shareholders vote to approve the compensation awarded to the Company’s named executive officers once every year.The Company submits the following proposal:“RESOLVED, that the option of once every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold an advisory shareholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis, the tabular disclosure regarding such compensation and the accompanying narrative disclosure.”You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to this proposal. The option of one year, two years or three years that receives the highest number of votes cast by the shareholders will be the frequency for the advisory vote on executive compensation that has been recommended by the shareholders. However, because this vote is advisory and not binding on the Board or the HRCC, the Board may decide that it is in the best interests of the Company and its shareholders to hold an advisory vote on executive compensation that differs from the option that received the highest number of votes from the Company’s shareholders.THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR “ANNUALLY” FORTHE FREQUENCY OF THE VOTE ON THE APPROVAL OF THE COMPENSATIONAWARDED TO THE COMPANY’S NAMED EXECUTIVE OFFICERSContents16
RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(“KPMG”("KPMG"), which served as our independent registered public accounting firm in 2010,2012, to serve as our independent registered public accounting firm for 2011.KPMG’sKPMG's independence. 2012 2011 $ 1,912,506 $ 1,800,578 — — 55,345 238,931 — — 2010 2009 Audit Fees(1) $ 1,783,931 $ 1,819,436 Audit-Related Fees — — Tax Fees(2) 281,885 315,942 All Other Fees — — (1)Audit Fees include fees associated with audit services, consultation on matters related to the consolidated financial statements, consents, reviews of the Company’s quarterly reports onForm 10-Q and reviews of the Company’s filings under the Securities Exchange Act of 1934.(2)Tax Fees reflect various tax-related services, including consultation, return preparation, planning and compliance.Company’sCompany's independent registered public accounting firm. All of the fees shown in the chart above were pre-approved by the Audit Committee. The Audit Committee may delegate to one of its members the authority to grant such pre-approvals, and any such approvals are presented to the full Audit Committee at its next scheduled meeting.
VOTING “FOR”"FOR" RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM17PROPOSAL FIVEAMENDMENT OF THE COMPANY’S ARTICLES OF INCORPORATION TO REQUIRETHAT DIRECTORS BE ELECTED BY A MAJORITY OF VOTES CASTThe Board recommends that shareholders approve an amendment to the Company’s Articles of Incorporation to require that, in an uncontested election, each director be elected by a majority of votes cast. Currently, under Pennsylvania law, absent a contrary requirement in the Articles of Incorporation or bylaws, directors are elected through plurality voting in which the nominees with the most votes are elected. Under plurality voting, only “for” votes are counted, not any “withhold” votes, so in an uncontested election a director could be elected with only one “for” vote, despite an overwhelming number of “withhold” votes.The proposed amendment would add a new Article 9 to the Articles of Incorporation, requiring that, in any election of directors in which the number of nominees equals the number of directors to be elected, a nominee must receive a majority of the votes cast in order to be elected. A majority of votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. In contrast, in a contested election where the number of nominees exceeds the number of directors to be elected, the current plurality voting rules will be in effect, meaning that the nominees receiving the highest numbers of votes, up to the number of directors to be elected, will be elected.In an uncontested election, an incumbent director who is not re-elected because he or she does not receive a majority of the votes cast would nonetheless continue in office because no successor has been elected. This is referred to as the “director holdover rule.” In that event, the incumbent director must tender his or her resignation to the Board. If a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then his or her resignation will be effective immediately. If fewer than a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then the Board must decide whether to accept or reject such director’s resignation, or whether other action should be taken, within 90 days after the date of the certification of the election results. The director who tenders his or her resignation will not participate in the decisions of the Board or any committee with respect to his or her own resignation.Given recent changes in corporate governance standards, the Board now believes that, in uncontested elections, requiring directors to be elected by a simple majority vote is more appropriate than plurality voting.With the approval of the Company’s shareholders, the following resolutions will be adopted to effectuate the proposed amendment to require that the directors be elected by a majority of the votes cast:RESOLVED, that the adoption of an amendment to the Articles of Incorporation of the Company is hereby approved to add a new Article 9 to read as set forth in these resolutions; andFURTHER RESOLVED, that the new Article 9 of the Articles of Incorporation of the Company shall read as follows:9. Each nominee for election as a director shall be elected by the vote of the majority of the votes cast by all shareholders entitled to vote with respect to the election of such nominee at any meeting for the election of directors, provided that if the number of nominees exceeds the number of directors to be elected at such meeting, then the nominees receiving the highest number of votes up to the number of directors to be elected shall be elected. For purposes of this Article, a majority of the votes cast means that the number of votes that are cast “for” a nominee must exceed the number of votes cast “against” such nominee. If any incumbent director is not elected, such director shall immediately tender his or her resignation to the Board of Directors. If a majority of the votes entitled to be cast in the election of18directors are voted “against” such director, then his or her resignation shall be effective immediately. If fewer than a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then the Board of Directors shall decide whether to accept or reject such director’s resignation, or whether other action should be taken, within 90 days after the date of the certification of the election results. No director required to tender his or her resignation shall participate in the decisions of the Board of Directors or any committee thereof with respect to his or her own resignation.THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE AMENDMENTOF THE COMPANY’S ARTICLES OF INCORPORATION TO REQUIRE THATDIRECTORS BE ELECTED BY A MAJORITY OF VOTES CAST19
REPORT OF THE AUDIT COMMITTEECompany’sCompany's independent registered public accounting firm.Company’sCompany's consolidated financial statements and compliance with legal and regulatory requirements. The Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’sCompany's independent registered public accounting firm, KPMG. Management is responsible for the preparation, presentation and integrity of the Company’sCompany's consolidated financial statements, for its accounting and financial reporting principles and for the establishment and effectiveness of internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. KPMG is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and expressing an opinion as to the conformity of such consolidated financial statements with accounting principles generally accepted in the United States and an opinion on the effectiveness of internal control over financial reporting based on criteria established in the Internal Control-Integrated Framework issued by the Committee on Sponsoring Organizations of the Treadway Commission. KPMG has free access to the Audit Committee to discuss any matter it deems appropriate.management’smanagement's assessment of the effectiveness of the Company’sCompany's internal control over financial reporting and KPMG’sKPMG's evaluation of the Company’sCompany's internal control over financial reporting. Management represented to the Audit Committee that the Company’sCompany's audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication"Communication with Audit Committees”Committees" and the additional matters required to be discussed by Statement on Auditing Standards No. 114, as modified or supplemented, “The Auditor’s"The Auditor's Communication with Those Charged with Governance.”KPMG’sKPMG's communications with the Audit Committee concerning independence and the Audit Committee discussed KPMG’sKPMG's independence with them.January 29, 2011.
Philip M. Browne, Chairperson
Lucinda M. Baier
Todd C. McCarty20
Table of ContentsOverviewCompany’sCompany's Chief Executive Officer, the Chief Financial Officer and the three other highest paid executive officers.officers in 2012. These five executive officers are referred to as the “named executive officers”"Named Executive Officers" throughout this proxy statement:Title Brendan L. Hoffman NameTitlePresident and Chief Executive Officer since February 7, 2012 Byron L. Bergren President and Chief Executive Officer through February 6, 2012 Anthony J. Buccina Vice Chairman, President — President—MerchandisingStephen R. Byers Executive Vice Chairman —President, Stores, Visual Construction, Distribution & Logistics,and Loss PreventionTim Grumbacher Strategic Initiatives Officer Keith E. Plowman Executive Vice President, Chief Financial Officer and Principal Accounting Officer Barbara J. SchrantzChief Operating OfficerHRCC’sCompany's philosophy is to directly link an increasing portion of an executive officer’sofficer's compensation with corporate performance and in alignment with shareholder value and to decreasevalue. At the same time, an executive officer’sofficer's base salary as a percentage of his or her total compensation decreases as his or her scope of responsibility increases. The following are the objectives that guide the HRCC’sHRCC's decisions regarding compensation:• Provide a compensation package that enables the Company to attract, motivate and retain key personnel.• Provide variable compensation opportunities, primarily on an annual basis, that are directly linked to corporate performance goals that drive operational success and enhance shareholder value.• Provide long-term equity incentive compensation opportunities through the award of stock options, shares of restricted stock and restricted stock units that align executive compensation with increases in shareholder value. These opportunities are available primarily to those executive officers who can influence the Company’s medium- and long-term results, generate value for shareholders and ensure the long-term growth of the Company. Equity grants are also designed to reward significant achievement of top performing executive officers and to attract new talent.conductsreviews a risk assessment conducted by the Company to ensure that the Company’sCompany's compensation program does not encourage unreasonable risk. and vested stock options with an exercise price below the current market price count towards the equity ownership requirement. Outstanding non-vested stock options, performance-basedPerformance-based restricted stock and21Ownership Guideline Chief Executive Officer 3x base salary Vice Chairman 2x base salary Executive Vice President 1x base salary fiscal 20102012 were measured based on the average price of the Company’sCompany's common stock during the first six months of fiscal 2007.2010. Share ownership requirements are reviewed annually by the HRCC. The HRCC has not yet established a share ownership requirement for the position of Chief Operating Officer, a position that did not exist when the guidelines were adopted in 2007.named executive officers in the positions listed aboveNamed Executive Officers currently owns shares sufficient to meet the requirement.HRCC’sHRCC's responsibilities include the following:• Review and approve, and in some cases recommend for the approval of the full Board, the compensation for the Company’s executive officers, including the named executive officers. The total compensation of each of the executive officers is evaluated to ensure it is competitive in the marketplace and reflects the HRCC’s assessment of each executive officer’s contributions and value to the Company.• Approve the performance goals and metrics with respect to annual performance-based bonuses and equity awards to executive officers, including the Executive Chairman, the Chief Executive Officer and the other named executive officers.• Monitor total compensation paid to the named executive officers and other key executives and consider whether such compensation is fair, reasonable and competitive in consideration of each executive’s capacity to influence shareholder value and promote the long-term growth of the Company.• Prepare an annual review and evaluation of the Chief Executive Officer’s performance for the year compared to pre-determined, HRCC-approved, performance metrics.