UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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RESOURCES CONNECTION, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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September 15, 20176, 2022
Dear Stockholder:
On behalfOur 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 accomplish initiatives with expertise, speed and efficiency. Our business model is purpose built for the modern economy and we are excited to grow and build our brand. We are different than the Big Four for good reason, and our client base, comprised of many of the world’s most beloved companies, continues to take notice. We are pleased to share the following information about our Board governance, compensation practices, and diversity, equity and inclusion commitment.
Stockholder Engagement
In April 2022, we were excited to host our first investor day in over a decade. We appreciated the opportunity to engage with key investors and stockholders face-to-face and dive deeper into our business, including a demonstration of Directors,HUGO, our new digital engagement platform. Throughout fiscal 2022, we also participated in many investor roadshows. We welcome dialogue with our stockholders and thank those of you who have been actively engaged in return.
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 2022 for a more robust disclosure of our outstanding gender and racial diversity representation in our leadership and our employees, as well as our other important corporate social responsibility initiatives.
2022 Annual Meeting
We cordially invitedinvite you to attend the 2017our 2022 Annual Meeting of Stockholders of Resources Connection, Inc., to be held at 1:30 p.m. Pacific Time, on October 19, 2017,20, 2022, 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 with the recommendations of the Board of Directors contained in the Proxy Statement.a timely manner.
We thank you for your ownership and are grateful for your support as we Dare to Work DifferentlyTM. We look forward to seeingthe year ahead and hope to see you on October 19, 2017, and urge you to return your proxy as soon as possible.at our Annual Meeting.
Sincerely, | ||
Kate W. Duchene | ||
President and Chief Executive Officer |
Sincerely,
IRVINE, CALIFORNIA 92614
(714) 430-6400
NOTICE OF 20172022 ANNUAL MEETING OF STOCKHOLDERS
1:30 p.m., Pacific Time, on Thursday, October | |||
Resources Connection, Inc. Office Building 17101 Armstrong Avenue, Irvine, California | |||
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(3) | To approve the Amendment and Restatement of the Resources Connection, Inc. 2019 Employee Stock Purchase Plan; | ||
| (4) | To approve on an advisory basis Resources Connection, Inc.’s executive compensation; and | |
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It is important that your shares be represented and voted at the Annual Meeting. |
* | We intend to |
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 20172022 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, 2017,20, 2022, and at any postponements or adjournments thereof. This Proxy Statement and accompanying form of proxyour 2022 Annual Report on Form 10-K, which includes our fiscal 2022 financial statements (“Annual Report”) were first sent or made available to stockholders on or about September 15, 2017.6, 2022.
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, 2017.20, 2022.
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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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, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to expectations concerning matters that are not historical facts. 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 our growth and operational plans, our project pipeline, our plans related to brand positioning, our environmental responsibility goals, expectations regarding the success of our business strategies, expectations regarding secular trends and expectations regarding our continued growth and ability to deliver increased shareholder value. 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, but are not limited to, the following: risks related to an economic downturn or deterioration of general macroeconomic conditions, risks arising from epidemic diseases or pandemics, the highly competitive nature of the market for professional services, risks related to the loss of a significant number of our consultants, or an inability to attract and retain new consultants, the possible impact on our business from the loss of the services of one or more key members of our senior management, risks related to potential significant increases in wages or payroll-related costs, our ability to secure new projects from clients, our ability to achieve or maintain a suitable pay/bill ratio, our ability to compete effectively in the competitive bidding process, risks related to unfavorable provisions in our contracts which may permit our clients to, among other things, terminate the contracts partially or completely at any time prior to completion, our ability to realize the level of benefit that we expect from our restructuring initiatives, risks that our recent digital expansion and technology transformation efforts many not be successful, our ability to build an efficient support structure as our business continues to grow and transform, our ability to grow our business, manage our growth or sustain our current business, our ability to serve clients internationally, possible disruption of our business from our past and future acquisitions, the possibility that our recent rebranding efforts may not be successful, our potential inability to adequately protect our intellectual property rights, risks that our computer hardware and software and telecommunications systems are damaged, breached or interrupted, risks related to the failure to comply with data privacy laws and regulations and the adverse effect it may have on our reputation, results of operations or financial condition, our ability to comply with governmental, regulatory and legal requirements and company policies, the possible legal liability for damages resulting from the performance of projects by our consultants or for our clients’ mistreatment of our personnel, risks arising from changes in applicable tax laws or adverse results in tax audits or interpretations, the possible adverse effect on our business model from the reclassification of our independent contractors by foreign tax and regulatory authorities, the possible difficulty for a third party to acquire us and resulting depression of our stock price, the operating and financial restrictions from our credit facility, risks related to the variable rate of interest in our credit facility, the possibility that we are unable to or elect not to pay our quarterly dividend payment, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 28, 2022 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.
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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.
FINANCIAL HIGHLIGHTSWHO WE ARE
We achievedare a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent. As a next-generation human capital partner for our clients, we specialize in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change. Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ successes.
Based in Irvine, California, with offices worldwide, our agile human capital delivery model attracts top-caliber professionals with in-demand skillsets who seek a workplace environment that embraces flexibility, collaboration and human connection. Our agile professional services model allows us to quickly align the right resources for the work at hand with speed and efficiency in ways that bring value to both our clients and talent. Our unique approach to workforce strategy strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and the usage of a flexible workforce to execute transformational projects has become the dominant operating model. Our approximately 4,300 professionals collectively engaged with over 2,200 clients around the world in fiscal 2022, including over 88% of the Fortune 100 as of May 2022.
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.
We believe our directors’ breadth of experience, diversity, tenure and skills strengthen our Board’s independent leadership and the effective oversight of management.
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Fiscal 2022 was a year in which we produced the strongest annual revenue and Adjusted EBITDA(1) we’ve seen in over ten years. We accomplished this by successfully executing on our record pipeline of $583.4opportunities across all businesses, while remaining disciplined on the cost front. In the fourth quarter of fiscal 2022, revenue grew by 25.9% to $217.0 million compared to the fourth quarter of fiscal 2021. The sustained topline growth over the last seven consecutive quarters reflects the strength of our execution and the relevance of our agile business model in today’s changing workplace and favorable secular trends. Annual revenue growth for fiscal 2017;
We generated $18.72022 was 27.9% to $805.0 million from fiscal 2021, driven by increase in net incomedemand for our services and was further enhanced by our reinvigorated focus to raise bill rates that better reflect the value delivered to clients. In addition to delivering strong topline performance, we also delivered 12.8% Adjusted EBITDA margin in fiscal 2017;2022(2), one of the highest Adjusted EBITDA margins in the history of the Company.
