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☐ Preliminary Proxy Statement
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☒ Definitive Proxy Statement
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☐ Soliciting Material Pursuant to §240.14a-12
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TABLE OF CONTENTS notice of 2022
annual meeting of
shareholders and
proxy statement TABLE OF CONTENTS message from the president and chief executive officer,
and the chair of the board
of directors JUNE 1, 2022 to our shareholders: The past year was incredibly important for Bed Bath and Beyond’s future. In this first year of our multi-year turnaround strategy, we increased investments in structurally critical parts of our business – including supply chain infrastructure and technology, ecommerce and customer experience solutions, and store remodels. We also began replacing outdated technology systems and continued to build on and enhance omni-channel capabilities that were rapidly deployed at the outset of the COVID pandemic. These improvements are intended to provide the Company with foundational enablers and a platform that can support challenging environments over the long term. In terms of creating value for shareholders, our focus in 2020 was delivering approximately $600 million in proceeds from asset sales. In 2021, we continued to focus on returning capital to our shareholders, including significantly increasing our three-year share repurchase program. The Company completed approximately $600 million in share repurchases in fiscal 2021 and completed the majority of its $1 billion share repurchase program ahead of our 2023 target. In the core business, we introduced eight new, margin-supportive Owned Brands in key destination categories, more than doubling penetration versus fiscal 2020. Further, after successfully executing improvements to our buybuy BABY business, we are exploring strategic alternatives to unlock even greater value from the banner. Over the past year, we made changes to board composition and added new directors with the skills and experience necessary to provide oversight of strategy and business performance. We also restructured the executive compensation program to reflect an operating environment beyond 2020, when we built a new executive team and supported operations during the onset of the COVID-19 pandemic. While the vast majority of direct pay for the CEO and other Named Executive Officers (NEO) remained tied to targeted performance metrics in 2021, we increased its proportion within our long-term compensation plans. The Board remains highly committed to executive incentive payouts that are aligned with achieving financial targets, creating long-term shareholder value, and informed by shareholder feedback. We appreciate and recognize the tireless dedication of our exceptional associates who, against an extraordinary macroeconomic environment, have shown tremendous commitment to our strategy and dedication to serving our customers. We will continue to support our associate base through actions to achieve the Company’s diversity, equity, and inclusion (DE&I) goals, while providing competitive total rewards, learning and development, and upskilling opportunities. The Board and management team remain focused on creating value for all stakeholders. We look forward to greeting you at this year’s virtual Annual Meeting.
| | |
Mark J. Tritton
President and
Chief Executive Officer | | | | | |
Harriet Edelman
Chair of the Board of
Directors |
TABLE OF CONTENTS notice of 2022 annual meeting of shareholders | (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 (set forth the amount on which the filing fee is calculated and state how it was determined): | | | | | (4) | Proposed maximum aggregate value of transaction: | | | | | (5) | Total fee paid: | | | | ☐ | Fee paid previously with preliminary materials. | ☐ | 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 Form or Schedule and the date of its filing. | | (1) | Amount Previously Paid: | | | | | (2) | Form, Schedule or Registration Statement No.: | | | | | (3) | Filing Party: | | | | | (4) | Date Filed: | | | | | | | |
PROPOSAL 1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
| | Time: | 9:00 A.M. on Friday, July 1, 2016 | | | Place: | The Madison Hotel
One Convent Road
Morristown, New Jersey 07960
|
Items of Business:
| (1) | To elect teneleven directors to serve until the Annual Meeting in 20172023 and until their respective successors have been elected and qualified (Proposal 1).qualified. | | |
| | | FOR
each director
nominee |
| (2) | PROPOSAL 2
To ratify the appointment of KPMG LLP as independent auditors for the 2016 fiscal year (Proposal 2).2022. | | |
| | | FOR |
| (3) | PROPOSAL 3
To consider the approval,approve, by non-binding vote, of the 20152021 compensation paid to the Company’s Named Executive Officers (Proposal 3)(NEOs) (commonly known as a “say-on-pay” proposal). | | |
| | | FOR |
| (4) | To vote on shareholder proposals (Proposals 4, 5 and 6). |
| (5) | To transact such other business as may properly be brought before the Annual Meeting or any adjournment or adjournments. |
Record Date:You can vote if you were a shareholder of record on May 6, 2016.
Proxy Voting:
Such other business as may properly be brought before the Annual Meeting or any adjournment or adjournments. proxy voting It is important that your shares be represented and voted at the Annual Meeting.Meeting of Shareholders (the “Annual Meeting”) of Bed Bath & Beyond Inc. (the “Company,” “we,” or “us”), a New York corporation. Whether or not you plan to attend the Annual Meeting, we urge you to vote online, via telephone or by mail, in each case prior to fill out the enclosed proxy card and return it to us in the envelope provided. No postage is required. | | | | Warren Eisenberg | | Co-Chairman | | | | Leonard Feinstein | | Co-Chairman | |
May 31, 2016
Important Notice Regarding the Availabilitydate of Proxy Material for the Annual Meeting of Shareholdersby following the instructions in our proxy statement. Proxies are being solicited by the Board to be held on July 1, 2016:this Notice ofused at the 2016 Annual Meeting of Shareholders,and the approximate date on which this Proxy Statement and accompanying Form of Proxy will be available to shareholders is on or about June 1, 2022.
This year’s Annual Meeting will be in a virtual-only meeting format. Shareholders will be able to listen, vote and submit questions via the Company’s 2015 Annual Report are availableinternet by visiting www.virtualshareholdermeeting.com/BBBY2022. Please retain the 16-digit control number included on your proxy card or in the voting instructions that accompanied your proxy materials as you will need this number to attend the meeting virtually, vote at www.bedbathandbeyond.com/annualmeeting2016the meeting or to submit a question to management at the meeting. We have designed the virtual meeting to offer the same participation opportunities as an in-person meeting. | DATE AND TIME
Thursday, July 14, 2022
10:00 A.M.
Eastern Daylight Time | | | VIRTUAL MEETING
LOCATION
www.virtualshareholder
meeting.com/BBBY2022 | | | WHO CAN VOTE
You can vote if you were a shareholder of record as of the close of business on May 16, 2022. | | PRINCIPAL
EXECUTIVE OFFICE
650 Liberty Avenue,
Union, NJ 07083 |
Important Notice Regarding the Availability of Proxy Material for the Annual Meeting of Shareholders to be held on July 14, 2022:
This Notice of the 2022 Annual Meeting of Shareholders, Proxy Statement and the Company’s 2021 Annual Report are available at www.proxyvote.com. |
TABLE OF CONTENTS table of contents | | | | PROXY STATEMENT SUMMARY | 1 | | | | | | | FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING | 5 | | | | | | |
| | | | | | | PROPOSAL 1—ELECTION OF DIRECTORS | 8 | | | | | | | | | Board Structure, Composition | | | | 8 | | |
| | | | | | | Board Nominees and Qualifications | 9 | | | | Board Leadership | 11 | | | Director Independence | 11 | | | Committees of the Board of Directors | 12 | | | Compensation Committee Interlocks and Insider Participation | 12 | | | Governance Guidelines and Policies; Additional Information | 13 | | | Compensation of Directors | 13 | | | Risk Oversight | 14 | | | PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 2016 | 15 | | | Appointment | 15 | | | Fees Paid | |
| | | | Pre-Approval Policies and Procedures | 15 | | |
| | | | | | | | | | | Audit Committee Report for | | | | 16 | | | | | | PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION | 17 | | | | | | | | | Compensation Committee Report | 18 | | | | | | | | | Compensation Discussion & Analysis | 18 | | | | | | | | |
| | | | Introduction | 18 | | | | | | | Executive Summary/Executive Compensation Philosophy and Objectives | 18 | | | | | | | Say on Pay Results | | | | 21potential
| | | | | Fiscal 2016 Executive Compensation Program Decisions | 22 | | | | | | |
| | | | Methodology for Determining Executive Compensation | 24 | | |
| | | | Fiscal 2015 Performance Goals and Performance | 29 | | | | Executive Officers | 30 | | | Compensation Tables | 31 | | | Summary Compensation Table | 31 | | | Grants of Plan Based Awards for Fiscal 2015 | 33 | | | Outstanding Equity Awards at Fiscal Year End | 34 | | | Option Exercises and Stock Vested for Fiscal 2015 | 37 | | | Nonqualified Deferred Compensation for Fiscal 2015 | 38 | | | Employment Agreements and Potential Payments Upon Termination or Change in Control | 39 |
TABLE OF CONTENTS fiscal 2021: rebuilding our foundation during the first year of our comprehensive transformation navigated a complex operating
environment while executing our
multi-year turnaround strategy
Fiscal 2021 marked the beginning of our multi-year transformation. We took important steps to improve the structural foundation of our Company amidst a still turbulent operating landscape impacted by the derailment of the global supply chain, disruptions from COVID-19 variants, and rising inflation. While these factors highlighted operational vulnerabilities in the near-term, the need for our long-term structural transformation has never been more apparent. | | |  $8 billion in net sales driven by Bed Bath & Beyond $3 billion of digital sales, maintaining 37% penetration $1.4 billion in buybuy Baby sales, growing double-digit $1 billion share repurchase program completed ahead of schedule $1.4 billion total liquidity position, including a new $1.0 billion ABL facility $182 million adjusted EBITDA* | met key milestones on our
long-term strategic roadmap
We have been charting a new course for the Company by reconstructing our operating model to drive greater long-term efficiency and effectiveness. In 2021, we began implementing key catalysts across our core strategic pillars. Despite the current headwinds we face, our long-term strategic execution continues to build momentum. We will have structural capabilities to bring us closer to industry standards and renew our business for long-term growth and profitability. We remain steadfastly dedicated to our associates, customers, brand and our strategy. | | | 8 new Owned Brands launched with sales penetration rate above Fiscal 21 goal Enhanced digital-first, omni-always presence with key partnerships (DoorDash, Uber), cross-banner website and new digital Marketplace >30% digital sales fulfilled by stores 2 million Beyond+ members, 8% increase vs. fiscal 2020 Collaboration with Kroger for Bed Bath & Beyond and buybuy BABY banners 130 remodels commenced, with 80 completed, including the grand re-opening of Chelsea, NYC flagship 200+ store fleet optimization program completed | PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS | 44 | | | PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION POLICY FOR SENIOR EXECUTIVES | 46 | | | PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL OF CERTAIN FUTURE SEVERANCE AGREEMENTS | 48 | | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 50 | | | Section 16(a) Beneficial Ownership Reporting Compliance | 51 | | | OTHER MATTERS | 52 | | | Certain Relationshipsembedded an ESG strategy into our
comprehensive transformation
Our core ESG pillars – people, community, and Related Transactions | 52 | | | Householding | 52 | | | Next Year’s Annual Meeting | 52 |
PROXY STATEMENT SUMMARY
You have received these proxy materials because the Board of Directors of Bed Bath & Beyond Inc. (the “Company”, “we”, or “us”), a New York corporation, is soliciting your proxy to vote your shares at the 2016 Annual Meeting of Shareholders. This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.
Summary of Voting Matters
The Board of Directors is not aware of any matter that will be presented for a vote at the 2016 Annual Meeting of Shareholders other than those shown below.
| | | | | | Proposals | Board Vote
Recommendation | Page
Reference | | 1. | Election of 10 Directors | FOR each director nominee | 8 | | 2. | Ratification of Appointment of Auditors | FOR | 15 | | 3. | Advisory Vote on Executive Compensation | FOR | 17 | | 4. | Shareholder Proposal Regarding Proxy Access Bylaws | AGAINST | 44 | | 5. | Shareholder Proposal Regarding an Equity Retention Policy for Senior Executives | AGAINST | 46 | | 6. | Shareholder Proposal Regarding Shareholder Approval of Certain Future Severance Agreements | AGAINST | 48 |
Board of Directors Nominees
You are being asked to vote on the following ten (10) nominees for director. Each director is elected annually by a majority vote of shares cast. Further information about each director can be found under “Board Nominees and Qualifications.”
4 | 1971 | Co-Founder/Co-Chairman, | |
TABLE OF CONTENTS PROPOSAL 1 | election of directors | | | | | | The Board recommends a vote FOR
each director nominee |  See page 8 | |
our director nominees at-a-glance | | | Harriet Edelman, 66 (Chair)
Vice Chair, Emigrant Bank | | |
| | | 2 | | 2019 | | | | | | | | | | | | | | | | Mark J. Tritton, 58
President and Chief Executive Officer,
Bed Bath & Beyond Inc. | | | | | | 1 | | 2019 | | | | | | | | | | | | |
| | | Marjorie Bowen, 57
Private investor and public
company director | | |
| | | 1 | | 2022 | | | | | | | | | | | | |
| | | Sue E. Gove, 63
President, Excelsior Advisors, LLC | | |
| | | 2 | | 2019 | | |
| | | | | | | | | |
| | | Jeffrey A. Kirwan, 55
Chairman, Maurices Inc. | | |
| | | 0 | | 2019 | | | | | |
| | | | | | | | | | Shelly Lombard, 62
Private investor, independent consultant
and public company director | | |
| | | 1 | | 2022 | | | | | | | | | | | | | | | | Benjamin Rosenzweig, 37
Partner, Privet Fund Management LLC | | |
| | | 2 | | 2022 | | | | | | | | | | | | |
| | | Joshua E. Schechter, 49
Private investor and public
company director | | | | | | 2 | | 2019 | | |
| | | | | | | | | | | | | Minesh Shah, 48
Chief Operations Officer, Stitch Fix, Inc. | | |
| | | 0 | | 2022 | | | | | | | | | | | | | | | | Andrea M. Weiss, 67
Founding Partner, The O Alliance, LLC;
Chief Executive Officer and Founder,
Retail Consulting Inc. | | |
| | | 3 | | 2019 | | |
| | | | | | | | | | | | | Ann Yerger, 60
Advisor, Spencer Stuart North
America Board Practice | | |
| | | 0 | | 2019 | | | | | |
| | | | | | |
A | | | Audit
Committee | | | P | | | People, Culture
and Compensation
Committee | | | N | | | Nominating and
Corporate
Governance Committee | | |
| | | Committee
Chair | | | ● | | | Audit Committee
Financial Expert |
TABLE OF CONTENTS PROPOSAL 2 | ratification of auditors | | | | | | The Board recommends a vote FOR
this proposal | See page 34 | |
PROPOSAL 3 | | | | | | The Board recommends a vote FOR
the approval, by non-binding vote, of the 2021 compensation paid to the Company’s NEOs | say-on-pay | | See page 37 | |
TABLE OF CONTENTS our board of directors and corporate governance | election of directors | | | | The Board recommends that the shareholders vote FOR the election of the eleven nominees as directors |
The Board, upon recommendation of its Nominating and Corporate Governance Committee, has nominated the eleven people named below for election as directors, with all eleven individuals being nominated to serve for a one-year term that expires at the 2023 Annual Meeting. In connection with the Cooperation Agreement entered into by the Company and RC Ventures in March 2022, the Company agreed to add Marjorie Bowen, Shelly Lombard and Benjamin Rosenzweig to the Board, and to nominate each of them for election as directors at the Annual Meeting. The Company further agreed that, effective at the Annual Meeting, the size of the Board will be reduced to a total of eleven directors. Beginning in April 2022, the Nominating and Corporate Governance Committee, together with an independent, third party consultant engaged for this purpose, conducted an assessment of the Board’s composition and the complement of skills and experiences appropriate for a public company in the retail sector. There was also an independent review of each director’s skills, qualifications and time commitments. In addition, each director was consulted regarding Board composition overall and their personal interest in continuing to serve. As a result of this process, the Nominating and Corporate Governance Committee recommended, and the Board approved, the eleven people named below to be nominated for election to the Board at the Annual Meeting. John Fleming, Virginia Ruesterholz, and Mary Winston will not stand for re-election. The Board has also reviewed certain changes to the composition of the Committees of the Board, including the respective Chairs, which will be effective immediately following the Annual Meeting. Each director will serve until the next annual meeting of shareholders or until their respective successors have been elected and qualified, if earlier. All of the nominees for director currently serve as directors. Information concerning our nominees as of the record date, and the key experience, qualifications and skills they bring to our Board, is provided below. A particular director may possess additional experience, qualifications, attributes or skills, even if not expressly indicated. Our Board’s diversity, tenure, age and independence are also shown below. The Board recommends that shareholders vote FOR the election of the eleven director nominees. TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
demographics of director nominees BED BATH & BEYOND BOARD DIVERSITY MATRIX (AS OF JUNE 1, 2022)* Part I: Gender Identity | | | | Directors | | | 6 | | | 5 | | | 0 | Part II: Demographic Background | | | | African American or Black | | | 1 | | | 0 | | | 0 | Alaskan Native or Native American | | | 0 | | | 0 | | | 0 | Asian | | | 0 | | | 1 | | | 0 | Hispanic or Latinx | | | 0 | | | 0 | | | 0 | Native Hawaiian or Pacific Islander | | | 0 | | | 0 | | | 0 | White | | | 5 | | | 4 | | | 0 | Two or More Races or Ethnicities | | | 0 | | | 0 | | | 0 | LGBTQ+ | | | 0 | Did Not Disclose Demographic Background or Gender | | | 0 |
*
| The Bed Bath & Beyond Inc.Board Diversity Matrix includes director nominees only. |
the core skills we seek from directors and why No | CORE SKILLS FOR OVERSIGHT OF OUR STRATEGY,
EFFECTIVE BOARD OVERSIGHT AND CORPORATE GOVERNANCE | Steven H. TemaresBed Bath & Beyond is engaged in a strategic transformation to become the preferred omni-channel home destination driven by teams consistently delivering balanced durable growth. | Our Board has identified certain core skills necessary to effectively oversee management and implement our transformation strategy. In addition, our Board values directors with experience successfully leading and serving on boards of other large, complex businesses. | Our director nominees bring an important mix of these core skills, as well as additional attributes and qualifications, such as diversity of gender, race and/or ethnicity and background to our Board.
|
2022 proxy statement | 1999 | | 9
|
TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
BED BATH & BEYOND DIRECTOR CORE SKILLS MATRIX The Board has considered each director based on, among others, the experiences, qualifications and skills indicated above in concluding such director should serve on our Board. TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
board nominees and qualifications 
Harriet
Edelman
Vice Chair, Emigrant Bank
Age: 66
Chair of the Board since
May 2020
Independent Director
since 2019 | | | | | | EXPERIENCE | | | | | | Ms. Edelman is an accomplished senior executive with over 30 years of global operating experience in consumer goods and financial services. Since 2010, she has served as the Vice Chair of Emigrant Bank, a private financial institution, after serving as Special Advisor to the Chairman from June 2008 to October 2010. Prior to that, she spent more than 25 years with Avon Products, Inc. holding various senior global leadership positions in sales, marketing, supply chain, information technology and product development. She has served on large public company boards for nearly 20 years in the U.S. and Europe and in multiple Board leadership positions. The consumer goods business has been central to Ms. Edelman’s career, and she has a strong passion for our Company and brand. She brings strong leadership to our Board to help deliver on our business transformation. | | | | | | EDUCATION | | | | | | • Bachelor of Music, Bucknell University
• MBA, Fordham Gabelli School of Business | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Assurant, Inc.
• Brinker International, Inc. | | | | | | SELECT NOT-FOR-PROFIT | | | | | | • Bucknell University Board of Trustees, Vice Chair (until 2020) |
Mark J. Tritton
President and Chief Executive Officer, Bed Bath & Beyond Inc.
Age: 58
Director since 2019
| No | | | | | EXPERIENCE | Dean S. Adler | 2001 | Co-Founder | | Mr. Tritton has over 30 years of experience in the retail industry. Since November 2019, Mr. Tritton has served as our President and Chief Executive Officer,
Lubert-Adler Partners, L.P. | Yes | CC, NC | Stanley F. Barshay | 2003 | RetiredOfficer. Prior to joining the Company, he was the Executive Vice President Merck & Co.
(formerly Schering-Plough Corporation) and PresidentChief Merchandising Officer of its Consumer Health Care Division | Yes | AC, CCTarget Corporation, one of the largest retailers in the U.S., from June 2016 to November 2019. During his tenure with Target Corporation, he was instrumental in transforming the omnichannel shopping experience. He has end-to-end retail industry experience in merchandising, design, manufacturing, marketing and distribution at some of the world’s leading iconic retailers and brands, including Nordstrom, Timberland and Nike. | Geraldine T. Elliott | 2014 | Retired Executive Vice President, Strategic Advisor,
Juniper Networks, Inc. | Yes | EDUCATION | Klaus Eppler (Lead Director) | 1992 | Pensioned partner | | • Bachelor of Education in English and History, University of Sydney, Australia | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Nordstrom, Inc. | | | | | | SELECT NOT-FOR-PROFIT | | | | | | • St. Jude Children’s Research Hospital |
TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Marjorie Bowen
Private investor and public company director
Age: 57
Independent Director
since 2022
| | | | | | EXPERIENCE | | | | | | Ms. Bowen is a private investor, active public company director, and former investment banker. Ms. Bowen has served on over a dozen boards of both public and private companies and has extensive board experiences with companies undergoing transformations. Ms. Bowen’s directorship experiences include several companies engaged in the lawretail industry. Previously, from 1989 through 2007, Ms. Bowen was a senior executive, Managing Director, and head of the fairness opinion practice at the multinational investment banking firm Proskauer Rose LLP | Yes | NCof Houlihan Lokey. Ms. Bowen was an active deal advisor and regularly assisted public company boards on transaction, strategic and other shareholder matters. Her significant prior directorship experience as well as her experience working with companies in transitional situations supports our ongoing business transformation. | Patrick R. Gaston | 2007 | | | EDUCATION | | | | | | • BA, Colgate University
• MBA, University of Chicago | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • CBL & Associates Properties
• Sequential Brands (until 2021)
• Centric Brands (until 2020)
• Navient (until 2020)
• Genesco (until 2019)
• ShoreTel (until 2017) | | | | | | PRIVATE BOARD MEMBERSHIPS | | | | | | • Voyager Aviation Holdings, LLC |
Sue E. Gove
President, Excelsior Advisors, LLC
Age: 63
Independent Director
since 2019
| | | | | | EXPERIENCE | | | | | | Ms. Gove is the founder of Excelsior Advisors, LLC, a retail consulting and advisory firm, where she has advised clients on key issues impacting the retail industry since 2014. She served as a Senior Advisor for Alvarez & Marsal, a global professional services firm, from March 2017 to March 2019. Prior to her consulting career, Ms. Gove spent more than 30 years in the retail industry where she served in senior financial, operating and strategic roles, leading to her positions as President and Chief Executive Officer Gaston Consulting; Pastof Golfsmith International Holdings, Inc. and Chief Operating Officer of Zale Corporation. In addition, Ms. Gove has served on various public company boards within the retail industry, providing significant leadership experience and diverse perspectives to our Board. | | | | | | EDUCATION | | | | | | • BBA, Accounting, University of Texas at Austin | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Conn’s, Inc.
• IAA, Inc.
• Tailored Brands (until 2020)
• Iconix Brand Group, Inc. (until 2019)
• Logitech International S.A. (until 2018)
• Autozone, Inc. (until 2017) | | | | | | PRIVATE BOARD MEMBERSHIPS | | | | | | • The Fresh Market
• Truck Hero, Inc. | | | | | | SELECT NOT-FOR-PROFIT | | | | | | • The University of Texas System, Audit Committee |
TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Jeffrey A.
Kirwan
Chairman, Maurices Inc.
Age: 55
Independent Director
since 2019
| | | | | | EXPERIENCE | | | | | | Mr. Kirwan currently serves as the Chairman of Maurices Incorporated, a specialty retailer focused on women’s value apparel. Previously, he served as the Global President of the Verizon FoundationGap Division of The Gap, Inc., a worldwide clothing and accessories retailer, from December 2014 to February 2018. He also led the Gap’s operations in China from 2011 to 2014. During his tenure with The Gap, Inc., he contributed to significant operational progress, including strong marketing and customer engagement, increased traffic and improved sales and digital business. Mr. Kirwan’s executive experience in large, multinational retailers, his knowledge of our customer base as well as his strong consumer marketing and sales experience is an important asset for our Board. | | | | | | EDUCATION | | | | ��� | | • BS, Rhode Island College
• Masters of Science, the University of Maryland University College | | | | | | PRIVATE BOARD MEMBERSHIPS | | | | | | • Maurices Inc. |
Shelly Lombard
Private investor, independent consultant and public company director
Age: 62
Independent Director
since 2022
| | | | | | EXPERIENCE | | | | | | Ms. Lombard currently serves as an independent consultant, focusing on investment analysis and financial training. She has over 30 years of experience analyzing, valuing, and investing in companies. Prior to becoming a consultant, she served as Director of High Yield and Special Situation Research for Britton Hill Capital, a broker dealer specializing in high yield and special situation bank debt and bonds and value equities, from 2011 to 2014. Prior to that, she was a high yield and special situation bond analyst and was also involved in analyzing, managing, and restructuring proprietary investments for various financial institutions. She was named by NACD as one of its 100 Directorship Honorees for 2021. Ms. Lombard brings strong financial analysis, investment, capital markets, and public company director experience to our Board. | | | | | | EDUCATION | | | | | | • BA, Communications and Government, Simmons University
• MBA, Finance, Columbia University | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • INNOVATE Corporation
• Spartacus Acquisition Corporation (until 2021)
• Alaska Communications Systems (until 2021) |
TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Benjamin
Rosenzweig
Partner, Privet Fund Management LLC
Age: 37
Independent Director
since 2022
| | | | | | EXPERIENCE | | | | | | Mr. Rosenzweig has been a Partner at Privet Fund Management LLC, an investment firm focused on event-driven, value-oriented investments in small capitalization companies, since 2008. Prior to that, Mr. Rosenzweig served as an Investment Banking Analyst in the corporate finance group of Alvarez & Marsal, a global professional services firm, from 2007 to 2008. During his tenure with Alvarez & Marsal, he advised clients on multiple M&A transactions, restructurings, capital formation transactions and similar financial advisory engagements across several industries. He currently serves on various public company boards, including as Chairman of the Board of Synalloy Corporation. Mr. Rosenzweig brings significant public company board experience and financial expertise to our Board. | | | | | | EDUCATION | | | | | | • BBA, Finance and Economics, Emory University | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Synalloy Corporation
• PFSweb, Inc.
• Potbelly Corporation (until 2022)
• Cicero, Inc. (until 2020)
• StarTek, Inc. (until 2018) | | | | | | PRIVATE BOARD MEMBERSHIPS | | | | | | • Hardinge Inc. |
Joshua E. Schechter
Private investor and public company director
Age: 49
Independent Director
since 2019
| | | | | | EXPERIENCE | | | | | | Mr. Schechter is a private investor and public company director. He has strong public company board leadership expertise, previously serving as Chairman of the Board of SunWorks, Inc., a premier provider of high-performance solar power solutions, and Chairman of the Board of Support.com, a leading provider of cloud-based software and services. He spent 13 years in investment services for Steel Partners and its affiliates, including Managing Director of Steel Partners Ltd. and Co-President, Steel Partners Japan Asset Management, LP. His significant experience with complex business and strategic transactions, M&A, corporate governance matters and capital markets, together with his public company board leadership experience provides valuable insight to our Board. | | | | | | EDUCATION | | | | | | • BBA, University of Texas at Austin
• MPA, Professional Accounting, University of Texas at Austin | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Landec Corp.
• Viad Corp
• Support.com (until 2021)
• SunWorks, Inc. (until 2020)
• Genesco Inc. (until 2019) |
TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Minesh Shah
Chief Operations Officer, Stitch Fix, Inc.
Age: 48
Independent Director
since 2022
| | | | | | EXPERIENCE | | | | | | Mr. Shah has served as Chief Operations Officer at Stitch Fix, the world's leading online shopping experience, since October 2020 and is responsible for the company's operations and client experiences. He also served as Vice President, Operations at Stitch Fix from September 2018 to October 2020. Previously, Mr. Shah served as Senior Director of Delivery Operations at Tesla Motors, Inc. from February 2017 to June 2018. He has spent most of his career in high growth, consumer-driven companies – focused on operations, customer experience, omnichannel programs, marketing and digital retail, including as Vice President of Global eCommerce for Uniqlo Co. Ltd. Mr. Shah’s extensive consumer, supply chain, marketing, technology and operational experience, as well as his deep knowledge and expertise in retail offer valuable perspective and oversight to our ongoing transformation. | | | | | | EDUCATION | | | | | | • BS, Chemical Engineering, Northwestern University
• MBA, Marketing, Management and Strategy, Northwestern University |
Andrea M.
Weiss
Founding Partner,
The O Alliance, LLC;
Chief Executive Officer
and Founder, Retail
Consulting Inc.
Age: 67
Independent Director
since 2019
| | | | | | EXPERIENCE | | | | | | Ms. Weiss was an early innovator in multi-channel commerce and brings nearly 30 years of entrepreneurial leadership experience in the retail industry, currently serving as Founding Partner of The O Alliance, LLC since 2014 and Chief Executive Officer and Founder of Retail Consulting Inc. since 2002. She is recognized as a pioneer in creating a seamless customer experience and has been a key player in transforming retail into the digital space. She also has extensive experience developing high-level business strategy and tactical execution plans, including implementing turnaround initiatives for leading brands in the U.S. and Europe. Ms. Weiss was named by NACD as one of the Top 100 Best Public Directors in 2016. Our Board benefits from Ms. Weiss’ extensive retail and transformation experience, as well as her experience serving on public company boards. | | | | | | EDUCATION | | | | | | • BFA, Virginia Commonwealth University
• Masters of Administrative Science, The Johns Hopkins University
• Post-Graduate Studies at Harvard Business School and The Kellogg School of Management at Northwestern University
• NACD Board Leadership Fellow and Directorship Certification | | | | | | PUBLIC BOARD MEMBERSHIPS | | | | | | • Cracker Barrel Old Country Store, Inc.
• O’Reilly Automotive, Inc.
• RPT Realty
• Chico’s FAS, Inc. (until 2018) | | | | | | SELECT NOT-FOR-PROFIT | | | | | | • Delivering Good, Inc., Chair of the Board
• Hampton University Board of Trustees, Vice Chair |
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Ann Yerger
Advisor, Spencer Stuart North America Board Practice
Age: 60
Independent Director since 2019 | | | | | | EXPERIENCE | | | | | | Ms. Yerger has dedicated her career to the advancement of corporate governance and investor protection initiatives. She has held various governance advisory roles, including her current position as Advisor with Spencer Stuart North America Board Practice, a leading board consulting firm, which she has held since 2017. She has also served as a Member of the Grant Thornton Audit Quality Advisory Council since 2019. Previously, Ms. Yerger served as Executive Director, Center for Board Matters at Ernst & Young LLP from 2015 to 2017. In addition, she has served as a member of several advisory boards and committees, including the Investor Advisory Committee of the U.S. Securities and Exchange Commission and the Western Union Foundation | Yes | ACNasdaq Listing and Hearing Review Council. She has been recognized by the International Corporate Governance Network and NACD for her contributions to investor collaboration and the improvement of corporate governance. Ms. Yerger's deep corporate governance and shareholder-oriented work provide our Board with important insight and guidance with respect to our corporate governance practices and engagement with key stakeholders. | Jordan Heller | 2003 | President, Heller Wealth Advisors LLC | Yes | ACEDUCATION | Victoria A. Morrison | 2001 | Executive Vice President & General Counsel,
Edison Properties LLC | Yes | CC, NC• BA, Economics, Duke University
• MBA, Tulane University
• CFA charterholder | | | | | | PRIVATE BOARD MEMBERSHIPS | | | | | | • Hershey Entertainment and Resorts |
* AC – Audit Committee; NC –TABLE OF CONTENTS
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
how we are selected and evaluated Directors are elected at each annual meeting to serve until the next annual meeting and until their respective successors are duly elected and qualified, subject to their earlier death, resignation or removal. The Board has adopted a policy regarding minimum qualifications for potential directors. These qualifications are considered by the Board and the Nominating and Corporate Governance Committee; CC – Compensation Committee, together with further core skills deemed useful in the context of an assessment of the current needs of the Board. All candidates for election to our Board must participate in a rigorous evaluation process. As part of this process, candidates are required to undergo a third-party background and conflicts check, complete our director questionnaire, and interview with, at a minimum, members of our Nominating and Corporate Governance Committee, Independent Chair of the Board, CEO and any external search firm or advisor engaged on these matters. Shareholders may recommend nominees to the Nominating and Corporate Governance Committee by submitting the names and supporting information in writing to the Company’s Corporate Secretary at 650 Liberty Avenue, Union, New Jersey 07083 in accordance with the Company’s Bylaws. The Nominating and Corporate Governance Committee believes the director nominees possess the experience, skills and qualifications established by the Corporate Governance Guidelines and necessary to continue the Company’s strategic transformation. In addition, the Company’s Corporate Governance Guidelines limit the number of outside board memberships of our directors. TABLE OF CONTENTS | 1 | OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Minimum qualifications to
serve as a director:
are of high character and integrity; are accomplished in their respective fields, with superior credentials and recognition; have relevant expertise and experience upon which to be able to offer advice and guidance to management; have sufficient time available to devote to the affairs of the Company; are able to work with the other members of the Board and contribute to the success of the Company; can represent the long-term interests of the Company’s shareholders as a whole; and are selected such that the Board represents a range of backgrounds, experience, ages and diversity of gender, race, and ethnicity. | | | Additional skills for effective Board
oversight of our strategy, risk and
corporate governance: | | | Applicable legal and
regulatory requirements:
The Nominating and Corporate Governance Committee also considers applicable legal and regulatory requirements that govern the composition of the Board, including but not limited to, Nasdaq and SEC requirements with respect to independence, diversity, financial literacy and other matters.
All members of all Committees are independent | | | | | | Digital/Omni-
channel Experience | | | | | | Senior
Leadership
& Strategic
Planning | | | | | | | Growth/Business
Transformation | | | | | | CEO
Experience | | | | | | | International
Experience | | | | | | Financial
Literacy/
Expertise | | | | | | | Marketing
(including Digital
Marketing)/
Personalization/
Customer
Experience | | | | | | Public Affairs/
Corporate
Governance/
ESG | | | | | | | Operations
Management
Experience | | | | | | Public Company
Board Service | | | | | | | Retail
Industry
Experience | | | | | | Risk
Management | | | | | | | | | | | | | Technology/ Cyber | | | consideration of diversity
Qualified candidates for membership on the Board will be considered without regard to race, color, creed, religion, national origin, age, gender identity, sexual orientation or disability. As detailed in our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee endeavors to include diverse candidates (including women and candidates who self-identify as either an underrepresented minority or LGBTQ+) in the qualified pool from which Board candidates are chosen and, when nominated and elected, to consider such directors for leadership on the Board and its committees. The Nominating and Corporate Governance Committee reviews and evaluates each candidate’s character, judgment, skills, background, experience and other qualifications (without regard to whether a nominee has been recommended by the Company’s shareholders), as well as the overall composition of the Board, and recommends to the Board for its approval the slate of directors to be nominated for election at the Annual Meeting. The Nominating and Corporate Governance Committee is committed to, and actively applies, its policy of inclusiveness as a critical component of its board refreshment efforts. |
PROXY STATEMENT SUMMARYTABLE OF CONTENTS
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board refreshment and succession planning As part of our continuing Board refreshment initiative, the Nominating and Corporate Governance HighlightsCommittee regularly assesses the current needs of the Board, including through its oversight of the Board’s composition and peer assessment process as further described under “board self-assessment and board composition & peer assessment processes” below. This effort is intended to help ensure that directors possess an appropriate mix of skills and experience, including a balance between new and experienced directors and a further alignment of the attributes of the directors with the Company’s strategic needs, and to help inform the Board’s succession planning process. The Nominating and Corporate Governance Committee also evaluates our director succession planning needs, including through the consideration of any possible retirements or other departures from the Board and the active consideration of new director candidates that would best complement the skills and attributes of the existing directors, and continue to best position the Board to assess, challenge and oversee the Company’s long-term strategy. The Nominating and Corporate Governance Committee evaluates any candidates against the standards and qualifications set forth in our Corporate Governance Guidelines as well as other relevant factors, including the candidate’s potential contribution to the diversity of the Board. To assist the Nominating and Corporate Governance Committee in identifying prospective Board nominees when undertaking a search, the Company may retain an outside search firm. The Nominating and Corporate Governance Committee also considers candidates suggested by its members, other directors, management and shareholders. Through this evaluation and assessment process in 2021, the Board, by recommendation from the Nominating and Corporate Governance Committee, identified the need for representation of additional skills and attributes on our Board. As a result, the Nominating and Corporate Governance Committee engaged a third-party independent search firm to assist with the identification of potential candidates, which resulted in the appointment of Minesh Shah on March 1, 2022. 2022 proxy statement | | – Extensive Shareholder Engagement
– Majority Independent Board
– Separate Chair and CEO
– Lead Independent Director
– Independent Committee Members
– >75% Board and Committee Attendance in 2015
– Annual Election of All Directors
– Majority Voting for Uncontested Director Elections
– Executive Sessions for Independent Directors
| – No Hedging with Respect to Company Securities
– Restrictions on Pledging Company Securities
– No Poison Pill
– Ownership Guidelines for CEO and Independent Directors
– Compensation “Clawback” Policy
– Strong Pay-For-Performance Philosophy
– Comprehensive Policy of Ethical Standards for Business Conduct
– Annual Board Evaluations
| 19
|
Fiscal 2015 Business HighlightsTABLE OF CONTENTS
OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Our Strategy
The retail environment continues to change dramatically as advancing technologies transform the way consumers shop for merchandise both online
how we are governed and in-store. The evolution of omnichannel retailing presents a great opportunity to provide a more seamless and personalized shopping experience for customers.Over the past few years,govern
corporate governance at Bed Bath & Beyond The Board believes that good corporate governance accompanies and aids the Company’s long-term success, and, in coordination with the Nominating and Corporate Governance Committee, regularly reviews the Company’s corporate governance policies and practices. The Company’s governance policies and practices, including the Corporate Governance Guidelines, were most recently updated in fiscal 2021 based upon a comprehensive review against peer and market leading practices.