• Prepare an annual review and evaluation of the Executive Chairman’s performance for the year compared to pre-determined, HRCC-approved, performance metrics.namedNamed Executive Officers (with the exceptions of Messrs. Bergren and Grumbacher) and other executive officers, and other key executives, excluding the Executive Chairman, compared to pre-determined, HRCC-approved performance metrics. The total compensation for the respective executives, the performance appraisals and the recommendations made by the Chief Executive Officer are presented for HRCC approval.named executive officersNamed Executive Officers excluding the Executive Chairman and the Chief Executive Officer, management provides recommendations to the HRCC. The HRCC relies on management and, as appropriate, the advice of outside experts to evaluate22Company’sCompany's performance-based annual cash incentive compensation program. Members of management who provide this support include ByronBrendan L. Bergren;Hoffman; Dennis R. Clouser, Executive Vice President, President—Information Systems, Logistics and Administration; Paul A. Cortese, Senior Vice President—Compensation, Benefits and HRIS; Denise M. Domian, Senior Vice President—Human Resources, Corporate Procurement & Operations and Information Services;Resources; and J. Gregory Yawman, Divisional Vice President, and Associate General Counsel and Secretary, each of whom generally attendattends meetings of the HRCC. Each of them is excused from a meeting during deliberation and approval of matters regarding his or her own compensation and from regularly scheduled HRCC executive sessions.companies (the “Compensation Peer Group”). In 2010,companies.followingCompany utilized compensation data from the Hay Associates 2012 Retail Executive and Management Total Remuneration Report. From this data, the Company identified a subgroup of 27 retail companies were includedwith median sales of $2.9 billion (the "Hay Subgroup"). The companies in the Compensation Peer Group:Hay Subgroup are:Abercrombie & Fitch Co. L.L. Bean IncorporatedAnn Taylor Stores CorporationChico's FAS, Inc. Macy’s,Neiman Marcus, Inc.Belk,Aeropostale, Inc. Nordstrom, Inc.Brown Shoe Company, Inc. Phillips-Van Heusen CorporationCollective Brands, Inc. Ross Stores,Petco Animal Supplies, Inc.Dillard’s,Alex Lee, Inc.Dick's Sporting Goods, Inc. Rent-a-Center, Inc. American Eagle Outfitters Inc. DSW, Inc. Saks, Inc. Dollar General CorporationAnn Inc. Target CorporationExpress, Inc.Shopko Stores Co., LLC Eddie Bauer,Belk, Inc.Fifth & Pacific Companies The Gap,Sports Authority, Inc.Hot Topic,Cabela's, Inc. The Timberland CompanyJ. C. Penney Company,Fossil, Inc. The TJX Companies,Stage Stores, Inc.Liz ClaiborneCarter's, Inc.GNC Holdings, Inc. Tiffany & Co. Charming Shoppes, Inc. hhgregg, Inc. Williams-Sonoma, Inc. In addition, Meridian providedCompany with compensation data from the Hewitt 2010 Total Compensation database (the “Hewitt Database”) that contains information for a large number of retail companies and has a median revenue of $4.7 billion. Because of the variance in size among the companies in the Hewitt Database, Meridian assists the Company in preparing a regression analysis that adjusts the compensation data for differences in company sales. Regression analysis is a statistical technique that establishes a “line of best fit” or “trend line” between variables. In the context of compensation, regression analysis is used to determine the relationship between company size (typically defined by revenue) and pay level. This enables organizations to use a peer group that includes companies both larger and smaller than the organization in question and, through regression analysis, “size adjust” the compensation data to reflect the organization’s revenue. This adjusted value is used as the basis of compensation comparisons between the Company and the companies in the Compensation Peer Group and the Hewitt Database.The HRCC has currently determined that it is appropriatestrove to deliver total compensation at approximately the 50th percentile of the Compensation Peer GroupHay Subgroup for each element of compensation. However, as the Company competes with many larger companies for the best executive-level talent, the HRCC may decide it is in the best interests of the Company and its shareholders to provide compensation for selected positions that exceeds the targeted compensation levels depending on the circumstances, including the Company’sCompany's needs, market factors, the executive’sexecutive's experience, the contribution of the executive to the Company, and in the HRCC’sHRCC's view, the positive impact the executive may have on the Company as a whole.2010,2012, the HRCC reviewed proxy statement compensation data from specific retailers in its benchmarking effort with respect to compensation of the Chief Executive Officer. These23Dillard’sDillard's, Inc.; J.C. Penney Company, Inc.; Kohl’sKohl's Corporation; Macy’s,Macy's, Inc.; Nordstrom, Inc.; and Saks, Inc. These companies were chosen because they are retailers with competitive assortments and a similar customer base as the Company. The HRCC recognizes that most of these retailers are larger in size than the Company, but the HRCC also believes that the Company competes directly with them for executive talent. The HRCC reviewed the compensation practices of, and the compensation packages provided by, these retailers. The data also provided context for ongoing deliberations of the HRCC.named executive officersNamed Executive Officers are base salary, performance-based annual cash incentive compensation, long-term equity incentive compensation, perquisites, and retirement and other benefits. The HRCC seeks to achieve a mix of these components such that total compensation is competitive in the marketplace. The HRCC also assesses the risks relating to performance-based compensation. The HRCC has transitioned the Company’sCompany's compensation program from its historical short-term orientation, which focused on base salary and annual cash incentive compensation, to a program with an increasing emphasis on long-term equity incentive compensation to better align the interests of the named executive officersNamed Executive Officers with the interests of shareholders in long-term growth. The HRCC does not have a pre-established policy for allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, it evaluates the actual mix against market data and attempts to provide each named executive officerNamed Executive Officer with a balanced compensation package that addresses retention and competitive requirements.24named executive officerNamed Executive Officer compensation:Purpose Characteristics Compensate named executive officersNamed Executive Officers for performing their roles and assuming their levels of executive responsibility. Intended to provide a competitive level of compensation, it is a necessary component in recruiting and retaining executives. Fixed component. Annually reviewed by the HRCC and adjusted as appropriate. Company’sCompany's financial results and performance. Intended to drive performance in a particular year without being a deterrent to long-term Company goals and initiatives or encouraging unreasonable risk. Company’sCompany's long-term financial goals and stock price appreciation. Align named executive officersNamed Executive Officers and shareholder interests, promote named executive officers’Named Executive Officers' retention and reward named executive officersNamed Executive Officers for superior Company performance over time. named executive officerNamed Executive Officer will vary and will depend on stock price. Restricted stock awards and RSUs may vest over time or based on Company performance. named executive officersNamed Executive Officers by providing an overall benefit package similar to those provided by comparable companies. named executive officersNamed Executive Officers is a required element under applicable employment agreements.“tally"tally sheet,”" with all components of compensation of the named executive officers,Named Executive Officers, including base salary, performance-based cash and equity incentive compensation, long-term equity incentive compensation, accumulated realized and unrealized stock option and restricted stock gains, and the dollar value to the executive and cost to the Company of all perquisites and other benefits and obligations under the Company’sCompany's supplemental executive retirement plans. The HRCC did not use the tally sheet in making individual pay decisions, but rather reviewed it to ensure the total package met the needs of both the Company and the executives. The HRCC believes the level of compensation of the Company’s named executive officersCompany's Named Executive Officers reflects the Company’sCompany's performance and total compensation to each of the named executive officersNamed Executive Officers is appropriate.25Company’s named executive officersCompany's Named Executive Officers are determined by evaluating their roles and responsibilities and compensation data compared with the Compensation Peer Group.Hay Subgroup. The base salary of each named executive officerNamed Executive Officer is reviewed annually. If appropriate, the Chief Executive Officer recommends salary increases for each of the named executive officersNamed Executive Officers other than himself. The HRCC’sHRCC's decision to increase base salary for any named executive officerNamed Executive Officer is based on the HRCC’sCompany's compensation philosophy and takes into specific account the level of responsibility of the named executive officer,Named Executive Officer, the Company’sCompany's performance, the named executive officer’sNamed Executive Officer's individual performance and the named executive officer’sNamed Executive Officer's compensation compared to similarly situated executives in the Compensation Peer Group.ByronBrendan L. Bergren,Hoffman, Anthony J. Buccina and Stephen R. Byers and Barbara J. Schrantz were established in employment agreements approved by the HRCC and, with respect to Mr. Bergren’sHoffman's employment agreement, the Board at the recommendation of the HRCC. These minimum base salaries were based on a variety of factors, including market data from the Compensation Peer GroupHay Subgroup and an evaluation of each person’sperson's capacity to positively affect the Company’sCompany's performance. The HRCC decided that the current base salaries were properly aligned with competitors and more emphasis should be placed on variable compensation linked to corporate performance.Cashcash bonus plan (the "Cash Bonus Plan (the “Cash Bonus Plan”Plan") in which the named executive officersNamed Executive Officers, with the exception of Mr. Grumbacher, participate. Awards of cash bonuses under this plan are variable, and theThe payout of any cash bonus under the plan is dependent upon the achievement of pre-determined Company performance goals which are pre-approved by the HRCC.2010,2012, the Cash Bonus Plan for the named executive officersNamed Executive Officers focused on the achievement of one or two of the following goals:Threshold Target Maximum • $net income, with a “threshold” of approximately $0.45.8 million a “target” of approximately $17.2$ 14.5 million and a “maximum” of approximately $120.0 million;$ 41.8 million • net sales, with a “threshold” of approximately $2.903$2.918 billion a “target” of approximately $2.985$ 2.976 billion and a “maximum” of approximately $3.246 billion; and$ 3.087 billion • EBITDA (defined as earnings before interest, income taxes, depreciation and amortization, including amortization of lease-related interests, and non-cash impairment charges), with a “threshold” of approximately $219.8$185.2 million a “target” of approximately $236.6$ 199.5 million and a “maximum” of approximately $339.4 million.$ 243.2 million named executive officerNamed Executive Officer depending on the capacity of the named executive officerNamed Executive Officer to influence the goal and the named executive officer’sNamed Executive Officer's area of responsibility. PaymentA threshold level of performance is set for each measure. Performance must be above the threshold to receive any payment for that measure. In addition, payment of any portion of a bonusCompany’sCompany's achievement of at least the “threshold”threshold level of net income. If the threshold level of net income is not achieved, there is no bonus payout under any of the goals for that year. In addition, if the net income “threshold” is attained, but the “threshold” performance for a goal other than net income is not attained, the portion of the bonus attributable to such other goal is forfeited.“threshold,” “target”"threshold," "target" and “maximum”"maximum" payout potentials under the Cash Bonus Plan for each named executive officer.Named Executive Officer. The following table sets forth (1) the approximate payouts, stated as a percentage of base salary, which could be earned26named executive officerNamed Executive Officer under the Cash Bonus Plan for 2010,2012, and (2) the Cash Bonus Plan performance goals and the weighting of such goals for each named executive officerNamed Executive Officer for 2010:2012: Payout at
Threshold Payout at
Target Payout at
Maximum Bonus Criteria
(weighting) 50 % 100 % 200 % Net income (75%) Net sales (25%)
50
%
100
%
200
% Adjusted EBITDA (50%)
25
%
50
%
100
% Adjusted EBITDA (50%)
37.5
%
75
%
150
