UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
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RESOURCES CONNECTION, INC.
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September 15, 20179, 2021
Dear Stockholder:
On behalf
Our purpose at RGP is to ignite the power of human agility. Human agility affords opportunity for talent to work in new ways and for clients to drive transformation with speed and efficiency. Our business model is particularly salient now emerging from the deep impacts of a global pandemic. We align to the Now of Work – bringing flexibility, global reach, continuous learning, virtual delivery, modular project work, and purpose to professional services. We are different than the Big Four for good reason and our client base, comprised of many of the world’s most beloved brands, are increasingly taking notice. While fiscal 2021 began in crisis and lockdown mode across the globe, we steadily grew throughout the year and finished by delivering year over year revenue growth in the fourth quarter as compared to the fourth quarter of fiscal 2020 on a same day constant currency basis. Despite the crisis environment, we also improved our cost structure and operational efficiency, positioning us for better profitability in the future. Given the macro changes in how work will be accomplished in the post-COVID era, we believe we have a brand experience and business model that will drive long-term, sustainable growth. We are committed to our consultants, our clients and our community to deliver superior performance and corporate citizenship as we move through recovery. In doing so, we are excited to provide more transparent communication, including information about our governance, diversity, equity and inclusion commitment and Board alignment and refreshment.
Stockholder Engagement
We continue to build a more robust approach to stockholder engagement through frequent, open and focused communication. During fiscal 2021, we participated in many investor roadshows on various virtual platforms and have appreciated the opportunity to be more interactive through technology. We welcome dialogue with our stockholders and thank those of Directors, you who have been actively engaged in return. We are hosting our first investor day on October 13, 2021 in New York City and invite you all to attend. We will be diving deeper into our Human Agility research, digital agenda, ESG commitment and our numbers.
DE&I
Diversity, equity and inclusion (“DE&I”) is a critical element of our human-first brand. We are extremely proud of our ability to attract and retain diverse talent. Our commitment to DE&I guides our conduct in our interactions with both clients and each other. We recognize diversity as a strength that is cultivated through our culture, our people, our business and our clients. Please review this Proxy Statement and our Annual Report for fiscal 2021 for a more robust disclosure of our outstanding gender and racial diversity representation, as well as our other important corporate social responsibility initiatives.
Board Refreshment & Alignment
During the past 12 months, we have welcomed two new Board members: Lisa Pierozzi and David White. Both are exceptional additions to our Board as they bring executive management skills and a passion for client service and people. In this Proxy Statement, we are announcing that Mike Wargotz is not standing for reelection. Throughout his tenure on our Board, Mike Wargotz has operated with distinction and excellence, and we thank him for his exceptional service. We will continue our refreshment efforts in the coming year as we also take the Board size down and increase diversity. In our search for new Board members, we seek the same values that guide our talent strategies – integrity, intellectual rigor, accountability and diversity of backgrounds, skills and attributes.
2021 Annual Meeting
We cordially invitedinvite you to attend the 2017our 2021 Annual Meeting of Stockholders of Resources Connection, Inc., to be held at 1:30 p.m. Pacific Time, on October 19, 2017,21, 2021, at the Company’s headquarters in Irvine, California. The formal noticeNotice of the Annual Meeting appears on the following page. The attached Notice of Annual Meetingpage and Proxy Statement describe the matters we expect to be acted upon at the Annual Meeting.
During the Annual Meeting, stockholders will have the opportunity to ask questions. Whether or not you plan to attend the Annual Meeting, it is important your shares be represented. Regardless ofPlease follow the number of shares you own, please sign and date the enclosed proxy card and promptly return it to us in the enclosed postage-prepaid envelope. Alternatively, as discussed in the Question and Answer section of the Proxy Statement, you may be eligibledirections below to vote electronically over the Internet or by telephone. If you sign and return your proxy card without specifying your choices, your shares will be voted in accordance witha timely manner.
We thank you for your ownership and are grateful for your support in helping us change the recommendations ofway the Board of Directors contained in the Proxy Statement.
world works. We look forward to seeingthe year ahead and hope to see you on October 19, 2017,at our Investor Day and urge you to return your proxy as soon as possible.Annual Meeting.
Sincerely, | ||
Kate W. Duchene | ||
President and Chief Executive Officer |
Sincerely,
Kate W. Duchene
Chief Executive Officer
RESOURCES CONNECTION, INC.
17101 ARMSTRONG AVENUE
IRVINE, CALIFORNIA 92614
(714) 430-6400
NOTICE OF 20172021 ANNUAL MEETING OF STOCKHOLDERS
1:30 p.m., Pacific Time, on Thursday, October | |||
Resources Connection, Inc. 17101 Armstrong Avenue, Irvine, California | |||
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It is important that your shares be represented and voted at the Annual Meeting. |
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PROXY STATEMENT
We are sending this Proxy Statement (“Proxy Statement”) to you, the stockholders of Resources Connection, Inc. (“Resources Connection”RGP,” “we” or “the Company”the “Company”), a Delaware corporation, as part of our Board of Directors’ (our “Board’s”) solicitation of proxies to be voted at our 20172021 Annual Meeting of Stockholders (“Annual Meeting”) to be held at the Company’s headquarters in Irvine, California, at 1:30 p.m., Pacific Time, on October 19, 2017,21, 2021, and at any postponements or adjournments thereof. This Proxy Statement and accompanying form of proxyour 2021 Annual Report on Form 10-K, which includes our fiscal 2021 financial statements (“Annual Report”) were first sent or made available to stockholders on or about September 15, 2017.9, 2021.
We are enclosing a copy of our 2017 Annual Report to Stockholders (“Annual Report”), which includes our fiscal 2017 financial statements. Our Annual Report is not, however, part of the proxy materials.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on October 19, 2017.21, 2021.
This Proxy Statement and our Annual Report are available electronically at www.proxyvote.com. Copies of these materials are also available electronically on the Company’s website athttp:https://ir.rgp.com/annuals-proxies.cfmfinancials-filings/annual-reports-and-proxies. The other information on our corporate website does not constitute part of this Proxy Statement.
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CEO Pay Ratio Disclosure | 64 | |||
Proposal 3. Advisory Vote on the Company’s Executive Compensation | 65 | |||
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2017FORWARD LOOKING STATEMENTS
Certain statements in this Proxy Statement are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,” “should,” or “will” or the negative of these terms or other comparable terminology. In this Proxy Statement, such statements include statements regarding the expected impact of the ongoing COVID-19 pandemic (the “Pandemic”), our growth and operational plans, including the strength of our pipeline, and expectations regarding macro trends. Such statements and all phases of the Company’s operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties include uncertainties regarding the impact of the Pandemic on our business and the economy generally, our ability to successfully execute on our strategic initiatives, our ability to realize the level of benefit that we expect from our restructuring initiatives, our ability to compete effectively in the highly competitive professional services market and to secure new projects from clients, our ability to successfully integrate any acquired companies, overall economic conditions and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 29, 2021 and our other public filings made with the U.S. Securities and Exchange Commission (the “SEC”) (File No. 000-32113). Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not intend, and undertakes no obligation, to update the forward-looking statements in this Proxy Statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law to do so.
This summary highlights information contained elsewhere in this Proxy Statement. The following description is only a summary. For more complete information about these topics, please review our Annual Report, which contains our financial statements, and read the entire Proxy Statement carefully before voting.
Although the Pandemic continued to bring challenges to the global economy and our business during fiscal 2021, including work-from-home government mandates across the world and the global suspension of business travel, it has also reinforced the importance of one of our foundational tenets: operational agility.
Notwithstanding the disruptions caused by the Pandemic, we are stable and growing our core business, particularly through strategic client and industry vertical programs, and our population is healthy. In fiscal 2021, our overall productivity remained high. While the prolonged adverse impact from the Pandemic significantly impacted our operating results throughout fiscal 2021, we have experienced a steady recovery in each sequential quarter after reaching a trough in revenue during the first quarter of fiscal 2021. In the fourth quarter of fiscal 2021, the revenue exceeded the first quarter of fiscal 2021 by 16.9% and returned to year over year growth compared to the fourth quarter of fiscal 2020 on a same day constant currency basis(1). Additionally, as we continued to right size and optimize our cost structure globally, we delivered solid cash flows and profit margins. Given our balance sheet and liquidity position, we believe we have the financial flexibility and resources needed to operate in an economic environment with continued uncertainty.
The impact of the Pandemic did not just affect us and our industry. We have all been impacted. Therefore, instead of focusing exclusively on the disruption, we choose to be optimistic, search for opportunities, and focus on what we can control – such as reducing costs, further investment in digital innovation, and embracing and enhancing our agile operating model with borderless talent.
While the impact of the Pandemic and the resulting restrictions imposed from time to time have undoubtedly caused disruptions in the U.S. and global economy and may continue to unsettle financial markets and global economic activities, we have been resourceful in bringing solutions to our clients despite the required restrictions, viewing the new ways of working as an opportunity, and above all else, have remained agile. As always, we thank you, our stockholders, for your continued support.
(1) | See page 30 of Resources Connection, Inc.’s Annual Report on Form 10-K, filed with the SEC on July 23, 2021, for a discussion of the adjustments made and a reconciliation of those adjustments to revenue, the most directly comparable U.S. generally accepted accounting principles (“GAAP”) financial measure, to compute same day constant currency revenue. |
We achieved 8.2% or $18.7 million in cost reduction for fiscal 2021, including (i) $12.5 million or 9.1% reduction in management compensation and (ii) $3.5 million or 19.8% savings in occupancy costs by shrinking over 60,000 square feet in real estate footprint;
• | We achieved Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, |
• | We achieved an Adjusted EBITDA Margin of |
We generated diluted earnings per share of $0.56$0.78 for fiscal 2017; and
We generated $39.9 million in cash flow from operations;
Our financial position is strong withThe 10.5% decline in revenue in fiscal 2021 reflected the adverse impact of the Pandemic and fewer business days in fiscal 2021. Revenue level troughed during the first quarter of fiscal 2021 and has since recovered steadily beginning in the second fiscal quarter as vaccine development advanced and uncertainties related to the Pandemic began to subside. With improved operating leverage and cost structure, we generated $39.9 million in cash of approximately $62.3 million and $28.3 million of cash provided byfrom operating activities in fiscal 2017.2021. As of May 29, 2021, we had $74.4 million in cash and cash equivalents and $75.5 million available for borrowing under our $120 million secured revolving credit facility with Bank of America. Given our balance sheet and liquidity position, we believe we have the financial flexibility and resources needed to operate in the current uncertain economic environment. Our continued ability to continue to generate cash allows us the flexibility of returningto return cash to you, our stockholders, while being opportunistic on investments for our future growth. Additionally, the Company entered into a $120 million secured revolving credit facility (“Facility”) with Bank of America in October 2016. The Facility is available for working capital and general corporate purposes, including potential acquisitions and stock repurchases. On November 21, 2016, the Company completed its Dutch auction tender offer, purchasing approximately 6.5 million shares of the Company’s common stock for approximately $104.2 million, excluding transaction costs, funded partially by borrowing $58.0 million under the Facility and using $46.2 million of cash on hand. As of the end of fiscal 2017, approximately $71 million remained available for borrowing under the Facility.
We returned approximately $133.1$18.2 million to stockholders during fiscal 20172021 through our dividend program which we kept intact despite the Pandemic. In an effort to ensure a strong liquidity position during the Pandemic, we did not make any share repurchase and dividend programs, as well as the repurchase of sharesrepurchases in the modified Dutch tender offer. Infiscal 2021. However, in the past three fiscal years, we have returned a cumulative total of almost $213.3$86.9 million to our stockholders through our share repurchase and dividend programs and the repurchase of shares in the modified Dutch tender offer.
program. We believe that the payment of a regular dividend, along with the continuancecontinuation of our stock repurchase plan givesas circumstances permit, provides us the ability to consistently return cash to our stockholders with consistency.stockholders.
Issuance of Quarterly Dividend:
In July 2010, our Board of Directors authorized the establishment of a regular quarterly dividend, subject to quarterly Board approval. This dividend has been increased each year since its introduction. InConsistent with prior quarters, in July 2017,2021, our Board authorized the payment of Directors approved a 9% increase in the quarterly dividend to $0.12at $0.14 per share. Our next dividend payment is payable on September 23, 2021 to all stockholders of record on August 26, 2021.
ShareStock Repurchase:
In July 2015, our Board of Directors approved a new sharestock repurchase program authorizing the purchase,repurchase, at the discretion of the Company’sour senior executives, of our common stock with anfor a designated aggregate dollar limit not to exceed $150 million. During the year ended May 29, 2021, the Company did not make any repurchases of its common stock on the open market. As of May 29, 2021, approximately $85.1 million remained available for future repurchases of our common stock under the July 2015 program.
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CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY HIGHLIGHTS
exceed $150 million. The program commencedCompany and our Board maintain a focus on corporate social responsibility and sustainability. We continuously look for new and better ways to foster a diverse and inclusive work environment, minimize our environmental impact and engage our surrounding communities, all while creating value for our stockholders. Below are some recent highlights of our diversity and sustainability initiatives. For additional information, see “Corporate Social Responsibility and Sustainability” beginning on page 32.
In fiscal 2021, we established a North American Diversity Council and a global Diversity Ambassador program, consisting of team members from around the world and from various functions. The Diversity Council and Diversity Ambassadors serve important roles in working closely with senior leaders to facilitate alignment between our DE&I efforts and overall business strategy of promoting human capital practices that support and accelerate our DE&I goals. | ||
• | Sustainability. As a global human capital company, our environmental footprint is relatively small. We nevertheless continue to take actions to reduce our footprint and be environmentally responsible, including (1) reducing our global real estate footprint by over 60,000 square feet during fiscal 2021 by creating designated virtual offices, utilizing shared work spaces and expanding our use of technology to allow more employees to work virtually; (2) reducing our use of paper by transitioning more than 95% of client invoices to electronic billing, implementing electronic paystubs for all US employees and reducing our use of print-based marketing materials in favor of digital assets; and (3) minimizing our Company’s carbon emissions through reduced air travel and commuting due to our use of virtual offices and hybrid approach to remote and in-office work and maximizing the use of technology for virtual meetings. |
MANAGEMENT HIGHLIGHTS
Fiscal 2017 was a year of change for the Company. Our Chief Executive Officer and our Chief Financial Officer retired. We formed a new executive team with redefined functional roles to drive a refined strategic vision for the Company, and developed an execution plan for the next five years. We completed a reductioncommitment toward this Fund in force with a goal to take approximately $7.0 million of cost out of our SG&A per year, affecting approximately 50 management employees. The following are the most significant changes to the management team in order of occurrence:
Change in the Chief Financial Officer
Nathan Franke, our Executive Vice President & Chief Financial Officer since 2007, retired effective August 26, 2016. Effective August 29, 2016, Herbert M. Mueller was promoted to the position of Executive Vice President and Chief Financial Officer to replace Mr. Franke. Mr. Mueller joined the Company in 2012 and previously served as Managing Director of our Atlanta, Georgia office with full oversight and operations responsibility for that practice office.
Appointment of a Chief Accounting Officer
On August 17, 2016, the Company announced the promotion of John D. Bower to the newly-created position of Chief Accounting Officer. Mr. Bower reports to the Chief Financial Officer. Since 2005, Mr. Bower served the Company as Senior Vice President, Finance. In that role, Mr. Bower was the senior finance leader responsible for the Company’s financial reporting and financial operations.
Change in the Chief Executive Officer
On October 7, 2016, Anthony C. Cherbak, President and Chief Executive Officer retired from the Company due to health issues. Mr. Cherbak has and will continue to serve the Company as a member of the Board of Directors. Consistent with the Company’s Emergency Succession Plan, the Board of Directors appointed Kate W. Duchene to the role of Interim Chief Executive Officer.
On December 16, 2016, following a search process led by a Search Committee of the Board of Directors, the Board appointed Kate W. Duchene to serve as President and Chief Executive Officer of the Company. Prior to her appointment, Ms. Duchene held the role of Chief Legal Officer, Executive Vice President, Human Resources & Secretary, for the Company, positions she held since 2000.
Resignation of the Executive Vice-President — International Operations and Procurement & Supply Chain Management
On November 16, 2016, Tracy Stephens announced his decision to leave his position as Executive Vice-President — International Operations and Procurement & Supply Chain Management of the Company and his memberships on the Boards of Directors of the Company’s international subsidiaries or affiliates. Mr. Stephens left the Company effective as of December 31, 2016.
Date and Time: | 1:30 p.m., Pacific Time, on Thursday, October |
Place: | Resources Connection, Inc. |
17101 Armstrong Avenue, Irvine, California 92614
| 17101 Armstrong Avenue, Irvine, California 92614* |
Record Date: | August 23, 2021 |
Voting: | Stockholders as of the close of business on the record date are entitled to |
* | In the event it is not possible or advisable to hold our Annual Meeting in person as currently planned due to the Pandemic, we may decide to hold the Annual Meeting virtually via the Internet. Please refer to the attached Notice of Annual Meeting for additional information. |
1. Election of three directors, each for a three-year term expiring at the Company’s annual meeting in 20202024 and until their respective successors are duly elected and qualified;
2. Ratification of the appointment of RSM US LLP as the Company’s independent registered public accounting firm for fiscal year 2018;2022;
3. Approval on an advisory basis of the Company’s executive compensation; and
4. Approval on an advisory basis of the frequency of future advisory votes on the Company’s executive compensation; and
5. Transaction of such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.
Detailed Information | ||
Proposal 1— Election of Three Directors for a Three-Year Term |
The following table provides summary information about each director nominee. More detailed information may be found in the section entitled “Proposal 1. Election of Directors.”
Name and Principal Occupation | Age | Director Since | Board Committees |
Donald B. Murray- Independent Chairman of the Board Former Chief Executive Officer, Resources Connection, Inc. | 74 | 1999 | None |
Lisa M. Pierozzi- Independent Former Executive Vice President, Finance & Administration and Chief Financial Officer of the Motion Picture Association Former Partner of PwC (formerly Price Waterhouse) | 60 | 2021 | Audit Committee |
A. Robert Pisano- Lead Independent Director Business Consultant and former interim Chief Executive Officer and President and Chief Operating Officer of the Motion Picture Association | 78 | 2002 | Compensation Committee Corporate Governance and Nominating Committee (Chair) |
Committee | ||||||||||||||||
Name | Age | Director | Background | Experience/ Qualification | Ind. | Comp | Audit | Nom/ Govern | ||||||||
Robert F. Kistinger | 64 | 2006 | Mr. Kistinger was the Chief Operating Officer of Bonita Banana Company from 2009 to 2014 and now continues to serve as an Executive Advisor to the company. He was formerly President and Chief Operating Officer of the Fresh Group of Chiquita Brands International, Inc. (“Chiquita”). Mr. Kistinger was employed at Chiquita for more than 27 years and held numerous senior management positions in accounting, financial analysis and strategic planning roles. Prior to joining Chiquita, Mr. Kistinger was with the accounting firm of Arthur | Mr. Kistinger has held leadership positions in large multinational companies with operations in Latin America, developing critical financial and international operations expertise. Mr. Kistinger’s knowledge, insight and experience are invaluable to the Company and to the Board as we continue to provide services and solutions to our clients around the world. | X | X | X |
Committee | ||||||||||||||||
Name | Age | Director | Background | Experience/ Qualification | Ind. | Comp | Audit | Nom/ Govern | ||||||||
Young & Company for six years and is a certified public accountant and a member of the American Institute of Certified Public Accountants | ||||||||||||||||
Jolene Sarkis | 67 | 2002 | Ms. Sarkis has been a private marketing and advertising consultant since 2001. Ms. Sarkis held various positions of responsibility for Time Inc. from 1985 to 2001 in sales and marketing, primarily for Time Inc.’s leading publications which include Time, People, Sports Illustrated, Fortune and Money. Ms. Sarkis served as Publisher of Fortune from 1996 to 2001 and, additionally, as President of Fortune from 1999 to 2001. She is currently Executive Vice President of CFS Restaurant Group, Inc., a position she has held since 2011. | Ms. Sarkis’ business experience in operations management and business development brings a unique skill set to the Board and to the Company in the critical areas of leadership and strategic planning, as well as marketing and human resources.. | X | X | ||||||||||
Anne Shih | 70 | 2007 | Ms. Shih is actively involved in many philanthropic endeavors, including her twenty years with the Bowers Museum in Santa Ana, California, where she currently serves as Chairwoman of the Board of Governors, a position she has held since 2010. Ms. Shih is an honorary president of the Chinese Cultural Arts Association, a position she has held since 2003 and was also Deputy Secretary of the Chinese Women’s League Los Angeles Chapter. In 2008, Ms. Shih was awarded a Certificate of Special Congressional Recognition from the U.S. Congress for her outstanding and invaluable service to the community. In 2010, Ms. Shih was made the first Official World Ambassador of Cultural Heritage for Shaanxi Province, China. | Ms. Shih’s strong business and personal relationships in Greater China are important to the Company and the Board as we expand our international footprint in Asia. | X | X |
Board Recommendation — FOR each of the Board’sThree Director Nominees
Detailed Information | ||
Proposal 2— Ratification of the appointment of RSM US LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year |
For more detailed information on the appointment of RSM US LLP, please refer to the detailed information in “Proposal 2. Ratification of Appointment of Independent Registered Public Accounting Firm for Fiscal Year 2018.2022.”
ShareholderStockholder ratification of the appointment of RSM US LLP as our independent registered public accounting firm is not required by our Third Amended and Restated Bylaws (our “Bylaws”) or otherwise. However, theour Board is submitting the appointment of RSM US LLP to theour stockholders for ratificationsratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or notthe decision to retain RSM US LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may appoint a different independent auditor at any time during the year if the Audit Committee determines that such a change would be in the best interestsinterest of the Company and our stockholders.
Set forth below is summary information with respect to RSM US LLP’s fees for services provided to the Company in fiscal 20172021 and fiscal 2016.2020.
2021 | 2020 | |||||||
Audit Fees | $ | 1,227,535 | $ | 1,235,500 | ||||
Audit Related Fees | $ | 52,400 | $ | 34,400 | ||||
Tax Fees | $ | 6,500 | $ | 6,500 | ||||
All Other Fees | $ | 0 | $ | 0 |
2017 | 2016 | |||||||
Audit Fees | $ | 736,500 | $ | 689,400 | ||||
Audit Related Fees | — | — | ||||||
Tax Fees | $ | 9,500 | — | |||||
All Other Fees | — | — |
Board Recommendation — FOR ratification of the appointment of RSM US LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 20182022
Detailed Information | ||
Proposal 3— Advisory Vote on the Company’s Executive Compensation |
We are asking stockholders to approve, on an advisory basis, the Company’s executive compensation as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this Proxy Statement (including in the compensation tables and narratives accompanying those tables as well as the Compensation Discussion and Analysis). TheOur Board of Directors recommends aFOR vote because it believes that the Company’s executive compensation programs use appropriate structures and sound pay practices that are effective in achieving the Company’s core objectives of providing competitive pay, pay for performance, and alignment of management’s interests with the interests of long-term stockholders. In addition to reviewing the information in “Proposal 3. Advisory Vote on the Company’s Executive Compensation” and the executive compensation tables and corresponding narratives in this Proxy Statement, stockholders are encouraged to read the “Compensation Discussion and Analysis” section of this Proxy Statement for a more detailed discussion of how our compensation programs reflect our core objectives. Further, theour Board believes our executive compensation programs are reasonable in relation to comparable public and private companies in our industry.
Pay for Performance Orientation
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For fiscal 2021, approximately 75% of our Chief Executive Officer’s and Chief Operating Officer’s, and 65% of our Chief Financial Officer’s, target total direct compensation(4) was not guaranteed but rather was tied to metrics related to Company performance and/or stock price, and therefore meaningfully “at risk”. |
• | Base Salaries. To preserve cash in an uncertain marketplace during the Pandemic, the Compensation Committee determined not to increase the base salary of any NEO during fiscal 2021. |
• | Annual |
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Ms. Duchene, our President and Chief Executive Officer, was awarded a total annual incentive of $438,685,$836,000, representing 33%37.2% of her maximum award opportunity or 75%111.5% of her target annual incentive opportunity;
Mr. Mueller Chief Financial Officer, was awarded a total annual incentive of $251,904,$391,000, representing 45%37.2% of her maximum award opportunity or 111.7% of her target annual incentive opportunity; and
Messrs. Cherbak and Franke were not eligible to receive a bonus under the EIP for fiscal 2017 because they both retired during fiscal 2017. Mr. Bower did not participate in the EIP for fiscal 2017 because the EIP for fiscal 2017 was approved prior to his appointment as Chief Accounting Officer. Mr. Bower was awarded a discretionary bonus of $175,000 for fiscal 2017.
(4) | Target total direct compensation means the NEO’s base salary, target annual cash incentive and grant date fair value (based on the value approved by the Compensation Committee and used to determine the number of shares subject to the award) of annual long-term incentive awards granted to the NEO in fiscal 2021. |
(5) | See pages 29 and 31 of Resources Connection, Inc.’s Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021, for a discussion of the adjustments made and a reconciliation of those adjustments to net income, the most directly comparable GAAP financial measure, to compute Adjusted EBITDA. |
(6) | Adjusted EBITDA Percentage for purposes of the EIP is total revenue minus the cost of services sold and Selling, General and Administration expense adjusted for stock compensation, changes in contingent consideration, Board approved restructuring and any additional items deemed appropriate by the Audit Committee, divided by revenue. |
• | Long-Term |
The Company’s current policy is to provide stockholders with an opportunity to approve, on an advisory basis, the compensation of our NEOs each year at the annual meeting of stockholders. We have included in this Proxy Statement a proposal to approve the frequency of future advisory votes on the Company’s executive compensation and our Board of Directors recommends that we continue with the current policy of holding such a vote every year. Accordingly, itIt is expected that the next such vote will occur at the 20182022 annual meeting of stockholders.
Board Recommendation — FOR approval of the Company’s Executive Compensation
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As set forth in Proposal 4, our stockholders are being provided the opportunity to cast an advisory vote on the frequency of future advisory votes on the compensation of our named executive officers. The Board recommends that our stockholders vote for an advisory vote on the Company’s executive compensation annually. While we believe a vote every year is the best choice for us, you are not voting to approve or disapprove the Board’s recommendation, but rather to make your own choice to have future advisory votes on executive compensation every year, every two years or every three years. You may also abstain from voting. Our Board values the opinions that our stockholders express in their votes and will take into account the outcome of the vote when determining the frequency of future advisory votes on the Company’s executive compensation.
Board Recommendation — 1 YEAR for the frequency of future advisory votes on the Company’s executive compensation
Why did I receive only a Notice of Internet Availability?