Our current corporate governance policies and practices include, among other things: |
ANNUAL
ELECTIONS | | | All directors are elected annually, which reinforces our Board’s accountability to shareholders. | MAJORITY
VOTING
STANDARD | | | Our Amended and Restated Bylaws provide for a “majority voting” standard in uncontested director elections. An incumbent director that does not meet the majority voting standard must promptly offer to resign from the Board. | BOARD REFRESHMENT | | | The Board has undergone a complete transformation, with all our directors standing for re-election appointed within the last four years. | PROXY ACCESS | | | Our Amended and Restated Bylaws provide that any shareholder or group of up to 20 shareholders owning 3% or more of the Company’s common stock continuously for at least the previous three years may nominate and include in our proxy materials director nominees totaling up to the greater of 20% of the Board or at least two directors. | SHAREHOLDER ENGAGEMENT | | | We are committed to active and ongoing shareholder engagement, including by directors, to capture investor perspectives. We regularly engage with our shareholders to better understand their perspectives in a variety of areas, and these discussions ensure the Company’s interests remain well-aligned with those of our shareholders. |
INDEPENDENCE | | | A majority of our directors must be independent. Currently, all of our directors other than our CEO are independent. The Board and its committees hold regular executive sessions of independent directors, including in conjunction with regular meetings. | INDEPENDENT CHAIR | | | We currently have an independent Chair of the Board. If in the future, our CEO is also the Chair of the Board or the Chair of the Board is otherwise not independent, our Corporate Governance Guidelines require an independent director to serve as Lead Director. | BOARD COMMITTEES | | | The Nominating and Corporate Governance Committee reviews and recommends committee membership. All of the members of the Audit Committee, People, Culture and Compensation Committee and Nominating and Corporate Governance Committee are independent directors. Each of our committees is chaired by an independent director, and each committee has an extensively detailed charter outlining the committee’s duties and responsibilities, which are reviewed at least on an annual basis. | BOARD
EDUCATION | | | Our comprehensive board education program begins with a new director orientation process that includes individual discussions with the Chair of the Board, the CEO and other senior executives and visits to one or more stores or other Company facilities. Director education continues at each Board meeting, through reports and presentations by Company officers and outside experts. The Board also encourages directors to periodically attend appropriate continuing education seminars or programs. |
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DIVERSITY | | | Our directors have a diversity of perspectives, backgrounds, ages, genders, races and ethnicities reflecting the diversity of the Company’s loyal customers and dedicated associates. As detailed in our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee endeavors to include diverse candidates (including women and candidates who self-identify as either an underrepresented minority or LGBTQ+) in the qualified pool from which Board candidates are chosen and, when nominated and elected, to consider such directors for leadership on the Board and its committees. | DIRECTOR OVERBOARDING POLICY | | | Our CEO and non-executive directors who are employed as the chief executive officer or are otherwise a “Named Executive Officer” of any public company are expected to serve on no more than one other public company board. Other directors are expected to serve on no more than three other public company boards. | SELF- ASSESSMENTS | | | The Board and each of its committees conduct rigorous annual self-assessments. | BOARD COMPOSITION
AND PEER
ASSESSMENTS | | | The Board conducts board composition and peer assessments on a biennial basis, which may be facilitated by an independent third-party. The last assessment was conducted in fiscal 2020 by an independent third-party. | RISK OVERSIGHT | | | The Board and the Audit Committee at least annually review and engage with the Company’s Enterprise Risk Management (ERM) process and monitor both the risk culture and emerging and current strategic risks. | ESG OVERSIGHT | | | The Board and the Nominating and Corporate Governance Committee regularly review the Company’s ESG strategies, policies and practices. The Board and the People, Culture and Compensation Committee regularly review the Company’s strategies, policies and practices with respect to people and culture matters, including diversity, equity and inclusion (“DE&I”) policies, programs and initiatives. | MANAGEMENT SUCCESSION PLANNING | | | The People, Culture and Compensation Committee is responsible for the oversight of regular management succession planning for the CEO and other executive officers of the Company. The Nominating and Corporate Governance Committee is responsible for the oversight of emergency management succession planning. |
COMPENSATION PRACTICES | | | The People, Culture and Compensation Committee is dedicated to aligning the Company’s executive compensation practices with the long-term strategy of the Company and the Company’s compensation design pillars. | COMPENSATION RECOUPMENT | | | The Company has the right to recover cash and equity incentive compensation paid to current and former officers in a broad range of covered events, including conduct detrimental to the Company. | ANTI-HEDGING
AND PLEDGING
POLICIES | | | The Company does not permit our executive officers to hedge the Company’s securities and restricts their ability to pledge the Company’s securities. | STOCK
OWNERSHIP GUIDELINES FOR OFFICERS AND DIRECTORS | | | The Company’s stock ownership guidelines contain minimum ownership requirements for executive officers and directors, which are regularly reviewed and benchmarked against our peers. |
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board leadership As stated in our Corporate Governance Guidelines, the Board’s general policy, based on experience, is that the positions of Chair and Chief Executive Officer (“CEO”) should be held by separate persons. Our current independent Chair of the Board is Harriet Edelman. As independent Chair of the Board, Ms. Edelman presides at all meetings of the shareholders and of the Board, and has driven change throughoutsuch powers and performs such other duties required by statute or the Company’s Amended and Restated Bylaws and as set forth in the Corporate Governance Guidelines or as the Board may from time to time determine. | | | | | | | 
Harriet Edelman
Independent
Chair of the Board | | | Our Corporate Governance Guidelines provide that the independent Chair will:
• seek to promote a strong board culture, including the participation of all directors in an environment of open dialogue, constructive feedback and effective communication across Board committees and among the Chair, the Board as a whole, and with regard to senior management;
• preside at all meetings of the Board, including executive sessions of the independent directors;
• preside at all meetings of the shareholders;
• have the authority to call meetings of the Board and of the independent directors;
• determine the agendas, schedule and information sent to the directors for Board meetings, including to assure sufficient time for discussion of agenda items, prioritize matters and promote effective information flow and follow-up;
• work with the applicable committee chairs and Board committees with respect to the annual performance review of the CEO and the Board’s self-assessment and board composition and peer assessment processes;
• act as a liaison between the members of the Board and management; and
• be available for consultation with the Company’s shareholders as appropriate.
| | | | | | | | | | |
Under the Company’s Corporate Governance Guidelines, if the Board, upon the recommendation of the Nominating and Corporate Governance Committee, decides in the future that, given the then current circumstances, combining the positions of independent Chair and CEO would foster a more effective and efficient Board, or the independent Chair is otherwise determined by the Board to not be independent, then the independent directors will designate an independent director to serve as Lead Director. The Lead Director would generally have the duties and responsibilities of the current independent Chair of the Board, unless otherwise determined by the Board. director independence The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has determined that all of our organizationdirectors other than Mr. Tritton are “independent directors” under the independence standards set forth in our Corporate Governance Guidelines and Nasdaq Listing Rule 5605(a)(2). The Board conducts an annual review of director independence. As part of this review, independence is assessed in both fact and appearance to capitalizepromote arms-length oversight and is designed to identify relationships and transactions between a director or their immediate family and the Company or members of executive management. In the ordinary course of business, transactions may occur between the Company and entities with which some of our directors or their family members are or have been affiliated. In connection with its evaluation of director independence, our Board reviewed such transactions, and it has determined that these transactions do not impair the independence of the respective director. TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
committees of the board of directors The Board has established standing committees to assist with the performance of its responsibilities. These committees are the Audit Committee, the People, Culture and Compensation Committee and the Nominating and Corporate Governance Committee. All members of the Audit, People, Culture and Compensation and Nominating and Corporate Governance Committees are considered independent pursuant to applicable SEC and Nasdaq rules, and all members of the People, Culture and Compensation Committee meet the “outside directors” requirements for purposes of applicable tax law. The Board has adopted written charters for the Audit, People, Culture and Compensation, and Nominating and Corporate Governance Committees. The charters are available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com.* Each Committee reviews its charter annually and recommends charter changes to the Board, as appropriate. |
*
| Web links throughout this document are provided for convenience only. Information from the Bed Bath & Beyond website is not incorporated by reference into this proxy statement. |
| The Audit Committee assists the Board by:
• overseeing the Company’s accounting and financial reporting processes and the integrity of the Company’s quarterly and annual financial statements;
• reviewing the Company’s earnings announcements, as well as financial information and earnings guidance provided to analysts and ratings agencies;
• reviewing audits of the Company’s financial statements;
• overseeing the Company’s internal control system and the quality of internal control by management;
• overseeing management’s practices to ensure adequate risk management;
• overseeing the Company’s corporate compliance program, including compliance with legal and regulatory requirements and the Company’s ethical conduct policy;
• reviewing and overseeing the independent auditor’s qualifications, independence and performance;
• overseeing the performance of the Company’s internal audit function;
• overseeing cybersecurity, data privacy, information technology and information protection programs; and
• overseeing procedures for receipt and treatment of complaints received by the Company from its customers, vendors or associates relating to accounting, internal accounting controls or auditing matters. | The Audit Committee has the authority to engage independent counsel and other advisors. |
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people, culture and compensation committee | The People, Culture and Compensation Committee assists the Board by:
• considering and determining all matters relating to the compensation of the CEO, the Executive Chair (if applicable) and other executive officers (as defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and such other key executives as the Committee shall determine;
• administering and functioning as the Committee that is authorized to make grants and awards of equity compensation to executive officers and such other key executives as the Committee shall determine under the Company’s equity compensation plans;
• overseeing the Company’s management succession planning for the CEO and other executive officers;
• overseeing the Company’s people and culture matters, including associate diversity and inclusion policies, programs and initiatives; and
• reviewing and reporting to the Board on such other matters as may be appropriately delegated by the Board for the Committee’s consideration.
The People, Culture and Compensation Committee has the authority to engage compensation consultants and other advisors. |
nominating and corporate governance committee | The Nominating and Corporate Governance Committee assists the Board by:
• reviewing and recommending to the Board changes in certain policies regarding the nomination of directors;
• identifying individuals qualified to become directors;
• evaluating and recommending for the Board’s selection nominees to fill positions on the Board;
• advising the Board with respect to leadership of the Board and the structure and composition of the committees of the Board;
• facilitating the annual assessment of the performance of the Board and its committees;
• facilitating a composition and peer assessment review of the Board not less than biennially;
• advising and making recommendations to the Board with respect to corporate governance matters, including the Company’s Corporate Governance Guidelines and other corporate governance policies;
• overseeing the Company’s ESG strategies, policies and practices; and
• overseeing the Company’s emergency management succession planning.
The Nominating and Corporate Governance Committee also has the authority to retain advisors, including third-party search firms to evaluate or assist in identifying or evaluating potential director nominees. |
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management succession planning While the full Board is responsible for ensuring that the Company engages in robust succession planning discussions for the CEO position and for ultimately determining who holds such position, the Board has delegated the responsibility for overseeing succession planning for the CEO and other executive officers to (i) the People, Culture and Compensation Committee for regular succession planning and (ii) the Nominating and Corporate Governance Committee for emergency succession planning. This oversight responsibility includes periodically reviewing the management succession plan and identifying potential successors for the CEO. The People, Culture and Compensation Committee and the Nominating and Corporate Governance Committee periodically report to the Board regarding succession planning matters. In addition, the CEO periodically reports to the People, Culture and Compensation Committee regarding succession plans for certain key officers and also makes recommendations to the Board regarding his/her own succession. people, culture and compensation committee interlocks and insider participation John E. Fleming, Jeffrey Kirwan and Ann Yerger served as members of the People, Culture and Compensation Committee during fiscal 2021. No director who served on advancing technologiesthe People, Culture and to strengthenCompensation Committee during fiscal 2021 was an officer or associate of the Company or any of its subsidiaries in fiscal 2021 or previously was an officer of the Company. None of our businessexecutive officers currently serve, or in fiscal 2021 has served, as a world-class omnichannel retailer. member of the board or compensation committee of any entity that has one or more executive officers serving on our Board or the People, Culture and Compensation Committee. meetings of the board and committees Our Board and its committees hold regular meetings each quarter and special meetings when necessary. All incumbent directors attended at least 75% of the total Board and committee meetings on which he or she served during 2021. All of our directors who were serving on the day of last year’s annual meeting of shareholders attended that meeting. Under our Corporate Governance Guidelines, absent unusual circumstances, Board members are expected to attend all Board meetings, all committee meetings on which they serve and our annual meeting of shareholders. Our non-employee directors, all of whom are currently independent, meet in executive session, without the presence of any corporate officer or member of management, in conjunction with regular meetings of the Board and its committees. Board of Directors | | | 9 | Audit Committee | | | 9 | People, Culture and Compensation Committee | | | 11 | Nominating and Corporate Governance Committee | | | 17 |
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We are committed to Board-level risk management. The Board monitors the Company’s “tone at the top” and risk culture and oversees current and emerging strategic risks. Risk management is overseen by the Board and facilitated through the work of the Board committees which are comprised entirely of independent directors and provide regular reports to the Board regarding matters reviewed by their committees.
| AUDIT COMMITTEE
• Financial reporting
• Legal and regulatory compliance
• Operational risk
• Cybersecurity and data privacy
• Internal controls
• Corporate compliance program
| | | PEOPLE, CULTURE AND
COMPENSATION
COMMITTEE
• People and culture matters, including DE&I
• Associate talent retention and development
• Compensation policies and practices
• Conflicts of interest involving advisors to the compensation committee
• Management succession planning for the CEO and other executive officers | | | NOMINATING
AND CORPORATE
GOVERNANCE
COMMITTEE
• ESG strategy, policies and practices
• Board composition, emergency management succession, and Board and CEO evaluations
• Governance-related risks, including assessing and monitoring the effectiveness of our Corporate Governance Guidelines |
enterprise risk management | The Company employs enterprise risk management (“ERM”) practices designed to identify and assess risks to our business and to develop strategies to mitigate and manage those risks. Our ERM risk assessment and related reporting involve cross-functional engagement to ensure appropriate prioritization and alignment across the Company. These activities, which are overseen by the Company’s Controls, Audit and Risk Services team, were recently refreshed in 2021. As part of its oversight responsibility, the Board receives reports on the material risks facing the Company, which are identified through multiple means, including the Company’s ERM process. The Audit Committee of our Board receives regular reports on the Company’s risks, mitigation efforts and related controls to manage such risks. Areas of risk and mitigation efforts reviewed with the Board and its committees in furtherance of the Board’s oversight responsibilities include: economic forces; competition; weather; people and culture risks such as recruitment and retention, safety, and succession; cybersecurity and data security risks; compliance risks associated with the range of legal, accounting, tax and financial reporting systems under which the Company operates; supply chain risks, including disruption arising from political instability or labor disturbances, supplier financial stability and legal compliance; and compliance with a variety of product, labor, social and environmental standards. The ERM process also informs the more detailed risk factor disclosure in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC. | Additional details on the Company’s risks can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended February 26, 2022. |
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board self-assessment and board composition & peer assessment processes The Board conducts a rigorous annual process to assess effectiveness of the Board and each of its committees. As part of this process, the Board and each of the committees are required to review and evaluate its performance. The Board has delegated to the Nominating and Corporate Governance Committee the responsibility to facilitate this self-assessment and report the results thereof to the Board, using such resources or methods as it determines to be appropriate. The Board also conducts a board composition review and peer assessment process on a biennial basis, which may be facilitated by an independent third-party consultant. As part of this process, all Board members are interviewed to provide input on each director, assess the Board’s effectiveness and identify opportunities to further improve performance. At completion of the evaluation, results are delivered to and reviewed by the Board. The last board composition review and peer assessment was completed at the end of fiscal 2020. board education program The Company and the Board believe that directors should continually update their skills and knowledge in order to effectively oversee the management of the affairs of the Company. The Board’s comprehensive board education program begins with a new director orientation process that includes individual discussions with the Chair of the Board, the CEO and other senior executives; visits to one or more stores and other Company facilities; and orientation by the Chief Legal Officer and Corporate Secretary regarding various Company programs and policies. Director education continues at each Board meeting, through reports and presentations by Company officers and outside experts and through the sharing of information among directors. Additionally, the Board recognizes the value of independent learning and keeping abreast of legal and business developments to ensure effective discharge of director duties. In order to advance these goals, the agenda at various Board meetings includes discussion of key business and governance issues. The Board also encourages directors to periodically attend appropriate continuing education seminars or programs. The Company reimburses directors for all reasonable fees and expenses associated with attending such programs, up to $10,000 per director in any fiscal year. anti-hedging and anti-pledging policies Our directors and executive officers are prohibited from engaging in hedging or monetization transactions with respect to Company securities, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars, exchange funds, puts, calls, forwards and other derivative instruments, or through the establishment of a short position in the Company’s securities. In addition, our directors and executive officers are prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account, unless they certify to the Company’s Chief Legal Officer their financial capacity to repay the covered loan without resorting to the pledged securities. TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
stock ownership guidelines As a further measure to align the interests of its non-employee directors with the interests of the Company, the Company’s stock ownership guidelines require all non-employee directors to achieve ownership of Company stock (inclusive of restricted stock), calculated in total share value, of not less than six times such director’s base annual cash retainer. In addition, until a non-employee director has achieved the minimum share ownership, such director is required to hold one hundred percent (100%) of the shares acquired through the vesting of restricted stock received from the Company. The People, Culture and Compensation Committee evaluates compliance with this policy on an annual basis. Once a director satisfies the ownership guideline as of a measurement date, they will be considered in compliance regardless of share price fluctuations or an increase in the director’s annual cash retainer, as long as their holdings remain at or above the number of shares held at the time they first met the ownership guideline. These enhanced requirements reflect the Board’s strong commitment to best-in-class governance policies and represent highest standards as measured against the Company’s peers. As of the end of fiscal 2021, all the Company’s directors owned shares in excess of the applicable guideline or were in compliance with the retention requirement described above. governance guidelines and policies; additional information The Investor Relations section of the Company’s website contains the following information: Corporate Governance Guidelines, including the Company’s Policies on Director Nominations and Director Attendance at the Annual Meeting; the Company’s Policy of Ethical Standards for Business Conduct that applies to all associates (including all officers) and members of the Board; the Company’s Compensation Recoupment Policy that applies to any current or former executive officer (as defined by the Exchange Act) and such other senior executives who may be deemed subject to the policy by the Board; the 2021 ESG Report, reporting on the environmental, social and governance issues most important to our business; and how shareholders can communicate with the Board. TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
environmental, social and governance (ESG) As Chairs of the Board and the Nominating and Corporate Governance Committee, we believe it is essential that the Board of Directors is directly engaged in the Company’s ESG strategy. This includes providing appropriate oversight to all aspects of the strategy and ensuring sufficient links to our Company’s unique business model, business plans, investments, and risk management processes. | During 2021, our Company published an enhanced ESG Report for the fiscal year 2020 and established important short- and long-term targets for the environment, the communities we serve, our associates and customers. Our ESG strategy embeds important principles and programs across our business — with functional plans, leadership ownership, metrics and targets. Through this framework, we aspire to be the most responsible partner we can for our associates, customers, communities, shareholders and planet. | The Board provides oversight to ESG matters in each Board committee and at the full Board level. This includes monitoring progress on our ESG and DE&I goals and further advancing our strategy through the identification of additional opportunities. In 2022, the Company tuned objectives first shared in 2021 and enhanced our overall program. | We look forward to our ESG initiatives further distinguishing our Company, driving success, making a positive impact on our customers and communities and responding to the interests of all stakeholders.
| | | |  | Harriet Edelman
Chair of the Board of Directors | | | Virginia P. Ruesterholz
Chair of the Nominating and
Corporate Governance Committee |
our approach to ESG Aligned with our purpose to make it easy to feel at home, our ESG vision and principles are embedded in all business activities. Our strategy is made up of three key pillars – People, Community and Planet – focusing on the areas where we believe we can contribute the most. | | | People:
create an equitable, inclusive work environment where all associates feel at home and can thrive | | | | Community:
provide a sense of home to the people and communities we serve | | | | Planet:
do our part to protect the planet we call home |
We have made tremendousare committed to a strong governance framework, designed to elevate and embed strong ethical values and governance throughout the business to enable the ESG strategy. As part of that framework, our Board provides our Company’s highest level of oversight for ESG matters. In addition, the Nominating and Corporate Governance Committee has express authority over our ESG programs, strategies, policies and practices, the People, Culture and Compensation Committee regularly review the Company’s strategies, policies and practices with respect to people and culture matters, including DE&I and the Audit Committee oversees the Company’s compliance program and risk management practices, including sustainability-related risks. For more information about our Board committee oversight responsibilities, see “committees of the board of directors.” TABLE OF CONTENTS OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
ESG highlights Our ESG journey is only beginning, and we are committed to making continued progress in the2022 and beyond. Our ESG vision and principles and 2021 progress is highlighted below. For more information on our ESG program and performance, please review our 2021 ESG Report, which is available on our website at www.bedbathandbeyond.com. We deeply believe our associates are our greatest asset. Being ‘people powered’ is a key principle of our multi-year business transformation strategy. Over the past year, we have made progress on improving the associate experience, including:
• implementing 100% paid parental leave at all levels
• conducting an all-associate engagement survey, the results of which will help us continue to improve our work environment and address associate feedback
• creating our Stronger, Together Relief Fund as a resource for associates facing short-term financial hardship in the event of an unforeseen personal event or natural disaster
• hiring our first Senior Vice President and Chief Diversity, Equity & Inclusion Officer responsible for the strategy and execution of our DE&I commitments | For more information about our people commitments, see “compensation, discussion and analysis - people & culture highlights.” |
Community support is an integral part of our heritage and we have a long-standing tradition of providing aid to our neighbors in need. We believe a sense of home is critical for the well-being of individuals and communities. In partnership with local and national non-profits, along with product donations and volunteering, we are working to advance this sense of home to positively impact communities in need. | Our commitments are supported by our partnerships with two national non-profit organizations, Good360 and Rebuilding Together, and our thousands of associates across North America who want to contribute and give back to the communities in which we operate. In 2021, we donated products representing $29.65 million in value. |
We understand the urgency of the environmental issues that face us today, and we focus our sustainability work on the critical issues of climate change, sustainable products, and eliminating waste. As we transform our business, we have the unique opportunity to deeply embed environmental considerations in the critical choices we make. We’ve made progress on our environmental goals, including:
• the acceleration of our greenhouse gas reduction goals for Scopes 1 and 2 emissions by 2030
• publishing our Environmental Policy, which describes our commitments on environmental issues
• launching our first circular economy initiative with buybuy Baby’s partnership with GoodBuy Gear to take back used baby gear for resale in exchange for store credit |
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The Director Compensation Table provides compensation information for each member of our Board during fiscal 2021, other than Mr. Tritton, our President and CEO, whose compensation is reflected in the Summary Compensation Table. Mr. Tritton did not receive any director fees for fiscal 2021, since he received compensation in his capacity as an executive of the Company. Annual director fees for fiscal 2021 were $90,000. In addition to annual fees, directors serving on standing committees of the Board were paid as follows: an additional $10,000 for Audit Committee members (or $25,000 for the Chair of the Audit Committee); an additional $7,500 for People, Culture and Compensation Committee members (or $25,000 for the Chair of the People, Culture and Compensation Committee); and an additional $5,000 for Nominating and Corporate Governance Committee members (or $16,500 for the Chair of the Nominating and Corporate Governance Committee). The independent Chair of the Board also receives an annual retainer in the amount of $200,000 (in addition to the standard annual director fees received by the independent Chair of the Board), with 75% payable in cash and 25% payable in restricted stock on the date of the Annual Meeting of Shareholders (calculated based on the average of the high and low trading prices on such date). The Company does not pay per meeting fees. Director fees are paid on a quarterly basis. Directors may elect to better serve our customersreceive all or 50% of their fees in stock. In addition to the fees above, each director, other than Mr. Tritton, received a grant of restricted stock under the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”) on the date of the Company’s 2021 Annual Meeting of Shareholders with a grant date value equal to $150,000. The number of shares were calculated using the average of the high and low trading prices of the Company’s common stock on the date of the 2021 Annual Meeting of Shareholders. In an ever-evolving digital world. Ateffort to further align the same time, our strategy remains rooted in our customer-centric culture and commitment to customer service, supported by significant investments to strengthen our foundation for future growth:To do more for and with our customers wherever, whenever and however they wish to interact with us;
To provide our customers a seamless experience whether they interact with us in a store, through oneinterests of our contact centers, on a desktop or tablet, smartphone or through social media;
To be viewed asBoard and the expert forCompany, the home, including the accompanying life stages that make a house a home, andnon-employee members of our Board are required to become the destination for our customers’ needs and wants as they express their life interests and travel through their life stages; all through the expanding and differentiated products, services and solutions we offer; and
To enhance our ability to achieve these objectives through an ongoing commitment to world class information technology, comprehensive analytics and targeted marketing and communications.
Our Performance
During fiscal 2015,maintain ownership of Bed Bath & Beyond made steady progressstock (inclusive of restricted stock) of not less than six times a director’s base annual cash retainer (measured at the close of the fiscal year and subject to later fluctuations in share price). In addition, until a non-employee director has achieved the minimum share ownership, the director is required to hold one hundred percent (100%) of the shares acquired through the vesting of restricted stock received from the Company. As of the end of fiscal 2021, all the Company’s directors owned shares in excess of the applicable guideline or were in compliance with the retention requirement described above.
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As described above and more fully below, the following table summarizes the annual compensation for the directors, other than Mr. Tritton, during fiscal 2021. Marjorie Bowen(6) | | | 0 | | | — | | | 0 | Harriet Edelman | | | 240,000 (3) | | | 200,020 (4) | | | 440,020 | John E. Fleming | | | 115,000 | | | 150,000 | | | 265,000 | Sue E. Gove | | | 105,000 | | | 150,000 | | | 255,000 | Jeffrey A. Kirwan | | | 97,500 (3) | | | 150,000 | | | 247,500 | Shelly Lombard(6) | | | 0 | | | — | | | 0 | Johnathan B. (“JB”) Osborne(5) | | | 31,731 | | | — | | | 31,731 | Harsha Ramalingam(5) | | | 31,731 | | | — | | | 31,731 | Benjamin Rosenzweig(6) | | | 0 | | | — | | | 0 | Virginia P. Ruesterholz | | | 116,500 | | | 150,000 | | | 266,500 | Joshua E. Schechter | | | 115,000 | | | 150,000 | | | 265,000 | Minesh Shah(6) | | | 0 | | | — | | | 0 | Andrea M. Weiss | | | 100,000 | | | 150,000 | | | 250,000 | Mary A. Winston | | | 95,000 | | | 150,000 | | | 245,000 | Ann Yerger | | | 102,500 (3) | | | 150,000 | | | 252,500 |
(1)
| The value of stock awards represents their respective total fair value on the date of grant calculated in accordance with Accounting Standards Codification (“ASC”) Topic No. 718, “Compensation—Stock Compensation” (“ASC 718”), without regard to the estimated forfeiture related to service-based vesting conditions. All assumptions made in the valuations are contained and described in Note 15 to the Company’s financial statements in the Company’s Annual Report on Form 10-K for fiscal 2021. Stock awards are rounded up to the nearest whole share when converted from dollars to shares. The amounts shown in the table reflect the total fair value on the date of grant and do not necessarily reflect the actual value, if any, that may be realized by the directors. |
(2)
| For all directors who did not resign before the end of fiscal 2021, includes the value of 5,071 restricted shares of common stock of the Company granted under the Company’s 2012 Plan on the date of the Company’s 2021 Annual Meeting of Shareholders and valued under ASC 718 at fair market value on such date ($29.58 per share, the average of the high and low trading prices on June 17, 2021). Such restricted stock vested on the last day of the fiscal year of grant, subject to the applicable director remaining in office until the last day of the fiscal year. |
(3)
| 50% of each of Mmes. Edelman’s and Yerger’s, and Mr. Kirwan’s fees were paid in unrestricted shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay Directors Fees in Stock and the number of shares was determined (in accordance with the terms of such plan) based on the fair market value per share on the second business day following the announcement of the Company’s financial results for its fiscal third quarter, which was $13.16 per share, the average of the high and low trading prices on January 10, 2022. |
(4)
| In addition to the 5,071 restricted shares of common stock mentioned in note 2 above, Ms. Edelman also received 1,691 restricted shares of common stock of the Company representing the amount of the Independent Chair of the Board retainer for fiscal 2021, granted under the Company’s 2012 Plan on the date of the Company’s 2021 Annual Meeting of Shareholders and valued under ASC 718 at fair market value on such date ($29.58 per share, the average of the high and low trading prices on June 17, 2021). Such restricted stock vested on the last day of the fiscal year of grant, subject to remaining in office until the last day of the fiscal year. |
(5)
| No longer serving as a director as of June 17, 2021. |
(6)
| Mr. Shah was appointed to the Board on March 1, 2022. Mmes. Bowen and Lombard and Mr. Rosenzweig were appointed to the Board on March 24, 2022. |
delinquent section 16(a) reports Section 16(a) of the Securities Exchange Act of 1934 requires our directors, officers and beneficial owners of 10% or more of our common shares to file reports with the SEC relating to their common share ownership and changes in such ownership, and to confirm that all required Section 16(a) forms were filed with the SEC. Based on a review of our strategic initiatives, including significant investments inrecords and certain written representations received from our people, technology, physicalexecutive officers and digital channels and supply chain,directors, we believe that all reports, except one, that were required to further strengthen our foundationbe filed under Section 16(a) during fiscal 2021, were timely filed. There was one late filing disclosing one transaction for future growth.Ms. Hong due to a filing code process issue. Select operational highlights:
TABLE OF CONTENTS Continued to expand, differentiate and improve our merchandiseOUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
certain relationships and related servicestransactions The Company’s Audit Committee reviews and, solutions. Developed enhanced analytics capabilities, including sophisticated, predictive modelingif appropriate, approves transactions brought to drivethe Committee’s attention in which the Company is a participant and the amount involved exceeds $120,000, and in which, in general, beneficial owners of more personalized targeted marketing.
Introduced new servicesthan 5% of the Company’s common stock, the Company’s directors, nominees for director, executive officers, and experiencesmembers of their respective immediate families, have a direct or indirect material interest. The Committee’s responsibility with respect to the review and approval of these transactions is set forth in the Audit Committee’s charter.
how we engage with and listen to our shareholders; how to communicate with us We actively engage with a significant and diverse group of our shareholders on topics important to them and to the Company. Topics discussed have included an increased focus on areas such as online appointment scheduling for registryexecutive compensation; governance practices, including board assessment and a new virtual coupon wallet called My Offers, which organizesrefreshment; board composition; business strategy; environmental and stores printsocial topics such as people and digital coupons so customers can accessculture and redeem them conveniently online or in-store. DE&I; balance sheet and capital allocation; and other topics suggested by our shareholders. In addition, our Investor Relations team, together with members of senior management, regularly engage with investors. PROXY STATEMENT SUMMARY
Continued development of our new Point-of-Sale system, including both hardwareShareholder feedback is discussed by the Board periodically throughout the year. This includes input through direct discussions and software elements. The new system—to be piloted in fiscal 2016—will provide a more efficient customer check out process by automating many manual processes,prior shareholder votes, as well as greatly enhancingengagement with proxy advisory firms that represent the interests of a wide array of shareholders. Feedback and insight from these discussions, in addition to emerging best practices, policies, and other market standards, are considered and evaluated by our promotional capabilities.
Progressed development of our Liberty View project in Brooklyn, a unique shopping venue which will house four of our conceptsBoard and provide a more experiential shopping environment.
Opened a new Customer Contact Center in Layton, Utahmanagement to enhance our 24/7 customer support.
Expanded our supply chain network, including a new distribution facility in Las Vegas, Nevada, to provide more flexible fulfillment optionsdisclosures and support anticipated growth across allpractices.
As part of our channels. Upgradedfiscal 2021 shareholder engagement plans, we reached out to our proprietary internal Web-based platform,top shareholders, representing the majority of our total shares outstanding, which group included index funds, hedge funds, public pension funds and actively-managed funds. The Beyond Store,Chair of our Board, members of the Board (including the Chair of our Nominating and integrated it withCorporate Governance Committee) and management participated in these meetings. During the course of these discussions, we covered the important topics listed above. In addition, we provided information on the strengthening of our executive leadership team, board refreshment and diversity, executive compensation, ESG and the progress being made in transforming the Company and driving long-term sustainable growth.
We plan to continue increasing shareholder and stakeholder outreach and are working to create a regular cadence of two-way communication opportunities as we seek to understand priorities from all perspectives. We also plan to launch a regular, ongoing governance outreach program overseen by our Board. Shareholders and interested parties may direct communications to individual directors, to a Board committee, to the independent directors as a group or to the Board as a whole, by addressing the communications to the appropriate party and sending them to Bed Bath & Beyond Inc., c/o Corporate Secretary, 650 Liberty Avenue, Union, NJ 07083. The Corporate Secretary will review all communications so addressed and buybuy BABY selling websiteswill forward to the addressee(s) all communications determined to bear substantively on the business, management or governance of the Company. TABLE OF CONTENTS | ratification of the appointment of auditors for fiscal 2022 | | | | The Board recommends that the shareholders vote FOR the ratification of the appointment of KPMG LLP as independent auditors for fiscal 2022. |
The Audit Committee is directly responsible for the appointment, compensation, retention and mobile channels,oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed KPMG LLP to enableserve as our independent auditors for fiscal 2022, subject to ratification by our shareholders. The Company’s auditors have been KPMG LLP for every year that it has been a public company. The Audit Committee and the Board believe that the continued retention of KPMG LLP as our independent registered public accounting firm is in the best interest of the Company and our shareholders. Representatives of KPMG LLP will be present at the Annual Meeting to answer questions. They will also have the opportunity to make a statement if they desire to do so. If the proposal to ratify their appointment is not approved, other certified public accountants will be considered by the Audit Committee. Even if the proposal is approved, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year if it believes that such a change would be in the best interest of the Company and its shareholders. fees paid to KPMG LLP for services and products The Audit Committee is responsible for the approval of the audit fees associated with the Company’s retention of KPMG LLP. The fees incurred by the Company for professional services rendered by and products purchased from KPMG LLP for fiscal 2021 and the fiscal year ended February 27, 2021 (“fiscal 2020”) were as follows: Audit Fees | | | $1,730,000 | | | $1,984,000 | Tax Fees | | | 115,000 | | | 52,000 | All Other Fees | | | 3,000 | | | 3,000 | | | | $1,848,000 | | | $2,039,000 |
In fiscal 2021 and fiscal 2020, in accordance with the SEC’s definitions and rules, “Audit Fees” included fees associated with the annual audit of the Company’s financial statements, the assessment of the Company’s internal control over financial reporting as integrated with the annual audit of the Company’s financial statements and the quarterly reviews of the financial statements included in its Form 10-Q filings. In fiscal 2020, “Audit Fees” also includes fees for additional procedures related to the divestitures of certain non-core banners, upgrades to information technology systems, the accelerated share repurchase program and fees for procedures due to consents on Form S-8 registration statements. In fiscal 2021 and 2020, “Tax Fees” included fees associated with tax planning, tax compliance (including review of tax returns) and tax advice (including tax audit assistance). The Audit Committee has concluded that the provision of the foregoing services is compatible with maintaining KPMG LLP’s independence. In addition to fees for audit and non-audit TABLE OF CONTENTS services, in fiscal 2021 and 2020, the Company paid a subscription fee for a KPMG sponsored research product, reflected above in “All Other Fees.” The Audit Committee has concluded that the provision of the foregoing services and products is compatible with maintaining KPMG LLP’s independence. pre-approval policies and procedures In accordance with the Audit Committee charter, the Audit Committee must pre-approve all audit and non-audit services provided to the Company by its outside auditor. To the extent permitted by applicable laws, regulations and Nasdaq rules, the Committee may delegate pre-approval of audit and non-audit services to the Chair of the Audit Committee or one or more members of the Committee, within certain parameters. Such member(s) must then report to the full Committee at its next scheduled meeting if such member(s) pre-approved any audit or non-audit services. In fiscal 2021 and fiscal 2020, all (100%) audit and non-audit services were pre-approved in accordance with the Audit Committee charter. audit committee report for the fiscal year ended february 26, 2022 The Audit Committee discussed the auditors’ review of quarterly financial information with the auditors prior to the release of that information and the filing of the Company’s quarterly reports with the SEC; the Audit Committee also met and held discussions with management and the independent auditors with respect to the audited year-end financial statements. Further, the Audit Committee discussed with the independent auditors the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 1301, “Communications with Audit Committees,” received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’ independence. The Committee also discussed with the auditors and the Company’s financial management matters related to the Company’s internal control over financial reporting. Based on these discussions and the written disclosures received from the independent auditors, the Committee recommended that the Board include the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended February 26, 2022, filed with the SEC on April 21, 2022. This audit committee report is not deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 and is not incorporated by reference into any filings that the Company may make with the SEC. AUDIT COMMITTEE Joshua E. Schechter, Chair
Sue E. Gove
Virginia P. Ruesterholz
Andrea M. Weiss TABLE OF CONTENTS executive officers Set forth below is information concerning individuals who were our executive officers as of May 16, 2022: Mark J. Tritton | | | 58 | | | President and Chief Executive Officer and Director | Gustavo Arnal | | | 52 | | | Executive Vice President, Chief Financial Officer | Anu Gupta | | | 53 | | | Executive Vice President, Chief Growth Officer | John Hartmann | | | 58 | | | Executive Vice President, Chief Operating Officer of the Company, and President, buybuy BABY, Inc. | Joe Hartsig | | | 58 | | | Executive Vice President and Chief Merchandising Officer of the Company, and President, Harmon Stores Inc. | Arlene Hong | | | 53 | | | Executive Vice President, Chief Legal Officer and Corporate Secretary | Rafeh Masood | | | 43 | | | Executive Vice President, Chief Customer Officer | Lynda Markoe | | | 55 | | | Executive Vice President, Chief People & Culture Officer | Gregg Melnick | | | 52 | | | Executive Vice President, Chief Stores Officer |
| | | Mark J. Tritton has served as President and Chief Executive Officer of the Company and as a director since November of 2019. Mr. Tritton’s biography and work history is set forth above under “Our Directors.” | | | | Gustavo Arnal joined the Company as Executive Vice President, Chief Financial Officer in May 2020. Prior to joining the Company, Mr. Arnal served as Group CFO of Avon from 2019 to 2020, and as CFO, International Divisions and Global Functions of Walgreens Boots Alliance from 2017 to 2018. Prior to Walgreens Boots Alliance, Mr. Arnal worked at Procter & Gamble for over twenty years, including senior global CFO positions in the U.S. and Europe. | | | | Anu Gupta has been Executive Vice President, Chief Growth Officer since November 2021 and previously served as Chief Strategy and Transformation Officer from September 2020 to November 2021. Prior to joining the Company, Ms. Gupta served as Chief Operating Officer of Jyve Corporation from 2018 to 2020, Senior Vice President Strategy Execution and Operational Excellence of Target from 2015 to 2018 and Senior Operating Executive of Hellman & Friedman LLC, a private equity firm, from 2013 to 2015. She has also held senior-level operational roles at The Michaels Companies, Inc. and Safeway, Inc. | | | | John Hartmann joined the Company as Executive Vice President, Chief Operating Officer of the Company and President of buybuy BABY, Inc. in May 2020. Prior to joining the Company, Mr. Hartmann served as President and Chief Executive Officer of True Value Company from 2013 to 2020. |
| | | Joe Hartsig joined the Company as Executive Vice President, Chief Merchandising Officer of the Company and President of Harmon Stores Inc. in March 2020. Prior to joining the Company, Mr. Hartsig served as Chief Merchandising Officer of Walgreens Boots Alliance from 2016 to 2020, as Head of Marketing and Digital Commerce at Walgreens Boots Alliance from 2015 to 2016 and as Chief Merchandising and Marketing Officer at Essendant from 2013 to 2015. |
| | | Arlene Hong joined the Company as Executive Vice President, Chief Legal Officer and Corporate Secretary in May 2020. Prior to joining the Company, Ms. Hong served as Senior Vice President, Chief Legal Officer and Corporate Secretary of FULLBEAUTY Brands from 2018 to 2020. Prior to that, she worked at Amazon from 2014 to 2018 as General Counsel of Quidsi, Amazon’s largest retail subsidiary, and as Senior Corporate Counsel for the Softlines business. She also previously served as Senior Vice President, General Counsel and Corporate Secretary at J. Crew and Ideeli. |
| | | Rafeh Masood has been Executive Vice President, Chief Customer Officer since November 2021 and joined the Company as Executive Vice President, Chief Digital Officer in May 2020. Prior to joining the Company, Mr. Masood served as Chief Digital Officer of BJ’s Wholesale Club from 2017 to 2020 and as Vice President, Customer Innovation Technology at Dick’s Sporting Goods from 2013 to 2017. |
| | | Lynda Markoe joined the Company as Executive Vice President, Chief People & Culture Officer in September 2020. Prior to joining the Company, Ms. Markoe held various leadership roles at J.Crew Group, Inc. since 2003, including serving as its Chief Administrative Officer and Global Head of Human Resources. Prior to that, Ms. Markoe was a human resources leader at Gap Inc. |
| | | Gregg Melnick has been Executive Vice President, Chief Stores Officer since May 2020. Mr. Melnick served as interim Chief Digital Officer of the Company from December 2019 to May 2020 and as Chief Operations Officer, Digital from 2018 to 2019. Prior to joining the Company in 2018, Mr. Melnick was President of Party City Holdings from 2014 to 2018. |
TABLE OF CONTENTS | approval, by non-binding vote, of the 2021 compensation paid to the Company’s NEOs | In accordance with the requirements of Section 14A of the Exchange Act, the Company is providing its shareholders the opportunity to cast an advisory vote on the compensation of its NEOs for fiscal 2021. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on the NEOs’ compensation. | The Board recommends a vote in favor of the following resolution: | “RESOLVED, that the compensation paid to the Company’s NEOs for fiscal 2021, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.” | This proposal is not binding upon the Company. However, the People, Culture and Compensation Committee, which is responsible for designing and administering the Company’s executive officer compensation program, values the opinions expressed by shareholders through this vote and considers the views provided by shareholders when making future compensation decisions for NEOs. The affirmative vote of the holders of a majority of the votes cast by our shareholders in person or represented by proxy and entitled to vote is required to approve this proposal. | The compensation framework for fiscal 2021 is based on our three design pillars, which are: (i) supporting our business transformation strategy; (ii) responding to shareholder views; and (iii) reflecting market-leading practices. While fiscal 2021 performance continued to be impacted by the COVID-19 pandemic, our primary objective has been to establish a compensation program that motivates our executive team to focus on our key strategic initiatives and shareholder value creation. The People, Culture and Compensation Committee supports the recommendation by the Board of a vote approving the fiscal 2021 executive compensation program. | We currently hold a say-on-pay vote annually, and the next say-on-pay vote is expected to occur at our 2023 Annual Meeting of shareholders. | | | | The Board recommends that the shareholders vote FOR the approval, by non-binding vote, of the 2021 compensation paid to the Company’s NEOs. |
TABLE OF CONTENTS message from the chair of our people, culture & compensation committee to our shareholders: Over the past several years, the People, Culture and Compensation Committee has dedicated extensive time and resources to develop an executive compensation framework to support the future of Bed Bath & Beyond Inc. Underlying our compensation design pillars that guided the development of this framework – supporting our business transformation strategy, responding to shareholder views and reflecting market-leading practices – is our core pay-for-performance philosophy. For fiscal 2021, we structured our compensation program specifically to drive change through our transformation as we transitioned from development to execution in year one of our multi-year strategy. As detailed in Mark and Harriet’s earlier letter, fiscal 2021 represented a challenging operational year for the industry, and for Bed Bath & Beyond Inc. While our team achieved certain critical strategic milestones that we believe lay the foundation for our long-term success, we could not overcome certain unforeseen macroeconomic challenges amidst internal operational deficits. Our performance did not meet expectations and we were disappointed in our near-term results. In adherence to our strict pay-for-performance philosophy, executive compensation in fiscal 2021 fell significantly below established target levels. We remain committed to directly linking pay to the achievement of financial targets aligned with our strategic goals and creating long-term shareholder value. The changes made to our compensation programs in 2021 to be more focused on critical drivers of success and more performance-oriented align with these objectives. In summary, decisions relating to fiscal 2021 executive compensation include: Selecting adjusted EBITDA (70% weighting) and comparable sales growth (30% weighting) as short-term incentive plan (STIP) performance metrics to focus our leadership team on driving results during the initial execution of our transformation priorities. We established performance goals in line with our aggressive annual financial plan, with target representing improvement over 2020 results. Increasing the weighting of our performance-driven long-term incentive (LTI) awards, resulting in an LTI mix of 60% PSUs and 40% RSUs versus 30% PSUs and 70% RSUs in fiscal 2020. Maintaining a heavy focus on relative total shareholder return (TSR) as a metric (50% weighting) for our PSUs to underscore the importance of measuring and gauging achievement versus our peers; however, we also added gross margin as a performance metric (50% weighting). The key metrics of our long-term transformation remain sales, gross margin, EBITDA and cash flow to drive value creation. Reflecting our financial performance in fiscal 2021, our incentive programs did not yield compensation rewards for our executive team. Specifically, performance against adjusted EBITDA and comparable sales goals under our STIP did not meet the minimum achievement level, resulting in a $0 payout. Our NEOs’ equity awards, which are granted in part to align executives’ pay with shareholder interests, were also impacted by stock price declines in fiscal 2021. Taking into account no bonus payout, current projections of our performance shares and the impact of stock price decline, realizable total direct compensation for our CEO was approximately 58% below the target total direct compensation established at the beginning of the year. We believe that recent say-on-pay results, combined with feedback received from shareholders during our 2021 engagement, demonstrate support for our approach to executive compensation and related governance policies and best practices. Given the stringent alignment of pay with performance in fiscal 2021, continued shareholder support, and the need to continue to focus our team on our strategic transformation, the People, Culture and Compensation Committee approved a consistent executive compensation structure for fiscal 2022. Consistent with the earlier references to the macroeconomic challenges we faced in fiscal 2021, the 2022 fiscal year-to-date period has shown considerable volatility across the consumer landscape. To support our pay-for-performance culture and drive sequential improvement amidst the unprecedented early-2022 environment, we continue to analyze the timing and measurement of performance metrics and goals to further align our executives’ compensation to performance and achievement of our goals. TABLE OF CONTENTS Our transformation strategy is people powered. To continue honoring our commitment to our hard-working associates and creating a culture where they can thrive, we changed our committee’s name in fiscal 2022 to the People, Culture and Compensation Committee. As part of our oversight responsibilities, we recently engaged in a dynamic review of our broad-based people strategies and programs, and we remain dedicated to providing opportunities for all associates to better service our customersthrive. On behalf of the People, Culture and Compensation Committee of the Board, we appreciate your continued support of Bed Bath & Beyond Inc.
| | | John E. Fleming
Chair, People, Culture and Compensation Committee |
TABLE OF CONTENTS people, culture and compensation committee report The directors named below, who constitute the People, Culture and Compensation Committee, have submitted the following report for inclusion in creating web orders, comparing products,this Proxy Statement. The People, Culture and reading product reviews. Select financial highlights:
Net sales of $12.1 billion increased approximately 1.9% or approximately 2.3%Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on a constant currency basis.
Comparable sales increased approximately 1%, or approximately 1.4% on a constant currency basis.