% Net sales (10%) Payout at Payout at Payout at Bonus Criteria Threshold Target Maximum (weighting) Byron L. Bergren 50 % 100 % 200 % Net income (100 )% Anthony J. Buccina 50 % 100 % 200 % Net sales (50 %) EBITDA (50 )% Stephen R. Byers 50 % 100 % 200 % Net sales (50 %) EBITDA (50 )% Keith E. Plowman 37.5 % 75 % 150 % Net income (100 )% Barbara J. Schrantz 25 % 50 % 100 % Net sales (50 %) EBITDA (50 %) HRCC reviewed performance datanet income threshold was not achieved in 2012 and consequently no bonus compensation was paid to the Named Executive Officers (except where contractually stipulated, as of the end of 2010 and determined the extent to which the targeted levels of performance were achieved. The amount of annual incentive compensation paid for 2010 to each named executive officer is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 33.named executive officers for 2010.named executive officerNamed Executive Officer compensation is long-term incentive compensation in the form of stock options and time-based and performance-based restricted stock and time-based and performance-based RSUs.stock. The HRCC annually reviews the performance and compensation of the named executive officersNamed Executive Officers to determine whether annual grants of options or awards of restricted stock or RSUs are warranted. Option grants andEquity awards of restricted stock and RSUs are made periodically at the discretion of the HRCC but generally are made within the first quarter of each fiscal year. Grants and awards (other than to the Chief Executive Officer) are made on the recommendation of the Company’s Chief Executive Officer, primarily to reward significant individual achievement and to motivate and retain key talent. The proportion of long-term equity incentive compensation in relation to base salary is a function of the named executive officer’sNamed Executive Officer's level of responsibility and capacity to enhance shareholder value. Company’s Chief Executive Officer should be directly aligned to the short- and long-term performance of the Company. In addition, the Chief Executive Officer and the other named executive officersNamed Executive Officers are awarded restricted stock as a retention tool. The other named executive officers are also granted options to align their interests with those of shareholders.Company’sCompany's common stock on the NASDAQ Stock Market on the date of the HRCC meeting at which the grant is approved. In certain instances, the HRCC has set the exercise price at the closing price on a grant date in the future to allow time to notify the grantee of the option grant or to set the grantnamed executive officersNamed Executive Officers in 2010.27the amendment of Mr. Bergren’san employment agreement on March 18, 2009,effective as of February 7, 2012, the HRCC granted Mr. Bergren an award of 400,000Hoffman 300,000 time-based restricted shares of the Company's common stock, shares, 100,000 of which vested on February 1, 2010,7, 2013, and 100,000 of which vested on February 1, 2011, and 200,000 of which vest on each of February 5, 2012.7, 2014 and February 7, 2015. In addition, Mr. BergrenHoffman received 400,000a grant of 300,000 performance-based restricted shares, 200,00050,000 of which were subject to vesting based on achievement of Company performance goals for 2009, 100,000 of which were subject to vesting based on achievement of Company performance goals for 20102012, and 100,000125,000 of which are subject to vesting based on achievement of Company performance goals for 2011. Ninety percenteach of 2013 and 2014. As the 2009performance goals for 2012 were not attained, the restricted stock award relating to 2012 performance goals was forfeited.(180,000 shares) vestedwhich are subject to vesting based upon theon achievement of Company performance targetsgoals for 2009. One hundred percentthe cumulative three-year period of the 2010 performance-based2013, 2014 and 2015. For vesting of restricted shares (100,000 shares) vested based uponabove the achievementtarget amount of performance targets for 2010.February 1, 2009, the HRCC grantedApril 30, 2012, whereby Mr. Buccina 100,000chose to retire at the end of the term of said agreement (February 15, 2013), Mr. Buccina was granted 37,500 performance-based restricted shares of the Company’sCompany's common stock. SuchIn consideration for such grant was awarded on February 2, 2009 and suchof performance-based restricted stock, Mr. Buccina forfeited 75,000 unvested shares vestedof time-based restricted stock granted on April 30,18, 2011. In addition, Mr. Buccina received, as performance-based compensation, a grant of 50,000As the performance goals for 2012 were not attained, the restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares were determined each year by the HRCC. The terms of the grants are set forth in the applicable Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (45,000 shares) vested based upon the achievement ofaward relating to 2012 performance targets for 2009. One hundred percent of the 2010 performance-based restricted shares (50,000 shares) vested based upon the achievement of performance targets for 2010.vestvested on an accelerated basis on February 15, 2013 pursuant to the aforementioned employment agreement dated April 12, 2013. In addition,30, 2012.as performance-based compensation, a grant of 10,000150,000 performance-based restricted shares, 50,000 of which were subject to vesting based on the basis of the achievement of certainCompany performance goals established for the Company’s 2010 fiscal year. One hundred percent of the 2010 performance-based restricted shares (10,000 shares) vested based upon the achievement of performance targets for 2010.Pursuant to an employment agreement dated February 1, 2009, the HRCC granted Mr. Byers 70,000 restricted shares of the Company’s common stock. Such grant was awarded on February 2, 2009 and such restricted shares vested on April 30, 2011. In addition, Mr. Byers received, as performance-based compensation, a grant of 35,000 restricted shares of the Company’s common stock for each of 20092011 and 2010. The metrics for earning such performance-based shares2012, and 50,000 of which were determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (31,500 shares) vestedsubject to vesting based upon theon achievement of Company performance targetsgoals for 2009. One hundred percent2013. As the performance goals for 2011 and 2012 were not attained, the restricted stock awards relating to 2011 and 2012 performance goals were forfeited. As Mr. Buccina retired as of February 15, 2013, the 2010 performance-based restricted shares (35,000 shares) vested based upon the achievement ofstock award relating to 2013 performance targets for 2010. shares of time-based restricted shares, 6,500 of which vested on April 12, 2011 and 5,000 of which vestvested on April 12, 2013.as performance-based compensation, a grant of 5,00012,000 performance-based restricted shares which were subject to vesting based on the basis of the achievement of certainCompany performance goals established for 2011. As the Company’s 2010 fiscal year. One hundred percentperformance goals for 2011 were not attained, the restricted stock award relating to 2011 performance goals was forfeited.the 20106,000 time-based restricted shares, all of which vest on April 17, 2015. In addition, Mr. Byers received a grant of 10,000 performance-based restricted shares (5,000 shares) vestedwhich were subject to vesting based upon theon achievement of Company performance targetsgoals for 2010.2012. As the performance goals for 2012 were not attained, the restricted stock award relating to 2012 performance goals was forfeited.Duringvestvested on April 12, 2013.was granted an awardreceived a grant of 25,00050,000 performance-based restricted shares all of which were subject to vesting based on achievement of Company performance goals for 2010. One hundred percent2011. As the performance goals for 2011 were not attained, the restricted stock award relating to 2011 performance goals was forfeited.the 2010 performance-based restricted shares (25,000 shares) vested based upon the achievement of performance targets for 2010.28During 2010, the HRCC granted Ms. Schrantz an award of 15,0008,000 time-based restricted shares all of which vest on April 12, 2013.17, 2015. In addition, Ms. Schrantz was granted an awardMr. Plowman received a grant of 15,00050,000 performance-based restricted shares all of which were subject to vesting based on achievement of Company performance goals for 2010. One hundred percent2012. As the performance goals for 2012 were not attained, the restricted stock award relating to 2012 performance goals was forfeited.the 201015,000 time-based restricted shares, all of which vest on April 17, 2016. In addition, Mr. Plowman received a grant of 20,000 performance-based restricted shares (15,000 shares) vestedwhich are subject to vesting based upon theon achievement of Company performance targetsgoals for 2010. On January 28, 2011, in connection with her election to the position2013 and a grant of Chief Operating Officer, the Company granted Ms. Schrantz an award of 75,000 time-based60,000 performance-based restricted shares which are subject to vesting based on achievement of which 25,000Company performance goals for the cumulative three-year period of 2013, 2014 and 2015. For vesting of restricted shares vest on eachabove the target amount of February 3, 2014, February 2, 2015 and February 1, 2016.HRCC’sHRCC's objectives to link an increasing portion of compensation to Company performance and to align the interests of key executives with those of shareholders.“Grants"Grants of Plan-Based Awards”Awards" table on page 35.named executive officersNamed Executive Officers with perquisites and other benefits that the Company and the HRCC believe are reasonable and consistent with the Company’sCompany's objective to motivate and retain superior executives for key positions. The HRCC periodically reviews the levels of perquisites and other benefits provided to named executive officers.Named Executive Officers. Perquisites primarily consist of supplemental medical benefits, automobile allowances, relocation benefits and reimbursement of legal fees incurred in connection with the negotiation of employment agreements. Perquisites traditionally have not constituted significant portions of an executive’sexecutive's compensation.named executive officersNamed Executive Officers also participate in benefit programs available to employees generally, such as health and dental insurance, life insurance and long-term disability insurance.named executive officersNamed Executive Officers participate in The Bon-Ton Stores, Inc. Retirement Contribution Plan, a tax-qualified defined-contribution plan. Under this plan, employees are able to contribute a portion of their annual salaries on a pre-tax basis and the Company may make discretionary retirementemployee’semployee's account. Company matching contributions may consist of two parts: a match based on an employee’semployee's years of service and a profit sharing match. Company retirement contribution amounts are included in the Summary Compensation Table on page 33.“Carson’s"Carson's Pension Plan”Plan"). The Carson’sCarson's Pension Plan is a qualified defined-benefit cash-balance plan in which the only named executive officerNamed Executive Officer who participates isparticipated was Anthony J. Buccina. The Carson’sCarson's Pension Plan was frozen to new participants in 2002 and all future benefit accruals were frozen in May 2006.ByronBrendan L. Bergren,Hoffman, Anthony J. Buccina and Stephen R. Byers and Barbara J. Schrantz.Byers. The decisions to enter into employment agreements and the terms of those agreements were based on the Company’sCompany's need to motivate and retain talent for the long-term growth of the Company.Theenteredelected Mr. Hoffman as its President and Chief Executive Officer, and the Company determined that it would be in its interest to enter into an employment agreement with Mr. Bergren following the Company’s acquisition of The Elder-Beerman Stores Corp in 2003. Theto provide for an initial term of employment of three years in order to retain Mr. Bergren’s employment agreement originally ran through 2008. The CompanyHoffman as its President and Chief Executive Officer. Mr. Bergren subsequently entered into a series of amendments of Mr. Bergren’s employment agreement that, among other matters, extended Mr. Bergren’s termHoffman was selected as President and Chief Executive Officer through January 31,292011due to his years of executive experience in the retail department store industry and provided that Mr. Bergren would serve in an important role to be determined byfor the Board from February 1, 2011 through February 5, 2012. On January 21, 2011, the Company entered into a further amendment of Mr. Bergren’s employment agreement providing that he will serve as President and Chief Executive Officer through February 5, 2012. The termlong-term growth of the agreement will extend automatically from year to year thereafter unless either party elects not to renew the agreement. The HRCC’s key objectives in entering into the various amendments of Mr. Bergren’s employment agreement included: (1) retaining Mr. Bergren’s experience and expertise to maximize the Company’s potential as a larger retailer; (2) maintaining stability of leadership and strategic focus; and (3) facilitating the Company’s succession planning process and enabling Mr. Bergren to assist the HRCC and the Board of Directors with this process.following the acquisition of Carson Pirie Scott to ensure a smooth integration and to lead the development and execution of a comprehensive merchandising strategy for the combined Company.strategy. With respect to Mr. Byers, the HRCC and Company management determined it would be in the best interests of the Company to enter into an employment agreement to retain Mr. Byers due to his significant level of experience in retail his direct experience with the Carson’s stores, and for the long-term growth of the Company. In January 2009, the Company entered into new employment agreements with both Mr. Buccina and Mr. Byers, extending the term of their respective employment relationships with the Company. In January 2011, the employment agreement of Mr. Buccina automatically renewed for an additional one-year period, and the Company elected not to renew the employment agreement of Mr. Byers. The Company anticipates enteringand Mr. Byers entered into a new employment agreement with Mr. Byersdated May 1, 2011 that revised his duties and provided that the term shall be for one year and shall renew for successive one-year terms beginning May 1st of each year unless either party elects not to provide for his continued employment withrenew the agreement. In January 2012, the Company after April 30, 2011. In April 2011,elected not to renew the employment agreement of Mr. Buccina. The Company and Mr. Buccina entered into an amendmenta new agreement dated April 30, 2012 that provided for employment through February 15, 2013, after which date Mr. Buccina chose to his employment agreement, as discussed on page 41.On January 30, 2011,retire from the Company appointed Barbara J. Schrantz as its Chief Operating Officer, and the Company determined that it would be in its best interests to enter into an employment agreement to retain Ms. Schrantz due to her years of experience with the Company and in the retail department store industry and for the long-term growth of the Company.named executive officersNamed Executive Officers are described under the heading “Summary"Summary of Employment Agreements with Named Executive Officers”Officers" beginning on page 39.event.events. In addition, Keith E. Plowman, with whom the Company does not have an employment agreement, is a participant in the Company’sCompany's severance plan. These arrangements are designed to promote stability and continuity of senior management through a change in control of the Company. Stock options and restricted stock will generally vest upon a change in control. The Company adopted “single trigger” treatmentprovides for vesting of equity awards to retain, focus and motivate executives during