As permitted by SEC rules, we are furnishing proxy materials for the Annual Meeting primarily over the Internet. On or about September 9, 2021, we mailed to each of our stockholders (other than those who previously requested electronic delivery or to whom we are mailing a paper copy of the proxy materials) a Notice of Internet Availability containing instructions on how to access and review the proxy materials via the Internet and how to submit a proxy electronically using the Internet. The Notice of Internet Availability also contains instructions on how to receive, free of charge, paper copies of the proxy materials. If you received the Notice of Internet Availability, you will not receive a paper copy of the proxy materials unless you request one.
We believe the delivery options that we have chosen will allow us to provide our stockholders with the proxy materials they need, while lowering the cost of the delivery of the materials and reducing the environmental impact of printing and mailing paper copies.
What am I voting on?
At the Annual Meeting, our stockholders will be voting on the following proposals:
1. the election of three director nominees (Robert F. Kistinger, Jolene Sarkis(Donald B. Murray, Lisa M. Pierozzi, and Anne Shih)A. Robert Pisano) to our Board, of Directors, each for a three-year term expiring at the annual meeting in 20202024 and until his or her respective successor is duly elected and qualified;
2. the ratification of the appointment of RSM US LLP as the Company’s independent registered public accounting firm for fiscal year 2018;2022; and
3. the approval, on an advisory basis, of the Company’s executive compensation; and
4. the approval, on an advisory basis, of the frequency of future advisory votes on the Company’s executive compensation.
Our stockholders will also consider any other business properly raised at the Annual Meeting or any postponement or adjournment thereof.
How does the Board of Directors recommend I vote on each of the proposals?
Our Board of Directors recommends you voteFORelection to our Board of Directors of each of the three nominees for director named in Proposal 1 of this Proxy Statement;FORthe ratification of the appointment of RSM US LLP as our independent registered public accounting firm for fiscal 2018,2022, as outlined in Proposal 2 of this Proxy Statement; and FORthe approval, on an advisory basis, of the Company’s executive compensation, as outlined in Proposal 3 of this Proxy Statement; and1 YEAR with respect to the approval, on an advisory basis, of the frequency of future advisory votes on the Company’s executive compensation, as outlined in Proposal 4 of this Proxy Statement.
Who can attend the Annual Meeting?
All stockholders of the Company as of the close of business on August 24, 2017,23, 2021, the record date, can attend the Annual Meeting. If your shares are held through a broker, bank or nominee (that is, in “street name”), you are considered the beneficial holder of such shares, and if you would like to attend the Annual Meeting, you must either (1) write Alice J. Washington,to Lauren Elkerson, our General Counsel,Corporate Secretary, at 17101 Armstrong Avenue, Irvine, CA 92614; or (2) bring to the meeting a copy of your brokerage account statement or a “legal proxy” (which you can obtain from the broker, bank or nominee that holds your shares). Please note, however, that beneficial owners whose shares are held in “street name” by a broker, bank or nominee may vote their shares at the Annual Meeting only as described below under “Who is entitled to vote at the meeting?”
Who is entitled to vote at the meeting?
Stockholders of record, as of the close of business on August 24, 2017,23, 2021, the record date, are entitled to vote at the Annual Meeting. If you are the beneficial owner of shares held in “street name” through a broker, bank or nominee and held such shares as of the close of business on the record date, the proxy materials are being forwarded to you by your broker, bank or nominee together with a voting instruction form. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, bank or nominee that holds your shares, giving you the right to vote the shares in person at the meeting. Even if you plan to attend the Annual Meeting, we recommend you submit your proxy or voting instructions in advance of the Annual Meeting so your vote will be counted if you later decide not to attend the Annual Meeting.
How do I vote?vote and what is the deadline?
Voting via the Internet, Telephone or Mail:
You may submit your proxy or voting instructions via the Internet, by telephone or by mail, depending on the manner in which you receive your proxy materials. If you received a Notice of Internet Availability by mail, you can vote on matters that properly come beforesubmit a proxy or
voting instructions via the meetingInternet by following the instructions provided in onethe Notice of two ways: (1)Internet Availability. If you received a printed set of the proxy materials by submittingmail, you may submit a proxy or voting instructions via the Internet, by telephone (if available) or by mail by following the instructions on the proxy card or (2)voting instruction form.
If you are a stockholder of record voting by votingtelephone or the Internet, your proxy must be received by 8:59 p.m. Pacific Time (11:59 p.m. Eastern Time) on October 20, 2021, in person at the meeting.
Iforder for your shares are registered in the name of a broker, bank or other nominee, you will receive a voting instruction form from your broker, bank or other nominee that can be used to instruct how your shares will be voted at the Annual Meeting. You may also be eligible to submit voting instructions electronically over the Internet or by telephone. A large numberHowever, if you are a stockholder of banks and brokerage firms are participating in the Broadridge Financial Solutions, Inc. (“Broadridge”) online program. If your bank or brokerage firm is participating in Broadridge’s program, your voting instruction form will provide instructions for such alternative methods of voting. If you submit your voting instructions via the Internet or by telephone, you do not have to return your voting instruction form by mail.
If yourrecord submitting a proxy card or voting instruction form does not reference Internet or telephone information, please completeby mail, you may instead mark, sign and returndate the paper proxy card or voting instruction form. Sign and date each proxy card or voting instruction form you receivereceived and return it in the postage-paid envelope.accompanying prepaid and addressed envelope so that it is received by us before the Annual Meeting. If you hold your shares in street name, please provide your voting instructions to the broker, bank or other nominee who holds your shares by the deadline specified by such broker, bank or nominee.
If you return your signed proxy card or voting instruction form but do not mark the boxes showing how you wish to vote, your shares will be votedFORelection to our Board of Directors of each of the three nominees for director named in Proposal 1 of this Proxy Statement;FORthe ratification of the appointment of RSM US LLP as our independent registered public accounting firm for fiscal 2018,2022, as outlined in Proposal 2 of this Proxy Statement; and FORthe approval, on an advisory basis, of the Company’s executive compensation, as outlined in Proposal 3 of this Proxy Statement;Statement. See “What happens if my shares are held by a broker?” below for information on how your shares will be voted if you are a beneficial owner and1 YEARwith respect do not submit voting instructions to the approval, on an advisory basis,broker, bank or other nominee who holds your shares.
Voting at the Annual Meeting
All stockholders of record may vote in person at the frequencyAnnual Meeting. Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions in advance to authorize the voting of future advisory votes onyour shares at the Company’s executive compensation, as outlined in Proposal 4 of this Proxy Statement.Annual Meeting so that your vote will be counted if you later are unable to attend. If you later attend and vote at the Annual Meeting, your previously submitted proxy or voting instructions will not be used.
Can I revoke my proxy or change my vote?
You have the right to revoke your proxy or voting instruction form at any time before your shares are voted at the Annual Meeting. If you are a stockholder of record, you may revoke your proxy by:
notifyingdelivering a written revocation to our corporateCorporate Secretary (Michelle Gouvion) in writing;
signing and returningsubmitting a later-dated proxy card;
submitting a new proxy electronically via the Internet, telephone or by telephone;mail, as described above under “Voting via the Internet, Telephone or
voting in person at the Annual Meeting.
If you are the beneficial owner of shares held in “street name” by a broker, bank or nominee, you may change your vote by submitting new voting instructions to your broker, bank or nominee, or, if you have obtained a legal proxy from your broker, bank or nominee giving you the right to vote your shares at the Annual Meeting, by attending the Annual Meeting and voting in person.
Please note that attendance at the Annual Meeting will not by itself constitute revocation of a proxy.
What is the deadline for voting my shares?
If you are a stockholder of record, please mark, sign, date and return the enclosed proxy card, which must be received before the polls close at the Annual Meeting in order for your shares to be voted at the meeting. If you are a beneficial stockholder, please follow the voting instructions provided by the bank, broker or other nominee who holds your shares.
How will voting on any other business be conducted?
Other than the proposals described in this Proxy Statement, we know of no other business to be considered at the Annual Meeting. However, if any other matters are properly presented at the meeting or any postponement or adjournment thereof, your proxy, if properly submitted, authorizes Kate W. Duchene, our President and Chief Executive Officer, or Herbert M. Mueller,Jennifer Y. Ryu, our Executive Vice President and Chief Financial Officer, to vote in their discretion on those matters.
Who will count the votes?
American Stock Transfer and Trust CompanyA representative of Broadridge will count the votes.
Who will bear the cost of soliciting votes?
The solicitation of proxies will be conducted electronically through the Internet and by mail, and the Company will bear all attendant costs. These costs include the expense of preparing and mailing proxy solicitation materials and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation materials to beneficial owners of the Company’s common stock. The Company may conduct further solicitation personally, telephonically, or through the Internet or by facsimile through its officers, directors and employees, none of whom will receive additional compensation for assisting with
the solicitation. At this time, the Company does not anticipate engaging the services of a proxy solicitor. The Company may incur other expenses in connection with the solicitation of proxies.
What does it mean if I receive more than one proxy card or voting instruction form?
It probably means your shares are registered differently and are in more than one account. Please sign and return each proxy card or voting instruction form you receive or, if available, submit youra proxy or voting instructions electronically viafor each of your accounts in the Internet or by telephone by followingmanner provided above under “How do I vote and what is the instructions set forth on each proxy card or voting instruction form,deadline?” to ensure all your shares are voted.
How many shares can vote?
As of the close of business on the record date, 29,899,42633,186,740 shares of our common stock, including unvested shares of restricted stock, were outstanding. Each share of our common stock outstanding and each unvested share of restricted stock with voting rights on the record date is entitled to one vote on each of the three director nominees and one vote on each other matter that may be presented for consideration and action by the stockholders at the Annual Meeting.
What is the voting requirement for each of the above matters?
Proposal 1. Election of Directors. Once a quorum has been established, under our Third Amended and Restated Bylaws, (our “Bylaws”), each director nominee must receive the affirmative vote of a majority of the votes cast with respect to that director’s election in order to be elected to our Board of Directors (that is, the number of shares voted “FOR”“FOR” the director nominee must exceed the number of votes cast “AGAINST” that director nominee). Each stockholder will be entitled to vote the number of shares of common stock held as of the close of business on the record date by that stockholder for each director position to be filled.nominee. Stockholders will not be allowed to cumulate their votes in the election of directors.
If any of the director nominees named in Proposal 1, each of whom is currently serving as a director, is not elected at the Annual Meeting by the requisite majority of votes cast, under Delaware law, the director would continue to serve on the Board of Directors as a “holdover director.” However, under our Bylaws, any incumbent director who fails to receive a majority of the votes cast must tender his or her resignation to the Secretary of the Company promptly following certification of the election results. In such circumstances, the Board, of Directors, taking into account the recommendation of the Corporate Governance and Nominating Committee of the Board, of Directors, must decide whether to accept or reject the resignation and publicly disclose its decision, including the rationale behind any decision to reject the tendered resignation, within 90 days following certification of the election results.
Other Proposals. Once a quorum has been established, under our Bylaws, approval of Proposals 2 and 3 and 4each requires the affirmative vote of stockholders holding a majority in voting power of those shares present in person or represented by proxy at the meeting and entitled to vote on the matter. Notwithstanding the above,foregoing, please be advised that each of Proposals 2 3 and 43 is advisory only and not binding on the Company or our Board of Directors.Board. Our Board of Directors will consider the outcome of the vote on each of these items in considering what actions, if any, should be taken in response to the advisory votes by stockholders. In addition, with respect to Proposal 4, if no frequency option receives the affirmative vote of a majority of the shares present in person or by proxy at the meeting and entitled to vote on the matter, our Board of Directors will consider the option receiving the highest number of votes cast as the preferred frequency option of our stockholders.
What constitutes a quorum?
In order to transact business at the Annual Meeting, a quorum must be present. Under Delaware law and our Bylaws, a quorum is present if a majority in voting power of the outstanding shares of our common stock outstandingentitled to vote at the meeting on the record date are present, in person or by proxy, and entitled to vote at the Annual Meeting. Because there were 29,899,42633,186,740 shares of common stock outstanding as of the close of business on the record date, holders of at least 14,949,71316,593,371 shares of our common stock will need to be present in person or by proxy at the Annual Meeting for a quorum to exist to transact business at the Annual Meeting.
What happens if my shares are held by a broker?
If you are the beneficial owner of shares held in “street name” by a broker, the broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not give instructions to the broker, the broker will nevertheless be entitled to vote the shares with respect to “routine” matters but will not be permitted to vote the shares with respect to “non-routine” matters. The ratification of the appointment of the Company’s independent registered public accounting firm in Proposal 2 is considered a routine matter and may be voted upon by your broker if you do not give instructions. However, brokers do not have discretionary authority to vote your shares on your behalf for any of the other items to be submitted for a vote of stockholders at the Annual Meeting (the election of directors or the advisory vote on the Company’s executive compensation and the advisory vote on the frequency of future advisory votes on the Company’s executive compensation). Accordingly, if you are a beneficial owner that has not submitted voting instructions to your broker and your broker exercises its discretion to vote your shares on Proposal 2, your shares will be treated as broker non-votes with respect to Proposals 1 3 and 43 (the election of directors and the advisory vote on the Company’s executive
compensation, and the advisory vote on the frequency of future advisory votes on the Company’s executive compensation)respectively). There will not be any broker non-votes on Proposal 2 (ratification of the appointment of the Company’s independent registered public accounting firm for fiscal year 2018)2022).
How will “broker non-votes” and abstentions be treated?
Broker non-votes with respect to Proposals 1 3 and 43 (the election of directors the advisory vote on the Company’s executive compensation and the advisory vote on the frequency of future advisory votes on the Company’s executive compensation) are counted for the purposes of calculating a quorum. However, when the broker notes on the proxy card that it lacks discretionary authority with respect to these matters and has not received voting instructions from the beneficial owner, those sharesnon-votes are not deemed to be a vote cast with respect to Proposal 1 or entitled to vote for the purpose of determining whether stockholders have approved the matterProposal 3 and, therefore, will not be counted in determining the outcome of the matter.such matters.
A properly executed proxy marked “ABSTAIN” with respect to the election of one or more director nominees in Proposal 1 will not be votedconsidered a vote cast with respect to the director or director nominees indicated and, therefore, will not be counted in determining the outcome of the director nominee’s election to the Board of Directors.Board. For the remaining Proposals, a properly executed proxy marked “ABSTAIN” with respect to the proposal has the same effect as a vote “AGAINST” the matter or, in the case of Proposal 4, a vote not in favor of any of the proposed frequency options.matter. In all cases, a properly executed proxy marked “ABSTAIN” will be counted for purposes of determining whether a quorum is present.
When must notice of business to be brought before an annual meeting be given and when are stockholder proposals and director nominations due for the 20182022 annual meeting?
Advance Notice Procedures. Under our Bylaws, business, including director nominations, may be brought before an annual meeting if it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the discretion of our Board of Directors or by a stockholder entitled to vote who has delivered notice to our corporate secretaryCorporate Secretary (containing certain information specified in our Bylaws) not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting (for next year’s annual meeting, no earlier than the close of business on June 21, 2018,23, 2022, and no later than the close of business on July 21, 2018)23, 2022). In the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 70 days after the anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered to our Corporate Secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. These requirements are separate from
and in addition to the requirements of the SEC that a stockholder must meet in order to have a stockholder proposal included in next year’s proxy statement.
Stockholder Proposals for the 20182022 Annual Meeting. Written notice of stockholder proposals to be considered for inclusion in the proxy statement and form of proxy relating to the 20182022 annual meeting of stockholders must be received no later than May 18, 2018.10, 2022. In addition, all proposals will need to comply with Rule 14a-8 under the Securities Exchange Act, of 1934 (the “Exchange Act”), which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials.
How do I obtain a copy of the Annual Report on Form 10-K thatfor Resources Connection, filed with the SEC?Inc.’s year ended May 29, 2021?
A copy of the Company’s most recent Annual Report for the year ended May 29, 2021 has been included with this Proxy Statement. If you desire another copy of our Annual Report or would like a copy of our Annual Report on Form 10-K filed with the SEC (including the financial statements and the financial statement schedules),we will provide one to you free of charge upon your written request to our Investor Relations Department at 17101 Armstrong Avenue, Irvine, California 92614, or from our Investor Relations website athttp:https://ir.rgp.comir.rgp.com/financials-filings/annual-reports-and-proxies.
How may I obtain a separate set of proxy materials?
If you share an address with another stockholder and did not receive a Notice of Internet Availability or otherwise receive your proxy materials electronically, you may receive only one set of proxy materials (including this Proxy Statement and our Annual Report) unless you have provided contrary instructions. If you wish to receive a separate set of proxy materials for this year or future years, please request the additional copies by contacting our Investor Relations Department at 17101 Armstrong Avenue, Irvine, California 92614, or by telephone at 714-430-6400. A separate set of proxy materials will be sent promptly following receipt of your request.
IfIn addition, if you are a stockholder of record and wish to receive a separate set of proxy materials in the future, or if you are a stockholder at a shared address to which we delivered multiple copies of this Proxy Statement or the Annual Report and you desire to receive one copy in the future, please contact our Investor Relations Department at 17101 Armstrong Avenue, Irvine, California 92614, or by telephone at 714-430-6400.
If you hold shares beneficially in street name, please contact your broker, bank or nominee directly if you have questions, require additional copies of this Proxy Statement or our Annual Report, or wish to receive multiple reports by revoking your consent to house holding.
PROPOSAL 1. ELECTION OF DIRECTORS
Our Board of Directorscurrently consists of nineeleven directors. Our Amended and Restated Certificate of Incorporation provides for a classified Board of Directors consisting of three classes of directors, each serving staggered three-year terms. At this year’s Annual Meeting, we will be electing three directors, each to serve a term of three years expiring at our 20202024 Annual Meeting and until his or her successor is duly elected and qualified. Michael H. Wargotz is not standing for re-election at the Annual Meeting.
Due to Mr. Wargotz not standing for re-election, only three directors will be serving in the class up for election at the Annual Meeting. Because the Board has nominated only three director nominees for election at the Annual Meeting for a three-year term expiring at the 2024 Annual Meeting, shares may not be voted for more than three director nominees. Our Board intends to reduce the number of directors to ten following the Annual Meeting.
Each of the nominees, Donald B. Murray, Lisa M. Pierozzi and A. Robert F. Kistinger, Jolene Sarkis and Anne Shih,Pisano, is presently a member of our Board, of Directors, having served on the Company’s Board since 2006,1999, 2021 and 2002, respectively. Messrs. Murray and Pisano were previously elected to our Board by our stockholders at our 2018 annual meeting of stockholders. This will be the first time Ms. Pierozzi will stand for election by our stockholders, after initially being appointed as a director by our Board following the recommendation of the Corporate Governance and Nominating Committee in February 2021. Ms. Pierozzi was initially identified as a director candidate by Mr. Pisano, our Lead Independent Director and Chairman of our Corporate Governance and Nominating Committee.
In addition, notwithstanding the Company’s retirement age policy, the Board affirmatively requested that each of Messrs. Murray and Pisano continue their service to the Board for an additional three-year term given their outstanding contributions, deep knowledge of the professional services industry and executive experience. Mr. Murray founded Resources Connection, Inc. in 1996, has served in various leadership positions with the Company and currently serves as Chairman of the Board. Mr. Pisano has served on the Board since 2002 and 2007, respectively.as the Lead Independent Director since 2004. The continued services of Messrs. Murray and Pisano contributes to the stability of the Board. Additionally, each possesses a unique blend of leadership, institutional knowledge and experience that our Board of Directors,requires to lead the Company through key enterprise initiatives and as we continue our board refreshment efforts.
Our Board, acting upon the recommendation of the Corporate Governance and Nominating Committee, recommends thethat stockholders vote in favor of the election of each of the nominees, named in this Proxy Statement to serve as members of our Board of Directors. (See “Director Nominees” below).Messrs. Murray and Pisano and Ms. Pierozzi.
In recommending director nominees for selection by the Board, the Corporate Governance and Nominating Committee considers a number of factors, which are described in more detail below under “Board of Directors —Corporate— Corporate Governance and Nominating Committee.” In considering these factors, the Corporate Governance and Nominating Committee and the Board consider the gender, ethnic and racial diversity of each nominee along with the fit of each individual’s qualifications, skills and skillsattributes with those of the Company’s other directors in order to build a Board of Directors that, as a whole, is effective, collegial and responsive to the Company and its stockholders.
The six There are no family relationships among our directors whose terms do not expire in 2017 are expectedor executive officers nor any arrangements or understandings between any director and any other person pursuant to continue to serve after the Annual Meeting until such timewhich a director was selected as their respective terms of office expire and their respective successors are duly elected and qualified. (See “Continuing Directors” below.)a director or nominee.
If at the time of the Annual Meeting any of the nominees should beis unable or unwilling for good cause to serve if elected, the persons named as proxyproxies on the proxy card will vote for such substitute nominee or nominees, if any, as our Board of Directors recommends or, if no substitute nominee is recommended by our Board, of Directors, for the remaining nominees, leaving a vacancy, unless our Board of Directors chooses to reduce the number of directors serving on the Board. Each of the nominees has consented to be named in this Proxy Statement and to serve if elected.
Following is biographical information about each nominee and each director.other director who will continue as a director after the Annual Meeting. This description includes the principal occupation of and directorships held by each director for at least the past five years, as well as the specific experience, qualifications, attributes and skills that led to theour Board’s conclusion that each nominee and director should serve as a member of the Company’s Board of Directors.
The individuals standing for election are:
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The Board of Directors unanimously recommends that stockholders vote FOR each of the nominees set forth above.
The following persons are the members of our Board of Directors whose terms of office do not expire until after the Annual Meeting and who are therefore not standing for re-election at the Annual Meeting:
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Donald B. Murray
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| Mr. Murray founded Resources Connection, Inc. in June 1996 and served as our Managing Director from inception until April 1999. From April 1999 through May 2008, Mr. Murray served as our Chairman, President and Chief Executive Officer and
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Key experience, qualifications, attributes and skills: | ||
In addition to his career credentials as a partner with Deloitte & Touche LLP, as the Company’s founder, | ||
Lisa M. Pierozzi Age 60 Director since February 2021 | Ms. Pierozzi formerly served as Executive Vice President, Finance & Administration and Chief Financial Officer of the Motion Picture Association (“MPA”) from 2006 to 2011. Prior to her role at MPA, Ms. Pierozzi was Senior Vice President, Business Planning and Development for Universal Studios’ global theme parks and resorts group from 2001 to 2005. Ms. Pierozzi joined PwC (formerly Price Waterhouse) in 1984 and was a partner from 1997 to 2001, where she had leadership roles in multiple industry transactions and operational reviews, including deal structuring and assessment, due diligence, financing, process improvement, systems and infrastructure overview. Ms. Pierozzi currently sits on the board of directors of the Motion Picture & Television Fund (“MPTF”) and is a founding member of the Normandy Institute. Ms. Pierozzi’s experience includes serving as chairman of the Audit Committee, of the MPTF as well as a nonvoting member of the Finance and Investment Committees and various other special committees of the MPTF. |
Key experience, qualifications, attributes and skills: | ||
Ms. Pierozzi brings to our Board more than 35 years of experience as a financial professional and advisor in leadership roles for both public and private companies, with particular expertise in public company financial reporting, systems and controls. | ||
A. Robert Pisano
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| Mr. Pisano has served as our Lead Independent Director since 2004. Mr. Pisano is a business consultant, an activity he began in September |
Key experience, qualifications, attributes and skills: | ||
Mr. Pisano’s 20 years of experience as a partner specializing in business litigation while at O’Melveny & Myers LLP, followed by his hands-on management of international business operations, marketing and business development while employed by the leaders in the entertainment industry provide a wealth of experience, especially in the areas of acquisitions and legislative and regulatory affairs, to |
Our Board unanimously recommends that stockholders vote “FOR” Proposal 1 to elect to the Board each of the three director nominees set forth above.