Comparable sales consummated through customer facing online websitesthis review and mobile applications increasedthe discussions with management with respect to the Compensation Discussion and Analysis, the People, Culture and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in excess of 25%.
Diluted EPS of $5.10, including $0.06 of net benefits from certain non-recurring items, including a favorable state audit settlement.
Generated $1.0 billionthis Proxy Statement for filing with the SEC and be incorporated by reference in net cash from operations and returned $1.1 billion to shareholders through share repurchase.
Subsequent to fiscal 2015, announced Board authorization of a quarterly dividend program, which will commence in fiscal 2016.
For more information regarding our fiscal 2015 financial performance, see ourthe Company’s Annual Report on Form 10-K for fiscal 2015 filed2021.
PEOPLE, CULTURE AND COMPENSATION COMMITTEE John E. Fleming, Chair
Jeffrey Kirwan
Ann Yerger TABLE OF CONTENTS compensation discussion & analysis (CD&A) Our NEOs
| | | Mark J. Tritton President and Chief Executive Officer since November 2019 | | |
| | | Gustavo Arnal Executive Vice President, Chief Financial Officer since May 2020 | | |
| | | Rafeh Masood Executive Vice President, Chief Customer Officer since November 2021 (Chief Digital Officer since May 2020) |
| | | John Hartmann Executive Vice President, Chief Operating Officer, and President, buybuy BABY, Inc. since May 2020 | | |
| | | Joe Hartsig Executive Vice President, Chief Merchandising Officer and President, Harmon Stores, Inc. since March 2020 | |
FISCAL 2021: YEAR ONE OF OUR STRATEGIC TRANSFORMATION | | With an entirely new leadership team and a clearly articulated strategy to rebuild and reimagine our Company, we began year one of our multi-year transformational plan energized and ready to execute on our mission: to re-establish our authority and be the preferred omni-channel home destination driven by teams consistently delivering balanced durable growth. | Our fiscal 2021 financial results reflect the complexities of executing a comprehensive transformation during a turbulent operating environment. Macroeconomic challenges, such as the ongoing effects of COVID-19, as well as global supply chain disruptions, highlighted our ill-equipped legacy infrastructure. Lower available inventory to sell and accelerated cost inflation impacted our sales and gross margin performance significantly. | Although fiscal 2021 presented several significant operating and environmental challenges, the efforts of our senior executives and our extended teams resulted in the achievement of our 2021 transformational milestones, which are critical catalysts for future growth and profitability. We launched eight new owned brands with sales penetration that exceeded our goals, added key omnichannel delivery and pick-up solutions for our customers while leveraging our powerful digital and store connections, substantially completed our current store fleet optimization program by closing approximately 200 stores, and elevated our existing stores by continuing our remodel program by initiating 130 remodels (80 complete). Finally, we began the long-term, structural reformation of our supply chain and technological foundation through investments in key IT systems and the opening of our first of four planned regional distribution centers. | Despite the achievement of these strategic milestones on our long-term transformational roadmap, we fell short of our near-term financial targets, which is reflected in the year-end determinations of the People, Culture and Compensation Committee (referred to in this section as the “Committee”). For additional strategic highlights, see “fiscal 2021 highlights.” | Our primary goal for the fiscal 2021 compensation program was to incentivize and reward balanced, sustainable growth with key financial metrics directly aligned with our transformation strategy and driving long-term shareholder value. For the performance-based cash short-term incentive plan (STIP), the Committee approved aggressive adjusted EBITDA and comparable sales growth goals. For long-term incentives, as disclosed previously, the Committee approved a more highly performance-weighted mix of PSUs (60% weighting) and time-vested RSUs (40% weighting). The goals approved by the Committee for the fiscal 2021 PSUs incorporate our emphasis on expanding gross margin (50% weighting) and also continues to measure relative TSR (50% weighting) performance. The PSUs vest at the end of a three-year performance period (2021-2023), subject to continued employment and achievement of the performance goals. |
TABLE OF CONTENTS Upon review of goal performance under the STIP in April 2022, it was concluded that threshold achievement levels were not met and, accordingly, the Committee awarded no STIP payouts for fiscal 2021. Further, as of fiscal year-end, the value of the fiscal 2021 LTI awards had decreased 56% for our CEO due to the impact of stock price decline and current projections of our performance shares. Total realizable direct compensation for our CEO was approximately 58% below the target total direct compensation established at the beginning of the year. Consistent with our program design, we believe these incentive plan outcomes continue to demonstrate our compensation philosophy of strongly correlating pay with performance. | | | |
our 2021 executive compensation framework emphasis on pay-for-
performance The 2021 executive compensation program was designed to drive performance, recognize achievement of strategic and transformation objectives for the year, and motivate and retain our new leadership team. Our program emphasizes at-risk pay and is consistent with the SEC on April 26, 2016.compensation design pillars established by the Committee in fiscal 2019, which communicate our pay-for-performance compensation philosophy and state that our program should support our business transformation strategy, be responsive to shareholder views and reflect market-leading practices. For more information, see “how we design our compensation program” and “executive compensation program elements.” Total Direct Compensation (At Target) Shareholder Outreach—We Listened, Learned & RespondedTABLE OF CONTENTS
incentive plans aligned with our transformation goals We recognize
Fiscal 2021 Program Design. In fiscal 2021, we made several changes to our incentive plans to further link performance and execution of our transformation strategy. The structure of both the value of listeningshort- and long-term incentive plans were determined taking into account the viewsconsideration key strategic initiatives relating to our multi-year transformation, and, as always, increasing long-term shareholder value. It was of paramount importance to us to remain committed to our performance focus, update our incentive plan designs to align with our current strategic initiatives and motivate our leadership team. For more information about our incentive plans, including selection of metrics and setting of performance goals, see “annual cash incentive compensation” and “long-term equity incentive compensation.” | | | The STIP performance metrics for fiscal 2021 continued to focus on adjusted EBITDA (70% weighting) as the primary driver of performance. For our secondary metric, rather than focusing on digital sales growth and reduction in SG&A expense, which were fiscal 2020 STIP metrics during the onset of the COVID-19 pandemic, our new metric focuses on growth in comparable sales (30% weighting). We chose this metric because it reflects our strategic emphasis on accelerating omni-channel, top-line growth. The goals for the STIP were designed to be challenging with targets established based on our annual financial plan and in the mid-range of our initial, publicly communicated outlook at the beginning of the fiscal year. |
| | | Our fiscal 2021 LTI focused on a more performance- driven mix of LTI awards weighted more heavily toward performance-based PSUs (60% weighting) – as compared to fiscal 2020, where we temporarily weighted more heavily toward time-vested RSUs (70% weighting) during the first year of the COVID-19 pandemic and as we hired a new leadership team and built out the elements of our overall business transformation efforts in a volatile environment. While the pandemic continued to impact fiscal 2021 performance, we considered principal drivers of long-term, sustainable growth and prioritized our objective of aligning executive and shareholder interests. The fiscal 2021 PSUs are based on achievement of aggressive adjusted gross margin goals, as well as a continued emphasis on outperformance of our peer group through relative total shareholder return. |
*
| Adjusted EBITDA and adjusted gross margin are non-GAAP financial measures. See Appendix A for a reconciliation of GAAP to non-GAAP measures for fiscal 2021 used in this proxy statement. |
TABLE OF CONTENTS Fiscal 2022 Program Design. The structure of our shareholders. Building relationships withfiscal 2022 executive compensation program reflects our shareholders is an integralon-going commitment to pursue a compensation plan based on our pay-for-performance design pillars. Acknowledging strong shareholder support, the program structure for fiscal 2022 largely follows the same format as for fiscal 2021. Performance metrics for the short- and long-term incentive plans remain relatively the same except for the addition of a traffic metric as we continue to focus our leadership team on financial and operational goals tied to our foundational transformation initiatives. As part of our corporate governance practices. We conduct shareholder outreach throughout the year to ensure that management and the Board understand and consider the issues of importance to our shareholders and are able to consider them appropriately. On a regular basis, we also meet with shareholders and potential investors toCommittee’s ongoing review our operating and financial results.After last year’s Annual Meeting, at which the advisory vote on executive compensation was below our expectations, we continued our shareholder outreach program. We contacted our top twenty-five shareholders representing approximately 68% of our outstanding shares to solicit feedback and explain our strategy on corporate governance and executive compensation. Members of senior management and the Board met or spoke with shareholders representing approximately 50% of our shares.
Investor Relations is the primary contact for shareholder interaction with the Company. Investors can reach us at (908) 613-5820 or via email at janet.barth@bedbath.com.
Shareholder Feedback and Compensation Philosophy Guided Changes to Fiscal 2016 Compensation Program
Subsequent to our shareholder engagement following the 2015 Annual Meeting and after consideration of the feedback received from our shareholders, the Compensation Committee approved the following changes to the fiscal 2016 executive compensation program:
No increase in base salary of the Company’s CEO (third consecutivecompensation program, in consultation with our independent compensation consultant, the RSU portion of equity awards for fiscal 2022 were granted in the form of cash-settled RSUs rather than stock-settled RSUs to be good stewards of our share pool given the current remaining share availability under our equity compensation plan. Consistent with the earlier references to the macroeconomic challenges we faced in fiscal 2021, the 2022 fiscal year-to-date period has shown considerable volatility across the consumer landscape as many retailers have reported. To support our pay-for-performance culture and drive sequential improvement amidst the unprecedented early-2022 environment (in addition to our continuing navigation of COVID-19), we continue to analyze the timing and measurement of performance metrics and goals to further align our executives’ compensation to performance and achievement of our goals, including evaluating whether targets based on a half year plan may be appropriate given the significant challenges presented already during fiscal 2022.
people & culture oversight of nopeople & culture Emphasizing the importance of our associates to our people-powered strategy, we recently changed the name of the Committee and amended its charter to not only reflect the name change, but to expressly state its responsibilities relating to broad-based people and culture programs. In April 2021, the Committee engaged in a comprehensive review of our company-wide people strategy. This deep-dive discussion, led by our Chief People & Culture Officer, also included an analysis of DE&I, turnover and other key labor and talent metrics. The Committee also receives regular people and culture updates. PEOPLE AND CULTURE HIGHLIGHTS | At Bed Bath & Beyond Inc., we are committed to creating and sustaining a talent culture that attracts, retains and develops high performing teams who consistently deliver operational excellence and business results. We strive to create a work environment in which all associates feel at home and can thrive by ensuring they have the resources that supports their physical, mental, social, and emotional well-being. | | | | associate engagement & retention | | | | Our culture of listening and learning creates a platform for all associates to provide feedback, and an opportunity for us to focus on what matters most to them. In 2021, we engaged associates through our first enterprise-wide associate survey, resulting in more than 70% associate participation. We shared the results from the survey – including key themes, top strengths, priority areas and next steps – with our Board, senior management, and associates to continue the dialogue and respond to the feedback we heard through action plans and continuous learning. | | | | As a result of engagement feedback, we have begun to develop key programs and policies to support and retain our critical talent. This work includes associate benefits and workplace programs, including 100% paid parental leave, a flexible time off policy and dedicated wellness spaces in our corporate offices. We conducted listening circles in response to societal topics that arose throughout the year to provide a safe space for associates to share their experiences as well as provide ideas for how we can support them. | | | | associate development & training | | | | Maintaining and sustaining an engaging workplace culture that provides development opportunities for associates is a top priority for us. A key focus area is our performance management process that includes goals and objectives that drive business transformation while leveraging the individual strengths and talents of associates. |
TABLE OF CONTENTS | | | We are building comprehensive learning and development programs, which will include an expansion of our skill development programs and upskilling training courses designed to provide associates with technical and competency-based skills applicable across a range of career paths. Additionally, we have developed strategic partnerships with learning organizations to curate development content on daily tools and on-demand learnings. | | | | Our regional and district store leaders, as well as supply chain leaders, participate in a newly-launched Foundational Leadership Course, which supports their career development and provides them with the tools and resources needed to lead associates and create a strong culture in our stores and our Distribution/Fulfillment facilities. Our role framework, completed in 2021, provides the foundation for career path options which in addition to performance management, serves as to further clarify the development and advancement opportunities for associates. | | | | In addition, associates receive annual training on a variety of topics, which is targeted based on their roles and job function and focus on our commitment to high ethical standards and fostering a culture of honesty, integrity, and compliance. | | | | diversity, equity & inclusion | | | | We embrace diversity, equity, and inclusion (DE&I) and strive to model a culture of trust and accountability where all associates feel they belong. By building upon our recruitment, development, and promotion practices, we are committed to equitably distributing opportunities and achieving a workforce that reflects the world we live in and the customers we serve. We monitor the representation of women and racially or ethnically diverse associates at all levels of our organization and continue to make progress toward our 2030 goals of 50% female and 25% racial and ethnic diversity at each level. In 2021, we appointed a Chief DE&I Officer, implemented educational programming to increase awareness, empathy and understanding and launched several associate resource groups aimed at building community, providing a platform for meaningful discussion and advancing a culture of DE&I to create safe and supportive spaces for our associates.
| | | | | | | | *Data for our associates provided as of December 31, 2021 | | | | compensation & benefits | | | | To support associate recruitment and retention, we recently redesigned our total rewards program to provide incentives, recognition and benefit programs that reflect the changing needs of our associates. Our compensation packages include, but are not limited to, competitive wage rates, an annual short-term incentive program, long-term incentive program, a 401(k) plan with matching contributions, paid vacation and holidays, a flexible time off policy, health, dental and vision insurance, paid parental leave, disability insurance, life insurance, health savings and flexible spending accounts, free health and wellness subscriptions and support via an associate relief fund. Eligibility for, and the level of, benefits vary depending on associates’ full-time or part-time status, work location, role, and tenure. |
TABLE OF CONTENTS | | | associate health & safety | | | | The health and wellbeing of our customers and associates is one of our top priorities. We implement health, safety, and security programs and strive to maintain a safe and secure environment for our associates and customers. We tailor our programs to address potential risks in all our workplaces, from stores, distribution centers, and corporate offices, to business travel. This includes our safety and security standards and policies, emergency response and crisis management protocol and associate training related to the risks and exposures in their areas of responsibility. | | | | In response to the COVID-19 pandemic, we expanded our policies to include a new vaccination time off policy, and sick time policies as required by state and local law, associate rapid response programs with COVID-19 protocols and safety tips and a new store safety plan, which includes requirements with respect to masks, social distancing and cleaning measures, among others. We’ve also introduced other remote work benefits including a hybrid corporate office schedule and dedicated weekly focus time to create time to innovate. | | | | More information about our People efforts can be found in our 2021 ESG Report, which is available on our website at www.bedbathandbeyond.com. |
compensation governance practices We continue to evaluate and enhance our executive compensation program to reflect our pay-for-performance philosophy and consider governance practices that benefit all shareholders. TABLE OF CONTENTS *
| Adjusted EBITDA and adjusted gross margin are non-GAAP financial measures. See Appendix A for a reconciliation of GAAP to non-GAAP measures for fiscal 2021 used in this proxy statement. |
TABLE OF CONTENTS how we consider shareholder feedback say-on-pay | | | | At the 2021 Annual Meeting, our executive compensation program received advisory approval of approximately 93% of the shares voted. We believe the improvement in say-on-pay results over the last several years reflects the development by the Committee of a pay-for-performance philosophy and a framework that became the basis of our compensation design pillars. The Committee considers the results of the say-on-pay vote as part of its decision-making process and is committed to remain responsive to shareholder priorities, with the goal of earning consistent high levels of shareholder support.
| | FISCAL 2021 ENGAGEMENT | As part of our fiscal 2021 plans, we reached out to our top shareholders, representing the majority of our total shares outstanding, which group included index funds, hedge funds, public pension funds and actively-managed funds. The Chair of the Board, members of the Board and management participated in virtual and telephone meetings with the majority of our largest shareholders. We covered executive compensation, as well as other important topics, including strategy and performance, Board refreshment and ESG. The feedback received from shareholders was positive and supportive of our compensation program, including our pay-for-performance philosophy.
| Going forward, we plan to continue our shareholder and stakeholder outreach and maintain a regular cadence of two-way communication opportunities, as we continue to understand priorities from all perspectives. We also plan to launch a regular, ongoing governance outreach program overseen by our Board which includes engagement on executive compensation matters and other relevant topics. For more information about how we engage directly with shareholders, see “how we engage with and listen to our shareholders; how to communicate with us.” |
TABLE OF CONTENTS how our NEOs were paid in 2021 executive compensation program elements Our fiscal 2021 performance driven compensation program for the NEOs and certain other key executives included the following elements:
The Committee focuses primarily on the elements of total direct compensation, including base salary, STIP and long-term incentives, when structuring and assessing compensation for the leadership team. We aim to set target total direct compensation and related elements generally at the median range for our peer group, but also consider role and specific talent markets, individual performance and potential and internal equity. For more information on our peer group and benchmarking, see “our compensation decision-making process.” base salary Base salaries represent fixed cash compensation tied to the size, scope and complexity of each executive’s position and the depth of each executive’s experience. The Committee considered these factors in setting base salaries that would attract and retain executives leading the Company’s transformation. The Committee reviews base salaries for executives on an annual basis to determine whether such salaries remain appropriate. This annual review considers each individual executive’s performance, as well as the results of peer group benchmarking. Any approved adjustments generally become effective in April of the applicable fiscal year. As part of its annual review and benchmarking of base salaries with its independent compensation consultant, the Committee approved (i) a 2.5% merit-based increase for Mr. Tritton in recognition of his continued leadership driving our strategic transformation, successful recruitment of a distinguished executive leadership team, and balanced and focused decision-making during the pandemic and (ii) an 18% adjustment for Mr. Masood to close the competitive gap to market and recognize the growth in importance of this role over time. The increases became effective April 2021. short-term incentive compensation For fiscal 2021, the Committee continued the use of its performance-based cash STIP, which was implemented in 2020 to ensure a mix of short-term fixed and variable pay tied to aggressive, quantitative objectives. The fiscal 2021 metrics included adjusted EBITDA and comparable sales growth, both of which align with our near-term transformation priorities of driving top-and bottom-line growth, including through our omni-always approach and focus on assortment, as well as resetting our cost structure through store remodels and fleet optimization. TABLE OF CONTENTS The STIP provides for the calculation of award payouts as follows: The Committee approves annual target STIP awards expressed as a percentage of each NEO’s base salary. Initial STIP target opportunities were determined in connection with the hiring of each of our NEOs. As part of its annual review and benchmarking of total target direct compensation with its independent compensation consultant, the Committee approved an increase in CEOfiscal 2021 STIP target opportunity for Mr. Tritton from 150% to 175% of his base pay)salary, in part to reflect his demonstrated growth in the role, to continue to focus his energy and Co-Chairmen. Reduced CEOattention on the transformational journey in a more meaningful way and to reflect a competitive market position aligned with similarly situated peer executives in similar roles. The Committee also increased the STIP target opportunity for Mr. Masood from 70% to 80% in connection with his promotion to Chief Customer Officer.
Performance metrics for the fiscal 2021 STIP were determined by the Committee based on our key transformation priorities in year one of our three-year strategy. In connection with setting the threshold, target and maximum achievement goals for the STIP, the Committee worked closely with its independent compensation consultant and approved goals that it deemed to be challenging and that would require significant progress toward our strategic transformation milestones in order to be met. To enhance market competitiveness, and to reward for outsized performance, the Committee increased the maximum payout opportunity for the fiscal 2021 STIP from $19.6 million150% to $16.9 million, or by approximately 14%200%. Balancing its decision to widen the payout scale, the Committee also reduced the payout for threshold performance from 50% to 25%. ADJUSTED
EBITDA* | 3 | | EBITDA is a common metric used to assess operating performance, particularly for our peer retail companies. We have selected adjusted EBITDA (70%) because we believe it directly measures achievement against all of our strategic goals collectively, including sales growth, margin expansion and cost control. |
PROXY STATEMENT SUMMARY
Enhanced the rigor of and amended our Performance Stock Unit (PSU) performance-based equity plan as follows:
°COMPARABLE
SALES GROWTH | | Adjusted weighting | Comparable sales growth (30%) aligns with our strategy and therefore takes into account our revenue base after divestitures of one-yearnoncore banners and three-year performance goals from 75/25rightsizing of our store fleet. Additionally, due to 50/50, respectively, increasing the weightingimpact of COVID-19 and resulting store closures in the three-year goal.first quarter of fiscal 2020, the metric in fiscal 2021 was designed to measure comparable sales growth in the second through fourth quarters. Comparable sales is defined in our 2021 Annual Report on Form 10-K, which was filed with the SEC on April 21, 2022. |
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| Adjusted EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of GAAP to non-GAAP measures for fiscal 2021 used in this proxy statement. |
2022 proxy statement | Applied a more strict achievement threshold | | 51
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TABLE OF CONTENTS The fiscal 2021 STIP goals were based on our annual financial plan and in the mid-range of our initial, publicly communicated outlook at the beginning of the fiscal year. The target adjusted EBITDA goal established for PSUs subject to the three-yearSTIP required improved performance goalover fiscal 2020 results. Comparable sales growth, by increasingnature of the achievement percentage from 80-164% to 100-144%, to earn measure, requires year-over-year improvement. Achievement of maximum-level payouts for both goals required significantly exceeding the operating plans in place at the time the goals were approved. |
Following completion of the fiscal year, the Committee evaluated performance against the adjusted EBITDA and comparable sales growth goals and calculated the fiscal 2021 payout. As discussed above in the CD&A Summary, our performance did not meet threshold levels under the STIP. FISCAL 2021 STIP PERFORMANCE AND PAYOUT CALCULATIONS °*
| Adjusted EBITDA is a non-GAAP financial measure. See Appendix A for a reconciliation of GAAP to non-GAAP measures for fiscal 2021 used in this proxy statement. |
Based on the Committee’s certification of performance results, our NEOs did not receive any 2021 STIP payouts. long-term incentive compensation Our long-term incentive program is designed to focus our executives on increasing shareholder value, to reward their contributions to our sustainable, long-term growth and performance, and to attract and retain key talent. For 2021, the Committee approved long-term incentive grants for our NEOs, consisting of a mix of PSUs and time-vested RSUs. In determining the split between PSUs and RSUs, the Committee considered:
• the need to motivate and retain our entirely new leadership team as it leads the Company’s business transformation;
• emphasis on performance-based, at-risk pay; and
• the goal of aligning executive and shareholder interests.
The Committee will continue to evaluate LTI pay mix as our transformation progresses to ensure alignment between pay and performance. | | | Fiscal 2021 PSUs are earned based on three-year adjusted gross margin (50%) and three-year relative TSR (50%). Payouts for PSUs based on relative TSR are also subject to a Total Shareholder Return (TSR) “Regulator” to achievement thresholds of each performance goal, capping PSU awardsTSR “regulator” that caps award payouts at 100% of the target if the Company’sour TSR over the performance period is negative. | | | Time-vested RSUs vest ratably on the first, second and third anniversary of the date of grant, generally subject to the executive’s continued employment through such date |
The Committee also approved target long-term incentive award values for each NEO. These values are determined in connection with the benchmarking and setting of target total direct compensation and related compensation elements TABLE OF CONTENTS for each NEO, as contemplated in applicable employment agreements. The Committee approved a 10% adjustment to Mr. Tritton’s target value at grant for fiscal 2021 in order to further align to market and continue to reward for achievements of longer-term objectives of the business. For more information, see “executive compensation program elements.” FISCAL 2021 TARGET LTI VALUE Mark J. Tritton | | | $7,700,000 | John Hartmann | | | $3,500,000 | Gustavo Arnal | | | $1,937,500 | Joseph Hartsig | | | $1,750,000 | Rafeh Masood | | | $1,137,500 |
Mr. Masood received an additional LTI award in connection with assuming his new position as Chief Customer Officer. This equity grant was structured consistently with the fiscal 2021 awards, including mix of PSUs (60% weighting) and RSUs (40% weighting), performance metrics, vesting conditions and goals. For more information, see “fiscal 2021 NEO compensation decisions.” 2021 PSUs – grants The Committee selected adjusted gross margin and relative TSR as the performance metrics, with equal weighting, for the 2021 PSUs and established: (i) for adjusted gross margin, aggressive threshold, target and maximum performance goals and related payout percentages based on achievement; and (2) for relative TSR, the payout percentages based on achievement versus other peer retailers. As noted in our compensation design pillars, the peer group for performance comparisons is the same as the peer group used for benchmarking. To further enhance shareholder alignment, the Committee continued its past practice of including an element in the terms and conditions of the 2021 PSUs based on relative TSR that caps any payouts at target (regardless of relative performance) if our absolute TSR over the performance period is negative. ADJUSTED GROSS MARGIN* | Gross margin is a key component of our transformation strategy and reflects achievement across all our critical drivers, including digital growth, owned brand penetration, focus on cost and sourcing savings and optimizing our costs of fulfillment. We believe that gross margin is critical to long-term value creation. | RELATIVE TSR | Relative TSR rewards shareholder returns and long-term performance relative to our peer group, and we believe also provides the right balance with our annual incentive metrics that focus on near-term strategic priorities. The risk of any excessive payouts in the event we are not delivering value to our shareholders is controlled by the cap on payouts at target in the event absolute TSR over the performance period is negative. |
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| Adjusted gross margin is a non-GAAP financial measure. See Appendix A for a reconciliation of GAAP to non-GAAP measures for fiscal 2021 used in this proxy statement. |
We set challenging threshold, target and maximum adjusted gross margin goals, with target alignment to our three-year transformation objectives. The payout scale for PSUs based on adjusted gross margin ranges from 50% (threshold) to 200% (maximum). | We require TSR performance above the 50th percentile of our peer group to payout at target (55th percentile). We believe this performance hurdle is higher than typical market practice and reflects robust goal-setting. For the TSR-based PSUs, the Committee changed the 25% (threshold) to 150% (maximum) payout scale used in fiscal 2020 to 25% (threshold) to 200% (maximum) for fiscal 2021, to align with market practice and our pay-for-performance culture. The Committee also focuses on carefully and thoughtfully identifying our peer group, including retailers with business characteristics similar to ours and companies of varying sizes in terms of revenue and market capitalization. |
2022 proxy statement | Adjusted | | 53
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TABLE OF CONTENTS 2019 PSUs – payouts In connection with Mr. Tritton’s appointment as CEO, he received several inducement and make-whole awards (to replace certain awards forfeited when he resigned from his prior employer). These awards included a make-whole PSU award with a value at grant of $3,500,000 vesting on November 4, 2021 (2019 PSUs). The 2019 PSUs were based on two-year performance tests relating to the development of our rigorous transformation strategy, including specific objectives and goals relating to same-store sales, EBIT growth, talent management, expense reduction and margin increase, and regular achievement updates to the Board. Following certification by the Committee that the performance goals were achieved, Mr. Tritton vested in 273,735 shares on November 4, 2021, with a value of $5,459,645. retirement and other benefits The NEOs generally are entitled to the same retirement and other benefits offered to all Bed Bath & Beyond associates. The cost of these benefits constitutes a small percentage of each NEO’s total compensation. Key benefits include paid vacation, premiums paid for short- and long-term disability insurance, a matching contribution to the NEO’s 401(k) plan account and payment of a portion of the NEO’s premiums for healthcare and basic life insurance. We do not provide any pension or retirement benefits, other than the 401(k) plan, or any nonqualified deferred compensation plans. We generally have provided our leadership team with certain perquisites, including an automobile allowance and an annual financial planning benefit. The Committee believes such limited perquisites are reasonable and consistent with our overall objective of attracting and retaining talented NEOs. See the “all other compensation” column in the Summary Compensation Table for further information regarding these benefits and perquisites, and the “potential payments upon termination or change in control” table for information regarding termination and change in control payments and benefits. fiscal 2021 NEO compensation decisions The following provides fiscal 2021 summary compensation information for each of our continuing NEOs. Pay mix for each NEO represents fiscal 2021 total direct compensation, including actual STIP payout of $0 and target LTI value. For more information, see “employment agreements and potential payments upon termination or change in control.” | | | Mark J. Tritton
president and chief executive officer
We entered into an employment agreement with Mr. Tritton in connection with his appointment as President and CEO in November 2019. The terms and conditions of this agreement were designed to establish a competitive compensation framework that aligns with our compensation design pillars. Mr. Tritton’s fiscal 2021 compensation consisted of the elements described below. | | | |
| | | base salary | | | $1,230,000 annually | | | | | | | STIP | | | No STIP bonus awarded for fiscal 2021
• Target STIP opportunity: 175% of base salary | | | | | | | LTI | | | $7,700,000 target award value for fiscal 2021 | | | | | | | other awards | | | No other awards granted in 2021
For more information about outstanding awards, including inducement and make-whole awards granted in connection with Mr. Tritton’s appointment in 2019, see “outstanding equity awards at fiscal year end.” | | | | | | | tailored
perquisites | | | • Financial planning
• Automobile allowance | |
TABLE OF CONTENTS | | | John Hartmann
chief operating officer and president buybuy BABY
We entered into an employment agreement with Mr. Hartmann in connection with his appointment as Chief Operating Officer and President, buybuy BABY in May 2020. The terms and conditions of this agreement were designed to establish a competitive compensation framework that aligns with our compensation design pillars. Mr. Hartmann’s fiscal 2021 compensation consisted of the elements described below. | | | |
| | | base salary | | | $1,000,000 annually | | | | | | | STIP | | | No STIP bonus awarded for fiscal 2021
• Target STIP opportunity: 125% of base salary | | | | | | | LTI | | | $3,500,000 target award value for fiscal 2021 | | | | | | | other awards | | | No other awards granted in 2021
For more information about outstanding awards, including inducement and make-whole awards granted in connection with Mr. Hartmann’s appointment in 2020, see “outstanding equity awards at fiscal year end.” | | | | | tailored
perquisites | | | • Relocation assistance in connection with Mr. Hartmann’s relocation to the New York metropolitan area
• Automobile allowance | | | |
| | | Gustavo Arnal
chief financial officer
In connection with Mr. Arnal’s appointment as Chief Financial Officer in April 2020, we entered into an employment agreement with Mr. Arnal in April 2020. The terms and conditions of this agreement were designed to establish a competitive compensation framework that aligns with our compensation design pillars. Mr. Arnal’s fiscal 2021 compensation consisted of the elements described below. | | | |
| | | base salary | | | $775,000 annually | | | | | | | STIP | | | No STIP bonus awarded for fiscal 2021
• Target STIP opportunity: 85% of base salary | | | | | | | LTI | | | $1,937,500 target award value for fiscal 2021 | | | | | | | other awards | | | No other awards granted in 2021
For more information about outstanding awards, including inducement and make-whole awards granted in connection with Mr. Arnal’s appointment in 2020, see “outstanding equity awards at fiscal year end.” | | | | | | | tailored
perquisites | | | • Financial planning
• Automobile allowance | | | |
TABLE OF CONTENTS | | | Joseph Hartsig
chief merchandising officer and president Harmon Stores Inc.
We entered into an employment agreement with Mr. Hartsig in connection with his appointment as Chief Merchandising Officer and President, Harmon Stores Inc. in March 2020. The terms and conditions of this agreement were designed to establish a competitive compensation framework that aligns with our compensation design pillars. Mr. Hartsig’s fiscal 2021 compensation consisted of the elements described below. | | | |
| | | base salary | | | $700,000 annually | | | | STIP | | | No STIP bonus awarded for fiscal 2021
• Target STIP opportunity: 80% of base salary for fiscal 2021 | | | | LTI | | | $1,750,000 target award value for fiscal 2021 | | | | other awards | | | No other awards granted in 2021
For more information about outstanding awards, including inducement and make-whole awards granted in connection with Mr. Hartsig’s appointment in 2020, see “outstanding equity awards at fiscal year end.” | | | | tailored
perquisites | | | • Financial planning
• Automobile allowance |
| | | Rafeh Masood
chief customer officer
We entered into an employment agreement with Mr. Masood in connection with his appointment as Chief Digital Officer in May 2020, which was amended in connection with his promotion to Chief Customer Officer in November 2021. The terms and conditions of this agreement were designed to establish a competitive compensation framework that aligns with our compensation design pillars. Mr. Masood’s fiscal 2021 compensation consisted of the elements described below and reflect increases related to his promotion. | | | |
| | | base salary | | | $650,000 annually | | | | | | | STIP | | | No STIP bonus awarded for fiscal 2021
• Target STIP opportunity: 80% of base salary (increased from 70% in November 2021) | | | | | | | LTI | | | $1,137,500 target award value for fiscal 2021 | | | | | | | other awards | | | • One-time LTI award with a value of $350,000 consisting of 60% PSUs and 40% RSUs in connection with appointment to Chief Customer Officer. The PSUs and RSUs vest pursuant to the same terms as the PSUs and RSUs awarded to NEOs as part of the fiscal 2021 executive compensation program described above.