change in control discussions and to be competitive with current market practice in order to attract the best talent.discussions. However, any cash severance benefits require a “double trigger”"double trigger" (including the executive’sexecutive's separation from the Company under specified circumstances) for payment.named executive officersNamed Executive Officers is provided under the heading “Potential"Potential Payments Upon Termination or Change in Control”Control" on page 45.management’smanagement's interests with those of shareholders and to support the Company’sCompany's governance practices, in 2010 the Board adopted in 2010 a recoupment policy applicable to annual cash incentive awards, performance-based RSUsrestricted shares and other performance-based compensation to executive officers of the Company. The policy provides that inif, as a result of a restatement of the eventCompany's financial statements, an executive officer received more incentive compensation than the executive officer would have received absent the incorrect financial statements, the Company is requiredmay take such action as it deems appropriate to prepare an accountingaddress the impact of the restatement due to the Company’s noncompliance with any30reporting requirement under the securities laws, the Company shall take action to recoup from executive officers the amount by which such awards exceeded the payment that would have been made based on the restated financial results.statements. Compensation subject to recoupment will include equity or contingent income exercised, earned or distributed during the periods, not to exceed three years, thatwhich required restatement of financial statements. The recoupment policy is set forth in amendments to the 2009 Omnibus Incentive Plan and the Cash Bonus Plan, filed as Exhibits 10.1 and 10.3, respectively, to the Company’s current report onCompany’sCompany's securities by officers, directors and their families. Specifically, they may not, at any time:• trade in any puts, calls, covered calls or other derivative products involving Company securities;• engage in any hedging transactions with respect to Company securities; or• engage in short sales of the Company’s securities.Section 162(m) of the(“Section 162(m)”) limits the deductibility of compensation in excess of $1,000,000 paid to the Chief Executive Officer and certain executive officers unless specified criteria are satisfied. The HRCC reviews and considers the deductibility of executive compensation under Section 162(m), and has generally designed the Company’sCompany's compensation program in a manner that permits compensation to be deductible. However, grants of restricted stock, when and if those grants vest for tax purposes, may create compensation for the grantee that is subject to the limitations on deductibility under Section 162(m). The HRCC may award non-deductible compensation when it believes such action would be in the best interests of the Company.31Shirley A. Dawe
Todd C. McCarty
Jeffrey B. ShermanThe HRCConof the Company’sCompany's compensation policies and plans. This risk assessment process includes a review of plan design and performance measures. Incentive compensation targets are reviewed annually and adjusted as necessary to align with the individual goals for executive officers.Company’sCompany's compensation program does not encourage excessive and unnecessary risk-taking. The Company designs the individual components of its compensation programs to encourage appropriate risk-taking to maximize long-term business potential, while avoiding undue risk that does not align with short- andshort-and long-term shareholder objectives. This design encourages the Company’sCompany's managers to remain focused on both the short- and long-term operational and financial goals of the Company. The following factors mitigate risk with respect to compensation programs: approval of executive compensation by a committee of independent directors, performance-based short-term and long-term incentive awards aligned with shareholder interests, caps on incentive payments, use of multiple financial goals including both top and bottom line measures, stock ownership guidelines and an incentive recoupment policy (described on page 30)32).32
Table of Contents
Summary Compensation Table Year Salary
($)(1) Bonus
($)(2) Stock
Awards
($)(3) Option
Awards
($)(4) Non-Equity
Incentive
Plan
Compensation
($)(5) Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(6) All Other
Compensation
($)(7) Total($) 2012 976,923 1,000,000 1,789,750 (8) — 500,000 (9) — 148,983 4,415,656 2011 — — — — — — — — 2010 — — — — — — — —
2012
33,750
—
137,200
(10)
—
—
—
11,402
182,352 2011 1,000,000 — 1,410,300 (11) — — — 89,185 2,499,485 2010 1,000,000 — 2,620,800 (12) — 1,000,000 — 70,773 4,691,573
2012
850,000
—
331,000
(13)
—
—
31,260
21,068
1,233,328 2011 842,500 — 1,659,600 (14) — — 30,922 15,138 2,548,160 2010 812,950 — 859,030 (15) — 779,000 22,677 14,367 2,488,024
2012
479,423
—
77,550
(16)
—
—
—
7,254
564,227 2011 520,000 — 287,664 (17) — — — 6,593 814,257 2010 545,875 — 540,130 (18) — 522,500 — 10,516 1,619,021
2012
650,000
—
—
—
—
—
88,422
738,422 2011 650,000 — — — — — 70,740 720,740 2010 650,000 — — — 260,000 — 74,039 984,039
2012
510,000
—
232,650
(19)
—
—
—
8,005
750,655 2011 504,625 — 788,310 (20) — — — 4,308 1,297,243 2010 478,875 — 745,275 (21) — 366,375 — 9,769 1,600,294 Change in Pension Value and Nonqualified Non-Equity Deferred Stock Option Incentive Plan Compensation All Other Name and Salary Bonus Awards Awards Compensation Earnings Compensation Total Year ($)(1) ($)(2) ($)(3) ($)(4) ($)(5) ($) ($)(6) ($) Byron L. Bergren, 2010 1,000,000 — 2,620,800 (7) — 1,000,000 — 70,773 4,691,573 President and Chief 2009 1,000,000 — 794,829 (8) — 920,000 — 75,908 2,790,737 Executive Officer 2008 1,000,000 — 1,286,600 (9) — — — 248,605 2,535,205 Anthony J. Buccina, 2010 812,950 — 859,030 (10) — 779,000 22,677 14,367 2,488,024 Vice Chairman, 2009 791,800 — 197,000 (11) — 649,276 — (12) 17,461 1,655,537 President — 2008 780,000 — 49,600 93,500 — — (13) 20,241 943,341 Merchandising Stephen R. Byers, 2010 545,875 — 540,130 (14) — 522,500 — 10,516 1,619,021 Vice Chairman — 2009 533,500 — 137,900 (15) — 416,130 — 12,366 1,099,896 Stores, Visual, 2008 525,000 — 49,600 93,500 — — 12,890 680,990 Construction, Distribution & Logistics, Loss Prevention Keith E. Plowman, 2010 478,875 — 745,275 (16) — 366,375 — 9,769 1,600,294 Executive Vice 2009 450,000 — 110,000 — 414,000 — 15,402 989,402 President, Chief 2008 438,750 — 34,720 74,800 — — 10,948 559,218 Financial Officer and Principal Accounting Officer Barbara J. Schrantz, 2010 395,875 — 1,235,595 (17) — 190,000 — 7,925 1,829,395 Chief Operating 2009 383,500 — 55,000 — 314,470 — 6,538 759,508 Officer 2008 378,923 — 17,360 37,400 — — 6,410 440,093 Automobile
Usage
($) Supplemental
Medical
Benefits
($) Insurance
Consultation
Expenses
($) Tax
Gross-Up
of Certain
Perquisites
($) Life
Insurance
Premiums
($) Legal
Fees
($) Commuting
Expenses
($) 401(k)
Plan
Company
Match
($) Total
($) — 3,320 — 67,190 808 20,000 57,665 — 148,983 946 308 5,000 3,961 — — — 1,187 11,402 — — — — 13,068 5,000 — 3,000 21,068 — — — — 5,004 — — 2,250 7,254 6,056 — 35,010 23,929 19,677 — — 3,750 88,422 — — — — 5,005 — — 3,000 8,005 (1)Actual base salary payments made in 2010, 2009 and 2008.(2)“Bonus” refers to non-performance-based guaranteed cash payments. There were no such payments made in 2010, 2009 and 2008. Other cash incentives were performance-based and are reflected under the column labeled “Non-Equity Incentive Plan Compensation.”(3)The amounts reported in this column reflect the aggregate grant date fair value of restricted stock share awards computed in accordance with ASC 718 for restricted stock granted in 2010, 2009 and 2008 to each named executive officer. The calculation of these amounts disregards any estimate of forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm 10-K filed with the SEC on April 13, 2011.(4)The amounts reported in this column reflect the aggregate grant date fair value of option awards computed in accordance with ASC 718 for stock options granted in 2008 to each named executive officer. The calculation of these amounts disregards the estimated forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm 10-K filed with the SEC on April 13, 2011.(5)The amounts reported in this column reflect the annual performance-based bonus awards to the named executive officers under the Company’s Cash Bonus Plan, which is discussed on page 26 of the Compensation Discussion and Analysis under the heading “Performance-Based Annual Incentive Compensation.”(6)The compensation reflected in the “All Other Compensation” column for each of the named executive officers for 2010 includes the following: Supplemental Insurance Tax Gross-Up of Life 401(k) Plan Automobile Medical Consultation Certain Insurance Company Usage ($) Benefits ($) Expenses ($) Perquisites ($) Premiums ($) Match ($) Total($) Byron L. Bergren 24,596 8,000 9,150 7,248 16,634 5,145 70,773 Anthony J. Buccina — — — — 8,487 5,880 14,367 Stephen R. Byers — — — — 5,371 5,145 10,516 Keith E. Plowman 1,550 575 — — 2,499 5,145 9,769 Barbara J. Schrantz — — — — 2,045 5,880 7,925 (7)The grant date fair value of 2010 time-based restricted stock awarded to Mr. Bergren was $1,750,000. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Bergren was $870,800, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Bergren for 2010 performance-based restricted stock was $1,244,000. An additional 100,000 performance-based restricted shares33were awarded to Mr. Bergren in 2010 but are excluded from the Summary Compensation Table as the award is contingent upon 2011 performance for which criteria was not established by the HRCC until March 2011.(8)The grant date fair value of 2009 time-based restricted stock awarded to Mr. Bergren was $284,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Bergren was $510,829, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual grant date fair value to Mr. Bergren for 2009 performance-based restricted stock was $459,747.(9)The grant date fair value of 2008 performance-based restricted stock awarded to Mr. Bergren was $1,286,600, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2008 year. Based upon 2008 performance, the actual grant date fair value to Mr. Bergren for 2008 performance-based restricted stock was zero.(10)The grant date fair value of 2010 time-based restricted stock awarded to Mr. Buccina was $313,800. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Buccina was $545,230, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Buccina for 2010 performance-based restricted stock was $778,900. The grant date fair value of 2010 performance-based restricted stock includes 50,000 performance-based restricted shares awarded to Mr. Buccina in 2009 that were excluded from the Summary Compensation Table in 2009 as the award was contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010. See footnote 11 below.(11)The grant date fair value of 2009 time-based restricted stock awarded to Mr. Buccina was $135,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Buccina was $62,000, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual grant date fair value to Mr. Buccina for 2009 performance-based restricted stock was $55,800. An additional 50,000 performance-based restricted shares were awarded to Mr. Buccina in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010.(12)The actuarial valuation of the change during 2009 in Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP was a net decrease of $2,898,985. The Company terminated the Carson’s SERP in 2008. Mr. Buccina received a payment of $2,931,821 for his accumulated benefits in the first quarter of 2009, reducing his accumulated benefits under the Carson’s SERP to zero. The actuarial valuation of the change during 2009 in Mr. Buccina’s benefits under the Carson’s Pension Plan was an increase of $32,836.(13)The actuarial valuation of the change during 2008 in Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP was a decrease of $62,393.(14)The grant date fair value of 2010 time-based restricted stock awarded to Mr. Byers was $180,435. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Byers was $359,695, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Byers for 2010 performance-based restricted stock was $513,850. The grant date fair value of 2010 performance-based restricted stock includes 35,000 performance-based restricted shares awarded to Mr. Byers in 2009 that were excluded from the Summary Compensation Table in 2009 as the award was contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010. See footnote 15 below.(15)The grant date fair value of 2009 time-based restricted stock awarded to Mr. Byers was $94,500. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Byers was $43,400, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual grant date fair value to Mr. Byers for 2009 performance-based restricted stock was $39,060. An additional 35,000 performance-based restricted shares were awarded to Mr. Byers in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010.(16)The grant date fair value of 2010 time-based restricted stock awarded to Mr. Plowman was $470,700. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Plowman was $274,575, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Plowman for 2010 performance-based restricted stock was $392,250.(17)The grant date fair value of 2010 time-based restricted stock awarded to Ms. Schrantz was $1,070,850. The grant date fair value of 2010 performance-based restricted stock awarded to Ms. Schrantz was $164,745, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Ms. Schrantz for 2010 performance-based restricted stock was $235,350.34recipient’srecipient's employment, and any unvested shares of restricted stock and unvested options are usually forfeited upon termination of employment.20102012 to the named executive officersNamed Executive Officers under the Company’sCompany's Stock Incentive Plan. Estimated
Possible
Payouts Under
Equity Incentive
Plan Awards(2) All Other
Stock
Awards;
Number
of Shares
of Stock
or Units
(#)(3) All Other
Option
Awards;
Number of
Securities
Underlying
Options
(#)(4) Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards(1) Exercise
or Base
Price of
Option
Awards