The growing shift in workforce strategy towards a project-based orientation was greatly accelerated by the Pandemic, which placed an enhanced emphasis on business agility, and continues to be hastened by the competition for talent. Permanent professional personnel positions are being reduced as organizations engage agile talent for project initiatives and transformation work. To capitalize on the favorable secular trends, we are keenly focused on executing the following business strategies to achieve our objectives to build and maintain the Company’s reputation as the premier provider of project execution services for companies facing transformation, change and compliance challenges:
• | Hire and retain highly qualified, experienced consultants. We believe our highly qualified, experienced consultants provide us with a distinct competitive advantage. Therefore, one of our top priorities is to continue to attract and retain high-caliber experts who are committed to serving clients and solving their problems. We believe we have been successful in attracting and retaining qualified, expert and diverse professionals by providing interesting work engagements with a blue-chip client base, competitive compensation and benefits, and continuing professional development and learning opportunities, as well as membership to an exclusive community of like-minded professionals, while offering flexible work schedules and more control over choosing client engagements. |
• | Maintain our distinctive culture. Our corporate culture, built upon our shared, foundational values of Loyalty, Integrity, Focus, Enthusiasm, Accountability and Talent, is a core pillar of our business strategy, and we believe it has been a significant component of our success. |
• | Establish consultative relationships with clients. We emphasize a relationship-oriented approach to business rather than a transaction-oriented approach. We believe the professional services experience of our management and consultants enables us to understand the needs of our clients and deliver an integrated, relationship-based approach to meeting those needs. Client relationships and needs are addressed from a client-centric, not geographic, perspective. Our revenue team regularly meets with our existing and prospective clients to understand their business issues and help them define their project needs. Our talent team then identifies consultants with the appropriate skills and expertise from our global talent pool to meet the clients’ objectives. We believe that by establishing relationships with our clients to solve their professional service needs, we are more likely to identify new opportunities to serve them. The strength and depth of our client relationships is demonstrated by the 75% retention rate of our top 100 clients over the last five fiscal years. |
• | Build the RGP brand. We want to maintain a leadership position in today’s world of work, providing the best talent to execute on client projects in an increasingly fluid gig-oriented environment. We have historically built our brand through the consistent and reliable delivery of high-quality, value-added services to our clients as well as a significant referral network of 3,388 consultants and 871 management and administrative employees as of May 28, 2022. In recognition of our high-quality service to clients and our efforts to be an “employer of choice” for our employees, we were named among Forbes’ 2022 World’s Best Management Consulting Firms, 2022 America’s Best Management Consulting Firms and 2022 America’s Best Midsize Employers Lists. Additionally, in recent years, we have invested in global, regional and local marketing and brand activation efforts that reinforce our brand. In fiscal 2022, we introduced our new tagline ― Dare to Work DifferentlyTM — to clarify our brand and are now in |
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We generated diluted earnings per share of $0.56 for fiscal 2017; and
We retained 100% of our top 50 clients from fiscal 2016 in fiscal 2017.
Our financial position is strong with cash of approximately $62.3 million and $28.3 million of cash provided by operating activities in fiscal 2017. Our ability to continue to generate cash allows us the flexibility of returning 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.
STOCKHOLDER RETURN
We returned approximately $133.1 million to stockholders during fiscal 2017 through our share repurchase and dividend programs, as well as the repurchase of shares in the modified Dutch tender offer. In the past three fiscal years, we have returned a cumulative total of almost $213.3 million to our stockholders through our share repurchase and dividend programs and the repurchase of shares in the modified Dutch tender offer.
We believe that the payment of a regular dividend, along with the continuance of our stock repurchase plan, gives us the ability to return cash to our stockholders with consistency.
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. In July 2017, our Board of Directors approved a 9% increase in the quarterly dividend to $0.12 per share.
Share Repurchase:
In July 2015, our Board of Directors approved a new share repurchase program, authorizing the purchase, at the discretion of the Company’s senior executives, of our common stock with an aggregate dollar limit not to
expense, restructuring costs, technology transformation costs, and plus or minus contingent consideration adjustments. See |
Adjusted EBITDA |
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the process of activating our new brand positioning. We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.
Fiscal 2022 was a successful year. We grew revenue, improved our cost structure and achieved higher profitability. We look forward to reaping the benefits of our rebranding and bolstering our foundational strength in fiscal 2023.
• | We achieved Adjusted EBITDA of $103.1 million for fiscal year 2022(1); |
• | We realized an Adjusted EBITDA Margin of 12.8% for fiscal year 2022(2), up 440 basis points compared to fiscal year 2021; |
Our successful execution, coupled with favorable secular trends including a rapid shift to workforce agility and a continued tight labor market, enabled us to attain broad based topline growth across most client segments, including strategic global and regional accounts in the majority of our markets and solution areas. We continue to generate robust cash flow from operations. Cash generated from operations was $49.4 million in fiscal 2022. As of May 28, 2022, we had $104.2 million in cash and cash equivalents and $119.8 million available for borrowing under our $175.0 million senior secured revolving credit facility. Given our balance sheet position, our ability to generate future positive cash flows from operations, and other sources of liquidity, we believe we have the financial resources needed to remain resilient during the current uncertain economic environment and maintain the flexibility to return cash to you, our stockholders, while being opportunistic on strategic investments for our future growth.
We returned $18.6 million to stockholders during fiscal year 2022 through our dividend program increasing cumulative dividends to $54.4 million over the past three fiscal years. In addition, we have returned $24.7 million to our stockholders through our share repurchase program over the past three fiscal years. We believe that the payment of a regular dividend, along with the continuation of our stock repurchase plan as circumstances permit, provides us the ability to consistently return cash to our stockholders.
Issuance of Quarterly Dividend
In July 2010, our Board authorized the establishment of a regular quarterly dividend, subject to quarterly Board approval. Consistent with prior quarters, in July 2022, our Board authorized the payment of a quarterly dividend at $0.14 per share payable on September 21, 2022 to all stockholders of record on August 24, 2022.
Stock Repurchase
In July 2015, our Board approved a stock repurchase program authorizing the repurchase, at the discretion of our senior executives, of our common stock for a designated aggregate dollar limit not to exceed $150 million. The program commenced in February 2016, upon exhaustionDuring the year ended May 28, 2022, the Company repurchased 1,155,236 shares of the previousCompany’s common stock repurchase programfor $19.7 million in a privately negotiated transaction with Dublin Acquisition, LLC pursuant to the terms of $150 million, which was approved by the Company’s Board of Directors in April 2011.a Stock Purchase Agreement, dated December 3, 2021. As of May 27, 2017,28, 2022, approximately $125.1$65.4 million remainsremained available for future repurchases of our common stock under the July 2015 repurchase program.
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CORPORATE SOCIAL RESPONSIBILITY AND ESG HIGHLIGHTS
Fiscal 2017 was a year of change for the Company. Our Chief Executive OfficerThe Company and our Chief Financial Officer retired.Board maintain a focus on corporate social responsibility and environmental, social and governance (“ESG”) matters that impact our employees, clients and their communities. We formedbelieve 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. We continuously look for new and better ways to foster a new executive team with redefined functional roles to drive a refined strategic visiondiverse and inclusive work environment, minimize our environmental footprint and engage our surrounding communities, all while creating value for the Company, and developed an execution plan for the next five years. We completed a reduction in force with a goal to take approximately $7.0 million of cost outour stockholders. Below are some recent highlights 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 Presidentdiversity and Chief Financial Officer to replace Mr. Franke. Mr. Mueller joined the Company in 2012sustainability initiatives. For additional information, see “Corporate Social Responsibility 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 membershipsESG Efforts” beginning on the Boards of Directors of the Company’s international subsidiaries or affiliates. Mr. Stephens left the Company effective as of December 31, 2016.
ANNUAL MEETING
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• | ESG Committee.To further advance our ESG efforts, we formed an ESG Committee during fiscal 2022, with oversight by the Corporate Governance and Nominating Committee of the Board. The ESG Committee is a cross-functional advisory committee comprised of employees from various sectors and geographic locations. It meets quarterly to discuss the Company’s general strategy with respect to ESG matters and makes recommendations to the Company’s executive leadership team on how the Company’s policies, practices and disclosures can respond to current and emerging ESG issues. |
• | Diversity within the Company.We are proud that 100% of our executive leadership team (i.e., our “Chief” level positions) consists of women and minorities. Many of our other key leaders are also women or minorities. Additionally, 40% of our directors on our Board are minorities or women. We also aim to have a workforce that reflects the diversity of the qualified talent that is available in the markets we serve. As of November 2021, 65.3% of our U.S.-based employees identified as minorities or women, and we are a Paradigm for Parity Coalition Company, which is a coalition of companies committed to addressing gender and diversity gaps in corporate leadership. |
In fiscal 2022, we continued our Diversity Council and DE&I Ambassador programs, consisting of employees representing a cross-section of functions and levels across the globe. The Diversity Council serves an important role 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. The DE&I Ambassador program’s mission is to spread the culture of DE&I, promote DE&I awareness and engage employees at all levels of the Company through existing business forums, established teams, offices, markets and regions. The DE&I Ambassador teams operate at a regional level and meet quarterly to share success stories and practices across the regions. | ||
• | Sustainability.In fiscal 2022, we implemented our Global Environmental Responsibility Policy, which sets forth our commitment to operate our business as a responsible corporate citizen dedicated to sound environmental management and with concern for the well-being of our common environment. 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 52,000 square feet during fiscal 2022 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 U.S. employees and reducing our use |
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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. |
• | Our Communities.We support and encourage our employees to volunteer their time and donate to local or national charitable causes. Since fiscal 2020, we have 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. We, as an organization, also view each local, national or global challenge as an opportunity to support and give back to the communities in the markets we serve. As an example, during the COVID lockdowns in China, we gifted our Chinese employees and their families with boxes of food to help alleviate food shortage problems experienced in the community. In fiscal 2022, we continued our 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 28, 2022, we achieved our goal of matching $100,000 in contributions during fiscal 2022. We intend to continue our commitment toward this Fund in fiscal 2023. |
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Date and Time: | 1:30 p.m., Pacific Time, on Thursday, October |
| Resources Connection, Inc. |
Office Building
17101 Armstrong Avenue, Irvine, California 92614
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Record Date: | August 22, 2022 |
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 2020
1. | Election of three directors, each for a three-year term expiring at the Company’s annual meeting in 2025 and until their respective successors are duly elected and qualified;
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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.”
