UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
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☐ | Soliciting Material Pursuant to |
The TJX Companies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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770 Cochituate Road Framingham, Massachusetts 01701 April Dear We cordially invite you to attend our The proxy statement accompanying this letter describes the business we will consider at the meeting. Please read the proxy statement and vote your shares. Your vote is important regardless of the number of shares you own. Instructions for online and telephone voting are attached to your proxy card. If you prefer, you can vote by mail by completing and signing your proxy card and returning it in the enclosedpre-paid return envelope. We hope that you will be able to join us on June Sincerely,
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS June The
Election of the directors named in this proxy statement
Ratification of appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal
Advisory approval of TJX’s executive compensation (thesay-on-pay vote)
Shareholder proposal for a report on compensation disparities based on race, gender, or ethnicity
Shareholder proposal for a
Shareholder proposal for a report on human rights risks Any other business properly brought before the meeting Shareholders of record at the close of business on April To attend the Annual Meeting, you must show that you were a TJX shareholder at the close of business on April By Order of the Board of Directors, Alicia C. Kelly Secretary Framingham, Massachusetts April YOUR VOTE IS IMPORTANT. PLEASE VOTE ONE OF THE FOLLOWING WAYS:
FISCAL
FISCAL 2019
Our EPS growth continued in fiscal 2019, and our long-term total shareholder return growth rates and annual sales growth continued to be strong relative to our fiscal 2019 peer group (detailed below underCompensation Discussion and Analysis: The Role of Our Peer Group).
2019 Proxy Statement 1
GOVERNANCE HIGHLIGHTS
Board Refreshment. In September 2018, our Board elected Rosemary Berkery to join the Board and to serve on the Audit Committee and the Executive Compensation Committee. Ms. Berkery is included with the other nominees standing for election at this annual meeting; seeProposal 1: Election of Directors, below. In addition, José Alvarez did not stand for election at our last annual meeting and his service on our board ended in June 2018.
Engaging with Shareholders. Our fiscal Corporate Responsibility. Our Corporate Responsibility program reflects our ‘smart for business, good for the world’ thinking. We categorize our global corporate responsibility efforts under four pillars, described further in theCorporate Responsibility section on p. 13 of this proxy statement:
We remain focused on enhancing our
VOTING ITEMS FOR
The Board of Directors of
Election of the directors named in this proxy statement (see p.
Ratification of appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal
Advisory approval of TJX’s executive compensation (thesay-on-pay vote) (see p.
Three shareholder proposals, if properly presented (see proposals starting on p.
If you owned TJX common stock at the close of business on April
If you are ashareholder of record (meaning you hold TJX shares registered in your name),
If you are astreet name holder With proper documentation, you may also vote in person at the meeting. Please seeVoting Requirements and Practices on p. This proxy statement, the proxy card, and the Annual Report to Shareholders for our fiscal year ended February
Please note below other topics included in this proxy statement that may be of interest. This list does not cover all information included in this proxy statement that you should consider. You should review the entire proxy statement carefully before voting your shares.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE
Integrity has always been a core tenet of TJX. We seek to perform with the highest standards of ethical conduct and in compliance with all laws and regulations that relate to our businesses. Our core Board practices and policies are reflected in our Corporate Governance Principles and Director Code of Business Conduct and Ethics. Our Board also maintains written charters for each of our Board committees, discussed further below.
Our Board of Directors is responsible for overseeing the business and affairs of the company, and, as part of this responsibility, for regularly monitoring the effectiveness of management’s implementation of strategy, policies, and decisions. The Board, with management, also believes that the interests of our shareholders are enhanced by responsibly considering the interests of our customers, Associates, suppliers, service providers, and communities where we operate. During the year, our Board reviews our strategies with management, including both our long-term strategy and annual plans for capital allocation and shareholder distributions. For fiscal 2019, strategies The Board also
RISK OVERSIGHT
It is management’s responsibility to manage risk and bring to the Board’s attention risks that are material to TJX. The Board has oversight responsibility for the systems established to report and monitor the most significant risks applicable to TJX. The Board administers its risk oversight role directly and through its committee structure and the committees’ regular communications with the full Board. The committees escalate risks to the full Board as they determine to be appropriate. In general terms:
The Board reviews strategic, financial, and execution risks and exposures associated with the annual plan and multi-year plans; any major litigation and other matters that may present material risk to our operations, plans, prospects, or reputation (including those related to human capital management, supply chain, and environmental sustainability); significant acquisitions and divestitures; and senior management succession planning. The Board receives regular reports from our Chief Risk and Compliance Officer.
The Audit Committee reviews risks associated with financial and accounting matters, including financial reporting, accounting, disclosure, internal controls over financial reporting, ethics and compliance programs, compliance with orders, data security, and cybersecurity, and helps oversee management’s processes to identify the material risks that we face as a company, including through our enterprise risk management program. The Audit Committee receives regular reports from our Chief Risk and Compliance Officer.
The Corporate Governance Committeereviews risks related to Board and CEO evaluations, management succession, and Board composition.
The Executive Compensation Committee (ECC) reviews risks related to executive compensation and the design of our compensation programs, plans, and arrangements.
The Finance Committeereviews risks related to financing plans, investment policies, capital structure and liquidity; tax strategies; foreign currency exchange and commodity hedging policies; insurance programs; and investment performance, asset allocation strategies, and funding of our pension and retirement benefit plans.
LEADERSHIP STRUCTURE
Our Board has separated the role of CEO and Chairman. Carol Meyrowitz has served as Chairman of the Board since June As provided in our Corporate Governance Principles, because our current Chairman is not independent, our independent directors have elected an independent Lead Director, John F. O’Brien, to serve as a liaison between the independent directors, the Executive Chairman, and management. The Board believes that the separate roles of Chairman, Chief Executive Officer, and Lead Director are in the best interests of TJX and its shareholders. Lead Director Role As Lead Director, Mr. O’Brien provides independence in TJX’s Board leadership through his review and approval of Board meeting agendas, his participation in management business review meetings, and his leadership of the independent directors.
Meeting at least quarterly with our Chief Executive Officer and Meeting with other executives and senior leadership as necessary; Generally attending regular management business review meetings; Scheduling meetings of the independent directors; Presiding at meetings of the Board in the Approving Board meeting schedules and Attending the meetings of each Board committee; and Undertaking other responsibilities designated by the independent directors, or as otherwise considered appropriate.
Board Independence
As a result of this review, our Board unanimously determined that 9 directors of our current11-member Board are independent: Zein Abdalla, Board Diversity As a global company with approximately The Corporate Governance Committee does not have a formal diversity policy that is applied when evaluating the suitability of individual Board nominees, but takes diversity, including
diversity of experience. We value the many kinds of diversity reflected in our Board and director nominees. 6 The TJX Companies, Inc. Board Composition
Board Assessment The Board believes it is important to have highly engaged directors and that the Board’s Currently, Director Qualifications and Nominations The Corporate Governance Committee recommends to the Board individuals to be director nominees who, in the opinion of the Committee, have high personal and professional ethics, integrity, and values; have demonstrated ability and judgment; and will be committed to collectively serving the long-term best interests of our shareholders. The
Finding Candidates. The Corporate Governance Committee’s process for identifying and evaluating candidates, including candidates recommended by shareholders, includes actively seeking The Corporate Governance Committee has a policy for shareholder recommendations of candidates for director nominees, which is available on our website. Any shareholder may submit, in writing, one candidate for consideration for each shareholder meeting at which directors are to be elected. Shareholders wishing to recommend a candidate must submit the recommendation by a date not later than the 120th calendar day before the first anniversary of the date that we released our proxy statement to shareholders in connection with the previous year’s annual meeting. Recommendations should be sent to the Corporate Secretary of TJX: Office of the Secretary/Legal Department The TJX Companies, Inc. 770 Cochituate Road Framingham, Massachusetts 01701 As described in the policy, a recommendation must provide specified information about the candidate as well as certifications from, and consents and agreements of, the candidate. The Corporate Governance Committee evaluates candidates for the position of director recommended by shareholders in the same manner as candidates from other sources. The Corporate Governance Committee will determine whether to interview any candidates and may seek additional information about candidates from third-party sources. Majority Voting Ourby-laws provide for the election of directors in an uncontested election by a majority of the shares properly cast at the meeting. Our Corporate Governance Principles require any incumbent nominee for director to provide an irrevocable contingent resignation to the Corporate Secretary of TJX at least 14 days in advance of the distribution date for proxy solicitation materials for the shareholder meeting at which such director is expected to be nominated to stand for election. This resignation would be effective only if (a) the director fails to receive the requisite majority vote in an uncontested election and (b) the Board accepts the resignation. Our Corporate Governance Principles provide procedures for the consideration of this kind of resignation by the Board. Within 90 days of the date of the annual meeting of shareholders, the Board, with the recommendation of the Corporate Governance Committee, will act upon such resignation. In making its decision, the Board will consider the best interests of TJX and its shareholders and will take what it deems to be appropriate action, which may include accepting or rejecting the resignation or taking further measures to address those concerns that were the basis for the underlying shareholder vote. Board Service Policies Under our Corporate Governance Principles, directors who are CEOs of public companies should not serve on more than two boards of public companies besides their own, and no director should serve on more than five boards of public companies, including the TJX Board. Under our Audit Committee Charter, members of the Audit Committee should not serve on the audit committee of more than two other public companies. When a director’s principal occupation or business association changes during his or her tenure as a director, our Corporate Governance Principles provide that the director is required to tender his or her resignation from the Board, and the Corporate Governance Committee will recommend to the Board any action to be taken with respect to the resignation. Stock Ownership Guidelines for Directors. Our Corporate Governance Principles provide that anon-employee director is expected to attain stock ownership with a fair market value equal to at least five times the annual retainer paid to the director within five years of initial election to the Board.
Board Attendance. During fiscal
The Board of Directors has five standing committees: Audit, Corporate Governance, Executive Compensation, Finance, and an Executive Committee, each described in more detail below. All members of the Audit, Corporate Governance, Executive Compensation, and Finance Committees arenon-employee directors and meet the independence standards adopted by the Board in compliance with NYSE listing standards for that committee. The Executive Committee includes our Executive Chairman who is not independent. While each committee has specific, designated responsibilities, each committee may act on behalf of the entire Board to the extent designated by the respective charter or otherwise by the Board. The Corporate Governance Committee annually reviews and makes recommendations on the composition of our standing committees. Our committees regularly invite all other Board members to join their meetings and, as necessary, otherwise report on their activities to the entire Board. Our Lead Director attended all committee meetings during fiscal 2019. The table below provides information about current membership and the meetings of these committees during fiscal
Each director attended at least 75% of all meetings of the Board and committees of which he or she was then a member.
AUDIT COMMITTEE
Mr. Hines, Chairman; The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the company’s financial statements and assists the Board in its oversight of the integrity of the Company’s financial
reviewing and discussing with management, internal auditors, and the independent registered public accounting firm our quarterly and annual financial statements, including the accounting principles and procedures applied in their preparation and any changes in accounting policies;
monitoring our system of internal financial controls and accounting practices;
2019 Proxy Statement 9 overseeing the audit process, including the annual audit;
overseeing our compliance and ethics programs;
overseeing, in conjunction with the Board, our enterprise risk management program; establishing and maintaining procedures for receipt, retention, and treatment of complaints, including the confidential and anonymous submission of complaints by
selecting, retaining, negotiating, and approving the compensation of, overseeing, and if necessary, replacing, the independent registered public accounting firm;
pre-approving all work by the independent registered public accounting firm; and
other matters as the Board considers appropriate. As part of these responsibilities, in addition to assuring the regular rotation of the lead partner of the independent auditor, as required by law, the Audit Committee, including its Chairman, is involved in the selection of, and reviews and evaluates the performance of, the independent auditor, including the lead audit partner, and further considers whether there should be regular rotation of the audit function among firms. Please see the Audit Committee charter, available on our website, tjx.com, for further details.
CORPORATE GOVERNANCE COMMITTEE
Ms. Shire, Chairman; Mr. Abdalla; Mr. The Corporate Governance Committee’s responsibilities include, among other things:
recommending director nominees to the Board;
developing, recommending to the Board, and reviewing corporate governance principles;
in concert with the Board, reviewing our policies with respect to significant issues of corporate social and public responsibility, including political contributions and activities, environmental and sustainability activities, and charitable giving;
reviewing practices and policies with respect to directors and the structure and frequency of Board meetings;
reviewing the functions, duties, and composition of the committees of the Board and making recommendations regarding compensation for Board and committee members;
recommending processes for the annual evaluations of the performance of the Board, each individual director, the Chairman, the independent Lead Director, and each committee and its
establishing performance objectives for the Chief Executive Officer and annually evaluating the performance of the Chief Executive Officer against such objectives; and
overseeing the maintenance and presentation to the Board of management’s plans for succession to senior management positions. Please see the Corporate Governance Committee charter, available on our website, tjx.com, for further details.