($/share) Grant Date
Fair Value
of Stock
and
Option
Awards
($)(5) Grant
Date Threshold
($) Target
($) Maximum
($) Threshold
(#) Target
(#) N/A 500,000 1,000,000 2,000,000 — — — — — — 3/13/12 — — — 25,000 50,000 (6) — — — 214,750 2/7/12 — — — — — 300,000 — — 1,575,000
—
—
—
—
—
17,612
—
—
90,000 8/23/12 — — — — — 5,866 — — 47,200
425,000
850,000
1,700,000
—
—
—
—
—
— 3/13/12 — — — 25,000 50,000 (7) — — — 214,750 4/30/12 — — — 18,750 37,500 (8) — — — 116,250
117,500
235,000
470,000
—
—
—
—
—
— 4/17/12 — — — 5,000 10,000 (9) — — — 35,250 4/17/12 — — — — — 6,000 — — 42,300
191,300
382,500
765,000
—
—
—
—
—
— 4/17/12 — — — 25,000 50,000 (10) — — — 176,250 4/17/12 — — — — — 8,000 — — 56,400 All Grant Other Date All Option Fair Estimated Possible Other Awards; Exercise Value of Estimated Possible Payouts Under Stock Number of or Base Stock Payouts Under Non-Equity Equity Incentive Awards; Securities Price of and Incentive Plan Awards(1) Plan Awards(2) Number of Underlying Option Option Grant Threshold Target Maximum Threshold Target Shares of Stock or Options Awards Awards Date ($) ($) ($) (#) (#) Units (#)(3) (#)(4) ($/share) ($)(5) Byron L. Bergren N/A 500,000 1,000,000 2,000,000 — — — — — — 1/31/10 — — — 50,000 100,000 (6) — — — 870,800 1/31/10 — — — — — 200,000 — — 1,750,000 Anthony J. Buccina N/A 410,000 820,000 1,640,000 — — — — — — 2/2/09 — — — 25,000 50,000 (7) — — — 435,400 4/12/10 — — — 5,000 10,000 (8) — — — 109,830 4/12/10 — — — — — 20,000 — — 313,800 Stephen R. Byers N/A 275,000 550,000 1,100,000 — — — — — — 2/2/09 — — — 17,500 35,000 (9) — — — 304,780 4/12/10 — — — 2,500 5,000 (10) — — — 54,915 4/12/10 — — — — — 11,500 — — 180,435 Keith E. Plowman N/A 183,200 366,400 732,800 — — — — — — 4/12/10 — — — 12,500 25,000 (11) — — — 274,575 4/12/10 — — — — — 30,000 — — 470,700 Barbara J. Schrantz N/A 100,000 200,000 400,000 — — — — — — 4/12/10 — — — 7,500 15,000 (12) — — — 164,745 4/12/10 — — — — — 15,000 — — 235,350 1/28/11 — — — — — 75,000 — — 835,500 (1)Represents the range of cash payouts targeted for 2010 performance under the Cash Bonus Plan described in the Compensation Discussion and Analysis on page 26 under the heading “Performance-Based Annual Incentive Compensation.” The amounts shown in the “Threshold” column reflect the minimum payout opportunity if threshold performance was achieved. If performance thresholds are not met, it is possible to have no payout under the Cash Bonus Plan. Actual payout amounts for 2010 performance are included under “Non-Equity Incentive Compensation” in the Summary Compensation Table.(2)Represents the range of performance-based restricted share payouts targeted for 2010 performance. These performance-based restricted shares are earned based on the achievement of goals for 2010 established by the HRCC. If performance thresholds are not met, it is possible to have no payout of these performance-based restricted shares. Dividends are not paid on performance-based restricted shares until such shares are vested. Because 100% of the performance target for 2010 was met, 100% of the target performance-based restricted shares were actually earned.(3)Outstanding Equity Awards at Fiscal Year-End table on page 37. Dividends are generally paid on unvested restricted shares when dividends are paid on Company common stock. Restricted shares will vest on an accelerated basis upon the executive’s termination of employment under certain circumstances. Additional information regarding the vesting acceleration provisions applicable to equity awards is included under the heading “Potential Payments upon Termination or Change in Control.”(4)Represents options issued under the Stock Incentive Plan, of which there were none in 2010.(5)Represents the grant date fair value of each equity award computed in accordance with ASC 718. The dollar value of restricted shares shown represents the grant date fair value calculated as the fair market value of our common stock on the respective grant dates. The dollar value of performance-based restricted shares awarded is computed based upon an assessment, as of the grant date, that it was probable 70% of the performance target would be met for the 2010 year. Because 100% of the performance target for 2010 was met, 100% of the 2010 target performance-based restricted shares were actually earned. Reference footnotes 7, 10, 14, 16 and 17 to the Summary Compensation Table.(6)Represents the target award of the first tranche of two equal tranches of performance-based restricted shares granted to Mr. Bergren on January 31, 2010. The performance goals for the first tranche were established by the HRCC on March 16, 2010. The performance goals for the second tranche were not established by the HRCC until March 15, 2011. The35second tranche is not reflected in this table because, for purposes of ASC 718 accounting, performance-based restricted shares are not considered to be “granted” until the respective performance goals have been established.(7)Represents the target award of the second tranche of two equal tranches of performance-based restricted shares granted to Mr. Buccina on February 2, 2009. The performance goals for the second tranche were established by the HRCC on March 16, 2010.(8)Represents the target award of performance-based restricted shares granted to Mr. Buccina on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010.(9)Represents the target award of the second tranche of two equal tranches of performance-based restricted shares granted to Mr. Byers on February 2, 2009. The performance goals for the second tranche were established by the HRCC on March 16, 2010.(10)Represents the target award of performance-based restricted shares granted to Mr. Byers on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010.(11)Represents the target award of performance-based restricted shares granted to Mr. Plowman on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010.(12)Represents the target award of performance-based restricted shares granted to Ms. Schrantz on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010.36 Option Awards Stock Awards Equity Equity Incentive Incentive Plan Plan Awards: Awards: Market Number or Payout Equity Market of Value of Incentive Value of Unearned Unearned Plan Shares Shares, Shares, Awards: Number of or Units or Units or Number of Shares or Units of Other Other Number of Number of Securities Units of Stock Rights Rights Securities Securities Underlying Stock That That That Underlying Underlying Unexercised Option That Have Have Have Unexercised Unexercised Unearned Exercise Option Have Not Not Not Not Options - Options - Options Price Expiration Vested Vested Vested Vested Exercisable Unexercisable (#) ($) Date (#) ($)(1) (#) ($)(1) Byron L. Bergren 125,000 — — 13.05 8/23/2014 — — — — 95,000 — — 20.44 7/6/2012 — — — — — — — — — 100,000 (2) 1,114,000 — — — — — — — 200,000 (3) 2,228,000 — — — — — — — — — 100,000 (4) 1,114,000 Anthony J. Buccina 96,000 — — 27.15 5/31/2013 — — — — 11,019 — — 55.85 3/26/2014 — — — — — 50,000 (5) — 4.96 3/17/2015 — — — — — — — — — 10,000 (6) 111,400 — — — — — — — 100,000 (7) 1,114,000 — — — — — — — 10,000 (8) 111,400 — — — — — — — 10,000 (9) 111,400 — — Stephen R. Byers 15,000 — — 31.84 4/2/2013 — — — — 21,500 — — 29.90 10/1/2013 — — — — 11,019 — — 55.85 3/26/2014 — — — — — 50,000 (5) — 4.96 3/17/2015 — — — — — — — — — 10,000 (6) 111,400 — — — — — — — 70,000 (7) 779,800 — — — — — — — 6,500 (8) 72,410 — — — — — — — 5,000 (9) 55,700 — — Keith E. Plowman 10,000 — — 17.91 5/26/2012 — — — — 11,019 — — 55.85 3/26/2014 — — — — — 40,000 (5) — 4.96 3/17/2015 — — — — — — — — — 7,000 (6) 77,980 — — — — — — — 50,000 (10) 557,000 — — — — — — — 5,000 (8) 55,700 — — — — — — — 25,000 (9) 278,500 — — Barbara J. Schrantz 10,000 — — 19.97 9/11/2012 — — — — 4,452 — — 51.83 4/26/2014 — — — — 15,000 — — 12.90 11/26/2014 — — — — — 20,000 (5) — 4.96 3/17/2015 — — — — — — — — — 3,500 (6) 38,990 — — — — — — — 25,000 (10) 278,500 — — — — — — — 15,000 (9) 167,100 — — — — — — — 75,000 (11) 835,500 — —
Outstanding Equity Awards at Fiscal Year-End Option Awards Stock Awards Number of
Securities
Underlying
Unexercised
Options—
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options—
Unexercisable
(#) Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) Option
Exercise
Price ($) Option
Expiration
Date Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#) Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares,
Units or Other
Rights That
Have Not
Vested ($)(1) — — — — — 300,000 (2) 3,930,000 — — — — — — — — — 250,000 (3) 3,275,000
125,000
—
—
13.05
2/6/2013
—
—
—
— — — — — — 23,478 (4) 307,600 — —
96,000
—
—
27.15
5/31/2013
—
—
—
— 11,019 — — 55.85 3/26/2014 — — — — 50,000 — — 4.96 3/17/2015 — — — — — — — — — 10,000 (5) 131,000 — — — — — — — — — 50,000 (6) 655,000
15,000
—
—
31.84
4/2/2013
—
—
—
— 21,500 — — 29.90 10/1/2013 — — — — 11,019 — — 55.85 3/26/2014 — — — — 50,000 — — 4.96 3/17/2015 — — — — — — — — — 5,000 (7) 65,500 — — — — — — — 10,000 (8) 131,000 — — — — — — — 6,000 (9) 78,600 — —
11,019
—
—
55.85
3/26/2014
—
—
—
— 40,000 — — 4.96 3/17/2015 — — — — — — — — — 25,000 (7) 327,500 — — — — — — — 12,000 (8) 157,200 — — — — — — — 8,000 (9) 104,800 — — (1)Market values reflect the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 (the last business day of the fiscal year), which was $11.14 per share.(2)Restricted shares vested 100% on February 1, 2011.(3)Restricted shares vest 100% on February 5, 2012.(4)These performance-based shares vest based on fiscal 2011 performance criteria established by the HRCC.(5)Stock options vested 100% on March 17, 2011.(6)Restricted shares vested 100% on March 17, 2011.(7)Restricted shares vested 100% on April 30, 2011.(8)Restricted shares vested 100% on April 12, 2011.(9)Restricted shares vest 100% on April 12, 2013.(10)Restricted shares vest 100% on April 27, 2012.(11)Restricted shares vest 25,000 each on February 3, 2014, February 2, 2015 and February 1, 2016.37
Table of Contentsnamed executive officersNamed Executive Officers and the number of years credited to each named executive officerNamed Executive Officer under the Carson’sCarson's Pension Plan, in which only Mr. Buccina iswas a participant.will remainremained in service until normal retirement age as defined under the Carson’sCarson's Pension Plan. The assumptions set forth in Note 89 to our audited financial statements included in ourForm 10-K filed with the SEC on April 13, 201117, 2013 were used to calculate the numbers below and are incorporated by reference. Plan Name Number of
Years Credited
Service Present Value of
Accumulated Benefit ($) Payments During
Last Fiscal Year ($) Carson's Pension Plan 13 (1) 316,328 — Present Value of Number of Years Accumulated Benefit Payments During Credited Service ($) Last Fiscal Year ($) Byron L. Bergren — — — — Anthony J. Buccina Carson’s Pension Plan 13 (1) 254,146 — Stephen R. Byers — — — — Keith E. Plowman — — — — Barbara J. Schrantz — — — — (1)Although Mr. Buccina has 18 years of actual service, he is credited with only 13 years of service under the terms of the Carson’s Pension Plan as all future benefit accruals were frozen in May 2006.Carson’sCarson's in March 2006, the Company assumed the Carson’sCarson's Pension Plan. The Carson’sCarson's Pension Plan is a qualified defined-benefit cash-balance plan in which the only named executive officer who participates isNamed Executive Officer participant was Anthony J. Buccina. The Carson’sCarson's Pension Plan was frozen to new participants in 2002 and all future benefit accruals were frozen in May 2006. The Carson’sCarson's Pension Plan was amended in 2007 in compliance with the Pension Protection Act of 2006.iswas not currently eligible for normal retirement under the Carson’sCarson's Pension Plan.Carson’sCarson's previous plan, which was merged into the Carson’sCarson's Pension Plan, are eligible for early retirement after 30 years of service. Payment of pension benefits will commence at age 65, unless the employee elects to begin such payments earlier in which case the pension benefit amount may be reduced. Mr. Buccina is currentlywas eligible for early retirement under the Carson’sCarson's Pension Plan.Termination Other than Normal Retirement or Early Retirement:Employees who terminate employment with three or more years of service prior to attaining age 55 qualify to receive a deferred vested pension. Payment of deferred vested pension benefits will commence at age 65, unless the employee elects to begin such payments earlier in which case the deferred vested pension benefit amount may be reduced. Mr. Buccina is currently eligible for deferred vested pension benefits under the Carson’s Pension Plan.38Carson’sCarson's Pension Plan was amended and restated to convert the plan’splan's benefit formula to a cash-balance design. Under this design, the pension benefit is expressed as aCarson’sCarson's Pension Plan.Carson’sCarson's Pension Plan were eliminated. Generally, the lump sum benefit payable under the Plan is the cash balance account value as of that date, with annual interest credits at the greater of 4.75% or the yield on3-year three-year U.S. Treasury constant maturities as of the last day of the prior calendar year. However, the lump sum benefit is not less than the lump sum value of benefits accrued under prior Plan formulas as of May 20, 2006.
Option Exercises and Stock Vested During 20102012 Option Awards Stock Awards Number of Shares
Acquired on Exercise
(#) Value Realized
on Exercise
($) Number of Shares
Acquired on Vesting
(#) Value Realized
on Vesting
($)(1) — — — — — — 200,000 1,000,000 — — 20,259 (2) 144,000 — — — — — — — — — — — — — — 50,000 336,000 Option Awards Stock Awards Number of Shares Value Realized Number of Shares Value Realized Acquired on Exercise on Exercise Acquired on Vesting on Vesting (#) ($) (#) ($)(1) Byron L. Bergren — — 120,648 1,098,897 — — 100,000 1,114,000 (2) Anthony J. Buccina — — 2,865 36,156 — — 60,000 668,400 (2) Stephen R. Byers — — 2,865 36,156 — — 40,000 445,600 (2) Keith E. Plowman — — 2,865 36,156 — — 25,000 278,500 (2) Barbara J. Schrantz — — 6,158 92,318 — — 15,000 167,100 (2) (1)Value reflects the closing price of the Company’s common stock on the NASDAQ Stock Market on the respective vesting date of the restricted stock awards.(2)2010 performance-based restricted stock awards vested January 29, 2011 as determined by the HRCC on March 8, 2011.