For more information about outstanding awards, including inducement and make-whole awards granted in connection with Mr. Masood’s appointment as Chief Digital Officer in 2020, see “outstanding equity awards at fiscal year end.” | | | | | tailored
perquisites | | | • Financial planning
• Automobile allowance | |
TABLE OF CONTENTS our compensation decision-making process role of the people, culture and compensation committee The Committee, which is comprised entirely of independent directors, reviews and establishes our management compensation and benefits philosophy, policies, plans and programs. In this role, the Committee is responsible for considering and determining all matters relating to the compensation of the CEO and other executive officers, including the NEOs, as well as administering and functioning as the committee that is authorized to make grants and awards of equity compensation to our NEOs. Pursuant to its charter, the Committee may form subcommittees and delegate its authority to any such subcommittee or to any designated officer of the Company as it deems appropriate, to the extent permitted by law or by applicable policies and rules of the Company. role of management Subsequent to the appointment of our new leadership team, meetings of the Committee have been regularly attended by our Chief People & Culture Officer and other members of our People & Culture management team. Our CEO also provides input as requested and, together with our CFO, contributes to the discussion of our internal operating budget and related calculation of goals for our incentive plans. independent consultants In fiscal 2021, the Committee engaged the services of an independent compensation consultant, Meridian Compensation Partners, LLC (Meridian). Meridian reports directly to the Committee and attended most meetings during the year. Meridian assisted with the development of competitive market data and benchmarking, helped the Committee design and implement our revised incentive compensation programs and provided information on trends and emerging best practices. Meridian has not served the Company in any other capacity except as consultant to the Committee. The Committee receives advice and assistance from the law firm of Winston & Strawn LLP. The Committee has concluded that no conflict of interest exists (or existed) that prevents (or prevented) Meridian or Winston & Strawn from being independent advisors to the Committee. benchmarking peer group Consistent with our compensation design pillars, the Committee established a single, updated and relevant peer group for setting total direct compensation levels and measuring relative performance. Until 2019, we relied on two peer groups: one group for compensation benchmarking and an expanded group for performance comparisons. In 2019, the Committee determined that having a single peer group would increase alignment between pay and performance, reduce complexity and increase transparency. This peer group was reaffirmed in 2020 and served as our peer group for fiscal 2021 compensation benchmarking. In October 2021, the Committee reassessed our peer group for fiscal 2022, based on a review by Meridian, and removed five companies due to size misalignment and/or non-standard pay practices. We continue to believe the peer group has an appropriate number and breadth of companies to support both purposes. The peer group consists primarily of retailers with business characteristics that make them similar to the Company. The Committee also considered various size parameters, including revenue and market capitalization. Based on the parameters reviewed, the following 22 companies (our Peer Group) were identified as competitors for business, talent or both. We aim to set target total direct compensation and related elements generally at the median range for our peer group, but also consider role and specific talent markets, individual performance and potential and internal equity. TABLE OF CONTENTS FISCAL 2021 PEER GROUP Advance Auto Parts, Inc. | | | Dollar Tree, Inc. | | | The Gap, Inc. | AutoZone, Inc. | | | Foot Locker, Inc. | | | The ODP Corporation | Bath & Body Works, Inc. | | | Kohl’s Corporation | | | The Michaels Companies, Inc. | Big Lots, Inc. | | | Macy’s, Inc. | | | Tractor Supply Company | Burlington Stores, Inc. | | | Nordstrom, Inc. | | | Ulta Beauty, Inc. | Dick’s Sporting Goods, Inc.. | | | O’Reilly Automotive, Inc. | | | Wayfair Inc. | Dillard’s Inc. | | | Ross Stores, Inc. | | | Williams-Sonoma, Inc. | Dollar General Corporation | | | | | | | | | | | | | | TO BE REMOVED FROM PEER GROUP FOR 2022: Dillard’s, Inc., Dollar General Corporation, Dollar Tree, Inc., The Michaels Companies, Inc., and Wayfair Inc. |
BED BATH & BEYOND COMPARED TO PEER GROUP Data sourced from S&P Capital IQ effective as of February 28, 2022. Revenue and number of associates data based on trailing twelve months. Market cap presented as of February 2022. The Committee reviews market data from compensation surveys to benchmark pay for executive officer positions when relevant Peer Group data are not available. additional compensation information impact of accounting and tax considerations The Committee considers various accounting and tax implications of cash, equity-based and other compensation. When determining the amounts of equity-based awards to be granted, the Committee examines the accounting cost associated with the grants. Under ASC 718, grants of stock options, PSUs and other equity-based awards result in an accounting charge for the Company equal to the fair value of the awards being granted. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallows a federal income tax deduction for compensation in excess of $1 million in any taxable year paid to certain covered executive officers. There is limited transitional relief for “qualified performance-based compensation” and certain other items of compensation that were in place before November 2, 2017. While the Committee generally considers this limit when determining executive compensation, the Committee reserves the discretion to decide that it is appropriate to exceed the limitation on deductibility so we have the flexibility to attract and retain talented executives and to ensure those executives are TABLE OF CONTENTS compensated in a manner that is consistent with the best interests of the Company and our shareholders. Interpretations of and changes in the tax laws and other factors beyond the Committee’s control also may affect the deductibility of compensation. employment agreements We have entered into employment agreements with our NEOs that set forth generally the elements of compensation discussed above and provide for termination payments in qualifying termination scenarios. We believe that it is in the best interests of the Company and its shareholders to enter into these employment arrangements as they provide a level of certainty to the Company and our executives on their fixed compensation and termination entitlements. For more information, see “employment agreements and potential payments upon change in control.” policy on the recovery of incentive compensation We have a stand-alone Compensation Recoupment Policy regarding the recovery of incentive compensation applicable to current and former senior officers. The Compensation Recoupment Policy is a stand-alone policy to underscore the importance of these principles and generally provides that we will seek to recoup incentive-based cash and equity compensation paid or awarded to current and former senior officers, where (i) there has been a restatement of the Company’s financial results or there was an error in the calculation of the achievement of applicable performance goals, which should have resulted in no performance-based award or a lower payment relating to such performance or (ii) the Board determines in good faith that the executive engaged in conduct detrimental to the Company (including fraud causing financial or reputational harm, commission of a felony, or material breach of restrictive covenants). The full policy is available in the Governance Documents section of our Investor Relations website available at www.bedbathandbeyond.com. The Committee continues to monitor the issuance of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to incentive compensation recoupment and will amend our Compensation Recoupment Policy to the extent necessary to comply with any such regulations. policies prohibiting hedging and pledging We do not permit executive officers to hedge the Company’s securities, and we also restrict their ability to pledge the Company’s securities. Additional detail regarding the Company’s anti-hedging and pledging policies can be found above under the heading “Anti-Hedging and Anti-Pledging Policies.” compensation risk assessment In March 2021, the Committee performed a risk assessment of our compensation programs, which included an analysis of the risk associated with our executive compensation program conducted by the Committee’s independent compensation consultant. In its review, the Committee considered the balance between pay components, measures of performance, magnitude of pay, pay caps, plan time horizons and overlapping performance cycles, program design and administration and other features that are designed to mitigate risk (such as stock ownership guidelines and a Compensation Recoupment Policy). Following its review, the Committee, with confirmation by the independent compensation consultant, determined that our compensation practices and policies do not create risks that are reasonably likely to have a material adverse effect on the Company. TABLE OF CONTENTS executive stock ownership guidelines We encourage our executives to own our common stock so that they share the same long-term investment risk as our shareholders. Our stock ownership guidelines, recently enhanced in 2020, require all executive officers, including our NEOs to maintain an ongoing and substantial investment in our common stock. The guidelines are based on multiples of base salary, varying by role, as follows: MINIMUM STOCK OWNERSHIP REQUIREMENT 6x
BASE SALARY | | | 3x
BASE SALARY | | | | | | 2x
BASE SALARY | Chief Executive Officer | | | Chief Financial Officer | | | Chief Stores Officer | | | Chief Legal Officer | | | | Chief Operating Officer | | | Chief Customer Officer | | | Chief People and Culture Officer | | | | Chief Merchandising Officer | | | Chief Growth Officer | | | |
All covered individuals must hold 50% of the net after-tax shares they receive in connection with the Company’s compensation programs or pursuant to such individuals’ employment agreements until their ownership requirement is met; Once the covered individual satisfies the ownership requirement, he or she is considered in compliance as long as such covered individual’s eligible holdings do not decline below the number of shares held when he or she first met the applicable ownership guideline; and The price used to determine compliance with the guidelines will be the 20-day trading average at each fiscal year-end. The Committee evaluates compliance with this policy on an annual basis. Once an executive satisfies the ownership guideline as of a measurement date, they will be considered in compliance regardless of share price fluctuations or an increase in base salary, as long as their holdings remain at or above the number of shares held at the time they first met the ownership guideline. As of the end of fiscal 2021, all of the Company’s executives subject to the policy owned shares in excess of the applicable guideline or were in compliance with the retention requirement described above. TABLE OF CONTENTS summary compensation table for fiscal 2021, fiscal 2020 and fiscal 2019 The following table sets forth information concerning the compensation of the Company’s NEOs for the last three completed fiscal years (except with regard to Messrs. Arnal, Hartmann and Hartsig, who had not yet joined the Company in fiscal 2019 and consequently, have information included for fiscal 2021 and fiscal 2020 only, and Mr. Masood, who was not an NEO for fiscal 2020 or fiscal 2019 and, consequently, has information included for fiscal 2021 only). Mark J. Tritton(6)
President and Chief Executive Officer | | | 2021 | | | 1,225,385 | | | 0 | | | 8,351,225 | | | 0 | | | 199,012 | | | 9,775,622 | | | 2020 | | | 1,144,615 | | | 710,000 | | | 6,931,834 | | | 2,700,000 | | | 1,440,503 | | | 12,926,952 | | | 2019 | | | 346,154 | | | 375,000 | | | 11,632,199 | | | 750,000 | | | 661,045 | | | 13,764,398 | Gustavo Arnal(7)
Executive Vice President, Chief Financial Officer | | | 2021 | | | 775,000 | | | 0 | | | 2,101,371 | | | 0 | | | 37,094 | | | 2,913,465 | | | 2020 | | | 611,058 | | | — | | | 2,740,375 | | | 988,125 | | | 310,841 | | | 4,650,399 | John Hartmann(8)
Chief Operating Officer and President, buybuy BABY | | | 2021 | | | 1,000,000 | | | 0 | | | 3,796,011 | | | 0 | | | 545,649 | | | 5,341,660 | | | 2020 | | | 750,000 | | | 687,500 | | | 6,635,377 | | | 1,473,214 | | | 103,553 | | | 9,649,644 | Joseph Hartsig(9)
Executive Vice President, Chief Merchandising Officer, and President, Harmon Stores Inc. | | | 2021 | | | 700,000 | | | 70,000 | | | 1,897,993 | | | 0 | | | 208,798 | | | 2,876,790 | | | 2020 | | | 635,385 | | | 260,000 | | | 2,556,051 | | | 420,000 | | | 61,974 | | | 3,933,410 | Rafeh Masood(10)
Executive Vice President, Chief Customer Officer | | | 2021 | | | 634,615 | | | 192,500 | | | 1,551,564 | | | 0 | | | 273,693 | | | 2,652,372 |
(1)
| Except as otherwise described in this Summary Compensation Table, salaries to NEOs were paid in cash in fiscal 2021, fiscal 2020 and fiscal 2019, and increases in salary were effective in April for fiscal 2021 for Messrs. Tritton and Masood. Messrs. Arnal, Hartmann and Hartsig did not have salary increases in fiscal 2021. None of our NEOs had salary increases in fiscal 2020. |
(2)
| The value of stock awards represents their respective total fair value on the date of grant calculated in accordance with ASC 718, without regard to the estimated forfeiture related to service-based vesting conditions, and in the case of PSUs, is based on the performance conditions applicable to such PSUs being achieved at the target payout level, which was determined to be the probable outcome as of the grant date. All assumptions made in the valuations are contained and described in Note 15 to the Company’s consolidated financial statements in the Company’s Form 10-K for fiscal 2021. Stock awards are rounded up to the nearest whole share when converted from dollars to shares. The amounts shown in the table reflect the total fair value on the date of grant and do not necessarily reflect the actual value, if any, that may be realized by the NEOs. |
(3)
| The value of stock awards consists of (i) PSU and RSU awards granted in fiscal 2021 to Messrs. Tritton, Arnal, Hartmann, Hartsig and Masood, (ii) PSU and RSU awards granted in fiscal 2020 to Messrs. Tritton, Arnal, Hartmann and Hartsig and (iii) a PSU award (the “Tritton Make-Whole PSU Award”) and RSU awards (the “Tritton Sign-On RSU Award” and the “Tritton Make-Whole RSU Award”) granted in fiscal 2019 to Mr. Tritton as an inducement material to his entering into an employment agreement and commencing employment with the Company. |
The fair value of the PSU awards that have not yet been certified is reported at 100% of target, which is the estimated outcome of performance conditions associated with the PSU awards on the grant date. If the Company achieves the highest level of performance for the PSU awards granted in fiscal 2021, then the fair value of such PSU awards would be $10,528,298, $2,649,156, $4,785,599, $2,392,774 and $1,943,207 for Messrs. Tritton, Arnal, Hartmann, Hartsig and Masood, respectively. If the Company achieves the highest level of performance for the PSU awards granted in fiscal 2020, then the fair value of such PSU awards would be $3,051,466, $844,608, $1,525,738 and $762,874 for Messrs. Tritton, Arnal, Hartmann and Hartsig, respectively. The performance metrics for Mr. Tritton’s PSU awards granted in fiscal 2019 did not provide for performance above 100% of the target. The vesting of the Tritton Sign-On RSU Award and the Tritton Make-Whole RSU Award granted in fiscal 2019 is based solely on time. (4)
| For fiscal 2020, the People, Culture and Compensation Committee implemented a new cash short-term incentive plan (the “STIP”), which re-balanced the mix of short-term fixed and variable pay tied to aggressive, quantitative objectives. Following completion of the fiscal year, the People, Culture and Compensation Committee evaluated performance against the adjusted EBITDA, digital sales growth and reduction in adjusted SG&A goals, and calculated the fiscal 2020 payout. Based on the People, Culture and Compensation Committee’s |
TABLE OF CONTENTS certification of performance results, NEOs earned an actual bonus payout for fiscal 2020 of 150% achievement. For fiscal 2021 the People, Culture and Compensation Committee set performance objectives of adjusted EBITDA and comparable sales growth under the STIP. Based on the People, Culture and Compensation Committee’s certification of performance results, no bonus was paid under the STIP for fiscal 2021. (5)
| Includes, inter alia, dividends or dividend equivalents on equity-based awards based on the amounts paid to all shareholders as of the record date for each dividend declared. For Mr. Tritton in fiscal 2021, the All Other Compensation column, includes (i) car allowance of $47,489, which includes $40,566 for an amount not paid in prior periods due to an administrative error, (ii) company match of 401K contributions, and (iii) a payment for financial planning benefits. In fiscal 2021, total dividend income of $138,275 was paid to Mr. Tritton. The amount reflected for Mr. Arnal in fiscal 2021 includes (i) car allowance of $27,094, and (ii) a payment for financial planning benefits. The amount reflected for Mr. Hartmann in fiscal 2021 includes (i) payment for his relocation assistance benefits of $275,884, (ii) $219,419 in gross-up payments to reimburse applicable taxes resulting from relocation expenses that were imputed as income to him, including federal, state and FICA taxes, (iii) car allowance of $42,653, and (iv) company match of 401K contributions. The amount reflected for Mr. Hartsig in fiscal 2021 includes (i) payment for his relocation assistance benefits of $86,888, (ii) $69,105 in gross-up payments to reimburse applicable taxes resulting from relocation expenses that were imputed as income to him, including federal, state and FICA taxes, (iii) car allowance of $26,489, (iv) company match of 401K contributions, (v) a payment for financial planning benefits, and (vi) a dividend payment intended to vest in FY 2022 that was inadvertently paid in FY 2021 due to an administrative error discovered after such payment vested and would otherwise have been payable to Mr. Hartsig. The amount reflected for Mr. Masood in fiscal 2021 includes (i) payment for his relocation assistance benefits of $121,146, (ii) $113,240 in gross-up payments to reimburse applicable taxes resulting from relocation expenses that were imputed as income to him, including federal, state and FICA taxes, (iii) car allowance of $26,721, (iv) company match of 401K contributions, and (v) a payment for financial planning benefits. |
(6)
| Mr. Tritton commenced employment as President and Chief Executive Officer of the Company, effective as of November 4, 2019. With respect to fiscal 2020, Mr. Tritton earned a cash bonus under the STIP in the total amount of $2,700,000, which is reflected in Non-Equity Incentive Plan Compensation and was paid in fiscal 2021. Additionally, in accordance with his employment agreement, Mr. Tritton was entitled to a make-whole cash award in the amount of $710,000 (the “Tritton Make-Whole Cash Award”), which is reflected in the Bonus column. The amount of base salary paid to Mr. Tritton during fiscal 2020 reflects the portion of his annual base salary of $1,200,000 that was earned during fiscal 2020 and also reflects a 30% salary reduction between April 10 and May 16, 2020, in response to the COVID-19 pandemic. With respect to fiscal 2019, Mr. Tritton was entitled to a performance-based cash bonus under the terms of his employment agreement with the Company with the target bonus opportunity of $750,000. The People, Culture and Compensation Committee determined that Mr. Tritton exceeded the performance objective with respect to his bonus for fiscal 2019 and determined that it should be paid out at 150% of target, in the total amount of $1,125,000. Of this total amount, $750,000 is reflected in the Non-Equity Incentive Plan Compensation, and $375,000 is reflected in the Bonus column. |
(7)
| Mr. Arnal commenced employment as Executive Vice President, Chief Financial Officer of the Company, effective as of May 4, 2020. The amount reflected in the Salary column for Mr. Arnal during fiscal 2020 reflects the portion of his annual base salary of $775,000 that was earned during fiscal 2020. With respect to fiscal 2020, Mr. Arnal earned a cash bonus under the STIP in the total amount of $988,125, which is reflected in Non-Equity Incentive Plan Compensation column and was paid in fiscal 2021. |
(8)
| Mr. Hartmann commenced employment as the Chief Operating Officer and President, buybuy BABY, effective as of May 18, 2020. The amount reflected in the Salary column for Mr. Hartmann during fiscal 2020 reflects the portion of his annual base salary of $1,000,000 that was earned during fiscal 2020. With respect to fiscal 2020, Mr. Hartmann earned a cash bonus payout under the STIP in the total amount of $1,473,214 which is reflected in the Non-Equity Incentive Plan Compensation and was paid in fiscal 2021. In accordance with his employment agreement, Mr. Hartmann was also entitled to a make-whole cash award in the amount of $187,500 and a sign-on cash award in the amount of $500,000, both of which are reflected in the Bonus column. |
(9)
| Mr. Hartsig commenced employment as the Executive Vice President, Chief Merchandising Officer, and President, Harmon Stores Inc., effective as of March 4, 2020. The amount reflected in the Salary column for Mr. Hartsig during fiscal 2020 reflects the portion of his annual base salary of $700,000 that was earned during fiscal 2020, and also reflects a 30% salary reduction between April 10 and May 16, 2020 in response to the COVID-19 pandemic. With respect to fiscal 2020, Mr. Hartsig earned a cash bonus payout under the STIP in the total amount of $420,000, which is reflected in the Non-Equity Incentive Plan Compensation column and was paid in fiscal 2021. In accordance with his employment agreement, Mr. Hartsig was entitled to a retention bonus of $70,000 per quarter for a one year period for a total amount of $280,000. In fiscal 2021 and 2020, Mr. Hartsig received $70,000 and $210,000, respectively, related to this retention bonus and is reflected in the Bonus column. In addition, in fiscal 2020, Mr. Hartsig was entitled to a sign-on cash award of $50,000, which is also reflected in the Bonus column. |
(10)
| Mr. Masood has been Executive Vice President, Chief Customer Officer since November 2021 and joined the Company as Executive Vice President, Chief Digital Officer in May 2020. |
TABLE OF CONTENTS grants of plan based awards grants of non-equity incentive plan awards, restricted stock units and performance stock units for fiscal 2021 The following table sets forth information with respect to RSUs and PSUs awarded during fiscal 2021 to each of the NEOs under the 2012 Plan. Mark J. Tritton | | | 5/10/2021(1) | | | 538,125 | | | 2,152,500 | | | 4,305,000 | | | — | | | — | | | — | | | — | | | $— | | | 5/10/2021(5) | | | | | | | | | | | | 45,283 | | | 90,566 | | | 181,132 | | | | | | $2,315,320 | | | 5/10/2021(6) | | | | | | | | | | | | 22,642 | | | 90,566 | | | 181,132 | | | | | | $2,948,829 | | | 5/10/2021(7) | | | | | | | | | | | | | | | | | | | | | 120,754 | | | $3,087,076 | Gustavo Arnal | | | 5/10/2021(1) | | | 164,688 | | | 658,750 | | | 1,317,500 | | | — | | | — | | | — | | | — | | | $— | | | 5/10/2021(5) | | | | | | | | | | | | 11,395 | | | 22,789 | | | 45,578 | | | | | | $582,601 | | | 5/10/2021(6) | | | | | | | | | | | | 5,697 | | | 22,788 | | | 45,576 | | | | | | $741,977 | | | 5/10/2021(7) | | | | | | | | | | | | | | | | | | | | | 30,385 | | | $776,793 | John Hartmann | | | 5/10/2021(1) | | | 312,500 | | | 1,250,000 | | | 2,500,000 | | | — | | | — | | | — | | | — | | | $— | | | 5/10/2021(5) | | | | | | | | | | | | 20,584 | | | 41,167 | | | 82,334 | | | | | | $1,052,434 | | | 5/10/2021(6) | | | | | | | | | | | | 10,292 | | | 41,166 | | | 82,332 | | | | | | $1,340,365 | | | 5/10/2021(7) | | | | | | | | | | | | | | | | | | | | | 54,888 | | | $1,403,212 | Joseph Hartsig | | | 5/10/2021(1) | | | 140,000 | | | 560,000 | | | 1,120,000 | | | — | | | — | | | — | | | — | | | $— | | | 5/10/2021(5) | | | | | | | | | | | | 10,292 | | | 20,583 | | | 41,166 | | | | | | $526,204 | | | 5/10/2021(6) | | | | | | | | | | | | 5,146 | | | 20,583 | | | 41,166 | | | | | | $670,182 | | | 5/10/2021(7) | | | | | | | | | | | | | | | | | | | | | 27,444 | | | $701,606 | Rafeh Masood | | | 5/10/2021(1) | | | 118,973 | | | 475,893 | | | 951,786 | | | — | | | — | | | — | | | — | | | $— | | | 5/10/2021(5) | | | | | | | | | | | | 6,690 | | | 13,379 | | | 26,758 | | | | | | $342,034 | | | 5/10/2021(6) | | | | | | | | | | | | 3,345 | | | 13,379 | | | 26,758 | | | | | | $435,620 | | | 5/10/2021(7) | | | | | | | | | | | | | | | | | | | | | 17,839 | | | $456,054 | | | 11/10/2021(8) | | | | | | | | | | | | 2,129 | | | 4,257 | | | 8,514 | | | | | | $92,930 | | | 11/10/2021(9) | | | | | | | | | | | | 1,065 | | | 4,257 | | | 8,514 | | | | | | $101,019 | | | 11/10/2021(10) | | | | | | | | | | | | | | | | | | | | | 5,676 | | | $123,907 |
(1)
| Represents the threshold, target and maximum amount of the fiscal 2021 non-equity incentive plan award granted to Messrs. Tritton, Arnal, Hartmann, Hartsig and Masood for fiscal 2021 pursuant to the STIP. Mr. Masood’s amounts have been prorated. See footnote (4) to the Summary Compensation Table in this Proxy Statement. |
(2)
| Number of shares when converted from dollars to shares, which number is rounded up to the nearest whole share. Amounts represent the threshold, target and maximum amounts for equity incentive plan awards with performance conditions for each NEO. |
(3)
| No option awards were granted to the NEOs in fiscal 2021. |
(4)
| Pursuant to the SEC rules, PSU and RSU awards are valued in accordance with ASC 718. See footnote (2) to the Summary Compensation Table in this Proxy Statement. The fair value of PSU awards is reported at 100% of target, which is the estimated outcome of performance conditions associated with the PSU awards on the grant date. |
(5)
| Represents an award of PSUs granted to the NEOs on May 10, 2021, under the Company’s 2012 Plan. Vesting of these PSUs granted to the NEOs depends on (i) the achievement of the Company’s Gross Margin Percentage, and, if the Gross Margin Percentage is achieved, (ii) the NEO’s continuous employment by the Company from the grant date until the third anniversary of the grant date. The awards are capped at 200% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting. |
(6)
| Represents an award of PSUs granted to the NEOs on May 10, 2021, under the Company’s 2012 Plan. Vesting of these PSUs granted to the NEOs depends on (i) the Company’s achievement of a three-year performance goal based on the Company’s Total Shareholder Return compared with the Company’s peer group as determined by the People, Culture and Compensation Committee of the Company’s Board |
TABLE OF CONTENTS of Directors, and, if the Total Shareholder Return goal is achieved, (ii) the NEOs’ continuous employment by the Company from the grant date until the third anniversary of the grant date. The awards are capped at 200% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting. (7)
| Represents an award of RSUs granted to the NEOs on May 10, 2021, under the Company’s 2012 Plan. The RSUs will vest in three equal annual installments beginning one year from the date of grant, provided that the NEO remains continuously employed by the Company from the grant date until the vesting periodsdate. |
(8)
| Represents an award of PSUs granted to Mr. Masood on November 10, 2021, under the Company’s 2012 Plan. Vesting of these PSUs granted to Mr. Masood depends on (i) the achievement of the Company’s Gross Margin Percentage, and, if the Gross Margin Percentage is achieved, (ii) Mr. Masood’s continuous employment by the Company from the grant date until the third anniversary of the grant date. The award is capped at 200% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting. |
(9)
| Represents an award of PSUs granted to Ms. Masood on November 10, 2021, under the Company’s 2012 Plan. Vesting of these PSUs granted to Mr. Masood depends on (i) the Company’s achievement of a three-year performance goal based on the Company’s Total Shareholder Return compared with the Company’s peer group as determined by the People, Culture and Compensation Committee of the Company’s Board of Directors, and, if the Total Shareholder Return goal is achieved, (ii) Mr. Masood’s continuous employment by the Company from the grant date until the third anniversary of the grant date. The award is capped at 200% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting. |
(10)
| Represents an award of RSUs granted to Mr. Masood on November 10, 2021, under the Company’s 2012 Plan. The RSUs will vest in three equal annual installments beginning one year from the date of grant, provided that the NEO remains continuously employed by the Company from the grant date until the vesting date. |
outstanding equity awards at fiscal year-end The following table sets forth information for each of the NEOs with respect to the value of all unvested RSUs and unvested PSUs as of February 26, 2022, the last day of fiscal 2021. Mark J. Tritton | | | 1,008,243(2) | | | $16,303,289 | Gustavo Arnal | | | 367,413(3) | | | $5,941,068 | John Hartmann | | | 831,727(4) | | | $13,449,026 | Joseph Hartsig | | | 300,837(5) | | | $4,864,534 | Rafeh Masood | | | 155,911(6) | | | $2,521,081 |
(1)
| Market value is based on the closing price of the Company’s common stock of $16.17 per share on February 25, 2022, the last trading day in fiscal 2021. |
(2)
| The amounts reflected for Mr. Tritton include (i) 120,754 RSUs that will vest as follows: (x) 40,252 RSUs vested on May 10, 2022 and (y) 40,251 RSUs that will vest on each of May 10, 2023 and 2024, subject, in general, to Mr. Tritton remaining in the Company’s employ through the vesting date, and to the terms, conditions and restrictions of the award agreement governing the grant; (ii) 494,450 RSUs that will vest on June 8, 2023, subject, in general, to Mr. Tritton remaining in the Company’s employ through the vesting date, and to the terms, conditions and restrictions of the award agreement governing the grant; (iii) 211,907 PSUs that will vest on June 8, 2023, subject to maintain a ratethe terms, conditions and restrictions of equal vesting over four years, if performance goalsthe award agreement governing the grant; and (iv) 181,132 PSUs that will vest on May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant. See footnote (4) to the Grants of Plan Based Awards table in this Proxy Statement. Unvested PSU awards are met.valued at target achievement. |
(3)
| The amounts reflected for Mr. Arnal include (i) 95,941 RSUs that will vest as follows: (x) 47,970 RSUs vested on May 4, 2022 and (y) 47,971 RSUs that will vest on May 4, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (ii) 30,385 RSUs that will vest as follows: (x) 10,129 RSUs vested on May 10, 2022 and (y) 10,128 RSUs will vest on each of May 10, 2023 and 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iii) 136,857 RSUs will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iv) 58,653 PSUs will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iv); and (v) 45,577 PSUs will vest on May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant. See footnote (4) to the Grants of Plan Based Awards table in this Proxy Statement. Unvested PSU awards are valued at target achievement. |
(4)
| The amounts reflected for Mr. Hartmann include (i) 54,888 RSUs that will vest as follows: 18,296 RSUs vested on May 10, 2022, and 18,296 RSUs will vest on each May 10, 2023, and May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; (ii) 341,327 RSUs that will vest as follows: (x) 170,663 RSUs vested on May 18, 2022 and (y) 170,664 RSUs will vest on May 18, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iii) 247,225 RSUs that will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iv) 105,954 PSU awards that will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; and (v) 82,333 PSU awards that will vest on May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant. See footnote (4) to the Grants of Plan Based Awards table in this Proxy Statement. Unvested PSU awards are valued at target achievement. |
TABLE OF CONTENTS (5)
| The amounts reflected for Mr. Hartsig include (i) 55,637 RSUs that will vest as follows: (x) 27,818 RSUs vested on March 4, 2022 and (y) 27,819 RSUs will vest on March 4, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (ii) 27,444 RSUs that will vest as follows: 9,148 RSUs vested on May 10, 2022, and 9,148 RSUs will vest on each of May 10, 2023, and May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iii) 123,613 RSUs that will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iv) 52,977 PSU awards that will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; and (v) 41,166 PSU awards that will vest on May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant. See footnote (4) to the Grants of Plan Based Awards table in this Proxy Statement. Unvested PSU awards are valued at target achievement. |
(6)
| The amounts reflected for Mr. Masood include (i) 17,839 RSUs that will vest as follows: (x) 5,947 RSUs vested on May 10, 2022 and (y) 5,946 RSUs will vest on each of May 10, 2023 and 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; (ii) 5,676 RSUs that will vest as follows: 1,892 RSUs will vest on each of November 10, 2022, 2023, and 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iii) 67,987 RSUs that will vest on June 8, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (iv) 29,137 PSU awards that will vest on June 08, 2023, subject to the terms, conditions and restrictions of the award agreement governing the grant; (v) 26,758 PSU awards that will vest on May 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant; and (vi) 8,514 PSU awards that will vest on November 10, 2024, subject to the terms, conditions and restrictions of the award agreement governing the grant. See footnote (4) and (6) to the Grants of Plan Based Awards table in this Proxy Statement. Unvested PSU awards are valued at target achievement. |
option exercises and stock vested option exercises and stock awards vested for fiscal 2021 The following table includes certain information with respect to the exercise of options and vesting of stock awards by NEOs during fiscal 2021. Mark J. Tritton(1) | | | 406,692 | | | $9,367,916 | Gustavo Arnal(2) | | | 47,971 | | | $1,181,526 | John Hartmann(3) | | | 170,664 | | | $4,295,613 | Joseph Hartsig(4) | | | 27,819 | | | $797,432 | Rafeh Masood(5) | | | 89,720 | | | $2,190,962 |
(1)
| Mr. Tritton acquired 406,692 shares in total on March 31, 2021 and November 4, 2021, upon the vesting of previously granted PSUs and RSUs. |
(2)
| Mr. Arnal acquired 47,971 shares in total on May 4, 2021, upon the vesting of previously granted RSUs. |
(3)
| Mr. Hartmann acquired 170,664 shares in total on May 18, 2021, upon the vesting of previously granted RSUs. |
(4)
| Mr. Hartsig acquired 27,819 shares in total on March 4, 2021, upon the vesting of previously granted RSUs. |
(5)
| Mr. Masood acquired 89,720 shares in total on May 11, 2021, upon the vesting of previously granted RSUs. |
FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTINGTABLE OF CONTENTS
employment agreements and potential payments upon termination or change in control employment agreements Each NEO has an employment agreement with the Company that provides for severance pay and other benefits upon a termination of his or her employment. For a complete description of payments due to each NEO upon termination of his or her employment with the Company, see “Potential Payments Upon Termination or Change in Control” below. Each NEO’s employment agreement provides for non-competition, non-solicitation, and non-interference during the term of employment and for a certain period thereafter. Mr. Tritton’s restricted period extends two years after separation from the Company; Mr. Hartmann’s restricted period is 18 months following termination; and Mr. Arnal’s, Mr. Hartsig’s, and Mr. Masood’s extends 12 months after termination. Each NEO employment agreement provides for confidentiality during the term of employment and surviving the end of the term of employment. potential payments upon termination or change in control The employment agreement of each NEO and certain of the plans in which the NEOs participate require the Company to pay compensation to the executives if their employment terminates. On April 20, 2022, as part of the Company’s annual review process that began in 2021, the People, Culture and Compensation Committee of the Company’s Board of Directors approved the adoption of an Executive Change in Control Severance Plan (the “Change in Control Plan”). This plan, similar to those of benchmarked peers, provides for enhanced cash severance to be paid to members of the Company’s executive leadership team and specific other employees as a result of certain events that would trigger a change in control of the Company, as defined in the Change in Control Plan, and based on a tier system. Mr. Tritton, as CEO, is a Tier I Executive and all other NEOs are Tier II Executives. Upon the occurrence of a termination of an NEO by us without Cause or by an NEO for Good Reason at any time three (3) months prior to a Change in Control or two (2) years following a Change in Control, such NEO would be entitled to the following: a cash severance payment equal to (a) two times (2x) in the case of a Tier I Executive, or (b) one and a half times (1.5x) in the case of Tier II Executives, the sum of the executive’s annual base salary and the executive’s target bonus, both as in effect immediately prior to the Change in Control; a prorated portion of the executive’s annual bonus for the period in which the termination date occurs, at target level of performance and paid at such time as other executives receive their bonuses; any equity or long-term compensation grant or award outstanding in accordance with the terms of the applicable compensation plan and award agreement; any Accrued Obligations; and continuation of an executive’s (and eligible dependents) health benefit coverage for (a) up to twenty-four (24) months for a Tier I Executive, or (b) up to eighteen (18) months for a Tier II Executive. The table below lists the estimated amount of compensation payable to each of Messrs. Tritton. Hartmann, Arnal, Hartsig and Masood in each termination situation using an assumed termination date and an assumed change in control date of February 26, 2022, the last day of fiscal 2021 and a price per share of common stock of $16.17 (the “Per Share Closing Price”), the closing per share price as of February 25, 2022, the last trading day of fiscal 2021. The salary and annual bonus otherwise payable to each NEO through February 26, 2022 are included in the Summary Compensation Table. TABLE OF CONTENTS employment agreement with Mr. Tritton The Board appointed Mark J. Tritton as the President and Chief Executive Officer of the Company, and in connection therewith, the Company entered into an employment agreement with Mr. Tritton (the “Tritton Employment Agreement”) on October 6, 2019. The Tritton Employment Agreement provides that in the event of a termination of Mr. Tritton’s employment due to his death or disability: the Company will pay Mr. Tritton any base salary that had accrued but had not been paid on or before the date of separation, any reimbursement due in accordance with the terms of the relevant employment agreement and any other vested benefits or vested amounts due and owed to the executive under the terms of any plan, program or arrangement of the Company (collectively, with respect to each applicable executive, the “Accrued Obligations”); and the Tritton Sign-On RSU Award and the Tritton Make-Whole RSU Award, to the extent not previously vested, will immediately vest in full and the Tritton Make-Whole PSU Award, to the extent not previously vested, will immediately vest in full at 100% of target level of performance (collectively, the “Tritton Make-Whole Award Acceleration”). The number of RSUs subject to the Tritton Sign-On RSU Award and the Tritton Make-Whole RSU Award were determined by dividing the grant values set forth in the employment agreement by the volume-weighted average closing price of a share of the Company’s common stock over the twenty trading day period ending immediately prior to Mr. Tritton’s start date (the “20-Day Volume-Weighted Average Determination”). The Tritton Employment Agreement provides that if the Company terminates Mr. Tritton’s employment without “Cause,” or in the event Mr. Tritton terminates with “Good Reason,” in each case, not in connection with a “change in control” (as defined in the 2018 Plan), then in addition to the Accrued Obligations and the Tritton Make-Whole Award Acceleration, Mr. Tritton will receive: (i) severance pay equal to the sum of (x) two times Mr. Tritton’s base salary and (y) his target annual bonus for the performance year in which the termination date occurs (payable over the 24 months following his termination date), (ii) any earned but unpaid annual bonus for the performance year prior to the year of termination, and (iii) up to 24 months of COBRA benefits at active employee rates. Severance pay will be paid in accordance with normal payroll; however, any amount due prior to the six months after termination of employment will be paid in a lump sum on the date following the six-month anniversary of termination of employment. If the Company terminates Mr. Tritton’s employment without “Cause,” or in the event Mr. Tritton terminates with “Good Reason,” in each case, within 30 days prior to, or two years following, a “change in control” (as defined in the 2018 Plan), then Mr. Tritton will receive the entitlements described in the preceding two sentences, except that the severance pay will be paid in lump sum, Mr. Tritton’s other outstanding time-based equity awards will immediately vest in full, and any other outstanding performance-based equity awards will vest, based on actual performance and prorated based on the number of days during the applicable performance period that Mr. Tritton remained employed by the Company, at the time that such awards would have otherwise vested had Mr. Tritton remained employed up to the vesting date. Mr. Tritton (or his estate or legal representative, in the event of Mr. Tritton’s death or disability) is required to deliver a formal release of all claims prior to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits under the Tritton Employment Agreement. In the event Mr. Tritton’s employment is terminated by the Company, and any compensation, payment or distribution by the Company would constitute an “excess parachute payment” as defined in Section 280G of the Code (“Section 280G”), payments would be reduced to the extent that such cutback would result in a better net after tax position for Mr. Tritton (as applicable to the relevant NEO, a “Cutback”). “Cause” is defined in the Tritton Employment Agreement as Mr. Tritton’s: (i) indictment for or plea of nolo contendere to a felony or commission of an act involving moral turpitude; (ii) commission of fraud, theft, embezzlement, self-dealing, misappropriation or other malfeasance against the business of the Company Group; (iii) indictment for or plea of nolo contendere to any serious offense that results in or would reasonably be expected to result in material financial harm, materially negative publicity or other material harm to any member of the Company Group; (iv) failure to perform any material aspect of his lawful duties or responsibilities for the Company or the Company Group (other than by reason of disability), and if curable, failure to cure in a timely manner; (v) failure to comply with any lawful written policy of the Company or reasonable directive of the Board, and in either case, if curable, failure to cure in a timely manner; (vi) commission of acts or omissions constituting gross negligence or gross misconduct in the performance of any aspect of his lawful duties or responsibilities; (vii) breach of any fiduciary duty owed to the Company Group; (viii) violation or breach of any restrictive covenant or any material term of the Tritton Employment Agreement, and, if curable, failure to TABLE OF CONTENTS cure in a timely manner; or (ix) commission of any act or omission that damages or is reasonably likely to damage the financial condition or business of the Company or materially damages or is reasonably likely to materially damage the reputation, public image, goodwill, assets or prospects of the Company. In addition, Mr. Tritton’s employment will be deemed to have terminated for “Cause” if, on the date Mr. Tritton’s employment terminates, facts and circumstances exist that would have justified a termination for Cause, to the extent that such facts and circumstances are discovered within four months after such termination. “Good Reason” is defined in the Tritton Employment Agreement as any of the following occurring without Mr. Tritton’s written consent: (i) a reduction of Mr. Tritton’s base salary, other than a reduction of less than ten percent in connection with a comparable decrease applicable to all senior executives of the Company; (ii) the Company’s relocation of Mr. Tritton’s place of employment by more than thirty-five miles; (iii) a material diminution in Mr. Tritton’s duties, authority or responsibilities; or (iv) a change in Mr. Tritton’s reporting line (such that he no longer reports directly to the Board) or in his title of Chief Executive Officer; provided, in each case, that a resignation will be with “Good Reason” only if Mr. Tritton provides the Company with written notice detailing the specific circumstances alleged to constitute “Good Reason” within sixty calendar days after the occurrence of such circumstances, the Company fails to cure such circumstances in all material respects within thirty days of receipt of notice, and Mr. Tritton actually resigns within one hundred and twenty days following the first occurrence of any grounds for “Good Reason”; provided further, that the removal of Mr. Tritton’s title as President and the subsequent appointment of a President who would report to Mr. Tritton would not constitute grounds for “Good Reason.” The Tritton Employment Agreement provides for non-competition and non-solicitation during the term of employment and for two years thereafter. The agreement also provides for non-disparagement and confidentiality during the term of employment and surviving the end of the term of employment.