EXECUTIVE COMPENSATION COMMITTEE
Mr. Bennett, Chairman; The ECC’s responsibilities include, among other things:
reviewing and approving the structure and philosophy of compensation of the Chief Executive Officer, other executive officers, and senior Associates;
approving the compensation and benefits, including awards of stock options, bonuses, and other awards and incentives, of our executive officers and other Associates in those categories as are from time to time identified by the ECC;
determining the compensation of the Chief Executive Officer, including awards of stock options, bonuses, and other awards and incentives, based on the evaluation by the Corporate Governance Committee of the performance of the Chief Executive Officer and such other factors as the ECC deems relevant;
determining the performance goals and performance criteria under our incentive plans;
approving the terms of employment of our executive officers, including employment and other agreements with such officers;
overseeing the administration of our incentive plans and other compensatory plans and funding arrangements; and
reviewing and undertaking other matters that the Board or the ECC deems appropriate, such as the review of our succession plan for the Chief Executive Officer and other executive officers. Pursuant to its charter, the ECC may delegate its authority to a subcommittee or to such other person that the ECC determines is appropriate and is permitted by applicable law, regulations, and listing standards. The ECC also reviews our compensation policies and practices for our Associates to determine whether they give rise to risks that are reasonably likely to have a material adverse effect on the company. SeeCompensation Program Risk Assessment, below. Please see the ECC charter, available on our website, tjx.com, for further details.
FINANCE COMMITTEE
Ms. Lane, Chairman; Mr. Abdalla; Mr. Bennett; and Mr. Hines The Finance Committee is responsible for reviewing and making recommendations to the Board relating to our financial activities and condition. The Finance Committee’s responsibilities include, among other things:
reviewing and making recommendations to the Board with respect to our financing plans and strategies; financial condition; capital structure; tax strategies, liabilities, and payments; dividends; stock repurchase programs; and insurance programs;
approving our cash investment policies, foreign exchange risk management policies, commodity hedging policies, capital investment criteria, and agreements for borrowing by us and our subsidiaries from banks and other financial institutions; and
reviewing investment policies as well as the performance and actuarial status of our pension and other retirement benefit plans. Please see the Finance Committee charter, available on our website, tjx.com, for further details.
EXECUTIVE COMMITTEE
Ms. Meyrowitz, Chairman; Ms. Lane; and Mr. O’Brien The Executive Committee meets at such times as it determines to be appropriate and has the authority to act for the Board on specified matters during the intervals between meetings of the Board.
COMPENSATION PROGRAM RISK ASSESSMENT
As part of our regular enterprise risk assessment process overseen by the Board and described above, we review the risks associated with our compensation plans and arrangements. In fiscal The assessment was led by our Chief Risk and Compliance Officer, whose responsibilities include leadership of our enterprise risk management process, and included consultation with and input from, among others, executive officers,
The assessment also considered the balance of potential risks and rewards related to our compensation programs and the role of those programs in implementing our corporate strategy.
CODES OF CONDUCT AND ETHICS AND OTHER POLICIES
Global Code of Code of Ethics for TJX Executives and Director Code of Business Conduct and Ethics. As noted above, we have a Director Code of Business Conduct and Ethics that is designed to promote honest and ethical conduct; compliance with applicable laws, rules, and regulations; and the avoidance of conflicts of interest for our Board members. We also have a Code of Ethics for TJX Executives governing our Executive Chairman, Chief Executive Officer and President, Chief Financial Officer, and other senior operating, financial, and legal executives. The Code of Ethics for TJX Executives is designed to ensure integrity in our financial reports and public disclosures. We intend to disclose any future amendments to, or waivers from, the Code of Ethics for TJX Executives and the Director Code of Business Conduct and Ethics, as required, within four business days of the waiver or amendment through a posting on our website or by filing a Current Report on Form8-K with the Securities and Exchange Commission, or SEC.
ONLINE AVAILABILITY OF INFORMATION
Our Corporate Governance Principles, Global Code of Conduct, Code of Ethics for TJX Executives, Director Code of Business Conduct and Ethics, and charters for our Audit, Corporate Governance, Executive, Executive Compensation, and Finance Committees are available on our website, tjx.com, in theInvestors section under Governance: Governance Documents. Information appearing on tjx.com is not a part of, and is not incorporated by reference in, this proxy statement.
For more than Our evolving global corporate responsibility
Our Workplace, which reflects our commitment to our Associates worldwide, including fostering
Our Communities, which focuses on our mission to help vulnerable families and children access the resources and opportunities they need to build a better future. Through charitable giving, volunteer efforts, community partnerships, andin-store fundraising, we
Environmental Sustainability, which reflects our longstanding commitment to pursue initiatives that are smart for our business and good for the environment. We have continually focused on meaningful initiatives that are aligned with our business goals to help reduce our environmental impact, drive operational cost reductions, and demonstrate our ongoing commitment to environmental sustainability. Key initiatives include increasing energy efficiency, reducing fuel usage, participating in recycling and waste management, and developing greener building designs. We remain focused on reducing our carbon footprint and are driving towards the achievement of our greenhouse gas (GHG) reduction goal, which is to reduce our global GHG emissions
Responsible Business, which reflects our commitment to operating ethically, sourcing responsibly, We remain focused on 2019 Proxy Statement 13
We are interested in hearing from our shareholders and communicate regularly with shareholders throughout the year. Security holders and other interested parties may communicate directly with our Board, thenon-management directors or the independent directors as a group, the Lead Director, or any other specified individual director or directors. To contact us, address your correspondence to the individual or group you would like to reach and send it to us, c/o the Corporate Secretary, who will forward these communications to the appropriate group or individual: Office of the Secretary/Legal The TJX Companies, Inc. 770 Cochituate Road Framingham, Massachusetts 01701
Audit Committee, c/o Corporate Internal Audit Director, The TJX Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701.
TRANSACTIONS WITH RELATED PERSONS
Under its charter, the Corporate Governance Committee is responsible for reviewing and approving or ratifying any transaction in which, in addition to TJX, any of our directors, director nominees, executive officers (or their immediate family members), or any greater than 5% shareholders (or their immediate family members) is a participant and has a direct or indirect material interest, as provided under SEC rules. In the course of reviewing potential related person transactions, the Corporate Governance Committee considers the nature of the related person’s interest in the transaction; the presence of standard prices, rates, or charges or terms otherwise consistent with arms-length dealings with unrelated third parties; the materiality of the transaction to each party; the reasons for TJX entering into the transaction with the related person; the potential effect of the transaction on the status of a director as an independent, outside, or disinterested director or committee member; and any other factors the Corporate Governance Committee may deem relevant. Our General Counsel’s office is primarily responsible for the implementation of processes and procedures for screening potential transactions and providing information to the Corporate Governance Committee. During fiscal
The Audit Committee operates in accordance with a written charter adopted by the Board and reviewed annually by the Committee. We are responsible for overseeing the quality and integrity of TJX’s accounting, auditing and financial reporting practices. The Audit Committee is composed solely of members who are independent, as defined by the NYSE and TJX’s Corporate Governance Principles. Further, the Board has determined that two of our members (Mr. Hines and Ms. Lane) are audit committee financial experts as defined by the rules of the SEC. 14 The TJX Companies, Inc. We met We took numerous actions to discharge our oversight responsibility with respect to the audit process. We reviewed and discussed the audited financial statements of TJX as of and for fiscal We reviewed and discussed with PwC communications required by the Standards of the PCAOB (United States), as described in PCAOB Auditing Standard 1301, “Communication with Audit Committees,” and, with and without
management present, discussed and reviewed the results of PwC’s examination of TJX’s financial statements. We also discussed the results of the internal audit examinations with and without management present. Based on these reviews and discussions with management and PwC, we recommended to the Board that TJX’s audited financial statements be included in its Annual Report on Form10-K for fiscal Audit Committee Michael F. Hines,Chairman
David T. Ching Amy B. Lane
AUDITOR FEES
The aggregate fees that TJX was billed for professional services rendered by PwC for fiscal
Audit fees were for professional services rendered for the audits of TJX’s consolidated financial statements including financial statement schedules and statutory and subsidiary audits,
Audit related fees were for consultations concerning financial accounting and reporting standards and employee benefit plan
Tax fees were for services related to tax compliance, planning and advice, including assistance with tax audits and appeals,
All other fees were primarily for services related to our environmental sustainability 2019 Proxy Statement 15 The Audit Committee is responsible for the audit fee negotiations associated with the company’s retention of PwC. The Audit Committeepre-approves all audit services and all permittednon-audit services by PwC, including engagement fees and terms. The Audit Committee has delegated the authority to take such action between meetings to the Audit Committee chairman, who reports the decisions made to the full Audit Committee at its next scheduled meeting. Our policies prohibit TJX from engaging PwC to provide any services relating to bookkeeping or other services related to accounting records or financial statements, financial information system design and implementation, appraisal or valuation services, fairness opinions orcontribution-in-kind reports, actuarial services, internal audit outsourcing, any management function, legal services or expert services not related to audit, broker-dealer, investment adviser, or investment banking services, or human resource consulting. In addition, the Audit Committee evaluates whether TJX’s use of PwC for permittednon-audit services is compatible with maintaining PwC’s independence. The Audit Committee concluded that PwC’s provision ofnon-audit services, which were approved in advance, was compatible with their independence.
PROPOSAL 1: ELECTION OF DIRECTORS Nominees and Their Qualifications The individuals listed below have been nominated and are standing for election at this year’s Annual Meeting. If elected, they will hold office until our
Please see theBoard Service at TJX section, above, for additional information about director qualifications and how we assess our nominees and Our Board of Directors unanimously recommends that you vote FOR the election of each of the nominees.
18 The TJX Companies, Inc.
2019 Proxy Statement 19
The following table shows, as of April
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The total number of shares beneficially owned by each individual and by the group above constitutes, in each case, less than 1% of the outstanding shares of TJX. The amounts above reflect sole voting and investment power except as noted below.noted. The shares listed in the table above reflect the two-for-one stock split effected November 6, 2018 and include:
Vested deferred shares (including estimated deferred shares for accumulated dividends) held by the following directors: Mr. Abdalla 8,539; Mr. Alvarez 41,210;19,028; Mr. Bennett 44,803;94,729; Ms. Berkery 1,069; Mr. Ching 28,133;58,727; Mr. Hines 47,136;99,456; Ms. Lane 38,577;81,002; Ms. Nemerov 2,176;8,362; Mr. O’Brien 56,726;116,659; Ms. Shire 59,727;122,740; and all directors and executive officers as a group 327,027.601,772.
Deferred shares (including estimated deferred shares for accumulated dividends) that are scheduled to vest within 60 days of April 9, 20188, 2019 held by the following directors: Ms. Berkery 1,069, each other non-executive director; director 1,728; and 9,891 held by all directors and executive officers as a group.group 14,893.
673,871.
Shares listed do not include the following, if not scheduled to vest within 60 days of April 9, 2018,8, 2019: unvested performance-based deferred share awards, performance share unit awards, orand restricted stock unit awards.
20182019 Proxy Statement 1921
The following table shows, as of April 9, 2018,8, 2019, each person known by us to be the beneficial owner of more than 5% of our outstanding common stock:
Name and Address of Beneficial Owner | Number of Shares |
Percentage of Class Outstanding | Number of Shares |
Percentage of Class Outstanding | ||||||||
The Vanguard Group, Inc.(1) 100 Vanguard Boulevard Malvern, PA 19355 |
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48,569,668 |
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7.7 |
% |
99,603,527 |
8.0% | ||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 |
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45,354,058 |
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7.2 |
% |
90,260,028 |
7.3% |
(1) | Amounts based on ownership of The Vanguard Group, Inc. |
(2) | Amounts based on ownership of BlackRock, Inc. and certain subsidiaries at December 31, |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires our directors and executive officers to file reports of holdings and transactions in our common stock with the SEC and the NYSE. To facilitate compliance, we have undertaken the responsibility to prepare and file these reports on behalf of our officers and directors. Based on our records and other information, all reports for fiscal 20182019 were timely filed, other than a delay in reporting the transfer of shares held by Mr. Abdalla from direct to indirect shared ownership.filed.