Summary of Employment Agreements with
Named Executive OfficersBergren’sBergren's employment agreement with the Company was entered into on August 24, 2004 (the “2004 Agreement”"2004 Agreement") and amended on May 1, 2005; May 23, 2006; July 19, 2007; March 18, 2009 and2009; January 21, 2011 and November 14, 2011. Mr. Bergren’sBergren's employment agreement, as amended, providesprovided for a minimum annual base salary of $1,000,000 and a bonus in accordance with the Cash Bonus Plan. In January 2011, the Company entered into an amendment of Mr. Bergren’sBergren's employment agreement, providingwhich provided that he willwould serve as President and Chief Executive Officer through February 5, 2012. The2012, with the term of the agreement will extendextending automatically from year to year thereafter unless either party electselected not to renew the agreement. If Mr. Bergren electselected not to renew, the Board has agreed to nominate Mr. Bergren as a member of the Board of Directors to serve until the annual meeting that iswas at least one year after expiration of the agreement. If the Company electselected not to renew the agreement,39 has agreed to nominate Mr. Bergren as a member of the Board of Directors and to effect his appointment as the non-executive Chairman of the Board to serve until the annual meeting that iswas at least one year after expiration of the agreement.Pursuant to On November 14, 2011, the July 19, 2007 amendment to his employment agreement,Company announced that Mr. Bergren would transition from his role as President and Chief Executive Officer to become Chairman of the Board and entered into a sixth amendment of Mr. Bergren's employment agreement. On February 6, 2012, Mr. Bergren retired as President and Chief Executive Office and was grantednamed Chairman of the following long-term incentive compensation awards:• 41,297 time-based restricted shares of the Company’s common stock which had an aggregate value of $1,350,000 as of July 19, 2007. Fifteen percent (6,195 shares) vested on February 2, 2008, thirty-five percent (14,454 shares) vested on January 31, 2009 and fifty percent (20,648 shares) vested on February 5, 2010.• 41,297 performance-based restricted shares with a value of $1,350,000 as of July 19, 2007. One hundred percent of these restricted shares were forfeited based upon the failure to achieve the net income performance targets for 2007 and 2008.• 365,854 performance-based restricted shares with a value of $2,700,000 as of February 4, 2008. One-half of these restricted shares were forfeited based upon the failure to achieve the performance targets for 2008. Ninety percent of the remaining 182,927 performance-based restricted shares (164,634 shares) vested based upon the achievement of performance targets for 2009.following long-term incentive awards:• 200,000 time-based restricted shares of the Company’s common stock which had an aggregate value of $354,000 as of March 25,Company's common stock of which 50% (100,000 shares) vested on February 1, 2010 and the remainder (100,000 shares) vested on February 1, 2011. He was also granted 200,000 performance-based restricted shares, 90% of which (180,000 shares) vested based upon the achievement of performance targets for 2009. Fifty percent (100,000 shares) vested on February 1, 2010, and the remainder (100,000 shares) vested on February 1, 2011.• 200,000 performance-based restricted shares with a value of $354,000 as of March 25, 2009. Ninety percent of these performance-based restricted shares (180,000 shares) vested based upon the achievement of performance targets for 2009.that Mr. Bergren receivefor two grants of shares of restricted stock in fiscal year 2010:• 200,000 time-based restricted shares of the Company’s common stock that vest one hundred percent on February 5, 2012.• 200,000 performance-based restricted shares of the Company’s common stock that vest based on the achievement of performance goals, 100,000 of which were subject to vesting based on achievement of Company performance goals for 2010 and 100,000 of which are subject to vesting based on achievement of Company performance goals for 2011. One-hundred percent of the 2010 performance-based restricted shares (100,000 shares) vested based upon the achievement of performance targets for 2010.Iniswas discharged without cause or resignsresigned for good reason, prior to February 5, 2012, the 2010 grant of performance-based restricted shares based upon Company performance for 2011 granted to Mr. Bergren shall become vested,would be appointed as non-executive Chairman of the Board and the underlying shares shallwould also be delivered,entitled to the same extent as would have applied had Mr. Bergren remained employedpayment of all accrued and unpaid Base Salary and accrued but unused vacation pay through the date the determination of vesting for these shares would otherwise have been. In addition, Mr. Bergren will be entitled to receive severance pay for a period of two years following termination of his employment payable in installments over such period. Mr. Bergren will also receive the bonus that would have been earned if Mr. Bergren had completed the fiscal year in which termination of employment occurs.as President and/or Chief Executive Officer, and a pro-rated bonus, if earned, based on the Company's full-year performance. The vesting of restricted stock and the payment of severance benefits arewere contingent on Mr. Bergren executing a general release consistent with certain terms of his employment agreement.40If The employment agreement also provided that if Mr. Bergren iswas discharged without cause during the term of his employment agreement following a “Change"Change in Control”Control" (as defined in the employment agreement) or resignsresigned from the Company with or without good reason during the term of his employment agreement after the expiration of three months following a Change in Control, Mr. Bergren willwould receive a payment equal to the lesser of 2.99 times his base salary (at the salary level immediately preceding the Change in Control plus his average bonus for the three immediately preceding fiscal years) or, if applicable, the “280G"280G Permitted Payment”Payment" (as defined in the 2004 Agreement). The Change in Control severance payment iswas contingent on Mr. Bergren signing and not timely revoking a general release of claims.For information regarding potential severance payments and accelerated vesting of equity awards to whichBergren may be entitled upon certain termination eventsand/or a Change in Control, see “Potential Payments Upon Termination or Change in Control” on page 45.Mr. Bergren’sBergren's employment agreement containscontained a non-competition clause that, during Mr. Bergren’sBergren's employment and for a period of one year after termination of his employment, prohibitsprohibited Mr. Bergren from engaging in or being financially interested in the retail department stores business of any competitor of the Company identified in the employment agreement. Mr. Bergren’sBergren's employment agreement also containscontained confidentiality provisions relating to the Company’sCompany's confidential information.President — President—MerchandisingJanuary 23, 2009,April 30, 2012, Mr. Buccina announced his intention to retire on February 15, 2013. Also on that date, the Company entered into an employment agreement (the “Buccina"Buccina Employment Agreement”Agreement"), Restricted Stock Agreement to retain the services of Mr. Buccina through February 15, 2013. The Company and Restricted Stock Agreement — Performance Shares with Mr. Buccina. The Buccina Employment Agreement waswere party to an employment agreement dated as of February 1, 2009, as amended by Amendment No. 1 to Employment Agreement dated April 12, 2011, (the “Amendment No. 1”).The Buccina Employment Agreement follows an employment agreement dated June 1, 2006 thatwhich expired January 31, 2009. The Buccina Employment Agreement provides that the term runs for a period of one year and shall renew for successive periods of one year unless either the Company or Mr. Buccina elects not to renew the Employment Agreement. The Employment Agreement automatically renewed for an additional one-year term toon April 30, 2012. Amendment No. 1 continues the provision of the Employment Agreement that provides that the term shall be for one year and shall renew for successive one-year terms beginning May 1st of each year, unless terminated pursuant to the terms of the Employment Agreement.Buccina’s initialBuccina's base salary under the Buccina Employment Agreement was $791,800is $850,000 per year. This base salary is subject to review during the term of the Buccina Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.100,00037,500 performance-based restricted shares of the Company’sCompany's common stock. In consideration for such grant of performance-based restricted stock, Mr. Buccina agreed to forfeit 75,000 unvested shares of time-based restricted stock granted pursuant to a restricted stock agreement dated April 18, 2011. As the termsperformance goals for 2012 were not attainted, the restricted stock award relating to 2012 performance goals was forfeited.Company’s Stock Incentive Plan.Company's common stock. Such grant was awarded on February 2, 2009 and such restricted shares vested on April 30, 2011. In addition, Mr. Buccina received, as performance-based compensation, a grant of 50,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares were determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (45,000 shares) vested based upon the achievement of performance targets41for 2009. One-hundred percent of the 2010 performance-based restricted shares (50,000 shares) vested based upon the achievement of performance targets for 2010.vestwould have vested on April 12, 2013. In addition,2013 and were accelerated to vest on February 15, 2013 pursuant to the terms of the Buccina Employment Agreement.as performance-based compensation, a grant of 10,000150,000 performance-based restricted shares, 50,000 of which were subject to vesting based on the basis of the achievement of certainCompany performance goals established for the Company’s 2010 fiscal year. One-hundred percenteach of the 2010 performance-based restricted shares (10,000 shares) vested2011 and 2012, and 50,000 of which were subject to vesting based upon theon achievement of Company performance targetsgoals for 2010.In2013. As the performance goals for 2011 and 2012 were not attained, the restricted stock awards relating to each of 2011 and 2012 performance goals were forfeited. As Mr. Buccina retired as of February 15, 2013, the restricted stock award relating to 2013 performance goals was forfeited.dischargetermination without cause or resignation for good reason during the term of the Buccina Employment Agreement or if the Company has not offered to renew the Buccina Employment Agreement at any time prior to February 1, 2014,agreement, Mr. Buccina will be entitledreceive a severance payment equal to two years of his base salary and will receive severance paya stipend equal to the greatercost of his base payCOBRA premiums for the remaining contract term ormedical and dental coverage for two times his base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of Mr. Buccina’s employment. The severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.“Change"Change in Control”Control" (as defined in the Buccina Employment Agreement), (1)Mr. Buccina's stock options and restricted shares held by Mr. Buccina shall vest and (2) Mr. Buccina is prohibited from resigning for good reason for a periodaccording to the terms of six months following the Change in Control.respective stock agreements. If following a Change in Control he is discharged without cause or resigns for good reason within two yearsduring the term of the Change in Control,Buccina Employment Agreement, Mr. Buccina will receive a severance payment equal to two times his average base pay for the most recently completed three years plus two times the average bonus paid to him for the most recently completed three years, or, if applicable, the “280G"280G Permitted Payment”Payment" (as such term is defined in the Buccina Employment Agreement). The Change in Control severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.