The following persons are the members of our Board whose terms of office do not expire until after the Annual Meeting and who will continue to serve on the Board after the Annual Meeting:
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| In 2016, Mr. | |
Key experience, qualifications, attributes and skills: | ||
Mr. | ||
Neil F. Dimick Age 72 Director since November 2003 Mr. Dimick’s term of office as one of our directors expires at the Annual Meeting in 2022. | Prior to joining our Board, Mr. Dimick served as Executive Vice President and Chief Financial Officer of AmerisourceBergen Corporation, a pharmaceutical services provider, from August 2001 to May 2002. He served as Senior Executive Vice President and Chief Financial Officer of Bergen Brunswig Corporation, as well as a director and a member of the Bergen board’s Finance, Investment and Retirement Committees, for more than | |
Key experience, qualifications, attributes and skills: | ||
Mr. Dimick brings to our Board, and the Audit Committee that he chairs, more than 25 years of public accounting experience, including eight years as a partner at Deloitte & Touche LLP, experience as a Chief Financial Officer for a large-cap publicly traded international company and continued involvement with public company boards and board committees, all of which provide our Board with in-depth knowledge of the many critical financial |
Kate W. Duchene Age 58 Director since January 2018 Ms. Duchene’s term of office as one of our directors expires at the Annual Meeting in 2022. | Ms. Duchene is our President and Chief Executive Officer, a position to which she was promoted in December 2016. Between 1999 and 2016, Ms. Duchene was our Chief Legal Officer, Secretary and Executive Vice President of Human Resources. From 2012 to 2016, Ms. Duchene also assumed leadership |
Key experience, qualifications, attributes and skills: | |
As our President and Chief Executive Officer, Ms. Duchene brings to our Board valuable leadership experience and a deep and thorough understanding of our operations, the day-to-day management of our business and our industry as a whole. | |
Robert F. Kistinger Age 68 Director since August 2006 Mr. Kistinger’s term of office as one of our directors expires at the Annual Meeting in 2023 | Mr. Kistinger was the Chief Operating Officer of Bonita Banana Company from 2009 to 2014 and now continues to serve as an Executive Advisor to the company. He was formerly President and Chief Operating Officer of the Fresh Group of Chiquita Brands International, Inc. (“Chiquita”). Mr. Kistinger was employed at Chiquita for Key experience, qualifications, attributes and skills: Mr. Kistinger has held leadership positions in large multinational companies with operations in Latin America, developing critical financial and international operations expertise. Mr. Kistinger’s knowledge, insight and experience are invaluable to the Company and to the Board as we continue to provide services and solutions to our clients around the world. |
Marco von Maltzan Age 66 Director since July 2018 Mr. von Maltzan’s term of office as one of our directors expires at the Annual Meeting in 2023 | Mr. von Maltzan, in addition to having served as the Chairman of the Supervisory Board of taskforce — Management on Demand AG, served as the Chairman of the Supervisory Board of industrial holding Greiffenberger AG from 2016 through June 2021, and, since 2015, has been the Deputy Chairman of the Shareholder Committee and member of the Audit Committee of food conglomerate Pfeifer & Langen Industrie- und Handels-KG. Mr. von Maltzan started his professional career in 1983 with top management consulting firm Roland Berger. In 1987, he joined BMW Group where he held various senior management positions, acting lastly as Chief Executive Officer of BMW Motorrad, BMW’s motorcycle division from 1999 to 2002. From 2003 to 2007, Mr. von Maltzan served as Chief Executive Officer of automotive supplier BERU AG which was sold to Michigan-based BorgWarner, Inc. From 2008 to 2011, Mr. von Maltzan acted as Chief Executive Officer of Profine Group, a leading producer of PVC profiles. Mr. von Maltzan has also held various board |
Key experience, qualifications, attributes and skills: Mr. von Maltzan brings to our Board over 35 years of international and industry-specific operational experience. This experience uniquely qualifies him to advise the Company in its international growth strategy. |
Jolene Sarkis Age 71 Director since April 2002 Ms. Sarkis’ term of office as one of our directors expires at the Annual Meeting in 2023 | Ms. Sarkis has been a private marketing and advertising consultant since 2001. Ms. Sarkis held various positions of responsibility for Time Inc. from 1985 to 2001 in sales and marketing, primarily for Time Inc.’s leading publications which include Time, People, Sports Illustrated, Fortune and Money. Ms. Sarkis served as Publisher of Fortune from 1996 to 2001 and, additionally, as President of Fortune from 1999 to 2001. In 2019, she retired as Executive Vice President of the CFS Restaurant Group, a position she held since 2011. |
Key experience, qualifications, attributes and skills: | |
Ms. Sarkis’ executive business experience in operations management and business development brings a unique skill set to our Board and to the Company in the critical areas of leadership and strategic planning, as well as marketing and human resources. | |
David P. White Age 53 Director since July 2021 Mr. White’s term of office as one of our directors expires at the Annual Meeting in 2023 | Mr. White previously served as the National Executive Director and Chief Negotiator of the Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) from 2009 to June 2021. Prior to rejoining SAG-AFTRA in 2009, where he previously served as General Counsel from 2002 to 2006, Mr. White was Managing Principal of Los Angeles-based Entertainment Strategies Group LLC from 2006 to 2009, providing consulting services to the entertainment industry. He was also previously a labor and employment attorney at O’Melveny & Myers LLP. Mr. White is a Rhodes Scholar and a graduate of Grinnell College, Stanford Law School and The Queen’s College, Oxford University. He currently serves as a board member of the Federal Reserve Bank of San Francisco, where he serves on the Audit and Risk Management Committee and Bank Governance Committee, as a board member of the MPTF, where he serves on the Audit Committee, and as a board member of The Actors Fund, where he serves on the Strategic Planning Committee. Mr. White also serves as a commissioner for the Entertainment Industry Commission on Eliminating Sexual Harassment and Advancing Equality in the Workplace. |
Key experience, qualifications, attributes and skills: | |
Mr. White brings to our Board over 20 years of legal and executive leadership expertise, with extensive expertise in human capital and regulatory matters all of which makes him a trusted advisor to the Company. |
The Board of Directors unanimously recommends a vote FOR election to the Board of Directors of each of the three director nominees named in this Proxy Statement.
The following table sets forth information about our current executive officers. Each of our executive officers serves at the pleasure of the Boardour Board. There are no family relationships among our directors or executive officers nor any arrangements or understandings between any of Directors:our executive officers and any other person pursuant to which an officer was selected.
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Kate W. Duchene | (58) President, Chief Executive Officer and Director Ms. Duchene has served as our President | ||||||
| Jennifer Y. Ryu (46) Executive Vice President and Chief Financial Officer Effective February 3, 2020, Jennifer Y. Ryu was named Executive Vice President and Chief Financial Officer. Prior to her appointment, Ms. Ryu served as the Interim Chief Financial Officer | ||||||
| Timothy L. Brackney (49) President and Chief Effective April 3, 2019, Timothy L. Brackney was named our President and Chief Operating Officer. Prior to his appointment as Chief Operating Officer, Mr. Brackney served as our President North America & EVP, Revenue from 2017 to April 2019. From 2014 to 2017, Mr. Brackney served as our SVP, West Region. He led the North Pacific Region from 2011 to 2014. From 2007 to 2011, Mr. Brackney was a Regional Managing Director for the Company. Before that time, he served as Regional Director and Managing Director of our Portland, Oregon office. |
Kate W. Duchene. Effective December 14, 2016, Ms. Duchene was named our Chief Executive Officer and President. Between 1999 and 2016, Ms. Duchene was our Chief Legal Officer, and since 2000, Ms. Duchene held the positions of corporate Secretary and Executive Vice President of Human Resources. Prior to joining Resources Connection, Ms. Duchene practiced law with O’Melveny & Myers LLP, an international law firm, in Los Angeles, California, specializing in labor and employment matters. Ms. Duchene was with O’Melveny & Myers LLP from October 1990 through December 1999.
Herbert M. Mueller. Effective August 29, 2016, Herbert M. Mueller was named our Executive Vice President and Chief Financial Officer. Prior to his appointment as the Executive Vice President and Chief
Financial Officer, Mr. Mueller served as the Company’s Managing Director in the Atlanta practice from November 2013 to August 2016 and as a Director of Client Service from January 2012 to November 2013. Prior to joining the Company, Mr. Mueller served as Senior Vice President and Chief Financial Officer of TAA Partners, Inc. and Chief Financial Officer of Delta Apparel.
John D. Bower. Effective August 17, 2016, Mr. Bower was appointed as our Chief Accounting Officer. Prior to his appointment as Chief Accounting Officer, Mr. Bower served as our Senior Vice President of Finance from 2005 to 2016 and controller from 1998 to 2005. Prior to joining the Company, Mr. Bower spent nine years with Deloitte and served as the Director of SEC Reporting at FHP International for five years.
TheOur Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman of the Board and Chief Executive Officer of the Company in any way that is in the best interests of the Company and its stockholders at a given point in time. TheOur Board believes that the decision as to who should serve as Chairman of the Board and Chief Executive Officer, and whether these offices should be combined or separate, should be assessed periodically by theour Board, and that theour Board should not be constrained by a rigid policy mandating that such positions be separate. The Company currently separates the roles of Chief Executive Officer and Chairman of the Board, with Mr. Murray currently serving as Chairman of the Board. Ms. Duchene serves as our Chief Executive Officer and is the individual with primary responsibility for managing the Company’s day-to-day operations with in-depth knowledge and understanding of the Company. Ms. Duchene does not currently serve as a member of our Board of Directors. This leadership structure permits Mr. Murray our Chairman of the Board, to focus on providing guidance to our Chief Executive Officer and setsto set the agenda for, and presidespreside over, meetings of the Board of Directors. By having a separate Chairman of the Board, the Company maintains an independent perspective on the Company’s business affairs.our Board. Mr. Murray, also our Company’s founder, has served as Chairman of the Board in a non-employee director status since his retirement as an employee and executive officer of the Company in August 2015. BecauseAlthough our Board has determined that Mr. Murray served in an executive officer position during his tenure as Executive Chairman,is independent under the listing requirements of The Nasdaq Stock Market (“Nasdaq”), because he is not deemed independent pursuanta former Chief Executive Officer and founder of the Company, our Board determined it was appropriate to NASDAQ Listing Rules. Therefore, the Board has designateddesignate A. Robert Pisano to serve as Lead Independent Director, with responsibilities that are similar to those typically performed by an independent chairman. Coupled with aThe Company’s Lead Independent Director who is appointed annually by the Board,independent directors on our Board. Coupled with the Chairman position, this combined structure provides independent oversight while avoiding unnecessary confusion regarding theour Board’s oversight responsibilities and the day-to-day management of business operations.
The responsibilities of our Chairman and our Lead Independent Director are summarized in the table below.
Chairman | Lead Independent Director | |
Calls meetings of the Board and stockholders | Calls meetings of the independent directors | |
Chairs meetings of the Board and the annual meeting of stockholders | Sets agenda and chairs executive sessions of the independent directors | |
Establishes Board meeting schedules and agendas | Available to chair meetings of the Board when there is a potential conflict of interest with the Chairman on issues to be discussed or the Chairman is absent | |
Ensures that information provided to the Board is sufficient for the Board to fulfill its primary responsibilities | Provides input to the Chairman on the scope, quality, quantity and timeliness of the information provided to the Board | |
Communicates with all directors on key issues and concerns outside of Board meetings | Serves as a conduit to the Chairman of views and concerns of the independent directors | |
With the Lead Independent Director, jointly recommends Committee Chair positions to full Board and the Corporate Governance and Nominating Committee | Collaborates with the Corporate Governance and Nominating Committee on questions of possible conflicts of interest or breaches of the Company’s governance principles by other directors, including the Chairman |
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Provides suggestions to the Corporate Governance and Nominating Committee with respect to the composition and structure of the Board and Board recruitment efforts | Oversees the process of hiring or firing a Chief Executive Officer, including any compensation arrangements | |
Leads the Board review of management succession and development plans | Recommends to the Board the retention of outside advisors who report directly to the Board | |
Represents the Company to, and interacts with, external stockholders and employees | Participates with the Compensation Committee Chair in communicating performance feedback and compensation decisions to the Chief Executive Officer |
TheOur Board believes the Company’s corporate governance measures ensureleadership structure ensures that strong, independent directors continue to effectively oversee effectively the Company’s management and key issues related to executive compensation, the evaluation of our Chief Executive Officer and succession planning, strategy, risk, and integrity.
As required by the Company’s Corporate Governance Guidelines and Committee Charters, our Board of Directors has determined that each of Ms. Crawford,Mr. Cherbak, Mr. Dimick, Mr. Kistinger, Mr. von Maltzan, Mr. Murray, Ms. Pierozzi, Mr. Pisano, Ms. Sarkis, Ms. ShihMr. Wargotz and Mr. WargotzWhite is an “independent director” under the NASDAQNasdaq Listing Rules. Mr. MurrayThe Board also previously determined that each of Susan Crawford and Anne Shih (who each retired during fiscal 2021) was employed as an executive officer until August 31, 2015, and Mr. Cherbak“independent director” under the Nasdaq Listing Rules. Ms. Duchene is currently employed as anthe President and Chief Executive Advisor toOfficer of the Company and,Company; accordingly, neither qualifiesshe does not qualify as an “independent director” under the NASDAQNasdaq Listing Rules. There were no transactions, relationships or arrangements engaged in by theseinvolving any of the Company’s directors which theour Board considered in making its independence determination.
Committees of the Board of Directors
The Company’s standing Board committees consist of (1) an Audit Committee, (2) a Compensation Committee, and (3) a Corporate Governance and Nominating Committee. Each committee of theour Board is comprised entirely of independent directors under the NASDAQNasdaq Listing Rules and, for members of the Audit Committee, the applicable rules of the SEC. As referenced above, theour Board of Directors also designates a Lead Independent Director to serve as a representative for the independent directors and to facilitate communications among the independent directors and management. The following identifies the current members of each of the Company’s standing Board committees and indicates the number of meetings held by each committee during fiscal 2017:2021. Ms. Duchene and Messrs. Murray and Cherbak do not currently serve on any committee of the Board.
Audit | Compensation | Corporate Governance and Nominating | Board of Directors | |||||||||
Director | Audit | Compensation | Corporate Governance and Nominating | Board of Directors | ||||||||
A. Robert Pisano, Lead Independent Director | Member | Chair | Independent | Member | Chair | Independent | ||||||
Susan Crawford | Member | Independent | ||||||||||
Neil Dimick | Chair | Member | Independent | Chair | Member | Independent | ||||||
Robert Kistinger | Member | Member | Independent | Member | Member | Independent | ||||||
Marco von Maltzan | Member | Independent | ||||||||||
Lisa M. Pierozzi | Member | Independent | ||||||||||
Jolene Sarkis | Chair | Independent | Chair | Independent | ||||||||
Anne Shih | Member | Independent | ||||||||||
Michael Wargotz | Member | Member | Independent | Member | Independent | |||||||
Number of Fiscal Year 2017 Meetings Held | 8 | 7 | 4 | 8 | ||||||||
David P. White | Member | Independent | ||||||||||
Number of Meetings Held in Fiscal 2021 | 10 | 7 | 4 | 7 |
Our Board of Directors met eightseven times during fiscal 2017.2021. All directors attended at least 75% of the aggregate of Board of Directors meetings and meetings of the committees upon which he or she serves. The Company’s policy is that directors should make themselves available to attend the Company’s annual meeting of stockholders. All then members of our Board attended our 20162020 annual meeting eitherof stockholders in person or telephonically.by video conference/telephone.
TheOur Board of Directors annually reviews and approves the charter of each of the committees. The Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee Charterscharters were reviewed and approved on July 27, 201729, 2021 and are available on the Investor Relations — Corporate Governance section of the Company’s website atwww.rgp.comhttps://ir.rgp.com/corporate-governance.
Corporate Governance and Nominating Committee
The current members of the Corporate Governance and Nominating Committee are Mr. Pisano (Chairperson), Ms. Crawford, Mr. Kistinger and Ms. Shih.Mr. White. The Corporate Governance and Nominating Committee met four times during fiscal 2017.2021.
Governance-Related Duties. The Corporate Governance and Nominating Committee is responsible for overseeing the corporate governance principles applicable to the Company, and the Company’s Code of Business Conduct and Ethics (the “Code of Conduct”), which is reviewed by the entire Board of Directors annually. See “Corporate Governance Guidelines and Code of Business Conduct and Ethics” below. In addition, the Corporate Governance and Nominating Committee annually reviews the Company’s compliance with the NASDAQNasdaq Listing Rules and reports the conclusions of such review to theour Board.
Nominating-Related Duties. The Corporate Governance and Nominating Committee is also responsible for overseeing the process of nominating individuals to stand for election or re-election as directors. In doing so, the Corporate Governance and Nominating Committee reviews and makes recommendations to theour Board with respect to the composition of the Board, tenure of Board members, and qualifications, skills and attributes for new directors. The Corporate Governance and Nominating Committee may also retain a professional executive search firm, on an as-needed basis, to assist in the identification and recruitment of independent Board candidates. The Company did not retain a professional executive search firm during fiscal 20172021 for Board member recruitment activities. While theThe Corporate Governance and Nominating Committee normally is able to identify an ample number of qualified candidates from its own resources and from candidates identified by a professional executive search firm, it will consider stockholder suggestions of persons to be considered as nominees, as further described below.below under “— Selection of Director Candidates.” Any director candidates recommended by the Company’s stockholders in accordance with the Company’s policy regarding such recommendations will be given consideration by the Corporate Governance and Nominating Committee, consistent with the process used for all candidates and in accordance with the Company’s policy regarding such recommendations.
Board Composition & Succession Planning. Given the tenure and longevity of our Board, coupled with the Company’s business transformation, the Corporate Governance and Nominating Committee is overseeing the development of a Board composition, refreshment and succession plan to continue to evolve our Board over the next one to two years. In connection with this plan, the Corporate Governance and Nominating Committee is considering and interviewing several director candidates. Our Board, led by the Corporate Governance and Nominating Committee, will continue to work towards achieving the Board’s refreshment and succession planning goals during fiscal 2022 and has prioritized the appointment of director candidates that are diverse in gender, sexual orientation, ethnicity or race or are members of any other underrepresented communities.
Selection of Director Candidates. The Corporate Governance and Nominating Committee’s process for identifying and evaluating new director candidates is as follows. If determined appropriate, the Corporate Governance and Nominating Committee may retain a professional executive search firm to assist the Corporate Governance and Nominating Committee in managing the overall process, including the identification of new director candidates who meet certain criteria set from time to time by the Corporate Governance and Nominating Committee. All potential new director candidates, whether identified by the search firm, stockholders or Board members, are then reviewed by the Corporate Governance and Nominating Committee, our executive officers,NEOs, and at times by the search firm. In the course of this review, some candidates are eliminated from further consideration because of conflicts of interest, unavailability to attend Board or committee meetings or other relevant reasons. The Corporate Governance and Nominating Committee then decides which of the remaining candidates most closely match the established criteria, described in the subsequent paragraph, and are therefore deserving of further consideration. The Corporate Governance and Nominating Committee then discusses these new director candidates, decides which of them, if any, should be pursued, gathers additional information if desired, conducts interviews and decides whether to recommend one or more of the candidates to the Board of Directors for nomination. In connection with this review, the Corporate Governance and Nominating Committee also reviews and considers each of the incumbent directors for continuing Board membership after his or her term expires. TheOur Board discusses the Corporate Governance and Nominating Committee’s recommended candidates, decides if any additional interviews or further background information is desirable and, if not, decides whether to nominate one or more candidates. Those nominees arewill then be named in the proxy statement for election by the stockholders at the annual meeting (or, if between annual meetings, the nominees may be electedappointed by the Board itself to fill any vacancies on theour Board).
In orderdetermining whether to be recommended byrecommend a candidate, the Corporate Governance and Nominating Committee a candidate must meetweighs the following selection criteria, as described in the Company’s Corporate Governance Guidelines: personal integrity, intelligence, relevant business background, independence, expertise in areas of importance to the Company’s objectives, and sensitivity to the Company’s corporate culture and responsibilities.responsibilities, relevant business background, diversity, independence, and ability to regularly prepare for and attend Board meetings. The Corporate Governance and Nominating Committee does not have a formal policy regarding the consideration of diversity in identifying director nominees but looks for individuals with specific qualifications so that theour Board as a whole may maintain an appropriate mix both of experience, background, expertise and skills, and of age,as well as gender, andsexual orientation, gender identity, ethnic and racial diversity. These specific qualifications may vary from one year to another, depending upon the composition of theour Board at that time.
Below we identify and describeis a description of the key experience, qualifications, attributes and skills the Committee considers important for director candidates in light of Resources Connection’sthe Company’s business:
• | Business Sector Knowledge and International Experience. We value directors with backgrounds that include the many business sectors that make up our core business — finance and accounting, risk management, information management, human capital, supply chain, legal and regulatory, corporate advisory, strategic communications and restructuring services. |
• | Management, Accounting and Finance Expertise. We value management experience in our directors as it provides a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth. While we require specific financial qualifications and expertise for Audit Committee membership, we expect all of our directors to be financially knowledgeable. |
• | Business Judgment, Leadership and Strategic Vision. We value directors with experience in significant leadership positions who |
Director Candidates Recommended by Stockholders. The Corporate Governance and Nominating Committee will consider individuals for nomination to stand for election as directors who are recommended to it in writing by any Resources Connection stockholder.stockholder of the Company. Any stockholder wishing to recommend an individual as a nominee for election at the Annual Meeting of Stockholders to be held in 20182022 should send a signed letter of recommendation, to be received before May 21, 2018,10, 2022, to the following address: Resources Connection, Inc., 17101 Armstrong Avenue, Irvine, CA 92614:92614; Attn: Alice J. Washington, General Counsel.Lauren Elkerson, Corporate Secretary. Recommendation letters must state the reasons for the recommendation and contain the full name and address of each proposed nominee as well as brief biographical information setting forth past and present directorships, employment, occupations and civic activities. Any such recommendation should be accompanied by a written statement from the proposed nominee consenting to be named as a candidate and, if nominated and elected, consenting to serve as a director. Our Bylaws include additional requirements regarding nominations of persons at a stockholders’ meeting other than by the Board of Directors.Board. See “Questions and Answers — When must notice of business to be brought before an annual meeting be given and when are stockholder proposals and director nominations due for the 20182022 annual meeting?”
The current members of the Compensation Committee are Ms. Sarkis (Chairperson), Mr. Dimick, Mr. Pisano and Mr. Wargotz.Wargotz, each of whom satisfies the additional independence requirements specific to Compensation Committee members under applicable Nasdaq Listing Rules. The Compensation Committee met seven times during fiscal 2017.2021.
The Compensation Committee is responsible for discharging the Board of Directors’Board’s responsibilities relating to the compensation of the Company’s NEOs.executive officers. The Compensation Committee reviews and approves the compensation arrangements, plans, policies and programs that apply to our NEOs.executive officers. Pursuant to the written charter of the Compensation Committee, its principal responsibilities include, among other things:
To review and approve the goals and objectives relevant to the compensation of our Chief Executive Officer, to evaluate the performance of our Chief Executive Officer in light of those goals and objectives and to determine the terms of the compensatory agreements and arrangements for our Chief Executive Officer;
To review and approve all of the Company’s compensation programs applicable to our other executive officers, including all forms of salary and grants of annual incentives and equity compensation;
To review and approve any new compensation plan or any material change to an existing compensation plan available to executive officers and to make recommendations to the Board of Directors with respect to equitythe adoption, amendment or discontinuation of the Company’s incentive compensation and incentiveequity-based plans subject to stockholderthat require Board approval;
To review and approve severance or similar termination payments to the Company’s executive officers; and
To establish, review and evaluate the Company’s long-term strategy of employee compensation and utilization of different types of compensation plans in consultation with senior management.
The Compensation Committee’s charter permits it to delegate duties and responsibilities to sub-committees or the Company’s management. However, the Compensation Committee has no current intention to delegate any of its authority with respect to determining executive officer compensation to any sub-committee or to management. The Compensation Committee takes into account our Chief Executive Officer’s recommendations regarding the corporate goals and objectives,
performance evaluations and compensatory arrangements for the Company’s executive officers other than the Chief Executive Officer. In particular, the Compensation Committee considered the Chief Executive Officer’s recommendations regarding the appropriate base salaries and annual incentive compensation opportunity payouts under the EIP for fiscal 20172021 for our NEOsexecutive officers (other than for our Chief Executive Officer whose base salary and annual incentive compensation was determined by the Compensation Committee and our Chief Accounting Officer whose base salary was determined by our Chief Executive Officer, in conjunction with our Chief Financial Officer and Director of Compensation, because Mr. Bower had not yet been appointed our Chief Accounting Officer at the time such base salary rates were established. Likewise, Mr. Bower’s bonus was determined by our Chief Financial Officer.Committee).
Pursuant to its charter, the Compensation Committee is authorized in its sole discretion to retain compensation consultants to assist it in carrying out its duties. The Compensation Committee hasis directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, including sole authority to determine and approve anythe terms, costs and fees for such engagements, with reasonable compensation consultant’s fees and other retention terms.to be borne by the Company. The Compensation Committee determines whether to retain a compensation consultant on an annual basis in light of the status of the management team and the business needs of the organization at the relevant time. The Compensation Committee did not engage a compensation consultant during fiscal 20172021 to provide advice or recommendations on the amount or form of executive and director compensation. In order to assist the Compensation Committee’s evaluation of executive compensation however, during fiscal 2017,2021, the Company subscribed to Main Data Group Inc.’s SnapshotCompensation Committee reviewed data on the Company’s peer group pulled from Equilar’s Insight Data Platform, which is a web-based provider of historical information, products and proprietary survey data regarding executive compensation. The Compensation Committee used thisthe data from Equilar generally as background information to assist in its decision makingtheir decision-making process.
During fiscal 2017,The current members of the Audit Committee of our Board of Directors consisted of three non-employee directors,are Mr. Dimick (Chairperson), Mr. Kistinger, Mr. von Maltzan, Ms. Pierozzi and Mr. Wargotz.Wargotz, each of whom satisfies the enhanced independence standards applicable to Audit Committee members pursuant to the Nasdaq Listing Rules and applicable rules promulgated under the Exchange Act. All threefive members of the Audit Committee qualify as financial experts.experts, as defined in Item 407 of Regulation S-K. The Audit Committee met eightten times during fiscal 2017.2021.
The Audit Committee reviews our auditing, accounting, financial reporting and internal control functions, appointsfunctions; is directly responsible for the appointment, compensation and engages, on behalfretention of our Board of Directors, the Company’s independent registered public accounting firmfirm; and oversees the Company’s risk assessment and risk management policies. Thepolicies, particularly the management of financial risks, and also receives regular reports from our Vice President of Internal Audit, who directly reports to the Chairperson of the Audit Committee. Additionally, the Audit Committee also reviewsis directly responsible for the evaluation and approvesoversight of the provisionwork of services by ourthe independent registered public accounting firm, as described under “Proposal 2. Ratification of the Appointment of Independent Registered Public Accounting Firm for Fiscal Year 2018”2022” below, under the caption “All Other Fees”, to ensureincluding ensuring such services are compatible with maintaining the independence of the independent registered public accounting firm. In discharging its duties, the Audit Committee:
Appoints, compensates, retains and oversees the work of the independent registered public accounting firm;
Reviews and approves the scope of the annual audit and the independent registered public accounting firm’s fees;
Reviews and discusses with management and the independent registered public accounting firm the Company’s annual audited financial statements, material accounting principles and related matters;
Consults with our independent registered public accounting firm with regard to the plan of audit, the results of the audit and the audit report and confers with the independent registered public accounting firm regarding the adequacy of internal accounting controls.
The Board’s Role in Risk Oversight
TheOur Board has an active role, as a whole and through its committees, in overseeing management of the Company’s risks. TheOur Board’s role in the risk oversight process includes receiving regular reports from members of senior management on areas of material risk to the Company, including legal, operational, financial and strategic risks. Also,These reports occur at regular and special meetings of the Board as appropriate. The involvement of theour Board in reviewing, approving and monitoring our fundamental financial and business strategies, as contemplated by our corporate governance documents, is critical to the determination of the types and appropriate levels of risk the Company undertakes. The Board’s committees, all comprised solely of independent directors, assist theour Board in fulfilling its oversight responsibilities in certain areas of risk. The Compensation Committee oversees the management of risks relating to our executive compensation plans and arrangements. The Corporate Governance and Nominating Committee oversees the management of risks associated with the composition of the Board of Directors and other types of corporate governance risks within its area of responsibility. The Audit
Committee oversees the Company’s risk assessment and risk management, policies, particularly the management ofwith respect to financial risks, such as financial reporting and alsoaccounting, internal controls, fraud, legal and regulatory compliance, and cybersecurity. The Audit Committee receives regular reports at each Audit Committee meeting from our Vice President of Internal Audit, who directly reports to the Chairperson of the Audit Committee. The Audit Committee also receives quarterly reports from our Senior Vice President, IT, on cybersecurity risks and the Company’s ongoing cybersecurity training for employees, which typically occurs monthly. The Audit Committee and the entire Board also receive quarterly reports from our Chief Legal Officer on any material litigation involving the Company and various material risk management matters, if any. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through the committee reports regarding such risks. This process enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Our Board of Directors believes the processes it has established for overseeing risk would be effective under a variety of leadership frameworks and, therefore, do not materially affect its choice of leadership structure as described under “Board Leadership Structure” above.