2022 The TJX Companies, Inc.
COMPENSATION DISCUSSION AND ANALYSIS
Our CD&A reviewsCompensation Discussion and Analysis (CD&A) describes the objectives and elements of TJX’s executive compensation program, describes the related processes of our Executive Compensation Committee (ECC), and discusses the fiscal 20182019 compensation for our Named Executive Officers (NEOs), listed below. It also explains the actions our ECC took in response to the shareholder feedback we received during our extensive shareholder outreach on executive compensation during fiscal 2018.:
NEO | Title | |
Ernie Herrman | Chief Executive Officer and President | |
Scott Goldenberg | Senior Executive Vice President, Chief Financial Officer | |
Carol Meyrowitz | Executive Chairman | |
| Senior Executive Vice President, Group President | |
| Senior Executive Vice President, Group President |
WHERE WE ARE TODAY
TJX is the leading internationaloff-price apparel and home fashions retailer. We have a long successful track record of strong financial performance, including 2223 consecutive years of annual comparable store sale increases, and an executive team with deep experience inoff-price retailing.retail. Having a highly-engagedhighly engaged senior leadership team with the ability to execute our distinctive and flexible retail business model has always been critical to our business. Accordingly, ourstrong performance over many years.
Our fiscal 2019 executive compensation program is designed to drive long-term profitable and sustainable growth, foster management stability, and support our leadership succession plans.
Fiscal 2018 Shareholder Outreach Initiative
We have followed a consistent approachreflects important changes to the design of our executive compensation program, for many years. The history ofwhich our say-on-pay results before 2017 demonstrated strong shareholder support for our program over several years, with support averaging over 95% between 2011 and 2016. But in response to the lower level of support for our 2017 say-on-pay vote, the ECC led anapproved after extensive shareholder outreach initiativeand engagement during fiscal 2018. This outreach focused on better understanding the concerns and perspectives of our shareholders, including those who did not support our say-on-pay vote in 2017. The ECC then made design changes to our fiscal 2019 program that respond to the shareholder feedback we received.
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This executive compensation outreach initiative was in addition to our regular, ongoing shareholder engagement.
2018 Proxy Statement 21
What We Heard and How We Responded
We heard a range of different perspectives on our executive compensation program from shareholders during our fiscal 2018 outreach, all of which were considered by the ECC.
We received considerable positive feedback about the overall program and support for our management team, consistent with our strong priorsay-on-pay results. Additionally, many of our larger shareholders agreed with the ECC on the importance of having a stable senior leadership team with the knowledge and expertise to execute our distinctiveoff-price business model successfully over the long-term.
However, we also heard some common concerns about specific aspects of our program’s design, discussed below, as well as comments cautioning us against overcomplicating our program or introducing too many changes. Based on this feedback, the ECC examined ways to improve our compensation program without compromising its strengths, including its focus on our core business goals, promoting stability, and driving performance, as well as its overall emphasis on long-term performance incentives. As a result, we made some important modifications to our program, summarized below, and updated our disclosure in several key areas.
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In making these changes, the ECC focused on designing the new program in a way that reflects shareholder concerns and strengthens our ability to drive the execution of ouroff-price business model over the long term, support sustained growth, and continue decades of proven success in all types of business and retail environments.
22 The TJX Companies, Inc.
Fiscal 2019 Executive Compensation Program
The key components of our executive compensation program continue to be base salary, annual cash incentives, and long-term incentives, both cash and equity. The most significant portion of total target compensation for our NEOs continues to be long-term performance-based incentive compensation.
The following summarizes what’s new for fiscal 2019. The key features of our new program—including the new mix of metrics and new design for our long-term incentives—were reviewed as part of our outreach process, and shareholders generally expressed support for these overall design changes during our fiscal 2018 outreach.
NEW MIX OF PERFORMANCE METRICS
The ECC conducted anin-depth review of various possible performance metrics in light of the shareholder preferences we heard and our business strategy. After careful consideration, the ECC determined that the fiscal 2019 program for our NEOs will include the following performance metrics in our incentive plans:
executive compensation program
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• • Our program is also intended to sustain our competitive position in a highly competitive and changing retail environment, promote Associate engagement and retention, foster alignment with shareholder interests, and maintain focus on business execution and long-term results. | ||||||
Changes the ECC made for fiscal 2019 | • The ECC led an extensive outreach initiative during fiscal 2018 and made meaningful changes in response to shareholder feedback, including by: / Expanding the performance metrics used in our incentive plans to include a balance of growth, profitability, and return metrics; and / Updating the design of our long-term incentives to increase overall rigor and performance sensitivity through new performance share units (PSUs). • In 2018, 90% of votes cast by our shareholders were in favor of our say-on-pay proposal, which we believe represents strong support for our new program. | |||||||
Performance and pay in fiscal 2019 | • Fiscal 2019 was another excellent year for TJX. We had a very strong consolidated comparable store sales increase of 6%, with increases of 3% or higher in each of our divisions, driven primarily by increased customer traffic. We also had above-plan EPS over last year, despite continued headwinds from cost pressures, and returned $3.4 billion to shareholders through our share repurchase and dividend programs. • Our strong performance led to above-target payouts under our cash incentive programs and full performance vesting of our long-term equity incentive awards.
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20182019 Proxy Statement 23
NEW LONG-TERM PERFORMANCE SHARE UNITS (PSUs)
Starting inHIGHLIGHTS OF OUR FISCAL 2019 EXECUTIVE COMPENSATION PROGRAM
2019 TARGET TOTAL COMPENSATION PAY MIX
Our fiscal 2019 NEOs will be eligible to receive newprogram maintains an emphasis on long-term equity award grants in the form of PSUs. PSUs will make upperformance incentives, which represent the largest portionpercentage of their target long-term incentives. PSUs granted intotal compensation for our NEOs. Although the pay mix was updated for fiscal 2019, willthe total target grant value of long-term incentives for our CEO and Executive Chairman did not increase as compared to fiscal 2018. The charts below show the mix of fiscal 2019 target total compensation for our CEO and our other NEOs.
Additional details about the elements of our program can be earned basedfound below starting on the achievementp. 31.
2019 PERFORMANCE METRICS
Our incentive plan metrics are intended to align with our long-term business strategy, and our fiscal 2019 program had a new mix of challenging EPS compound annualperformance measures that seek to balance growth, rate (CAGR) goals measured at the end of a three-year performance cycle (fiscal 2019-2021). The new PSUs will also be subject to a downward ROIC modifier, which means that if the company does not achieve its ROIC goals, award payouts will be adjusted downward by 20%.profitability, and returns:
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Pre-Tax Income
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EPS Growth |
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Supplemental metric
representing top line
performance
Primary long-term measure | Long-term modifier |
The EPS growth target goalAdditional details about these metrics and how they are used in our program are included below, starting on p. 31.
EMPHASIS ON PERFORMANCE INCENTIVES
Our PSU awards were new for fiscal 2019-2021 is aligned with2019 and comprised the largest component of target total compensation for our long range business plan, withNEOs. The design of our new PSU program added additional rigor and increased the target reflecting meaningful growth over the three-year period. The threshold level reflects the minimal levelpay sensitivity of growth during the three-year period required for any payout, and the maximum level is intended to be a significant stretch goal for the period. The ROIC modifier is intended to ensure that a full payout based on EPS results will be made only if we also generate meaningful returns over the three-year period.
Comparedour long-term performance incentives, compared to the design of our previous performance-based stock awards (PBSAs), which were intended to serve as vehicles for stability and retention and not solely as performance incentives, the new PSU design adds more performance sensitivity and increases the overall rigor of the program.. The number of PSUs eligible to vest will be reduced for performance below target, and a higher threshold level of performance is required for any of the PSUs to vest, as compared to our prior PBSAs (as illustrated below).PBSAs.
* Performance level for PSUs is expressed as a percent of target based on EPS at the end of the fiscal 2019-2021 performance period, which corresponds to the target EPS CAGR goal for the period.
24 The TJX Companies, Inc.
2019 TARGET TOTAL COMPENSATION PAY MIX
Key elements of our fiscal 2019 target compensation mix for our NEOs are as follows:
The charts below show the mix of fiscal 2019 target total compensation for our CEO and our other NEOs.
2018 Proxy Statement 25
Continued Focus on Good Compensation Governance
HIGHLIGHTS OF OUR COMPENSATION GOVERNANCE
Our compensation governance practices, over the past several years, highlighted in the table below, reflect the ECC’s focus on strong and effective oversight of the ECC:governance:
What We Do and What We Don’t Do |
✓ | Pay for performance, directly tying incentive compensation to the achievement of objective performance metrics | |
✓ | Award limits on maximum plan payouts | |
✓ | Emphasis on long-term opportunities for equity and cash incentives | |
✓ | Stock ownership guidelines for our executive officers andnon-employee directors, updated during fiscal 2019 | |
✓ | Clawback policy applicable to our executive officers, amended during fiscal 2019 | |
✓ | ||
✓ | ||
No change of control excise taxgross-ups | ||
| No single-trigger severance benefits upon a change of control | |
No automatic full acceleration of equity awards upon a change of control | ||
No hedging or pledging of company stock by our executive officers | ||
No dividends on unearned stock awards | ||
No repricing or exchange of underwater stock options without shareholder approval |
SHAREHOLDER OUTREACH AND ECC RESPONSIVENESS
Our executive compensation program for fiscal 2019 reflects an extensive shareholder outreach initiative led by the ECC during fiscal 2018 in response to the results of oursay-on-pay vote in 2017. Before the ECC approved the new program design for fiscal 2019, we sought initial feedback from shareholders, worked to redesign our program based on the initial feedback, and then sought additional feedback on potential design changes from our shareholders. We reached out to shareholders representing over 50% of shares outstanding, and held discussions with more than 37% of shares outstanding and with proxy advisory firms. The entire process was overseen by the ECC between May 2017 and April 2018. We believe our shareholders strongly supported the changes to our fiscal 2019 executive compensation program, consistent with the results of oursay-on-pay vote in 2018 where we received 90% support (compared to 58% in 2017).
During fiscal 2019, we continued our outreach to shareholders on executive compensation matters and the key features of our new program. The ECC also undertook a review of our compensation recovery and forfeiture practices following a 2018 shareholder vote on our clawback policy, as discussed below on p. 40.
FOCUS ON GOAL-SETTINGGOAL SETTING
Each year, the ECC sets objective business performance targets and the amounts payable at different levels of performance under each ofestablishes goals for our incentive plans. These goalsplans that are part oftied to our strategic planning process and are derived from our Board-approved annual and multi-year business plans.plans that are reviewed with and overseen by our Board. Our incentive plan targets are generally set at levels that align with the financial guidance we provide to investors. Atinvestors and are intended to be challenging but reasonably achievable. Historically, this process has resulted in incentive plan goals that demonstrate the timerigor of our program over time:
Our annual incentive program has had year-over-year increases in our corporate performance targets for the goals are established,past five years, and fiscal 2019 annual performance targets were set higher than prior year targets and actual results.
Our long-term incentive program has had consecutive increases in our long-term cash performance targets for three-year cycles beginning in fiscal 2017, fiscal 2018, and fiscal 2019, and we introduced a three-year EPS growth target in our new PSU program that started in fiscal 2019.
THOUGHTFUL DECISION MAKING PROCESS
In overseeing executive compensation and making compensation decisions throughout the year, the ECC follows a thoughtful and deliberate approach that considers a variety of important qualitative and quantitative factors including:and seeks to balance potential business risk, performance, and rewards. The annual process includes competitive analysis, market checks, executive assessments, an annual compensation risk assessment, and input from an independent compensation consultant that has been engaged by and reports directly to the ECC. (SeeThe Decision Making Process, starting on p. 28, for more information.)
2019 Proxy Statement 25
FISCAL 2019 REVIEW
Our fiscal 2019 results reflect strong execution of our business plan and growth strategies, as we increased annual comparable store sales profitability,in all divisions, primarily driven by strong customer traffic gains, and earnings;
FISCAL 2019 BUSINESS REVIEW
Financial Results/ Business Execution1 | Shareholder | Business/Strategic | ||||||
• $39.0 billion net sales, an increase of 9% over fiscal 2018 • Comparable store sales increased 6% over a 2% increase in fiscal 2018, driven primarily by customer traffic increases in every division • Fourth quarter net sales were $11.1 billion and comparable stores sales were up 6% for the quarter over 4% growth in the same period last year | • 26.8% total shareholder return • Returned $3.4 billion to shareholders through our share repurchase and dividend programs • Increased dividend by 25% during fiscal 2019; announced plan to increase current dividend by 18% in fiscal 2020 • $59.5 billion market cap atfiscal year-end | • Successfully grew our global store base by a net 236 stores globally during fiscal 2019 • Expanded to 4,306 total stores at fiscalyear-end across 9 countries • Continued to invest in distribution capabilities and systems to support growth plans |
1 | Fiscal 2018 was a 53-week year. Fiscal 2019 was a 52-week year. Comparable store sales are defined in Appendix A. |
Our EPS growth continued in fiscal 2019, and our various businesses;
Historically, this process has led to year-over-year increases in our annual corporate MIP targets over the past five years, demonstrating the rigor and consistent growth in these programs over time.