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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
Set forth below is summary information with respect to RSM US LLP’s fees for services provided to the Company in fiscal
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We are asking stockholders to approve an amendment and restatement of the Currently, a total of 1,825,000 shares of our common stock are authorized for issuance under the ESPP. Of these shares, 1,335,53 shares have previously been purchased and 489,417 shares remain available for purchase in the current and future offering periods as of August 22, 2022. If stockholders approve the amendment and restatement of the ESPP, the maximum number of shares that may be issued under the ESPP will increase from 1,825,000 shares to 3,325,000 shares. Key Features of our current employee stock purchase program: Purchase price is 85% of the fair market value of the Company’s Two six-month offering periods per calendar year with purchases on the last trading day in the offering period (generally ending each January 15 and July 15); The number of shares that would be authorized for Available to all U.S. employees and non-U.S. employees of designated subsidiaries with 90 days or more of continued employment. For more detailed information on the ESPP, please refer to the detailed information in “Proposal 3. Approval of the Amendment and Restatement of Resources Connection, Inc.’s 2019 Employee Stock Purchase Plan.”
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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 executive compensation tables and narratives accompanying those tables as well as the Compensation Discussion and Analysis).
PAY FOR PERFORMANCE ORIENTATION
Ms. Duchene, our President and Chief Executive Officer, was awarded a total annual incentive of
15 Ms. Ryu, our Executive Vice President and
Mr. Brackney, our President and Chief Operating Officer, was awarded a total annual incentive of $1,680,000, representing 93.3% of his maximum award opportunity or
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.
Contents
As permitted by SEC rules, we are furnishing proxy materials for the Annual Meeting primarily over the Internet. On or about September 6, 2022, 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:
Our stockholders will also consider any other business properly raised at the Annual Meeting or any postponement or adjournment thereof.
Our Board
All stockholders of the Company as of the close of business on August
Stockholders of record, as of the close of business on August 17 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 AND WHAT IS THE DEADLINE?
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 If you are a stockholder of record voting by
If you return your signed proxy card Voting at the Annual Meeting. All stockholders of record may vote in person at the Annual 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 your shares at the 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:
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.
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
A representative of Broadridge will serve as the inspector of elections and will count the
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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
It probably means your shares are registered differently and are in more than one account. Please
As of the close of business on the record date
Proposal 1. Election of 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 Other
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
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 19 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, the
Broker non-votes with respect to Proposals 1, 3 and 4 (the election of directors, the A properly executed proxy marked “ABSTAIN” with respect to the election of one or more director nominees in Proposal 1 will not be
Advance Notice 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. Further, if you intend to solicit proxies in support of director nominees other than the Board’s nominees at the 2023 annual meeting of stockholders, you must provide written notice setting forth the information required by Rule 14a-19 under the Exchange Act, unless the required information has been provided in a preliminary or definitive proxy statement previously filed by the stockholder. Such written notice must be provided in accordance with Rule 14a-19 no later than August 21, 2023. If we change the date of the 2023 annual meeting of stockholders to a date that is more than 30 days from the anniversary date of the Annual Meeting, your written notice must be received by the later of 60 days prior to the date of the 2023 annual meeting of stockholders or the 10th calendar day following the day on which public announcement of the date of the 2023 annual meeting of stockholders is first made. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our Bylaws as described below. Stockholder Proposals for the 20 HOW DO I OBTAIN A COPY OF THE ANNUAL REPORT FOR RESOURCES CONNECTION, INC.’S YEAR ENDED MAY 28, 2022?
A copy of the Company’s
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.
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. 21 PROPOSAL 1. ELECTION OF DIRECTORS Our Board Each of the nominees, In addition, notwithstanding the Company’s retirement age policy, the Board affirmatively requested that Mr. Dimick continue his service to the Board for an additional three-year term given his outstanding contributions, deep knowledge of the professional services industry and executive experience. Mr. Dimick has served as Chairman of the Audit Committee since 2004, and his continued services contributes to the stability of the Board and provides important oversight of the Company’s audit and financial reporting processes. Additionally, he possesses a unique blend of leadership, institutional knowledge and experience that our Board requires to lead the Company through key enterprise initiatives and will serve as an important mentor to newer board members as we continue our board refreshment efforts. Our Board, acting upon the recommendation of the Corporate Governance and Nominating Committee, recommends 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
If at the time of the Annual Meeting any of the nominees Following is biographical information about each nominee and each 22 The individuals standing for election are:
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24 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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The following table sets forth information about our current executive officers. Each of our executive officers serves at the pleasure of our executive officers and any other person pursuant to which an officer was selected.
The responsibilities of our Chairman and our Lead Independent Director are summarized in the table below.
Our Board believes the Company’s corporate As required by the Company’s Corporate Governance Guidelines and Committee Charters, our Board Our Board believes our directors’ breadth of experience, diversity, tenure and skills strengthen our Board’s independent leadership and the effective oversight of management. Following is a summary of each director’s unique skills and experience, as well as the diversity and demographic background of our directors (as self-identified).
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Committees of the Board 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
32 Table of
Our Board
Corporate Governance and Nominating Committee The current members of the Corporate Governance and Nominating Committee are Mr. Pisano (Chairperson), Governance-Related Nominating-Related 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 few 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 2023 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 33 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 In Below
Director Candidates Recommended by The current members of the Compensation Committee are Ms. Sarkis (Chairperson), Mr. Dimick, Mr. Pisano and Mr. 34 The Compensation Committee is responsible for discharging the 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 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 Pursuant to its charter, the Compensation Committee is authorized in its sole discretion to retain compensation consultants and other advisors to assist it in carrying out its duties. The Compensation Committee
The primary function of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and audits of the financial statements of the Company. The Audit Committee reviews our auditing, accounting, financial reporting and internal control 35 Year
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; Meets independently with our internal finance and audit staff, our independent registered public accounting firm and our senior management; and 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
Our Board
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 36 on specific short-term goals important to our success, and that it does not encourage unnecessary or excessive risk taking over a In addition, a significant portion of the compensation provided to our NEOs is in the form of subject to long-term vesting schedules, to help ensure that NEOs always have significant compensation opportunities tied to long-term stock price performance.