Risk Assessment of Compensation Programs
We have reviewed our compensation programs across the Company to determine whether they encourage unnecessary or excessive risk taking, and we have concluded that they do not.
In particular, as to our compensation arrangements for our NEOs, the Compensation Committee takes risk into account in establishing and reviewing these arrangements. The Compensation Committee believes that our executive compensation arrangements do not encourage unnecessary or excessive risk taking for several reasons. First, the base salaries of our NEOs are fixed in amount and thus do not encourage risk taking. Second, while our annual incentive programEIP focuses on achievement of short-term or annual goals, and short-term goals may encourage the taking of short-term risks at the expense of long-term results, the annual incentive programEIP is only one component of our overall compensation program and is balanced by the focus of our long-term incentive awards on driving longer-term stockholder gains. Third, the Compensation Committee retains authority to exercise its discretion in determining the amount to award undereach NEO with respect to the qualitative component of our NEO annual incentive programEIP based on its subjective assessment of the Company’s performance, the executive’sNEO’s individual performance, and any other factors the Compensation Committee may consider — including exposure to risk and risk management. Fourth, annual incentive awards are capped pursuant to our planEIP so that our NEOs are not able to achieve unlimited reward for taking significant risk. The Compensation Committee believes that the annual incentive programEIP appropriately balances risk and the desire to focus executives on specific short-term goals important to our success, and that it does not encourage unnecessary or excessive risk taking over a shortshort- or long termlong-term measure.
In addition, a significant portion of the compensation provided to our NEOs is in the form of stock optionsequity awards that are important to help further align each executive’s interests with those of our stockholders. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking since the ultimate value of the awards is tied to our stock price, and since awards are generally granted on an annual basis and
subject to long-term vesting schedules to help ensure that NEOs always have significant compensation opportunities tied to long-term stock price performance.
Employee, Officer and Director Hedging
We maintain an insider trading policy that, among other things, strongly discourages all of our employees, officers and directors from entering into hedging or monetization transactions involving our securities. Hedging or monetization transactions are transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds, that are designed to hedge or offset any decrease in the market value of our securities. Pursuant to our policy, any person wishing to enter into such an arrangement must submit the proposed transaction to our Chief Legal Officer for pre-approval.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Corporate Governance Guidelines. Our Board has adopted Corporate Governance Guidelines, which direct our Board’s actions with respect to, among other things, theour Board’s responsibilities, Board composition and selection of directors, Board meetings, theour Board’s standing committees and procedures for appointing members of these committees, stockholder communications with the Board, Board compensation, conduct and ethics standards for directors, and indemnification of directors. A current copy of our Corporate Governance Guidelines is posted on the Investor Relations — Corporate Governance section of our website atwww.rgp.com.https://ir.rgp.com/corporate-governance.
Code of Business Conduct and Ethics. The Company has also adopted athe Code of Business Conduct and Ethics that applies to everyone in the Company, including all of itsour directors, executive officers and employees. A current copy of our
Code of Business Conduct and Ethics is posted on the Investor Relations — Corporate Governance section of the Company’s website atwww.rgp.com.https://ir.rgp.com/corporate-governance. In addition, waivers from, and amendments to, our Code of Business Conduct and Ethics that apply to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, will be timely posted on the Investor Relations — Corporate Governance section of the Company’s website atwww.rgp.comhttps://ir.rgp.com/corporate-governance to the extent required by applicable SEC and NASDAQNasdaq rules.
Our Board annually conducts a self-evaluation to determine whether it and its committees are functioning effectively. This review is overseen by the Corporate Governance and Nominating Committee, and in fiscal 2021, all committees were determined to be functioning effectively and in accordance with their respective charters and applicable SEC and Nasdaq rules.
Our Board of Directors provides a process for stockholders to send communications to the Board, of Directors, to individual directors or to groups of directors, including non-management directors as a group. Communications should be sent to the Company’s corporate headquarters at 17101 Armstrong Avenue, Irvine, CA 92614, addressed to the attention of the specific group or individual or, if the communication is intended for all non-management directors, to the Chairperson of the Corporate Governance and Nominating Committee, the Chairperson of the Compensation Committee or the Chairperson of the Audit Committee and marked “Confidential, Intended for Recipient’s Review Only.” Upon receipt of any such communication, the material is forwarded directly to the addressee. If the communication is not directed to a specific individual, the material is forwarded to the Chairperson of the Audit Committee who reviews the content to determine its relevance and appropriate audience. The Company also maintains a Corporate Integrity Hotline, monitored by the Chairperson of the Audit Committee, so that any employee, stockholder or other interested party may use this vehicle to anonymously report problems or concerns involving ethical or compliance violations or complaints regarding accounting, internal accounting controls or auditing matters. Information about the hotline is posted on the Investor Relations, Corporate Governance page of our website atwww.rgp.com.https://ir.rgp.com/corporate-governance. The toll freetoll-free number for the Corporate Integrity Hotline is (866) 588-5733.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
The Company and our Board maintain a focus on environmental responsibility and sustainability, as well as social responsibility and governance oversight and activities. We believe that environmentally and socially responsible operating practices go hand in hand with generating value for our stockholders and clients, being an employer of choice, and being good neighbors within our communities. To promote these interests, we are committed to responsible business practices and continual improvement of our operations and our relationships with our employees, our clients and the communities in which we operate. We are also committed to enhanced transparency of, and best practices in, our corporate responsibility and sustainability policies and practices. Below are some of the ways in which we demonstrate our commitment to the environment, our employees and communities, and responsible governance.
Corporate Social Responsibility
Our Culture and Values
In a world of digital transformation, we are unified under the vision that we must keep business as human first. Our culture is built upon our shared, core values of Loyalty, Integrity, Focus, Enthusiasm, Accountability and Talent, and we believe this is a key reason for our success. Along with our core values, we act in accordance with our Code of Conduct, which sets forth the standards our employees and directors must adhere to at all times in the execution of their duties. Our Code of Conduct covers topics such as honest and candid conduct, conflicts of interest, protecting confidential information, anti-corruption, compliance with laws, rules and regulations, fair dealing, equal opportunities and non-harassment, maintaining a safe workplace, and the reporting of violations. The Code of Conduct reflects our commitment to operating in a fair, honest, responsible and ethical manner and also provides direction for reporting complaints in the event of alleged violations of our policies (including through an anonymous hotline).
Diversity, Equity and Inclusion
As a global human capital company, DE&I are of utmost importance, and our maintenance and improvement on this value is a priority. Our workforce reflects diversity in all its forms, including gender and gender identity, race and ethnicity, age, sexual orientation and a variety of cultural and personal backgrounds. As a human-first company, we believe a diverse workforce is essential to our continued success, and we strive to maintain a diverse and inclusive workforce at all levels. Our fiscal 2021 DE&I initiatives focused on increasing DE&I awareness, education and involvement among our workforce, increasing diversity in our workforce, and promoting diversity in our Go-to-Market activities. To ensure our commitment to these DE&I initiatives, we established in fiscal 2021 a North American Diversity Council and a global Diversity Ambassador program, consisting of employees from around the world and from our various functions. This Council and the Diversity Ambassadors work closely with senior leaders to facilitate alignment between DE&I efforts and our overall business strategy of promoting human capital practices that support and accelerate our DE&I goals.
We are proud that 100% of our executive leadership team, which includes our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief People Officer, and Chief Legal Officer, consists of women and minorities, with our executive leadership team comprised of 80% female and 40% racially and ethnically diverse minorities. Many of our other key leaders are also women or minorities. Additionally, 36% of our directors are minorities or women, with three of our directors identifying as female and one of our directors identifying as a racially or ethnically diverse minority. We also aim to have a workforce that reflects the diversity of qualified talent that is available in the markets that we serve. As of November 2020, 52.6% of our North American employees are minorities or women. We are a Paradigm for Parity Coalition Company and a 2020 Women on Boards “W” Winning Company.
Engagement with our Communities
Through both volunteerism and philanthropic efforts, we are dedicated to contributing to the communities in which we operate. We encourage everyone in our organization to volunteer their time and donate as they deem appropriate to local, and in some cases national, charitable causes. Our employees give generously of their time to help those charities, and the people those organizations serve. In fiscal 2020 and fiscal 2021, we sponsored Brightpath STEAM Academy, which is a robotics summer camp organized by one of our employees for under-privileged and under-represented students in St. Louis, Missouri. During the Pandemic, our healthcare team partnered with our healthcare clients to source and donate needed personal protective equipment to the medical community and first responders. Additionally, shortly after the global work-from-home mandate was implemented, we created the RGP Kids Academy which connects children of our employees with volunteer tutors and coaches from across the RGP ecosystem to help support our employees while they simultaneously juggle work and childcare. In fiscal 2021, we established a Social Justice Charitable Matching Fund, which has allowed us to help raise DE&I awareness internally across our organization by matching employees’ contributions to charitable organizations that promote social justice. As of May 29, 2021, we achieved our goal of matching $100,000 in contributions during fiscal 2021. We intend to continue our commitment toward this Fund in fiscal 2022.
Employee Wellbeing, Resilience and Growth
Employee safety and wellbeing is of paramount importance to us in any year and was of particular focus in our fiscal years 2020 and 2021 in light of the Pandemic. To further this focus, we formed a Global Business Continuity Team to improve our disaster preparedness plans and implement strategies to manage the health and security of our employees, business continuity and client confidence, so that we can continue to provide our clients with excellent customer service and our employees with a safe and healthy work environment. In response to the Pandemic, we introduced a work-from-home policy, critical safety and hygiene protocols and training, and a limited business travel directive. We continue to monitor changing government rules and regulations in countries where we operate and have begun to reopen our offices in accordance with local health department guidelines. Our goal is to help every human in our workforce maintain a positive, productive and connected work experience. We provide productivity and collaboration tools and resources for employees working remotely, and during 2020 and 2021, we enhanced and promoted programs to support our employees’ physical and mental wellbeing, including the offering of virtual fitness and education classes. We also offer all U.S.-based employees participation in our Employee Assistance Program, which provides our employees with mental health support and resources.
Strong leadership is critical to fostering employee engagement and positioning employees to perform at their best. For these reasons, we invest in the ongoing professional development of our employees through curated programs that are designed to promote personal, functional and leadership growth.
As a global human capital company, our environmental footprint is relatively small. We nevertheless continue to take actions to reduce our footprint and be environmentally responsible, including (1) reducing our global real estate footprint by over 60,000 square feet during fiscal 2021 by creating designated virtual offices, utilizing shared work spaces and expanding our use of technology to allow more employees to work virtually; (2) reducing our use of paper by transitioning more than 95% of client invoices to electronic billing, implementing electronic paystubs for all US employees and reducing our use of print-based marketing materials in favor of digital assets; and (3) minimizing our Company’s carbon emissions through reduced air travel and commuting due to our use of virtual offices and hybrid approach to remote and in-office work and maximizing the use of technology for virtual meetings. We have plans to reduce our physical footprint by an additional 100,000 square feet over the next few years.
Under our director compensation policy, annual compensation for the members of our Board of Directors who are not employed by us or any of our subsidiaries (referred to herein as a “non-employee directors”) consists of an annual cash retainer, an additional cash retainer for non-employee directors serving in certain positions as described below, and an annual equity award. In the case of a non-employee director who is newly elected or appointed to our Board, of Directors, such director is eligible to receive a proratedpro-rated cash retainer and an equity award, with the amount and terms thereof to be determined by our Boardpro-ration based on the number of Directors orcalendar days remaining in the calendar year that the director first serves as a committee thereof in its discretion.non-employee director. Our Board of Directors reserves the right to modify the director compensation policy from time to time.
Pursuant to the terms of our director compensation policy, each non-employee director then in office receives an annual cash retainer (“Annual Board Retainer”) and an additional cash retainer for holding certain
positions (“Additional Retainers”). The following table sets forth the schedule of Annual Board Retainer and Additional Retainers as in effect during fiscal 2017:2021:
Type of Fee | Dollar | |||
Annual Board Retainer | $ | 50,000 | ||
Additional Annual Retainer for Chairman of the Board | $ | 250,000 | ||
Additional Annual Lead Independent Director Retainer | $ | 15,000 | ||
Additional Retainer for Audit Committee Chairperson | $ | 20,000 | ||
Additional Retainer for Compensation Committee Chairperson | $ | 15,000 | ||
Additional Retainer for Corporate Governance and Nominating Committee Chairperson | $ | 10,000 | ||
Additional Retainer for Service on the Audit Committee | $ | 5,000 | ||
Additional Retainer for Service on the Compensation Committee | $ | 5,000 | ||
Additional Retainer for Service on the Corporate Governance and Nominating Committee | $ | 2,500 |
Each such retainer is paid at the start of each calendar year, and as a result, covers different fiscal years. Newly elected or appointed non-employee directors will receive apro rata pro-rata portion of the Annual Board Retainer and any applicable Additional Retainers, with the prorationpro-ration based on the number of calendar days remaining in the calendar year that the director first serves as a non-employee director or held the particular position, as the case may be. Non-employee directors are also generally reimbursed for out-of-pocket expenses they incur serving as directors.
Annual Equity Award | ||
New Director Award |
Annual Restricted StockEquity Awards for Continuing Board Members
On the first trading day of each calendar year, each non-employee director then in office will automatically be granted an award of restricted stock (or, as discussed below, restricted stock units) with respect to shares of the Company’s common stock with a grant value of approximately $100,000 (the “Annual Equity Award”). The number of shares of the Company’s common stock subject to such restricted stock (or restricted stock unit) award will be determined by dividing the Annual Equity Award grant value of $100,000 by the per-share closing price of the Company’s common stock on the date of grant (roundedand rounding down to the nearest whole share).share. Directors who own Company stock in excess of ten times the applicable guideline level under our stock ownership guidelines, set forth below under “Compensation Discussion and Analysis — Stock Ownership Guidelines for Directors”, are permitted to elect a vested cash payment in lieu of the annual restricted stockequity award. In fiscal 2017,2021, Mr. Murray elected to receive cash in lieu of his annual restricted stockequity award.
Initial Restricted StockEquity Awards for New Directors
Each newly elected or appointed non-employee director is granted an initial award of restricted stock award on(or, as discussed below, restricted stock units) upon joining the Board of Directors.Board. The number of shares subject to such restricted stock (or restricted stock unit) award will be determined by dividing the Annual Equity Award grant value of $100,000 (pro-rated based on the number of calendar days remaining in the calendar year that the director first serves as a non-employee director) by the per-share-closing price of the Company’s common stock on the date of grant (rounded down to the nearest whole share).
An employee or former employee of the Company or one of its subsidiaries who ceases or has ceased to be so employed and becomes a non-employee director will not be eligible for an initial restricted stockequity award grant butand will also be eligible for cash compensation and annual equity awards on the same basis as other non-employee directors, as described above.
Provisions Applicable to All Non-Employee Director Restricted StockEquity Awards
For fiscal 2017,2021, each restricted stockequity award granted to the non-employee directors was made under and subject to the terms and conditions of the Company’s 20142020 Plan. Non-employee director restricted stockequity awards will beare evidenced by, and subject to the terms and conditions of, an award agreement in the form approved by theour Board to evidence such type of grant pursuant to this policy.the 2020 Plan. Each award will vestvests in equal annual installments over the four-year period following the grant date. Non-employee directors are also entitled to cash dividend and stockholder voting rights with respect to outstanding and unvested restricted stock awards.
Restricted stock and restricted stock unit awards are generally forfeited as to the unvested portion of the award upon the non-employee director’s termination of service as a director of the Company for any reason. However, in the event the non-employee director ceases to serve as a director due to his or her mandatory retirement as may be required pursuant to the Company’s mandatory retirement policy as then in effect for members of theour Board, each restricted stock and restricted stock unit award held by the director that is then outstanding and otherwise unvested will generally become immediately vested and nonforfeitable. Restricted stock and restricted stock unit awards granted to non-employee directors, to the extent then outstanding and unvested, will become fully vested and nonforfeitable in the event of a change in control event. With
Directors Deferred Compensation Plan
Our non-employee directors may elect, pursuant to our Directors Deferred Compensation Plan, to defer payment of all or a portion of their compensation for service on our Board.
In the case of a deferral of an equity award, the non-employee director is granted restricted stock units in lieu of restricted stock. Restricted stock units granted in lieu of a restricted stock award are subject to the four-year vesting requirement noted above.
In the case of a deferral of cash compensation, the director receives a number of restricted stock units equal to the amount of the cash compensation being deferred, divided by the per-share closing price of a share of our common stock on the date that the cash compensation would have been paid but for the deferral. Restricted stock units credited in lieu of cash compensation are fully vested.
Restricted stock units credited with respect to awards todeferrals by non-employee directors (“deferred stock units”) cannot be voted or sold. Deferred stock units accrue dividend equivalents, credited in the 2014 Plan is administeredform of additional stock units, if and when dividends are paid on our common stock. The dividend equivalent stock units are subject to the same vesting and payment terms as the stock units to which they relate. Deferred stock units generally become payable, in a lump sum or a series of installment payments as elected by the Board, anddirector, when the Board hasdirector no longer serves on our Board. Deferred stock units are settled in cash, based on the ability to interpret and make all required determinations under the plan. This authority includes making required proportionate adjustments to outstanding awards to reflect stock splits and similar corporate transactions. Awards are generally transferable to a beneficiaryvalue of a director uponshare of common stock at the time of payment.
Ms. Crawford, Mr. Dimick, Mr. Kistinger, Ms. Sarkis and Mr. Wargotz each elected to defer their equity award for the 2021 plan year. None of the directors elected to defer their cash compensation for the 2021 plan year.
Other Arrangements
On August 12, 2019, the Company entered into a one-year consulting agreement with Mr. Cherbak in the event Ms. Ryu required assistance as she transitioned into the role of Chief Financial Officer. The Company agreed to pay Mr. Cherbak $300 per hour for his or her death orconsulting services. Mr. Cherbak did not perform any services under this agreement, and thus received no payment pursuant to the terms of this agreement. The agreement expired by its terms on August 11, 2020. Mr. Cherbak continues to be compensated as approved by the Board.a non-employee director.
DIRECTOR COMPENSATION — FISCAL 20172021
The following table presents information regarding the compensation paid for fiscal 20172021 to our non-employee directors. The compensation paid to Mr. Cherbak, who retired asMs. Duchene, our President and Chief Executive Officer, during fiscal 2017, is presented below in the “Executive Compensation Tables for Fiscal 20172021 — Summary Compensation Table — Fiscal 2015 — 2017”2019 to 2021” and the related explanatory tables. Mr. CherbakMs. Duchene did not receive separate compensation for her service on the Board of Directors.our Board.
Name | Fees Earned | Stock | Option | All Other | Total ($) | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
Donald B. Murray(3) | 400,000 | 0 | 0 | 0 | 400,000 | |||||||||||||||
Anthony Cherbak | 50,000 | 100,000 | 0 | 0 | 150,000 | |||||||||||||||
Susan Crawford(4) | 52,500 | 100,000 | 0 | 0 | 152,500 | |||||||||||||||
Neil Dimick | 75,000 | 100,000 | 0 | 0 | 175,000 | |||||||||||||||
Robert Kistinger | 57,500 | 100,000 | 0 | 0 | 157,500 | |||||||||||||||
Marco von Maltzan | 55,000 | 100,000 | 0 | 0 | 155,000 | |||||||||||||||
Lisa M. Pierozzi(5) | 50,329 | 91,505 | 0 | 0 | 141,834 | |||||||||||||||
A. Robert Pisano | 80,000 | 100,000 | 0 | 0 | 180,000 | |||||||||||||||
Jolene Sarkis | 65,000 | 100,000 | 0 | 0 | 165,000 | |||||||||||||||
Anne Shih(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Michael Wargotz | 60,000 | 100,000 | 0 | 0 | 160,000 | |||||||||||||||
David P. White(7) | 0 | 0 | 0 | 0 | 0 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Total ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Donald B. Murray(3) | 400,000 | 0 | — | 400,000 | ||||||||||||
Susan Crawford | 52,500 | 99,992 | — | 152,492 | ||||||||||||
Neil Dimick | 75,000 | 99,992 | — | 174,992 | ||||||||||||
Robert Kistinger | 57,500 | 99,992 | — | 157,492 | ||||||||||||
A. Robert Pisano | 80,000 | 99,992 | — | 179,992 | ||||||||||||
Jolene Sarkis | 65,000 | 99,992 | — | 164,992 | ||||||||||||
Anne Shih | 52,500 | 99,992 | — | 152,492 | ||||||||||||
Michael Wargotz | 60,000 | 99,992 | — | 159,992 |
(1) | The amounts reported in column (c) of the table above reflect the fair value on the grant date of the restricted stock (or restricted stock unit) award granted to our non-employee directors during fiscal |
(2) | As described above, on January 4, 2021, each of our |
(3) | Mr. Murray’s fees earned listed in this table reflect the director retainer fees to which he was entitled that were paid in January |
(4) | Ms. Crawford retired from our Board effective February 1, 2021. |
(5) | Ms. Pierozzi was appointed to our |
(6) | Ms. Shih retired from our Board effective October 22, 2020 and received no compensation in |
(7) | Mr. White was appointed to our Board effective July 29, 2021 and received no compensation in fiscal 2021 as he was not yet appointed to the |
Aggregate Outstanding Equity Awards
The following table presents the aggregate number of outstanding unexercised options to acquire shares of Company common stock, andnumber of unvested shares of Company restricted stock and number of unvested Company restricted stock units held by each of our non-employee directors as of May 27, 2017.29, 2021.
Director | Number of Options Outstanding | Number of Shares of Unvested Restricted Stock | Number of
| Number of Shares of
| ||||||||||||
Donald B. Murray | 563,750 | 0 | 260,000 | 0 | ||||||||||||
Anthony Cherbak | 370,000 | 16,240 | ||||||||||||||
Susan Crawford | 14,328 | 14,045 | 0 | 0 | ||||||||||||
Neil Dimick | 9,000 | 14,045 | 0 | 17,837 | ||||||||||||
Robert Kistinger | 9,000 | 14,045 | 0 | 17,837 | ||||||||||||
Marco von Maltzan | 0 | 17,624 | ||||||||||||||
Lisa M. Pierozzi | 0 | 7,735 | ||||||||||||||
A. Robert Pisano | 17,263 | 14,045 | 0 | 17,837 | ||||||||||||
Jolene Sarkis | 9,000 | 14,045 | 0 | 17,837 | ||||||||||||
Anne Shih | 15,000 | 14,045 | 0 | 0 | ||||||||||||
Michael Wargotz | 12,000 | 14,045 | 0 | 17,837 | ||||||||||||
David P. White | 0 | 0 |
Stock Ownership Guidelines for Directors
On July 28, 2011, the Board approved the following stock ownership guidelinesWe maintain Stock Ownership Guidelines for the non-employee members of the Board of Directors.our Board. Please see “Compensation Discussion and Analysis — Stock Ownership Guidelines for NEOs” below for information on the guidelines applicable to our executive officers.
All of our non-employee directors should own Company common stock equal in value to the lesser of two times the annual board retainer or 10,000 shares. Stock that counts towards satisfaction of the ownership guidelines (“Qualifying Shares”) includes:
Shares of common stock beneficially held, either directly or indirectly;
Restricted stock issued and held whether vested or unvested;
Shares of common stock held following the exercise of a stock option or payment of other equity award.
All individuals covered by these guidelines should satisfy the applicable share ownership guidelines within five years of first becoming subject to them. If a covered individual’s guideline level of ownership changes as a result of a change in position or change in retainer, the individual should satisfy the applicable guidelines within a five-year period beginning in January following the year of such change. The Company’s Stock Ownership Guidelines are available on the Investor Relations — Corporate Governance page of the Company’s website atwww.rgp.comhttps://ir.rgp.com/corporate-governance.
As shown in the table below, as of August 23, 2021, each of our current non-employee directors currentlyeither meets both the minimum share ownership and dollar amount guidelines (even though only one of the guidelines must be met).or has time remaining to fulfill such guidelines.
Non-Employee Director Stock Ownership Status
Guideline | 10,000 Shares | $100,000 | $100,000(1) | |||||||||||||
Qualifying Shares Held1 | Value as of the Record Date2 | Qualifying | Value as of the | |||||||||||||
Donald B. Murray | 1,220,304 | $ | 14,826,694 | 1,210,304 | $ | 19,316,452 | ||||||||||
Susan Crawford | 35,273 | $ | 428,567 | |||||||||||||
Anthony Cherbak | 60,261 | $ | 961,766 | |||||||||||||
Neil Dimick | 35,273 | $ | 428,567 | 63,023 | $ | 1,005,847 | ||||||||||
Robert Kistinger | 35,273 | $ | 428,567 | 63,023 | $ | 1,005,847 | ||||||||||
Marco von Maltzan | 24,131 | $ | 385,131 | |||||||||||||
Lisa M. Pierozzi | 7,735 | $ | 123,451 | |||||||||||||
A. Robert Pisano | 53,741 | $ | 652,953 | 81,491 | $ | 1,300,596 | ||||||||||
Jolene Sarkis | 35,273 | $ | 428,567 | 63,023 | $ | 1,005,847 | ||||||||||
Anne Shih | 41,273 | $ | 501,467 | |||||||||||||
Michael Wargotz | 35,273 | $ | 428,567 | 56,823 | $ | 906,895 | ||||||||||
David P. White | 2,741 | $ | 43,746 |
(1) | The relevant guideline is $100,000, as this is the lesser of (i) two times the annual board retainer (i.e. $100,000) and (ii) the value of 10,000 shares (which was valued on the record date at $159,600). |
(2) | Represents the Qualifying Shares held by the director on August |
(3) | Determined by multiplying the number of Qualifying Shares held by the director on August |
POLICY REGARDING TREATMENT OF RELATED PARTY TRANSACTIONS
The Company’s policies and procedures for the review, approval or ratification of related-party transactions required to be disclosed pursuant to Item 404 of SEC Regulation S-K are set forth in the written charter of the Audit Committee. Pursuant to its charter, the Audit Committee must review and approve all proposed related-person transactions that are subject to disclosure pursuant to Item 404 of SEC Regulation S-K before the Company is permitted to enter into any such transaction. In fiscal 2017,2021, there were no reportable related-party transactions under Regulation S-K.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information about the beneficial ownership of our common stock as of August 24, 2017,23, 2021 for:
each person known by the Company who beneficially owns more than five percent of the common stock of the Company;
each of our directors;
each NEO named in the Summary Compensation Table; and
all current directors and executive officers as a group.