As part of the goal-setting process, at the time the goals are established the ECC also establishes definitions of the applicable financial metrics (including, for example, planned exchange rates for foreign currency translation) and automatic adjustments (including, for example, for unplanned changes in accounting standards, acquisitions, or dispositions) that would apply during the performance period. The ECC uses these definitions and adjustments to better align our incentive plans with how we evaluate our business operations and trends and, in some cases, to allow certain strategic decisions to be made in the long-term interests of TJX without being influenced by incentive plan results. The effect of these items on our incentive plan results is included in the details below. The ECC has not made any discretionary increases to incentive plan payouts for our NEOs in recent years.
* | See Appendix A to the proxy statement for notes on Annual Sales Growth chart and reconciliations of adjusted EPS to GAAP EPS. |
26 The TJX Companies, Inc.
FISCAL 2019 INCENTIVE PLAN PERFORMANCE
Our strong business performance in fiscal 2019 led to the following results under our performance-based incentive plans.
Annual Incentives | Long-Term Incentives | |||
Actual results were above our targets for our annual incentive plan (MIP), driven by strong sales execution and focus on profitability • Pre-tax Income for MIP exceeded our fiscal 2019 target at 105.31% of target, resulting in a payout percentage of 158.44% for that metric • Total Sales for MIP exceeded our fiscal 2019 target at 103.72% of target, resulting in a payout percentage of 189.26% for that metric, which was then capped at 158.44% based on the plan design that limits upside impact of sales results | Actual results were above our target for our long-term incentives that were linked to the fiscal 2017 – 2019 performance cycle, reflecting the consistency and strength of the company’s performance over the longer term • Pre-tax Income for LRPIP exceeded our fiscal 2017-2019 target at 106.30% of target, resulting in a payout of 115.74% • LRPIP performance resulted in full performance vesting for the previously granted PBSAs covering the fiscal2017-2019 performance period |
For more detail about plan goals and payout mechanics and definitions of Pre-tax Income for MIP, Total Sales for MIP, and Pre-tax Income for LRPIP, seeAnnual Cash Incentives: Management Incentive Plan (MIP) starting on p. 33 andLong-Term Incentives starting on p. 34.
CEO TOTAL DIRECT COMPENSATION
The chart below shows the total direct compensation1 of our CEO for fiscal 2019, including results of our cash incentive payouts, compared to fiscal 2017 and fiscal 2018.
1 Total direct compensation for each fiscal year consists of the following elements: base salary, earned cash incentives (MIP and LRPIP with performance periods ending in the fiscal year), and the grant date fair value of equity incentives granted during the fiscal year (PSUs and RSUs for fiscal 2019 and PBSAs and stock options for fiscal 2017 and fiscal 2018). PBSA and stock option grants have been eliminated from the program as of fiscal 2019.
2019 Proxy Statement 27
THE DECISION MAKING PROCESS
THE ROLE OF THE EXECUTIVECEO TOTAL DIRECT COMPENSATION COMMITTEE
The ECC, a committee of our Board of Directors composed entirely of independent directors, overseeschart below shows the compensation of our executive officers, including the NEOs. In determining the overall level of executive compensation and establishing the design and mix of specific elements, the ECC follows a thoughtful and deliberate process and considers various quantitative and qualitative factors, such as:
The ECC approaches executive compensation as part of the overall strategic framework for total rewards at TJX. This framework applies to all TJX associates and reflects our global total rewards principles, which include sharing in the success of the company, encouraging teamwork and collaboration across a diverse workforce, and being fair and equitable.
The ECC consults with and reviews data from an independentdirect compensation consultant, discussed further below, to assess the overall competitiveness of our NEOs’ compensation and our executive compensation program and to determine the appropriate levels and the mix of individual compensation components.
In addition to any special actions the ECC may take throughout the year in connection with its other charter responsibilities, the ECC typically reviews and approves elements of our NEOs’ compensation using the following general process:
THE ROLE OF EXECUTIVES
Our executive officers play a limited role in determining executive compensation. The ECC invites our executive officers to attend portions of its meetings, and they participate in our strategic planning process, discuss business and organizational strategies with the Board, and recommend to the Board, for its review and approval, the annual and multi-year plans for TJX and our divisions. These Board-approved plans form the basis for the performance targets of our short- and long-term incentive plans, and those targets are approved by the ECC. The ECC also receives individual performance evaluations, based in part on executive self-assessments,1 of our CEO for fiscal 2019, including results of our cash incentive payouts, compared to fiscal 2017 and Executive Chairmanfiscal 2018.
1 Total direct compensation for each fiscal year consists of the following elements: base salary, earned cash incentives (MIP and LRPIP with performance periods ending in the fiscal year), and the grant date fair value of equity incentives granted during the fiscal year (PSUs and RSUs for fiscal 2019 and PBSAs and stock options for fiscal 2017 and fiscal 2018). PBSA and stock option grants have been eliminated from the Corporate Governance Committee (which does not make executive compensation recommendations). For eachprogram as of our other NEOs, the CEO makes compensation recommendations to the ECC based in part on the individual annual performance evaluations of these executives. These evaluations from the Corporate Governance Committee and the CEO take into account the NEO’s individual responsibilities, performance, andfiscal 2019.
20182019 Proxy Statement 27
support of TJX’s cultural values. The ECC considers these executives’ performance evaluations and the CEO’s recommendations, among other factors, in establishing compensation for our NEOs.
THE ROLE OF COMPENSATION CONSULTANTS
The ECC engaged Pearl Meyer & Partners, LLC (Pearl Meyer) to serve as the independent compensation consultant to the ECC for fiscal 2018. Pearl Meyer attended all of the ECC’s meetings during the fiscal year and was available to the ECC on an ongoing basis throughout the year. Pearl Meyer provided industry, peer, and market data and advised the ECC on a variety of matters, including the design and competitive positioning of key compensation elements (base salary, annual bonus, and long-term cash and equity incentives) for our NEOs and other senior management; short-term and long-term relationships between NEO pay and corporate performance relative to our peers; the establishment and evaluation of a compensation peer group; the design and competitive positioning of our new compensation program for fiscal 2019; employment agreement terms; aggregate equity program usage; and updates on practices, trends, and regulatory developments as well as on otherpay-related matters. The ECC used this information and advice from Pearl Meyer as a reference in making its executive compensation decisions and determinations about the design, overall level and mix of compensation, plan metrics, goals and formulas, and individual compensation components, including benefits and perquisites.
Pearl Meyer did not perform any services for TJX other than work for or requested by the ECC and for the Corporate Governance Committee on director compensation. Pearl Meyer reported directly to the ECC, which determined the scope of Pearl Meyer’s engagement and its fees.
The ECC regularly reviews the services provided to the ECC by outside consultants. During fiscal 2018, the ECC reviewed its existing relationship with Pearl Meyer, including potential conflicts of interest, and determined that Pearl Meyer’s work for the ECC did not raise any conflicts of interest and that Pearl Meyer continued to be an independent advisor to the ECC.
THE ROLE OF OUR PEER GROUP
The ECC uses data from a peer group to inform its compensation decision-making for our NEOs. The ECC annually assesses the composition of this peer group. During fiscal 2017, the ECC considered what would be an appropriate peer group to evaluate fiscal 2018 compensation practices and pay levels. After consultation with Pearl Meyer, the ECC determined that the following group of 16 large, publicly traded consumer-oriented companies listed below would be appropriate to use for fiscal 2018.
FY 18 Peer Companies
FY 18 Peer Company Comparison
Peer Data
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Revenue ($B)*
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Market Cap ($B)*
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Median | $ 25.5 | $ | 40.7 | |||||||
TJX | $ 32.7 | $ | 49.0 | |||||||
TJX Percentile Rank | 59th | 56th | ||||||||
*Revenue is trailing four quarters at the end of 2016. Market cap is as of December 30, 2016. |
28 The TJX Companies, Inc.
The ECC established the fiscal 2018 peer group after taking into account TJX’s growth and continued global focus, coupled with challenges facing smaller peers in the domestic retail industry. Criteria used in constructing the peer group included:
Compared to our fiscal 2017 peer group, the fiscal 2018 peer group removed five companies that in the judgment of the ECC no longer fit our size and business focus criteria: Amazon.com, Inc.; Bed Bath & Beyond Inc.; eBay, Inc.; Staples, Inc.; and YUM! Brands, Inc. The ECC also added three companies that it determined are more comparable in size, scale, and global focus: McDonald’s Corporation; PepsiCo, Inc.; and The Procter & Gamble Company. As shown in the table above, TJX was above the median of the fiscal 2018 peer group in both revenue and market cap.
The ECC uses peer group data to inform the competitiveness of compensation and program design and believes that this data provides important context for its compensation decisions. At the same time, the ECC recognizes that ouroff-price retail business model, in combination with our size and global focus, is distinct from other companies and the ECC does not rely on strict benchmarking or target any element of NEO compensation by reference to any specified level of compensation within the peer group. The ECC has also supplemented peer group data from time to time with additional case studies and market data to provide further context for its compensation decisions.
CONSIDERATIONS FOR EXECUTIVE CHAIRMAN COMPENSATION
Ms. Meyrowitz assumed the role of Executive Chairman at the start of fiscal 2017 and is an active and integral member of the executive management team in addition to serving as Chairman of the Board. Our Board believes strongly that Ms. Meyrowitz, who has wide ranging,in-depth knowledge of our business and the retail industry overall, continues to play a critical role as an executive at TJX in addition to providing effective leadership to the Board. In her role as Executive Chairman, she serves as a key resource in the areas of merchandising, marketing, and internal training, and provides support to our CEO, CFO, and other members of senior management, with an emphasis on strategic initiatives and long-term company strategy.
The ECC recognizes that the role of executive chairman varies across companies. In establishing compensation for Ms. Meyrowitz, the ECC, advised by Pearl Meyer, evaluated other Fortune 200 companies with executive chairman positions and took into account the degree of active involvement that Ms. Meyrowitz would have as part of the management team at TJX relative to other executive chairman roles that may be more limited or transitional in nature.
2018 Proxy Statement 29
FISCAL 2018 REVIEW
During fiscal 2018, we solidly executed our business plan and growth strategies, increasing comparable store sales, driven by customer traffic, and growing our store base globally while maintaining focus on driving profitable sales, reinvesting in the business, managing expenses, and returning value to shareholders. These and other events during the year contributed to our annual incentive plan results, as described below. At the beginning of fiscal 2019, we announced plans to continue our growth and reinvestment initiatives, including driving comparable store sales and customer traffic gains, increasing ourlong-term store growth potential for some of our chains and, in light of U.S. tax law changes, planning a more substantial share buyback program and increase to our quarterly dividends and additional investments in our Associates and our communities.
FISCAL 2018 BUSINESS REVIEW
(53 weeks)
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30 The TJX Companies, Inc.
FISCAL 2018 INCENTIVE PLAN PERFORMANCE
Our performance in fiscal 2018 led to the following results under our performance-based incentive plans:
Additional details about these performance results and the payouts for each NEO are included below.
CEO TOTAL DIRECT COMPENSATION
The chart below shows the total direct compensation1 of our CEO for fiscal 2019, including results of ournon-equity cash incentive compensation payouts, compared to recent years.fiscal 2017 and fiscal 2018.
1 Total direct compensation for each fiscal year consists of the following elements: base salary, earned cash incentives (MIP and LRPIP with performance periods ending in the fiscal year), and the grant date fair value of equity incentives granted during the fiscal year (PSUs and RSUs for fiscal 2019 and PBSAs and stock options for fiscal 2017 and fiscal 2018). PBSA and stock option grants have been eliminated from the program as of fiscal 2019.
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20182019 Proxy Statement 3127
THE DECISION MAKING PROCESS
THE ROLE OF THE EXECUTIVE COMPENSATION COMMITTEE
The ECC, a committee of our Board of Directors composed entirely of independent directors, oversees the compensation of our executive officers, including the NEOs. In determining the overall level of executive compensation and establishing the design and mix of specific elements, the ECC considers a number of quantitative and qualitative factors, including:
The ECC approaches executive compensation as part of the overall strategic framework for total rewards at TJX. This framework applies to all TJX Associates and reflects our global total rewards principles, which include sharing in the success of the company, encouraging teamwork and collaboration across a diverse workforce, and being fair and equitable.
The ECC consults with and reviews data from an independent compensation consultant (discussed further below) to assess the overall competitiveness of our NEOs’ compensation and our executive compensation program and to determine the appropriate levels and the mix of individual compensation components.