We maintain an insider trading policy that, among other things, strongly discourages all of our employees, officers and CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT AND ETHICS Corporate Governance
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 2022, all committees were determined to be functioning effectively and in accordance with their respective charters and applicable SEC and Nasdaq rules. Our Board 37 CORPORATE SOCIAL RESPONSIBILITY AND ESG EFFORTS The Company and our Board maintain a focus on corporate social responsibility and ESG matters that impact our employees, clients and their communities. 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. We continuously look for new and better ways to foster a diverse and inclusive work environment, minimize our environmental footprint and engage our surrounding communities, all while creating value for our stockholders. We are also committed to enhanced transparency of, and best practices in, our corporate responsibility and ESG policies and practices. To further advance our ESG efforts, we formed an ESG Committee during fiscal 2022, with oversight by the Corporate Governance and Nominating Committee of the Board. The ESG Committee is a cross-functional advisory committee comprised of employees from various sectors and geographic locations. It meets quarterly to discuss the Company’s general strategy with respect to ESG matters and makes recommendations to the Company’s executive leadership team on how the Company’s policies, practices and disclosures can respond to current and emerging ESG issues. 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 board members must adhere to at all times in the execution of their duties, and our Corporate Social Responsibility Policy. Our Code of Conduct covers topics such as honest and candid conduct, conflicts of interest, disclosure controls and procedures, 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). Our Corporate Social Responsibility Policy sets forth the principles to which we adhere and that guide our conduct, including our commitment to human rights, diversity and inclusion, labor health and safety, anti-bribery, anti-corruption, community involvement, responsible environmental management and commitment to our people. Diversity, Equity and Inclusion (DE&I) DE&I are critical underpinnings of our shared values and guide our conduct in our interactions with both clients and each other. As a human-first company, we recognize diversity as a strength that is cultivated through our culture, our people, our business and our clients. 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. We believe a diverse workforce is essential to our continued success, and we strive to maintain a diverse and inclusive workforce at all levels. We are proud that 100% of our executive leadership team (i.e., our “Chief” level positions) consists of women or minorities, with our executive leadership team comprised of 67% female and 50% racially and ethnically diverse minorities. Additionally, 40% of our directors on our Board identify as women or minorities, with three directors identifying as female and one director identifying as a racially or ethnically diverse minority. We are also a Paradigm for Parity Coalition company, which is a coalition of companies committed to addressing gender and diversity gaps in corporate leadership. 38 We aim to have a workforce that reflects the diversity of qualified talent that is available in the markets that we serve. As of November 2021, 65.3% of our U.S.-based employees identified as minorities or women. Our gender and racial diversity representation in the C-suite positions, Board and U.S.-based workforce is presented in the following table: Diversity Representation* * -- Data for our C-suite and Board is as of the date of this Proxy Statement and data for our total U.S.-based employees is as of November 2021. In fiscal 2022, we continued our Diversity Council and DE&I Ambassador programs, consisting of employees representing a cross-section of functions and levels across the globe. The Diversity Council serves an important role 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. Our Diversity Council hosts periodic town hall meetings that are accessible to our global workforce. In these meetings, our council discusses the current year’s DE&I initiatives and strategy for execution on those initiatives and considers ideas for new DE&I activities raised by the broader employee population. Our fiscal 2022 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. The DE&I Ambassador is a voluntary role, and the team is comprised of employees from a variety of functions across the globe. This group’s mission is to spread the culture of DE&I, promote DE&I awareness and engage employees at all levels of the Company through existing business forums, established teams, offices, markets and regions. The DE&I Ambassador teams operate at a regional level and meet quarterly to share success stories and practices across the regions. 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. Since fiscal 2020, we have 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. In fiscal 2022, we continued our 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 28, 2022, we achieved our goal of matching $100,000 in contributions during fiscal 2022. We intend to continue our commitment toward this Fund in fiscal 2023. Employee Wellbeing, Resilience and Growth Employee safety and wellbeing is of paramount importance to us in any year and continued to be of particular focus to us in fiscal 2022. Our Global Business Continuity Team continued to improve our disaster preparedness plans and implement strategies to manage the health and security of our employees, business continuity, client confidence and excellent customer 39 service. In response to the Pandemic, we introduced a work-from-home policy, critical safety and hygiene protocols and a limited business travel directive. We continue to monitor changing government rules and regulations in countries where we operate and have reopened offices in accordance with local health department guidelines. We also provide support to employees who may be particularly impacted by the Pandemic. For example, during the COVID lockdowns in China, we gifted our Chinese employees and their families with boxes of food to help alleviate food shortage problems experienced in the community. We have also evolved our work-from-home policy to a hybrid work policy, where employees are invited to work collaboratively with colleagues in the office but are permitted to work from home as needed or desired. 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 fiscal 2022, we enhanced and promoted programs to support our employees’ physical and mental wellbeing, including the offering of virtual fitness and education classes, and the continuation of the RGP Kids Academy that offers academic and enrichment classes for children and families of our employees. In addition, we continued to support and prepare our internal leaders to lead through this unprecedented time of change by integrating wellness and leadership development topics into our quarterly senior leadership meetings. We also conducted intentional leader listening forums to help guide our leaders establish and manage a return to the office hybrid work approach. Additionally, we offer all employees participation in monthly wellness programs on topics that impact the employee experience and are intended to create a thriving culture centered on health, happiness, and connectivity, and in fiscal 2022, we expanded our Employee Assistance Program, which provides our employees with mental health support and resources, to our global employee population. Building Strong Leaders and Talent Management 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 acclimate employees to the business and promote personal, functional and leadership growth. In fiscal 2022, we facilitated small leader forums to foster peer mentorship opportunities and to support areas where our leaders sought reinforcement in driving alignment and building high performing teams. Successful talent development starts with hiring the right people. We seek to recruit and hire candidates that demonstrate skills and competencies that align with our core values and that have an aptitude to further develop those strengths. After onboarding, we remain dedicated to providing employees with training and development opportunities to allow our employees to progress in their careers. We offer newly hired employees the opportunity to participate in our “RGP U” program to accelerate and support their integration into our organization. This program gives our new hires a connected cohort to drive a sense of belonging early in their career at RGP and offers their leaders a more efficient use of individual coaching time with new employees. 40 In fiscal 2022 we implemented our Global Environmental Responsibility Policy, which sets forth our commitment to operate our business as a responsible corporate citizen dedicated to sound environmental management and with concern for the well-being of our common environment. Our goals are to (1) operate our offices in an environmentally sound manner, (2) conserve natural resources by recycling materials, purchasing recycled materials, and reducing waste produced by our business, (3) reduce our impact on global climate change and pollution by reducing our greenhouse gas emissions through reduced commuting and business travel by our employees and (4) improve our energy conservation and efficiency practices through improved technologies and employee education. 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 52,000 square feet during fiscal 2022 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 U.S. 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. Cumulatively since fiscal 2021, we have reduced our real estate footprint by 112,000 square feet and we have plans to reduce our physical footprint by an additional 83,000 square feet over the next few years. 41 Under our director compensation policy, annual compensation for the members of our Board 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 2022:
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 a
Annual 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 42 Stock Ownership Guidelines for Initial Each newly elected or appointed non-employee director is granted an initial award of restricted stock 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 Provisions Applicable to All Non-Employee Director For fiscal 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 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 Mr. Dimick, Mr. von Maltzan, Mr. Kistinger and Ms. Sarkis each elected to defer their equity award for the 2022 plan year. None of the directors elected to defer their cash compensation for the 2022 plan year. 43 DIRECTOR COMPENSATION — FISCAL The following table presents information regarding the compensation paid for fiscal
44 Aggregate Outstanding Equity Awards The following table presents the aggregate number of outstanding unexercised options to acquire shares of Company common stock,
Stock Ownership Guidelines for Directors
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:
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 at 45 As shown in the table below, as of August 22, 2022, each of our current non-employee directors
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 46 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table contains information about the beneficial ownership of our common stock as of August
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.