Unless otherwise indicated, the address for each person or entity named below is c/o Resources Connection, Inc., 17101 Armstrong Avenue, Irvine, CA 92614.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, and except for community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. TheExcept as otherwise indicated below, the percentage of beneficial ownership is based on 29,899,42633,186,740 shares of the Company’s common stock outstanding as of August 24, 2017.23, 2021.
Directors and Named Executive Officers | Number of Shares Beneficially Owned | Percentage of Shares Outstanding** | ||||||
Donald B. Murray(1) | 1,784,054 | 6 | % | |||||
Anthony Cherbak(2) | 582,700 | * | ||||||
Kate W. Duchene(3) | 396,772 | * | ||||||
Nathan W. Franke(4) | 310,260 | * | ||||||
A. Robert Pisano(5) | 71,004 | * | ||||||
John D. Bower(6) | 68,336 | * | ||||||
Anne Shih(7) | 56,273 | * | ||||||
Susan Crawford(8) | 49,601 | * | ||||||
Michael Wargotz(9) | 47,273 | * | ||||||
Neil Dimick(10) | 44,273 | * | ||||||
Robert Kistinger(11) | 44,273 | * | ||||||
Jolene Sarkis(12) | 44,273 | * | ||||||
Herbert M. Mueller(13) | 39,263 | * | ||||||
Executive Officers and Directors as a group(13 persons)(14) | 3,538,355 | 11.8 | % |
Directors and Named Executive Officers | Number of Shares Beneficially Owned | Percentage of Shares Outstanding** | ||||||
Donald B. Murray (1) | 1,470,304 | 4.40% | ||||||
Kate W. Duchene (2) | 454,236 | 1.35% | ||||||
Anthony Cherbak (3) | 430,261 | 1.28% | ||||||
Timothy L. Brackney (4) | 156,658 | * | ||||||
A. Robert Pisano (5) | 81,491 | * | ||||||
Neil Dimick (6) | 35,273 | * | ||||||
Robert Kistinger (7) | 35,273 | * | ||||||
Jolene Sarkis (8) | 35,273 | * | ||||||
Michael Wargotz (9) | 29,073 | * | ||||||
Jennifer Y. Ryu (10) | 22,350 | * | ||||||
Lisa M. Pierozzi (11) | 7,735 | * | ||||||
David P. White | 2,741 | * | ||||||
Marco von Maltzan (12) | 0 | * | ||||||
Executive Officers and Directors as a group (13 persons) (13) | 2,760,668 | 8.04% |
5% Stockholders
| Number of Shares
| Percentage of Shares
| ||||||
BlackRock Inc. (14) | 5,056,225 | 15.60% | ||||||
Dimensional Fund Advisors LP (15) | 2,477,959 | 7.60% | ||||||
The Vanguard Group (16) | 2,050,936 | 6.32% |
5% Stockholders | Number of Shares Beneficially Owned | Percentage of Shares Outstanding** | ||||||
BlackRock Fund Advisors(15) | 3,764,267 | 10.7 | % | |||||
Vanguard Group Inc.(16) | 2,897,920 | 9.8 | % | |||||
Dimensional Fund Advisors LP(17) | 2,499,367 | 8.4 | % | |||||
Royce & Associates, LP(18) | 2,371,939 | 8.0 | % |
* | Represents less than 1%. |
** | We determine beneficial ownership in accordance with the rules of the SEC. We deem (i) shares subject to options that are currently exercisable or exercisable within 60 days after August |
(1) | Includes |
(2) | Includes 356,000 shares of common stock subject to options exercisable within 60 days of August 23, 2021. |
(3) | Includes 25,000 shares beneficially owned by Mr. Cherbak in The Cherbak Family Trust, Anthony C. Cherbak and Debra L. Cherbak Trustees and |
(4) | Includes |
(5) | Includes 10,536 shares beneficially owned by Mr. Pisano in the Pisano Living Trust, Robert A. Pisano Trustee. Mr. Pisano has sole voting and investment power over shares held in the trust. |
(6) | Does not include 27,750 deferred restricted stock units that will be paid out in cash at the end of service to the extent then-vested. |
(7) | Does not include 27,750 deferred restricted stock units that will be paid out in cash at the end of service to the extent then-vested. |
(8) | Does not include 27,750 deferred restricted stock units that will be paid out in cash at the end of service to the extent then-vested. |
(9) | Does not include 27,750 deferred restricted stock units that will be paid out in cash at the end of service to the extent then-vested. |
(10) | Includes 11,250 shares of common stock subject to options exercisable within 60 days of August |
(11) | Shares beneficially owned by Ms. Pierozzi in the Apsley Belgrave Trust, Lisa M. Pierozzi as Trustee. Ms. Pierozzi has sole voting and investment power over shares held in the trust. |
(12) | Does not include 24,131 deferred restricted stock units that will be paid out in cash at the end of service to the extent then vested. |
(13) | Includes |
(14) |
According to a Schedule |
(15) | According to a Schedule 13G/A filed with the SEC on February 12, 2021, by Dimensional Fund Advisors LP, as of December 31, 2020, Dimensional Fund Advisors LP has sole voting power with respect to 2,367,798 shares of common stock, and sole dispositive power with respect to 2,477,959 shares of common stock. The address of |
Dimensional Fund Advisors LP, as listed in the Schedule 13G/A, is Building One, 6300 Bee Cave Road, Austin, TX 78746. As disclosed in the Schedule 13G/A, Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Dimensional Funds”). In its role as investment advisor, sub-adviser and/or manager to certain Dimensional Funds, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the shares of the Company’s common stock that are owned by the Dimensional Funds and may be deemed to be the beneficial owner of the shares of the common stock of the Company held by the Dimensional Funds. However, all other shares of the Company’s common stock reported in the table above are owned by the Dimensional Funds. Dimensional disclaims beneficial ownership of such shares of the Company’s common stock. |
(16) | According to a Schedule 13G/A filed with the SEC on February 10, |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires our executive officers (as defined under Section 16), directors and persons who beneficially own greater than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. We are required to disclose any failure of these executive officers, directors and 10% stockholders to file these reports by the required deadlines. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons that no report on Form 5 was required for such persons, we believe that, for the reporting period covering fiscal 2017, with the exception of amended Form 4 filings by Kate Duchene and Anthony Cherbak each dated September 16, 2016 to clarify a grant date, delayed Form 3 filings by Herbert Mueller and John Bower indicating their beneficial ownership in our stock after their appointments to Chief Financial Officer and Chief Accounting Officer respectively, and an amendment to Mr. Bower’s Form 3 to include additional shares of stock, all executive officers and directors complied, on a timely basis, with all their reporting requirements under Section 16(a) for such fiscal year.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR FISCAL YEAR 20182022
The Audit Committee of the Board of Directors has appointed the accounting firm of RSM US LLP as the Company’s independent registered public accounting firm to conduct the annual audit of Resources Connection’sthe Company’s financial statements for fiscal year 2018.2022. If the stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain RSM US LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may appoint a different independent auditor at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and our stockholders.
A representative of RSM US LLP will be available at the Annual Meeting to answer any appropriate questions concerning the independent registered public accounting firm’s areas of responsibility and will have an opportunity to make a statement if he or she desires to do so.
The following table shows information about RSM US LLP’s fees for services provided to the Company in fiscal year 20172021 and 2016.2020.
2017 | 2016 | 2021 | 2020 | |||||||||||||
Audit Fees | $ | 736,500 | $ | 689,400 | $ | 1,227,535 | $ | 1,235,500 | ||||||||
Audit Related Fees | — | — | ||||||||||||||
Tax Fees | $ | 9,500 | — | |||||||||||||
Audit Related Fees(1) | $ | 52,400 | $ | 34,400 | ||||||||||||
Tax Fees(2) | $ | 6,500 | $ | 6,500 | ||||||||||||
All Other Fees | — | — | $ | 0 | $ | 0 |
(1) | Audit Related Fees include those fees for professional services reasonably related to the performance of the audit or review of financial statements. |
(2) | Tax Fees include global compliance and reporting for our tax return and information-reporting requirements. |
Audit Committee Policy Regarding Pre-Approval of Services of Independent Registered Public Accounting Firm
As set forth in its charter, the Audit Committee has the sole authority to review in advance, and grant any appropriate pre-approval of: (1) all auditing services to be provided by the independent registered public accounting firm and (2) all non-audit services to be provided by the independent registered public accounting firm as permitted by Section 10A of the Exchange Act, and in connection therewith to approve all fees and other terms of engagement. Such pre-approval can be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual basis. The pre-approval of non-auditing services can be delegated by the Audit Committee to one or more of its members, but the decision must be presented to the full Audit Committee at the next scheduled meeting. In fiscal 20172021 and 2016,2020, all fees of RSM US LLP were pre-approved by the Audit Committee.
The Board of Directors unanimously recommends athat stockholders vote FOR ratification of“FOR” Proposal 2 to ratify the appointment of RSM US LLP as the Company’s independent registered public accounting firm for fiscal year 2018.2022.
The following report of the Audit Committee does not constitute soliciting material and shall not be deemed filed with the SEC under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act or incorporated by reference in any document so filed.
To the Board of Directors of Resources Connection, Inc.:
As set forth in more detail in the Audit Committee charter, the Audit Committee’s primary responsibilities fall into three categories:
first, the Audit Committee is responsible for overseeing the preparation of and reviewing the quarterly and annual financial reports prepared by the Company’s management, including discussions with management and the Company’s outside independent registered public accounting firm regarding significant accounting and reporting matters;
second, the Audit Committee is responsible for the engagement, compensation, retention and oversight of all of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting), as well as determining whether the outside registered public accounting firm is independent (based in part on the annual letter provided to the Company pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding the public accounting firm’s communications with the Audit Committee concerning independence); and
third, the Audit Committee oversees management’s implementation of effective systems of internal controls.
The Audit Committee has reviewed and discussed with the Company’s management and its independent registered public accounting firm, RSM US LLP, the Company’s audited financial statements for the year ended May 27, 2017,29, 2021, known as the Audited Financial Statements. Management advised the Audit Committee that the Audited Financial Statements were prepared in accordance with generally accepted accounting principles. In addition, the Audit Committee discussed with RSM US LLP the matters required to be discussed byPCAOB Auditing Standard 1301 (previously Auditing Standard No. 16), Communications with Audit Committees. the applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The Audit Committee also has received and reviewed the written disclosures and the letter from RSM US LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with that firm its independence from the Company. The Audit Committee also discussed with the Company’s management and RSM US LLP such other matters, and received such assurances from that firm, as the Audit Committee deemed appropriate.
Management is responsible for the Company’s internal controls and the financial reporting process. RSM US LLP is responsible for performing an independent audit of the Company’s financial statements and the Company’s internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon.
Based on the foregoing review and discussions and a review of the reports of RSM US LLP with respect to the Audited Financial Statements, and relying thereon, the Audit Committee recommended to the Company’s Board of Directors the inclusion of the Audited Financial Statements in Resources Connection’sthe Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2017.29, 2021.
THE AUDIT COMMITTEE
THE AUDIT COMMITTEE | |
Neil Dimick, Chairperson | |
Robert Kistinger | |
Marco von Maltzan | |
Lisa M. Pierozzi | |
Michael Wargotz |
Neil Dimick, Chairperson
Robert Kistinger
Michael Wargotz
The following discussion of named executive officer compensation contains descriptions of various employment-related agreements and employee compensation plans. These descriptions are qualified in their entirety by reference to the full text or detailed descriptions of the agreements and plans that we have filed as exhibits to our Annual Report on Form 10-K for the year ended May 27, 201729, 2021, filed with the SEC on July 24, 201723, 2021.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes the Company’s compensation philosophy, explains the objectives of our compensation programs and sets forth the elements of the compensation paid or awarded to, or earned by our Chief Executive Officer and the other NEOs identified in the Summary Compensation Table — Fiscal Years 2015-2017. This CD&A also provides the Company’s analysis of these policies and decisions.for fiscal 2021.
The Company’s NEOs for fiscal 2017 were:
2021 are:
| ||||||
Name | Age | Position | ||||
Kate W. Duchene | 58 | President and Chief Executive Officer | ||||
| 46 | Executive Vice President and Chief Financial Officer | ||||
| 49 | President and Chief | ||||
| ||||||
|
Fiscal 20172021 Executive Summary
In fiscal 2017, we managedThe Compensation Committee is responsible for setting the succession of both our Chief Executive Officer and our Chief Financial Officer, and created the position of Chief Accounting Officer. Effective August 26, 2016, Nathan W. Franke retired as our Executive Vice President and Chief Financial Officer and Herbert M. Mueller was promoted to the position of Executive Vice President and Chief Financial Officer as of August 29, 2016. On August 17, 2016, John D. Bower was promoted to the newly-created position of Chief Accounting Officer. On October 7, 2016, Anthony C. Cherbak retired as our President and Chief Executive Officer due to health issues. Consistent with our Emergency Succession Plan, the Board of Directors appointed Kate W. Duchene the Interim Chief Executive Officer. Following a search process led by a Search Committeecompensation of the BoardNEOs. In determining elements of Directors, on December 16, 2016,compensation for fiscal 2021 for our NEOs, the Board appointed Ms. Duchene to serveCompensation Committee considered the Company’s business results as our President and Chief Executive Officer.
discussed in more detail in this CD&A. The following are certain highlights of our business results for fiscal 2017:
2021:
We achieved revenue of $583.4$629.5 million;
We generatedachieved 8.2% or $18.7 million in cost reduction;
• | We achieved Adjusted EBITDA of |
• | We achieved an Adjusted EBITDA Margin of |
We generated $28.3diluted earnings per share of $0.78;
We returned $133.1$18.2 million to shareholdersstockholders in fiscal 20172021 through the Company’s dividend program and the repurchase of 7.4 million shares of common stock through our share repurchase program and modified Dutch tender offer;
We retained 100% of our top 50 clients from fiscal 20162020 in fiscal 2017;2021; and
We closedended fiscal 20172021 with $62.3$74.4 million in cash and cash equivalents.
Highlights of the executive compensation program for fiscal 20172021 include:
• | Base Salaries. |
• | Annual Incentives. All of our NEOs |
|
(7) | See pages 29 and 31 of Resources Connection, Inc.’s Annual Report on Form 10-K, filed with the |
(8) | Adjusted EBITDA Margin is Adjusted EBITDA divided by revenue. |
EBITDA Percentage(7)(9) of 6.5% |
Ms. Duchene, our President and Chief Executive Officer, was awarded a total annual incentive of $438,685,$836,000, representing 33%37.2% of her maximum award opportunity or 75%111.5% of her target annual incentive opportunity;
Mr. Mueller Chief Financial Officer, was awarded a total annual incentive of $251,904,$391,000, representing 45%37.2% of her maximum award opportunity or 111.7% of her target annual incentive opportunity; and
Messrs. Cherbak and Franke were not eligible to receive a bonus under the EIP for fiscal 2017 because they retired during fiscal 2017. Mr. Bower did not participate in the EIP for fiscal 2017 because it was approved prior to his appointment as Chief Accounting Officer. Instead, Mr. Bower was awarded a discretionary bonus of $175,000 for fiscal 2017.
• | Long-Term Incentives.In fiscal |
• | Stock Ownership |
TheOur Board appoints each executive officer of the Company. The Compensation Committee has responsibility for setting the compensation of our NEOs.executive officers. The Compensation Committee has sole authority to determine the compensation of our Chief Executive Officer. In setting the compensation of the NEOsexecutive officers other than the Chief Executive Officer, the Compensation Committee considers the recommendations of the Chief Executive Officer. See “Board of Directors — Compensation Committee” above for a discussion of the powers and responsibilities of the Compensation Committee and the role that our President and Chief Executive Officer plays in compensation decisions. Except as otherwise noted in this CD&A, the Compensation Committee’s decisions are subjective and the result of its business judgment, which is informed by the experiences of the members of the Compensation Committee.
Our compensation philosophy is to deliver NEO compensation that will allow us to attract and retain highly qualified executives while maintaining a strong relationship between executive pay and Company performance. In a professional services business, we believe talent is the Company’s “critical”critical asset. The Company must maintain a compensation program that allows us to compete against public and private firms for exceptional talent around the globe utilizing an appropriate mix of cash and equity reward elements. In structuring our current executive compensation programs, we are guided by the following principles:
• | “At Risk” Compensation/Pay for Performance. A significant portion of each executive’s compensation should be “at risk” and tied to the Company’s attainment of our annual and long-term financial and business objectives, including retaining our team-oriented culture. |
For fiscal 2021, approximately 75% of our Chief Executive Officer’s and Chief Operating Officer’s, and 65% of our Chief Financial Officer’s, target total direct compensation(10) was not guaranteed but rather was tied to metrics related to Company performance and/or stock price, and therefore meaningfully “at risk”.
(9) | Adjusted EBITDA Percentage for purposes of the EIP is total revenue minus the cost of services sold and Selling, General and Administration expense adjusted for stock compensation, changes in contingent consideration, Board approved restructuring and any additional items deemed appropriate by the Audit Committee, divided by revenue. |
(10) | Target total direct compensation means the NEO’s base salary, target annual cash incentive and grant date fair value (based on the value approved by the Compensation Committee and used to determine the number of shares subject to the award) of annual long-term incentive awards granted to the NEO in fiscal 2021. |
• | Competitive Compensation. The Company’s executive compensation programs should provide a fair and competitive compensation opportunity that enables us to attract and retain superior executive talent in the global market. |
• | Alignment with Stockholder Interests. Executive compensation should be structured to include variable elements that link executives’ financial reward to stockholder return, and executive stock ownership should be encouraged. |
We have implemented this pay for performance philosophy through the following program design.
While embracing the Company’s compensation philosophy, the Compensation Committee has designed the executive compensation programs to achieve the following objectives: (1) serve to reinforce the Company’s goals and business objectives, with an eye toward longer-term prosperity and success; (2) pay for performance in a manner that supports growth and innovation without encouraging excessive risk; (3) align the interests of management and stockholders by weighting a significant portion of total reward opportunities on long-term performance awards; (4) allow the Company to attract, retain and motivate key executives by providing competitive compensation with an appropriate mix of fixed and variable elements; and (5) appreciate the culture of the Company in recognizing and supporting outstanding team-based performance and behaviors that demonstrate our core values of TIEL: Talent, Integrity, Enthusiasm and Loyalty.values. As described in more detail below, the material elements of our current executive compensation programs for NEOs include a base salary; an annual, cash-based incentive compensation opportunity; a long-term equity incentive opportunityopportunity; and potential severance and other benefits payable in connection with a termination
of employment or change in control. We believe that each element of our executive compensation program helps us to achieve one or more of our compensation objectives, as illustrated by the table below:
Compensation Element | Compensation Objectives | |
Designed to be Achieved | ||
Base Salary | • Attract, motivate, reward and retain high-caliber talent | |
Annual | • Directly link pay to performance | |
• Incentivize creation of stockholder value | ||
• Attract, motivate, reward and retain high-caliber talent | ||
Long-Term Equity Incentives | • Incentivize creation of stockholder value | |
• Directly link pay to performance | ||
• Attract, motivate, reward and retain high-caliber talent | ||
Severance and Other Benefits Potentially Payable Upon Termination of Employment or a Change in Control | • Attract, motivate, reward and retain high-caliber talent |
Use of Compensation Consultant
During fiscal 2017,2021, the Compensation Committee did not engage an independent compensation consultant. Pursuant to its charter, the Compensation Committee has the authority in its sole discretion to retain an independent consultant as it deems appropriate and necessary. The Compensation Committee did not make significant changes to the compensation program design during the fiscal year and, therefore, determined it was not in the best interests of the Company, nor necessary, to incur the additional costs of engaging such services for fiscal 2017. However, in2021. In order to assist the Compensation Committee’s evaluation of executive compensation during fiscal 2021, the Compensation Committee in conducting its annual review ofreviewed data on the Company’s peer group and other relevant data, the Company subscribed to the services of Mainpulled from Equilar’s Insight Data Group (“MDG”),Platform, which is a web-based provider of historical information, products and proprietary survey data regarding executive compensation benchmarking, data and analytics. MDG’s data included executive compensation information for comparable executives at the companies noted in “Use of Peer Group Data” below.compensation. The Compensation Committee used thisthe data from Equilar generally as background information to assist in itstheir decision making process.process
The individual compensation elements of our program are intended to create a total compensation package for each NEO that we believe achieves our compensation objectives and provides competitive compensation opportunities relative to companies in our comparative peer group.
In fiscal 2017,2021, as is its annual practice, the Compensation Committee reviewed the composition of the Company’s peer group to help ensure its alignment with the Company’s size, practice areas, business model delivery and geographic reach. The Compensation Committee reviews the composition of the peer group each year and approves any change to the peer group. After a review of both our peers in the marketplace and those that major advisory firms, such as ISS, include in our services sector peer group, the Compensation Committee determined that all the companies that constituted our peer group for our fiscal 20162020 executive compensation decisions would be largely the same for our fiscal 20172021 executive compensation decisions, except that The Corporate Executive Board CompanyHackett Group replaced Navigant Consulting, Inc. which was removed from the group due to its acquisition by Gartner, Inc. in 2017.acquired during fiscal 2020. For fiscal 2017,2021, the peer group consisted of the following ten professional services companies, and we believe it reflects the competitive landscape in which the Company operates and competes for talent.
Peer Group Companies
CBIZ, Inc. | ||||
CRA International, Inc. | FTI Consulting, Inc. | |||
Hackett Group, Inc. | Heidrick & Struggles International, Inc. | |||
Hudson Global, Inc. | ||||
Huron Consulting Group Inc. | ICF International, Inc. | Kforce, Inc. | ||
| ||||
|
The chart below contains information on revenues,revenue, market capitalization and employee headcounthead count for our named peer group.1(1)
Company Name
| Performance
| Annual
| Market
| Number Of
| ||||||||||
CBIZ, Inc. | 12/31/20 | 963.9 | 1,774.1 | 4,800 | ||||||||||
CRA International, Inc. | 12/31/20 | 508.4 | 587.6 | 831 | ||||||||||
FTI Consulting, Inc. | 12/31/20 | 2,461.3 | 4,591.0 | 6,321 | ||||||||||
Hackett Group, Inc. | 12/31/20 | 239.5 | 521.0 | 1,047 | ||||||||||
Heidrick & Struggles International, Inc. | 12/31/20 | 629.4 | 799.8 | 1,563 | ||||||||||
Hudson Global, Inc. | 12/31/20 | 101.4 | 47.0 | 380 | ||||||||||
Huron Consulting Group Inc. | 12/31/20 | 871.0 | 1,182.7 | 3,807 | ||||||||||
ICF International, Inc. | 12/31/20 | 1,506.9 | 1,709.9 | 6,300 | ||||||||||
Kforce, Inc. | 12/31/20 | 1,397.7 | 1,225.5 | 2,000 | ||||||||||
Korn/Ferry International, Inc. | 4/30/21 | 1,841.0 | 3,667.0 | 7,889 | ||||||||||
Resources Connection, Inc. | 5/29/21 | 629.5 | 479.5 | 3,753 |
Company Name | Performance Data Date | Annual Revenue ($MM) | Market Cap ($MM) | Number Of Employees | ||||||||||||
CRA International, Inc. | 12/31/16 | 325 | 305 | 540 | ||||||||||||
FTI Consulting, Inc. | 12/31/16 | 1,810 | 1,895 | 4,718 | ||||||||||||
Heidrick & Struggles International, Inc. | 12/31/16 | 601 | 449 | 1,814 | ||||||||||||
Hudson Global, Inc. | 12/31/16 | 423 | 43 | 1,600 | ||||||||||||
Huron Consulting Group Inc. | 12/31/16 | 798 | 1,100 | 2,818 | ||||||||||||
ICF International, Inc. | 12/31/16 | 1,185 | 1,050 | 5,000 | ||||||||||||
Kforce, Inc. | 12/31/16 | 1,320 | 548 | 2,800 | ||||||||||||
Korn/Ferry International | 4/30/16 | 1,292 | 1,554 | 6,947 | ||||||||||||
Navigant Consulting, Inc. | 12/31/16 | 1,034 | 1,230 | 5,768 | ||||||||||||
Resources Connection, Inc. | 5/28/16 | 598 | 561 | 3,283 | ||||||||||||
The Advisory Board Company | 12/31/16 | 803 | 1,336 | 3,800 |
(1) | The information contained in the chart was obtained from |
In addition to the peer group data, the Compensation Committee also reviews summary statistical information from survey data about general industry practices in private companies and partnerships with which we compete for talent. In reviewing this information, the Compensation Committee does not focus on any one company included in the surveys to make its decisions.
Our compensation evaluation process generally involves comparing the base salaries, annual incentive compensation opportunities, total cash compensation and long-term equity incentive opportunities provided to our NEOs to similar compensation opportunities provided to comparable executives at our peer group companies. Although these benchmarks and other survey data represent useful background, the Compensation Committee exercises its judgment and discretion in setting individual executive compensation packages. This data is used by the Compensation Committee, not to set specific targets vis-à-vis peer company executives, but to assess as background data in determining what it considers in its judgment to be fair and reasonable pay practices for our NEOs. Our Company operates what we believe is a unique compensation program that reinforces a team-based culture and rewards NEOs more for companyCompany and team-based results thanas well as particular individual achievements.
Role of Stockholder Say-on-Pay Votes and Investor Feedback
The Company’s stockholders are provided with an opportunity to cast an annual advisory vote on the Company’s executive compensation program through the say-on-pay proposal. At the Company’s annual meeting of stockholders held in October 2016,2020, approximately 95%96.8% of the votes cast supported the Company’s say-on-pay proposal. The Compensation Committee believes this strong result affirms stockholders’ support of the Company’s approach to its executive compensation program. However, the Compensation Committee also heard from investors that they would like to see the Company move away from option awards in favor of restricted stock units in the long-term incentive program for NEOs. In response to this feedback and to increase the retention value to NEOs, the Compensation Committee determined to award restricted stock units to NEOs during fiscal 2021, instead of option awards. The Compensation Committee did not otherwise change its approach to executive compensation or the executive compensation program design for fiscal year 2017,2021, and believes the executive compensation program in place, as in prior years, includes a number of features that further the goals of the Company’s executive compensation program and reflect current best practices. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay proposals when making future compensation decisions for the NEOs.
Elements of Pay for Named Executive Officers
We provide an annual base salary to our NEOs to induce talented executives to join or remain with the Company, to compensate them for their services during the fiscal year and to provide them with a stable source of income. For fiscal year 2017, each of our NEOs, had an employment agreement or employment letter which set forth his or her minimum level of annual base salary.