In addition to any special actions the ECC may take throughout the year, the ECC typically reviews and approves the elements of our NEOs’ compensation using the following general process:
THE ROLE OF EXECUTIVES
Our executive officers play a limited role in determining executive compensation. The ECC may invite our executive officers to attend portions of its meetings, discuss business and organizational strategies with the Board, and review with the Board the annual and multi-year business plans for TJX and our divisions. These business plans form the basis for the performance targets for our short- and long-term incentive plans, and those targets are approved by the ECC. The ECC also receives individual performance evaluations of our CEO and Executive Chairman from the Corporate Governance Committee (which does not make executive compensation recommendations). For each of our other NEOs, the CEO makes compensation recommendations to the ECC based in part on individual annual performance evaluations of these executives. Individual performance evaluations take into account the NEO’s individual responsibilities, performance, self-assessments, and support of TJX’s cultural values. The ECC considers these executives’ performance evaluations and the CEO’s recommendations, among other factors, in establishing compensation for our NEOs.
28 The TJX Companies, Inc.
THE ROLE OF OUR PEER GROUP
The ECC uses peer group data to inform its compensation decision-making for our NEOs. The ECC annually assesses the composition of this peer group. During fiscal 2018, the ECC considered what would be an appropriate peer group to be used to provide context for making compensation decisions for fiscal 2019. After consultation with Pearl Meyer & Partners, LLC (Pearl Meyer), the ECC determined that the following group of 16 large, publicly traded consumer-oriented companies listed below would continue to be appropriate to use for fiscal 2019.
FY19 Peer Companies
Best Buy | L Brands | Nike | Ross Stores | |||
Gap | Lowe’s | Nordstrom | Starbucks | |||
Kimberly-Clark | Macy’s | PepsiCo | Target | |||
Kohl’s | McDonalds | Procter & Gamble | The Home Depot |
The ECC evaluated the peer group for fiscal 2019 and determined that it continued to be appropriate after taking into account TJX’s growth and global operations, coupled with challenges facing smaller peers in the domestic retail industry. The ECC considered criteria beyond standard industry classifications in constructing and evaluating the peer group, including:
industry similarity, targeting retail companies and also considering consumer product companies that met complexity criteria;
revenues and market capitalization;
business complexity, reflected by factors such as significant global operations, brand and/or product line diversity, multiple segments, ande-commerce strategy; and
financial performance metrics, including operating and market performance.
The ECC approved the fiscal 2019 peer group based on the analysis described above. At the time of the peer group evaluation for fiscal 2019, TJX was, and as of the end of fiscal 2019 continued to be, above the peer group median in both revenue and market cap, and the ECC believed that the fiscal 2019 peer group was an appropriate comparator group for TJX in terms of size, industry, business focus and overall complexity of operations, channels and customer focus. For comparisons of TJX performance to the fiscal 2019 peer group through the end of fiscal 2019, seeFiscal 2019 Business Review on p. 26.
The ECC uses peer group data to inform the competitiveness of NEO compensation and to evaluate program design, marketplace practices, and the relationship of pay and performance on a relative basis. The ECC believes that peer group data provides important context for its compensation decisions. At the same time, the ECC recognizes that ouroff-price retail business model, in combination with our size and global focus, is distinct from other companies. The ECC does not rely on strict benchmarking or target any element of NEO compensation by reference to any specified level of compensation within the peer group. The ECC has also supplemented peer group data from time to time with additional case studies and market data to provide further context for its compensation decisions.
2019 Proxy Statement 29
THE ROLE OF COMPENSATION CONSULTANTS
The ECC engaged Pearl Meyer to serve as the independent compensation consultant to the ECC for fiscal 2019. Pearl Meyer attended all of the ECC’s meetings during the fiscal year and was available to the ECC on an ongoing basis throughout the year. Pearl Meyer provided industry, peer, and market data and advised the ECC on a variety of matters, including the design and competitive positioning of key compensation elements (base salary, annual bonus, and long-term cash and equity incentives) and our new fiscal 2019 compensation program for our NEOs and other senior management; short-term and long-term relationships between NEO pay and corporate performance relative to our peers; the establishment and evaluation of a compensation peer group; employment agreement terms, severance arrangements and our Executive Severance Plan, and compensation forfeiture and recovery policies and practices; aggregate equity program usage; and updates on practices, trends, and regulatory developments as well as on otherpay-related matters. The ECC used this information and advice from Pearl Meyer as a reference in making its executive compensation decisions and determinations about the design, overall level and mix of compensation, plan metrics, goals and formulas, and individual compensation components, including benefits and perquisites.
Pearl Meyer did not perform any services for TJX other than work for or requested by the ECC and for the Corporate Governance Committee on director compensation. Pearl Meyer reported directly to the ECC, which determined the scope and terms of Pearl Meyer’s engagement.
The ECC regularly reviews the services provided to the ECC by outside consultants. During fiscal 2019, the ECC reviewed its existing relationship with Pearl Meyer, including potential conflicts of interest, and determined that Pearl Meyer’s work for the ECC did not raise any conflicts of interest and that Pearl Meyer continued to be an independent advisor to the ECC.
30 The TJX Companies, Inc.
FISCAL 20182019 EXECUTIVE COMPENSATION PROGRAM
Program elements:Our fiscal year 20182019 executive compensation program consisted of base salary and annual and long-term incentives as summarized below:below.
Base Salary |
Salary • Provide a base level of compensation to reflect individual roles and responsibilities,
• Recognize individual performance
| |
Annual Cash Incentives |
Management Incentive Plan (MIP)
• Incentivize performance to reach or exceed our annual financial
• Encourage engagement, teamwork, and collaboration within divisions
| |
Incentives |
Equity:
• Align executive interests with shareholders and reward stock performance
•
• Support longer-term retention objectives
Cash: Long Range Performance Incentive Plan (LRPIP)
• Incentivize performance to reach or exceed our longer-term financial
• Foster teamwork and collaboration across divisions
• Support longer-term retention objectives
|
Our program also includes health and welfare, deferred compensation, and retirement benefits, as well as relocation-related benefits and limited perquisites. Our overall executive compensationSeeOther Compensation Practices and Considerations starting on p. 38.
Performance metrics: The ECC conducted an in-depth review of compensation-related performance measures during fiscal 2018 and, after careful consideration, determined that the fiscal 2019 program is intended to sustainfor our competitive position, promote Associate engagement and retention, foster alignment with shareholder interests, and support effective leadership development, succession planning, and leadership transitions, which we believe are critical to our success.NEOs would include the following mix of metrics:
Performance Metric | Why It’s Included | How It’s Used | ||
Pre-Tax Income | • Reflects divisional profitability, including bothtop-line performance and effective management of expenses • Highly relevant to our business, well understood, and part of broad-based incentive program for all TJX management | • Primary but not sole metric in our annual MIP program, weighted at 80% • Three-year cumulative metric in our long-term cash program (LRPIP) | ||
Total Sales | • Demonstrates attention totop-line growth • Highly visible and easy to understand | • Secondary measure in our MIP program, weighted at 20% • Limited upside from sales; MIP payout formula restricts sales impact to maintain overall emphasis on profitability | ||
EPS Growth | • Maintains critical focus on profitable growth • Reinforces attention to capital discipline and corporate results • Important measure internally and externally | • Primary measure in our new long-term PSU program • Excludes the impact of certain unplanned items, such as unbudgeted buybacks and unanticipated changes in corporate tax rates | ||
ROIC | • Reinforces attention to capital investments and generating appropriate returns | • Secondary measure in our new long-term PSU program • Used as downward-only modifier |
32 2019 Proxy StatementThe TJX Companies, Inc. 31
Incentive plan goal setting:As described above on p. 25, each year the ECC sets objective business performance targets and the amounts payable at different levels of performance under each of our incentive plans. At the time the goals are established, the ECC considers a variety of qualitative and quantitative factors, including:
estimated long-term trends in sales, comparable store sales, profitability, and earnings;
maturity of our various businesses;
strategic investments to support our growth;
external factors (such as market competition, currency volatility, and wage and other cost pressures);
balance of potential business risks, performance, and rewards;
historical performance against targets and relative to peers and the market; and
degree of difficulty in achieving various levels of performance.
The goals for our MIP, LRPIP and PSU incentive programs reflect the company’s strategic planning for the next fiscal year or three-year period, as applicable, and are built from our business plans, including long-term growth goals, for our divisions. The ECC believes that the targets for each of these incentive plans are challenging but reasonably achievable and that the payout formulas reflect an appropriate degree ofpay-for-performance sensitivity, taking into account the factors described above.
As part of the goal-setting process, at the time the goals are established, the ECC also establishes definitions of the applicable financial metrics (including, for example, planned exchange rates for foreign currency translation) and automatic adjustments (including, for example, for unplanned changes in accounting standards, acquisitions, or dispositions) that would apply during the performance period. The ECC uses these definitions and adjustments to better align our incentive plans with how we evaluate our business operations and trends and, in some cases, to allow certain strategic decisions to be made in the long-term interests of TJX without influencing or being influenced by incentive plan results. The effect of these items on our incentive plan results is included below underAnnual Cash Incentives: Management Incentive Plan (MIP)and Long-Term Incentives: Long Range Performance Incentive Plan (LRPIP). The ECC has not made any discretionary increases to incentive plan payouts for our NEOs in recent years.
Base Salary
Base salaries provide competitive, fixed compensation to attract and retain our executives and to reflect individual responsibilities, performance, experience, and value in the marketplace. Base salaries are typically reviewed on an annual basis in connection with individual performance evaluations and may be reviewed in connection with new employment agreements, new positions, or other organizational changes. For fiscal 2018 and fiscal 2019, the ECC approved salary increases as part of our annual individual performance and salary review process for each of our NEOs, other than Mr. Herrman and Ms. Meyrowitz, who did not receive salary increases for fiscal 2019, and Mr. MacMillan, whose compensation arrangements reflect his move to Canada during fiscal 2018 and his scheduled retirement during fiscal 2019. Salary reviews are based on various factors, including an assessment of individual performance and responsibilities, our prior year performance, contractual obligations, and overall competitiveness of compensation.
Base Salaries at Fiscal 2018 Year-End
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Ernie Herrman | $ | 1,600,000 | ||
Carol Meyrowitz | $ | 1,040,000 | ||
Michael MacMillan | CAD$ | 1,418,280 | ||
Richard Sherr | $ | 1,050,000 | ||
Scott Goldenberg | $ | 900,000 |
Base Salaries at Fiscal 2019Year-End | ||||
Ernie Herrman | $1,600,000 | |||
Scott Goldenberg | $ 936,000 | |||
Carol Meyrowitz | $1,040,000 | |||
Richard Sherr | $1,070,000 | |||
Kenneth Canestrari | $ 860,000 |
32 The TJX Companies, Inc.
Annual Cash Incentives: Management Incentive Plan (MIP)
The objective of the annual cash incentive awards made under our MIP is to motivate our NEOs and other key Associates to achieve or exceed a fiscal year performance targettargets set in advance by the ECC.
Key Features of MIP:
Broad-based program that extends throughout our global organization, emphasizing team-based execution of our business strategies
Performance tied to objective annual business goals and results approved by the ECC
Maximum individual payout limits apply to all awards (for fiscal 2018,2019, no more than $6,318,408,$6,700,478, and no more than 200% of each individual award opportunity)
Performance goals:goals and results for fiscal 2019:For fiscal 2018,2019, the ECC determined that for MIP,adjusted annual adjustedpre-tax income was an(referred to asPre-tax Income for MIP) and adjusted total annual sales (referred to as Total Sales for MIP) would be appropriate and effective measure to motivate, focus, and reward operational performance across the company, particularlymeasures for our management.Pre-tax income is used across the company to plan, manage, and evaluate our business. The ECC believes that it is a key measure of our success, as it reflectstop-line performance, effective management of expenses and profitability; promotes consistency of focus across the company over short- and long-term performance periods; and is objective and understandable by our participants.NEOs’ MIP awards.