employment agreement with Mr. Hartmann The Board appointed John Hartmann as Chief Operating Officer of the Company and President, buybuy BABY, and in connection therewith, the Company entered into an employment agreement with Mr. Hartmann (the “Hartmann Employment Agreement”) on April 1, 2020. The Hartmann Employment Agreement provides that in the event of a termination of Mr. Hartmann’s employment due to his death or disability: the Company will pay Mr. Hartmann (or his estate) any Accrued Obligations; the Hartmann Make-Whole RSU Award (the number of RSUs subject to which were calculated using the 20-Day Volume-Weighted Average Determination), to the extent not previously vested, will immediately vest in full as of the date of termination (the “Hartmann Make-Whole Award Acceleration”); and the Company will pay Mr. Hartmann (or his estate) any earned but unpaid annual bonus for a fiscal year occurring before the fiscal year in which the termination occurs. The Hartmann Employment Agreement provides that if the Company terminates Mr. Hartmann’s employment as a result of non-renewal of the employment term or otherwise without “Cause,” or in the event Mr. Hartmann terminates with “Good Reason,” then in addition to the Accrued Obligations and the Hartmann Make-Whole Award Acceleration, Mr. Hartmann will receive: (i) cash severance pay equal to one and a half times the sum of (x) Mr. Hartmann’s then-current base salary and (y) his then-current target annual bonus, payable over the 18 months following his termination date, (ii) any earned but unpaid annual bonus for the fiscal year prior to the fiscal year in which the termination occurs, and (iii) up to 78 weeks of COBRA benefits at active employee rates. Mr. Hartmann (or his estate or legal representative, in the event of Mr. Hartmann’s death or disability) is required to deliver a formal release of all claims prior to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits under the Hartmann Employment Agreement. In the event Mr. Hartmann’s employment is terminated by the Company, and any compensation, payment or distribution by the Company would constitute an “excess parachute payment” as defined in Section 280G, payments would be subject to the Cutback. “Cause,” for each of Messrs. Hartmann, Arnal, Hartsig and Masood, unless otherwise noted, is generally defined in their respective employment agreements as the executive’s: (i) indictment for or plea of nolo contendere to a felony or commission of an act involving moral turpitude; (ii) commission of fraud, theft, embezzlement, self-dealing, TABLE OF CONTENTS misappropriation or other malfeasance against the business of the Company Group; (iii) indictment for or plea of nolo contendere to any serious offense that results in or would reasonably be expected to result in material financial harm, materially negative publicity or other material harm to any member of the Company Group; (iv) failure to perform any material aspect of his lawful duties or responsibilities for the Company or the Company Group (other than by reason of disability), and if curable, failure to cure in a timely manner; (v) failure to comply with any lawful written policy of the Company or reasonable directive of the CEO or the Board, and in either case, if curable, failure to cure in a timely manner; (vi) commission of acts or omissions constituting gross negligence or gross misconduct in the performance of any aspect of his lawful duties or responsibilities; (vii) breach of any fiduciary duty owed to the Company Group; (viii) violation or breach of any restrictive covenant or any material term of the applicable employment agreement, and, if curable, failure to cure in a timely manner; or (ix) commission of any act or omission that damages or is reasonably likely to damage the financial condition or business of the Company or materially damages or is reasonably likely to materially damage the reputation, public image, goodwill, assets or prospects of the Company. In addition, the executive’s employment will be deemed to have terminated for “Cause” if, on the date the executive’s employment terminates, facts and circumstances exist that would have justified a termination for Cause, to the extent that such facts and circumstances are discovered within four months after such termination. “Good Reason,” for each of Messrs. Hartmann, Arnal, Hartsig and Masood, is generally defined in the their respective employment agreements as any of the following occurring without applicable executive’s written consent: (i) a reduction of the executive’s base salary, other than a reduction of less than ten percent in connection with a comparable decrease applicable to all senior executives of the Company; (ii) the Company’s relocation of the executive’s place of employment by more than thirty-five miles; (iii) a material diminution in the executive’s duties, authority or responsibilities; or (iv) a change in the executive’s reporting line (such that he or she no longer reports directly to the CEO or the Board); provided, in each case, that a resignation will be with “Good Reason” only if the executive provides the Company with written notice detailing the specific circumstances alleged to constitute “Good Reason” within sixty calendar days after the occurrence of such circumstances, the Company fails to cure such circumstances in all material respects within thirty days of receipt of notice, and the applicable executive actually resigns within one hundred and twenty days following the first occurrence of any grounds for “Good Reason.” The Hartmann Employment Agreement provides for non-competition and non-solicitation during the term of employment and for 18 months thereafter. The agreement also provides for non-disparagement and confidentiality during the term of employment and surviving the end of the term of employment. employment agreement with Mr. Arnal The Board appointed Gustavo Arnal Executive Vice President and Chief Financial Officer of the Company, and in connection therewith, the Company entered into an employment agreement with Mr. Arnal (the “Arnal Employment Agreement”) on April 24, 2020. The Arnal Employment Agreement provides that in the event of a termination of Mr. Arnal’s employment due to his death or disability: the Company will pay Mr. Arnal (or his estate) any Accrued Obligations; and the Arnal Sign-On RSU Award (the number of RSUs subject to which were calculated using the 20-Day Volume-Weighted Average Determination), to the extent not previously vested, will immediately vest in full as of the date of termination (the “Arnal Sign-On Award Acceleration”). The Arnal Employment Agreement provides that if the Company terminates Mr. Arnal’s employment as a result of non-renewal of the employment term or otherwise without “Cause,” or in the event Mr. Arnal terminates for “Good Reason,” then in addition to the Accrued Obligations and the Arnal Sign-On Award Acceleration, Mr. Arnal will receive: (i) cash severance pay equal to the sum of (x) Mr. Arnal’s then-current base salary and (y) his then-current target annual bonus, payable over the 12 months following his termination date, (ii) any earned but unpaid annual bonus for the fiscal year prior to the fiscal year in which the termination occurs, (iii) full vesting of any 2020 equity awards, (based on actual performance with respect to performance-based 2020 equity awards, and prorated for the number of days in the performance period before Mr. Arnal’s termination), and (iv) up to 52 weeks of COBRA benefits at active employee rates. Mr. Arnal (or his estate or legal representative, in the event of Mr. Arnal’s death or disability) is required to deliver a formal release of all claims prior to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits under the Arnal Employment Agreement. TABLE OF CONTENTS The Arnal Employment Agreement provides for non-competition and non-solicitation during the term of employment and for 12 months thereafter. The agreement also provides for non-disparagement and confidentiality during the term of employment and surviving the end of the term of employment. employment agreement with Mr. Hartsig The Board appointed Joseph Hartsig Executive Vice President, Chief Merchandising Officer of the Company and President, Harmon Stores Inc., and in connection therewith, the Company entered into an employment agreement with Mr. Hartsig (the “Hartsig Employment Agreement”) on February 26, 2020. The Hartsig Employment Agreement provides that in the event of a termination of Mr. Hartsig’s employment due to his death or disability: the Company will pay Mr. Hartsig (or his estate) any Accrued Obligations; the Hartsig Make-Whole RSU Award (the number of RSUs subject to which were calculated using the 20-Day Volume-Weighted Average Determination), to the extent not previously vested, will immediately vest in full as of the date of termination (the “Hartsig Make-Whole Award Acceleration”); the Company will pay Mr. Hartsig (or his estate) any earned but unpaid annual bonus for a fiscal year prior to the fiscal year in which the termination occurs; and The Company will pay Mr. Hartsig (or his estate) any portion of the Hartsig Retention Bonus that has not been paid as of the termination. The Hartsig Employment Agreement provides that if the Company terminates Mr. Hartsig’s employment as a result of non-renewal of the employment term or otherwise without “Cause,” or in the event Mr. Hartsig terminates for “Good Reason,” then in addition to the Accrued Obligations and the Hartsig Make-Whole Award Acceleration, Mr. Hartsig will receive: (i) cash severance pay equal to the sum of (x) Mr. Hartsig’s then-current base salary and (y) his then-current target annual bonus, payable over the 12 months following his termination date, (ii) any earned but unpaid annual bonus for the fiscal year prior to the fiscal year in which the termination occurs, (iii) if such termination occurs in the last 6 months of the fiscal year in which the termination occurs, a portion of the annual bonus for such fiscal year (based on actual performance and prorated for the number of days in the performance period before Mr. Hartsig’s termination), (iv) any portion of the Hartsig Retention Bonus that has not been paid as of the termination date, and (v) up to 52 weeks of COBRA benefits at active employee rates. Mr. Hartsig (or his estate or legal representative, in the event of Mr. Hartsig’s death or disability) is required to deliver a formal release of all claims prior to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits under the Hartsig Employment Agreement. In the event Mr. Hartsig’s employment is terminated by the Company, and any compensation, payment or distribution by the Company would constitute an “excess parachute payment” as defined in Section 280G, payments would be subject to the Cutback. The Hartsig Employment Agreement provides for non-competition and non-solicitation during the term of employment and for 12 months thereafter. The agreement also provides for non-disparagement and confidentiality during the term of employment and surviving the end of the term of employment. employment agreement with Mr. Masood The Board appointed Rafeh Masood Executive Vice President, Chief Digital Officer of the Company, and in connection therewith, the Company entered into an employment agreement with Mr. Masood on April 22, 2020, which was later amended to reflect his appointment to Executive Vice President, Chief Customer Officer on November 2, 2021 (collectively, the “Masood Employment Agreement”). The Masood Employment Agreement provides that in the event of a termination of Mr. Masood’s employment due to his death or disability: the Company will pay Mr. Masood (or his estate) any Accrued Obligations; the Masood Sign-on RSU Award (the number of RSUs subject to which were calculated using the 20-Day Volume-Weighted Average Determination), to the extent not previously vested, will immediately vest in full as of the date of termination (the “Masood Sign-on RSU Award Acceleration”); TABLE OF CONTENTS the Company will pay Mr. Masood (or his estate) any earned but unpaid annual bonus for a fiscal year prior to the fiscal year in which the termination occurs; and The Company will pay Mr. Masood (or his estate) any portion of the Masood Retention Bonus that has not been paid as of the termination. The Masood Employment Agreement provides that if the Company terminates Mr. Masood’s employment as a result of non-renewal of the employment term or otherwise without “Cause,” or in the event Mr. Masood terminates for “Good Reason,” then in addition to the Accrued Obligations and the Masood Sign-on RSU Award Acceleration, Mr. Masood will receive: (i) cash severance pay equal to the sum of (x) Mr. Masood’s then-current base salary and (y) his then-current target annual bonus, payable over the 12 months following his termination date, (ii) any earned but unpaid annual bonus for the fiscal year prior to the fiscal year in which the termination occurs, (iii) any portion of the Masood Retention Bonus that has not been paid as of the termination date, and (iv) up to 52 weeks of COBRA benefits at active employee rates. Mr. Masood (or his estate or legal representative, in the event of Mr. Masood’s death or disability) is required to deliver a formal release of all claims prior to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits under the Masood Employment Agreement. In the event Mr. Masood’s employment is terminated by the Company, and any compensation, payment or distribution by the Company would constitute an “excess parachute payment” as defined in Section 280G, payments would be subject to the Cutback. The Masood Employment Agreement provides for non-competition and non-solicitation during the term of employment and for 12 months thereafter. The agreement also provides for non-disparagement and confidentiality during the term of employment and surviving the end of the term of employment. PSU and RSU Award Agreements The award agreements applicable to the PSUs and RSUs held by our NEOs provide for accelerated vesting upon certain termination events, including in connection with a change in control (as defined in the 2018 Plan). Upon a termination due to death or disability (as defined in an applicable employment agreement or, if not there defined, the 2012 Plan), the RSUs will immediately vest in full, and upon a termination by the Company without Cause or for Good Reason, subject to the NEO’s timely execution, delivery, and non-revocation of a release of claims in favor of the Company, a pro-rated portion of the RSUs will vest on the original vesting date. In the event of a termination by the Company without Cause or for Good Reason, in each case, within ninety (90) days prior to, or two (2) years following, a change in control, subject to the NEO’s timely execution, delivery, and non-revocation of a release of claims in favor of the Company, the RSUs will immediately vest in full. The award agreements applicable to the PSUs held by our NEOs provide that (i) upon a termination due to the NEO’s death, the awards will vest at target, (ii) upon a termination due to disability (as defined in an applicable employment agreement or, if not there defined, the 2012 Plan), the awards will remain outstanding and eligible to vest in full based on actual performance on the original vesting date, (iii) upon a termination by the Company without Cause or for Good Reason, subject to the NEO’s timely execution, delivery, and non-revocation of a release of claims in favor of the Company, the awards will remain outstanding and eligible to vest based on actual performance on the original vesting date, prorated for the portion of the period during which the NEO was employed and (iv) upon a termination by the Company without Cause or for Good Reason within ninety (90) days prior to, or two (2) years following, a change in control, subject to the NEO’s timely execution, delivery, and non-revocation of a release of claims in favor of the Company, the awards will immediately vest in full based on actual performance during the portion of the performance period ending on the date of such termination. TABLE OF CONTENTS Table and related footnotes follow: Mark J. Tritton | | | | | | | | | | | | | | | | Termination due to death or disability(5) | | | $— | | | $— | | | $16,303,289 | | | $— | | | $16,303,289 | Termination without Cause or with Good Reason(6) | | | $6,765,000 | | | $— | | | $7,792,242 | | | $31,984 | | | $14,589,226 | Change in Control + Termination(7) | | | $6,765,000 | | | $2,152,500 | | | $16,303,289 | | | $31,984 | | | $25,252,773 | Gustavo Arnal | | | | | | | | | | | | | | | | Termination due to death or disability(5) | | | $— | | | $— | | | $5,941,068 | | | $— | | | $5,941,068 | Termination without Cause or with Good Reason(6) | | | $1,433,750 | | | $— | | | $4,632,414 | | | $— | | | $6,066,164 | Change in Control + Termination(7) | | | $2,150,625 | | | $658,750 | | | $5,941,068 | | | $— | | | $8,750,443 | John Hartmann | | | | | | | | | | | | | | | | Termination due to death or disability(5) | | | $— | | | $— | | | $13,449,026 | | | $— | | | $13,449,026 | Termination without Cause or with Good Reason(6) | | | $3,375,000 | | | $— | | | $9,356,835 | | | $25,949 | | | $12,757,784 | Change in Control + Termination(7) | | | $3,375,000 | | | $1,250,000 | | | $13,449,026 | | | $25,949 | | | $18,099,975 | Joseph Hartsig | | | | | | | | | | | | | | | | Termination due to death or disability(5) | | | $— | | | $— | | | $4,864,534 | | | $— | | | $4,864,534 | Termination without Cause or with Good Reason(6) | | | $1,260,000 | | | $— | | | $2,823,176 | | | $15,288 | | | $4,098,464 | Change in Control + Termination(7) | | | $1,890,000 | | | $560,000 | | | $4,864,534 | | | $22,933 | | | $7,337,467 | Rafeh Masood | | | | | | | | | | | | | | | | Termination due to death or disability(5) | | | $— | | | $— | | | $2,521,081 | | | $— | | | $2,521,081 | Termination without Cause or with Good Reason(6) | | | $1,170,000 | | | $— | | | $1,106,917 | | | $17,300 | | | $2,294,217 | Change in Control + Termination(7) | | | $1,755,000 | | | $520,000 | | | $2,521,081 | | | $25,949 | | | $4,822,030 |
(1)
| If an NEO is terminated during the three (3) months preceding a Change in Control or two (2) years following, the severance would be paid out in a lump sum within 60 days of the termination date. If the termination is not in connection with a Change in Control, severance payments will be made in installments in accordance with the regular payroll payment schedule; provided that if severance payments are subject to Section 409A of the Code (“Section 409A”), certain payments may be delayed until six months following separation from the Company. |
(2)
| If an NEO is terminated during the three (3) months preceding a Change in Control or two (2) years following, the pro rata share of the NEO’s bonus, at target level, would be paid at such time as other executives receive their bonuses. |
(3)
| Represents the employer portion of COBRA continuation coverage at active employee rates. Upon a termination without Cause or for Good Reason, (i) Mr. Tritton would be entitled to 24 months of benefits continuation, (ii) Mr. Hartmann would be entitled to 18 months of benefits continuation, and (iii) Messrs. Hartsig and Masood would be entitled to 12 months of benefit continuation. Upon a termination without Cause or for Good Reason during the three (3) months preceding a Change in Control of two (2) years following, (i) Mr. Tritton would be entitled to 24 months of benefits continuation, (ii) Messrs. Hartmann, Hartsig and Masood would be entitled to 18 months of benefits continuation. Because Mr. Arnal has elected not to receive coverage under the Company’s health and welfare programs as of the last day of fiscal 2021, no amount would be payable or is reflected in respect of COBRA continuation coverage at active employee rates in the event of a termination of employment by Mr. Arnal as of the last date of fiscal 2021. |
(4)
| Assumes for Messrs. Tritton, Arnal, Hartmann, Hartsig, and Masood that no Cutback applies. |
(5)
| In the event of termination by reason of death or disability, outstanding 2020 and 2021 RSU awards will vest in full. In the event of disability, the outstanding 2020 and 2021 PSU awards will vest in full based on actual performance. For purposes of this analysis, the values above assume target performance. In the event of death, the outstanding 2020 and 2021 PSU awards will vest in full based on target performance. |
(6)
| Upon a termination without Cause or for Good Reason, (i) Mr. Tritton would become entitled to a severance payment equal to two times the sum of his base salary and his target fiscal 2021 annual bonus, (ii) Mr. Hartmann would be entitled to a severance payment equal to one and one-half times the sum of base salary and target fiscal 2021 annual bonus, and (iii) Messrs. Arnal, Hartsig and Masood would become entitled to a severance payment equal to one time the sum of base salary and target fiscal 2021 annual bonus. With respect to equity compensation, the 2020 and 2021 outstanding RSU awards will vest pro-rata and the 2020 and 2021 PSU awards will vest based on actual performance and prorated based on the portion of the performance period the NEO remained employed by the Company, at the time that such awards would have otherwise vested had the NEO remained employed up to the vesting date. For purposes of this analysis, the values above assume target performance. Mr. Arnal’s 2020 outstanding RSU award will vest in full pursuant to the terms of his employment agreement. All of the above severance payments are subject to the execution and non-revocation of a release of claims. |
(7)
| Upon a termination without Cause or for Good Reason during the three (3) months preceding a Change in Control of two (2) years following, (i) Mr. Tritton would become entitled to a severance payment equal to two times the sum of his base salary and his target annual bonus and a pro rata share of his annual bonus, at target level, for the performance period in which the termination occurs and (ii) Messrs. Arnal, Hartmann, Hartsig and Masood would become entitled to a severance payment equal to one and one half times the sum of their base salary |
TABLE OF CONTENTS and target annual bonus and a pro rata share of their annual bonus, at target level, for the performance period in which the termination occurs. With respect to equity compensation, all of Mr. Tritton’s other outstanding time-based equity awards will immediately vest in full, and any other outstanding performance-based equity awards will vest, based on actual performance and prorated based on the portion of the performance period that Mr. Tritton remained employed by the Company, at the time that such awards would have otherwise vested had Mr. Tritton remained employed up to the vesting date. For the remaining NEOs, the 2020 and 2021 RSU awards will vest in full, while the 2020 and 2021 PSU awards will vest in full based on actual performance through the date of termination. For purposes of this analysis, the values above assume target performance. All of the above severance payments are subject to the execution and non-revocation of a release of claims. The Company has prepared the following information required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, regarding the ratio of the compensation of our CEO to that of the Company’s median associate, using certain permitted methodologies. The median associate at the Company, not counting the CEO, was determined by: using our total associate population (whether employed on a full-time, part-time, seasonal or temporary basis), which as of February 26, 2022, the Company’s fiscal year end, includes approximately 32,000 associates (of which more than 62% were part-time and more than 90% were hourly), comprised of approximately 30,000 US associates and approximately 2,000 non-US associates; and using payroll records as of February 26, 2022, the Company’s fiscal year end. The median associate was identified using total cash compensation, which, for this purpose, included base salary, bonus and commissions, per payroll records for the twelve months ended February 26, 2022 and pay for any permanent full-time and part-time associates (whether salaried or hourly) who were not employed for the full fiscal year was annualized. The individual identified as the median associate is a part-time hourly associate working in a Bed Bath & Beyond store receiving a total annual compensation for fiscal 2021 of $18,652. The identification of the median associate was influenced by the Company having a workforce significantly composed of part-time, hourly store associates. The compensation of the Company’s CEO for fiscal 2021 as reported in the Summary Compensation Table was $9,775,622. The ratio of the annual total compensation of the Company’s CEO to that of the median associate is estimated to be 524:1. This estimate was calculated in a manner consistent with the applicable SEC rules and guidance, based upon the payroll and employment records of the Company. The rules and guidance applicable to this disclosure permit a variety of methods and a range of reasonable estimates and assumptions to reflect compensation practices. Therefore, the pay ratio reported by other companies in similar industries may well not be comparable to the pay ratio reported above. In connection with the preparation of the foregoing disclosure, management has provided the People, Culture and Compensation Committee with the analysis of the CEO to median associate pay ratio and accompanying contextual narrative, for its information when setting executive pay decisions. TABLE OF CONTENTS security ownership of certain beneficial owners and management The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of May 16, 2022 by (i) each person or group of affiliated persons known by us to beneficially own more than 5% of our common stock; (ii) our NEOs; (iii) each of our directors and nominees for director; and (iv) all of our directors and executive officers as a group. Ownership data with respect to our institutional shareholders is based upon information publicly available as described in the footnotes below. The following table gives effect to the shares of common stock issuable within 60 days of May 16, 2022 upon the exercise of all options and other rights beneficially owned by the indicated shareholders on that date. Beneficial ownership is determined in accordance with Rule 13d-3 promulgated under Section 13 of the Exchange Act, and includes voting and investment power with respect to shares. Percentage of beneficial ownership is based on 79,886,442 shares of our common stock outstanding at May 16, 2022. Except as otherwise noted below, each person or entity named in the following table has sole voting and investment power with respect to all shares of our common stock that he, she or it beneficially owns. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083. BlackRock, Inc. | | | | | | 16,527,076(1) | | | 20.7% | FMR LLC | | | | | | 13,801,041(2) | | | 17.3% | The Vanguard Group | | | | | | 10,719,381(3) | | | 13.4% | RC Ventures LLC | | | | | | 9,450,100(4) | | | 11.8% | Mark J. Tritton | | | President and Chief Executive Officer and Director | | | 414,883(5) | | | * | Gustavo Arnal | | | Executive Vice President, Chief Financial Officer | | | 105,325(6) | | | * | John Hartmann | | | Executive Vice President, Chief Operating Officer and President, buybuy BABY, Inc. | | | 239,409(7) | | | * | Joseph Hartsig | | | Executive Vice President, Chief Merchandising Officer and President, Harmon Stores, Inc. | | | 40,667(8) | | | * | Rafeh Masood | | | Executive Vice President, Chief Customer Officer | | | 65,799(9) | | | * | Marjorie L. Bowen | | | Director | | | — | | | * | Harriet Edelman | | | Director | | | 63,789 | | | * | John E. Fleming | | | Director | | | 51,587 | | | * | Sue E. Gove | | | Director | | | 55,587 | | | * | Jeffrey A. Kirwan | | | Director | | | 33,455 | | | * | Shelly Lombard | | | Director | | | — | | | * | Benjamin L. Rosenzweig | | | Director | | | — | | | * | Virginia P. Ruesterholz | | | Director | | | 32,347 | | | * | Joshua E. Schechter | | | Director | | | 35,087 | | | * | Minesh Shah | | | Director | | | — | | | * | Andrea M. Weiss | | | Director | | | 25,096 | | | * | Mary A. Winston | | | Director | | | 107,434 | | | * | Ann Yerger | | | Director | | | 37,424 | | | * | All Directors and Executive Officers as a Group (22 persons) | | | | | | 1,373,527 | | | 1.7% |
*
| Less than 1% of the outstanding common stock of the Company. |
TABLE OF CONTENTS (1)
| Information regarding BlackRock, Inc. was obtained from a Schedule 13G filed with the SEC on February 7, 2022 by BlackRock, Inc. The Schedule 13G states that BlackRock, Inc. has sole voting power of 16,185,182 shares of common stock and sole dispositive power of 16,527,076 shares of common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(2)
| Information regarding FMR LLC was obtained from a Schedule 13G filed with the SEC on February 9, 2022 by FMR LLC. The Schedule 13G states that FMR LLC has sole voting power of 1,505,668 shares of common stock and sole dispositive power of 13,801,041 shares of common stock. The address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
(3)
| Information regarding The Vanguard Group was obtained from a Schedule 13G filed with the SEC on February 9, 2022 by The Vanguard Group. The Schedule 13G states that The Vanguard Group has shared voting power of 111,109 shares of common stock, sole dispositive power of 10,526,689 shares of common stock and shared dispositive power of 192,692 shares of common stock. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(4)
| Information regarding RC Ventures LLC was obtained from a Schedule 13D filed with the SEC on March 24, 2022 by RC Ventures LLC. The Schedule 13D states that RC Ventures LLC has sole voting power of 9,450,100 shares of common stock and sole dispositive power of 9,450,100 shares of common stock. The address of RC Ventures LLC is P.O. Box 25250, PMB 30427, Miami, Florida 33102-5250. |
(5)
| The shares reported as being owned by Mr. Tritton are owned by him individually. |
(6)
| The shares reported as being owned by Mr. Arnal are owned by him individually. |
(7)
| The shares reported as being owned by Mr. Hartmann include 170,663 RSUs that will vest within 60 days of the reporting date. |
(8)
| The shares reported as being owned by Mr. Hartsig are owned by him individually. |
(9)
| The shares reported as being owned by Mr. Masood are owned by him individually. |
TABLE OF CONTENTS frequently asked questions These proxy materials are delivered in connection with the solicitation by the Board of Directors of Bed Bath & Beyond Inc., a New York corporation, of proxies to be voted at our 2016the Annual Meeting of Shareholders and at any adjournment or adjournments. This year we have elected to take advantage of the SEC’s rule that allows us to furnish proxy materials to you online. We believe electronic delivery will expedite shareholders’ receipt of materials, while lowering costs and reducing the environmental impact of our 2022 Annual Meeting by reducing printing and mailing of full sets of materials. We mailed the Notice of Internet Availability of Proxy Statement,Materials (“Notice”) containing instructions on how to access our proxy statement and annual report online on or about June 1, 2022. If you would like to receive a paper copy of the proxy card and our 2015 Annual Report are being mailed starting May 31, 2016. materials, the Notice contains instructions on how to receive a paper copy. The information regarding stock ownership and other matters in this Proxy Statement is as of the record date, May 6, 2016,16, 2022, unless otherwise indicated. You may vote on the following proposals: election of teneleven directors to hold office until the Annual Meeting in 20172023 or until their respective successors have been elected and qualified (Proposal 1); ratification of the appointment of KPMG LLP as independent auditors for the fiscal year ending February 25, 2017 (“fiscal 2016”)2022 (Proposal 2); and consider the approval, by non-binding vote, of the 20152021 compensation paid to the Company’s Named Executive OfficersNEOs (commonly known as a “say-on-pay” proposal) (Proposal 3);
a shareholder proposal regarding proxy access bylaws (Proposal 4);
a shareholder proposal regarding an equity retention policy for the Company’s senior executives (Proposal 5);
a shareholder proposal requiring the Board of Directors to seek shareholder approval of certain future severance agreements (Proposal 6).
THE BOARD RECOMMENDS A VOTETHAT YOU VOTE: FOR THE ELECTION OF THE TEN DIRECTORS, the election of the eleven directors; FOR THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS, the ratification of the appointment of auditors; and FOR THE SAY-ON-PAY PROPOSAL,ANDAGAINSTTHE THREE SHAREHOLDER PROPOSALS. the say-on-pay proposal. Shareholders of record of the Company’s common stock at the close of business on May 6, 201616, 2022 are entitled to receive this notice and to vote their shares at the Annual Meeting. As of that date, there were 154,366,66279,886,442 shares of common stock outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting. Where will the Annual Meeting be held? This year’s Annual Meeting will be held virtually. We have scheduled the Annual Meeting to be held online at www.virtualshareholdermeeting.com/BBBY2022 on Thursday, July 14, 2022 at 10:00 A.M. Eastern Daylight Time. There will not be a physical location for the Annual Meeting and you will not be able to attend the meeting in person. Shareholders will be able to listen, vote and submit questions via the internet by visiting www.virtualshareholdermeeting.com/BBBY2022. Please retain the 16-digit control number included on your proxy card or in the voting instructions that accompanied your proxy materials as you will need this number to attend the meeting virtually. We have designed the virtual meeting to offer the same participation opportunities as an in-person meeting. TABLE OF CONTENTS Who is entitled to attend the Annual Meeting? All of our shareholders of record as of the close of business on the record date, or their duly appointed proxy holders, may attend the Annual Meeting online at www.virtualshareholdermeeting.com/BBBY2022. If you are not a shareholder of record but hold shares through a broker, bank or other nominee, you should contact your broker, bank, or other nominee as soon as possible, so that you can be provided with a control number and gain access to the meeting. How do I attend the Annual Meeting and submit questions or make comments? If you are a registered holder of the Company’s common stock, you do not need to register in advance to attend the Annual Meeting. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/BBBY2022, you must enter the control number found on your proxy card. If you hold your shares in street name, contact your broker, bank, or other nominee as soon as possible, so that you can be provided with a control number and gain access to the meeting. Shareholders may vote electronically and submit questions online while attending the Annual Meeting. If you wish to submit a question or make a comment during the Annual Meeting, you may log into the virtual meeting at www.virtualshareholdermeeting.com/BBBY2022 and type a question into the “Ask a Question” field and click “Submit.” This year, shareholders may also submit questions in advance of the meeting by visiting www.proxyvote.com and selecting the “Submit Questions” option. Please have your control number available as you will need it when accessing www.proxyvote.com. Questions that are substantially similar may be grouped and answered to avoid repetition. Questions or comments pertinent to meeting matters will be addressed during the Annual Meeting, subject to time constraints. Questions or comments that relate to proposals that are not properly before the Annual Meeting, relate to matters that are not proper subject for action by shareholders, are irrelevant to the Company’s business, relate to material non-public information of the Company, relate to personal concerns or grievances, are derogatory to individuals or that are otherwise in bad taste, are in substance repetitious of a question or comment made by another shareholder, or are not otherwise suitable for the conduct of the Annual Meeting as determined in the sole discretion of the Company, will not be answered. What if I have trouble accessing the Annual Meeting? Technical support will be available by phone to address any technical difficulties beginning 15 minutes before the start time of the Annual Meeting and will remain available until the meeting has ended. The phone numbers for contacting technical support will be posted on the log-in page for the virtual meeting at www.virtualshareholdermeeting.com/BBBY2022. The Company encourages you to use the electronic means available to you to vote your shares. How you vote will depend on how you hold your shares of Bed Bath & Beyond Inc. common stock. TABLE OF CONTENTS If your shares are registered directly in your name with Bed Bath & Beyond Inc.’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those shares, and these proxy materials arethe Notice is being sent directly to you. If you hold restricted stock under the Company’s 2012 Incentive Compensation Plan, you are also considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to vote by proxy.proxy through any of the below methods. | | | | | | | www.proxyvote.com | | | 1-800-690-6903 | | | if you received a paper copy
of the proxy materials
Vote Processing,
c/o Broadridge, 51 Mercedes
| | | |  |  |  |
Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person.online at www.virtualshareholdermeeting.com/BBBY2022. However, for those who will not be voting at the Annual Meeting, in person, your final voting instructionsproxy must be received by no later than 11:59 p.m.P.M. Eastern Daylight Time on June 30, 2016.FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING
Beneficial Owner Most shareholders of Bed Bath & Beyond Inc. hold their shares through a stockbroker, bank or other nominee, rather than directly in their own name. If you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker on how to vote. Your broker or nominee has enclosed a voting instruction form for you to use in directing the broker or nominee on how to vote your shares. If you hold your shares through a New York Stock Exchange member brokerage firm, such member brokerage firm has the discretion to vote shares held on your behalf with respect to the appointment of the Company’s auditors, but not with respect to any other proposal, as more fully described under “What is a broker ‘non-vote’?” .Yes. If you are the shareholder of record, you may revoke your proxy before it is exercised by doing any of the following: sending a letter to the Company stating that your proxy is revoked; signingdelivering a newlater-dated proxy and sending it to the Company;Company (either in writing, by telephone or over the internet); or
attending the Annual Meeting virtually and voting by ballot. Beneficial owners should contact their broker or nominee for instructions on changing their vote. How many votes must be present to hold the
A “quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the shareholders entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum but are not counted for purposes of determining any of the proposals to be voted on. TABLE OF CONTENTS How many votes are needed to approve the proposals? At the 2016 Annual Meeting, of Shareholders, a “FOR” vote by a majority of votes cast is required to (i) elect each nominee for the election of directors, todirector (Proposal 1), (ii) ratify the selection of KPMG LLP as the Company’s independent auditors for fiscal 20162022 (Proposal 2) and to(iii) approve, by non-binding vote, the say-on-pay proposal as well as Proposals 4, 5 and 6, the shareholder proposals.(Proposal 3). A “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of votes “AGAINST.” Abstentions and broker non-votes shall not constitute votes “FOR” or votes “AGAINST.” With respect to Proposal 1, the election of directors, if a nominee who is an incumbent director fails to receive a “FOR” vote by a majority of votes cast, then such nominee must immediately tender his or her resignation, and the Board will decide, through a process managed by the Nominating and Corporate Governance Committee (excluding from the process such nominee), whether to accept the resignation. In the event of such a situation, the Board intends to complete this process promptly after the Annual Meeting but no later than 90 days from the date of the certification of the election results. The Company will file a Form 8-K to disclose its decision and an explanation of such decision. An abstention is a properly signed proxy card which is marked “abstain.” What is a broker “non-vote”? A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under current applicable rules, Proposal 2 is a “discretionary” item upon which brokers that hold shares as nominee may vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the tenth day before the Annual Meeting. However, brokers that hold shares as nominee may not vote on behalf of the beneficial owners on the following proposals unless you provide voting instructions: Proposal 1, the election of directors,directors; and Proposal 3, the say-on-pay proposal, and Proposals 4, 5 and 6, the shareholder proposals.proposal. Therefore, if your shares are held by such nominee, please instruct your broker regarding how to vote your shares on each of these proposals. This will ensure that your shares are counted with respect to each of these proposals. What if I receive more than one proxy card and/or voting instruction card? This means that you have multiple accounts holding shares of the Company. These may include: accounts with our transfer agent; shares held by the administrator of our employee stock purchase plan; and accounts with a broker, bank or other holder of record. In order to vote all of the shares held by you in multiple accounts, you will need to vote the shares held in each account separately. Please follow the voting instructions provided on each proxy card to ensure that all of your shares are voted. Will any other matters be acted on at the
If any other matters are properly presented at the Annual Meeting or any adjournment, the persons named in the proxy will have discretion to vote on those matters. As of April 3, 2016,March 19, 2022, which is the date by which any proposal for consideration at the Annual Meeting submitted by a shareholder must have been received by the Company to be presented at the Annual Meeting, and as of the date of this Proxy Statement, the Company did not know of any other matters to be presented at the Annual Meeting. TABLE OF CONTENTS FAQs ABOUT THE 2016 ANNUAL MEETING AND VOTING
Who pays for this proxy solicitation? The Company will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person or by telephone or other means by directors or associates of the Company. The Company has engaged D.F. King & Co., Inc.,None of those directors or associates will receive special compensation for a fee to be determined,such services. We have retained Innisfree M&A Incorporated to assist in proxy solicitation for the solicitationAnnual Meeting at an estimated cost of proxies.$20,000 plus expenses. The Company will also reimburse brokerage firms and other nominees, custodians and fiduciaries for costs incurred by them in mailing proxy materials to the beneficial owners of shares held of record by such persons. Whom should I callcontact with other questions? If you have additional questions about this Proxy Statement or the Annual Meeting or would like additional copies of this document or our 20152021 Annual Report on Form 10-K, please contact: Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, NJ 07083, Attention: Investor Relations Dept., Telephone: (908) 613-5820.PROPOSAL 1—ELECTION OF DIRECTORS
Board Structure, Composition and Meetings
The Board of Bed Bath & Beyond Inc. consists of ten (10) directors. DirectorsEmail: ir@bedbath.com. These documents are elected annually at each annual meeting to serve until the next annual meeting or until their successors are duly elected and qualified, subject to their earlier death, resignation or removal. Each of the nominees currently serves as a director and was elected by the shareholders at the 2015 Annual Meeting. Biographical information and qualifications of the nominees for director are included below under “Board Nominees and Qualifications.”
The Board has adopted a policy regarding specific, minimum qualifications for potential directors. These factors, and others as considered useful by the Board and the Nominating and Corporate Governance Committee, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. The Company’s policies regarding director qualifications and skills are included on the Company’s website at www.bedbathandbeyond.com under the Investor Relations section.
Qualified candidates for membership on the Board will be considered without regard to race, color, creed, religion, national origin, age, gender, sexual orientation or disability. The Nominating and Corporate Governance Committee reviews and evaluates each candidate’s character, judgment, skills (including financial literacy), background, experience and other qualifications (without regard to whether a nominee has been recommended by the Company’s shareholders), as well as the overall composition of the Board, and recommends to the Board for its approval the slate of directors to be nominated for election at the annual meeting of the Company’s shareholders. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, the Committee believes that it is desirable that Board members represent a diversity of backgrounds, including gender and race, as well as diversity of viewpoints and experience.
The Board holds regular meetings each quarter and special meetings when necessary. The Board held five meetings during the fiscal year ended February 27, 2016 (“fiscal 2015”). Directors are expected to attend the Board meetings and meetings of committees of the Board on which they serve. The Company encourages, but does not require, the directors to attend the Company’s Annual Meeting of Shareholders. During fiscal 2015, all nominees for director attended more than 75% of the total number of meetings of the Board of Directors and committees on which he or she served. All of the Company’s directors attended the 2015 Annual Meeting of Shareholders.
The Board of Directors believes it is structured to provide oversight, direction and guidance to management. In doing so, the members of the Board bring to their service valuable expertise in a wide range of subject matter areas relevant to the Company in the execution of its strategy. These areas include:
• operations
• finance and financial reporting
• merchandising
• legal and regulatory compliance
| • technology
• international business
• real estate
• leadership in large, complex organizations
|
The Board, as part of its annual self-assessment and on an ongoing basis as appropriate, considers the skills and experience of its members in relation to the needs of the Company.
PROPOSAL 1—ELECTION OF DIRECTORS
Board Nominees and Qualifications
The Board of Directors, upon recommendation of its Nominating and Corporate Governance Committee, has nominated for reelection as directors, for a one year term expiring at the 2017 Annual Meeting, each of the current members of the Board.
Information concerning our directors as of the record date, and the key experience, qualifications and skills they bring to our Board is provided below.
| | Warren Eisenberg | Co-Founder and Co-Chairman | Mr. Eisenberg, 85, is a Co-Founder of the Company and has served as Co-Chairman since 1999. He has served as a director since 1971. Mr. Eisenberg served as Chairman from 1992 to 1999, and served as Co-Chief Executive Officer from 1971 to 2003. |
| | Leonard Feinstein | Co-Founder and Co-Chairman | Mr. Feinstein, 79, is a Co-Founder of the Company and has served as Co-Chairman since 1999. He has served as a director since 1971. Mr. Feinstein served as President from 1992 to 1999, and served as Co-Chief Executive Officer from 1971 to 2003.
Messrs. Eisenberg and Feinstein remain active as part of the senior leadership of the Company and bring to the Board, among other benefits, their experience in building the Company during its 45-year history and their overall experience in the retail industry, in each case for over 50 years.
|
| | Steven H. Temares | Chief Executive Officer | Steven H. Temares, 57, has served as Chief Executive Officer of the Company since 2003. He was President and Chief Executive Officer from 2003 to 2006 and was President and Chief Operating Officer from 1999 to 2003. Mr. Temares joined the Company in 1992 and has served as a director since 1999. Mr. Temares has been part of the leadership of the Company throughout its entire history as a public company. |
| | Dean S. Adler | Dean S. Adler, 59, is a Co-Founder and Chief Executive Officer of Lubert-Adler Partners, L.P., a private real estate investment firm. He has served as a Principal of Lubert-Adler Partners, L.P. for over ten years. Mr. Adler has been a director of the Company since 2001. Mr. Adler also previously has served as a director of Developers Diversified Realty Corp., a shopping center real estate investment trust, and Electronics Boutique, Inc., a mall retailer. Among other things, Mr. Adler has wide experience and involvement in commercial real estate including, in particular, retail real estate. |
| | Stanley F. Barshay | Stanley F. Barshay, 76, has served in a variety of senior executive positions at consumer healthcare companies. He served as Executive Vice President of Merck & Co. (formerly Schering-Plough Corporation) and President of its Consumer Health Care Division from November 2009 until his retirement on April 1, 2010; prior to November 2009, Mr. Barshay was Chairman, Consumer Health Care, at Schering-Plough Corporation since June 2003. For many years, Mr. Barshay served in a variety of senior executive positions at American Home Products (now part of Pfizer). Mr. Barshay has been a director of the Company since 2003. Among other things, Mr. Barshay brings to the Board specialized knowledge about the marketing of consumer goods, and in particular health and beauty care products. |
| | Geraldine T. Elliott | Geraldine T. Elliott, 59, is retired Executive Vice President, Strategic Advisor at Juniper Networks, Inc. She served as Executive Vice President and Chief Customer Officer at Juniper Networks, Inc. from March 2013 to February 2014 after prior roles as Executive Vice President and Chief Sales Officer, and as Executive Vice President of Strategic Alliances. Ms. Elliott joined Juniper in 2009 after seven years at Microsoft Corporation, where she held a series of senior executive positions, including Corporate Vice President of the company’s Industry Solutions Group, Worldwide Public Sector organization, and their North American Enterprise Sales region. Prior to joining Microsoft, Ms. Elliott spent 22 years at IBM Corporation, where she held executive and management positions in North America and Asia Pacific in sales, services, consulting, strategy development, and product management. She has been a director of the Company since February 2014. Additionally, Ms. Elliott is founder of Broadrooms.com, an informational resource for executive women serving on corporate boards in the U.S. She serves as an independent director on the boards of Whirlpool Corporation and Imperva, Inc. Among other things, Ms. Elliott brings to the Board her strategic understanding of transformative digital technologies, as well as her global marketing, sales, service and channel experience. |
PROPOSAL 1—ELECTION OF DIRECTORS
| | Klaus Eppler | Klaus Eppler, 85, has been a pensioned partner in the law firm of Proskauer Rose LLP, counsel to the Company, since 2001. Mr. Eppler was an equity partner of Proskauer Rose LLP from 1965 to 2001, when he ceased active partnership with responsibilities for clients. He has been a director of the Company since 1992 and has served as outside Lead Director since 2002. Mr. Eppler has served as a director of one or more retailers, including publicly traded retailers, continuously for over 35 years. Throughout his career as a practicing attorney, he represented numerous public companies or their boards of directors, including many retail companies. Among other things, Mr. Eppler brings to the Board his experience with a wide variety of retailers. |
| | Patrick R. Gaston | Patrick Gaston, 58, is Chief Executive Officer of Gaston Consulting. From January 2013 through February 2016, he was President of the Western Union Foundation, which supports education and disaster relief efforts throughout the world with the support of the Western Union Company. From January to December 2012, he was the Chief Executive Officer of Gastal Networks, LLC, a consulting firm specializing in corporate social responsibility initiatives. From January to December 2011, he served a one-year term as Executive in Residence and Senior Advisor with the Clinton Bush Haiti Fund to support the rebuilding efforts in Haiti. Until January 2011, Mr. Gaston was President of the Verizon Foundation since 2003. Prior to assuming that position, Mr. Gaston held a variety of management positions at Verizon Communications Inc. and its predecessors since 1984, including positions in operations, marketing, human resources, strategic planning and government relations. He has been a director of the Company since 2007. Among other things, Mr. Gaston brings to the Board experience with respect to very large and complex public companies as well as extensive experience with other local, national and international organizations through his non-profit work. |
| | Jordan Heller | Jordan Heller, 55, has been President of Heller Wealth Advisors LLC, a provider of financial advisory services, since 2008. Mr. Heller was previously a partner with The Schonbraun McCann Group LLP from 2005 to 2008. Prior to joining The Schonbraun McCann Group, Mr. Heller was a Managing Director at American Economic Planning Group. He has been a director of the Company since 2003. Mr. Heller is also a director of Equity One, Inc., a shopping center developer and owner. Among other things, Mr. Heller brings to the Board experience in and knowledge of various financial matters. He is a certified public accountant, chartered financial analyst and Certified Financial Planner™, and serves as an ‘‘audit committee financial expert’’ on the Company’s Audit Committee. |
| | Victoria A. Morrison | Victoria A. Morrison, 63, has been the Executive Vice President & General Counsel of Edison Properties, LLC, a diversified real estate company, since 2007. Ms. Morrison was previously practicing law as a partner in the law firm of Riker, Danzig, Scherer, Hyland & Perretti LLP since 1986. She has been a director of the Company since 2001. Among other things, Ms. Morrison brings to the Board experience in and knowledge of real estate law and transactions. |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF THE TEN NOMINEES AS DIRECTORS.
PROPOSAL 1—ELECTION OF DIRECTORS
Board Leadership
Messrs. Eisenberg, Feinstein and Temares function together as the senior leaders of the Company. Since Messrs. Eisenberg, Feinstein and Temares are not ‘‘independent directors’’ within the meaning of NASDAQ Listing Rule 5605(a)(2), the Board of Directors appointed an independent director to serve as the outside Lead Director. Mr. Eppler has served as the outside Lead Director since 2002. The general authority and responsibilities of the outside Lead Director are established by the Board of Directors. In that capacity, Mr. Eppler presides at all executive sessions of the independent directors, has the authority to call meetings of the independent directors, acts as a liaison between the members of the Board and management, functions as Secretary of the Board (including with respect to the proposal and maintenance of Board agendas and schedules for meetings), arranges for Board committee functions and acts as Secretary of Board committees and receives communications from the Company’s shareholders.
Director Independence
The Board of Directors, upon the advice of the Nominating and Corporate Governance Committee, has determined that Mses. Elliott and Morrison and Messrs. Adler, Barshay, Eppler, Gaston and Heller each are ‘‘independent directors’’ under the independence standards set forth in NASDAQ Listing Rule 5605(a)(2). This determination was based on the fact that each of these directors is not an executive officer or employee of the Company or has any other relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
The Board of Directors’ independence determination is analyzed annually in both fact and appearance to promote arms-length oversight. In making its independence determination this year, the Board of Directors considered relationships and transactions since the beginning of its 2015 fiscal year. The Board of Directors’ independence determinations included reviewing the following relationships, and a determination that the relationships and the amounts involved, in each case, were immaterial.
Mr. Eppler is a (non-equity) pensioned partner of Proskauer Rose LLP. In 2001, he ceased active partnership with responsibilities for clients. The firm receives fees for legal services from the Company which represented a fraction of 1% of the revenues of Proskauer Rose LLP.
Mr. Adler is a principal or executive officer of several private equity funds, each with broad commercial real estate holdings. Several funds have among their investments interests in entities which hold retail properties, and for a part of fiscal 2015, portions of two such properties were under lease to the Company or subsidiaries for the operation of four of the over 1,500 stores operated by the Company. Both properties were sold during 2015 and are no longer held by the funds. The interests of these funds in the rentals from the four stores represented a fraction of 1% of the rental income of the funds of which Mr. Adler is a principal or executive officer. In addition, Messrs. Eisenberg and Feinstein, the Company’s Co-Chairmen, have as part of their overall investment strategy investments in family limited partnerships, which partnerships hold passive interests in certain of such funds representing between approximately 1% and 3% of the interests of such funds.
Ms. Elliott previously served as an executive of Juniper Networks, which provides network services to a significant number of companies around the world, including the Company, which obtains such services on terms and pricing generally available to Juniper customers. Ms. Elliott retired from Juniper in 2014. Ms. Elliott is a member of the Board of Directors of Whirlpool Corporation, which manufactures a wide array of kitchen and other products, some of which are purchased by the Company at market rates for resale in the ordinary course of business. Ms. Elliott is also a member of the Board of Directors of Imperva, Inc., which provides some of the Company’s firewall technology either through a third party or directly, at terms and pricing generally available to Imperva customers.
The Company leases 15 stores (or less than 1% of the Company’s total stores) from Equity One, Inc. (or its affiliates), on whose Board of Directors Mr. Heller serves. The rental income from these stores represents approximately 2.3% of the total annual minimum rent received by Equity One.
As the Board determined, in each case, that the relationships and the amounts involved were immaterial, the Board does not believe that the relationships or transactions might reasonably impair the ability of the directors to act in the shareholders’ best interests.
PROPOSAL 1—ELECTION OF DIRECTORS
Committees of the Board of Directors
The Board has established standing committees to assist with performance of its responsibilities. These include: Audit, Compensation, and Nominating and Corporate Governance Committees. The Board has adopted written charters for each of these committees. The charters are available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com. All members of the Audit, Compensation and Nominating and Corporate Governance Committees are considered independent pursuant to applicable Securities and Exchange Commission (‘‘SEC’’) and NASDAQ rules, and all members of the Compensation Committee meet the “outside directors” requirements for purposes of applicable tax law.
AUDIT
The Audit Committee assists the Board in fulfilling its oversight responsibilities by (i) overseeing the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements, and (ii) reviewing the financial reports and other financial information provided by the Company to the public. In addition, the functions of this Committee have included, among other things, recommending to the Board the engagement or discharge of independent auditors, discussing with the auditors their review of the Company’s quarterly results and the results of their annual audit and reviewing the Company’s internal accounting controls. The Audit Committee held six meetings during fiscal 2015. The current members of the Committee are Messrs. Barshay, Gaston and Heller. The Board of Directors has determined that Mr. Heller is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.
COMPENSATION
The Compensation Committee assists the Board by (i) considering and determining all matters relating to the compensation of the Company’s Co-Chairmen, CEO and other executive officers (as defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and such other key executives as the Committee shall determine; (ii) administering and functioning as the Committee that is authorized to make grants and awards of equity compensation to executive officers and such other key executives as the Committee shall determine under the Company’s equity compensation plans; and (iii) reviewing and reporting to the Board on such other matters as may be appropriately delegated by the Board for the Committee’s consideration. The Committee has the authority to engage consultants and other advisors. The Compensation Committee held ten meetings during fiscal 2015. The current members of the Committee are Messrs. Adler and Barshay and Ms. Morrison.
NOMINATING AND CORPORATE GOVERNANCE
The Nominating and Corporate Governance Committee assists the Board by (i) reviewing and recommending changes in certain policies regarding the nomination of directors to the Board for its approval; (ii) identifying individuals qualified to become directors; (iii) evaluating and recommending for the Board’s selection nominees to fill positions on the Board; and (iv) recommending changes in the Company’s corporate governance policies to the Board for its approval. The Committee also oversees Board and management succession planning. The Committee’s policy is to identify potential nominees based on properly submitted suggestions from any source and has established procedures to do so. In addition, the Board may determine that it requires a director with a particular expertise or qualification and will actively recruit such a candidate. The Nominating and Corporate Governance Committee also has the authority to retain third party search firms to evaluate or assist in identifying or evaluating potential nominees. Shareholders wishing to propose a director candidate for nomination must provide timely notice of such nomination in accordance with the Company’s Amended By-Laws. The Nominating and Corporate Governance Committee held one meeting during fiscal 2015. The current members of the Committee are Messrs. Adler and Eppler and Ms. Morrison.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee was (i) during fiscal 2015, an officer or employee of the Company or any of its subsidiaries or (ii) formerly an officer of the Company or any of its subsidiaries.
None of our executive officers currently serves, or in fiscal 2015 has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
PROPOSAL 1—ELECTION OF DIRECTORS
Governance Guidelines and Policies; Additional Information
The Board has adopted Corporate Governance Guidelines that are available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com, where you may also find the Company’s policies on director attendance at the Annual Meeting and how shareholders can communicate with the Board of Directors. In addition, the Board has adopted a Policy of Ethical Standards for Business Conduct that applies to all directors and employees. This Policy also can be found in the Investor Relations section of the Company’s website noted above. The Company intends to post on this website any amendments to, or waivers from, the Code of Ethics that applies to the principal executive officer, financial officer and accounting officer.
The Company maintains directors and officers indemnification insurance coverage. This insurance covers directors and officers individually where exposures exist other than those for which the Company is able to provide indemnification. This coverage is from June 1, 2015 through June 1, 2016, at a total cost of approximately $251,000. The primary carrier is Arch Insurance Company. Although no assurances can be provided, the Company intends to obtain similar coverage from June 1, 2016 through June 1, 2017.
Compensation of Directors
The Director Compensation Table provides compensation information for each member of our Board of Directors during fiscal 2015, other than Warren Eisenberg, Leonard Feinstein and Steven H. Temares, each of whom is a Named Executive Officer of the Company and none of whom received any additional compensation for his service as a director of the Company.
Annual director fees for fiscal 2015 were $100,000. In addition, directors serving on standing committees of the Board of Directors were paid as follows: an additional $10,000 for Audit Committee members, an additional $7,500 for Compensation Committee members, and (other than for the Lead Director) an additional $5,000 for Nominating and Corporate Governance Committee members. The Lead Director received an additional $15,000 for acting in that capacity. Director fees are paid on a quarterly basis. Directors have the right to elect to receive all or 50% of their fees in stock. In addition to the fees above, each director received a grant of restricted stock under the Company’s 2012 Incentive Compensation Plan with a fair market value equal to $90,000 on the date of the Company’s 2015 Annual Meeting of Shareholders (calculated based on the average of the high and low trading prices on such date). Such restricted stock vested on the last day of fiscal 2015.