The Compensation Committee generally reviews the base salary paid to each NEO on an annual basis to determine whether an adjustment is warranted. In establishing a newbasis. Under each NEO’s employment agreement, the Compensation Committee may increase the NEO’s then current base salary oron its review, but it may not reduce the base salary level.
In determining whether base salary increases for fiscal 2021 for the NEOs were appropriate, for fiscal 2017, the Compensation Committee considered the base salary levels of other employees within the Company, each NEO’s length of service, to the Company in his or her role, ourCompany’s general financial performance and growth, and the base salaries and total cash compensation earned by comparable executives at ourthe Company’s peer group companies (based on their published data).
Base Given the uncertain marketplace due to the Pandemic, the Compensation Committee determined that it was appropriate to make no changes to the NEOs’ base salaries for Ms. Duchene and Messrs. Mueller and Bower were adjusted in fiscal 2017 in connection with the executive transitions. Our Compensation Committee approved a new base salary of $583,000 annually for Ms. Duchene effective December 16, 2016 in connection with her appointment as our new President and Chief Executive Officer. The Compensation Committee approved a base salary of $375,000 annually and a one-time sign-on bonus of $75,000 for Mr. Mueller, who was appointed as our new Executive Vice President and Chief Financial Officer effective August 29, 2016. Mr. Bower who was appointed as our new Chief Accounting Officer effective August 17, 2016, was awarded an annual base salary of $250,000. Ms. Duchene’s new base
salary level was set at the same rate as the salary previously paid by the Company to her predecessor, Mr. Cherbak. The Compensation Committee set Mr. Muller’s new base salary level slightly lower than the rate previously paid by the Company to his predecessor, Mr. Franke, commensurate with the time Mr. Muller has served on the Company’s executive team. Since the Company previously did not have a Chief Accounting Officer, Mr. Bower’s base salary level was established considering the factors noted above.
Mr. Cherbak, who retired as Chief Executive Officer effective October 2016, and Mr. Franke, who retired as Chief Financial Officer effective August 2016, each received the same base salary for their roles as in fiscal 2016 through their respective dates of retirement. In connection with their retirements, Messrs. Cherbak and Franke entered into new employment and consulting agreements, respectively, with the Company. Mr. Cherbak’s annual salary level was reduced under his new employment agreement (from $583,000 annually to $150,000 annually) and an hourly consulting rate was established for Mr. Franke under his consulting agreement. These agreements were negotiated between the Company and the executives and are summarized below under “Description of Employment Agreements — Cash Compensation.”2021.
Column (c) of the “Summary Compensation Table — Fiscal 20152019 — 2017”2021” in the “Executive Compensation Tables for Fiscal 2017”2021” section below shows the base salary paid to each NEO for fiscal 2017.2021.
The Compensation Committee establishedCompany’s annual incentive compensation plan is the EIP for fiscal 2017 in which Ms. Duchene and Messrs. Mueller and Cherbak participated. However, Mr. Cherbak did not earn an incentive underEIP. Each of the EIP for fiscal 2017 because of his retirement as our Chief Executive Officer during the fiscal year. Mr. Bower did not participateNEOs participated in the EIP for fiscal 2017 because the EIP was approved prior to his appointment as Chief Accounting Officer. Mr. Bower was awarded a discretionary bonus of $175,000 for fiscal 2017. Mr. Franke did not participate in the EIP for fiscal 2017 because of his retirement in early fiscal 2017.
In summary, the2021. The EIP sets forth theeach participant’s target annual incentive compensation opportunity and the overall annual incentive structure and mechanics, which includes both a quantitative and qualitative component, used to determine the participant’s incentive cash award for the fiscal year. For fiscal 2017,2021, the Compensation Committee set the following annual incentive compensation opportunitiesterms for the NEOs under the fiscal 2017 EIP:
Prior to her promotion to Chief Executive Officer, Ms. Duchene’s target annual incentive compensation opportunity was set at 75% of her base salary, and the maximum incentive compensation opportunity was equal to 150% of her base salary consistent with other EVPs. In connection with her appointment as President and Chief Executive Officer, theThe target annual incentive compensation opportunity for each of the NEOs for fiscal 2021 was as follows: for Ms. Duchene, $750,000, for Ms. Ryu, $350,000, and for Mr. Brackney, $550,000.
The target annual incentive compensation opportunity for Mr. Mueller was set at 75% of his base salary, and the maximum incentive compensation opportunityeach NEO was equal to 150% of his base salary.
The target annual incentive compensation opportunity for Mr. Cherbak was set at 100% of his base salary, and the maximum incentive compensation opportunity was equal to 225% of his base salary. Mr. Cherbak’s target and maximum award percentages for the fiscal 2017 EIP were not changed from that300% of the fiscal 2016 EIP.
The participant’sEach NEO’s threshold, target and maximum annual incentive percentages were generally determined by the Compensation Committee in its discretion based on its subjective assessment of several factors, including comparable annual incentive opportunities in effect for comparable executives at our peer group companies (based on their published data), total cash compensation and equity awards earned by comparable executives at our peer group companies (based on their published data), internal comparability with percentage targets of other executives within the Company, and the Company’s objective of creating appropriate at-risk incentives to reinforce our team-based management culture and maximize stockholder value. The Compensation Committee also
determined that these levels provided for fair and competitive rewards to the NEOs after reviewing historical data regarding the peer group companies and using its own subjective judgment and knowledge of the industry’s pay practices.
Pursuant to the terms of the EIP for fiscal 2017,2021, to trigger any award for any participant, the Company must achieve at least a 6.5% “Adjusted EBITDA Margin” (as defined below)Percentage”(11). If that goal is attained, 60% of each participant’s incentive opportunity under the EIP is determined based on quantitative and qualitative components, and 40% of each participant’s incentive opportunity underas shown in the EIP is determined based on qualitative components.following chart:
As notedshown above, the quantitative component of the EIP constitutes 60% of each participant’s target annual incentive compensation opportunity and is determined based on the Company’s revenue and “Adjusted EBITDA Margin” resultsPercentage” achieved for the fiscal year. These quantitative measures are equallyyear (with each metric weighted each representing 30% of the participant’s total target annual incentive opportunity. The “Adjusted EBITDA Margin” measure is our earnings before interest, taxes, depreciation, amortization and stock-based compensation expense, expressed as a percentage of revenue.50%). The Compensation Committee selected
(11) | Adjusted EBITDA Percentage for purposes of the EIP is total revenue minus the cost of services sold and Selling, General and Administration expense adjusted for stock compensation, changes in contingent consideration, Board approved restructuring and any additional items deemed appropriate by the Audit Committee, divided by revenue. |
these quantitative performance measuresmetrics for the EIP because it believes such measures are closely correlated to our annual business objectives and growth in stockholder value, and are straightforward to administer, understand and communicate.
With Threshold level of performance (which is equal to 80% of the performance target set for each metric) must be achieved for both quantitative metrics for any amount to be payable with respect to the quantitative award components,multiplier under the Company must achieve at least 75%EIP. The Maximum level of the revenue performance target for the participants to receive any payment of the portion of their annual incentive linked to that performance metric and the Company must achieve at least 75% of the Adjusted EBITDA Margin performance target for the participants to receive any payment of the portion of their annual incentive linked to that performance metric. Specifically, for each quantitative performance measure, a threshold payment will be madeis achieved if the Company achieves 110% or more of the performance levelstarget set for a metric.
Revenue | |||
Adjusted EBITDA Percentage | Threshold | Target | Maximum |
Threshold | 50% | 75% | 100% |
Target | 75% | 100% | 150% |
Maximum | 100% | 150% | 200% |
As shown in the chart above, the quantitative metrics are combined to determine the overall quantitative multiplier achieved for the year. For example, if Target Revenue and Threshold Adjusted EBITDA Percentage were achieved for fiscal 2021, the quantitative multiplier would be equal to 75% of the target annual incentive. The payout percentages in the table above are interpolated on a straight-line basis for performance level amount,between the target payment will be made ifThreshold and Maximum levels. If the Company achievesachieved performance levels equals to 100% ofabove the target performanceMaximum level, and the maximum payment willquantitative multiplier would be made if the Company achieves performance levels equal to 140% or more of the target performance levels. For each performance measure, the threshold payout and target payout are equal to 30% and 100%, respectively, of the target annual incentive compensation opportunity attributable to the performance measure for each of the participants, and the maximum payout is equal to 225% and 150% of the target amount attributable to the performance measure for each of Ms. Duchene and Mr. Cherbak, and for Mr. Mueller, respectively. The amounts payable for performance levels in between the threshold, target and maximum performance levels are determined based on a straight line interpolation.capped at 200%.
The following table sets forth the target performance levels established by the Compensation Committee for the EIP and the actual results achieved by the Company for fiscal 2017.2021. As shown in the table, the Company achieved 92.6%approximately 97% of the revenueRevenue target and 67.8%103% of the Adjusted EBITDA MarginPercentage target for fiscal 2017 (based on Adjusted EBITDA of $43,900,0002021, which interpolated together resulted in approximately 111.5% quantitative multiplier for fiscal 2017). Achievement of 92.6% of the revenue target produced a payment percentage of 79.3% for the2021.
Quantitative Metric | Fiscal 2021 Target | Fiscal 2021 Results | Percentage of Target Achieved |
Revenue | $650 million | $629.7 million | 97% |
Adjusted EBITDA Percentage | 8.1% | 8.4% | 103% |
The qualitative performance multiplier portion of the EIP incentive opportunity based on that metric. No portion of the EIP incentive opportunity was paid for fiscal 2017 with respect to the Adjusted EBITDA Margin metric as the 67.6% achievement percentage was less than the required 75% threshold.
Metric Definition | Target | Fiscal 2016 Actual Results | Actual Payout Percentage Achieved | |||||||
Revenue | $630.0 million | $ | 583.7 million | 92.6 | ||||||
Adjusted EBITDA Margin | 11.1% of Actual Revenue | 7.5% | 67.6 | % |
The remaining 40% of each participant’s targetNEO’s annual incentive compensation opportunity is determined based on the Compensation Committee’s assessment of each NEO’s impact on enterprise objectives and strategic initiatives, achievement of pre-established individual performance goals (called CRAVE goals), and other qualitative measurescontributions determined by the Compensation Committee. Such factors generally include the Compensation Committee’s subjective assessment of the Company’s financial performance for the year as a whole (as opposed to the quantitative performance components which measure performance against pre-established targets), the individual participant’s performance for the year with respect to other stated strategic, operational and human capital objectives defined for each individual, and other qualitative team-based performance assessments. The Company believes this mix of predominantly quantitative components coupled with a smallerand qualitative componentcomponents provides appropriate incentives to achieve pre-established goals while giving the Compensation Committee some flexibility to reward other achievements.
For fiscal 2017,2021, the Compensation Committee based its qualitative award determination for the participants on its subjective assessment of the Company’s financial performance, including management of operating costs, cash flow, profitability and gross margins; client service performance, including, client retention, client penetration and continuity, expansion of global accounts and strategic business model expansion; and human resources management, including, employee retention, development and growth of leadership and management skills, and effective team stewardshipespecially in light of the Company’s culture.challenges presented by the Pandemic and racial injustice and social equity events that disrupted the operating environment. The Compensation Committee also gave considerationconsidered the achievement of team accomplishments during fiscal 2021 including pivoting to virtual operations with efficiency and impact for our clients and consultants, completing a significant restructuring of our business in Europe without losing critical personnel or clients, controlling costs while investing in technology and digital initiatives for the significant leadership changes that took placefuture success of the Company, returning the Company to top line growth in the fourth quarter of fiscal 2021, advancing the development of a human cloud product to launch in fiscal 2017,2022, managing our cash flow and balance sheet well, increasing engagement with investors, and achieving significant efficiencies through digital transformation, automation and workforce planning. The Compensation Committee also considered how each individual NEO performed against the changesNEO’s stated enterprise and functional goals and determined that each individual NEO had achieved a level of “successful” (which corresponds to the focusa modifier of 80-110% of the business andtarget annual incentive). In making this determination, the flexibility and leadership thatCompensation Committee considered the participants exhibitedfollowing individual accomplishments by each NEO during the transition period and thereafter. fiscal 2021:
Ms. Duchene:
· | Led the Company though the uncertainty and disruption of the Pandemic while holding the enterprise steady; |
· | Led the team to reduce the cost structure and drive efficiency while investing in the future of the Company; |
· | Advanced the digital agenda of the Company by driving forward the human cloud product; |
· | Oversaw the continued growth of Veracity and taskforce despite the impacts of the global Pandemic; and |
· | Led significant work around positioning and brand strategy, including renewed engagement with investors, delivering numerous speaking engagements and writing op-ed and editorial content for many publications to advance the Company’s brand. |
Ms. Ryu:
· | Partnered with Mr. Brackney to deliver a successful restructuring plan for Europe, including by streamlining the finance organization and navigating the complexity of accounting and reporting with no deficiencies; |
· | Executed our real estate restructuring plan in North America; |
· | Undertook numerous projects to transform the finance function with process optimization, automation, and organizational design; and |
· | Accomplished significant work to improve our financing arrangements, including negotiating the extension of our credit facility during the Pandemic, giving us greater liquidity and flexibility in terms. |
Mr. Brackney:
· | Delivered a successful restructuring plan for Europe, which reduced costs while delivering more revenue and creating deeper relationships with strategic accounts; |
· | Drove operational improvements to reduce cost and drive efficiency and scale in our go-to-market function; |
· | Improved our client pursuit activities and results, especially in strategic client accounts, healthcare practice and Veracity; and |
· | Instrumental in driving our pivot to virtual operations and a move toward borderless talent, which inspired revenue and talent leaders to think creatively to close revenue faster in a disrupted world. |
There was no specific weighting of these particular factors. The considerations for the fiscal 2017 EIP awards included the following:
We formed a new executive team, including the new role of Chief Accounting Officer, to drive a strategic vision for the Company and establish an effective execution plan for the next five years;
We completed a modified Dutch tender offer in November 2016, which was approved and directed by the Board;
We completed a reduction in force to take approximately $7 million of cost out of our SG&A per year, affecting approximately 50 management employees;
We designed a new globally aligned sales process and implemented Salesforce.com;
We returned $133.1 million to our shareholders in the form of dividends, stock buybacks, including the modified Dutch tender offer;
We achieved 100% retention of our top 50 clients during fiscal 2017; and
We increased our quarterly dividend during the first quarter of fiscal 2017 to $0.11 per share from $0.10 per share, which was increased to $0.12 per share in July 2017.
Based upon all of the foregoing, as well as its general assessment of competitive compensation practices, the Compensation Committee decideddetermined that each NEO had achieved 100% of the following under the EIPNEO’s qualitative goals for fiscal 2017:2021.
Although the Compensation Committee noted the achievements listed above, the Compensation Committee determined that the Company did not increase revenue and share value to the full extent management believed possible as viewed against peer company performance. Accordingly, the Compensation Committee decided to set a qualitative award amount for fiscal 2017 for each of Ms. Duchene and Mr. Mueller that was greater than the executive’s target amount, but less than the executive’s maximum amount, for the qualitative component of the executive’s fiscal 2017 EIP opportunity.
The qualitative award for fiscal 2017 determined by the Compensation Committee for Ms. Duchene amounted to $300,000.
The qualitative award for fiscal 2017 determined by the Compensation Committee for Mr. Mueller amounted to $185,000.
The following table shows the components of each executive’s final fiscal 2017 EIP incentive.
Executive | Base Salary | Target Bonus (% of Base Salary) | Revenue Payout (79.3% payout percentage x 30% of target bonus opportunity) | Adjusted EBITDA Margin Payout ($0; performance less than required threshold) | Qualitative Component | Total Fiscal 2017 EIP Incentive | ||||||||||||||||||
Ms. Duchene | $ | 583,000 | 100 | % | $ | 138,685 | $ | 0 | $ | 300,000 | $ | 438,685 | ||||||||||||
Mr. Mueller | $ | 375,000 | 75 | % | $ | 66,904 | $ | 0 | $ | 185,000 | $ | 251,904 |
The amounts paid to each participating NEO in respect of his or her annual incentive compensation opportunity under the EIP for fiscal 20172021 are presented in column (d)(g) of the “Summary Compensation Table — Fiscal 20152019 — 2017”2021” below.
As evidenced by the compensation paid to the participating NEOs for fiscal 2017 under the EIP as compared to peer group data, the Company’s pay practices bear out its philosophy that a significant portion of the cash
compensation for the NEOs should be “at risk” and tied to the Company’s attainment of its annual financial and business objectives.
Discretionary Cash Bonus
As described above, Mr. Bower was not eligible to participate in the EIP for fiscal 2017 because he was appointed Chief Accounting Officer after the fiscal year 2017 EIP had been established. The Company paid a discretionary bonus to Mr. Bower of $175,000 for fiscal 2017, which amounted to approximately 70% of his base salary, based on his exceptional contributions to the Company during the fiscal year.
The amount paid to Mr. Bower as a discretionary bonus is presented in column (d) of the “Summary Compensation Table — Fiscal 2015 — 2017” below.
The Company’s view is that the NEOs’ long-term compensation should be directly linked to the value provided to our stockholders. The NEOs’In response to investor feedback and to increase retention value to NEOs, in fiscal 2021 the Compensation Committee granted the NEO’s long-term compensation is currently awarded in the form of restricted stock options having an exercise price equal to the closing price of the Company’s commonunits rather than options. Restricted stock on the grant date. Stock options areunits align award recipients’ interests with our preferred form of equity award for executivesstockholders’ interests because the value of these awards is dependent upon our stock price. These awards can have a greater retention value than options will notbecause the awards have any value unless the shares of the Company’s common stock appreciate in value following the grant date. If theeven if our stock price does not appreciate after the executive does not realize any value fromgrant date of the option. This vehicle is directly tiedawards and, compared to stockholder return. We believe thatoptions, a smaller number of shares can be awarded as a 20-year old company, continuingrestricted stock unit award to build a global footprint, we have significant growth ahead of us. As such, we believe thatdeliver the same grant date award value.
The restricted stock options — which only convey real value with share price appreciation — continue to be the most appropriate equity vehicle to use in our reward programs to align executive and stockholder interests.
Stock option grantsunits granted to our NEOs typicallyin fiscal 2021 vest in a series of annual installments over a four-year vesting period. We believe this four-year vesting period provides an incentive for the NEOs to remain in our employ, and also focuses the NEOs on the long-term performance and business objectives of the Company for the benefit of our stockholders. We believe the four-year vesting period is consistent with compensation practices in the market generally and strikes an appropriate balance between the interests of the Company, our stockholders and the individual NEOs in terms of the incentive, value creation and compensatory aspects of these equity awards.
The size of equity award granted to each of our NEOs is a decision made by the Compensation Committee in the exercise of its business judgment. In making this determination, the Compensation Committee considers its general assessment of the Company’s revenue achievement and return on equity, client retention,financial performance, Company morale, success in developing a productive management
team, corporate governance, performance and risk management. The Compensation Committee also takes into account the total cash compensation paid to the NEOs in our immediately preceding fiscal year, the number and value of optionsequity awards previously granted to the NEOs, dilution effects on our stockholders, the need to make sureensure that an appropriate number of shares would be available for optionequity awards to less-senior employees, the number and value of long-term equity awards made to comparable executives at our peer group companies (based on their published data), and the goal of providing the NEOs with total long-term equity compensation and total compensation amounts that we think are appropriate and competitive. We believe the size of each NEO’s stock optionequity award is consistent with our compensation objectives of paying for performance and putting a significant portion of the NEOs’ total compensation “at risk.”
After a review of the factors described in the preceding paragraph, the Compensation Committee determined that an increased equity award value for each NEO for fiscal 2021 was appropriate to approvebetter align each NEO’s total direct compensation with the median total direct compensation received by similarly situated executives at the Company’s peer group. The Compensation Committee also determined that an increased equity awards,award value was important to keep executives focused on increasing stockholder value into the future. Accordingly, in November 2020, the form of stock options, to the NEOs (other than Mr. Franke) in fiscal 2017. The Compensation Committee approved the grant of optionsrestricted stock unit awards under the 2020 Plan to purchase 38,000, 15,000 and 70,000 shares of the Company’s common stockNEOs with grant date values as follows: $1,350,000 for Ms. Duchene, $360,000 for Ms. Ryu and Messrs. Mueller and Cherbak, respectively. Following his appointment as Chief Accounting Officer,$1,000,000 for Mr. Bower received an equity award of 15,000 options as part of the annual company-wide awards program in September 2016. Pursuant to his employment agreement, Mr. Mueller was granted 10,000 restricted stock units in connection with his appointment as Chief Financial Officer. The grant was negotiated with Mr. Mueller as part of his employment agreement. This award is scheduled to vest over a period of four years following the grant date and each unit is payable, on vesting in a share of Company
Common Stock. Mr. Franke did not receive an equity award in fiscal 2017 because he retired before the Compensation Committee approved the executive equity award grants for fiscal 2017. The Board and management fully support the pay for performance principle advocated by ISS, Glass Lewis and other advisory services, and that principle has long been the cornerstone of our executive compensation program. Our Board and management are fully committed to increasing earnings per share thereby positioning the Company to increase dividends in the future and create an environment for improved stockholder returns.
During fiscal 2017,2021, the NEOs were eligible to participate in the Company’s retirement and health and welfare programs that are generally available to other employees in the Company. In addition, as part of his employment agreement, Mr. Mueller was provided a relocation allowance of $24,000. Eacheach NEO other than Mr. Bower because of the timing of his appointment, also received a modest automobile allowance or car expense reimbursement. The Compensation Committee believes these modest perquisites are consistent with competitive practices and help us attract and retain talent. Mr. Cherbak and Mr. Franke’s automobile allowance ended on the date of their respective retirements.
Change In Control and Severance Benefits
Employment Agreements.The Company believes that severance protections can play a valuable role in attracting and retaining high caliber talent. In the competitive professional services industry in which we operate, where executives are commonly being recruited by both more established companies and by start-up ventures, severance and other termination benefits are an effective way to offer executives financial security to offset the risk of accepting an opportunity with another company. Pursuant to their employment agreements or employment letters, as applicable, in effect during fiscal 2017,2021, each of the continuing NEOs would be entitled to severance payments in the case of Ms. Duchene and Mr. Mueller, if the executive’s employment was terminated by the Company without cause or by the executive for good reason, and in the case of Mr. Bower, if the executive’s employment was terminated by the Company without cause.reason. Because we believe that a termination by an executive for good reason (or constructive termination) is conceptually the same as an actual termination by the Company without cause, we believe it is appropriate to provide severance benefits following such constructive termination of the executive’s employment. The level of severance benefits for our Chief Executive Officer differs from the other NEOs because of the scope and responsibility of the position and the competitive pay practices for the role. The NEOs’ severance benefits are generally the result of negotiations with the executive and set at levels we believe are reasonable and consistent with our objective of attracting and retaining team-oriented executives.
As noted above, Messrs. Cherbak and Franke retired effective October 7, 2016 and August 26, 2016, respectively. Mr. Cherbak entered into a new employment agreement with the Company dated October 20, 2016 which provided for his continued employment as an executive advisor. Mr. Franke entered into a consulting agreement with the Company dated August 17, 2016. In light of their new roles with the Company, neither of the agreements with Mr. Cherbak and Mr. Franke provide for any change in control or severance benefits.
The continuing NEOs’ employment agreements or employment letters, as applicable, are described in further detail in the narrative following the “Description of Employment Agreements — Cash Compensation” section and in the “Potential Payments upon Termination or Change in Control”
section below.
Stock Ownership Guidelines for NEOs
We maintain ownership guidelines for the Company’sour NEOs. Under the stock ownership guidelines:
The Chief Executive Officer should own Company common stock equal in value to the lesser of three times base salary or 100,000 shares.
AllEach other NEOsNEO should own Company common stock equal in value to the lesser of two times the executive’s base salary or 20,000 shares.
Stock that counts towards satisfaction of the ownership guidelines (“Qualifying Shares”) includes:
Shares of common stock beneficially held, either directly or indirectly;
Restricted stock issued and held whether vested or unvested;
Shares of common stock held following the exercise of a stock option or payment of other equity award.
All executive officersNEOs covered by these guidelines should satisfy the applicable share ownership guidelines within five years of first becoming subject to them. If a covered individual’s guideline level of ownership changes as a result of a change in position or compensation, the individual should satisfy the applicable guidelines within a five-year period beginning in January following the year of such change. TheAs shown in the table below, shows ownership of Qualifying Shares as of the Record Date byAugust 23, 2021, each of our NEOs who is currently serving as an executive officer. Each of these NEOs still has additional time to satisfymeets the share ownership guidelines.
Named Executive Officer Stock Ownership Status
Guideline(1) | Qualifying | Market Value of | ||||||||||
Kate W. Duchene | $1,596,000 | 217,744 | $3,475,194 | |||||||||
President and Chief Executive Officer | ||||||||||||
Jennifer Y. Ryu | $319,200 | 42,966 | $685,737 | |||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||
Timothy L. Brackney | $319,200 | 95,435 | $1,523,143 | |||||||||
President and Chief Operating Officer |
Share-Based Guideline | Qualifying Shares Held | Market Value Guideline | Market Value of Shares Held as of the Record Date1 | |||||||||||||
Kate W. Duchene | 100,000 | 80,022 | $ | 1,749,000 | $ | 972,267 | ||||||||||
President and Chief Executive Officer | ||||||||||||||||
Herbert M. Mueller | 20,000 | 13,263 | $ | 764,800 | $ | 161,145 | ||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||||
John D. Bower | 20,000 | 12,686 | $ | 500,000 | $ | 154,135 | ||||||||||
Chief Accounting Officer |
(1) | The relevant guideline is the lesser of (i) three times, in the case of Ms. Duchene, or two times, in the case of Ms. Ryu and Mr. Brackney, the NEO’s base salary (i.e. $2,100,000, $750,000 and $1,000,000, respectively) and (ii) the value of 100,000 shares (in the case Ms. Duchene) or 20,000 shares (in the case of Ms. Ryu and Mr. Brackney on the record date (i.e. $1,596,000 and $319,200, respectively). |
(2) | Determined by multiplying the number of Qualifying Shares held by the NEO on August |
Insider Trading Policy Summary
The Company’s directors, officers and employees worldwide annually acknowledgeare subject to the Company’s Insider Trading Policy which advisesprovides that if the director, officer or employee is in possession of material, non-public information relating to Resources Connection, it is the Company’s policy thatCompany, neither the director, officer or employee, nor any person related to such director, officer or employee, may buy or sell securities of Resources Connectionthe Company or engage in any other action to take advantage of, or pass on to others, that information. This policy also applies to trading in the securities of any other company, including our customers or suppliers, if the director, officer or employee has material, non-public information about that company which was obtained in the course of his or her employment with the Company or Board membership.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue CodeFederal income tax law generally disallows a tax deduction to public corporationspublicly-held companies for compensation over $1,000,000 paid to a current or former NEO that exceeds $1 million during the tax year. Certain stock options granted by the Company before November 2, 2017, as well as certain amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for any yearan exception to the corporation’s chief executive officer and certain$1 million deductibility limit. There can be no assurance that any compensation the Company intended to be deductible will in fact be deductible. Although the potential deductibility of its other executive officers. However, Section 162(m) exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. Asis one of the factors in its consideration of compensation matters, the Compensation Committee considersnotes when designing the anticipated tax treatmentCompany’s executive compensation program, the Compensation Committee has the flexibility to take any compensation-related actions it determines are in the best interests of the Company and to the executives of various payments and benefits. However, we reserve the right to design programsits stockholders, including awarding compensation that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs maywill not be deductible for tax purposes.