• | Pre-tax Income for MIP is weighted at 80% of the total payout opportunity for our NEOs and is considered to be an effective measure to motivate, focus, and reward operational performance across the company, particularly for our management. |
• | Total Sales for MIP is weighted at 20% of the total payout opportunity for our NEOs and is capped so that the total sales-based payout cannot exceed the payout percentage earned under thepre-tax income goal, thereby maintaining our emphasis on profitable sales. |
Our NEOs’ fiscal 20182019 MIP award opportunities were tied tobased on the aggregate of all divisional MIP goals, which we refer to as the corporate goal, to emphasize each NEO’s accountability to the business as a whole. MIP goals are generally intended to reflect the company’s strategic planning for the next fiscal year and are built from Board-approved annual business plans for our divisions. In setting the corporate MIP goal for fiscal 2018, the ECC believed that the target was challenging but reasonably achievable (considering, among other things, anticipated wage pressures, market volatility, and currency exchange volatility), and that the payout formulas reflected an appropriatepay-for-performance sensitivity based on the maturity and expected growth of each division.goals. As a result of this
2018 Proxy Statement 33
the goal-setting process described above in theIncentive plan goal setting section, the ECC established a fiscal 2018 corporate2019Pre-tax Income for MIP performance targetstarget that werewas higher than both fiscal 2017 corporate MIP performance targetsthe prior year’s target and fiscal 2017 corporate MIP actual results even after accountingunder MIP, and a fiscal 2019 Total Sales for MIP target that was higher than the estimated benefit of the fiscal 2018 53rd week. The ECC also established specified rates for converting foreign income (to remove the impact of translational foreign exchange)prior year’s actual sales, in each case on an absolute and automatic adjustments to reflect certain contingent events that may affect performance.constant currency basis.
The fiscal 20182019 MIP performance levels and corresponding payout percentages are shown below, including the performance target, thresholdtargets, thresholds (the level of performance at or below which no payout would be made), and maximummaximums (the level at or above which the award payout would be the maximum under the award terms). After the end of fiscal 2018,2019, our actual performance was measured against the performance target and MIP performance results were certified by the ECC.
Fiscal 20182019 MIP Goals and Results1
(Pre-Tax Income for MIP and Total Sales for MIP in 000s)
Payout Opportunity (as a % of Target) | Performance Goals: AdjustedPre-Tax Income* | |||||||||||
Performance Level | Dollars (in 000s) | % of Target | ||||||||||
Threshold | 0 | % | $ | 3,970,415 | 88.89 | % | ||||||
Target | 100 | % | $ | 4,466,717 | 100 | % | ||||||
Maximum | 200 | % | $ | 4,838,943 | 108.33 | % | ||||||
* Our Fiscal 2018 corporate MIP goal for all NEOs consisted of a consolidated adjustedpre-tax income goal for all TJX divisions, which included all of our businesses: Marmaxx (T.J. Maxx and Marshalls), HomeGoods, TJX International (including TJX Europe (T.K. Maxx and Homesense) and Trade Secret in Australia (rebranded as T.K. Maxx during fiscal 2018)), TJX Canada and oure-commerce businesses (including Sierra Trading Post). Under the termspre-established by the ECC, MIP performance goals and results were adjusted to reflect thepre-established currency exchange rates (to remove the impact of translational foreign exchange) and to exclude capitalized inventory costs, interest income and expense, andmark-to-market impact of inventory derivatives. |
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Threshold | Target | Maximum | Actual | |||||||||||||
Pre-tax Income for MIP (80%) | $ | 3,953,958 | $ | 4,518,777 | $ | 4,929,555 | $ | 4,758,861 | ||||||||
Percentage of target | 87.5% | 100% | 109.1% | 105.31% | ||||||||||||
Payout opportunity (as a % of target) | 0% | 100% | 200% | 158.44% | ||||||||||||
Total Sales for MIP (20%)2 | $ | 36,101,116 | $ | 38,001,077 | $ | 39,584,376 | $ | 39,414,366 | ||||||||
Percentage of target | 95.0% | 100% | 104.2% | 103.72% | ||||||||||||
Payout opportunity (as a % of target)2 | 0% | 100% | 200% | 189.26% | ||||||||||||
Total Payout | 158.44% | |||||||||||||||
1 Our Fiscal 2019 corporate MIP goals for all NEOs consisted of adjusted annualpre-tax income and sales goals for all TJX divisions, which included all of our businesses. Under the termspre-established by the ECC, MIP performance goals and results were adjusted to reflectpre-established currency exchange rates (to remove the impact of translational foreign exchange) and, in the case ofpre-tax income, to exclude capitalized inventory costs, interest income and expense, andmark-to-market impact of inventory derivatives, as applicable. Payout levels are interpolated on straight-line bases for performance between threshold and target or between target and maximum, as applicable.
2 Total Sales for MIP payout percentage is capped at thePre-tax Income for MIP payout percentage. |
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Performance results for fiscal 2018: Adjustedpre-tax2019 Proxy Statement income, which included the impact of the Sierra Trading Post impairment charge taken during the year, was $4,324,884, or 96.82% of target performance. This corresponded to a final MIP payout percentage of 71.42%. Consistent with our pay for performance philosophy, the below-target results resulted in below-target MIP payouts for our NEOs, as detailed below. 33
Award opportunities and payouts:Each MIP award has a target award opportunity, expressed as a percentage of the individual’s base salary earned during the fiscal year. The ECC approved these individual award opportunities at the beginning of fiscal 20182019 based on a variety of factors, including an assessment of overall competitiveness, mix of compensation elements, individual responsibilities, and contractual obligations, and individual responsibilities.obligations. The fiscal 20182019 MIP award earned by each NEO was determined by applying the corporate MIP payout percentage of 71.42%158.44% to the individual’s target award opportunity, as shown below.
34 The TJX Companies, Inc.
Fiscal 20182019 MIP Opportunities and Payouts
Target (as a % of Base Salary) | Target1 (as a $ amount) | Actual Amount Earned | Target (as a % of Base Salary) | Target1 (as a $ amount) | Actual Amount Earned | |||||||||||||||||||
Ernie Herrman | 150 | % | $2,428,848 | $1,734,683 | 150 | % | $2,400,002 | $3,802,562 | ||||||||||||||||
Scott Goldenberg | 55 | % | $ 512,136 | $ 811,428 | ||||||||||||||||||||
Carol Meyrowitz | 150 | % | $1,580,770 | $1,128,986 | 150 | % | $1,560,000 | $2,471,664 | ||||||||||||||||
Michael MacMillan2 | 55 | % | $ 603,181 | $ 430,792 | ||||||||||||||||||||
Richard Sherr | 55 | % | $ 588,607 | $ 420,383 | 55 | % | $ 587,020 | $ 930,075 | ||||||||||||||||
Scott Goldenberg | 55 | % | $ 498,173 | $ 355,795 | ||||||||||||||||||||
Kenneth Canestrari | 50 | % | $ 427,645 | $ 677,561 | ||||||||||||||||||||
1 Target amount based on actual U.S. salary earned during fiscal 2018, a53-week year, plus, in the case of Mr. MacMillan, an amount based on his annual CAD salary adjusted to reflect his period of service in Canada during fiscal 2018. 2 For Mr. MacMillan, CAD-denominated amounts were converted to USD at the average annual exchange rate of $0.7753 per CAD for fiscal 2018. |
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1Target amount based on actual salary earned during fiscal 2019. | 1Target amount based on actual salary earned during fiscal 2019. |
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Long-Term Incentives
One of the key objectives of our long-term incentive programsprogram is to strengthen the retention succession planning, and stability of our leadership team, which has been a critical factor and key driver for the success of TJX. We use a mix of long-term vehicles to incentivize our executives, foster teamwork that drivesto drive execution of our business goals, and align the interests of our NEOsexecutives with the interests of our shareholders.
Key Equity Grant Practices: Our fiscal 2019 long-term incentive program for our NEOs consisted of PSUs, RSUs and LRPIP and was heavily weighted toward objective performance-based compensation:
80% of the total target long-term incentive value (PSUs and LRPIP) was tied to objective financial performance metrics.
20% of the total target long-term incentive value consisted of RSUs with service-based vesting conditions.
LONG-TERM EQUITY INCENTIVES
Key Features of Fiscal 2019 Equity Grants:
All equity awards are subject to individual award limits under the plan.plan
All equity awards since September 2015grants are “double-trigger” (no automatic full acceleration upon on a change of control).
All optionsPSU grants have an exercise price equalthree-year performance vesting conditions and all RSU grants are generally scheduled to the closing stock price on the NYSE onvest in full three years from the grant date.date
Equity awards are granted under our Stock Incentive Plan (SIP) and generally granted at our regularly scheduled ECC meetings, held at approximately the same times each year.
34 The ECCTJX Companies, Inc.
Performance Share Units (PSUs) and Restricted Stock Units (RSUs)
Fiscal 2019 PSUs.For fiscal 2019, PSUs made up the largest portion of target long-term incentives for our NEOs. PSUs granted in fiscal 2019 will be earned based on the achievement of challenging EPS compound annual growth rate (CAGR) goals measured at the end of a three-year performance cycle (fiscal 2019-2021). The new PSUs will also be subject to a downward ROIC modifier, which means that if the company does not achieve its ROIC goals, award payouts would be adjusted downward by 20%.
Step 1 | Step 2 | |||||
Level of EPS | Payout as a | ROIC | ||||
Below Threshold <87% of target | 0% | Below Target Range: Reduce by 20% | ||||
Threshold 87% of target | 25% | |||||
Target 100% | 100% | At or Above Target Range: No Modification | ||||
Maximum >130% of target | 200% |
1 | Performance level expressed as a percent of target based on EPS at the end of the fiscal 2019-2021 performance period, which corresponds to the target EPS CAGR goal for the period. |
2 | Before ROIC modifier. Payout levels based on EPS performance will be interpolated on straight-line bases for performance between threshold and target or between target and maximum, as applicable. |
The EPS growth target goal for fiscal 2019-2021 is aligned with our long range business plan and reflects meaningful growth over the three-year period. The threshold level reflects the minimum level of growth during the three-year period for any payout, and the maximum level is intended to be a significant stretch goal for the period. The ROIC modifier is intended to ensure that a full payout based on EPS results would be made only if we also generate meaningful capital returns over the three-year period. Consistent with our past disclosure practice, we plan to provide additional detail about the fiscal 2019-2021 performance goals once the performance cycle is complete.
Fiscal 2019 RSUs.NEOs were awarded RSUs in fiscal 2019 that are generally scheduled to vest in full three years from the grant date. NEOs who have any programs, plans,satisfied special service retirement eligibility criteria are eligible for partial vesting of RSUs based on full years completed in the service period, as discussed underPotential Payments upon Termination or practicesChange of timing these equity grants in coordinationControl. RSUs are intended to maintain an appropriate degree of stability and retention within the program and support our management continuity and succession planning, which is a longstanding, key component of our leadership strategy.
Fiscal 2019 PSUs and RSUs
In April 2018, the ECC granted PSUs and RSUs to our NEOs, with the releasesize of materialnon-public information.each award determined based on factors that included the executive’s responsibilities, the potential value of each grant, contractual obligations, and an assessment of the overall competitiveness and mix of our executive compensation.
Number of PSUs | Number of RSUs | Total Grant Date Fair Value* | ||||||||||
Ernie Herrman | 179,590 | 54,416 | $9,632,857 | |||||||||
Scott Goldenberg | 67,150 | 19,800 | $3,579,297 | |||||||||
Carol Meyrowitz | 92,312 | 29,152 | $5,000,065 | |||||||||
Richard Sherr | 67,028 | 20,990 | $3,623,261 | |||||||||
Kenneth Canestrari | 51,620 | 15,330 | $2,755,996 | |||||||||
* Reflects the aggregate grant date fair value of April 2018 PSU and RSU awards as determined for financial reporting purposes. Stock awards are valued based on the closing price of our common stock on the NYSE on the grant date ($41.165). The underlying valuation assumptions for equity awards are further discussed in Note H to our audited financial statements filed with our Annual Report on Form10-K for fiscal 2019. |
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2019 Proxy Statement 35
Previously Granted Performance-Based Stock Awards (PBSAs).
Each of our NEOs held PBSAs includegranted in March 2016 with performance-based vesting conditions linkedcriteria that were satisfied based on a fiscal 2017-2019 LRPIP performance payout of 115.74%, as described further below. The performance vesting criteria for the fiscal 2017-2019 LRPIP-based PBSAs required achievement of at least 87% of the targeted cumulativepre-tax income performance under LRPIP for full vesting and achievement of at least 60% of the targeted cumulativepre-tax income performance under LRPIP for partial vesting. In comparison to TJX’s financialour new PSUs, which have more performance service-based vesting conditions that provide important retention incentives,sensitivity and retirement terms that support our succession planning process. Because oura wider range of potential pay outcomes, the PBSAs granted prior to fiscal 2019 were designed to serve as a vehicle for stability and retention and not solely as a performance incentive, targets for full PBSA vesting were set at a level below our cash incentive targets with no above-target opportunity. Vesting of these awards is subject to satisfaction of service requirements specified in the awards (described below on p. 48) as well as the performance criteria described below.incentive.
LONG-TERM CASH INCENTIVES
2018 Proxy Statement 35
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Fiscal 2018 PBSAs
In April 2017, the ECC granted PBSAs to our NEOs, with the size of each award determined based on factors including the executive’s responsibilities, contractual obligations, the potential value of each grant, and the overall competitiveness and mix of our executive compensation. Each April 2017 PBSA included a fiscal 2018-2020 LRPIP-based performance goal with a three-year vesting period, described in the table above.