“Potential"Potential Payments Upon Termination or Change in Control”Control" on page 45.Buccina’sBuccina's employment and for a period equal to one-half of the period for which he receives severance payments after termination of his employment, prohibits Mr. Buccina from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Buccina Employment Agreement. The Buccina Employment Agreement also contains confidentiality provisions relating to the Company’sCompany's confidential information.Chairman —President, Stores, Visual Construction, Distribution & Logistics and Loss PreventionJanuary 23, 2009, the Company entered into an employment agreement (the “Byers Employment Agreement”), Restricted Stock Agreement and Restricted Stock Agreement — Performance Shares with Stephen R. Byers. In JanuaryMay 2, 2011, the Company elected not to renew the employment agreement of Mr.and Stephen R. Byers upon its expiration on April 30, 2011. As of the preparation of this proxy statement, the Company was negotiatingentered into a new employment agreement with Mr. Byers to provide for his continued employment with the Company after April 30, 2011.followsreplaces an employment agreement dated June 28, 2006, as amended by the first amendment to the employment agreement dated December 20, 2006, which expired January 31, 2009. The Byers Employment Agreement was effective as of February 1, 2009 (the "2009 Agreement"), which expired April 30, 2011. The Byers Employment Agreement provides that the term shall be for one year and shall renew for successive one-year terms beginning May 1st of each year, unless terminated by either party pursuant to the Company’s January 2011 election notterms of the Byers Employment Agreement. renew, terminated on April 30, 2011.Mr. Byers’s initial base salary under the Byers Employment Agreement, was $533,500 per year.Mr. Byers shall receive a base salary effective May 1, 2011 through April 28, 2012 at an annual rate of $510,000, and, effective April 29, 2012, at an annual rate of $470,000. This base salary is subject to review during the term of the Byers Employment Agreement and may be increased in the sole discretion of the Company.42providedprovides that Mr. Byers wasis eligible for a bonus under the Cash Bonus Plan under the following parameters: beginning with fiscal year 2012, a target bonus of 100%50% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC.HRCC, and for fiscal year 2011, a target bonus prorated between the 100% target established by the 2009 Agreement for the first three months of the fiscal year and a 50% target for the remaining nine months of the fiscal year. The performance measures to be utilized and the weighting of these performance measures arewill be determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.The Byers Employment Agreement provided that Mr. Byers receive a grant of 70,000 restricted sharesis also eligible to participate in plans and programs that are generally made available to the other employees of the Company’s common stock pursuant to the terms of the Company’s Stock Incentive Plan. Such grant was awarded on February 2, 2009 and such restricted shares vested on April 30, 2011. In addition, Mr. Byers received, as performance-based compensation, a grant of 35,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares were determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (31,500 shares) vested based upon the achievement of performance targets for 2009. One-hundred percent of the 2010 performance-based restricted shares (35,000 shares) vested based upon the achievement of performance targets for 2010.12, 2010,17, 2012, Mr. Byers was awarded a grant of 11,500 shares of6,000 time-based restricted shares 6,500 of which vestedvest on April 12, 2011 and 5,00017, 2015. In addition, Mr. Byers received a grant of 10,000 performance-based restricted shares where were subject to vesting based on achievement of Company performance goals for 2012. As the performance goals for 2012 were not attained, the restricted stock award relating to 2012 performance goals was forfeited.12, 2013.17, 2016. In addition, Mr. Byers received as performance-based compensation, a grant of 5,00020,000 performance-based restricted shares which are subject to vesting based on the basis of the achievement of certainCompany performance goals established for the Company’s 2010 fiscal year. One-hundred percent2013 and a grant of the 201022,500 performance-based restricted shares (5,000 shares) vestedwhich are subject to vesting based upon theon achievement of Company performance targetsgoals for 2010.Inthe cumulative three-year period of 2013, 2014 and 2015. For vesting of restricted shares above the target amount of 15,000 shares, it is an additional requirement that the TSR be a positive number.dischargetermination without cause or resignation for good reason, duringMr. Byers will receive a severance payment equal to one and one-half years of his base salary and will receive a stipend equal to the initial termcost of COBRA premiums for medical and dental coverage for one and one-half years. It also provides that if, prior to February 1, 2014, the Company exercises its right not to renew the Byers Employment Agreement and the Company and Mr. Byers would have beendo not enter into a new employment agreement and Mr. Byers is terminated without cause or resigns for good reason, he will be entitled to receivea severance paypayment equal to the greaterone year of his base pay for the remaining contract term or two times his base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of Mr. Byers’s employment.salary. The severance payment wasis contingent on Mr. Byers signing and not timely revoking a general release of claims.“Change in Control”"Change of Control" (as such term is defined in the Byers Employment Agreement), (1) the vesting of stock options and restricted shares held by Mr. Byers shall vest if Mr. Byers is governed by the terms of such stock optiondischarged without cause or restricted share grantsresigns for good reason and (2) Mr. Byers is prohibited from resigning for good reason for a period of six months following the Change inof Control. If following a Change inof Control he is discharged without cause or resigns for good reason within two years of the Change inof Control, Mr. Byers will receive a severance payment equal to twoone and one-half times his average base pay for the most recently completed three years plus twoone and one-half times the average bonus paid to him for the most recently completed three years or, if applicable, the “280G"280G Permitted Payment”Payment" (as such term is defined in the Byers Employment Agreement). The Change inof Control severance payment is contingent on Mr. Byers signing and not timely revoking a general release of claims.“Potential"Potential Payments Upon Termination or Change in Control”Control" on page 45.Byers’sByers's employment and for a period equal to one-half of the period for which he receives severance payments after termination of his employment, prohibits Mr. Byers from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Byers Employment Agreement. The Byers Employment Agreement also contains confidentiality provisions relating to the Company’sCompany's confidential information.43
Table of ContentsBarbara J. Schrantz, Chief Operating OfficerOn January 30, 2011, the Company entered into an employment agreement (the “Schrantz Employment Agreement”), a Restricted Stock Agreement and a Restricted Stock Agreement — Performance Shares with Barbara J. Schrantz. The Schrantz Employment Agreement was effective as of January 30, 2011 and will terminate on January 28, 2012, unless sooner terminated in accordance with the terms thereof. Unless terminated, the Schrantz Employment Agreement shall renew for successive one-year terms beginning on the first day of the Company’s fiscal year.Ms. Schrantz’s initial base salary under the Schrantz Employment Agreement is $480,000 per year. This base salary is subject to review during the term of the Schrantz Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.The Schrantz Employment Agreement provides that Ms. Schrantz is eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 75% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC. The performance measures to be utilized and the weighting of these performance measures will be determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.In connection with Ms. Schrantz’s promotion to the position of Chief Operating Officer, Ms. Schrantz received on January 28, 2011, a grant of 75,000 restricted shares of the Company’s common stock pursuant to the terms of the Company’s 2009 Omnibus Incentive Plan. Such restricted shares vest, subject to prescribed conditions, as follows: 25,000 shares on February 3, 2014, 25,000 shares on February 2, 2015, and 25,000 shares on February 1, 2016. In addition, Ms. Schrantz received, as performance-based compensation, a grant of 150,000 restricted shares of the Company’s common stock subject to vesting as follows: 50,000 shares subject to vesting on the basis of achievement of performance goals for fiscal year 2011, 50,000 shares subject to vesting on the basis of achievement of performance goals for fiscal year 2012, and 50,000 shares subject to vesting on the basis of achievement of performance goals for fiscal year 2013. The performance goals for earning such performance-based shares shall be determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements.In the event of discharge without cause or resignation for good reason during the initial term of the Schrantz Employment Agreement ending January 28, 2012, Ms. Schrantz will be entitled to receive severance pay equal to one and one-half times her base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of Ms. Schrantz’s employment. In addition, if at any time prior to February 1, 2014 (i) the Company exercises its right not to renew the Schrantz Employment Agreement, (ii) the Company and Ms. Schrantz do not enter into a new employment agreement and (iii) thereafter Ms. Schrantz is discharged or resigns for good reason, Ms. Schrantz will be entitled to receive a severance payment equal to her base salary. All severance payments are contingent on Ms. Schrantz signing and not timely revoking a general release of claims.Upon a “Change in Control” (as defined in the Schrantz Employment Agreement), the vesting of stock options and restricted shares held by Ms. Schrantz shall be governed by the terms of such stock option or restricted share grants and Ms. Schrantz may not resign for good reason for a period of six months following the Change in Control. If following a Change in Control she is discharged without cause or resigns for good reason within two years of the Change in Control, Ms. Schrantz will receive a severance payment equal to one and one-half times her average base pay for the most recently completed three years plus two times the average bonus paid to her for the most recently completed three years, or, if applicable, the “280G Permitted Payment” (as such term is defined in the Schrantz Employment Agreement). The Change in Control severance payment is contingent on Ms. Schrantz signing and not timely revoking a general release of claims.44For information regarding potential severance payments and accelerated vesting of equity awards to which Ms. Schrantz may be entitled upon certain eventsand/or a Change in Control, see “Potential Payments Upon Termination or Change in Control” below.The Schrantz Employment Agreement contains a non-competition clause that, during Ms. Schrantz’s employment and for a period of nine months after termination of her employment, prohibits Ms. Schrantz from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Schrantz Employment Agreement. The Schrantz Employment Agreement also contains confidentiality provisions relating to the Company’s confidential information.named executive officersNamed Executive Officers (with the exception of Mr. Bergren, who retired as President and Chief Executive Officer on February 6, 2012) in the event of a termination of employment or a change"Change in controlControl" of the Company.Company, as such term is defined in the agreements and plans. The potential amount of compensation payable to each named executive officersuch Named Executive Officer in each situation is set forth in the tables below. The amounts shown in the tables assume that termination of the named executive officerNamed Executive Officer and/or a changeChange in controlControl occurred on January 29, 2011.February 2, 2013. The actual amounts to be paid will depend on the circumstances and time of the termination or changeChange in control.ByronControl.Bergren — Hoffman—President and Chief Executive Officer
Payments Upon Termination For Cause
Termination Voluntary
Termination
Without
Good
Reason Involuntary
Termination
Without
Cause or
Resignation
for Good
Reason(1) Change in
Control
Without
Termination Change in
Control with
Termination(2) Retirement Disability Death — — $ 2,000,000 — $ 2,193,354 (3) — — — — $ 500,000 500,000 $ 500,000 500,000 $ 500,000 $ 500,000 $ 500,000 — — 7,205,000 7,205,000 7,205,000 — 7,205,000 7,205,000 — — 30,430 — 30,430 — — — — — — — — — — 2,000,000 — $ 500,000 $ 9,735,430 $ 7,705,000 $ 9,928,784 $ 500,000 $ 7,705,000 $ 9,705,000 Involuntary Termination Voluntary Without Termination Cause or Change in Change in without Resignation Control Control Executive Benefits and For Cause Good for Good Without with Termination Reason Reason(1) Termination Termination(2) Retirement Disability Death Cash Severance — — $ 2,000,000 — $ 3,906,933 (3) — — — Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4) — $ 1,000,000 1,000,000 $ 1,000,000 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Value of Accelerated Options(5) — — — — — — — — Value of Accelerated Restricted Stock(6) — — 3,342,000 4,456,000 4,456,000 — 4,456,000 4,456,000 Value of Performance RSUs(7) — 225,685 225,685 225,685 225,685 225,685 225,685 225,685 Continuing Health and Welfare Benefits — — 13,167 — 47,402 — — — Life Insurance — — — — — — — 2,000,000 — $ 1,225,685 $ 6,580,852 $ 5,681,685 $ 9,636,020 $ 1,225,685 $ 5,681,685 $ 7,681,685 (1)Payment requires the execution of a general release.(2)With regard to change in control, “termination” means either (i) Mr. Bergren is discharged without cause during the term of his employment agreement following the closing of the change in control transaction, or (ii) Mr. Bergren resigns for any reason after the expiration of three months following the change in control, including, without limitation, resignation by Mr. Bergren with or without “Good Reason.”(3)Pursuant to Mr. Bergren’s employment agreement, as amended, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. This calculation did not require such reduction.(4)This calculation is subject to reduction by the HRCC, but assumes no such reduction.(5)The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share). There is no value reflected for accelerated options as the exercise price of options exceeded the closing price of the Company’s stock on January 28, 2011.(6)The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(7)Mr. Bergren’s RSUs for 2006 vested on February 3, 2007 without regard to acceleration and their vesting would not have been affected by Mr. Bergren’s termination or a change in control on January 29, 2011.45Buccina — Buccina—Vice Chairman, President — President—Merchandising
Payments Upon Termination For Cause
Termination Voluntary
Termination
without
Good
Reason Involuntary
Termination
Without
Cause or
Resignation
for Good
Reason(1) Change in
Control
Without
Termination Change in
Control with