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PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
The Audit Committee of the Board 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
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
50 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 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:
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 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 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
51 PROPOSAL 3. APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE RESOURCES At the 2022 Annual Meeting, stockholders will be asked to approve an amendment and restatement of the Resources Connection, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”), which would increase the maximum number of shares of our common stock authorized for issuance under the ESPP by an additional 1,500,000 shares. This amendment and restatement was adopted, subject to stockholder approval, by our Board on August 18, 2022. Under Section 423 of the Internal Revenue Code, we may not increase the ESPP share limit without stockholder approval. Currently, a total of 1,825,000 shares of our common stock are authorized for issuance under the ESPP. Of these shares, 1,335,583 shares have previously been purchased and 489,417 shares remain available for purchase in the current and future offering periods as of August 22, 2022. If stockholders approve the amendment and restatement of the ESPP, the maximum number of shares that may be issued under the ESPP will increase from 1,825,000 shares to 3,325,000 shares. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the U.S. Internal Revenue Code. It provides each of our eligible employees with an opportunity to purchase shares of the Company’s common stock at a discount through accumulated payroll deductions. The Board believes that maintaining an ESPP will help us retain and motivate eligible employees and will help further align the interests of eligible employees with those of our stockholders. Key features of our current stock purchase program are as follows:
STOCKHOLDER APPROVAL REQUIREMENT Unless and until our stockholders approve the amended and restated version of the ESPP, the ESPP will continue to operate in accordance with its current terms and from the shares currently available for issuance under the ESPP without regard to the amendment and restatement being proposed in this Proposal 3. Our Board approved the additional share authority requested under the ESPP to help ensure that a sufficient reserve of common stock remains available for issuance under the ESPP to allow us to continue the plan in the future. Our Board recommends that stockholders vote FOR this Proposal 3 to approve the amendment and restatement of the 2019 Employee Stock Purchase Plan. Our executive officers are eligible to participate in the ESPP and thus have a personal interest in the approval of the proposed amendment and restatement of the ESPP. In the event the stockholders do not approve the proposed amendment and restatement of the ESPP, the ESPP will continue in operation pursuant to its current terms with no change to the 1,825,000 shares that are currently authorized for issuance under the ESPP. 52 SUMMARY DESCRIPTION OF THE RESOURCES CONNECTION, INC. 2019 EMPLOYEE STOCK PURCHASE PLAN (AS AMENDED AND RESTATED) The principal terms of the ESPP (as proposed to be amended and restated) are summarized below. The following summary is qualified in its entirety by the full text of the ESPP (as proposed to be amended and restated), which is included as Annex A to this Proxy Statement. Purpose. The purpose of the ESPP is to provide eligible employees with an opportunity to purchase shares of the Company’s common stock at a favorable price and upon favorable terms in consideration of the participating employees’ continued services. The ESPP is intended to provide an additional incentive to participating eligible employees to remain in the Company’s employ and to advance the best interests of the Company and its stockholders. Offering Periods and Purchase Dates. Shares of the Company’s common stock are offered under the ESPP through a series of offering periods. Offering periods are generally six months in duration, but the administrator may provide in advance that a particular offering period will be of a different duration. However, an offering period may not be shorter than three months and may not be longer than 27 Participants in the ESPP generally may not accrue rights to purchase stock under all employee stock purchase plans (as described in Section 423 of the U.S. Internal Revenue Code) of the Company and its subsidiaries at a rate exceeding $25,000 (based on the fair market value of the stock at the beginning of the applicable offering period) for each calendar year in which the purchase right is outstanding. Shares Available. Currently, a total of 1,825,000 shares of our common stock are authorized for issuance under the plan. As noted above, as of August 22, 2022, 1,335,583 shares have previously been purchased and 489,417 shares remain available for purchase in the current and future offering periods. If stockholders approve this Proposal 3, the total number of shares of our common stock authorized for issuance under the ESPP will be increased by an additional 1,500,000 shares, from 1,825,000 shares to 3,325,000 shares. Anti-dilution Adjustments. As is customary in stock incentive plans of this nature, the number and kind of shares available under the ESPP, as well as ESPP purchase prices and share limits, are subject to adjustment in the case of certain corporate events. These events include reorganizations, mergers, combinations, consolidations, recapitalizations, reclassifications, stock splits, stock dividends, asset sales or other similar unusual or extraordinary corporate events, or extraordinary dividends or distributions of property to the Company’s stockholders. Eligibility and Participation. All persons who are employed by the Company or designated subsidiaries at the start of an offering period, including officers and employee directors, and who have been employed for at least 90 days, are generally eligible to participate in the ESPP for that offering period. An eligible employee may become a participant by completing a stock purchase agreement authorizing payroll deductions and filing it with the Company’s payroll office prior to the applicable enrollment date. Payroll deductions are generally limited to 15% of each participant’s compensation. A participant generally cannot purchase more than 3,000 shares of common stock under the ESPP with respect to any one offering period. The plan administrator may adjust such 15% and 3,000 share limits prior to the start of an offering period without stockholder approval. A participant generally may elect to terminate and/or withdraw his or her contributions during an offering period, and participation ends automatically on a participant’s termination of employment. If a participant’s participation in the ESPP terminates during an offering period, he or she will no longer be permitted to make contributions to the ESPP for that Offering Period and the contributions previously credited to his or her ESPP account generally will be refunded to the participant in cash. However, a participant’s termination from participation will not have any effect upon his or her ability to participate in any succeeding offering period, provided that the applicable eligibility and participation requirements are again then met. As of August 22, 2022, approximately 3,400 employees of the Company and its designated subsidiaries (including all of the Company’s executive officers) were eligible to participate in our ESPP. 53 No employee can participate in the ESPP if, after entering the offering period, he or she would be deemed to own stock of the Company possessing more than five percent of the total combined voting power of all of the Company’s outstanding stock. Transfer Restrictions. A participant’s rights with respect to purchase rights under the ESPP, as well as contributions credited to his or her ESPP account, may not be assigned, transferred, pledged or otherwise disposed of in any way except by will or the laws of descent and distribution. Administration, Amendment and Termination of the Plan. The ESPP is administered by the Board or by a committee appointed by the Board. Currently, the Compensation Committee of our Board administers the ESPP. Our Board may amend, modify or terminate the plan at any time and in any manner, and to construe and interpret the ESPP, provided that the existing rights of participants are not materially adversely affected thereby. The ESPP administrator also may, from time to time, without stockholder approval and without limiting our Board of Director’s amendment authority, designate those subsidiaries of the Company whose employees may participate in the ESPP and, subject only to certain limitations under the U.S. Internal Revenue Code, change the ESPP’s eligibility rules. The administrator also may adopt rules, procedures or sub-plans applicable to particular subsidiaries or locations (for example and without limitation, as to participants employed in a particular jurisdiction outside of the U.S. who are subject to other applicable laws and regulations), which sub-plans may be designed to be outside of the scope of Section 423 of the Internal Revenue Code and need not comply with the otherwise applicable provisions of Section 423 of the Internal Revenue Code. Decisions of the ESPP administrator with respect to the ESPP are final and binding on all persons. Stockholder approval for any amendment will only be required to the extent necessary to meet the requirements of Section 423 of the Internal Revenue Code or to the extent otherwise required by law or Nasdaq rules. If stockholders approve the ESPP and unless previously terminated by our Board, no new offering periods will commence on or after July 16, 2029, or, if earlier, when no shares remain available for issuance under the ESPP. No Limit on Other Plans. The ESPP does not limit the ability of the Board or any committee of the Board to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority. U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE
If the participant holds the shares for the Required Holding Period and then sells the shares at a price in excess of the purchase price paid for the shares, the gain on the sale of the shares will be taxed as ordinary income to the participant to the extent of the lesser of (1) the amount by which the fair market value of the shares on the first day of the offering period in which the participant acquired the shares exceeded the purchase price of the shares, or (2) the gain on the sale of the shares. Any portion of the participant’s gain on the sale of the shares not taxed as ordinary income will be taxed as long-term capital gain. If the participant holds the shares for the Required Holding Period and then sells the shares at a price less than the purchase price paid for the shares, the loss on the sale will be treated as a long-term capital loss to the participant. The Company will not be entitled to a tax deduction with respect to any shares held by the participant for the Required Holding Period, regardless of whether the shares are eventually sold at a gain or a loss. 54 The participant has a “Disqualifying Disposition” if the participant disposes of the shares before the participant has held the shares for the Required Holding Period. If the participant sells the shares in a Disqualifying Disposition, the participant will realize ordinary income in an amount equal to the difference between the fair market value of the shares on the date on which the participant acquired the shares and the purchase price paid for the shares, and the Company generally will be entitled to a corresponding tax deduction. In addition, if the participant makes a Disqualifying Disposition of the shares at a price in excess of the fair market value of the shares on the purchase date, the participant will realize capital gain in an amount equal to the difference between the selling price of the shares and the fair market value of the shares on the purchase date. Alternatively, if the participant makes a Disqualifying Disposition of the shares at a price less than the fair market value of the shares on the purchase date, the participant will realize a capital loss in an amount equal to the difference between the fair market value of the shares on the purchase date and the selling price of the shares. The Company will not be entitled to a tax deduction with respect to any capital gain realized by the participant. SPECIFIC BENEFITS UNDER THE ESPP Participation in the ESPP is voluntary and is dependent on each eligible employee’s election to participate and his or her determination as to the amount of contributions set aside to purchase shares under the ESPP (subject to the limits discussed above). Accordingly, future purchases under the ESPP are not determinable. If the share increase reflected in this Proposal 3 had been in effect for fiscal 2022, we do not expect that the number of shares purchased by participants in the plan during that year would have been materially different than the number of shares purchased under the ESPP as set forth in the table below. For the six-month offering periods that ended in the Company’s fiscal 2020, fiscal 2021, and fiscal 2022, and for the first offering period in fiscal 2023 that occurred in July 2022, the total number of shares of our common stock purchased under the ESPP was 184,222, 506,715, 461,992 and 182,654 shares, respectively. The ESPP was only in place for one offering period in fiscal 2020 and 215,379 shares were purchased in fiscal 2020 under our predecessor Employee Stock Purchase Plan. However, because benefits under the ESPP may change based on any number of variables, including, without limitation, the fair market value of the Company’s common shares at various future dates, the number of our employees who elect to participate in the ESPP, and the amount employees elect to contribute, it is not possible to determine the benefits that will be received by employees if the proposed ESPP amendment and restatement is approved by stockholders, but we currently estimate that the 1,989,417 shares that will be available for issuance under the ESPP if stockholders approve this Proposal 3 (the 489,417 shares currently available for issuance under the ESPP as of August 22, 2022 plus the proposed 1,500,000 additional shares) will last approximately three to four years based on the closing price of a share of the Company’s common stock as of August 22, 2022, the approximately 700 eligible employees participating in the ESPP as of that date and their contribution elections then in effect. The closing market price for a share of the Company’s common stock as of August 22, 2022 was $20.97 per share. 55 AGGREGATE PAST PURCHASES UNDER THE EMPLOYEE STOCK PURCHASE PLAN As of August 22, 2022, 1,335,583 shares of the Company’s common stock had been purchased under the ESPP. The following number of shares had been purchased under the ESPP as of the date by the persons and groups identified below:
56 EQUITY COMPENSATION PLAN INFORMATION The following table sets forth, for the Company’s compensation plans under which equity securities of the Company are authorized for issuance, the number of shares of the Company’s common stock subject to outstanding options, warrants, and rights, the weighted-average exercise price of outstanding options, warrants, and rights, and the number of shares remaining available for future award grants as of May 28, 2022:
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD The affirmative vote of a majority in voting power of the shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal is required for approval of the amended and restated ESPP. The Board believes that approval of the amended and restated ESPP will promote the interests of the Company and its stockholders and continue to enable the Company to attract, retain and award persons important to its success. All of our executive officers are eligible to participate in the ESPP and thus have a personal interest in the approval of the amended and restated ESPP.
57 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 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 The Company’s NEOs for fiscal 2022 are:
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Fiscal 20172022 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 2022 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:
We achieved revenue of $583.4 million;
We generated $18.7 million in net income;
2022:
• | We achieved revenue of $805.0 million for fiscal year 2022, which represents a 27.9% increase in revenue year-over-year; | |
• | We realized a 540 basis point improvement in the selling, general and administrative expenses as a percentage of revenue from 33.3% in fiscal 2021 to 27.9% in fiscal 2022; | |
• | We generated $67.2 million in net income for fiscal year 2022; | |
• | We achieved Adjusted EBITDA of | |
• | We realized an Adjusted EBITDA Margin of 12.8% for fiscal year 2022(6), up 440 basis points compared to fiscal year 2021; | |
• | We produced diluted earnings per share of $2.00 for fiscal year 2022; | |
• | We generated $49.4 million in cash flow from operations; | |
• | We returned $18.6 million to stockholders in fiscal 2022 through the Company’s dividend program; | |
• | We retained 75% of our top 100 clients; and | |
• | We ended fiscal year 2022 with $104.2 million in cash and cash equivalents. |
Highlights of the executive compensation program for fiscal 2022 include:
• | Base Salaries. The Company increased the base salary of our Chief Financial Officer to better align her base salary with the average base salary of the CFOs in the Company’s peer group. No other change was made to the base salaries of our other NEOs during fiscal 2022. |
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We generated $28.3 million in cash flow from operations;
(5) | See |
(6) | Adjusted EBITDA Margin |
We returned $133.1 million to shareholders in fiscal 2017 through the Company’s dividend program and the repurchase58
We retained 100% of our top 50 clients from fiscal 2016 in fiscal 2017; and
We closed fiscal 2017 with $62.3 million in cash and cash equivalents.
Highlights of the executive compensation program for fiscal 2017 include:
• |
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Annual Incentives. |
For fiscal 2022, the Compensation Committee set challenging performance |
Ms. Duchene was awarded a total annual incentive of $438,685, representing 33% of her maximum award opportunity or 75% of her target annual incentive opportunity; and
Mr. Mueller was awarded a total annual incentive of $251,904, representing 45% of his maximum award opportunity or 90% of his target annual incentive opportunity.
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.
• | Ms. Duchene, our President and Chief Executive Officer, was awarded a total annual incentive of $2,100,000, representing 93.3% of her maximum award opportunity or 280% of her target annual incentive opportunity; | |
• | Ms. Ryu, our Executive Vice President and Chief Financial Officer, was awarded a total annual incentive of $980,000, representing 93.3% of her maximum award opportunity or 280% of her target annual incentive opportunity; and | |
• | Mr. Brackney, our President and Chief Operating Officer, was awarded a total annual incentive of $1,680,000, representing 93.3% of his maximum award opportunity or 280% of his target annual incentive opportunity. |
• | Performance-Based Long-Term Incentives. | |
The remaining 50% of the NEOs’ annual equity incentive awards were granted in the form of time-based RSUs that vest over a four-year period. |
• | Stock Ownership Guidelines. To help focus our NEOs on long-term stockholder value, we maintain guidelines requiring our NEOs to own a significant amount of the Company’s stock. See “Stock Ownership Guidelines for NEOs” below. |
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.
(7) | 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. |
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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. |
As illustrated in the charts below, for fiscal 2022 approximately 79% of our Chief Executive Officer’s and Chief Operating Officer’s, and approximately 65% of our Chief Financial Officer’s, target total direct compensation(8) was not guaranteed but rather was tied to metrics related to Company performance and/or stock price, and therefore meaningfully “at risk”. Furthermore, approximately half of our NEOs’ target total direct compensation is tied to the Company’s financial performance.
• | 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.
(8) | 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 target number of shares subject to the award) of annual long-term incentive awards granted to the NEO in fiscal 2022. |
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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 | |
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 2017,2022, 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 other than the introduction of PSUs into the mix of equity awards granted 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, in2022. In order to assist the Compensation Committee’s evaluation of executive compensation during fiscal 2022, 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 its decision makingtheir decision-making 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 2017,2022, 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,Institutional Shareholder Services (“ISS”), include in our services sector peer group, the Compensation Committee determined that all the companies that constituted our peer group for our fiscal 20162021 executive compensation decisions would be largely the same for our fiscal 20172022 executive compensation decisions, except that The Corporate Executive Board Company was removed from the group due to its acquisition by Gartner, Inc. in 2017.decisions. For fiscal 2017,2022, the peer group consisted of the following ten professional
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services companies, and we believe it reflects the competitive landscape in which the Company operates and competes for talent.