Fiscal 2018 PBSAs
Number of Shares | Grant Date Fair Value* | |||||||
Ernie Herrman | 117,325 | $9,000,001 | ||||||
Carol Meyrowitz | 65,181 | $5,000,035 | ||||||
Michael MacMillan | 40,000 | $3,068,400 | ||||||
Richard Sherr | 40,000 | $3,068,400 | ||||||
Scott Goldenberg | 40,000 | $3,068,400 | ||||||
* Reflects the aggregate grant date fair value of April 2017 PBSAs as determined for financial reporting purposes. Stock awards are valued based on the closing price of our common stock on the NYSE on the grant date. The underlying valuation assumptions for equity awards are further discussed in Note H to our audited financial statements filed with our Annual Report on Form10-K for fiscal 2018. |
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Previously Granted PBSAs
Each of our NEOs, other than Ms. Meyrowitz, held previously granted PBSAs with performance-based vesting criteria that were satisfied based on fiscal 2016-2018 LRPIP performance payout of 121.37%, as described further below. These PBSAs remained subject to service-based vesting conditions after fiscal 2018 year-end, as described in footnote 3 to the Outstanding Equity Awards table.
The career shares award granted to Mr. Herrman during fiscal 2016 in connection with the CEO transition is scheduled to vest in full at the end of fiscal 2026 withpro-rated annual vesting beginning at the end of fiscal 2020, subject to his continued employment with TJX. The remaining service condition for the PBSA granted to Ms. Meyrowitz during fiscal 2016 in connection with the CEO transition was satisfied at the end of fiscal 2018.
36 The TJX Companies, Inc.
Stock Options. Stock options help align the interests of our NEOs with those of our shareholders because they only deliver value to the extent the value of our stock appreciates. The ECC determined the number of stock options granted to our NEOs during fiscal 2018 by setting a fixed dollar value for each NEO (other than Ms. Meyrowitz) and dividing this value by the closing price of our common stock on the NYSE on the grant date ($73.21). The fixed dollar value established for each NEO is a function of internal compensation levels and historical practices and was reviewed by the ECC for overall market competitiveness. Stock options generally vest in equal annual installments over three years from the grant date. As noted above, stock options have been eliminated for our NEOs in our new fiscal 2019 executive compensation program.
Fiscal 2018 Stock Option Awards
Number of Shares | Grant Date Fair Value1 | |||||||
Ernie Herrman | 43,220 | $618,910 | ||||||
Carol Meyrowitz2 | — | — | ||||||
Michael MacMillan | 19,540 | $279,813 | ||||||
Richard Sherr | 22,540 | $322,773 | ||||||
Scott Goldenberg | 19,540 | $279,813 | ||||||
1 Reflects the aggregate grant date fair value of September 2017 option awards as determined for financial reporting purposes. Option awards are valued using the Black-Scholes option pricing model. The underlying valuation assumptions for equity awards are further discussed in Note H to our audited financial statements filed with our Annual Report on Form10-K for fiscal 2018.
2Under the terms of her employment agreement effective at the beginning of fiscal 2017, Ms. Meyrowitz is not eligible for new option grants. |
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Long Range Performance Incentive Plan (LRPIP).LRPIP awards are designed to motivate our NEOs and other key Associates to achieve or exceed long-term financial goals, as well as to foster teamwork and collaboration across the company and promote retention. As ourOur LRPIP awards have overlapping three-year cycles, inwith a new cycle starting each fiscal year we complete a cycle, continue our performance under an ongoing cycle and grant awards for a new cycle.year.
Key Features of LRPIP:
Broad-based program that extends throughout our global organization, emphasizing team-based execution of our company-wide business strategies over a longer time horizon
Performance tied to objective long-term business goals and results approved by the ECC
Maximum individual payout limits apply to all awards (no more than $5,788,125,$6,077,531, and no more than 200% of each NEO award opportunity, for the fiscal 2016-20182017-2019 cycle)
Fiscal 2016-20182017-2019 LRPIP – Completed Cycle
Performance conditions: LRPIP goals and awards for the fiscal 2016-20182017-2019 cycle were established by the ECC during fiscal 2016.2017. LRPIP goals are generally intended to reflect the company’s longer-term strategic planning, which is built from Board-approved company business plans and starts with our operating divisions, taking into account a variety of factors atas described above in the time the goals are established. InIncentive plan goal setting the fiscal 2016-2018 LRPIP goals, the ECC believed that the targets were challenging but reasonably achievable and reflected the long-term growth goals for our primary divisions. section. The ECC determined that the payout formulas reflected an appropriatepay-for-performance sensitivity for a long-term incentive program; that cumulative three-year adjustedpre-tax income measure further detailed in the table below (referred to asPre-tax Income for LRPIP), was an appropriate and effective metric to motivate, focus, and reward operational performance across the company over a longer time horizon;horizon, and that using a weighted combination of performance of our four majorgoal based on aggregate targets for all divisions would promote our team-based approach to achieving our long-term goals. The fiscal 2016-2018 goals also included specified rates for converting foreign income (to remove the impact of translational foreign exchange) and automatic adjustments to reflect certain contingent but objectively determinable events that may affect performance.
2018 Proxy Statement 37
Performance results for the fiscal 2016-2018 cycle:2017-2019 cycle: After the end of fiscal 2018,2019, LRPIP performance results for this cycle were certified by the ECC.
Fiscal 2016-20182017-2019 LRPIP Goals and Results1
(AdjustedPre-Tax Income1 for LRPIP in 000s)
Performance Goals | Actual Performance Results | |||||||||||||||||||||||||||
Division | Threshold2 60% (Payout% = 0%) | Cumulative 3-Year (Payout% = 100%) | Maximum2 140% (Payout% = 200%) | Divisional Weighting | Actual Cumulative 3-Year Performance | Unweighted Divisional Contribution to Award Payout% | Weighted Divisional Contribution to Award Payout% | |||||||||||||||||||||
(A) | (B) | (C) | (D) | (B x D) | ||||||||||||||||||||||||
Marmaxx | $5,084,581 | $ 8,474,301 | $ 11,864,021 | 68.5 | % | $ | 9,129,890 | 119.35 | % | 81.75 | % | |||||||||||||||||
HomeGoods | $ 943,765 | $ 1,572,942 | $ 2,202,119 | 10.5 | % | $ | 1,820,857 | 139.40 | % | 14.64 | % | |||||||||||||||||
TJX Canada | C$ 760,066 | C$1,266,777 | C$ 1,773,488 | 10.5 | % | C$ | 1,737,064 | 192.95 | % | 20.26 | % | |||||||||||||||||
TJX Europe | £ 465,012 | £ 775,020 | £ 1,085,028 | 10.5 | % | £ | 604,430 | 44.98 | % | 4.72 | % | |||||||||||||||||
100 | % | Total Payout:3 | 121.37 | % |
Threshold | Target | Maximum | Actual | |||||||||||||
Pre-tax Income for LRPIP | $ | 7,431,476 | $ | 12,385,381 | $ | 17,339,285 | $ | 13,165,119 | ||||||||
Percentage of target | 60% | 100% | 140% | 106.30% | ||||||||||||
Payout opportunity (as a % of target) | 0% | 100% | 200% | 115.74% | ||||||||||||
1 Fiscal 2017-2019 LRPIP performance was measured by an aggregate adjustedpre-tax income goal for all divisions for the three-year period. The fiscal 2017-2019 LRPIP performance goal is not directly comparable to the fiscal 2016-2018 LRPIP performance goal, which was measured by a weighted combination of performance for our four major divisions. Under the termspre-established by the ECC at the beginning of fiscal 2017 for the fiscal 2017-2019 LRPIP cycle, LRPIP performance goals and results were adjusted to reflectpre-established currency exchange rates (to remove the impact of translational foreign exchange) and to exclude capitalized inventory costs, interest income and expense, andmark-to-market impact of inventory derivatives, as applicable. Fiscal 2017-2019 LRPIP performance results were further adjusted downward by the ECC to exclude certain transactional foreign exchange gains at TJX Europe during fiscal 2017. Payout levels are interpolated on straight-line bases for performance between threshold and target or between target and maximum, as applicable. |
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1 Fiscal 2016-2018 LRPIP performance was measured by adjusted
pre-tax36 income goals for our four major divisions for the three-year period as shown above. (TJX Europe was renamedThe TJX International at the end of fiscal 2016.) Under the termspre-establishedCompanies, Inc. by the ECC at the beginning of fiscal 2016, LRPIP performance goals and results were adjusted to reflectpre-established currency exchange rates (to remove the impact of translational foreign exchange) and to exclude capitalized inventory costs, interest income and expense,mark-to-market impact of inventory derivatives, and certain new businesses (Austria, the Netherlands, U.S.e-commerce, and Trade Secret). Fiscal 2016-2018 LRPIP performance results were further adjusted downward by the ECC to exclude certain transactional foreign exchange gains at TJX Europe during fiscal 2017.
2 The threshold and maximum amounts shown assume that each division performs at the same level against its target. Because each division contributes toward the final payout without a divisional threshold or maximum (to reflect aggregate company results), there is no single level of performance for threshold or maximum payouts.
3 To calculate the total payout, the actual performance (column C) is measured against the performance target for each division (column A). Apre-established payout formula determines the unweighted contribution of each division to the award payout (column D). Each unweighted contribution (column D) is then weighted according to thepre-established weightings (column B x column D) and added together to determine the overall LRPIP award payout percentage.
Award opportunities and payouts:At the beginning of the fiscal 2016-20182017-2019 cycle, the ECC approved individual LRPIP award opportunities based on a variety of factors, including an assessment of overall competitiveness, mix of compensation elements, contractual obligations, and individual responsibilities at the time of the grant. The actual LRPIP award earned for each individual is the target opportunity for the cycle multiplied by the total payout percentage of 121.37%115.74%, as shown below.
Fiscal 2016-2018 Target Opportunities | Fiscal 2016-2018 LRPIP Actual Award Earned | |||||||
Ernie Herrman* | $1,100,000 | $1,335,070 | ||||||
Carol Meyrowitz* | $1,575,000 | $1,911,577 | ||||||
Michael MacMillan | $ 700,000 | $ 849,590 | ||||||
Richard Sherr | $ 500,000 | $ 606,850 | ||||||
Scott Goldenberg | $ 500,000 | $ 606,850 | ||||||
* In fiscal 2016 when these awards were granted, Mr. Herrman served as the President of the company and Ms. Meyrowitz as the CEO. The CEO transition occurred at the beginning of fiscal 2017, when Mr. Herrman became CEO and President and Ms. Meyrowitz became Executive Chairman. |
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38 The TJX Companies, Inc.
Fiscal 2017-2019 LRPIP Opportunities and Payouts
Fiscal 2017-2019 Target Opportunities | Fiscal 2017-2019 LRPIP Actual Award Earned | |||||||
Ernie Herrman | $1,525,000 | $1,765,035 | ||||||
Scott Goldenberg | $ 500,000 | $ 578,700 | ||||||
Carol Meyrowitz | $1,000,000 | $1,157,400 | ||||||
Richard Sherr | $ 500,000 | $ 578,700 | ||||||
Kenneth Canestrari | $ 400,000 | $ 462,960 |
Fiscal 2018-20202019-2021 LRPIP – New Cycle
At the beginning of fiscal 2018,2019, the ECC established the new LRPIP target award opportunities for the fiscal 2018-20202019-2021 cycle for our NEOs. These opportunities were set after consideration of a variety of factors, including an assessment of overall competitiveness, mix of compensation elements, contractual obligations, and individual responsibilities at the time of the grant and are as follows:
Fiscal | ||||
Ernie Herrman | $1,600,000 | |||
Scott Goldenberg | $ 500,000 | |||
Carol Meyrowitz | $1,040,000 | |||
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Richard Sherr | $ 700,000 | |||
| $ |
As part of the company’s long-term strategic planninggoal-setting process for fiscal years 2018 through 2020,described above, the ECC also established thePre-tax Income for LRPIP adjustedpre-tax income target for this new three-year cycle basedfiscal years 2019 through 2021 (based on aggregate targets for all divisions (without divisional weightings)divisions), payout formulas, and a maximum LRPIP payout percentage of 200%. The target is intended to be consistent with the Board-approved business plans for our divisions, to reflect the long-term growth goals for these divisions, and to be challenging but reasonably achievable. The minimum (threshold) level for any payout is 60% of the performance target and the maximum payout level is achieved if performance is at or above 140% of the performance target.
Consistent with our past disclosure practice, we plan to provide additional detail about the performance goals for this cycle, which are based on business targets through fiscal 2020,2021, once the performance cycle is complete.