Termination(2) Retirement Disability Death — — $ 1,700,000 — $ 2,622,484 (3) — — — — — — $ 622,250 622,250 — $ 786,000 $ 786,000 $ 316,328 $ 316,328 316,328 — 316,328 $ 316,328 316,328 316,328 — — 36,884 — — — — — — — — — — — — 1,700,000 $ 316,328 $ 316,328 $ 2,053,212 $ 622,250 $ 3,561,062 $ 316,328 $ 1,102,328 $ 2,802,328 Involuntary Termination Voluntary Without Termination Cause or Change in Change in without Resignation Control Control Executive Benefits and Payments For Cause Good for Good Without with Termination Reason Reason(1) Termination Termination(2) Retirement Disability Death Cash Severance — — $ 1,640,000 — $ 2,027,384 (3) — — — Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4) — $ 779,000 779,000 $ 779,000 779,000 $ 779,000 $ 779,000 $ 779,000 Value of Accelerated Options(5) — — — 309,000 309,000 — — — Value of Accelerated Restricted Stock(6) — — 1,114,000 1,448,200 1,448,200 — 1,448,200 1,448,200 Carson’s Pension Plan(7) $ 254,146 254,146 254,146 — 254,146 254,146 254,146 254,146 Continuing Health and Welfare Benefits — — 31,601 — 31,601 — — — Life Insurance — — — — — — — 1,640,000 $ 254,146 $ 1,033,146 $ 3,818,747 $ 2,536,200 $ 4,849,331 $ 1,033,146 $ 2,481,346 $ 4,121,346 (1)Payment requires execution of a general release.(2)If, within six months following a change in control, Mr. Buccina leaves the Company for any reason other than termination without cause, he may not collect any additional benefits.(3)Pursuant to Mr. Buccina’s employment agreement, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. This calculation did not require such reduction.(4)This calculation is subject to reduction by the HRCC, but assumes no such reduction.(5)The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(6)The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(7)The actuarial equivalent present value of the accrued benefit.Byers —Byers—Executive Vice Chairman —President, Stores, Visual Construction, Distribution & Logistics,and Loss Prevention
Payments Upon Termination For Cause
Termination Voluntary
Termination
Without
Good
Reason Involuntary
Termination
Without
Cause or
Resignation
for Good
Reason(1) Change in
Control
Without
Termination Change in
Control with
Termination(2) Retirement Disability Death — — $ 705,000 — $ 1,237,253 (3) — — — — — — $ 275,100 275,100 — $ 275,100 $ 275,100 — — 27,986 — 27,986 — — — — — — — — — — 940,000 — — $ 732,986 $ 275,100 $ 1,540,339 — $ 275,100 $ 1,215,100 Involuntary Termination Voluntary Without Termination Cause or Change in Change in Executive Benefits Without Resignation Control Control and Payments For Cause Good for Good Without with Termination Reason Reason(1) Termination Termination(2) Retirement Disability Death Cash Severance — — $ 1,100,000 — $ 1,349,753 (3) — — — Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4) — $ 522,500 522,500 $ 522,500 522,500 $ 522,500 $ 522,500 $ 522,500 Value of Accelerated Options(5) — — — 309,000 309,000 — — — Value of Accelerated Restricted Stock(6) — — 779,800 1,019,310 1,019,310 — 1,019,310 1,019,310 Continuing Health and Welfare Benefits — — 31,986 — 31,986 — — — Life Insurance — — — — — — — 1,100,000 — $ 522,500 $ 2,434,286 $ 1,850,810 $ 3,232,549 $ 522,500 $ 1,541,810 $ 2,641,810
Payments Upon Termination For Cause
Termination Voluntary
Termination Involuntary
Termination
Without Cause Change in
Control
Without
Termination Change in
Control With
Termination Retirement Disability Death — — — — — — — $ 923,000 — — — — — — — $ 923,000 (1)Payment requires execution of a general release.46(2)If, within six months following a change in control, Mr. Byers leaves the Company for any reason other than termination without cause, he may not collect any additional benefits.(3)Pursuant to Mr. Byers’s employment agreement, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times his “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times his base amount. This calculation did not require such reduction.(4)This calculation is subject to reduction by the HRCC, but assumes no such reduction.(5)The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(6)The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).Plowman — Plowman—Executive Vice President, Chief Financial Officer and Principal Accounting Officer
Payments Upon Termination For Cause
Termination Voluntary
Termination Involuntary
Termination
Without Cause Change in
Control
Without
Termination Change in
Control With
Termination Retirement Disability Death — — $ 220,673 (1) — $ 220,673 (1) — — — — — — $ 589,500 (2) 589,500 (2) — $ 589,500 $ 589,500 — — — — — — — 1,010,000 — — $ 220,673 $ 589,500 $ 810,173 — $ 589,500 $ 1,599,500 Involuntary Change in Change in Termination Control Control Executive Benefits and For Cause Voluntary Without Without With Termination Termination Cause Termination Termination Retirement Disability Death Cash Severance — — $ 183,188 (1) — $ 183,188 (1) — — — Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(2) — $ 366,375 366,375 $ 366,375 366,375 $ 366,375 $ 366,375 $ 366,375 Value of Accelerated Options(3) — — — 247,200 (4) 247,200 (4) — — — Value of Accelerated Restricted Stock(5) — — — 969,180 (4) 969,180 (4) — 969,180 969,180 Life Insurance — — — — — — — 978,000 — $ 366,375 $ 549,563 $ 1,582,755 $ 1,765,943 $ 366,375 $ 1,335,555 $ 2,313,555 (1)Assumes Mr. Plowman signs a general release and is not rehired by the Company.(2)This calculation is subject to reduction by the HRCC, but assumes no such reduction.(3)The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(4)The HRCC has discretion to fully vest the options and restricted stock of the Company upon a change in control. This calculation assumes the HRCC would choose to fully vest all options and restricted stock upon a change in control on January 29, 2011.(5)The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).Barbara J. Schrantz — Chief Operating Officer Involuntary Termination Without Voluntary Cause or Change in Change in Termination Resignation Control Control Executive Benefits and For Cause Without for Good Without with Termination Good Reason Reason(1) Termination Termination(2) Retirement Disability Death Cash Severance — — $ 400,000 — $ 400,000 (3) — — — Pro-rated Non-Equity Incentive Compensation (Cash Bonus)(4) — $ 190,000 190,000 $ 190,000 190,000 $ 190,000 $ 190,000 $ 190,000 Value of Accelerated Options(5) — — — 123,600 123,600 — — — Value of Accelerated Restricted Stock(6) — — 835,500 1,320,090 1,320,090 — 1,320,090 1,320,090 Life Insurance — — — — — — — 960,000 — $ 190,000 $ 1,425,500 $ 1,633,690 $ 2,033,690 $ 190,000 $ 1,510,090 $ 2,470,090 (1)Payment requires execution of a general release.47(2)If, within six months following a change in control, Ms. Schrantz leaves the Company for any reason other than termination without cause, she may not collect any additional benefits.(3)Pursuant to Ms. Schrantz’s employment agreement, if the aggregate present value of the “parachute payments” determined under Section 280G exceeds three times her “base amount,” as defined in Section 280G, the payouts upon a change in control shall be reduced to be less than three times her base amount. This calculation did not require such reduction.(4)This calculation is subject to reduction by the HRCC, but assumes no such reduction.(5)The intrinsic value of unvested options subject to accelerated vesting, based on the difference between the exercise price of the options and the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).(6)The intrinsic value of unvested restricted stock subject to accelerated vesting, based on the closing price of the Company’s common stock on the NASDAQ Stock Market on January 28, 2011 ($11.14 per share).January 29, 2011,February 2, 2013, The Bon-Ton Stores, Inc. Amended and Restated 2009 Omnibus Incentive Plan and the Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan, and the Amended and Restated 1991 Stock Option and Restricted Stock Plan were in effect. Each of these plans has been approved by the shareholders. There were no other equity compensation plans in effect. The following information concerning these plans is as of January 29, 2011:February 2, 2013: Number of shares of
common stock
to be issued upon
exercise of
outstanding
options, warrants
and rights
(a) Weighted-
average exercise
price of
outstanding
options,
warrants and
rights
(b) Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
(c) 694,230 $ 18.50 — (1) 1,684,500 — — (1) 362,274 — — (1) 2,741,004 — 2,510,042 — — — 2,741,004 — 2,510,042 Number of securities remaining available Number of shares of for future issuance common stock to be under equity issued upon Weighted-average compensation plans exercise of exercise price of (excluding outstanding outstanding securities options, warrants options, warrants reflected in and rights and rights column (a)) (a) (b) (c) Equity compensation plans approved by security holders Stock options 1,056,322 $ 16.65 — (1) Restricted shares 1,738,675 — — (1) Restricted stock units 292,851 — — (1) Subtotal 3,087,848 — 1,590,587 Equity compensation plans not approved by security holders — — — Total 3,087,848 — 1,590,587 (1)The referenced plans do not allocate available shares among stock options, restricted shares or RSUs.Company’sCompany's common stock are required to file reports of their holdings and transactions in Company stock with the SEC. To our knowledge, based solely on our review of copies of Section 16(a) forms furnished to us or upon written representations from these reporting persons that no other reports were required, all such filings in 20102012 were made in a timely manner.Company’sCompany's Code of Ethical Standards and Business Conduct provides that no director or associate of the Company shall engage in any transactions with the Company unless approved by the Audit Committee. The Audit Committee Charter provides that the Audit Committee shall have the responsibility to review and approve all such related party transactions. All executive officers and directors are required to disclose any possible related party transaction in which such executive482016,2021, and the Company has threetwo five-year renewal options. The rental payments during 20102012 under this lease were $223,500. The aggregate amount of all payments due under the terms of the lease at the beginning of 20112013 through the$1,229,250.$1,899,750. The late Ms. Grumbacher iswas the wife of Tim Grumbacher, the Executive Chairman Emeritus of the Board.20102012 from the Company which was paid pursuant to the terms of an employment agreement with Mr. Gleim with respect to his employment as Vice Chairman of the Company from 1995 to 2002.20122014 Annual Meeting of Shareholders must be received by the Company by January 3, 20128, 2014 in order to be considered at the meeting and included in the Company’sCompany's proxy statement and form of proxy relating to that meeting.20122014 Annual Meeting of Shareholders is received by the Company after March 20, 2012,18, 2014, the proposals with respect to such matter shall be deemed “untimely”"untimely" for purposes ofRule 14a-4(c) under the Securities Exchange Act and, therefore, the Company will have the right to exercise discretionary voting authority with respect to such proposal.President — President—Investor Relations, by telephone at(717) 757-7660, by U.S. mail at 2801 E.East Market Street, York, Pennsylvania 17402 or bye-mail at ir@bonton.com. Similarly, if a shareholder would like to receive his or her own set of the Company’sCompany's proxy materials in future years or if a shareholder shares an address with another shareholder and both would like to receive only a single set of the Company’sCompany's proxy materials in future years, please contact Ms. Kerr.49The Bon-Ton Stores, Inc.c/o Proxy ServicesPO Box 9142Farmingdale, NY 11735VOTE BY INTERNET - www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 13, 2011. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by The Bon-Ton Stores, Inc., in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 13, 2011. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLYTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ForAllWithholdAllFor AllExcept Signature (Joint Owners) Signature [PLEASE SIGN WITHIN BOX] Date Date To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you voteFOR the following:ooo1.Election of DirectorsNominees01 Lucinda M. Baier02 Byron L. Bergren03 Philip M. Browne04 Shirley A. Dawe05 Marsha M. Everton06 Michael L. Gleim07 Tim Grumbacher08 Todd C. McCarty 0000174781_1 R1.0.0.51160 For Withhold For All All All Except The Board of Directors recommends you vote FOR the following proposal: ForAgainstAbstainfollowing: 1. Election of Directors Nominees 01 Lucinda M. Baier 02 Philip M. Browne 03 Michael L. Gleim 04 Tim Grumbacher 05 Brendan L. Hoffman 06 Todd C. McCarty 07 Jeffrey B. Sherman The Bon-Ton Stores, Inc. c/o Proxy Services PO Box 9142 Farmingdale, NY 11735 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 17, 2013. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by The Bon-Ton Stores, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 17, 2013. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR proposals 42 and 5. 3. For Against Abstain 2 2. To approve, on an advisory basis, the
compensation of the named executive officers of the Company, as disclosed in the Proxy Statement.ooo4Statement; 3. To ratify the appointment of KPMG LLP as independent registered public accounting firm for 2011.oooThe Board of Directors recommends youvote 1 YEAR on the following proposal:5 To amend the Company’s Articles of Incorporation to require that each director shall be elected by a majority of votes cast.ooo1 year2 years3 yearsAbstain3To vote, on an advisory basis, on the frequency of the advisory vote to approve the compensation of the named executive officers of the Company.oooo2013; and NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Yes No Please indicate if you plan to attend this meeting ooPlease sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
Signature [PLEASEWITHIN BOX]DateSignature (Joint Owners)DateDATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE. Continued and to be signed on reverse sideImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report/10-KWrap is/are available at: www.proxyvote.com. 
THE BON-TON STORES, INC.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OFDIRECTORSANNUAL MEETING OF SHAREHOLDERSJune 14, 2011The shareholder hereby appoints Byron L. Bergren and Keith E. Plowman, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of The Bon-Ton Stores, Inc. that the shareholder is entitled to vote at the Annual Meeting of Shareholders to be held at 9:00 a.m. Eastern Time on June 14, 2011, at Bon-Ton’s Corporate Office, 2801 E. Market Street, York, PA 17402, and any adjournment or postponement thereof.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE SIDE, FOR THE PROPOSALS AND ANNUALLY AS THE FREQUENCY OF THE VOTE ON APPROVAL OF COMPENSATION OF NAMED EXECUTIVE OFFICERS.PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.Continued and to be signed on reverse side