Peer Group Companies
The chart below contains information on
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 62 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 Elements of Pay for Named Executive Officers
The Compensation Committee generally reviews the base salary paid to each NEO on an annual In determining whether base salary increases for fiscal 2022 for the NEOs were appropriate,
Column (c) of the “Summary Compensation Table — Fiscal The
63 (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.
As
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 2022, the quantitative multiplier would be equal to 75% of the target annual incentive. For Adjusted EBITDA Percentage or Revenue performance 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
64 The qualitative performance multiplier portion of
For fiscal Ms. Duchene:
Ms. Ryu:
Mr. Brackney:
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There was no specific weighting of these particular factors.
Based upon all of the foregoing, as well as its general assessment of competitive compensation practices, the Compensation Committee
The amounts paid to each participating NEO in respect of his or her annual incentive compensation opportunity under the EIP for fiscal
The Company’s view is that the NEOs’ long-term compensation should be directly linked to the value provided to our stockholders. In November 2021, the Compensation Committee granted each NEO a number of time-based RSUs and a “target” number of PSUs, each expressed as a dollar value that was then converted into a number of RSUs/PSUs based on the Company’s stock price
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 66 Compensation Committee determined that an increased equity award value for each NEO for fiscal 2022 was appropriate to better align each NEO’s total direct compensation with the median total direct compensation received by similarly situated executives at the Company’s
Fiscal 2022 PSUs. The
For Adjusted EBITDA Percentage or Revenue performance between the
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During fiscal Change In Control and Severance Benefits
The section below. Stock Ownership Guidelines for NEOs We maintain ownership guidelines for
Stock that counts towards satisfaction of the ownership guidelines (“Qualifying Shares”) includes:
All 68 Table of
Insider Trading Policy Summary The Company’s directors, officers and employees worldwide Tax Deductibility of Executive Compensation
In August 2022, the Compensation Committee approved the Company’s executive compensation program for fiscal 2023 and reviewed each NEO’s base salary and target annual cash incentive compensation (the “target annual cash compensation”). In determining each NEO’s target annual cash compensation for fiscal 2023, the Compensation Committee considered each NEO’s length of service and performance in 69 The Compensation Committee also increased Ms. Duchene’s target annual cash incentive opportunity for fiscal 2023 by $75,000 to $825,000, and increased Ms. Ryu’s and Mr. Brackney’s target annual cash incentive compensation opportunities for fiscal 2023 by $50,000 each to $400,000 and $650,000, respectively. The Compensation Committee determined that these changes resulted in each NEO’s target annual cash compensation 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
The Compensation Committee members whose names appear on the Compensation Committee Report above served as members of the Compensation Committee for all of fiscal 70 EXECUTIVE COMPENSATION TABLES FOR FISCAL Summary Compensation Table — Fiscal The following table presents information regarding compensation of our NEOs for services rendered during fiscal years
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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.
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. 72 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
Grants of Plan-Based Awards in Fiscal The following table presents information regarding (i) the
Description of Plan-Based Awards For information on the 73 Outstanding Equity Awards at Fiscal The following table presents information regarding the outstanding equity awards held by each NEO as of May
Name Anthony Cherbak Nathan W. Franke
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Option Exercises and Stock Vested in Fiscal The following table
75 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.
Severance Benefits The following sections describe the severance benefits provided under each of the NEOs’ employment Kate W. Duchene Termination Without Cause or for Good Reason; Non-Renewal of Agreement 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. Death or Jennifer Y. Ryu
Termination Without Cause or for Good Reason; Non-Renewal of Agreement lump sum cash payment equal to (a) one and one-half times 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. 76 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) her 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 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. In the event that Mr. Brackney’s employment terminates due to his death or disability,
The PSU award agreements provide that in the event that an NEO’s employment terminates prior to the end of the performance period by the Company without 77 Estimated Severance and
The following table presents the Company’s estimate of the amount of the benefits to which
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As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is providing the following disclosure about the relationship of the median of the total annual compensation of all of our employees (other than our Chief Executive Officer) to the total annual compensation of Ms. Duchene, our President and Chief Executive Officer. We believe the pay ratio disclosed below is a reasonable estimate calculated in a matter consistent with Item 402(u) of Regulation S-K. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and exclusions and to make reasonable assumptions and estimates and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. For fiscal 2022:
Applicable SEC rules permit us to use the same median employee in calculating the pay ratio above as the median employee we identified in 2021 in presenting the pay ratio in our proxy statement for our annual meeting of stockholders held in 2021 (the “2021 median employee”) if there have been no changes that we reasonably believe would significantly affect this pay ratio disclosure and to substitute another employee for the median employee in certain circumstances. We believe that there have been no changes to our employee population or compensation arrangements that would result in a significant change to the pay ratio disclosure. Accordingly, the median employee used in calculating the pay ratio above was the 2021 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 2022 Summary Compensation Table. 79 PROPOSAL 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 For fiscal 2022, approximately 79% 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”. Furthermore, approximately half of our NEOs’ target total direct compensation is tied to the Company’s financial performance. Base Salaries. The Company increased the base salary of our Chief Financial Officer to better align her base salary with the average base salary of the CFOs in the Company’s peer group. No other change was made to the base salaries of our other NEOs during fiscal 2022. Annual Incentives.All of our NEOs participated in our EIP during fiscal 2022. The EIP reflects a pay for performance culture. Incentives are earned based on Company performance, measured by the Company’s Revenue and Adjusted EBITDA Percentage(13)(14), and individual qualitative performance criteria. If the Company does not achieve the threshold level of financial performance under the EIP, the amount payable under the qualitative performance criteria is capped at 50% of the target annual incentive. The maximum amount that may be earned under the EIP is 300% of the target annual incentive. For fiscal 2022, the Compensation Committee set challenging performance goals that exceeded the Revenue and Adjusted EBITDA Percentage achieved under the EIP for fiscal 2021. Given the Company’s strong performance for fiscal 2022, the Company exceeded the “maximum” financial performance goals for both Revenue and Adjusted EBITDA Percentage performance, and as a result the quantitative multiplier under the EIP was equal to the maximum of 200% of the target annual incentive. The Compensation Committee also determined that each of our NEOs achieved each of their individual CRAVE goals for fiscal 2022 and displayed outstanding leadership through continued Pandemic recovery and a tightening labor market, resulting in the achievement of 140% of their EIP qualitative goals designated for fiscal 2022. Accordingly, the Compensation Committee awarded our NEOs annual cash incentives under the EIP for fiscal 2022 as follows:
Ms. Duchene, our President and Chief Executive Officer, was awarded a total annual incentive of $2,100,000, representing 93.3% of her maximum award opportunity or 280% of her target annual incentive opportunity;
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The remaining 50% of the NEOs’ annual equity incentive awards were granted in the form of time-based RSUs that vest over a four-year period. PSUs and RSUs align the interests of our NEOs with 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:
The Compensation Committee annually compares our executive compensation levels and elements with compensation levels and elements
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, target annual incentive and grant date fair value of equity awards granted during the year) that are at or below the median of the peer group companies. We strive to pay for performance in line with Company results and Company-wide
“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. 81 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.
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We file annual, quarterly and special reports, proxy statements and other information with the SEC.
September WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, ALL STOCKHOLDERS ARE REQUESTED TO
83 RESOURCES CONNECTION, INC. 2019 EMPLOYEE STOCK PURCHASE PLAN (As amended and restated on August 18, 2022) The
The purpose of this Plan is to
Capitalized terms used herein which are not otherwise defined shall have the following meanings. “Account” means the bookkeeping account maintained by the Corporation, or by a recordkeeper on “Board” means the “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time. “Commission” means the U.S. Securities and Exchange Commission. “Committee” means the committee appointed by the Board “Common Stock” means the Common Stock, par value $0.01 per share, of the “Compensation” means an Eligible Employee’s regular gross pay. Compensation includes any amounts contributed as salary reduction contributions to a plan qualifying under Section 401(k), 125 or 129 of the “Contributions” means all bookkeeping amounts credited to the
“Effective Date” means June 29, 2019, the date this Plan was adopted by the Board. “Eligible Employee” means any employee of the Corporation, or of any Subsidiary which has been designated in writing by the Committee as a “Participating Subsidiary” (including any Subsidiaries which have become such after the date that this Plan is approved by the stockholders of the Corporation). Notwithstanding the foregoing, “Eligible Employee” shall not include any employee who has not been employed continuously by the Corporation or a Subsidiary for at least the 90 days immediately preceding and including the first day of the applicable Offering Period. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time. “Exercise Date” means, with respect to an Offering Period, the last day of that Offering Period. 84 “Fair Market Value” on any date means:
“Grant Date” means the first day of each Offering Period, as determined by the Committee and announced to potential Eligible Employees. “Offering Period” means the six-consecutive month period commencing on each Grant Date; provided, however, that the Committee may declare, as it deems appropriate and in advance of the applicable Offering Period, a shorter (not to be less than three months) Offering Period or a longer (not to exceed 27 months) Offering Period; provided further that the Grant Date for an Offering Period may not occur on or before the Exercise Date for the immediately preceding Offering Period. “Option” means the stock option to acquire Shares granted to a Participant pursuant to Section 8. “Option Price” means the per share exercise price of an Option as determined in accordance with Section 8(b). “Parent” means any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation in which each corporation (other than the Corporation) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one or more of the other corporations in the chain. “Participant” means an Eligible Employee who has elected to participate in this Plan and who has filed a valid and effective Subscription Agreement to make Contributions pursuant to Section 6. “Plan” means this Resources Connection, Inc. 2019 Employee Stock Purchase Plan, as amended from time to time. “Rule 16b-3” means Rule 16b-3 as promulgated by the Commission under Section 16, as amended from time to time. “Share” means a share of Common Stock. “Subscription Agreement” means the written enrollment agreement or applicable electronic form of enrollment agreement filed by an Eligible Employee with the Corporation (or its designee) pursuant to Section 6 to participate in this Plan. “Subsidiary” means any corporation (other than the Corporation) in an unbroken chain of corporations (beginning with the Corporation) in which each corporation (other than the last corporation) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one or more of the other corporations in the chain. “Tax-Related Items” means any U.S. and non-U.S. federal, provincial, state and/or local taxes (including, without limitation, income tax, social insurance contributions, fringe benefit tax, employment tax, stamp tax and any employer tax liability which has been transferred to a Participant) for which a Participant is liable in connection with his or her participation in the Plan.
Any person employed as an Eligible Employee as of a
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During the term of this Plan, the Corporation will offer Options to purchase Shares in each Offering Period to all Participants in that Offering Period. Unless otherwise specified by the Committee in advance of the
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If any amount which is not sufficient to purchase a whole Share remains in a Participant’s Account after the exercise of his or her Option on the Exercise Date, such amount shall be refunded to such Participant as soon as administratively practicable after such date; provided that the Committee may provide in advance of an Offering Period for If the Share limit of If any amount which exceeds the Individual Limit set forth in
As soon as administratively practicable after the Exercise Date, the Corporation shall, in its discretion, either deliver to each Participant a certificate representing the Shares purchased upon exercise of his or her Option, provide for the crediting of such Shares in book entry form in the name of the
If a Participant ceases to be 88 as of the date that the Participant is no longer an Eligible Employee and the Contributions previously credited to For purposes of this Section 11(a), a Participant’s employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence with the Corporation (or applicable Participating Subsidiary, as the case may be) if
89 not comply with the otherwise applicable provisions of this Plan. The Committee may delegate ministerial non-discretionary functions to third parties, including individuals who are officers or employees of the Corporation or Participating Subsidiaries.
In the event of the death of a Participant, the Corporation shall deliver such Shares and/or cash payable pursuant to the terms hereof to the executor or administrator of the estate of the Participant or to the Participant's legal heirs, as determined by the Committee.
Neither Contributions credited to a Participant’s Account nor any Options or rights with respect to the exercise of Options or right to receive Shares under this Plan may be anticipated, alienated, encumbered, assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 13) by the Participant. Any such attempt at anticipation, alienation, encumbrance, assignment, transfer, pledge or other disposition shall be without effect and all amounts shall be paid and all Shares shall be delivered in accordance with the provisions of this Plan. Amounts payable or Shares deliverable pursuant to this Plan shall be paid or delivered only to (or credit in the name of, as the case may be) the Participant or, in the event of the Participant’s death, to the Participant’s beneficiary pursuant to Section 13. The Corporation may require a Participant to hold any Shares the Participant acquires under this Plan in a brokerage account identified by the Corporation until the date the Shares are transferred, sold or otherwise disposed of in any way by the Participant, or such earlier time as the Corporation may determine.
All Contributions received or held by the Corporation under this Plan will be included in the general assets of the Corporation and may be used for any corporate purpose. Notwithstanding anything else contained herein to the contrary, no interest will be paid to any Participant or credited to his or her Account under this Plan (in respect of Account balances, refunds of Account balances, or otherwise).
Statements shall be provided or made available (in writing or electronically) to Participants as soon as administratively practicable following each Exercise Date. Each Participant’s statement shall set forth, as of such Exercise Date, that Participant’s Account balance immediately prior to the exercise of his or her Option, the Option Price, the number of whole Shares purchased and his or her remaining Account balance, if any.
Upon or in contemplation of any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend), or reverse stock split; any merger, combination, consolidation, or other reorganization; split-up, spin-off, or any similar extraordinary dividend distribution in respect of the Common Stock (whether in the form of securities or property); any exchange of Common Stock or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; or a sale of substantially all the assets of the 90 Corporation as an entirety occurs; then the Committee shall, in such manner, to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances:
The Committee may adopt such valuation methodologies for outstanding Options as it deems reasonable in the event of a cash or property settlement and, without limitation on other methodologies, may base such settlement solely upon the excess (if any) of the amount payable upon or in respect of such event over the Option Price of the Option. In any of such events, the Committee may take such action sufficiently prior to such event to the extent that the Committee deems the action necessary to permit the Participant to realize the benefits intended to be conveyed with respect to the underlying shares in the same manner as is or will be available to stockholders generally. Without limiting the generality of Section 12, any good faith determination by the Committee as to whether an adjustment is required in the circumstances pursuant to this Section 17, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.
Upon a dissolution or liquidation of the Corporation, or any other event described in Section 17 that the Corporation does not survive, or does not survive as a publicly-traded company in respect of its Shares, the Plan and, if prior to the last day of an Offering Period, any outstanding Option granted with respect to that Offering Period shall terminate, subject to any provision that has been expressly made by the Board for the survival, substitution, assumption, exchange or other settlement of the Plan and Options. In the event a Participant’s Option is terminated pursuant to this Section 18 without a provision having been made by the Board for a substitution, exchange or other settlement of the Option, such Participant’s Account shall be paid to him or her in cash without interest.
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All notices or other communications by a Participant to the Corporation contemplated by this Plan shall be deemed to have been duly given when received in the form and manner specified by the Committee (or its delegate) at the
This Plan, the granting of
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Notwithstanding anything else contained herein to the contrary, the effectiveness of this Plan is subject to the approval of this Plan by the stockholders of the
Notwithstanding anything else contained in this Plan herein to the contrary, the Corporation may deduct from a Participant’s Account balance as of an Exercise Date, before the exercise of the Participant’s Option is given effect on such date, the amount of any Tax-Related Items which the Corporation reasonably determines it or any Subsidiary may be required to withhold with respect to such exercise. In such event, the maximum number of whole Shares subject to such Option (subject to the other limits set forth in this Plan) shall be purchased at the Should the Corporation for any 93 right at its option to (i) require the Participant to pay or provide for payment of the amount of any Tax-Related Items which the Corporation or Subsidiary reasonably determines that it or any affiliate is 94 |