In July 2021, the Compensation Committee approved the executive compensation program for fiscal 2022 and in any event, becausereviewed each NEO’s base salary and target annual incentive compensation (the “target total direct compensation”). In determining each NEO’s target total direct compensation for fiscal 2022, the Compensation Committee considered each NEO’s length of ambiguitiesservice, the Company’s general financial performance and uncertainties asgrowth, and the target total direct compensation of comparable executives at the Company’s peer group companies (based on their published data). Based on this analysis, the Compensation Committee increased Ms. Ryu’s base salary by $25,000 to $400,000 for fiscal 2022. The Compensation Committee also increased Mr. Brackney’s target annual incentive compensation opportunity by $50,000 to $600,000 for
fiscal 2022. The Compensation Committee determined the current base salary levels for Ms. Duchene and Mr. Brackney and the current target annual incentive compensation opportunities for Mses. Duchene and Ryu were appropriate and made no other changes to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding the Company’s efforts, thatNEOs’ target total direct compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) does in fact do so.
The following report of the Compensation Committee does not constitute soliciting material and shall not be deemed filed with the SEC under the Securities Act or the Exchange Act or incorporated by reference in any document so filed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and our discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this Proxy Statement.
THE COMPENSATION COMMITTEE | |
Jolene Sarkis, Chairperson | |
Neil Dimick | |
A. Robert Pisano | |
Michael Wargotz |
Jolene Sarkis, Chairperson
Neil Dimick
A. Robert Pisano
Michael Wargotz
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members whose names appear on the Compensation Committee Report above served as members of the Compensation Committee for all of fiscal 2017.2021. No member of the Compensation Committee at any time during the 2017 fiscal year2021 was an executive officer or employee of the Company during or prior to the 2017 fiscal year,2021, or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers served as a director or a member of the Compensation Committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director or member of the Compensation Committee during fiscal 2017.2021.
EXECUTIVE COMPENSATION TABLES FOR FISCAL 20172021
Summary Compensation Table — Fiscal 2015 — 20172019 to 2021
The following table presents information regarding compensation of our NEOs for services rendered during fiscal years 2015, 20162019, 2020 and 2017.2021. Unless otherwise noted, the footnote disclosures apply to fiscal 20172021 compensation. For an explanation of the amounts included in the table for fiscal 20152019 and 2016,2020, please see the footnote disclosures in our Proxy Statement for the corresponding fiscal year.
Name and Position
| Year
| Salary
| Bonus
| Stock
| Option
| Non-Equity
| Change
| All Other
| Total
|
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Kate W. Duchene | 2021 | 700,000 | 0 | 1,349,996 | 0 | 836,000 | 0 | 24,775 | 2,910,771 |
President and Chief Executive Officer | 2020 | 693,654 | 0 | 0 | 427,580 | 745,000 | 0 | 23,977 | 1,890,211 |
2019 | 583,000 | 0 | 0 | 476,901 | 791,171 | 0 | 23,250 | 1,874,322 | |
Jennifer Y. Ryu | 2021 | 375,000 | 0 | 359,990 | 0 | 391,000 | 0 | 19,216 | 1,145,206 |
Executive Vice President and Chief Financial Officer | 2020 | 338,231 | 0 | 152,900 | 114,171 | 229,000 | 0 | 36,876 | 871,178 |
Timothy L. Brackney | 2021 | 500,000 | 0 | 999,992 | 0 | 613,000 | 0 | 27,401 | 2,140,393 |
President and Chief Operating Officer | 2020 | 511,539 | 500,000 | 0 | 235,169 | 347,000 | 0 | 23,977 | 1,617,685 |
2019 | 373,154 | 0 | 0 | 232,065 | 363,795 | 0 | 632,062 | 1,601,076 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(6) | Stock Awards ($) | Option Awards ($)(7) | Non-Equity Incentive Plan Compensation ($)(8) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(9) | Total ($) | |||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||
Kate W. Duchene | 2017 | 477,423 | -0- | -0- | 165,528 | 438,685 | -0- | 22,950 | 1,104,586 | |||||||||||||||||||||||||
President and Chief Executive Officer(1) | 2016 | 397,308 | -0- | -0- | 212,534 | 342,853 | -0- | 22,950 | 975,645 | |||||||||||||||||||||||||
2015 | 330,000 | 180,000 | -0- | 182,436 | 150,951 | -0- | 22,800 | 866,187 | ||||||||||||||||||||||||||
Herbert M. Mueller | 2017 | 382,400 | 75,000 | 145,200 | 65,340 | 251,904 | -0- | 51,138 | 970,981 | |||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer(2) | ||||||||||||||||||||||||||||||||||
John D. Bower | 2017 | 267,318 | 175,000 | -0- | 65,340 | -0- | -0- | 7,950 | 515,608 | |||||||||||||||||||||||||
Chief Accounting Officer(3) | ||||||||||||||||||||||||||||||||||
Anthony Cherbak | 2017 | 224,231 | -0- | -0- | 304,920 | -0- | -0- | 11,565 | 540,716 | |||||||||||||||||||||||||
Former President and Chief Executive Officer(4) | 2016 | 583,000 | -0- | -0- | 391,510 | 587,045 | -0- | 22,950 | 1,584,505 | |||||||||||||||||||||||||
2015 | 583,000 | 190,000 | -0- | 364,872 | 358,851 | -0- | 22,800 | 1,519,523 | ||||||||||||||||||||||||||
Nathan W. Franke | 2017 | 107,692 | -0- | -0- | -0- | -0- | -0- | 19,554 | 127,246 | |||||||||||||||||||||||||
Former Executive Vice President and Chief Financial Officer(5) | 2016 | 397,308 | -0- | -0- | 212,534 | 342,853 | -0- | 22,950 | 975,645 | |||||||||||||||||||||||||
2015 | 330,000 | 180,000 | -0- | 182,436 | 150,951 | -0- | 22,800 | 866,187 | ||||||||||||||||||||||||||
The amounts reported in columns (e) and (f) of the table above |
(2) | The amounts reported in column (g) above represent amounts earned |
(3) | The following table identifies the items reported in |
The “Summary Compensation Table — Fiscal 2015 —2017” above quantifies the value of the different forms of compensation earned by or awarded to our NEOs for the applicable fiscal years. The primary elements of each NEO’s total compensation reported in the table are base salary, an annual incentive compensation oppor-
tunity (which has both quantitative components and a qualitative component) and long-term equity incentives consisting of non-qualified stock options. NEOs may also receive other benefits listed in column (i) of the “Summary Compensation Table — Fiscal 2015 — 2017,” as further described in footnote (2).
Executive Officer | Automobile Allowance ($) | 401(k) Plan Matching Contribution ($) | Total ($) |
Kate W. Duchene | 15,000 | 9,775 | 24,775 |
Jennifer Y. Ryu | 15,000 | 4,216 | 19,216 |
Timothy L. Brackney | 15,000 | 12,401 | 27,401 |
Description of Employment Agreements — Cash Compensation
We have entered into employment agreements or employment letter agreements with each of the NEOs. The salary and bonus terms of each agreement are briefly described below. Provisions of these agreements relating to outstanding equity incentive awards, if any, and post-termination of employment benefits are discussed below under the applicable sections of this Proxy Statement.
Kate W. Duchene. On December 19, 2016,February 3, 2020, we entered into a new employment agreement with Ms. Duchene, in connection with her appointment as Chief Executive Officer.which we amended by a letter agreement on January 20, 2021. The December 2016February 2020 agreement supersedes Ms. Duchene’s prior employment agreement with the Company dated as of July 17, 2008.December 19, 2016. The December 2016February 2020 agreement provides for a three-year term of employment commencing on December 19, 2016February 3, 2020 and ending with the close of business on December 18, 2019, withFebruary 2, 2023. Beginning on February 3, 2023, and on each February 3 thereafter, the term automatically being extendedextends for onean additional year unless either party provides notice that the term will not be extended. The agreement provides for Ms. Duchene to receive an annualized base salary of $583,000,$700,000, subject to annual review by the Board of Directors.Board. Based on its review, the Board of Directors has the discretion to increase (but not reduce) the base salary each year. The agreement also provides for Ms. Duchene to participate in any annual incentive plans maintained by the Company for its global senior management executivesexecutive officers generally, and that she will be eligible to receive equity award grants on such terms and conditions as determined from time to time by the Board. In addition, the agreement provides that Ms. Duchene is entitled to participate in any retirement, health and welfare and other fringe benefit plans and programs maintained by the Company for its global senior management executivesexecutive officers generally. Ms. Duchene’s current annual base salary remains at the $583,000 level provided for in the agreement.
Herbert M. Mueller.Jennifer Y. Ryu. On August 17, 2016,February 3, 2020, we entered into an employment agreement with Mr. Mueller.Ms. Ryu. The agreement provides for a three-year term of employment commencing on August 29, 2016February 3, 2020 and ending with the close of business on August 28, 2019, withFebruary 2, 2023. Beginning on February 3, 2023, and on each February 3 thereafter, the term automatically being extendedextends for onean additional year unless either party provides notice that the term will not be extended. The agreement provides for with Mr. MuellerMs. Ryu to receive an annualized base salary of $375,000, subject to annual review by the Board of Directors.$375,000. The Compensation Committee, based on the recommendation of the Chief Executive Officer, in consultation with the Board, has discretion to increase (but not reduce) the executive’sMs. Ryu’s base salary each year. Additionally, the agreement provides for a one-time sign-on bonus of $75,000 to assist in covering the differential in real estate costs in California.salary. The agreement also provides for the executiveMs. Ryu to participate in any annual incentive plans maintained by the Company for its global senior management executivesexecutive officers generally, and that she will be eligible to receive equity award grants on such terms and conditions as determined from time to time by the Board. In addition, the agreement provides that Ms. Ryu is entitled to participate in any retirement, health and welfare and other fringe benefit plans and programs maintained by the Company for its executive officers generally.
Timothy L. Brackney. On February 21, 2020, we entered into a new employment agreement with Mr. Brackney. The February 2020 agreement supersedes Mr. Brackney’s prior employment agreement with the Company dated as of April 3, 2019. The February 2020 agreement provides for a three-year term of employment commencing on February 21, 2020 and ending with the close of business on February 20, 2023. Beginning on February 21, 2023, and on each February 21 thereafter, the term automatically extends for an additional year unless either party provides notice that the term will not be extended. The agreement provides for Mr. Brackney to receive an annualized base salary of $500,000. The Chief Executive Officer, in consultation with the Board, has discretion to increase (but not reduce) Mr. Brackney’s base salary. The agreement also provides for Mr. Brackney to participate in any annual incentive plans maintained by the Company for its executive officers generally, and that he will be eligible to receive equity award grants on such terms and conditions as determined from time to time by the Board. In connection with his promotion, the agreement also provided Mr. Mueller with the following equity awards: (1) 10,000 restricted stock units that will be scheduled to vest equally over a four-year period, and (2) stock options to purchase 15,0000 shares of the Company’s common stock with the terms as described under “Compensation Discussion and Analysis— Long-Term Incentive Awards”. In addition, the agreement provides that the executiveMr. Brackney is entitled to participate in any retirement, health and welfare and other fringe benefit plans and programs maintained by the Company for its global senior management executivesexecutive officers generally. Mr. Mueller’s current annual base salary remains at the $375,000 level provided for in the agreement.
John D. Bower. On August 17, 2016, we entered into an employment letter with Mr. Bower. Mr. Bower’s agreement commenced effective August 29, 2016 and continues until terminated by either party. The agreement provides that Mr. Bower will receive an annualized base salary of $250,000 and be eligible for a cash bonus each year in accordance with the discretionary Company-wide incentive compensation program. The current annual base salary for Mr. Bower is $250,000.
Anthony Cherbak. As noted above, Mr. Cherbak retired as President and Chief Executive Officer effective October 7, 2016. On October 20, 2016, the Company entered into an employment agreement with Mr. Cherbak that supersedes Mr. Cherbak’s prior employment agreement with the Company dated as of April 23, 2013. The agreement provides for Mr. Cherbak’s continued employment by the Company as an executive advisor through
February 28, 2018 with an annual base salary of $150,000. Mr. Cherbak will continue to participate in the Company’s health, welfare, retirement and other benefit programs offered to Company employees generally. At the end of the period of employment, the Company will pay or reimburse Mr. Cherbak to continue medical coverage under COBRA for eighteen months.
Nathan W. Franke. On July 17, 2008, we entered into employment agreements with Mr. Franke. The agreement provided for a three-year term of employment expiring July 31, 2011, with the term automatically being extended for one year on each August 1 (commencing with August 1, 2011) unless either party provides notice that the term will not be extended. The agreement provided for Mr. Franke to receive an annualized base salary of $300,000, subject to annual review by the Board of Directors. The Compensation Committee, based on the recommendation of the Chief Executive Officer, had discretion to increase (but not reduce) the executive’s base salary each year. The agreement also provided for the executive to participate in any annual incentive plans maintained by the Company for its global senior management executives generally. In addition, the agreement provided that the executive was entitled to participate in any retirement, health and welfare and other fringe benefit plans and programs maintained by the Company for its global senior management executives generally.
As noted above, Mr. Franke retired as Executive Vice President and Chief Financial Officer, effective August 26, 2016. On August 17, 2016, we entered into a consulting agreement with Mr. Franke that supersedes Mr. Franke’s prior employment agreement with the Company dated as of July 17, 2008, as described above. Pursuant to the agreement, Mr. Franke will provide transition assistance to the Company’s new Chief Financial Officer and other services. The agreement provides for a two-year term commencing on August 29, 2016 and ending with the close of business on August 28, 2018, and a pay rate of $300 per hour. Mr. Franke will not receive any additional benefits or compensation, except for reimbursements for reasonable and customary expenses incurred with the Company’s prior written authorization.
Grants of Plan-Based Awards in Fiscal 20172021
The following table presents information regarding (i) the non-qualifiedrestricted stock optionsunit awards granted to NEOs in fiscal 2017,2021, and (ii) potential threshold, target and maximum amounts payable under the NEOs’ annual incentive compensation opportunity under the EIP for fiscal 2017.2021. The material terms of each of these compensation opportunities are described below and in the “Compensation Discussion and Analysis” section above.
Estimated Potential Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum $ | ||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||
Kate W. Duchene | — | 174,900 | 583,000 | 1,311,750 | — | — | — | — | ||||||||||||||||||||||||
09/09/16 | — | — | — | — | 38,000 | 14.52 | 165,528 | |||||||||||||||||||||||||
Herbert M. Mueller | — | 84,375 | 281,250 | 562,500 | — | — | — | — | ||||||||||||||||||||||||
09/09/16 | — | — | — | — | 15,000 | 14.52 | 65,340 | |||||||||||||||||||||||||
09/09/16 | — | — | — | 10,000 | — | — | 145,200 | |||||||||||||||||||||||||
John D. Bower(3) | 09/09/16 | — | — | — | — | 15,000 | 14.52 | 65,340 | ||||||||||||||||||||||||
Anthony Cherbak(4) | 09/09/16 | — | — | — | — | 70,000 | 14.52 | 304,920 | ||||||||||||||||||||||||
Nathan W. Franke(5) | — | — | — | — | — | — | — | — |
| All Other Awards: Number
| Grant Date
| ||||
Name
| Grant
| Threshold
| Target
| Maximum
| ||
(a) | (b) | (c) | (d) | (e) | (f) | (g) |
Kate W. Duchene | n/a | 375,000 | 750,000 | 2,250,000 | — | — |
11/12/2020 | — | — | — | 115,979 | 1,349,996 | |
Jennifer Y. Ryu | n/a | 175,000 | 350,000 | 1,050,000 | — | — |
11/12/2020 | — | — | — | 30,927 | 359,990 | |
Timothy L. Brackney | n/a | 275,000 | 550,000 | 1,650,000 | — | — |
11/12/2020 | — | — | — | 85,910 | 999,992 |
(1) | Amounts reported represent the potential amounts payable to participating NEO under the EIP for fiscal |
(2) | The amounts reported in column |
Description of Plan-Based Awards
For information on the restricted stock optionsunit awards and non-equity incentive plan awards granted to our NEOs for fiscal 2017,2021, please see the discussion in the “Compensation Discussion and Analysis” section above under the heading “Elements of Pay for Named Executive Officers — “Long-TermLong-Term Incentive Awards” and “Annual Incentive Compensation.” Also see the “Potential Payments Upon Termination or Change in Control” section below for the consequences of certain change in control or other corporate transactions or certain terminations of employment with respect to these awards.
Outstanding Equity Awards at Fiscal 20172021 Year-End Table
The following table presents information regarding the outstanding equity awards held by each NEO as of May 27, 2017,29, 2021, the end of fiscal 2017.2021.
Option Awards
| Stock Awards
| ||||||
Name
| Grant Date
| Number of
| Option Awards
| Option
| Option
| Number of
| Market Value
|
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) |
Kate W. Duchene | 03/14/2012 | 35,000 | 0 | $ 12.60 | 03/14/2022 | ||
05/28/2013 | 35,000 | 0 | $ 11.05 | 05/28/2023 | |||
06/2/2014 | 40,000 | 0 | $ 12.18 | 06/2/2024 | |||
08/31/2015 | 38,000 | 0 | $ 15.69 | 08/31/2025 | |||
09/9/2016 | 38,000 | 0 | $ 14.52 | 09/9/2026 | |||
11/3/2017 | 56,250 | 18,750 | $ 15.80 | 11/3/2027 | |||
10/5/2018 | 42,500 | 42,500 | $ 18.96 | 10/5/2028 | |||
09/17/2019 | 25,000 | 75,000 | $ 17.44 | 09/17/2029 | |||
11/12/2020 | 118,428 | 1,726,680 | |||||
Jennifer Y. Ryu | 09/17/2019 | 3,750 | 11,250 | $ 17.44 | 09/17/2029 | ||
02/4/2020 | 3,750 | 11,250 | $ 15.29 | 02/4/2030 | |||
02/4/2020 | 7,500 | 109,350 | |||||
11/12/2020 | 31,578 | 460,407 | |||||
Timothy L. Brackney | 05/28/2013 | 1,500 | 0 | $ 11.05 | 05/28/2023 | ||
06/2/2014 | 2,000 | 0 | $ 12.18 | 06/2/2024 | |||
08/31/2015 | 25,000 | 0 | $ 15.69 | 08/31/2025 | |||
09/9/2016 | 30,000 | 0 | $ 14.52 | 09/9/2026 | |||
11/3/2017 | 26,250 | 8,750 | $ 15.80 | 11/3/2027 | |||
10/5/2018 | 25,000 | 25,000 | $ 18.96 | 10/5/2028 | |||
09/17/2019 | 13,750 | 41,250 | $ 17.44 | 09/17/2029 | |||
11/12/2020 | 87,727 | 1,279,060 |
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
Kate W. Duchene | 03/27/2008 | 11,250 | 0 | $ | 17.89 | 3/27/2018 | ||||||||||||||
02/19/2009 | 49,500 | 0 | $ | 14.48 | 2/19/2019 | |||||||||||||||
02/19/2010 | 35,000 | 0 | $ | 17.90 | 2/19/2020 | |||||||||||||||
03/07/2011 | 35,000 | 0 | $ | 19.26 | 3/7/2021 | |||||||||||||||
03/14/2012 | 35,000 | 0 | $ | 12.60 | 3/14/2022 | |||||||||||||||
05/28/2013 | 26,250 | 8,750 | $ | 11.05 | 5/28/2023 | |||||||||||||||
06/02/2014 | 20,000 | 20,000 | $ | 12.18 | 6/2/2024 | |||||||||||||||
08/31/2015 | 9,500 | 28,500 | $ | 15.69 | 8/31/2025 | |||||||||||||||
09/09/2016 | 0 | 38,000 | $ | 14.52 | 9/9/2026 | |||||||||||||||
Herbert M. Mueller | 04/02/2012 | 2,500 | 0 | $ | 14.33 | 4/2/2022 | ||||||||||||||
05/28/2013 | 1,125 | 375 | $ | 11.05 | 5/28/2023 | |||||||||||||||
06/02/2014 | 1,500 | 1,500 | $ | 12.18 | 6/2/2024 | |||||||||||||||
08/31/2015 | 1,000 | 3,000 | $ | 15.69 | 8/31/2025 | |||||||||||||||
09/09/2016 | 0 | 15,000 | $ | 14.52 | 9/9/2026 | |||||||||||||||
John D. Bower | 03/27/2008 | 4,500 | 0 | $ | 17.89 | 03/27/2018 | ||||||||||||||
02/19/2010 | 7,500 | 0 | $ | 17.90 | 02/19/2020 | |||||||||||||||
03/07/2011 | 8,000 | 0 | $ | 19.26 | 03/07/2021 | |||||||||||||||
05/28/2013 | 0 | 2,150 | $ | 11.05 | 05/28/2023 | |||||||||||||||
06/02/2014 | 0 | 4,500 | $ | 12.18 | 06/02/2024 | |||||||||||||||
08/31/2015 | 3,500 | 10,500 | $ | 15.69 | 08/31/2025 | |||||||||||||||
09/09/2016 | 0 | 15,000 | $ | 14.52 | 09/09/2026 |
Name Anthony Cherbak Nathan W. Franke Grant Date Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable Option
Exercise
Price ($) Option
Expiration
Date (a) (b) (c) (d) (e) (f) 03/27/2008 11,250 0 $ 17.89 3/27/2018 02/19/2009 51,750 0 $ 14.48 02/19/2019 02/19/2010 50,000 0 $ 17.90 02/19/2020 03/07/2011 60,000 0 $ 19.26 03/06/2021 03/14/2012 60,000 0 $ 12.60 03/14/2022 05/28/2013 67,500 22,500 $ 11.05 05/28/2023 06/02/2014 40,000 40,000 $ 12.18 06/02/2024 08/31/2015 17,500 52,500 $ 15.69 08/31/2025 09/09/2016 0 70,000 $ 14.52 09/09/2026 01/02/2008 25,000 0 $ 17.55 01/02/2018 02/19/2009 49,500 0 $ 14.48 02/19/2019 02/19/2010 35,000 0 $ 17.90 02/19/2020 03/07/2011 35,000 0 $ 19.26 03/07/2021 03/14/2012 35,000 0 $ 12.60 03/14/2022 05/28/2013 26,250 8,750 $ 11.05 05/28/2023 06/02/2014 20,000 20,000 $ 12.18 06/02/2024 08/31/2015 9,500 28,500 $ 15.69 08/31/2025
Subject to each NEO’s continued employment, these options are scheduled to become vested and exercisable over a four-year period, with one-fourth of each option grant becoming vested and exercisable on each of the first four anniversaries of the grant date of the option. The grant date of each option is included in the table above under column (b). All unexercised options expire ten years from the date of grant. As described in the “Potential Payments upon Termination or Change in Control” section below, all or a portion of each option grant may vest earlier in connection with certain change in control or other corporate transactions or certain terminations of employment.
(1) | Subject to each NEO’s continued employment, each stock option grant was scheduled to become vested and exercisable over a four-year period, with one-fourth of each option grant becoming vested and exercisable on each of the first four anniversaries of the grant date of the option. The grant date of each option is included in the table above under column (b). All unexercised options expire ten years from the date of grant. As described in the “Potential Payments upon Termination or Change in Control” section below, all or a portion of each option grant may vest earlier in connection with certain change in control or other corporate transactions or certain terminations of employment. |
(2) | Subject to each NEO’s continued employment, each restricted stock or restricted stock unit award was scheduled to become vested over a four-year period, with one-fourth of each award becoming vested on each of the first four anniversaries of the grant date of the award. The grant date of each restricted stock or restricted stock unit award is included in the table above under column (b). As described in the “Potential Payments upon Termination or Change in Control” section below, all or a portion of each restricted stock or restricted stock unit award may vest earlier in connection with certain change in control or other corporate transactions or certain terminations of employment. |
(3) | The market value of stock awards reported in column (h) is computed by multiplying the applicable number of shares of stock reported in column (g), by $14.58, the closing market price of the Company’s common stock on May 28, 2021, the last trading day of fiscal 2021. |
Option Exercises and Stock Vested in Fiscal 20172021
The following table presents information aboutsummarizes the amount realized upon the exercisevesting of stock options byawards during fiscal 2021 that were previously granted to our NEOs. None of our NEOs exercised stock options during fiscal 2017.2021.
Option Awards | Stock Awards | |||||||||||||||
Name
| Number of Shares
| Value
| Number of Shares
| Value
| ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Kate W. Duchene | 0 | $ | 0 | 0 | 0 | |||||||||||
Jennifer Y. Ryu | 0 | $ | 0 | 2,500 | 30,700 | |||||||||||
Timothy L. Brackney | 0 | $ | 0 | 0 | 0 |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Kate W. Duchene | — | — | — | — | ||||||||||||
Herbert M. Mueller | — | — | — | — | ||||||||||||
John D. Bower | 4,400 | $ | 14,749.50 | — | — | |||||||||||
Anthony Cherbak | — | — | — | — | ||||||||||||
Nathan W. Franke | — | — | — | — |
(1) | The dollar amounts shown |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following section describes the benefits that may become payable to the NEOs in connection with certain terminations of their employment with the Company and/or a change in control of the Company. All such benefits will be paid or provided by the Company.