As described more fully below, the following table summarizes the annual compensation for the non-employee directors as members of our Board of Directors during fiscal 2015.
| | | | | | | | | Name | | Fees Earned or Paid in
Cash ($) | | Stock Awards
($)(2) | | Total ($) | | Dean S. Adler | | | 112,500 | (1) | | | 90,000 | | | | 202,500 | | | Stanley F. Barshay | | | 117,500 | | | | 90,000 | | | | 207,500 | | | Geraldine T. Eilliott | | | 100,000 | | | | 90,000 | | | | 190,000 | | | Klaus Eppler | | | 115,000 | | | | 90,000 | | | | 205,000 | | | Patrick R. Gaston | | | 110,000 | (3) | | | 90,000 | | | | 200,000 | | | Jordan Heller | | | 110,000 | | | | 90,000 | | | | 200,000 | | | Victoria A. Morrison | | | 112,500 | | | | 90,000 | | | | 202,500 | |
| (1) | This director fee was paid in shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay Directors Fees in Stock and the number of shares was determined (in accordance with the terms of such plan) based on the fair market value per share on the second business day following the announcement of the Company’s financial results for its fiscal third quarter, which was $46.23 per share, the average of the high and low trading prices on January 11, 2016. |
| (2) | Represents the value of 1,296 restricted shares of common stock of the Company granted under the Company’s 2012 Incentive Compensation Plan at fair market value on the date of the Company’s 2015 Annual Meeting of Shareholders ($69.47 per share, the average of the high and low trading prices on July 2, 2015), such restricted stock to vest on the last day of the fiscal year of grant provided that the director remains in office until the last day of the fiscal year. No stock awards were outstanding for each director as of February 27, 2016. |
| (3) | Fifty percent of this director fee was paid in shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay Directors Fees in Stock and the number of shares was determined (in accordance with the terms of such plan) as described in footnote (1). |
PROPOSAL 1—ELECTION OF DIRECTORS
Risk Oversight
As part of its oversight responsibility, the Board receives at least annually a report on the material risks facing the Company, which risks are identified through the Company’s Enterprise Risk Management (“ERM”) process. This report is presented to the Board by a committee of key executives representing legal, compliance, finance and internal audit, and results from a formal process where members of the committee meet with executives of each principal business function to identify and assess the significant risks in each such business function’s areas of responsibility. The committee then analyzes with those executives what risk mitigation efforts are or should be in place to eliminate or reduce such risks to acceptable levels, where possible, and then engages on these matters with the full Board of Directors. In the annual ERM report, areas of risk and mitigation efforts reviewed with the full Board in furtherance of its oversight responsibilities generally include: general business risks, such as economic forces, competition and weather; employment-related risks, such as recruitment and retention, succession, labor costs and associate relations; data security risks with respect to Company, associate and customer data; compliance risks associated with the range of legal, accounting, tax, and financial reporting systems under which the Company operates; supply chain risks, including disruption arising from political instability or labor disturbances, supplier financial stability and legal compliance; and compliance with a variety of product, labor, social, and environmental standards. The Board is updated on certain risks more frequently than annually, upon request or as developments warrant.
The ERM process and report to the Company’s Board of Directors also informs the more detailed Risk Factor disclosure in the Company’s annual report on Form 10-K, filed with the Securities & Exchange Commission.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE ELECTION OF THE TEN NOMINEES AS DIRECTORS.
PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 2016
Appointment of KPMG LLP
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed KPMG LLP to serve as our independent auditors for fiscal 2016, subject to ratification by our shareholders. The Company’s auditors have been KPMG LLP for every year that it has been a public company. The Audit Committee and the Board of Directors believe that the continued retention of KPMG LLP as our independent registered public accounting firm is in the best interest of the Company and our shareholders.
Representatives of KPMG LLP will be present at the Annual Meeting to answer questions. They will also have the opportunity to make a statement if they desire to do so. If the proposal to ratify their appointment is not approved, other certified public accountants will be considered by the Audit Committee. Even if the proposal is approved, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year if it believes that such a change would be in the best interest of the Company and its shareholders.
Fees Paid to KPMG LLP for Services and Products
The Audit Committee is responsible for the approval of the audit fee associated with the Company’s retention of KPMG LLP. The fees incurred by the Company for professional services rendered by and products purchased from KPMG LLP for fiscal 2015 and the fiscal year ended February 28, 2015 (“fiscal 2014”) were as follows:
| | | | | | | | | 2015 | | 2014 | | Audit Fees | | $ | 1,214,000 | | | $ | 1,214,000 | | | Audit-Related Fees | | | — | | | | 86,000 | | | Tax Fees | | | 61,000 | | | | 81,000 | | | All Other Fees | | | 3,000 | | | | 3,000 | | | | | | | | | | | | | | | $ | 1,278,000 | | | $ | 1,384,000 | |
In fiscal 2015 and fiscal 2014, in accordance with the SEC’s definitions and rules, “Audit Fees” included fees associated with the annual audit of the Company’s financial statements, the assessment of the Company’s internal control over financial reporting as integrated with the annual audit of the Company’s financial statements and the quarterly reviews of the financial statements included in its Form 10-Q filings. In fiscal 2014, “Audit-Related Fees” included fees for procedures required due to a Form S-3 registration statement and for a review of the accounting for the accelerated share repurchase program. In fiscal 2015 and fiscal 2014, “Tax Fees” included fees associated with tax planning, tax compliance (including review of tax returns) and tax advice (including tax audit assistance). The Audit Committee has concluded that the provision of the foregoing services is compatible with maintaining KPMG LLP’s independence. In addition to fees for audit and non-audit services, in fiscal 2015 and 2014, the Company paid a subscription fee for a KPMG sponsored research product, reflected above in “All Other Fees.”
Pre-Approval Policies and Procedures
In accordance with the Audit Committee charter, the Audit Committee must pre-approve all audit and non-audit services provided to the Company by its outside auditor. To the extent permitted by applicable laws, regulations and NASDAQ rules, the Committee may delegate pre-approval of audit and non-audit services to one or more members of the Committee. Such member(s) must then report to the full Committee at its next scheduled meeting if such member(s) pre-approved any audit or non-audit services.
In fiscal 2015 and fiscal 2014, all (100%) audit and non-audit services were pre-approved in accordance with the Audit Committee charter.
PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 2016
Audit Committee Report for the Year Ended February 27, 2016
The Board of Directors has determined that the membership of the Audit Committee meets the SEC and NASDAQ independence and experience requirements. The Board of Directors has also determined that Mr. Heller qualifies as an “audit committee financial expert.”
The Audit Committee discussed the auditors’ review of quarterly financial information with the auditors prior to the release of that information and the filing of the Company’s quarterly reports with the SEC; the Audit Committee also met and held discussions with management and the independent auditors with respect to the audited year-end financial statements.
Further, the Audit Committee discussed with the independent auditors the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 16, ‘‘Communications with Audit Committees,’’ received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’ independence. The Committee also discussed with the auditors and the Company’s financial management matters related to the Company’s internal control over financial reporting. Based on these discussions and the written disclosures received from the independent auditors, the Committee recommended that the Board of Directors include the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended February 27, 2016, filed with the SEC on April 26, 2016.
This audit committee report is not deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 and is not incorporated by reference into any filings that the Company may make with the SEC.
AUDIT COMMITTEE
Stanley F. Barshay
Patrick R. Gaston
Jordan Heller
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR FISCAL 2016.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, the Company is providing its shareholders the opportunity to cast an advisory vote on the compensation of its named executive officers for fiscal 2015. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on named executive officers’ compensation.
The Board of Directors recommends a vote in favor of the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers for fiscal 2015, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
This proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive officer compensation program, values the opinions expressed by shareholders in the Compensation Committee’s ongoing engagement, discussed below, and considers the views provided by shareholders when making future compensation decisions for named executive officers. The affirmative vote of the holders of a majority of the votes cast by our shareholders in person or represented by proxy and entitled to vote is required to approve this proposal.
The following Compensation Discussion & Analysis referenced in the Compensation Committee report is intended to provide additional information and detail for your consideration of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE
COMPANY’S NAMED EXECUTIVE OFFICERS FOR FISCAL 2015 AS DISCLOSED IN
THIS PROXY STATEMENT.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Compensation Committee Report
The Compensation Committee of the Company’s Board of Directors has submitted the following report for inclusion in this Proxy Statement:
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on the Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for fiscal 2015 for filing with the SEC.
The foregoing report is provided by the following directors, who constitute the fiscal year 2015 Compensation Committee:
COMPENSATION COMMITTEE
Dean S. Adler
Stanley F. Barshay
Victoria A. Morrison
Compensation Discussion & Analysis (CD&A)
Introduction
In this section, we describe our executive compensation philosophy and program that we have implemented to support our strategic objectives and serve the long-term interests of our shareholders. We also discuss how our principal executive officer, principal financial officer, and certain other Named Executive Officers (our NEOs) were compensated in fiscal 2015 and describe how their compensation fits within our executive compensation philosophy. Finally, we discuss changes made to our executive compensation structure for 2016 after consideration of input from our shareholders, with the purpose of better aligning performance goals with our long-term strategy.
This CD&A is organized as follows:
Executive Summary (page 18), including our executive compensation philosophy and objectives, an overview of our strategy, some highlights of our fiscal 2015 operational and financial performance.
Say on Pay Results and Shareholder Outreach (page 21) presents a summary of our 2015 advisory vote on executive compensation and our efforts to engage with shareholders to better understand their interests, concerns and suggestions.
Fiscal 2016 Executive Compensation Program Decisions (page 22) describes modifications to our executive compensation program, based in part on input from shareholders and adopted to even better align the performance goals with our long-term strategy.
Methodology for Determining Executive Compensation (page 24) explains our compensation design process, the elements of our NEO compensation packages, which are heavily weighted toward performance-based compensation and provides a review of the senior executive compensation for fiscal 2015, including other benefits and considerations.
Fiscal 2015 Performance Goals and Performance (page 29) describes the fiscal 2015 performance goals under our long-term incentive program, our performance compared to those goals, and the resulting NEO incentive payouts for fiscal 2015.
Executive Summary/Executive Compensation Philosophy and Objectives
Our compensation programs are determined by the Compensation Committee of the Board of Directors, with the assistance of an independent consultant. The primary objectives of the Company’s executive officer compensation program are to:
Align rewards with performance that enhances shareholder value by heavily weighting compensation with equity;
Retain an executive team that drives the long-term success of the Company;
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Support the Company’s strong team orientation;
Attract additional talented executives as required, and encourage high-potential team players to build a career at the Company; and
Provide financial rewards and incentives that are competitive with other organizations and fair to employees and shareholders.
The Company believes that its compensation policies, plans and programs have no material adverse effect on the Company’s enterprise risk.
The Company believes that a key factor in its success to date has been the stability of its executive team. The average tenure of our NEOs is approximately 33 years, which has created a very cohesive executive team, led by our CEO Steven Temares, which has deep knowledge of the Company as well as the depth and breadth of experience to navigate the ever-evolving and dramatically changing retail landscape. The assembly and retention of this executive team and its team-based approach has also contributed to the Company’s strong corporate culture to think long-term and do whatever it takes to satisfy a customer. To that end, the Company’s policy is to seek, whenever possible, at all levels, to promote from within and to make compensation program changes gradually in order to compensate executives in a manner designed to promote the long-term success of the organization as well as to maintain a level of stability. Compensation heavily weighted toward equity awards that vest over four or five years also supports such stability.
The Company’s compensation programs do not include annual cash bonuses and allocate the majority of each executive’s compensation to long-term equity awards and performance-based compensation. The Compensation Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success. The Committee believes that paying a fair base salary and putting all other compensation in the form of long-term equity awards and performance-based compensation creates alignment with the Company’s and shareholders’ goal of incenting management to continue to enhance shareholder value over the long term.
The increased pace of change in the retail environment over the past several years has been fueled by advancing technologies that are impacting the way consumers are able to make shopping decisions and purchase products and services. At the same time, our Company has been driving change—across our organization—through significant investments in our people as well as Information Technology, Digital and Mobile capabilities, Analytics, Pricing, Merchandising, Marketing, Store Operations, Customer Service, Real Estate as well as our Supply Chain network.
The Compensation Committee recognizes the significant transformation occurring within the Company and the level of fortitude and expertise required to create the right balance between achieving positive results in the near-term, and investing for long-term success. We have great confidence in our executive team and their ability to further strengthen and position Bed Bath & Beyond as a world-class omnichannel retailer.
Our Strategy
The retail environment continues to change dramatically as advancing technologies transform the way consumers shop for merchandise both online and in-store. The evolution of omnichannel retailing presents a great opportunity to provide a more seamless and personalized shopping experience for customers.
Over the past few years, Bed Bath & Beyond has driven change throughout our organization to capitalize on advancing technologies and to strengthen our business as a world-class omnichannel retailer. We have made tremendous progress in the transformation of our Company to better serve our customers in an ever-evolving digital world. At the same time, our strategy remains rooted in our customer-centric culture and commitment to customer service, supported by significant investments to strengthen our foundation for future growth:
To do more for and with our customers wherever, whenever and however they wish to interact with us;
To provide our customers a seamless experience whether they interact with us in a store, through one of our contact centers, on a desktop or tablet, smartphone or through social media;
To be viewed as the expert for the home, including the accompanying life stages that make a house a home, and to become the destination for our customers’ needs and wants as they express their life interests and travel through their life stages; all through the expanding and differentiated products, services and solutions we offer; and
To enhance our ability to achieve these objectives through an ongoing commitment to world class information technology, comprehensive analytics and targeted marketing and communications.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
We recognize that the investments we are making impact our operating profit in the short term. However, this multi-year investment cycle, including fiscal 2015, has produced meaningful change across many key areas of our business including Information Technology, Digital and Mobile capabilities, Analytics, Pricing, Merchandising, Marketing, Store Operations, Customer Service, Real Estate as well as our Supply Chain network.
We believe that our foundation has never been stronger than it is today, including the quality of our people, our merchandise assortments and our technologies. We remain steadfast in making the right investments to position our Company for long-term success. We are excited about the opportunities that will enable us to continue to do more for and with our customers and to strengthen our business as a world-class omnichannel retailer.
Our fiscal 2015 financial performance reflects the benefit of the significant investments in our business, steady progress on our strategic initiatives, and the return of $1.1 billion to our shareholders through share repurchase.
This is an exciting time for Bed Bath & Beyond. We are confident that we are making the right investments to position our Company for long-term profitable growth, and to further enhance shareholder value. To that end, subsequent to fiscal 2015, our Board of Directors authorized a quarterly dividend program that will commence in fiscal 2016. Our Board took this action in recognition of the Company’s strong cash flow generation and confidence in our business, as well as to provide a more balanced approach to returning value to shareholders. In addition to the dividend, the Company will continue to repurchase shares under our current $2.5 billion authorization, subject to business and market conditions.
Our Performance
During fiscal 2015, we made steady progress on our strategic initiatives, including significant investments in our people, technology, physical and digital channels and supply chain, to further strengthen our foundation for future growth.
Select operational highlights:
Continued to expand, differentiate and improve our merchandise and related services and solutions.
Developed enhanced analytics capabilities, including sophisticated, predictive modeling to drive a more personalized targeted marketing strategy.
Introduced new services and experiences such as online appointment scheduling for registry and a new virtual coupon wallet called My Offers, which organizes and stores print and digital coupons so customers can access and redeem them conveniently online or in-store.
Continued development of our new Point-of-Sale system, including both hardware and software elements. The new system—to be piloted in fiscal 2016—will provide a more efficient customer check out process by automating many manual processes, as well as greatly enhancing our promotional capabilities.
Progressed development of our Liberty View project in Brooklyn, a unique shopping venue which will house four of our concepts and provide a more experiential shopping environment.
Opened a new Customer Contact Center in Layton, Utah to enhance our 24/7 customer support.
Expanded our supply chain network, including a new distribution facility in Las Vegas, Nevada, to provide more flexible fulfillment options and support anticipated growth across all of our channels.
Upgraded our proprietary internal Web-based platform, The Beyond Store, and integrated it with our Bed Bath & Beyond and buybuy BABY selling websites and mobile channels, to enable our associates to better service our customers in creating web orders, comparing products, and reading product reviews.
Select financial highlights:
Net sales of $12.1 billion increased approximately 1.9% or approximately 2.3% on a constant currency basis.
Comparable sales increased approximately 1%, or approximately 1.4% on a constant currency basis.
Comparable sales consummated through customer facing online websites and mobile applications increased in excess of 25%.
Diluted EPS of $5.10, including $0.06 of net benefits from certain non-recurring items, including a favorable state audit settlement.
Generated $1.0 billion in net cash from operations and returned $1.1 billion to shareholders through share repurchase.
Subsequent to fiscal 2015, announced Board authorization of a quarterly dividend program, which will commence in fiscal 2016.
For more information regarding our fiscal 2015 financial performance, see our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on April 26, 2016.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Say on Pay Results and Shareholder Outreach
Over the past several years we have expanded our shareholder outreach program. The feedback received through our engagement efforts led us to make initial changes to our executive compensation program in 2014, which were announced prior to the Annual Meeting of Shareholders in July 2014 and included in our 2014 Proxy Statement. The program remained consistent in fiscal 2015. While this engagement and enhanced disclosure was generally well received by our shareholders, the advisory vote on our executive compensation at our 2015 Annual Meeting of Shareholders was below expectations, with approximately 35% of votes cast in favor, down from 72% support the prior year.
Since that time, we have continued to engage with our shareholders to discuss various compensation and governance matters:
Contacted top twenty-five shareholders representing approximately 68% of the total shares outstanding (as of March 26, 2016).
Representatives of the Compensation Committee, along with the Co-Chairmen and management, met in person with nine institutional shareholders representing approximately 31% of the total outstanding shares, as well as held conversations with a leading proxy advisory firm.
Representatives of the Compensation Committee and management spoke with an additional six institutional shareholders by phone, representing approximately 18% of the total outstanding shares.
In these meetings, our shareholders expressed a wide range of viewpoints relating to compensation and governance practices. This engagement process was very informative and productive.
Key feedback included the following:
| | Shareholder Feedback | Our Responses | Concerns regarding magnitude of CEO pay | Following our shareholder engagement after the 2015 Annual Meeting and after consideration of the issues discussed with our shareholders, the Compensation Committee approved the following actions with respect to our CEO compensation in 2016:
| | • | No salary increase for our CEO, marking third consecutive year. | | | | | • | Reduced CEO target compensation from $19.6 million to $16.9 million, or by approximately 14%. | | | | | • | In addition, the Compensation Committee enhanced the rigor of and amended our PSU compensation performance goals applicable to our CEO and other senior executives as described in this chart below.
| Concerns regarding rigor of performance goals
| Payouts tied to PSU performance goals are contingent upon achievement of various levels of Earnings Before Interest and Taxes (EBIT) margin and Return on Invested Capital (ROIC) as well as the continued performance of service by the executives. After consideration of shareholder feedback, the Compensation Committee has enhanced the rigor of and amended these performance goals for fiscal 2016 by:
| | • | Adjusting the weighting of one-year and three-year performance goals from 75/25 to 50/50, respectively, increasing the weighting of the three-year goal. | | | | | • | Applying a more strict achievement threshold for PSUs subject to the three-year performance goal by increasing the achievement percentage from 80-164% to 100-144%, to earn 100% payment. | | | | | • | Applying a Total Shareholder Return (TSR) “Regulator” to achievement thresholds of each performance goal, capping PSU awards at 100% of the target if the Company’s TSR over the performance period is negative. | | | | | • | Adjusting the vesting periods for PSUs to maintain a rate of equal vesting over four years, if performance goals are met. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Shareholder Feedback | | Our Responses | Suggestion to better articulate our business strategy and linkage to executive compensation program | | In 2016, we significantly expanded our disclosure regarding our investment strategy to become a world-class omnichannel retailer and the progress we have made in transforming our business over the past several years. We believe that a combination of a one-year performance goal based on EBIT margin and a three-year goal based on ROIC, in each case relative to a retail industry peer group, are appropriate to support this long-term strategy. A performance goal based on EBIT margin incentivizes short-term fiscal discipline as these investments are being made, while a performance goal based on ROIC measures how these investments are returning value to the enterprise over the long term.
| Suggestion to better articulate our philosophy regarding cash bonuses | | The Compensation Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success. The Committee believes that paying a fair base salary and putting all other compensation in the form of long-term equity awards and performance-based compensation creates alignment with the Company’s and shareholders’ goal of incenting management to continue to enhance shareholder value over the long term. |
The Compensation Committee will continue to actively engage with shareholders to discuss various compensation and governance matters and will consider their feedback in any future changes to the Company’s executive compensation program.
Fiscal 2016 Executive Compensation Program Decisions
The Compensation Committee continues to believe that a combination of Performance Stock Units (including an EBIT performance metric requiring fiscal discipline in a short-term one-year period with vesting that extends over two years, and an ROIC performance metric that measures the return on the investments being made to address a rapidly changing industry over a three-year period with vesting after years three and four), together with stock options vesting over three or five years, appropriately aligns the compensation program with both the short- and long-term interests of the Company’s shareholders.
Subsequent to the recent shareholder engagement efforts and in discussion with the full Board of Directors, the Compensation Committee made further changes to the Company’s executive compensation program for fiscal 2016, building on changes made during the prior two years. The Compensation Committee believes these changes further strengthen the direct link between pay and performance.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Summary of Executive Compensation and Relevant Governance Changes
In furtherance of the objectives of aligning compensation awards with performance, while retaining an executive team that drives the long-term success of the Company, the Compensation Committee has made significant changes to the Company’s executive officer compensation program over the last three years.
FY 2016
| • No increase in base salary of the Company’s CEO (third consecutive year of no increase in CEO base pay) and Co-Chairmen.
| • Reduced CEO target compensation from $19.6 million to $16.9 million, or by approximately 14%.
| • Enhanced the rigor of and amended our Performance Stock Unit (PSU) performance-based equity plan as follows:
| ¡ | Adjusted weighting of one-year and three-year performance goals from 75/25 to 50/50, respectively, increasing the weighting of the three-year goal.
| ¡ | Applied a more strict achievement threshold for PSUs subject to the three-year performance goal by increasing the achievement percentage from 80-164% to 100-144%, to earn 100% payment.
| ¡ | Applied a Total Shareholder Return (TSR) “Regulator” to achievement thresholds of each performance goal, capping PSU awards at 100% of the target if the Company’s TSR over the performance period is negative.
| ¡ | Adjusted the vesting periods for PSUs to maintain a rate of equal vesting over four years, if performance goals are met.
|
• Maintained practice of not awarding cash bonuses. | | FY 2015
| • CEO annual base salary amount remained unchanged since 2014 (second consecutive year of no increase).
| FY 2014
| • The Company significantly redesigned its 2014 equity incentive program for the Named Executive Officers, with a view toward further strengthening the direct link between pay and performance and providing performance metrics that are fundamental to the business and aligned with shareholder value creation.
|
• The features of the program for fiscal 2014 included the following:
| ¡ | No increase in base salary for the Company’s CEO or Co-Chairmen. The Company also maintained its practice of not awarding cash bonuses.
| ¡ | A revised performance-based equity plan with the following components:
|
| ▪ | One-year performance goal based upon EBIT margin relative to a retail industry peer group, under which awards vest in three equal annual installments from date of grant. The Compensation Committee believed it appropriate to set a target based upon EBIT margin when compared to a retail industry peer group, to incentivize continued operational and fiscal discipline as management executes against the Company’s strategic goals.
| | ▪ | Three-year performance goal based upon ROIC relative to a retail industry peer group, under which awards vest four years after grant. The Compensation Committee believed that, as a relative measure compared to a retail industry peer group, ROIC over a three-year period provides a suitable metric to measure how the Company’s investments are returning value to the enterprise.
|
¡ | Awards of stock options, which were intended to be valued at no more than one-third of total performance-based equity, vesting over a five-year period (three years for the Co-Chairmen). The Compensation Committee believed stock options provide further incentives aligned with the long-term interests of shareholders.
| • In addition, the Board of Directors adopted the following:
|
¡ | Stock ownership guidelines that require the Company’s CEO and each outside director to hold the Company’s common stock with a value of at least $6,000,000 and $300,000, respectively.
| ¡ | Restrictions on engaging in hedging transactions involving the Company’s common stock and on pledging such common stock, in each case, by the Company’s directors and executive officers.
|
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Below is a summary of our executive compensation practices that we have implemented to drive performance, as well as practices we avoid because we do not believe they serve investors’ long-term interests.
What We Do
| | | | Provide a majority of pay in equity and performance-based compensation. | | Use an independent compensation consulting firm, which provides no other services to Bed Bath & Beyond, and independent counsel. | | | | Pay for performance based on measurable goals tied to Company strategy.
| | Engage in shareholder outreach. | | | | Apply multi-year vesting to equity awards. | | Require significant stock ownership for CEO and each outside director with a value of at least $6,000,000 and $300,000, respectively. | | | | Include caps on individual payouts in incentive plans. | | Subject incentive pay to compensation recovery “claw-back” policy. | | | | Conduct an annual advisory vote on executive compensation.
| | Limit outside board memberships. | | | | Have a lead director and a high proportion of independent directors.
| | | What We Don’t Do
| | | | Design compensation programs using cash bonuses, to avoid short-termism.
| | Have excessive perquisites, or allow tax gross-ups for perquisites or upon a change in control. | | | | Allow hedging and unrestricted pledging of the Company’s securities.
| | Allow re-pricing of stock options. |
Methodology for Determining Executive Compensation
The Compensation Committee has engaged the services of an independent compensation consultant, retaining Arthur J. Gallagher & Co. Human Resources & Compensation Consulting Practice (Gallagher) or its predecessor to conduct a compensation review for the Named Executive Officers and certain other executives. Gallagher has not served the Company in any other capacity except as consultants to the Compensation Committee. The Compensation and the Nominating and Corporate Governance Committees also receive advice and assistance from the law firm of Chadbourne & Parke LLP, which has acted as counsel only to the Company’s independent directors and its Board committees. The Compensation Committee has concluded that no conflict of interest exists that prevents Gallagher or Chadbourne from being independent advisors to the Compensation Committee.
The Compensation Committee charter, which describes the Compensation Committee’s function, responsibilities and duties, is available on the Company’s website at www.bedbathandbeyond.com under the Investor Relations section. The Compensation Committee consists of three independent members of our Board of Directors. The Compensation Committee meets on a regular basis and met 10 times in fiscal 2015.
Under the direction of the Compensation Committee, the compensation review included a peer group competitive market review of executive compensation and total compensation recommendations by Gallagher. The peer group developed by Gallagher, agreed upon by the Compensation Committee and upon which Gallagher based its recommendations for fiscal 2015 compensation, consisted of 19 retail companies of a size range in revenue and net income relatively closely aligned with the Company’s revenue and net income. The peer group remained the same from fiscal 2014 to fiscal 2015.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
The 19 company peer group consisted of the following companies at the time of the analysis:
| | Advance Auto Parts, Inc. | L Brands, Inc. | AutoZone, Inc. | Macy’s, Inc. | Dick’s Sporting Goods, Inc. | Nordstrom, Inc. | Dillard’s, Inc. | O’Reilly Automotive, Inc. | Dollar General Corporation | PetSmart, Inc. | Family Dollar Stores, Inc. | Ross Stores, Inc. | Foot Locker, Inc. | Staples, Inc. | GameStop Corp. | Starbucks Corporation | The Gap, Inc. | The TJX Companies, Inc. | Kohl’s Corporation | |
Gallagher conducted a compensation review for all executive officers, including the Named Executive Officers, and for certain other key executives. Gallagher benchmarked the Named Executive Officers total compensation and separately their cash compensation against data from the 19 company peer group. Gallagher also assisted the Compensation Committee in determining the targets and other provisions, for the one-year and three-year performance goals. With respect to grants of PSUs, the Compensation Committee, with assistance from Gallagher, adopted a wider peer group of 47 retail companies against which the performance goals will be measured. This larger peer group includes 18 of the 19 company benchmarking peer group described above and was created to establish a larger, more stable statistical base over the duration of the performance periods.
The compensation approved by the Compensation Committee for each of Messrs. Eisenberg, Feinstein and Temares for fiscal 2015 was determined by the Compensation Committee taking into account recommendations of and certain data received from Gallagher. The compensation approved by the Compensation Committee for the Named Executive Officers for fiscal 2015, other than the Co-Chairmen and Mr. Temares, was determined by the Compensation Committee, taking into account the recommendations of the Co-Chairmen, Chief Executive Officer and Gallagher and certain data the Compensation Committee received from Gallagher. No executive was present during voting or deliberations with respect to matters relating to such executive’s compensation.
Based on the recommendations and data from Gallagher, and in light of the Company’s financial results for fiscal 2014, the growth in the size and scope of the Company, the strategic investments being made to position the Company for long-term growth, its relative performance in its industry and other factors, the Compensation Committee determined that the Named Executive Officers of the Company should receive the total compensation packages for fiscal 2015, as described below.
Elements of Compensation
The Company seeks to provide total compensation packages to its associates, including its Named Executive Officers, which implement its compensation philosophy. As described above, the Company places greater emphasis in the compensation packages for Named Executive Officers on equity incentive compensation than on cash compensation in order to align compensation more closely with long-term performance results and the creation of shareholder value. The Compensation Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success.
The components of the Company’s compensation programs for its executive officers and certain other key executives are base salary, equity compensation (consisting of awards of PSUs and stock options), retirement and other benefits (consisting of health plans, a limited 401(k) plan match and a nonqualified deferred compensation plan) and very limited perquisites. Consistent with prior practice and the Company’s culture, the Company does not provide perquisites such as club memberships, company planes or retreats. For those perquisites provided, see the footnotes to the Summary Compensation Table on page 31.
Base Salary
The Company pays base salaries to provide its Named Executive Officers with current, regular compensation that is appropriate for their position, experience and responsibilities. Changes in base salary, if any, are generally effective in May of each fiscal year. The Company believes that total cash compensation levels for its Named Executive Officers are appropriate taking into consideration factors including that the Company does not pay annual cash bonuses.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Equity Compensation
PSUs
In early fiscal 2014, the Company significantly redesigned its equity incentive program for its Named Executive Officers and certain other key executives with a view toward creating an enhanced link between pay and performance, providing performance metrics fundamental to the business, and aligning with shareholder value creation. The redesigned program eliminated the prior performance test and created a new framework consisting of a one-year performance test based on EBIT margin relative to a peer group and a three-year performance test based on ROIC relative to such peer group. Payouts under the performance goals were contingent upon achievement of various levels of EBIT margin and ROIC as well as the continued performance of services by the executives. The 2014 and 2015 awards were in the form of PSUs, of which 75% were subject to the one-year EBIT margin goal and 25% were subject to the three-year ROIC goal (subsequently changed for fiscal 2016 to 50% for each of the one-year goal and three-year goal, increasing the weighting of the three-year goal). The Compensation Committee believed it appropriate to set a target based upon EBIT margin when compared to a retail industry peer group, to incentivize continued operational and fiscal discipline as management executes against the Company’s strategic goals. The Compensation Committee also believed that, as a relative measure compared to a retail industry peer group, ROIC over a three-year period provides a suitable metric to measure how the Company’s investments are returning value to the enterprise. The Compensation Committee believes that these goals are an appropriate measure of performance for companies in the retail industry and, specifically, for companies in the Company’s sector.
The following table sets forth the achievement ranges for the one-year relative EBIT margin goal and the three-year relative ROIC goal in place for fiscal 2015, together with the associated payout percentages and vesting schedule. As shown in the table, the awards range from a floor of zero to a cap of 150% of target achievement.
| | | | | PSUs Subject to One-Year EBIT Goal for 2015 (75% Weighting) | PSUs Subject to Three-Year ROIC Goal for 2015 (25% Weighting) | | Vesting : 1/3 year 1, 1/3 year 2, 1/3 year 3 | Vesting : 100% year 4 | Achievement Percentage (% of Peer Group Average) | Payment Percentage of
Common Stock
Underlying PSUs | Achievement Percentage (% of Peer Group Average) | Payment Percentage of Common Stock
Underlying PSUs | | 200% or Greater | 150% | 180% or Greater | 150% | | 185-199% | 110% | 165-179% | 110% | | 125-184% | 100% | 80-164% | 100% | | 100-124% | 90% | 70-79% | 90% | | 80-99% | 75% | 60-69% | 75% | | 70-79% | 50% | 50-59% | 50% | | 60-69% | 25% | 40-49% | 25% | | <60% | 0% | <40% | 0% |
The metrics with respect to each peer group member necessary to measure the performance criteria are based on data reported in the S&P Capital IQ Database to the extent publicly available, and to the extent such data is not publicly available, are based on information otherwise publicly available.
The PSUs are not transferable, cannot be pledged, assigned or otherwise disposed of and are subject to the terms of the Company’s 2012 Incentive Compensation Plan.
The overall approach to equity compensation in fiscal 2015 for all executive officers, including the Named Executive Officers, and for certain other executives was to combine the performance-based PSU awards with stock options. In determining the allocation between these two forms of equity awards, the Company considered the retention component and the role of the executive in the enhancement of shareholder value. For fiscal 2015, the Company allocated at least two-thirds of the value of equity compensation granted to all executive officers, including the Named Executive Officers, to PSU awards and no greater than one-third of such value to stock option awards. The vesting provisions relating to equity compensation have been and continue to be determined with a principal purpose of retaining the Company’s executives and key associates. The Company believes its equity compensation program promotes the long-term retention of its executives and key associates, including its Named Executive Officers and in large measure directly aligns compensation of its Named Executive Officers with Company performance.
The Company believes that the performance-based tests described above meet the standard for performance-based compensation under Section 162(m) of the Code, so that the PSU awards are intended to be deductible compensation by the Company for certain executives if their annual compensation exceeds $1 million.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Stock Options
Stock option awards are made in dollars (with the number of shares covered by the options determined by dividing the dollar amount of the grant by the Stock Option Fair Value, as defined below). The Compensation Committee believes that making stock option awards in dollar amounts rather than share amounts is advisable because making stock option awards in dollar amounts allows the Compensation Committee to align stock option awards with the value of the option grants. Awarding stock options in a fixed dollar amount also enables the Compensation Committee to more readily evaluate appropriate aggregate compensation amounts and percentage increases or decreases for executives, in comparison to making stock option awards in share amounts (the value of which varies depending on the trading price of the Company’s stock and other factors). In making the awards, the Compensation Committee considered the fair value of these options on the date of grant determined in accordance with Accounting Standards Codification Topic No. 718, “Compensation—Stock Compensation” (the Stock Option Fair Value).
Consistent with the Company’s historic practice, the stock options vest over time, subject, in general, to the Named Executive Officers remaining in the Company’s service on specified vesting dates.
Time Vested Restricted Stock
All executives (other than Named Executive Officers and other key executives whose compensation is determined by the Compensation Committee) and associates awarded incentive compensation receive grants consisting solely of restricted stock. Vesting of restricted stock awarded to these associates is based solely on time with no performance-based test.
All 2015 awards of equity compensation were made under the Company’s 2012 Incentive Compensation Plan approved by the Company’s shareholders, which is the only equity incentive plan under which the Company can currently make awards of equity compensation.
Senior Executive Compensation
The Compensation Committee reviews the compensation packages for the Chief Executive Officer, the other Named Executive Officers and the other senior executives believed to be the most important and influential in determining the continued success of the Company.
In the spring of 2015, when the Compensation Committee made its determinations relating to executive compensation for the Company’s Named Executive Officers for fiscal 2015, the Compensation Committee took into account, among other things, the following:
the Company’s net earnings per diluted share had increased to $5.07 for fiscal 2014 from $4.79 in the prior year;
the Company had returned approximately $2.251 billion to shareholders through share repurchases in fiscal year 2014; and
the Company had made capital expenditures exceeding $300 million in fiscal 2014, principally for strategic investments related to enhancing its omnichannel capabilities to further position the Company for continued growth and success in the ever-evolving retail environment, and operated approximately 1,500 stores.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
The following charts illustrate the average mix of target total direct compensation for Mr. Temares and for chief executive officers in the Company’s peer group for 2015:
Mr. Temares’ base salary did not increase in fiscal 2015, and remained at $3,967,500, which represented his entire cash compensation since the Company does not pay cash bonuses. Cash compensation for fiscal 2015 represented 20% of Mr. Temares’ total compensation.
Equity awards to Mr. Temares for fiscal 2015 consisted of $10,446,137 of PSUs (representing 147,222 PSUs) and $5,224,624 of stock options (representing 226,003 options). Approximately 80% of Mr. Temares’ cash and equity compensation for fiscal 2015 was dependent on Company performance and/or an increase in shareholder value.
As calculated in accordance with the Company’s stock ownership guidelines for the Company’s Chief Executive Officer, Mr. Temares held substantially more than the minimum $6,000,000 holding requirement. In setting the minimum holding requirement, the Compensation Committee considered the relative value of stock required to be held by CEOs within the peer group. It is important to note that Mr. Temares has not sold any post-tax restricted shares during his tenure with the Company.
For fiscal 2015, the base salaries for the Co-Chairmen did not increase and remained at $1,100,000 each, the same as they were for the previous nine years. Equity awards in 2015 for the Co-Chairmen did not increase and have remained in the same amount as they were for the previous four years (rounded to the next full share). The base salaries and equity awards of the other Named Executive Officers increased based upon several factors including increased responsibilities and in certain cases individual performance.
The stock options granted to the Chief Executive Officer and the other Named Executive Officers vest in five equal annual installments, while the stock options awarded to the Co-Chairmen vest in three equal annual installments. In each case, vesting commences on the first anniversary of the grant date and is also based on continued service to the Company.
In the view of the Compensation Committee, the fiscal 2015 compensation packages for the Chief Executive Officer, the Co-Chairmen, and the other Named Executive Officers, based on the Company’s growth and strong financial results in 2014, the strategic investments being made to position the Company for long-term growth, and based on the results and recommendations of Gallagher’s compensation review, were appropriate for a company with the revenues and earnings of the Company.
For further discussion related to equity grants to the Named Executive Officers in fiscal 2015, see the Potential Payments Upon Termination or Change in Control Table.
Other Benefits
The Company provides the Named Executive Officers with the same benefits offered to all other associates. The cost of these benefits constitutes a small percentage of each Named Executive Officer’s total compensation. Key benefits include paid vacation, premiums paid for long-term disability insurance, a matching contribution to the Named Executive Officer’s 401(k) plan account, and the payment of a portion of the Named Executive Officer’s premiums for healthcare and basic life insurance.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
The Company has a nonqualified deferred compensation plan for the benefit of certain highly compensated associates, including the Named Executive Officers. The plan provides that a certain percentage of an associate’s contributions may be matched by the Company, subject to certain limitations. This matching contribution will vest over a specified period of time. See the Nonqualified Deferred Compensation Table.
The Company provides the Named Executive Officers with certain perquisites including tax preparation services and car service, in the case of Messrs. Eisenberg and Feinstein, and a car allowance, in the case of all Named Executive Officers, other than Ms. Lattmann. The Compensation Committee believes all such perquisites are reasonable and consistent with its overall objective of attracting and retaining our Named Executive Officers.
See the “All Other Compensation” column in the Summary Compensation Table for further information regarding these benefits and perquisites, and Potential Payments Upon Termination or Change in Control Table for information regarding termination and change in control payments and benefits.
Impact of Accounting and Tax Considerations
The Compensation Committee considers the accounting cost associated with equity compensation and the impact of Section 162(m) of the Code, which generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to certain executives, subject to certain exceptions for performance-based compensation. Stock options and performance-based compensation granted to our Named Executive Officers are intended to satisfy the performance-based exception and be deductible. Base salary amounts in excess of $1 million are not deductible by the Company.
Policy on the Recovery of Incentive Compensation
In fiscal 2009, the Board adopted a policy as part of the Company’s corporate governance guidelines on the recovery of incentive compensation, commonly referred to as a “clawback policy,” applicable to the Company’s Named Executive Officers (as defined under Item 402(a)(3) of Regulation S-K). The policy appears in the Company’s Corporate Governance Guidelines, available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com. The Compensation Committee is monitoring the issuance of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to incentive compensation recoupment and will amend its policy to the extent necessary to comply with such Act.
Fiscal 2015 Performance Goals and Performance
The table below shows how we performed against the fiscal 2015 performance goals under our equity incentive program, which were set by the Compensation Committee in early fiscal 2015.
The one-year performance goal based on EBIT margin relative to a retail industry peer group earned 100% of the incentive target for each NEO.
Mean (average) EBIT for Peer Group Companies | 7.28% | Bed Bath & Beyond | 11.69% | Achievement Percentage | 160.60% | Payment Percentage | 100.00% |
The three-year performance goal based on ROIC relative to such peer group will be measured at the end of fiscal 2017.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Executive Officers
Set forth below is information concerning our executive officers as of May 6, 2016.
| | | Name | Age | Position | Warren Eisenberg | 85 | Co-Chairman and Director | Leonard Feinstein | 79 | Co-Chairman and Director | Steven H. Temares | 57 | Chief Executive Officer and Director | Arthur Stark | 61 | President and Chief Merchandising Officer | Eugene A. Castagna | 50 | Chief Operating Officer | Susan E. Lattmann | 48 | Chief Financial Officer and Treasurer | Matthew Fiorilli | 59 | Senior Vice President—Stores |
The biographies for Messrs. Eisenberg, Feinstein and Temares are set forth above under Election of Directors (Proposal 1). Biographies for our other executive officers are as follows:
Arthur Stark has been President and Chief Merchandising Officer since 2006. Mr. Stark has served as Chief Merchandising Officer since 1999 and was a Senior Vice President from 1999 to 2006. Mr. Stark joined the Company in 1977.
Eugene A. Castagna has been Chief Operating Officer since 2014. Mr. Castagna served as Chief Financial Officer and Treasurer from 2006 to 2014, as Assistant Treasurer from 2002 to 2006 and as Vice President—Finance from 2000 to 2006. Mr. Castagna joined the Company in 1994.
Susan E. Lattmann has been Chief Financial Officer and Treasurer since 2014. Ms. Lattmann served as Vice President—Finance from 2006 to 2014, as Vice President—Controller from 2001 to 2006 and as Controller from 2000 to 2001. Ms. Lattmann is a certified public accountant and joined the Company in 1996.