For purposes of this section, we have assumed that (i) the price per share of the Company’s common stock is equal to $12.65, the closing price per share on May 26, 2017 (the last trading day of fiscal 2017), (ii) outstanding stock options are substituted or assumed in connection with certain change in control or other corporation transactions where the Company does not survive (or does not survive as a publicly-traded company), and the Compensation Committee does not exercise any discretion to otherwise accelerate the vesting of outstanding awards in connection with such an event, and (iii) the value of any stock options are required to be accelerated pursuant to the terms of the award or the executive’s employment agreement is equal to the full value of such awards (i.e. the difference between that closing price on May 26, 2017 and the exercise price of the options). In the event that outstanding stock options are not substituted or assumed in connection with certain corporate transactions where the Company does not survive (or does not survive as a publicly-traded company), these awards would generally become fully vested in advance of being terminated in connection with the transaction.
Severance Benefits in Effect at the End of Fiscal 2017
The following sections describe the severance benefits provided under each of the NEOs’ employment agreements as in effect at the end of fiscal 2017.agreements. The agreements with Ms.Mses. Duchene and Ryu and Mr. MuellerBrackney also include restrictive covenants including an indefinite confidentiality covenant, one-year post-termination confidentiality, non-solicitation of employees and non-compete covenantsconsultants covenant and non-interference with business relationships covenant in favor of the Company.
Kate W. Duchene
Termination Without Cause or for Good Reason; Non-Renewal of Agreement Term. In the event that Ms. Duchene’s employment is terminated by the Company without “cause” or by Ms. Duchene for “good reason” (as such terms are defined in the executive’sher employment agreement), Ms. Duchene will be entitled to receive a lump sum cash payment equal to (a) three times the sum of her then current annual base salary plus target annual incentive bonus, (b) her earned and unpaid annual bonus for the prior fiscal year, if any, and (c) a pro-rated portion of herthe annual bonus she would have received for the year her employment terminates.terminates if her employment had not terminated. In addition, Ms. Duchene will generally be entitled to (x) continued participation in the Company’s group health plans at the Company’s expense for up to two years following her termination of employment (or a lump sum payment to procure substantially similar health coverage) and (y) full vesting of her then-outstanding and otherwise unvested stockequity awards (with the accelerated vesting of performance-based awards to be determined by the terms of the applicable award agreement). Any outstanding options and restricted stock awards.will remain exercisable for the term of the award. In the event that the Company elects not to extend the term of Ms. Duchene’s employment agreement, Ms. Duchene would be entitled to the benefits set forth above except that the lump sum payment would equal one and one-half times her then current annual base salary rate.above. Ms. Duchene’s right to receive any of these severance benefits is subject to her providing a release of claims to the Company. Ms. Duchene’s employment agreement does not provide for a tax “gross-up” payment.
Should benefits payable to Ms. Duchene trigger excise taxes under Section 4999 of the Internal Revenue Code, Ms. Duchene will either be entitled to the full amount of her benefits or, if a cut-back in the benefits would result in greater net (after-tax) benefit to Ms. Duchene, the benefits will be cut-back to the extent necessary to avoid such excise taxes. Ms. Duchene’s employment agreement does not provide for a tax “gross-up” payment.
Death or Disability. In the event that Ms. Duchene’s employment terminates due to her death or disability, Ms. Duchene (or her estate) will be entitled to receive a lump sum cash payment equal to the sum of (a) one year’s base salary, (b) any earned and unpaid annual bonus for the prior fiscal year, if any, and (c) a proratedpro-rated portion of her target annual incentive compensation for the fiscal year in which the termination occurs. In addition, Ms. Duchene would be entitled to full vesting of her then-outstanding and otherwise unvested equity-based awards.equity awards, which will remain exercisable for three years (or until the expiration date of the award, if sooner).
Herbert M. MuellerJennifer Y. Ryu
Termination Without Cause or for Good Reason; Non-Renewal of Agreement Term. In the event that Mr. Mueller’sMs. Ryu’s employment is terminated by the Company without “cause” or by Mr. MuellerMs. Ryu for “good reason” (as such terms arewere defined in the executive’sher employment agreement), Mr. MuellerMs. Ryu will be entitled to receive a
lump sum cash payment equal to (a) one and one-half times hisher then current annual base salary rate.rate plus target annual incentive bonus and (b) her earned and unpaid annual bonus for the prior fiscal year, if any. In addition, the executiveMs. Ryu will generally be entitled to (x) continued participation in the Company’s group health plans at the Company’s expense until the earlierfor up to eighteen months following her termination of (a) the expiration of one year from the effective date of termination or (b) Mr. Mueller’s eligibility for participation in the group health plan of a subsequent employer. Upon the successful completion of the first half of the initial three year term, Mr. Mueller’s benefits described above shall increase upon termination toemployment (or a lump sum payment to procure substantially similar health coverage) and (y) full vesting of her then-outstanding and unvested equity awards, which, if applicable, will remain exercisable for the term of the award. In the event that the Company elects not to extend the term of Ms. Ryu’s employment agreement, Ms. Ryu would be entitled to the benefits set forth above. Ms. Ryu’s right to receive any of these severance benefits is subject to her providing a release of claims to the Company. Ms. Ryu’s employment agreement does not provide for a tax “gross-up” payment.
Should benefits payable to Ms. Ryu trigger excise taxes under Section 4999 of the Internal Revenue Code, Ms. Ryu will either be entitled to the full amount of her benefits or, if a cut-back in the benefits would result in greater net (after-tax) benefit to Ms. Ryu, the benefits will be cut-back to the extent necessary to avoid such excise taxes.
Death or Disability. In the event that Ms. Ryu’s employment terminates due to her death or disability, Ms. Ryu (or her estate) will be entitled to receive (a) any earned and unpaid annual bonus for the prior fiscal year, if any, and (b) a pro-rated portion of her target annual incentive compensation for the fiscal year in which the termination occurs. In addition, Ms. Ryu would be entitled to full vesting of her then-outstanding and unvested equity awards, which, if applicable, will remain exercisable for three years (or until the expiration date of the award, if sooner).
Timothy L. Brackney
Termination Without Cause or for Good Reason; Non-Renewal of Agreement Term. In the event that Mr. Brackney’s employment is terminated by the Company without “cause” or by Mr. Brackney for “good reason” (as such terms are defined in his employment agreement), he will be entitled to receive a lump sum cash payment equal to three and a half(a) two times his then current annual base salary rate plus target annual incentive bonus and (2) his earned and unpaid annual bonus for the prior fiscal year, if any. In addition, Mr. Brackney will generally be entitled to (x) continued participation in the Company’s group health plans at the Company’s expense for up to two years following the termination of his employment (or a period of two years. Mr. Mueller will also be entitledlump sum payment to theprocure substantially similar health coverage) and (y) full vesting of his then-outstanding and otherwise unvested stock options and restricted stock awards.equity awards, which will remain exercisable for the term of the award. In the event that the Company elects not to extend the term of Mr. Mueller’sBrackney’s employment agreement, Mr. MuellerBrackney would be entitled to the benefits set forth above except that the lump sum payment would equal one times his then current annual base salary rate.above. Mr. Mueller’sBrackney’s right to receive any of these severance benefits is subject to his providing a release of claims to the Company. Mr. Mueller’sBrackney’s employment agreement does not provide for a tax “gross-up” payment.
Should benefits payable to Mr. Brackney trigger excise taxes under Section 4999 of the Internal Revenue Code, Mr. Brackney will either be entitled to the full amount of his benefits or, if a cut-back in the benefits would result in greater net (after-tax) benefit to Mr. Brackney, the benefits will be cut-back to the extent necessary to avoid such excise taxes.
Death or Disability.Disability. In the event that Mr. Mueller’sBrackney’s employment terminates due to his death or disability, Mr. Muellerhe (or his estate) will be entitled to receive a proratedlump sum cash payment equal to the sum of (a) one year’s base salary, (b) any earned and unpaid annual bonus for the prior fiscal year, if any, and (c) a pro-rated portion of his target annual incentive compensation for the fiscal year in which the termination occurs. In addition, Mr. MuellerBrackney would be entitled to full vesting of his then-outstanding and otherwise unvested equity-based awards.equity awards, which will remain exercisable for three years (or until the expiration date of the award, if sooner).
John D. Bower
Termination Without Cause. InThe 2020 Plan generally provides that, in the event that Mr. Bower’s employment is terminatedoutstanding stock awards and stock options granted by the Company without “cause” (as definedare not substituted or assumed in connection with certain corporate transactions where the executive’sCompany does not survive (or does not survive as a publicly-traded company), these awards would generally become fully vested in advance of being terminated in connection with the transaction. In addition, each of the NEOs’ employment letter), Mr. Boweragreements provide that all then-outstanding equity awards will be entitled to receivedeemed immediately vested upon (or immediately prior to) a lump sum payment equal to one time his then current annual base salary rate pluschange in control of the equivalent of one year’s cash bonus payment (averaged over the most recent three years of award). In addition, Mr. Bower will generally be entitled to continued participationCompany.
Estimated Severance and Change in the Company’s group health plans at the Company’s expense until the earlier of (a) the expiration of one year from the effective date of termination or (b) Mr. Bower’s eligibility for participation in the group health plan of a subsequent employer. Upon a “change in control” (as defined in the 2014 Plan), Mr. Bower will also be entitled to the full vesting of his then-outstanding and otherwise unvested stock options and restricted stock awards. Mr. Bower’s right to receive any of these severance benefits is subject to his providing a release of claims to the Company. Mr. Bower’s employment agreement does not provide for a tax “gross-up” payment.
Estimated Potential Termination Payments andControl Benefits
The following table presents the Company’s estimate of the amount of the benefits to which as to each of theour NEOs employed by us at the end of the fiscal year, the NEO would have been entitled had the executive’s employment with the Company terminated under the circumstances described above, or had a change in control of the Company occurred, on May 26, 2017.29, 2021. For purposes of this table, we have assumed that the price per share of the Company’s common stock is equal to $14.58, the closing price per share on May 28, 2021 (the last trading day of fiscal 2021).
Name | Trigger | Cash Severance | Continued Health Benefits | Equity Awards ($)(1) | Incentive Compensation ($)(2) | Total ($) |
Kate W. Duchene | Termination without Cause, for Good Reason or Election by Company Not to Renew | 4,350,000 | 50,656 | 1,726,680 | 836,000 | 6,963,336 |
Death or Disability | 700,000 | 0 | 1,726,680 | 836,000 | 3,262,680 | |
Change in Control — No Termination of Employment | 0 | 0 | 1,726,680 | 0 | 1,726,680 | |
Jennifer Y. Ryu | Termination without Cause, for Good Reason or Election by Company Not to Renew | 1,087,500 | 0 | 569,757 | 0 | 1,657,257 |
Death or Disability | 0 | 0 | 569,757 | 391,000 | 960,757 | |
Change in Control — No Termination of Employment | 0 | 0 | 569,757 | 0 | 569,757 | |
Timothy L. Brackney | Termination without Cause, for Good Reason or Election by Company Not to Renew | 2,100,000 | 51,349 | 1,279,060 | 0 | 3,430,409 |
Death or Disability | 500,000 | 0 | 1,279,060 | 613,000 | 2,392,060 | |
Change in Control — No Termination of Employment | 0 | 0 | 1,279,060 | 0 | 1,279,060 |
Name | Base Salary ($) | Trigger | Cash Severance | Continued Health Benefits | Equity Awards ($)(1) | Incentive Compensation ($)(2) | Total ($) | |||||||||||||||||||
Kate W. Duchene | 583,000 | Termination without Cause or for | ||||||||||||||||||||||||
Good Reason Not in Connection | ||||||||||||||||||||||||||
with a Change in Control | 3,498,000 | 55,194 | 23,400 | 438,685 | 4,015,279 | |||||||||||||||||||||
Death or Disability | 583,000 | — | 23,400 | 438,685 | 1,045,085 | |||||||||||||||||||||
Election by Company Not to Renew | 874,500 | 55,194 | 23,400 | 438,685 | 1,391,779 | |||||||||||||||||||||
Change in Control — No | ||||||||||||||||||||||||||
Termination of Employment3 | — | — | 23,400 | — | 23,400 | |||||||||||||||||||||
Termination Without Cause or for | ||||||||||||||||||||||||||
Good Reason in Connection with a | ||||||||||||||||||||||||||
Change in Control | 3,498,000 | 55,194 | 23,400 | 438,685 | 4,015,279 | |||||||||||||||||||||
Herbert M. Mueller | 375,000 | Termination without Cause or for | ||||||||||||||||||||||||
Good Reason Not in Connection | ||||||||||||||||||||||||||
with a Change in Control | 562,500 | 16,127 | 127,805 | 251,904 | 958,336 | |||||||||||||||||||||
Death or Disability | 375,000 | 127,805 | 251,904 | 754,709 | ||||||||||||||||||||||
Election by Company Not to Renew | 375,000 | 16,127 | 127,805 | 251,904 | 770,836 | |||||||||||||||||||||
Change in Control — No | ||||||||||||||||||||||||||
Termination of Employment3 | — | — | 127,805 | — | 127,805 | |||||||||||||||||||||
Termination Without Cause or for | ||||||||||||||||||||||||||
Good Reason in Connection with a | ||||||||||||||||||||||||||
Change in Control | 562,500 | 16,127 | 127,805 | 251,904 | 958,336 | |||||||||||||||||||||
John D. Bower | 250,000 | Termination without Cause or for | ||||||||||||||||||||||||
Good Reason Not in Connection | ||||||||||||||||||||||||||
with a Change in Control | 250,000 | 27,950 | — | 163,667 | 441,617 | |||||||||||||||||||||
Death or Disability | 250,000 | 27,950 | — | 163,667 | 441,617 | |||||||||||||||||||||
Election by Company Not to Renew | 250,000 | 27,950 | — | 163,667 | 441,617 | |||||||||||||||||||||
Change in Control — No | ||||||||||||||||||||||||||
Termination of Employment3 | — | — | 5,555 | — | 5,555 | |||||||||||||||||||||
Termination Without Cause or for | ||||||||||||||||||||||||||
Good Reason in Connection with a | ||||||||||||||||||||||||||
Change in Control | 250,000 | 27,950 | 5,555 | 163,667 | 447,172 |
(1) | This column reports the intrinsic value of the unvested portions of the executive’s outstanding and unvested equity awards that |
(2) | This column represents the pro-rata bonus award for fiscal 2021 that becomes payable to the executive as stated in their employment agreement based on each severance trigger set forth in the “Trigger” column. Therefore, this column reflects the actual amounts earned for fiscal |
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For fiscal 2021:
We selected May 29, 2021, which is a date within the last three months of fiscal 2021, as the date we would use to identify our median employee. To identify our median employee among our U.S. and international employee population, we took into account the total cash compensation paid for fiscal 2021 (including cash salary or wages and cash bonus or incentives) to all individuals, other than Ms. Duchene, employed by us on that date. We believe that cash compensation, determined on this basis, was an appropriate measure because we do not distribute annual equity awards to all employees. We annualized the cash compensation of permanent employees hired by us during fiscal 2021, but we did not annualize the compensation of seasonal or temporary employees. We did not exclude any employees working outside of the U.S. Pay data for the fiscal year for our employees outside the U.S. were converted to U.S. dollars using an annual average foreign currency exchange rate for each applicable country of employment. We did not make any cost-of-living adjustments in identifying the median employee. After identifying the median employee using the above methodology, we calculated annual total compensation for that employee using the same methodology we use for our NEOs as set forth in the 2021 Summary Compensation Table.
PROPOSAL 3. ADVISORY VOTE ON THE COMPANY’S EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to cast a non-binding advisory vote on the compensation paid to our NEOs as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this Proxy Statement (including in the compensation tables and narratives accompanying those tables as well as the Compensation Discussion and Analysis). This advisory vote on executive compensation is commonly referred to as a “Say-on-Pay” vote.
We design our executive compensation programs to implement our core objectives of providing competitive pay, pay for performance, and alignment of management’s interests with the interests of long-term stockholders. Stockholders are encouraged to read the Compensation Discussion and Analysis section of this Proxy Statement for a more detailed discussion of how our compensation programs reflect our core objectives.
We believe stockholders should consider the following when voting on this proposal:
Pay for Performance Orientation
• | “At Risk” Compensation/Pay for Performance. A significant portion of each NEO’s compensation is “at risk” and tied to the Company’s attainment of our annual and long-term financial and business objectives, including retaining our team-oriented culture. |
For fiscal 2021, approximately 75% of our Chief Executive Officer’s and Chief Operating Officer’s, and 65% of our Chief Financial Officer’s, target total direct compensation(12) was not guaranteed but rather was tied to metrics related to Company performance and/or stock price, and therefore meaningfully “at risk”.
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• | Base Salaries. To preserve cash in an uncertain marketplace during the Pandemic, the Compensation Committee determined not to increase the base salary of any NEO during fiscal 2021. |
(12) | Target total direct compensation means the NEO’s base salary, target annual cash incentive and grant date fair value (based on the value approved by the Compensation Committee and used to determine the number of shares subject to the award) of annual long-term incentive awards granted to the NEO in fiscal 2021. |
• | Annual |
• | Long-Term Incentives. In fiscal |
Alignment with Long-Term Stockholder Interests
A substantial portion of our executive compensation is weighted toward variable, at-risk pay in the form of annual and long-term incentives.
The Company also maintains the following policies which we believe are in the best interests of stockholders:
Stock Ownership Guidelines — We focus our executives on long-term stockholder value by requiring our executive officersNEOs to own a significant amount of the Company’s stock.
No Repricing — Our 2004 Stock Incentive Plan and our 20142020 Plan expressly prohibitprohibits repricing awards without stockholder approval.
No Gross-Ups — The Company will no longer include “gross-ups”does not have tax “gross-up” provisions in any new executiveNEO’s employment agreement for excise taxes triggered in connection with a change in control of the Company.
The Compensation Committee annually compares our executive compensation levels and elements with compensation levels and elements at other relevant companies and competitors.
As more fully set forth above in the “Executive Compensation — Compensation Discussion and Analysis — Use of Peer Group Data,” following a review by the Compensation Committee of our competitors in the marketplace and those that major advisory firms, such as ISS, include in our services sector peer group, the Committee determined that no changes to the fiscal 2016 peer group were necessary for fiscal 2017, except for the removal of The Corporate Executive Board Company due to its acquisition by Gartner, Inc. in 2017. All other members ofsimilar positions at the peer group from fiscal 2016 remainedof companies disclosed in the same. CD&A above.
Our peer group analysis (based on information that was publicly available at the time the Compensation Committee made the corresponding compensation decisions) reflects that our NEOs have base salary and total compensation levels (taking into account base salary, annual incentive and grant date fair value of equity awards granted during the year) that are below the median of the peer group companies. We strive to pay for performance in line with Company results and Company-wide pay practices.
(13) | See pages 29 and 31 of Resources Connection, Inc.’s Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021, for a discussion of the adjustments made and a reconciliation of those adjustments to net income (loss), the most directly comparable GAAP financial measure, to compute Adjusted EBITDA. |
(14) | Adjusted EBITDA Percentage for purposes of the EIP is total revenue minus the cost of services sold and Selling, General and Administration expense adjustments for stock compensation, changes in contingent consideration, Board approved restructuring and any additional items deemed appropriate by the Audit Committee, divided by revenue. |
Recommendation
TheOur Board believes the Company’s executive compensation programs use appropriate structures and sound pay practices that are effective in achieving our core objectives. TheOur Board also believes that our executive compensation programs are reasonable in relation to comparable public and private companies in our industry. Accordingly, theour Board of Directors recommends that you vote in favor of the following resolution:
“RESOLVED, that the compensation of the Company’s named executive officers as disclosed pursuant to the SEC’s executive compensation disclosure rules (which includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables) is hereby approved.”
This proposal to approve the compensation paid to our NEOs is advisory only and will not be binding, overrule any decision by, or create or imply any additional fiduciary duties for the Company or our Board. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program values the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for NEOs.
The Company’s current policy is to provide stockholders with an opportunity to approve the compensation of the NEOs each year at the annual meeting of stockholders. We have included in this Proxy Statement a proposal to approve the frequency of future advisory votes on the Company’s executive compensation and our Board of Directors recommends that we continue with the current policy of holding such a vote ever year. Accordingly, if stockholders approve every1 YEAR as the preferred frequency option in Proposal No. 4, itIt is expected that the next such vote will occur at the 20182022 annual meeting of stockholders.
The Board of Directors unanimously recommends athat stockholders vote FOR the approval,“FOR” Proposal 3 to approve, on an advisory basis, of the compensation of our NEOs as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules.
PROPOSAL 4. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
As described in Proposal 3 above, our stockholders are being provided the opportunity to cast an advisory vote on the compensation of our NEOs, or the Say-on-Pay vote.
In 2011, our stockholders had the opportunity to cast an advisory vote on how often we should include a Say-on-Pay vote in our proxy materials for our annual meetings of stockholders or special stockholder meetings for which we must include executive compensation information in the proxy statement for that meeting (commonly referred to as a “Say-on-Frequency” vote). At our 2011 annual meeting, our stockholders voted to hold a Say-on-Pay vote every year, and the Board of Directors determined that the Say-on-Pay vote would be held annually.
Under SEC rules, we are required to hold a new Say-on-Frequency vote at least every six years. Accordingly, this Proposal 4 affords our stockholders the opportunity to cast an advisory vote on how often we should include a Say-on-Pay vote in our proxy materials for future annual meetings of stockholders (or special stockholder meetings for which we must include executive compensation information in the proxy statement for that meeting). Under this Proposal 4, our stockholders may vote to have future advisory votes on executive compensation every year, every two years, every three years, or abstain from voting.
We believe that advisory votes on executive compensation should be conducted every year so that our stockholders may annually express their views on our executive compensation program.
Like the Say-on-Pay vote, this Say-on-Frequency vote is advisory and will not be binding on the Company or our Board of Directors. However, the Board and the Compensation Committee value the opinions expressed by our stockholders and will take the outcome of this vote into account when determining the frequency of future Say-on-Pay votes.
The Board of Directors unanimously recommends a vote, on an advisory basis, to hold future advisory votes on executive compensation every 1 year.
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file at the office of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. Our SEC filings are also available to the public from commercial document retrieval services, at the web site maintained by the SEC at www.sec.gov, and on our website atwww.rgp.com.
By order of the Board of Directors,
Michelle Gouvion
Associate General Counsel and Secretary
Irvine, California
By order of the Board of Directors, | |
Lauren A. Elkerson | |
Chief Legal Officer and Corporate Secretary |
September 15, 20179, 2021
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, ALL STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGNPROMPTLY SUBMIT A PROXY OR VOTING INSTRUCTIONS TO INSTRUCT HOW YOUR SHARES ARE TO BE VOTED AT THE ANNUAL MEETING. IF YOU ATTEND AND RETURN THE ENCLOSED VOTING INSTRUCTION FORM OR PROXY CARD PROMPTLY OR, IF AVAILABLE, VOTE YOUR SHARES BY TELEPHONE OR USING THE INTERNET.
ANNUAL MEETING OF STOCKHOLDERS OF RESOURCES CONNECTION, INC. October 19, 2017 GO GREENe-Consent makes it easy to go paperless. Withe-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FORAT THE ANNUAL MEETING, TOYOUR PROXY OR VOTING INSTRUCTIONS WILL NOT BE HELD OCTOBER 19, 2017: The accompanying Proxy Statement and the Company’s Annual Report to Stockholders for its fiscal year ended May 27, 2017, are available electronically on the Company’s website at http://ir.resourcesglobal.com/index.cfm. Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 00003330303040000000 8 101917 PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER DIRECTED HEREBY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY (IF SIGNED) WILL BE VOTED “FOR” EACH DIRECTOR NOMINEE NAMED IN PROPOSAL 1, “FOR” EACH OF PROPOSAL 2 AND PROPOSAL 3, AND “1 YEAR” ON PROPOSAL 4. IF ANY DIRECTOR NOMINEE NAMED IN PROPOSAL 1 BECOMES UNABLE OR UNWILLING FOR GOOD CAUSE TO SERVE IF ELECTED, THE PERSONS NAMED AS PROXY SHALL VOTE FOR THE ELECTION OF SUCH OTHER PERSON AS THE BOARD OF DIRECTORS MAY PROPOSE TO REPLACE SUCH NOMINEE. WHETHER OR NOT DIRECTION IS MADE, EACH OF THE PROXIES IS AUTHORIZED TO VOTE IN HIS OR HER DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. To indicate changes change your to the the new address registered address on name(s) your in the account, address on the please account space check above. may not the Please be box submitted at note right and that via this method. 1. Nominees for a three-year term as a member of the Company’s Board of Directors: FOR AGAINST ABSTAIN 1a. Robert F. Kistinger 1b. Jolene Sarkis 1c. Anne Shih The Proposal Board 2. of Directors and the Audit Committee recommend a vote FOR 2. Ratification of the appointment of RSM US LLP as the Company’s independent registered public accounting firm for fiscal year 2018. The Board of Directors recommends a vote FOR Proposal 3. 3. Advisory approval of the Company’s executive compensation. The Board of Directors recommends a vote of 1 YEAR on Proposal 4. 1 year 2 years 3 years ABSTAIN 4. Advisory Company’s approval executive of the compensation. frequency of future advisory votes on the 5. In other their matters discretion, as each may of properly the proxies come is authorized before the to meeting vote in his or or at her any discretion adjournment upon any or postponement thereof. Signature of Stockholder Date: Signature of Stockholder Date: Note: Please title as such. sign exactly If the signer as your is a name corporation, or names please appear sign on full this corporate Proxy. When name shares by duly are authorized held jointly, officer, each giving holder full should title as sign. such. When If signer signing is a as partnership, executor, please administrator, sign in attorney, partnership trustee name or by guardian, authorized please person. give fullUSED.
RESOURCES CONNECTION, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 19, 2017 The undersigned, a stockholder of RESOURCES CONNECTION, INC., a Delaware corporation (the “Company”), acknowledges receipt of a copy of the Notice of Annual Meeting of Stockholders, the accompanying Proxy Statement and a copy of the Company’s Annual Report to Stockholders for its fiscal year ended May 27, 2017; and, revoking any proxy previously given, hereby constitutes and appoints Herbert M. Mueller and Kate W. Duchene, and each or either of them, as proxies, with full power of substitution in each, to represent and to vote all shares of Common Stock of the Company standing in the name of the undersigned that the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders of the Company to be held at the Company’s Corporate Headquarters located at 17101 Armstrong Avenue, Irvine, California on October 19, 2017, at 1:30 p.m. pacific time, and at any adjournment or postponement thereof, on all matters coming before said meeting. The proposals referred to on the reverse side are described in the Proxy Statement, dated September 15, 2017, which is being delivered herewith in connection with the Annual Meeting of Stockholders. (Continued and to be signed on the reverse side) 1.1 14475