Matthew Fiorilli has been Senior Vice President—Stores since 1999. Mr. Fiorilli joined the Company in 1973.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Compensation Tables
SUMMARY COMPENSATION TABLE FOR FISCAL 2015,
FISCAL 2014 AND FISCAL 2013
The following table sets forth information concerning the compensation of the Company’s Named Executive Officers.
| | | | | | | | | Name and Principal Position | Fiscal
Year | Salary(1)
($) | Stock
Awards(2)(3)
($) | Option
Awards(2)
($) | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) | All Other
Compensation
($) | Total ($) | Warren Eisenberg(4)(5) Co-Chairman | 2015 | 1,100,000 | 1,500,060 | 500,008 | — | 147,887 | 3,247,955 | | 2014 | 1,100,000 | 1,500,025 | 500,010 | — | 145,635 | 3,245,670 | | 2013 | 1,100,000 | 1,500,023 | 500,019 | — | 153,138 | 3,253,180 | Leonard Feinstein(6)(7) Co-Chairman | 2015 | 1,100,000 | 1,500,060 | 500,008 | — | 165,878 | 3,265,946 | | 2014 | 1,100,000 | 1,500,025 | 500,010 | — | 160,213 | 3,260,248 | | 2013 | 1,100,000 | 1,500,023 | 500,019 | — | 163,564 | 3,263,606 | Steven H. Temares(8)(9)(10) Chief Executive Officer | 2015 | 3,967,500 | 10,446,137 | 5,224,624 | (242,787) | 14,194 | 19,409,668 | | 2014 | 3,967,500 | 9,712,323 | 4,856,147 | 556,242 | 23,828 | 19,116,040 | | 2013 | 3,867,981 | 6,750,034 | 6,750,011 | 1,753,736 | 22,993 | 19,144,755 | Arthur Stark(11)(12) President and Chief Merchandising Officer | 2015 | 1,770,769 | 1,675,035 | 600,015 | — | 15,112 | 4,060,931 | | 2014 | 1,670,769 | 1,550,022 | 600,012 | — | 14,699 | 3,835,502 | | 2013 | 1,568,846 | 1,450,064 | 600,014 | — | 14,352 | 3,633,276 | Eugene A. Castagna(13)(14) Chief Operating Officer | 2015 | 1,811,154 | 1,750,034 | 750,001 | — | 12,000 | 4,323,189 | | 2014 | 1,670,769 | 1,550,022 | 600,012 | — | 13,878 | 3,834,681 | | 2013 | 1,421,154 | 1,450,126 | 600,014 | — | 16,416 | 3,487,710 | Susan E. Lattmann(15)(16) Chief Financial Officer and Treasurer | 2015 | 871,154 | 900,064 | 400,002 | — | 8,262 | 2,179,482 | | 2014 | 730,769 | 750,013 | 300,006 | — | 7,955 | 1,788,743 | | 2013 | 534,908 | 300,058 | — | — | 7,820 | 842,786 | Matthew Fiorilli(17)(18) Senior Vice President—Stores | 2015 | 1,655,769 | 1,425,060 | 600,015 | — | 18,572 | 3,699,416 | | 2014 | 1,555,769 | 1,300,038 | 600,012 | — | 22,154 | 3,477,973 | | 2013 | 1,453,846 | 1,200,060 | 600,014 | — | 21,825 | 3,275,745 |
| (1) | Except as otherwise described in this Summary Compensation Table, salaries to Named Executive Officers were paid in cash in fiscal 2015, fiscal 2014 and fiscal 2013, and increases in salary, if any, were effective in May of the fiscal year. |
| (2) | The value of stock awards and option awards represents their respective total fair value on the date of grant calculated in accordance with Accounting Standards Codification Topic No. 718, “Compensation—Stock Compensation” (“ASC 718”), without regard to the estimated forfeiture related to service-based vesting conditions. All assumptions made in the valuations are contained and described in footnote 12 to the Company’s financial statements in the Company’s Form 10-K for fiscal 2015. Stock awards and option awards are rounded up to the nearest whole share when converted from dollars to shares. The amounts shown in the table reflect the total fair value on the date of grant and do not necessarily reflect the actual value, if any, that may be realized by the Named Executive Officers. |
| (3) | The value of stock awards granted in fiscal 2015 and 2014 consists of performance stock unit (“PSU”) awards. Please see Compensation Discussion and Analysis for a description of the PSU awards. The one-year performance-based test for both fiscal 2015 and 2014 was met at the 100% target. The fair value of the PSU awards are reported at 100% of target, which is the estimated outcome of performance conditions associated with the PSU awards on the grant date. If the Company achieves the highest level of performance for the PSU awards, then the fair value of the PSU awards would be $2,250,125, $2,250,125, $15,669,206, $2,512,588, $2,625,051, $1,350,132 and $2,137,661 for Mr. Eisenberg, Mr. Feinstein, Mr. Temares, Mr. Stark, Mr. Castagna, Ms. Lattmann and Mr. Fiorilli, respectively. The value of stock awards granted in fiscal year 2013 consists of restricted stock. Except as described below, the vesting of restricted stock awards granted in fiscal 2013 depends on (i) the Company’s achievement of a performance-based test for the fiscal year of the grant, and (ii) assuming the performance-based test is met, time vesting, subject in general to the executive remaining in the Company’s service on specific vesting dates. The performance-based test for fiscal 2013 was met, and the fair value of such performance-based stock awards are reported at 100% of target, their maximum value assuming the highest level of performance. The vesting of restricted stock awards granted to Ms. Lattmann in fiscal 2013 and a portion of restricted stock awards granted to Mr. Castagna in fiscal 2013 are based solely on time vesting. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
| (4) | Salary for Mr. Eisenberg includes a deferral of $569,756, $550,000 and $546,504 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (5) | All Other Compensation for Mr. Eisenberg includes incremental costs to the Company for tax preparation services of $34,780, $31,625 and $42,950, car service of $81,598, $79,598 and $77,214 and car allowance of $23,559, $26,612 and $25,325, and an employer nonqualified deferred compensation plan matching contribution of $7,950, $7,800 and $7,650 for fiscal 2015, 2014 and 2013, respectively. |
| (6) | Salary for Mr. Feinstein includes a deferral of $591,009, $550,000 and $550,000 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (7) | All Other Compensation for Mr. Feinstein includes incremental costs to the Company for tax preparation services of $34,780, $31,625 and $42,950, car service of $87,982, $86,077 and $82,905 and car allowance of $35,166, $34,711 and $30,059 and an employer nonqualified deferred compensation plan matching contribution of $7,950, $7,800 and $7,650 for fiscal 2015, 2014 and 2013, respectively. |
| (8) | Salary for Mr. Temares includes a deferral of $42,000, $40,624 and $36,684 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (9) | The change in pension value for fiscal 2015, 2014 and 2013 is a result of the change in the actuarial present value of the benefits payable under the supplemental executive retirement benefit agreement with Mr. Temares, reflecting an increase in salary in fiscal 2013, and which is discussed more fully below. There was no cash payment as a result of this increase. See also “Potential Payments Upon Termination or Change in Control—Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann” below. |
| (10) | All Other Compensation for Mr. Temares includes incremental costs to the Company for car allowance of $6,244, $16,103 and $15,344 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $7,950, $7,725 and $7,649 for fiscal 2015, 2014 and 2013, respectively. |
| (11) | Salary for Mr. Stark includes a deferral of $10,192, $10,639 and $10,937 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (12) | All Other Compensation for Mr. Stark includes incremental costs to the Company for car allowance of $6,547, $6,995 and $6,702 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $8,565, $7,704 and $7,650 for fiscal 2015, 2014 and 2013, respectively. |
| (13) | Salary for Mr. Castagna includes a deferral of $180,538, $166,154 and $141,538 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (14) | All Other Compensation for Mr. Castagna includes incremental costs to the Company for car allowance of $3,500, $6,203 and $8,766 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $8,500, $7,675 and $7,650 for fiscal 2015, 2014 and 2013, respectively. |
| (15) | Salary for Ms. Lattmann includes a deferral of $36,731, $29,594 and $25,598 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (16) | All Other Compensation for Ms. Lattmann includes incremental costs to the Company for employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $8,262, $7,955 and $7,820 for fiscal 2015, 2014 and 2013, respectively. |
| (17) | Salary for Mr. Fiorilli includes a deferral of $33,038, $140,654 and $83,827 for fiscal 2015, 2014 and 2013, respectively, pursuant to the terms of the Company’s nonqualified deferred compensation plan. Such amount for fiscal 2015 is also reported in the Nonqualified Deferred Compensation Table below. |
| (18) | All Other Compensation for Mr. Fiorilli includes incremental costs to the Company for car allowance of $10,622, $14,579 and $14,175 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $7,950, $7,575 and $7,650 for fiscal 2015, 2014 and 2013, respectively. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
GRANTS OF PLAN BASED AWARDS
Grants of Stock Options and Performance Stock Units for Fiscal 2015
The following table sets forth information with respect to stock options granted and performance stock units awarded during fiscal 2015 to each of the Named Executive Officers under the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”). The Company did not grant any non-equity incentive plan awards in fiscal 2015.
| | | | | Estimated Future Payouts Under
Equity Incentive Plan Awards | | All Other
Option Awards:
Number of
Securities
Underlying | | Exercise
or
Base
Price of
Option | | Closing
Market
Price on
Date of | | Grant Date
Fair
Value of
Stock and
Option | | Name | | Grant
Date | | | Threshold(1)
(#) | | | | Target(1)
(#) | | | | Maximum(1)
(#) | | | | Options(1)
(#) | | | | Awards(2)
($/Sh) | | | | Grant
($/Sh) | | | | Awards(3)
($) | | | Warren Eisenberg | | 5/11/15 | | | 0 | | | | 21,141 | | | | 31,712 | | | | | | | | | | | | | | | $ | 1,500,060 | | | | | 5/11/15 | | | | | | | | | | | | | | | 21,629 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 500,008 | | | Leonard Feinstein | | 5/11/15 | | | 0 | | | | 21,141 | | | | 31,712 | | | | | | | | | | | | | | | $ | 1,500,060 | | | | | 5/11/15 | | | | | | | | | | | | | | | 21,629 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 500,008 | | | Steven H. Temares | | 5/11/15 | | | 0 | | | | 147,222 | | | | 220,833 | | | | | | | | | | | | | | | $ | 10,446,137 | | | | | 5/11/15 | | | | | | | | | | | | | | | 226,003 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 5,224,624 | | | Arthur Stark | | 5/11/15 | | | 0 | | | | 23,607 | | | | 35,411 | | | | | | | | | | | | | | | $ | 1,675,035 | | | | | 5/11/15 | | | | | | | | | | | | | | | 25,955 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 600,015 | | | Eugene A. Castagna | | 5/11/15 | | | 0 | | | | 24,664 | | | | 36,996 | | | | | | | | | | | | | | | $ | 1,750,034 | | | | | 5/11/15 | | | | | | | | | | | | | | | 32,443 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 750,001 | | | Susan E. Lattmann | | 5/11/15 | | | 0 | | | | 12,685 | | | | 19,028 | | | | | | | | | | | | | | | $ | 900,064 | | | | | 5/11/15 | | | | | | | | | | | | | | | 17,303 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 400,002 | | | Matthew Fiorilli | | 5/11/15 | | | 0 | | | | 20,084 | | | | 30,127 | | | | | | | | | | | | | | | $ | 1,425,060 | | | | | 5/11/15 | | | | | | | | | | | | | | | 25,955 | | | $ | 70.96 | | | $ | 70.30 | | | $ | 600,015 | |
| (1) | Number of shares when converted from dollars to shares, which number is rounded up to the nearest whole share. |
| (2) | The exercise price of option awards is the average of the high and low trading prices of the Company’s common stock on the date of grant. |
| (3) | Pursuant to the SEC rules, stock and option awards are valued in accordance with ASC 718. See footnote 2 to the Summary Compensation Table in this Proxy Statement. |
Vesting of stock option awards depends on time vesting, subject in general to the executive remaining in the Company’s service on specific vesting dates. The options granted in fiscal 2015 to Messrs. Eisenberg and Feinstein vest in three equal installments starting on the first anniversary of the grant date. The options granted in fiscal 2015 to Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann vest in five equal installments starting on the first anniversary of the grant date. At the time of grant or thereafter, option awards and underlying shares of common stock are not transferable other than by will or the laws of descent and distribution, except as the Compensation Committee may permit.
Vesting of performance stock unit awards (“PSUs”) depends on (i) the Company’s achievement of a performance-based test during a one-year period from the date of grant and during a three-year period from the date of grant, and (ii) assuming achievement of the performance-based test, time vesting, subject, in general, to the executive remaining in the Company’s service on specified vesting dates. Performance during the one-year period is based on Earnings Before Interest and Taxes (“EBIT”) margin relative to a peer group of the Company comprising 47 companies. Upon achievement of the one-year performance-based test, the corresponding PSUs will vest annually in substantially equal installments over a three year period starting one year from the date of grant. Performance during the three-year period is based on Return on Invested Capital (“ROIC”) relative to such peer group. Upon achievement of the three-year performance-based test, the corresponding PSUs will vest on the fourth anniversary date of grant. The awards based on EBIT margin and ROIC are capped at 150% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information for each of the Named Executive Officers with respect to the value of all unexercised options, unvested restricted stock awards and unvested performance stock units as of February 27, 2016, the end of fiscal 2015.
| | | | | | | | | | | | Option Awards | Stock Awards | | Name | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | 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) ($) | | Warren Eisenberg | 81,367 | | — | $ 32.8700 | 5/12/16 | 38,977(7) | $ 1,909,483 | 27,157(13) | $ 1,330,421 | | | 84,603 | | — | $ 28.3300 | 5/11/17 | | | | | | | 29,326 | | — | $ 45.2000 | 5/10/18 | | | | | | | 25,440 | | — | $ 56.1850 | 5/10/19 | | | | | | | 21,682 | | — | $ 68.9100 | 5/10/20 | | | | | | | 14,961 | | 7,481(2) | $ 69.7750 | 5/10/21 | | | | | | | 7,952 | | 15,903(2) | $ 62.3400 | 5/12/22 | | | | | | | — | | 21,629(2) | $ 70.9550 | 5/11/23 | | | | | | Leonard Feinstein | 29,326 | | — | $ 45.2000 | 5/10/18 | 38,977(7) | $ 1,909,483 | 27,157(13) | $ 1,330,421 | | | 25,440 | | — | $ 56.1850 | 5/10/19 | | | | | | | 21,682 | | — | $ 68.9100 | 5/10/20 | | | | | | | 14,961 | | 7,481(2) | $ 69.7750 | 5/10/21 | | | | | | | 7,952 | | 15,903(2) | $ 62.3400 | 5/12/22 | | | | | | | — | | 21,629(2) | $ 70.9550 | 5/11/23 | | | | | | Steven H. Temares | 374,288 | (19) | — | $ 32.8700 | 5/12/16 | 189,370(8) | $ 9,277,236 | 186,171(14) | $ 9,120,517 | | | 296,109 | | — | $ 28.3300 | 5/11/17 | | | | | | | 263,930 | | — | $ 45.2000 | 5/10/18 | | | | | | | 203,520 | | 50,880(3) | $ 56.1850 | 5/10/19 | | | | | | | 149,608 | | 99,739(3) | $ 68.9100 | 5/10/20 | | | | | | | 121,182 | | 181,774(3) | $ 69.7750 | 5/10/21 | | | | | | | 46,336 | | 185,346(3) | $ 62.3400 | 5/12/22 | | | | | | | — | | 226,003(3) | $ 70.9550 | 5/11/23 | | | | | | Arthur Stark | 8,206 | | — | $ 32.8700 | 5/12/16 | 72,046(9) | $ 3,529,534 | 29,823(15) | $ 1,461,029 | | | 8,933 | | 8,933(4) | $ 28.3300 | 5/11/17 | | | | | | | 32,101 | | — | $ 45.2000 | 5/10/18 | | | | | | | 24,422 | | 6,106(4) | $ 56.1850 | 5/10/19 | | | | | | | 15,611 | | 10,408(4) | $ 68.9100 | 5/10/20 | | | | | | | 10,772 | | 16,158(4) | $ 69.7750 | 5/10/21 | | | | | | | 5,725 | | 22,901(4) | $ 62.3400 | 5/12/22 | | | | | | | — | | 25,955(4) | $ 70.9550 | 5/11/23 | | | | |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
| Option Awards | Stock Awards | | Name | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | 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) ($) | | Eugene A. Castagna | 8,933 | 8,933 (5) | $ 28.3300 | 5/11/17 | 62,558 (10) | $ 3,064,716 | 30,880 (16) | $ 1,512,811 | | | 32,101 | — | $ 45.2000 | 5/10/18 | | | | | | | 24,422 | 6,106 (5) | $ 56.1850 | 5/10/19 | | | | | | | 15,611 | 10,408 (5) | $ 68.9100 | 5/10/20 | | | | | | | 10,772 | 16,158 (5) | $ 69.7750 | 5/10/21 | | | | | | | 5,725 | 22,901 (5) | $ 62.3400 | 5/12/22 | | | | | | | — | 32,443 (5) | $ 70.9550 | 5/11/23 | | | | | | Susan E. Lattmann | 2,862 | 11,451 (6) | $ 62.3400 | 5/12/22 | 17,407 (11) | $ 852,769 | 15,693 (17) | $ 768,800 | | | — | 17,303 (6) | $ 70.9550 | 5/11/23 | | | | | | Matthew Fiorilli | 41,029 | — | $ 32.8700 | 5/12/16 | 58,342 (12) | $ 2,858,175 | 25,298 (18) | $ 1,239,349 | | | 35,731 | 8,933 (4) | $ 28.3300 | 5/11/17 | | | | | | | 32,101 | — | $ 45.2000 | 5/10/18 | | | | | | | 24,422 | 6,106 (4) | $ 56.1850 | 5/10/19 | | | | | | | 15,611 | 10,408 (4) | $ 68.9100 | 5/10/20 | | | | | | | 10,772 | 16,158 (4) | $ 69.7750 | 5/10/21 | | | | | | | 5,725 | 22,901 (4) | $ 62.3400 | 5/12/22 | | | | | | | — | 25,955 (4) | $ 70.9550 | 5/11/23 | | | | |
| (1) | Market value is based on the closing price of the Company’s common stock of $48.99 per share on February 26, 2016, the last trading day in fiscal 2015. |
| (2) | Messrs. Eisenberg and Feinstein’s unvested option awards are scheduled to vest as follows: (a) 7,481 on May 10, 2016, (b) 7,951 on May 12, 2016 and 7,952 on May 12, 2017 and (c) 7,210 on each of May 11, 2016 and 2018 and 7,209 on May 11, 2017. |
| (3) | Mr. Temares’ unvested option awards are scheduled to vest as follows: (a) 50,880 on May 10, 2016, (b) 49,869 on May 10, 2016 and 49,870 on May 10, 2017, (c) 60,591 on each of May 10, 2016 and 2017 and 60,592 on May 10, 2018, (d) 46,336 on each of May 12, 2016 and 2018 and 46,337 on each of May 12, 2017 and 2019 and (e) 45,200 on each of May 11, 2016 and 2018 and 45,201 on May 11, 2017, 2019 and 2020. |
| (4) | Messrs. Stark and Fiorilli’s unvested option awards are scheduled to vest as follows: (a) 8,933 on May 11, 2016, (b) 6,106 on May 10, 2016, (c) 5,204 on each of May 10, 2016 and 2017, (d) 5,386 on each of May 10, 2016, 2017 and 2018, (e) 5,725 on each of May 12, 2016, 2017 and 2018 and 5,726 on May 12, 2019 and (f) 5,191 on each of May 11, 2016, 2017, 2018, 2019 and 2020. |
| (5) | Mr. Castagna’s unvested option awards are scheduled to vest as follows: (a) 8,933 on May 11, 2016, (b) 6,106 on May 10, 2016, (c) 5,204 on each of May 10, 2016 and 2017, (d) 5,386 on each of May 10, 2016, 2017 and 2018, (e) 5,725 on each of May 12, 2016, 2017 and 2018 and 5,726 on May 12, 2019 and (f) 6,488 on each of May 11, 2016 and 2018 and 6,489 on each of May 11, 2017, 2019 and 2020. |
| (6) | Ms. Lattmann’s unvested option awards are scheduled to vest as follows: (a) 2,863 on each of May 12, 2016, 2018 and 2019 and 2,862 on May 12, 2017 and (b) 3,460 on each of May 11, 2016 and 2018 and 3,461 on each of May 11, 2017, 2019 and 2020. |
| (7) | Messrs. Eisenberg and Feinstein have an aggregate of 26,947 shares of unvested restricted stock and an aggregate of 12,030 shares underlying unvested performance stock units (“PSUs”). Messrs. Eisenberg and Feinstein’s unvested restricted stock awards are scheduled to vest as follows: (a) 5,340 on May 10, 2016, (b) 4,354 on each of May 10, 2016 and 2017 and (c) 4,299 on May 10, 2016 and 4,300 on each of May 10, 2017 and 2018. Messrs. Eisenberg and Feinstein’s unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 6,015 on each of May 12, 2016 and 2017. |
| (8) | Mr. Temares has an aggregate of 111,472 shares of unvested restricted stock and an aggregate of 77,898 shares underlying unvested PSUs. Mr. Temares’ unvested restricted stock awards are scheduled to vest as follows: (a) 18,600 on May 10, 2016, (b) 17,414 on each of May 10, 2016 and 2017 and (c) 19,348 on each of May 10, 2016, 2017 and 2018. Mr. Temares’ unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 38,949 on each of May 12, 2016 and 2017. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
| (9) | Mr. Stark has an aggregate of 59,614 shares of unvested restricted stock and an aggregate of 12,432 shares underlying unvested PSUs. Mr. Stark’s unvested restricted stock awards are scheduled to vest as follows: (a) 7,060 on May 11, 2016, (b) 5,531 on each of May 10, 2016 and 2017, (c) 4,449 on May 10, 2016 and 4,450 on each of May 10, 2017 and 2018, (d) 3,918 on each of May 10, 2016, 2017 and 2018 and 3,919 on May 10, 2019 and (e) 4,157 on each of May 10, 2016 and 2018 and 4,156 on May 10, 2017. Mr. Stark’s unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 6,216 on each of May 12, 2016 and 2017. |
| (10) | Mr. Castagna has an aggregate of 50,126 shares of unvested restricted stock and an aggregate of 12,432 shares underlying unvested PSUs. Mr. Castagna’s unvested restricted stock awards are scheduled to vest as follows: (a) 5,295 on May 11, 2016, (b) 4,425 on each of May 10, 2016 and 2017, (c) 3,560 on each of May 10, 2016, 2017 and 2018, (d) 3,193 on each of May 10, 2016, 2018 and 2019 and 3,192 on May 10, 2017, (e) 3,440 on each of May 10, 2016, 2017 and 2018 and (f) 736 on February 26, 2017 and 737 on each of February 26, 2018 and 2019. Mr. Castagna’s unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 6,216 on each of May 12, 2016 and 2017. |
| (11) | Ms. Lattmann has an aggregate of 11,392 shares of unvested restricted stock and an aggregate of 6,015 shares underlying unvested PSUs. Ms. Lattmann’s unvested restricted stock awards are scheduled to vest as follows: (a) 1,412 on May 11, 2016, (b) 885 on each of May 10, 2016 and 2017, (c) 712 on each of May 10, 2016, 2017 and 2018, (d) 581 on each of May 10, 2016, 2018 and 2019 and 580 on May 10, 2017, (e) 573 on each of May 10, 2016, 2017 and 2019 and 574 on each of May 10, 2018 and 2020 and (f) 294 on February 26, 2017 and 295 on each of February 26, 2018 and 2019. Ms. Lattmann’s unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 3,007 on May 12, 2016 and 3,008 on May 12, 2017. |
| (12) | Mr. Fiorilli has an aggregate of 47,916 shares of unvested restricted stock and an aggregate of 10,426 shares underlying unvested PSUs. Mr. Fiorilli’s unvested restricted stock awards are scheduled to vest as follows: (a) 5,295 on May 11, 2016, (b) 4,425 on each of May 10, 2016 and 2017, (c) 3,560 on each of May 10, 2016, 2017 and 2018, (d) 3,193 on each of May 10, 2016, 2018 and 2019 and 3,192 on May 10, 2017 and (e) 3,440 on each of May 10, 2016, 2017 and 2018. Mr. Fiorilli’s unvested PSU awards that have satisfied the applicable performance-based test are scheduled to vest as follows: 5,213 on each of May 12, 2016 and 2017. |
| (13) | Messrs. Eisenberg and Feinstein’s unvested PSU awards are valued at target achievement and include 15,855 PSU awards, subject to a one-year performance goal, and 11,302 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,285 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,016 on May 12, 2018 and 5,286 on May 11, 2019. |
| (14) | Mr. Temares’ unvested PSU awards are valued at target achievement and include 110,416 PSU awards, subject to a one-year performance goal, and 75,755 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 36,806 on May 11, 2016 and 36,805 on each of May 11, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 38,949 on May 12, 2018 and 36,806 on May 11, 2019. |
| (15) | Mr. Stark’s unvested PSU awards are valued at target achievement and include 17,705 PSU awards, subject to a one-year performance goal, and 12,118 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,902 on each of May 11, 2016 and 2018 and 5,901 on May 11, 2017. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,216 on May 12, 2018 and 5,902 on May 11, 2019. |
| (16) | Mr. Castagna’s unvested PSU awards are valued at target achievement and include 18,498 PSU awards, subject to a one-year performance goal, and 12,382 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,166 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 6,216 on May 12, 2018 and 6,166 on May 11, 2019. |
| (17) | Ms. Lattmann’s unvested PSU awards are valued at target achievement and include 9,513 PSU awards, subject to a one-year performance goal, and 6,180 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 3,171 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 3,008 on May 12, 2018 and 3,172 on May 11, 2019. |
| (18) | Mr. Fiorilli’s unvested PSU awards are valued at target achievement and include 15,063 PSU awards, subject to a one-year performance goal, and 10,235 PSU awards, subject to a three-year performance goal. Upon attainment of the one-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,021 on each of May 11, 2016, 2017 and 2018. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: 5,214 on May 12, 2018 and 5,021 on May 11, 2019. |
| (19) | Mr. Temares’ 374,288 exercisable option awards that expire on May 12, 2016 include 187,144 option awards held by him individually and 187,144 option awards held by a family limited partnership. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
OPTION EXERCISES AND STOCK VESTED
Option Exercises and Stock Awards Vested for Fiscal 2015
The following table includes certain information with respect to the exercise of options and vesting of stock awards by Named Executive Officers during fiscal 2015.
| | | | | | | | | | | | | | Option Awards | | | | Stock Awards | | | Name | | | Number of Shares
Acquired on
Exercise (#) | | | | Value Realized
on Exercise
($) | | | | Number of Shares
Acquired on
Vesting (#) | | | | Value Realized on
Vesting ($) | | | Warren Eisenberg(1) | | | — | | | | — | | | | 26,647 | | | | 1,896,434 | | | Leonard Feinstein(1)(2) | | | 165,970 | | | | 7,064,241 | | | | 26,647 | | | | 1,896,434 | | | Steven H. Temares(3) | | | — | | | | — | | | | 114,222 | | | | 8,107,981 | | | Arthur Stark(4) | | | — | | | | — | | | | 37,416 | | | | 2,652,625 | | | Eugene A. Castagna(5)(6) | | | 8,206 | | | | 117,691 | | | | 31,429 | | | | 2,210,972 | | | Susan E. Lattmann(7) | | | — | | | | — | | | | 8,109 | | | | 565,720 | | | Matthew Fiorilli(8) | | | — | | | | — | | | | 29,690 | | | | 2,105,036 | |
| (1) | Messrs. Eisenberg and Feinstein each acquired (i) 20,631 shares on May 10, 2015, upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 6,016 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
| (2) | Mr. Feinstein exercised stock options on April 13, 2015. |
| (3) | Mr. Temares acquired (i) 75,273 shares on May 10, 2015, upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 38,949 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
| (4) | Mr. Stark acquired (i) 31,200 shares in total on May 10, 2015, May 11, 2015 and May 12, 2015 upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 6,216 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
| (5) | Mr. Castagna exercised stock options on February 18, 2016. |
| (6) | Mr. Castagna acquired (i) 25,213 shares in total on May 10, 2015, May 11, 2015, May 12, 2015 and February 26, 2016, upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 6,216 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
| (7) | Ms. Lattmann acquired (i) 5,101 shares in total on May 10, 2015, May 11, 2015, May 12, 2015 and February 26, 2016, upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 3,008 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
| (8) | Mr. Fiorilli acquired (i) 24,476 shares in total on May 10, 2015, May 11, 2015 and May 12, 2015 upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 5,214 shares on May 12, 2015 upon the vesting of PSUs for which the performance test had been met. |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
Effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of employees defined by the Internal Revenue Service as highly compensated. A certain percentage of an employee’s contributions may be matched by the Company, subject to certain plan limitations, as more fully described below. The following table provides compensation information for the Company’s nonqualified deferred compensation plan for each of the Named Executive Officers for fiscal 2015.
Nonqualified Deferred Compensation for Fiscal 2015
| | | | | | | | | | | | | Name | | Executive
Contributions
for Fiscal
2015(1) ($) | | Company
Contributions
for Fiscal
2015(2) ($) | | Aggregate
Earnings
(Losses) in
Fiscal 2015(3) ($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Fiscal
Year End
2015(4) ($) | | Warren Eisenberg | | | 569,756 | | | | 7,950 | | | | (268,753 | ) | | | — | | | | 4,042,012 | | | Leonard Feinstein | | | 591,009 | | | | 7,950 | | | | (268,583 | ) | | | — | | | | 4,068,995 | | | Steven H. Temares | | | 42,000 | | | | 1,126 | | | | (22,606 | ) | | | — | | | | 387,874 | | | Arthur Stark | | | 10,192 | | | | 5,450 | | | | 432 | | | | (16,773 | ) | | | 33,973 | | | Eugene A. Castagna | | | 180,538 | | | | 1,813 | | | | (97,160 | ) | | | — | | | | 1,482,627 | | | Susan E. Lattmann | | | 36,731 | | | | 3,465 | | | | (24,059 | ) | | | — | | | | 281,773 | | | Matthew Fiorilli | | | 33,038 | | | | 2,100 | | | | (74,849 | ) | | | — | | | | 838,681 | |
| (1) | All amounts reported in this column were also reported in this Proxy Statement in the “Salary” column of the Summary Compensation Table for the applicable named executive officer. |
| (2) | All amounts reported in this column were also reported in this Proxy Statement in the “All Other Compensation” column of the Summary Compensation Table for the applicable named executive officer. |
| (3) | Amounts reported in this column represent returns on participant-selected investments. |
| (4) | Amounts reported in this column that were also reported in previously filed Proxy Statements in the “Salary” or “All Other Compensation” columns of the Summary Compensation Tables for Messrs. Eisenberg, Feinstein, Temares, Stark, Castagna and Fiorilli and Ms. Lattmann were $2,586,278, $2,589,774, $251,682, $17,473, $961,838, $233,391 and $62,397, respectively. |
Under the Company’s nonqualified deferred compensation plan, a participant’s regular earnings may be deferred at the election of the participant, excluding incentive compensation, welfare benefits, fringe benefits, noncash remuneration, amounts realized from the sale of stock acquired under a stock option or grant, and moving expenses.
When a participant elects to make a deferral under the plan, the Company credits the account of the participant with a matching contribution equal to fifty percent of the deferral, offset dollar for dollar by any matching contribution that the Company makes to the participant under the Company’s 401(k) plan. The payment of this matching contribution is made upon the conclusion of the fiscal year. The maximum matching contribution to be made by the Company to a participant between the Company’s nonqualified deferred compensation plan and the Company’s 401(k) plan cannot exceed the lesser of $7,950 or three percent of a participant’s eligible compensation.
A participant is fully vested in amounts deferred under the nonqualified deferred compensation plan. A participant has a vested right in matching contributions made by the Company under the nonqualified deferred compensation plan, depending on the participant’s years of service with the Company: 20% at one to two years of service, 40% at two to three years of service, 60% at three to four years of service, 80% at four to five years of service and 100% at five or more years of service. As each of the Named Executive Officers has more than five years of service to the Company, they are each fully vested in the matching contributions made by the Company under the plan.
Amounts in a participant’s account in the nonqualified deferred compensation plan are payable either in a lump sum or substantially equal annual installments over a period of five or ten years, as elected by the participant. Such distributions may be delayed to a period of six months following a participant’s termination of employment to comply with applicable law.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Employment Agreements and Potential Payments Upon Termination or Change in Control
Employment Agreements
There were no amendments to any Named Executive Officer’s employment agreement since the Company’s 2015 Annual Meeting of Shareholders.
Messrs. Eisenberg and Feinstein
Messrs. Eisenberg and Feinstein have employment agreements with the Company with terms currently expiring February 25, 2017, or as further extended by mutual agreement. These agreements provide for salaries at the rate of $800,000 per year which may be increased from time to time by the Company. The current annual salary for each of Messrs. Eisenberg and Feinstein is $1,100,000. Under these agreements, each of Messrs. Eisenberg and Feinstein may at any time elect senior status (i.e., to be continued to be employed to provide non-line executive consultative services) at an annual salary of the greater of $400,000 (increased for cost of living adjustments) or 50% of his average salary over the three-year period prior to such election for a period (the “Senior Status Period”) of up to ten years from the date of such election. During the Senior Status Period, the executive must provide services at a level of at least 25% of the average level of services the executive performed for the prior 36 month period. During the Senior Status Period, the Company is required to provide to the executive an office at a location specified by the executive, a secretary, car service and car allowance, all on a basis comparable to that which is currently provided to the executive. The agreements contain non-competition, non-solicitation and confidentiality provisions. These provisions generally apply through the term of employment, including the Senior Status Period and any other time when salary payments are required to be made under the agreements. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their active employment, their Senior Status Period and during the period of supplemental pension payments. For a complete description of payments due to Messrs. Eisenberg and Feinstein upon termination of their employment with the Company, see “Potential Payments Upon Termination or Change in Control” below.
Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann
Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann have employment agreements with the Company which provide for severance pay and other benefits upon a termination of their employment. For a complete description of payments due to Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann upon termination of their employment with the Company, see “Potential Payments Upon Termination or Change in Control” below. These agreements also provide for non-competition and non-solicitation of the Company’s employees during the term of employment and for one year thereafter (two years in the case of Mr. Castagna and Ms. Lattmann), and confidentiality during the term of employment and surviving the end of the term of employment.
Potential Payments Upon Termination or Change in Control
The foregoing employment agreements and certain of the plans in which the executives participate require the Company to pay compensation to the executives if their employment terminates.
The estimated amount of compensation payable to such Named Executive Officers in each termination situation is listed in the table below. The table is presented using an assumed termination date and an assumed change in control date of February 27, 2016, the last day of fiscal 2015 and a price per share of common stock of $48.99 (the “Per Share Closing Price”), the closing per share price as of February 26, 2016, the last business day of fiscal 2015. Descriptions of the agreements under which such payments would be made follow.
Messrs. Eisenberg and Feinstein
Pursuant to their employment agreements, following the Senior Status Period, Messrs. Eisenberg and Feinstein are each entitled to supplemental pension payments of $200,000 per year (as adjusted for a cost of living increase) until the death of the survivor of him and his current spouse. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their Senior Status Period and during the period of supplemental pension payments or following a termination other than due to “cause” (as defined below). Under the agreements, if Messrs. Eisenberg and Feinstein are terminated without cause or if the executive elects to terminate his employment due to a “constructive termination” (as defined below), the executive shall be paid through the end of the term of employment and the Senior Status Period.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
The agreements were amended, effective March 1, 2014, to eliminate the executives’ ability to terminate employment for any reason following a change in control and receive change in control severance payments and benefits. The agreements now provide that, following a termination without cause or a constructive termination, in each case, occurring on a change in control of the Company (as defined in the agreements) or within two years following a change in control, each of the executives shall be paid an amount equal to three times salary then in effect, if the written notice is given before the Senior Status Period, or, if during the Senior Status Period, one half of Senior Status Salary for the number of years (including fractions), if any, remaining in the Senior Status Period, payable over such applicable period in accordance with normal payroll practices. The agreements provide that in the event any amounts paid or provided to the executive in connection with a change in control are determined to constitute “excess parachute payments” under Section 280G of the Code which would be subject to the excise tax imposed by Section 4999 of the Code, the payments and benefits due to the executive will be reduced if the reduction would result in a greater amount payable to the executive after taking into account the excise tax imposed by Section 4999 of the Code. The agreements also provide that upon a change in control of the Company, the Company will fund a “rabbi trust” for each of the executives to hold an amount equal to the value of the payments and certain benefits payable to each of the executives upon his termination of employment with the Company. In the event of termination of employment, the executives are under no obligation to seek other employment and there is no reduction in the amount payable to the executive on account of any compensation earned from any subsequent employment. In the event of termination due to death of either of the executives, the executive’s estate or beneficiary shall be entitled to his salary for a period of one year following his death and payment of expenses incurred by the executive and not yet reimbursed at the time of death. In the event of termination due to the inability to substantially perform his duties and responsibilities for a period of 180 consecutive days, the executive shall be entitled to his salary for a period of one year following the date of termination (less any amounts received under the Company’s benefit plans as a result of such disability). To the extent that any payments under the employment agreements due following the termination of Messrs. Eisenberg and Feinstein are considered to be deferred compensation under Section 409A, such amounts will commence to be paid on the earlier of the six-month anniversary of termination of employment or the executive’s death.
Either of the executives may be terminated for cause upon written notice of the Company’s intention to terminate his employment for cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for cause is based. The executives shall have ten days after such notice is given to cure such conduct, to the extent a cure is possible. “Cause” generally means (i) the executive is convicted of a felony involving moral turpitude or (ii) the executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under the agreement, resulting, in either case, in material economic harm to the Company, unless the executive believed in good faith that such act or non act was in the best interests of the Company. “Constructive termination” generally means the executive’s election to terminate employment due to (i) a reduction in the executive’s salary or a material reduction in the executive’s benefits or perquisites (other than as part of any across-the-board action applicable to all executive officers of the Company), (ii) removal from, or failure to reelect the executive to, the position of co-chairman or chairman or as a director, (iii) a material diminution in the executive’s duties or the assignment of duties materially inconsistent with the executive’s duties or that materially impairs the executive’s ability to function as the co-chairman or chairman or (iv) the Company’s principal office or the executive’s own office location provided by the Company is relocated and, in any case, not timely cured by the Company. In addition, pursuant to their respective restricted stock and performance stock unit agreements, shares of restricted stock and performance stock units granted to Messrs. Eisenberg and Feinstein will vest upon death or disability, or upon a termination of employment without cause or constructive termination, subject to attainment of any applicable performance goals.
In substitution for a split dollar insurance benefit previously provided to such executives, in fiscal 2003, the Company entered into deferred compensation agreements with Messrs. Eisenberg and Feinstein under which the Company is obligated to pay Messrs. Eisenberg and Feinstein $2,125,000 and $2,080,000, respectively, in each case payable only on the last day of the first full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result in the loss of a deduction for such payment pursuant to applicable federal income tax law.
Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann
The agreements with Messrs. Temares, Stark and Fiorilli provide for severance pay equal to three years’ salary, and the agreements with Mr. Castagna and Ms. Lattmann provide for severance pay equal to one year’s salary, if the Company terminates their employment other than for “cause” (including by reason of death or disability). Additionally, the agreements with Messrs. Temares, Stark, Castagna and Fiorilli provide for one year’s severance pay if the executive voluntarily leaves the employ of the Company. Severance pay will be paid in accordance with normal payroll; however, other than for Ms. Lattmann, any amount due prior to the six months after termination of employment will be paid in a lump sum on the date following the six month anniversary of termination of employment. Any severance payable to these executives will be reduced by any monetary compensation earned by them as a result of their employment by another employer or otherwise. “Cause” is defined in the agreements as when the executive has: (i) acted in bad faith or with dishonesty; (ii) willfully failed to follow reasonable and lawful directions of the Company’s Chief Executive Officer or the Board of Directors, as applicable; (iii) performed his or her duties with gross negligence; or (iv) been convicted of a felony. Upon a termination of employment by the Company for any reason other than for cause, all unvested options will vest and become exercisable. In addition, pursuant to their respective restricted stock and performance stock unit agreements, or, in the case of Ms. Lattmann, her employment agreement, shares of restricted stock and performance stock units granted will vest upon death or disability, or upon a termination of employment without cause subject to attainment of any applicable performance goals. These agreements also provide for non-competition and non-solicitation during the term of employment and for one year thereafter (two years in the case of Mr. Castagna and Ms. Lattmann), and confidentiality during the term of employment and surviving the end of the term of employment.
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Mr. Temares has a supplemental executive retirement benefit agreement and a related escrow agreement, under which he is entitled to receive a supplemental retirement benefit on his retirement or other separation from service from the Company. The retirement benefit will be payable in the form of a lump sum equal to the present value of an annual amount equal to 50% of Mr. Temares’ annual base salary on the date of termination of employment if such annual amount were paid for a period of 10 years in accordance with the Company’s normal payroll practices. Except in the case of Mr. Temares’ death (in which case the supplemental retirement benefit will be immediately payable) and the agreement as to escrow, the supplemental retirement benefit will be paid on the first business day following the six month anniversary of Mr. Temares’ termination and will be includible in his income for tax purposes at such time.
In the event Mr. Temares elects to retire or voluntarily terminates his employment with the Company, a portion of the supplemental retirement benefit, net of withholdings, will be deposited into an escrow account governed by a separate agreement. No portion of the supplemental retirement benefit will be deposited into the escrow account, however, in the event Mr. Temares dies, is terminated by the Company without cause (as such term is defined in his employment agreement), terminates due to disability, or terminates employment within 12 months following a change of control. In the event Mr. Temares elects to retire or voluntarily terminates his employment with the Company, 1/10 of the lump sum supplemental retirement benefit distribution (net of applicable withholding taxes) will be distributed to Mr. Temares; and 9/10 of the lump sum supplemental retirement benefit distribution (net of applicable withholding taxes) will be deposited into an escrow account to be distributed in nine equal annual installments on each of the following nine anniversaries of the deposit date, subject to acceleration in the case of Mr. Temares’ death or a change of control of the Company. The entire escrow account will be distributed to Mr. Temares’ beneficiary no later than 30 days following his death or to Mr. Temares no later than 30 days following a change of control of the Company. If Mr. Temares does not comply with the restrictive covenant not to compete with the Company (as described in his employment agreement, for the term of the escrow agreement) prior to the payment of the entire escrow amount, the Company will have the right to direct the escrow agent to pay the remaining escrow amount to the Company no later than 15 days after notice to the escrow agent and Mr. Temares will forfeit any and all rights to such remaining escrow amount. Mr. Temares has agreed that in the event any amount in escrow is forfeited, he will use commercially reasonable efforts to obtain a refund of applicable taxes and remit such refund to the Company and the Company has agreed to reimburse Mr. Temares, or to pay on his behalf, reasonable legal fees and expenses incurred in connection with such a refund request. Although the amended Supplemental Executive Retirement Plan (“SERP”) provides that Mr. Temares will be protected from any impact resulting from the possible application of Section 409A to the terms of the SERP due to the complexities surrounding Section 409A, the Company believes that no such payment will be required.
Table and related footnotes follow:
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
| | | | | | | | | | | | | | | | | | | | | | | | | | Cash
Severance | | | | Senior Status Salary Continuation(3) | | | | Option Acceleration(4) | | | | Restricted
Stock Acceleration(4) | | | | PSU
Acceleration(5) | | | | Benefit Continuation(6) | | | | Nonqualified
Deferred
Compensation
Balance(7) | | | | Supplemental
Pension(8) | | | | Split-Dollar
Life Insurance
Substitute
Payment(9) | | | | Total | | | Warren Eisenberg(10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause/Constructive Termination(1)(2) | | $ | 1,093,989 | | | $ | 5,740,637 | | | $ | — | | | $ | 1,320,134 | | | $ | 1,366,086 | | | $ | 1,293,823 | | | $ | 4,042,012 | | | $ | 439,267 | | | $ | 2,125,000 | | | $ | 17,420,948 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(11) | | $ | 3,300,000 | | | $ | — | | | $ | — | | | $ | 1,320,134 | | | $ | 1,366,086 | | | $ | 1,293,823 | | | $ | 4,042,012 | | | $ | 2,065,419 | | | $ | 2,125,000 | | | $ | 15,512,474 | | | Leonard Feinstein(10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause/Constructive Termination(1)(2) | | $ | 1,093,989 | | | $ | 5,740,637 | | | $ | — | | | $ | 1,320,134 | | | $ | 1,366,086 | | | $ | 1,777,948 | | | $ | 4,068,995 | | | $ | 972,740 | | | $ | 2,080,000 | | | $ | 18,420,529 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(11) | | $ | 3,300,000 | | | $ | — | | | $ | — | | | $ | 1,320,134 | | | $ | 1,366,086 | | | $ | 1,777,948 | | | $ | 4,068,995 | | | $ | 2,822,658 | | | $ | 2,080,000 | | | $ | 16,735,821 | | | Steven H. Temares(12) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause(11) | | $ | 11,902,500 | | | $ | — | | | $ | — | | | $ | 5,461,013 | | | $ | 9,225,503 | | | $ | — | | | $ | 387,874 | | | $ | 19,055,452 | | | $ | — | | | $ | 46,032,342 | | | Voluntary Termination(13) | | $ | 3,967,500 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 387,874 | | | $ | 19,055,452 | | | $ | — | | | $ | 23,410,826 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(11) | | $ | 11,902,500 | | | $ | — | | | $ | — | | | $ | 5,461,013 | | | $ | 9,225,503 | | | $ | — | | | $ | 387,874 | | | $ | 19,055,452 | | | $ | — | | | $ | 46,032,342 | | | Arthur Stark(14) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause(11) | | $ | 5,370,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,920,490 | | | $ | 1,476,412 | | | $ | — | | | $ | 33,973 | | | $ | — | | | $ | — | | | $ | 9,985,431 | | | Voluntary Termination(13) | | $ | 1,790,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 33,973 | | | $ | — | | | $ | — | | | $ | 1,823,973 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(11) | | $ | 5,370,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,920,490 | | | $ | 1,476,412 | | | $ | — | | | $ | 33,973 | | | $ | — | | | $ | — | | | $ | 9,985,431 | | | Eugene A. Castagna(14) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause(13) | | $ | 1,840,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,455,673 | | | $ | 1,515,261 | | | $ | — | | | $ | 1,482,627 | | | $ | — | | | $ | — | | | $ | 7,478,117 | | | Voluntary Termination(13) | | $ | 1,840,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,482,627 | | | $ | — | | | $ | — | | | $ | 3,322,627 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(13) | | $ | 1,840,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,455,673 | | | $ | 1,515,261 | | | $ | — | | | $ | 1,482,627 | | | $ | — | | | $ | — | | | $ | 7,478,117 | | | Susan E. Lattmann(14) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause(13) | | $ | 900,000 | | | $ | — | | | $ | — | | | $ | 558,094 | | | $ | 760,717 | | | $ | — | | | $ | 281,773 | | | $ | — | | | $ | — | | | $ | 2,500,584 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(13) | | $ | 900,000 | | | $ | — | | | $ | — | | | $ | 558,094 | | | $ | 760,717 | | | $ | — | | | $ | 281,773 | | | $ | — | | | $ | — | | | $ | 2,500,584 | | | Matthew Fiorilli(14) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause(11) | | $ | 5,025,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,347,405 | | | $ | 1,248,706 | | | $ | — | | | $ | 838,681 | | | $ | — | | | $ | — | | | $ | 9,644,348 | | | Voluntary Termination(13) | | $ | 1,675,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 838,681 | | | $ | — | | | $ | — | | | $ | 2,513,681 | | Change in Control
(No Termination) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | Change in Control + Termination(11) | | $ | 5,025,000 | | | $ | — | | | $ | 184,556 | | | $ | 2,347,405 | | | $ | 1,248,706 | | | $ | — | | | $ | 838,681 | | | $ | — | | | $ | — | | | $ | 9,644,348 | |
PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
| (1) | Cash severance represents current salary continuation through February 25, 2017. |
| (2) | In the event of a termination of employment due to death or disability, each of Messrs. Eisenberg and Feinstein (or their respective estates) will receive the same payments as if there was a “Termination Without Cause/Constructive Termination,” except that neither Mr. Eisenberg nor Mr. Feinstein (nor their respective estates) will receive either “Senior Status Salary Continuation” or “Benefit Continuation” payments. |
| (3) | Represents $400,000, adjusted for the cost of living increase between June 30, 2000 and June 30, 2015 for the CPI-U for NY, Northern NJ and LI, for 10 years during the Senior Status Period. |
| (4) | Represents the value of unvested outstanding stock options and restricted stock that would accelerate and vest on a termination occurring on February 27, 2016. In the case of stock options, the value is calculated by multiplying the number of shares underlying each accelerated unvested stock option by the difference between the Per Share Closing Price and the per share exercise price. In the case of restricted stock, the value is calculated by multiplying the number of shares of restricted stock that accelerate and vest by the Per Share Closing Price. |
| (5) | Represents the value of unvested outstanding performance stock unit (PSU) awards that would accelerate and vest on a termination without cause (and, in the cases of Messrs. Eisenberg and Feinstein, upon a termination without cause or constructive termination), subject to attainment of any applicable performance goals and after the Compensation Committee certifies achievement of the applicable performance test. These values represent acceleration of the portion of (i) the 2014 PSU awards for which the one-year performance test has been met and (ii) the 2015 PSU awards subject to the one-year performance test at target, which result was reasonably estimable on February 27, 2016 based on assumptions regarding the performance of the peer companies. The portion of 2014 and 2015 PSU awards subject to a three-year performance test, based on relative performance against the peer companies, was substantially uncertain on February 27, 2016 and is not included. For a more complete discussion of the metrics and method of calculating the applicable performance metrics for PSU awards, please see the discussion of Performance Stock Units in the Equity Compensation section of the Compensation Discussion & Analysis above. |
| (6) | Represents the estimated present value of continued health and welfare benefits and other perquisites for the life of the executive and his spouse. |
| (7) | Reflects executives’ vested account balances as of February 27, 2016. |
| (8) | For Messrs. Eisenberg and Feinstein, represents the estimated present value of lifetime supplemental pension payments, commencing six months following the conclusion of the Senior Status Period. For Mr. Temares, present value will be paid out six months following (1) termination without cause or (2) any termination (including voluntary termination) following a change in control. |
| (9) | This amount will be paid on the last day of the following fiscal year. |
| (10) | The employment agreements of Messrs. Eisenberg and Feinstein provide that in the event any amounts paid or provided to the executive in connection with a change in control are determined to constitute “excess parachute payments” under Section 280G of the Code which would be subject to the excise tax imposed by Section 4999 of the Code, the payments and benefits due to the executive will be reduced if the reduction would result in a greater amount payable to the executive after taking into account the excise tax imposed by Section 4999 of the Code. However, no reduction of payments and benefits are disclosed above since neither of these executives would have been subject to excise taxes as a result of payments subject to Section 280G of the Code that would have been made in connection with a change in control occurring on February 27, 2016. |
| (11) | Cash severance represents three times current salary payable over a period of three years following a termination without cause; or, in the cases of Messrs. Eisenberg and Feinstein, following a termination without cause or constructive termination occurring on a change in control or within two years following a change in control. |
| (12) | In the event of a termination of employment due to death or disability, Mr. Temares (or his estate) will receive the same payments as if there was a “Termination Without Cause.” |
| (13) | Cash severance represents one times current salary payable over a period of one year. |
| (14) | In the event of a termination of employment due to death or disability, the Named Executive Officer (or the executive’s estate) will receive the same payments as if there were a “Termination Without Cause.” |
PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS
We have been notified that the following shareholder proposal will be presented for consideration at the Annual Meeting. Promptly upon receipt of an oral or written request we will provide you with the name and address of, and number of shares held by, each proponent.
RESOLVED: Shareholders of Bed Bath & Beyond Inc. (the “Company”) ask the board of directors (“the Board”) to take the steps necessary to adopt a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.
The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must:
| (a) | have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination; |
| (b) | give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and |
| (c) | certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at the Company. |
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of each nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit.
SUPPORTING STATEMENT
We believe proxy access is a fundamental shareholder right that will make directors more accountable and enhance shareholder value. A 2014 CFA Institute study concluded that proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption” and could raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)
The proposed terms are similar to those in vacated SEC Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-9136.pdf). The SEC, following extensive analysis and input from companies and investors, determined that those terms struck the proper balance of providing shareholders with a viable proxy access right while containing appropriate safeguards.
The proposed terms enjoy strong support. Through October 2015, votes on more than 100 similar proposals averaged 55% and at least 60 companies enacted bylaws with similar terms.
We urge shareholders to vote FOR this proposal.
The Board of Directors Recommends a Vote Against Proposal 4
The Board of Directors recognizes that proxy access is an important development in corporate governance. Our directors, and particularly our Nominating and Corporate Governance Committee, have discussed and will continue to discuss proxy access developments with shareholders as part of the Company’s shareholder engagement program.
Based on discussions with our shareholders, we know that not all shareholders support proxy access. Among those who do support proxy access, there are differing views of the features that are appropriate for a proxy access bylaw. Additionally, based on our review of proxy access bylaws that have been adopted by other companies, there is an array of approaches on structure and fundamental terms. For example, there is not a market consensus on the percentage of shareholder-nominated candidates that can appear in the Company’s proxy materials, which we believe is a fundamental term. The proposal requires this percentage to be 25%, which is inconsistent with market trends of 20%. Accordingly, we recognize that proxy access standards are still evolving and that there is not yet a set of terms that is widely accepted by all stakeholders.
PROPOSAL 4—SHAREHOLDER PROPOSAL REGARDING PROXY ACCESS BYLAWS
While proxy access is a trending issue in corporate governance, only a minority of companies have adopted it to date. The Board believes that any decision to implement proxy access should be made in a careful and deliberative manner. For example, the Board wishes to further review continuing marketplace developments and carefully consider the intended and potentially unintended consequences of proxy access bylaws.
The Board is committed to further engagement with shareholders on proxy access and further evaluation of the issue in the coming year. Moreover, the Board intends to substantively address proxy access in advance of the Company’s 2017 annual meeting. We believe that, by that time, there is more likely to be market consensus on the fundamental terms for a proxy access bylaw.
Prior to any adoption of proxy access bylaws, our shareholders continue to have different methods for participating in the director nomination process, including:
Submitting for consideration the names of potential directors directly to the Nominating and Corporate Governance Committee; and
In accordance with SEC rules, state law and our bylaws, nominating and soliciting proxies for their own director candidates at shareholder meetings.
Additionally, we have procedures to ensure that our directors are accountable for continually representing the interests of our shareholders. These procedures include (i) a non-classified Board where each director must be re-elected annually by receiving a majority of votes cast; (ii) an annual evaluation of the Board and each committee by our directors; (iii) active shareholder outreach by the Board; and (iv) an established process for any shareholder to communicate with the Board, including with respect to potential board members.
We believe that the foregoing procedures provide our shareholders with a sufficient voice in the director nomination and election process, even without proxy access bylaws. Given these existing procedures and pending our shareholder engagement and monitoring of proxy access developments (including a more fulsome evaluation of the appropriate terms that proxy access bylaws should contain) over the next year, the Board believes that this proposal is not currently in the best interest of our shareholders and not the proper mechanism for considering proxy access.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS
RECOMMENDS A VOTEAGAINST THIS PROPOSAL.
PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION POLICY FOR SENIOR EXECUTIVES
We have been notified that the following shareholder proposal will be presented for consideration at the Annual Meeting. Promptly upon receipt of an oral or written request we will provide you with the name and address of, and number of shares held by, each proponent.
RESOLVED: Shareholders of Bed Bath & Beyond Inc. (the “Company”) urge the Compensation Committee of the Board of Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age or terminating employment with the Company. For the purpose of this policy, normal retirement age shall be defined by the Company’s qualified retirement plan that has the largest number of plan participants. The shareholders recommend that the Committee adopt a share retention percentage requirement of at least 50 percent of net after-tax shares. The policy should prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to the executive. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented so as not to violate the Company’s existing contractual obligations or the terms of any compensation or benefit plan currently in effect.
SUPPORTING STATEMENT
Equity-based compensation is an important component of senior executive compensation at our Company. While we encourage the use of equity-based compensation for senior executives, we are concerned that our Company’s senior executives are generally free to sell shares received from our Company’s equity compensation plans. In our opinion, the Company’s current share ownership guidelines for its senior executives do not go far enough to ensure that the Company’s equity compensation plans continue to build stock ownership by senior executives over the long-term.
As detailed in last year’s proxy statement, our Company’s share ownership guidelines required the CEO Steven Temares to hold stock with a value of at least $6,000,000 or approximately 111,982 shares according to the current trading price. For comparison, in 2014 Mr. Temares’ targeted amount of equity awards was 155,796 shares and 231,682 option awards. In other words the supposed “long-term” share ownership requirement could be met with less than half of one year’s worth of stock and option awards. In addition Mr. Temares already owns 2,018,624 shares or roughly 18 times the requirement.
We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity compensation.
Our proposal seeks to better link executive compensation with long-term performance by requiring a meaningful share retention ratio for shares received by senior executives from the Company’s equity compensation plans. A 2009 report by the Conference Board Task Force on Executive Compensation observed that such hold-through-retirement requirements give executives “an ever growing incentive to focus on long-term stock price performance as the equity subject to the policy increases” (available at http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf).
We urge shareholders to vote FOR this proposal.
The Board of Directors Recommends a Vote Against Proposal 5
The Board of Directors believes that equity interest by our senior executives is an important part of our executive compensation program and, along with other aspects of our compensation program, aligns the interests of our shareholders and our executives. The Company’s active engagement with shareholders is, and will continue to be, a more productive means of ensuring an appropriate level of equity interest rather than the proposal’s requirements of an inflexible mandatory policy.
The Board recommends a vote against proposal 5 because:
The proposal’s policy is unnecessary because our Named Executive Officers currently hold a substantial amount of, and have a substantial economic interest in, our common stock.
Our current executive compensation program and policies already align our senior executives’ interests with the long-term interests of shareholders.
The proposed policy could be harmful in several respects and limit our ability to attract and retain qualified candidates for senior executive positions.
PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION POLICY FOR SENIOR EXECUTIVES
Our Named Executive Officers currently hold a substantial amount of, and have a substantial economic interest in, our common stock.
Our Named Executive Officers have a strong interest in our long-term performance due to their substantial holdings and economic interest in our common stock, which is reflected in the table below. Other than our Chief Executive Officer, who is already subject to, and complies with, a robust stock ownership policy, our Named Executive Officers have achieved this high level of ownership despite not being bound to a formal policy for stock ownership. Additionally, our Chief Executive Officer has greatly exceeded his required ownership amount of $6,000,000. This substantial ownership, and related economic interest, by our Named Executive Officers motivates them to deliver long-term results, while at the same time discourages them from unreasonable risk-taking.
| | | | | | | Named Executive Officer | | | Shares/Shares
Equivalent(1) | | | | Share/Share
Equivalent Value(2) | | | Warren Eisenberg | | | 1,108,420 | | | $ | 48,841,554 | | | Leonard Feinstein | | | 968,521 | | | $ | 42,509,725 | | | Steven H. Temares | | | 1,550,598 | | | $ | 37,558,815 | | | Arthur Stark | | | 189,165 | | | $ | 7,110,643 | | | Eugene A. Castagna | | | 177,869 | | | $ | 6,346,314 | | | Susan E. Lattmann(3) | | | 32,593 | | | $ | 1,475,159 | | | Matthew Fiorilli | | | 193,474 | | | $ | 6,293,409 | |
| (1) | Includes (i) shares of common stock held directly or through an estate planning vehicle for the benefit of the executive (but not solely for the benefit of his or her family members); (ii) restricted stock where any applicable performance goals have been achieved; (iii) performance stock units whose performance goals have been achieved and (iv) shares of common stock underlying in-the-money, vested stock options (the value of such option shares are calculated as described in footnote 2 below). Share ownership is as of May 6, 2016, the record date. |
| (2) | Calculated based on the closing price of $45.26 per share on May 6, 2016. For shares of common stock underlying in-the-money, vested stock options, value reflects the difference between the aforementioned closing price and the exercise price. |
| (3) | Ms. Lattmann became an executive officer on February 26, 2014. These numbers reflect her shorter tenure as a Named Executive Officer. |
Our current executive compensation program and policies already align our senior executives’ interests with the long-term interests of shareholders.
The following aspects of our executive compensation program align the interests of our senior executives with that of our shareholders and render the proposed policy unnecessary for the achievement of that goal.
| • | Focus on long-term equity incentive awards. We do not employ short-term cash incentives or pay cash bonuses, and consequently, a large proportion of each executive’s annual compensation has been in the form of long-term equity incentive awards, in the form of stock options or performance stock units. As a result, executives have a rolling, long-term incentive linked to the value of our common stock. |
| • | Anti-hedging policy. We have a policy against hedging transactions with respect to our Company’s securities, and this policy further aligns the interests of our senior executives with that of our shareholders by prohibiting our executives from engaging in transactions designed to hedge or offset decreases in the market value of our common stock that they hold. |
The proposed policy could be harmful in several respects and limit our ability to attract and retain qualified candidates for senior executive positions.
While the Board believes it is important that our executives have a meaningful equity stake in our Company, the Board also believes that executives should not be restricted from responsibly managing their personal financial affairs and diversifying their investment portfolios over the course of their careers. This is already made more challenging for executives by an internal policy that restricts their trading in our common stock to certain limited window periods during the year and, even then, only when they are not in possession of material, nonpublic information.
The policy could also put us at a competitive disadvantage in retaining our current, and attracting new, senior executives, given that the majority of large public companies, including major retailers, do not require senior executives to retain such a significant share interest for such an extended period of time. This policy could have a particular negative effect on younger executives, who could be potentially faced with decades of a retention obligation not imposed by our competitors.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTEAGAINST THIS PROPOSAL.
PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL OF CERTAIN FUTURE SEVERANCE AGREEMENTS
We have been notified that the following shareholder proposal will be presented for consideration at the Annual Meeting. Promptly upon receipt of an oral or written request we will provide you with the name and address of, and number of shares held by, each proponent.
RESOLVED: that the shareholders of Bed Bath & Beyond Inc. (“the Company”) urge the Board of Directors to seek shareholder approval of future severance agreements with senior executives that provide benefits in an amount exceeding 2.99 times the sum of the executives’ base salary plus bonus.
“Future severance agreements” include employment agreements containing severance provisions, special retirement provisions and agreements renewing, modifying or extending existing agreements.
“Benefits” include lump-sum cash payments (including payments in lieu of medical and other benefits); the payment of any “gross-up” tax liability; the estimated present value of special retirement provisions; any stock or option awards that are awarded under any severance agreement; any prior stock or option awards as to which the executive’s access is accelerated under the severance agreement; fringe benefits; and consulting fees (including reimbursable expenses) to be paid to the executive.
SUPPORTING STATEMENT
We believe that requiring shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99 times an executive’s base salary plus bonus will provide valuable feedback, encourage restraint, and strengthen the hand of the Board’s compensation committee.
According to the Summary of Potential Payments Upon Termination or Change in Control on page 36 of the Company’s 2015 Proxy Statement, if there is a change of control and the chief executive officer is terminated, he will receive three times the sum of his base salary. According to the Company’s 2015 Proxy Statement, if there had been a change of control and termination on February 28, 2015, the CEO would have received a cash severance of $11.9 million upon termination, in addition to payments for equity awards and other benefits. In the CEO’s case, he would receive a total of $62.6 million in a change in control and termination scenario.
If you agree with us that the Company should seek shareholder ratification of severance packages with a total cost exceeding 2.99 times an executive’s base salary plus bonus, then please VOTE FOR this proposal.
The Board of Directors Recommends a Vote Against Proposal 6
The Compensation Committee works to structure the Company’s compensation program to attract, incentivize and retain executives to carry out our business strategy. The Compensation Committee requires flexibility in a dynamic environment where competitive compensation structures and applicable laws are subject to change. The Company’s active engagement with shareholders is, and will continue to be, a more productive means of ensuring accountability in designing executive compensation arrangements than the proposal’s requirements of requiring shareholder approval for each severance agreement.
The Board recommends a vote against proposal 6 because:
The proposed policy could adversely impact the Company’s ability to secure high-performing executives.
The Compensation Committee has evolved in its approach to severance arrangements for executives, without the need for a rigid policy.
Accelerated vesting of equity awards is appropriate given our compensation practices, which do not include cash bonuses for executives.
We seek and obtain shareholder feedback on compensation issues.
The proposed policy would be unduly restrictive and could adversely impact the Company’s ability to secure high-performing executive talent in the future.
The structure of compensation and retention programs in the marketplace for talent is constantly changing. Tax policy and legal requirements evolve over time as well. The severance aspects of an executive compensation package will often be structured and negotiated on an individual by individual basis taking into account these market trends, tax policies and legal requirements. Subjecting the severance element to shareholder approval would interfere with these individual negotiations and could jeopardize the Company’s ability to design and extend an attractive and competitive employment offer to future executives.
PROPOSAL 6—SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER APPROVAL OF CERTAIN FUTURE SEVERANCE AGREEMENTS
Prior shareholder approval through special meeting. Calling and holding a special meeting is an expensive and time-consuming process, and top candidates are unlikely to be willing to wait for such approval and may instead seek employment elsewhere, including at one of the Company’s competitors that does not have similar restrictions on executive severance.
Post-signing shareholder ratification. Even if shareholder ratification, after the fact, is an acceptable method of obtaining shareholder approval under the proposal, the potential for shareholders to reject the severance provisions—potentially many months after the compensation package is finalized—would likely cause top candidates to view the agreed-upon severance provisions as too uncertain to merit serious consideration.
Given these risks, the Company believes that shareholder interests are best protected by providing flexibility to the Compensation Committee, which consists solely of independent directors and oversees all matters regarding senior executive compensation, on how to design severance packages for potential executive candidates.
The Compensation Committee has evolved in its approach to severance arrangements for executives, without the need for a rigid policy.
Our severance agreements with our Chief Operating Officer and, more recently, our Chief Financial Officer provide for a cash severance payment upon a termination without cause of only one times each officer’s salary (compared to three times salary in older agreements with other Named Executive Officers). Additionally, in connection with a change in control transaction, the agreements with our Named Executive Officers contain a “double trigger” arrangement whereby the executives receive equity acceleration only upon a qualifying termination following the change in control transaction (which in the case of our Co-Chairmen includes “constructive termination” as described under Employment Agreements and Potential Payments Upon Termination or Change in Control, above).
Accelerated vesting of equity awards is appropriate given our compensation practices, which do not include cash bonuses for executives.
While our senior executives continue to be eligible to receive accelerated vesting of equity awards in certain termination scenarios, we believe that this benefit is appropriate given our compensation practice. Because our compensation packages for executives do not include cash bonuses, the proposed policy relying on that element as a basis of severance pay would be severely limiting.
We do not award cash bonuses and instead provide the largest portion of compensation to our senior executives in the form of equity awards (including performance-based awards). We believe that this structure properly incentivizes our executives to achieve long-term value for, and aligns their interests with, our shareholders.
In light of the fundamental role equity plays in our compensation structure, the Compensation Committee believes that it is appropriate that certain termination scenarios result in acceleration of equity awards at an amount greater than the proposal’s specified cap. For example, our existing arrangements providing for accelerated vesting of equity awards allow our senior executives to remain focused on protecting shareholders’ interests in the event of a potential change in control transaction and not be distracted by concerns about losing a substantial portion of their unvested equity compensation.
The Compensation Committee seeks and obtains extensive and detailed shareholder feedback through its outreach program.
As described elsewhere in this proxy statement, the Company reached out to shareholders representing approximately 68% of the Company’s outstanding shares over the course of the last year, and members of the Compensation Committee have met or spoken with shareholders representing approximately 50% of the Company’s shares. Similar engagement has occurred in prior years. Such shareholder outreach is the most effective method of providing shareholders with a voice in the Company’s executive compensation program. Requiring additional shareholder approval of a specific element of a compensation package is unlikely to provide shareholders with more effective input and carries the risk of jeopardizing the Company’s ability to attract and retain qualified candidates.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTEAGAINST THIS PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of May 6, 2016 by (i) each person or group of affiliated persons known by us to beneficially own more than 5% of our common stock; (ii) our Named Executive Officers; (iii) each of our directors and nominees for director; and (iv) all of our directors and executive officers as a group.
The following table gives effect to the shares of common stock issuable within 60 days of May 6, 2016 upon the exercise of all options and other rights beneficially owned by the indicated stockholders on that date. Beneficial ownership is determined in accordance with Rule 13d-3 promulgated under Section 13 of the Exchange Act, and includes voting and investment power with respect to shares. Percentage of beneficial ownership is based on 154,366,662 shares of our common stock outstanding at May 6, 2016. Except as otherwise noted below, each person or entity named in the following table has sole voting and investment power with respect to all shares of our common stock that he, she or it beneficially owns.
Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083.
| | | | | | | | | Name | | Position | | Number of Shares of Common Stock
Beneficially Owned and Percent of Class as
of May 6, 2016 | | The Vanguard Group | | | | | 13,701,292 | (1) | | | 8.9 | % | | BlackRock, Inc. | | | | | 10,584,463 | (2) | | | 6.9 | % | | FMR LLC | | | | | 10,224,916 | (3) | | | 6.6 | % | | Brown Brothers Harriman & Co. | | | | | 8,823,373 | (4) | | | 5.7 | % | | State Street Corporation | | | | | 8,620,466 | (5) | | | 5.6 | % | | Warren Eisenberg | | Co-Chairman and Director | | | 2,043,024 | (6) | | | 1.3 | % | | Leonard Feinstein | | Co-Chairman and Director | | | 1,902,906 | (7) | | | 1.2 | % | | Steven H. Temares | | Chief Executive Officer and Director | | | 2,290,171 | (8) | | | 1.5 | % | | Arthur Stark | | President and Chief Merchandising Officer | | | 276,024 | (9) | | | * | | | Eugene A. Castagna | | Chief Operating Officer | | | 266,025 | (10) | | | * | | | Susan E. Lattmann | | Chief Financial Officer and Treasurer | | | 38,770 | (11) | | | * | | | Matthew Fiorilli | | Senior Vice President—Stores | | | 281,336 | (12) | | | * | | | Dean S. Adler | | Director | | | 28,617 | | | | * | | | Stanley F. Barshay | | Director | | | 23,915 | | | | * | | | Geraldine T. Elliott | | Director | | | 2,815 | | | | * | | | Klaus Eppler | | Director | | | 14,460 | | | | * | | | Patrick R. Gaston | | Director | | | 17,539 | | | | * | | | Jordan Heller | | Director | | | 16,372 | | | | * | | | Victoria A. Morrison | | Director | | | 14,155 | | | | * | | | All Directors and Executive Officers as a Group (14 persons) | | | | | 7,216,129 | | | | 4.7 | % |
| * | Less than 1% of the outstanding common stock of the Company. |
| (1) | Information regarding The Vanguard Group was obtained from a Schedule 13G filed with the SEC on February 10, 2016 by The Vanguard Group. The Schedule 13G states that The Vanguard Group has sole voting power of 311,802 shares of common stock, shared voting power of 16,700 shares of common stock, sole dispositive power of 13,371,420 shares of common stock and shared dispositive power of 329,872 shares of common stock. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
| (2) | Information regarding BlackRock, Inc. was obtained from a Schedule 13G filed with the SEC on February 10, 2016 by BlackRock, Inc. The Schedule 13G states that BlackRock, Inc. has sole voting power of 9,064,922 shares of common stock and sole dispositive power of 10,584,463 shares of common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
| (3) | Information regarding FMR LLC was obtained from a Schedule 13G filed with the SEC on February 12, 2016 by FMR LLC. The Schedule 13G states that FMR LLC has sole voting power of 1,627,216 shares of common stock and sole dispositive power of 10,224,916 shares of common stock. The address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
| (4) | Information regarding Brown Brothers Harriman & Co. was obtained from a Schedule 13G filed with the SEC on February 16, 2016 by Brown Brothers Harriman & Co. The Schedule 13G states that Brown Brothers Harriman & Co. has sole voting power and sole dispositive power of 2,657,816 shares of common stock, shared voting power of 6,165,557 shares of common stock, and shared dispositive power of 7,271,692 shares of common stock. The address of Brown Brothers Harriman & Co. is 140 Broadway, New York, NY 10005. |
| (5) | Information regarding State Street Corporation was obtained from a Schedule 13G filed with the SEC on February 12, 2016 by State Street Corporation. The Schedule 13G states that State Street Corporation has shared voting power and shared dispositive power of 8,620,466 shares of common stock. The address of State Street Corporation is One Lincoln Street, Boston, MA 02111. |
| (6) | The shares shown as being owned by Mr. Eisenberg include: (a) 518,204 owned by Mr. Eisenberg individually; (b) 122,003 shares issuable pursuant to stock options granted to Mr. Eisenberg that are exercisable or become exercisable within 60 days; (c) 500,000 shares owned by a foundation of which Mr. Eisenberg and his family members are trustees and officers; (d) 869,855 shares owned by trusts for the benefit of Mr. Eisenberg and his family members; (e) 26,947 shares of restricted stock; and (f) 6,015 shares underlying PSUs that are expected to vest within 60 days. Mr. Eisenberg has sole voting power with respect to the shares held by him individually and in trust for which he is the trustee but disclaims beneficial ownership of any of the shares not owned by him individually and in trust for which he is not the trustee. |
| (7) | The shares shown as being owned by Mr. Feinstein include: (a) 900,218 shares owned by Mr. Feinstein individually; (b) 122,003 shares issuable pursuant to stock options granted to Mr. Feinstein that are exercisable or become exercisable within 60 days; (c) 350,000 shares owned by a foundation of which Mr. Feinstein and his family members are directors and officers; (d) 156,483 shares held by trusts for the benefit of Mr. Feinstein’s family members; (e) 341,240 shares owned by his spouse; (f) 26,947 shares of restricted stock; and (g) 6,015 shares underlying PSUs that are expected to vest within 60 days. Mr. Feinstein has sole voting power with respect to the shares held by him individually and in trust for which he is the trustee but disclaims beneficial ownership of any of the shares not owned by him individually and in trust for which he is not the trustee. |
| (8) | The shares shown as being owned by Mr. Temares include: (a) 412,615 shares owned by Mr. Temares individually; (b) 1,520,705 shares issuable pursuant to stock options granted to Mr. Temares that are exercisable or become exercisable within 60 days; (c) 187,144 shares issuable pursuant to stock options that are exercisable held by a family limited partnership, of which Mr. Temares and his spouse are the sole general partners, and of which Mr. Temares and his spouse serve as limited partners together with trusts for the benefit of Mr. Temares, his spouse and his children; (d) 14,286 shares owned by the above described family limited partnership; (e) 5,000 shares owned by a family limited partnership established by Mr. Temares’ mother; (f) 111,472 shares of restricted stock; and (g) 38,949 shares underlying PSUs that are expected to vest within 60 days. Mr. Temares has sole voting power with respect to the shares held by him individually and the above described family limited partnership but disclaims beneficial ownership of the shares owned by the family limited partnership established by Mr. Temares’ mother. |
| (9) | The shares shown as being owned by Mr. Stark include: (a) 85,018 shares owned by Mr. Stark individually; (b) 125,176 shares issuable pursuant to stock options granted to Mr. Stark that are exercisable or become exercisable within 60 days; (c) 59,614 shares of restricted stock; and (d) 6,216 shares underlying PSUs that are expected to vest within 60 days. |
| (10) | The shares shown as being owned by Mr. Castagna include: (a) 74,277 shares owned by Mr. Castagna individually; (b) 135,406 shares issuable pursuant to stock options granted to Mr. Castagna that are exercisable or become exercisable within 60 days; (c) 50,126 shares of restricted stock; and (d) 6,216 shares underlying PSUs that are expected to vest within 60 days. |
| (11) | The shares shown as being owned by Ms. Lattmann include: (a) 15,186 shares owned by Ms. Lattmann individually; (b) 9,185 shares issuable pursuant to stock options granted to Ms. Lattmann that are exercisable or become exercisable within 60 days; (c) 11,392 shares of restricted stock; and (d) 3,007 shares underlying PSUs that are expected to vest within 60 days. |
| (12) | The shares shown as being owned by Mr. Fiorilli include: (a) 67,300 shares owned by Mr. Fiorilli individually; (b) 160,907 shares issuable pursuant to stock options granted to Mr. Fiorilli that are exercisable or become exercisable within 60 days; (c) 47,916 shares of restricted stock; and (d) 5,213 shares underlying PSUs that are expected to vest within 60 days. |
Section 16(a) Beneficial Ownership Reporting Compliance
The members of our Board of Directors, our executive officers and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires them to file reports with respect to their ownership of our common stock and their transactions in such common stock. Based solely upon a review of the copies of Section 16(a) reports that we have received from such persons or entities for transactions in our common stock and their common stock holdings for fiscal 2015, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors and executive officers.
OTHER MATTERS
Certain Relationships and Related Transactions
The Company’s Audit Committee reviews and, if appropriate, approves transactions brought to the Committee’s attention in which the Company is a participant and the amount involved exceeds $120,000, and in which, in general, beneficial owners of more than 5% of the Company’s common stock, the Company’s directors, nominees for director, executive officers, and members of their respective immediate families, have a direct or indirect material interest. The Committee’s responsibility with respect to the review and approval of these transactions is set forth in the Audit Committee’s charter.
Martin Eisenberg is the Company’s Regional Vice President for the Northeast Region, with responsibilities in areas that include store operations, merchandising, store design and product sourcing. For fiscal 2015, his salary was $525,872 and he received other benefits consistent with his position and tenure, including a restricted stock award valued at $150,000, and an automotive allowance and employer 401(k) match aggregating approximately $12,000. He has been employed by the Company since 1977 and is the son of Warren Eisenberg, the Company’s Co-Chairman.
A brother-in-law of Arthur Stark, the Company’s President, earned in his capacity as a sales representative employed by Blue Ridge Home Fashions commissions (aggregating approximately $284,000) on sales of merchandise in fiscal 2015 by Blue Ridge Home Fashions to the Company in the amount of approximately $28.4 million. Additionally, a son-in-law of Mr. Stark is a managing member and has a minority equity interest in Colordrift LLC which had aggregate sales of merchandise to the Company of approximately $3.2 million in fiscal 2015. Colordrift LLC had a pre-existing sales relationship with the Company at the time such managing member became Mr. Stark’s son-in-law, which was during the Company’s fiscal 2012 year.
Householding
Unless we have received contrary instructions, we are mailing one copy of the proxy materials (other than the proxy card) to record holders who have the same address and last name. Such record holders will continue to receive separate proxy cards. We refer to this practice as householding. If you are a record holder who participates in householding and wish to receive separate copies of the proxy materials for the 20162022 Annual Meeting or future Annual Meetings, then please contact the Secretary of the Company by writing toCompany’s Investor Relations Department at 650 Liberty Avenue, Union, New Jersey 07083, or calling 908-688-0888.by emailing ir@bedbath.com. We will promptly deliver separate copies of the proxy materials for the 20162022 Annual Meeting upon receiving your request. If you are a record holder who is eligible for householding and do not currently participate in the program but would like to, then please contact the Secretary of the CompanyInvestor Relations at the address or phone number indicated above. If you are a beneficial owner, then please contact your stockbroker, bank or other holder of record to receive one or separate copies of the proxy materials. Next Year’s Annual Meeting
next year’s annual meeting Proposals whichthat shareholders intend to be eligible for inclusion in next year’sthe Company’s proxy statement undermaterials for the 2023 Annual Meeting of Shareholders pursuant to the SEC’s proxy rules (i.e., Rule 14a-8) must be received by the Company no later than January 31, 2017. Such proposals can be sentFebruary 1, 2023. Any shareholder intending to include a director nominee in the Company at 650 Liberty Avenue, Union, New Jersey 07083, Attn: Warren Eisenberg, Co-Chairman and Secretary.In addition, underCompany’s proxy materials for the 2022 Annual Meeting of Shareholders pursuant to Article II, Section 11 of the Company’s Amended By-laws,and Restated Bylaws (i.e. proxy access) should carefully review the requirements for using proxy access, as described in such Section. The Company must receive a shareholder’s nomination, with all required information, between the close of business on January 2, 2023 and the close of business on February 1, 2023.
Under the Company’s Amended and Restated Bylaws, any proposal for consideration at the 20172023 Annual Meeting of Shareholders submitted by a shareholder other than pursuant to Rule 14a-8the two methods described above will be considered timely only if it is received by the Secretary of the Company at its principal executive offices at 650 Liberty Avenue, Union, New Jersey 07083 between the close of business on March 3, 201716, 2023 and the close of business on April 3, 2017,15, 2023, and is otherwise in compliance with the requirements set forth in the Company’s Amended By-laws.and Restated Bylaws. If the date of the 20172023 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after the anniversary date of the 20162022 Annual Meeting of Shareholders, notice must be received notno earlier than the close of business on the 120th day prior to the 20172023 Annual Meeting of Shareholders and not later than the close of business on the 90th day prior to the 20172023 Annual Meeting of Shareholders, or if the first public announcement of the date of the 20172023 Annual Meeting of Shareholders is less than 100 days prior to the date of the 20172023 Annual Meeting of Shareholders, the 10th day following the date on which notice of the date of the meeting is given to shareholders or made public, whichever occurs first. TABLE OF CONTENTS Any information required to be received by the Company, as described above, should be sent to the Company’s Corporate Secretary at 650 Liberty Avenue, Union, New Jersey 07083, Attn: c/o Corporate Secretary. cautionary note regarding forward-looking statements This proxy statement and related materials contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including, but not limited to, our progress and anticipated progress towards our long-term objectives, as well as more generally the status of our future liquidity and financial condition and our outlook for our 2022 Fiscal year. Many of these forward-looking statements can be identified by use of words such as may, will, expect, anticipate, approximate, estimate, assume, continue, model, project, plan, goal, preliminary, and similar words and phrases, although the absence of those words does not necessarily mean that statements are not forward-looking. Our actual results and future financial condition may differ materially from those expressed in any such forward-looking statements as a result of many factors. Such factors include, without limitation: general economic conditions including the recent supply chain disruptions, labor shortages, wage pressures, rising inflation and the ongoing military conflict between Russia and Ukraine; a challenging overall macroeconomic environment and a highly competitive retailing environment; risks associated with the ongoing COVID-19 pandemic and the governmental responses to it, including its impacts across our businesses on demand and operations, as well as on the operations of our suppliers and other business partners, and the effectiveness of our and governmental actions taken in response to these risks; changing consumer preferences, spending habits and demographics; demographics and other macroeconomic factors that may impact the level of spending for the types of merchandise sold by us; challenges in executing our omni-channel and transformation strategy, including our ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets we serve; our ability to successfully execute our store fleet optimization strategies, including our ability to achieve anticipated cost savings and to not exceed anticipated costs; our ability to execute on any additional strategic transactions and realize the benefits of any acquisitions, partnerships, investments or divestitures; disruptions to our information technology systems, including but not limited to security breaches of systems protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; damage to our reputation in any aspect of our operations; the cost of labor, merchandise, logistical costs and other costs and expenses; potential supply chain disruption due to trade restrictions or otherwise, and other factors such as natural disasters, pandemics, including the COVID-19 pandemic, political instability, labor disturbances, product recalls, financial or operational instability of suppliers or carriers, and other items; inflation and the related increases in costs of materials, labor and other costs; inefficient management of relationships and dependencies on third-party service providers; our ability to attract and retain qualified employees in all areas of the organization; unusual weather patterns and natural disasters, including the impact of climate change; uncertainty and disruptions in financial markets; volatility in the price of our common stock and its effect, and the effect of other factors, including the COVID-19 pandemic, on our capital allocation strategy; changes to statutory, regulatory and other legal requirements or deemed noncompliance with such requirements; changes to accounting rules, regulations and tax laws, or new interpretations of existing accounting standards or tax laws; new, or developments in existing, litigation, claims or assessments; and a failure of our business partners to adhere to appropriate laws, regulations or standards. . A further description of these and other risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the year ended February 26, 2022 and the Company’s other filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Except as required by law, we do not undertake any obligation to update our forward-looking statements. 
TABLE OF CONTENTS non-GAAP financial measures The Company reports its financial results in accordance with GAAP. The Company also reports certain non-GAAP financial measures that it believes provide management, analysts, investors and other users of the Company’s financial information with meaningful supplemental information regarding the performance of the Company’s business. These non-GAAP financial measures include, but are not limited to, adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”). The Company also uses certain non-GAAP financial measures in its short term annual incentive compensation program (“STIP”). These non-GAAP financial measures should not be considered superior to, but rather in addition to other financial measures prepared by the Company in accordance with GAAP. The Company’s method of determining these non-GAAP financial measures may be different from other companies’ methods and, therefore, may not be comparable to those used by other companies and the Company does not recommend the sole use of these non-GAAP measures to assess its financial and earnings performance. NON-GAAP RECONCILIATION
RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA
(IN MILLIONS)
(UNAUDITED) Net (loss) income | | | $(560) | | | $18 | | | $(1) | | | $281 | | | $37 | | | $— | | | $127 | | | $462 | | | $(98) | Depreciation and amortization | | | 294 | | | — | | | — | | | (39) | | | — | | | — | | | — | | | (39) | | | 255 | Gain on extinguishment of debt | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | Interest expense | | | 65 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 65 | (Benefit) provision for income taxes | | | 87 | | | — | | | — | | | — | | | — | | | — | | | (127) | | | (127) | | | (40) | EBITDA | | | $(114) | | | $18 | | | $(1) | | | $242 | | | $37 | | | $— | | | $— | | | $296 | | | $182 |
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Align pay with our transformation strategy, performance and creation of value for shareholders
No performance goals for incentive awards that encourage excessive risk taking