2019 Proxy Statement 37
OTHER COMPENSATION PRACTICES POLICIES AND GUIDELINESCONSIDERATIONS
RETIREMENT BENEFITS
All of our NEOs other than Mr. MacMillan, are eligible to participate in our 401(k) plan and also participate in our broad-based pension plan for U.S. Associates under which benefits are accrued based on compensation and service. We also maintain a Supplemental Executive Retirement Plan (SERP). Ms. Meyrowitz is a vested participant in our primary SERP benefit program, a nonqualified pension benefit based on final average earnings. We have not offered primary SERP benefits to new participants for many years. Mr. Herrman, Mr. Goldenberg, Mr. Sherr, and Mr. GoldenbergCanestrari participate in our alternative SERP benefit program, which is intended to restore pension benefits that would otherwise not be available due to Internal Revenue Code restrictions. Mr. MacMillan was eligible to participate in our U.S. retirement benefit programs for a portion of fiscal 2018, and, following his move to Canada, became eligible to participate in our Canadian retirement benefit programs for the balance of fiscal 2018. Long termLong-term incentives are not included in defined benefit pension calculations, and we do not have a policy of granting extra years of credited service for purposes of our pension plans. These programs are discussed under Pension Benefits.Benefits.
DEFERRED COMPENSATION
During fiscal 2018,2019, our NEOs could defer compensation under our Executive Savings Plan (ESP), an elective deferred compensation plan, intended to help us compete for and retain talent by providing participants with additional opportunities for personal financial planning and by rewarding and encouraging retention while emphasizing performance-based pay.and rewarding company performance. Participants in the ESP, other than those eligible for our primary SERP benefit, are eligible to receive an employer match based in part on our performance under our MIP. Mr. Herrman, Mr. Goldenberg, Mr. Sherr, and Mr. GoldenbergCanestrari received an ESP match for fiscal 2018. Mr. MacMillan received an ESP match for a portion of fiscal
2018 Proxy Statement 39
2018, and, following his move to Canada, became eligible to participate and receive a match under our Canadian Executive Savings Plan (CESP) for the balance of fiscal 2018.2019.
Under his employment agreement in effect during fiscal 2019, Mr. Herrman is eligible for additional performance-based company credits under the ESP for each of fiscal 2017, fiscal 2018, and fiscal 2019. The credits are made to Mr. Herrman’s ESP account after the end of the applicable fiscal year if he remains employed through the end of the year and to the extent applicable MIP performance goals are met for the year, with no credit provided if no MIP payout is achieved for the year. Mr. Herrman received the full additional ESP credit for fiscal 2018,2019, which required achievement of at least 96% of the targeted corporatePre-tax Income for MIP performanceand at least 98% of the targeted Total Sales for MIP (resulting in a MIP payout of at least 67%) for the year. The additional credits (and any earnings under the ESP) are payable to Mr. Herrman following his separation from service with the company if, on the terms provided under the ESP, he complies with applicable post-employmentnon-competition,non-solicitation, and other covenants intended to protect the company. restrictive covenants. In determining the magnitude, duration, and conditions of the additional credits under ESP, the ECC undertook a holistic look at Mr. Herrman’s career compensation opportunities at the time of his transition to CEO, with the objective of ensuring the long-term retention of Mr. Herrman for the duration of his career as CEO while emphasizing performance-based pay. TheMr. Herrman’s new employment agreement that became effective at the start of fiscal 2020 does not include additional performance-based ESP credits for Mr. Herrman are not intended to continue beyond fiscal 2019.credits.
Ms. Meyrowitz has amounts previously deferred under our General Deferred Compensation Plan (GDCP), now closed to new deferrals, which earn notional interest at an annually adjusted rate based on U.S. Treasury securities. Our deferred compensation plans for NEOs are discussed with the compensation tables underNonqualified Deferred Compensation Plans.Plans. Company-provided amounts under these programs are included below as All Other Compensation and detailed in footnote 5 to the Summary Compensation Table.
EXPATRIATE-RELATEDPERQUISITES AND OTHER BENEFITS
As part of our global mobility program, our policies provide that executive officers and other eligible Associates who relocate at our request are eligible for certain relocation and expatriate benefits to facilitate the transition and international assignment, including tax assistance. These policies are intended to recognize and compensate Associates for the costs associated with living and working outside the Associates’ home countries, with the goal that Associates are not financially advantaged or disadvantaged as a result of their international assignment and related taxes. During fiscal 2018, Mr. MacMillan continued to be eligible for benefits under this program in connection with his prior assignments in the U.K. and Canada. These benefits are detailed in footnote 5 to the Summary Compensation Table.
PERQUISITES
We provide limited perquisites and other personal benefits to our NEOs, which are reviewed every year by the ECC. These benefits consist generally of automobile allowances, reimbursement for legal, financial and tax planning services, and payment of management life insurance premiums, and, for Mr. MacMillan, certain Canada-based benefits, none of which is grossed up for taxes. The amounts are included below as All Other Compensation and detailed in footnote 5 to the Summary Compensation Table.
38 The TJX Companies, Inc.
STOCK OWNERSHIP GUIDELINES AND HEDGING/PLEDGING PROHIBITIONS
We have stock ownership guidelines that apply to all of our executive officers. OurUnder these guidelines, updated during fiscal 2019, our CEO and President and our Executive Chairman are expected to attain stock ownership with a fair market value equal to at least fivesix times annual base compensation. Our Chief Financial Officer and each Senior Executive Vice President are expected to attain stock ownership with a fair market value of at least three times annual base compensation. At age 62, thethese ownership guidelines are reduced by fifty percent. TheseOur stock ownership guidelines are designed to align our executives’ interests with those of our shareholders and to encourage a long-term focus. As of April 9, 2018,8, 2019, each of our executive officers was in compliance with our stock ownership guidelines and policies. Our policies also prohibit our executive officers from engaging in pledging or hedging transactions with respect to TJX stock.
40 The TJX Companies, Inc.
EMPLOYMENT AGREEMENTS
The ECC has reviewed and approved, after consultation with Pearl Meyer, individual employment agreements for our NEOs that set theircertain terms of employment, including compensation, benefits, and termination and change of control provisions discussed underSeverance, Retirement, and Change of Control Provisions.Provisions. We believe that these employment agreements and related plans help retain our executives and support our succession planning process, including our CEO transition at the start of fiscal 2017.process. The ECC takes the terms of these agreements into account when approving compensation for our NEOs.
Each of our NEO employment agreements has a three-year term. Our agreements with Mr. Herrman and Ms. Meyrowitz, unless terminated earlier in accordance with their terms, continue until February 2, 2019. In February 2018,2019, we entered into new employment agreements with Mr. GoldenbergHerrman and Mr. Sherr,Ms. Meyrowitz, which became effective at the beginning of fiscal 20192020 and, unless terminated earlier in accordance with their terms, continue until January 29, 2022. The existing three-year agreements with Mr. Goldenberg, Mr. Sherr, and Mr. Canestrari, unless terminated earlier in accordance with their terms, continue until January 30, 2021. Mr. MacMillan is scheduled to retire from TJX in April 2018, and in January 2018 we entered into a letter agreement with him confirming the terms of his retirement.
The agreements with our NEOs establish a minimum level of base salary and provide for participation in the SIP, MIP, and LRPIP, at levels commensurate with the executive’s position and responsibilities and subject to terms established by the ECC, and also entitle the executives to participate in TJX’s fringe benefit and deferred compensation plans, including, in the case of Mr. Herrman and Ms. Meyrowitz, an automobile allowance commensurate with their respective positions and reimbursement of reasonable legal and financial advisor fees and costs incurred in negotiating the case of Mr. MacMillan, the company’s executive life insurance program.agreement. Mr. Herrman’s and Ms. Meyrowitz’s agreements that became effective at the start of fiscal 2020 also provide for minimum MIP and LRPIP target award levels during the term of the agreements.agreements, which were not increased from the target percentages provided under their previous agreements in effect during fiscal 2019. Mr. Herrman’s agreement providesthat became effective at the start of fiscal 2020 continues to provide for an enhanced benefits to himcompany match under our ESP, including an increased company match and his previous agreement in effect during fiscal 2019 provided for the additional performance-based company credits described above inDeferred Compensation.Compensation. Ms. Meyrowitz’s agreement that became effective at the start of fiscal 2020 provides for annual performance-based stock awards with a total grant date value of $5 million, that will be subject to satisfactionconsisting of performance criteriaPSUs with a three-year performance vesting period and RSUs, and also specifies interest rate assumptions for determining her SERP benefit. Mr. MacMillan’s
EXECUTIVE CHAIRMAN COMPENSATION
The ECC recognizes that the role of executive chairman varies across companies. In establishing compensation for Ms. Meyrowitz, our Executive Chairman, the ECC was advised by Pearl Meyer and evaluated other Fortune 200 companies with executive chairman positions and took into account the degree of active involvement that Ms. Meyrowitz has as part of the management team at TJX relative to other executive chairman roles that may be more limited or transitional in nature. Ms. Meyrowitz is an active and integral member of the executive management team in addition to serving as Chairman of the Board. In her role as Executive Chairman, she serves as a key resource in the areas of merchandising, marketing, and internal training, and provides support to our CEO, CFO, and other members of senior management, with an emphasis on strategic initiatives and long-term company strategy. Our Board believes strongly that Ms. Meyrowitz, who has wide ranging,in-depth knowledge of our business and the retail industry overall, continues to play a critical role as an executive at TJX in addition to providing effective leadership to the Board. During fiscal 2019, the ECC
2019 Proxy Statement 39
reviewed additional market information and advice from Pearl Meyer in connection with the new employment agreement includes provisions relatedwith Ms. Meyrowitz and determined that compensation for Ms. Meyrowitz continues to his movebe reasonable and appropriate in light of her duties and responsibilities to Canada during 2017 and his prior international assignments.TJX.
SEVERANCE, RETIREMENT, AND CHANGE OF CONTROL PROVISIONS
We provide benefits to our executive officers in connection with certain terminations of employment, and in connection with a change of control of TJX, under the terms of our employment agreements and plans. Each NEO has agreed to post-employmentnon-competition,non-solicitation and other covenants intended to protect our business. During fiscal 2019, each of our NEOs entered into participation agreements under our Executive Severance Plan (Severance Plan), which was established by the ECC after consultation with Pearl Meyer. The Severance Plan provides for payments and benefits upon a qualifying termination of employment (other than in connection with a change of control of TJX) and includes restrictive covenants and other conditions. Severance Plan benefits replace, with no significant changes, the severance benefits and related terms that previously applied to the NEOs under their employment agreements. The terms of certain of our long-term incentive awards under our SIP and LRPIP include special retirement vesting provisions for our NEOs and other participants, as discussed with the compensation tables below. Change of control benefits continue to be provided to our NEOs under the terms of their employment agreements. We believe that severance, retirement, and change of control protections assist in attracting and retaining high quality executives, in our succession planning, and in keeping themour executives focused on their responsibilities during any period in which a change of control may be contemplated or pending and that, more generally, it is important to define the relative obligations of TJX and our NEOs, including obtaining protection against competition and solicitation. We seek to achieve these objectives in a manner consistent with our other compensation objectives described above, taking into account contractual obligations, applicable law and current market practice, among other considerations. These provisions are described in more detail underPotential Payments upon Termination or Change of Control.Control.
POLICIES ON CLAWBACK, POLICYFORFEITURE AND RECOVERY OF COMPENSATION
We have aDuring fiscal 2019, the ECC reviewed our policies and practices related to compensation forfeiture and recovery, including our clawback policy and other recourse mechanisms. Our clawback policy, as amended by the Board in fiscal 2019, provides that, in the event of a material restatement of financial results, allows the Board based on available remedies, to seek recovery or forfeiturea Board committee will evaluate the circumstances and may, in its discretion, recover from any current or former executive officer of the portion of incentive compensation that was received by or vested in the executive officer during the three-year period prior to the determination that a restatement was required and that would not have been earned had performance been measured on the basis of the restated results where theresults. Our expanded clawback policy no longer requires a Board reasonably determinesdetermination that the executive engagedofficer engage in knowing or intentional fraudulent or illegal conductconduct. Instead, the amended policy provides the Board or a Board committee with the discretion to recover compensation in the event of a material restatement of financial results whether or not the executive officer is individually “at fault.”
Outside of our clawback policy, we also consider other potential recourse mechanisms as part of our approach to executive compensation. In addition to potential legal remedies and disciplinary or other employment actions that materially contributedmay be available to the needcompany, NEO compensation may be subject to forfeiture, recovery, or adjustment in a variety of circumstances under our other policies, plans and agreements, including forfeiture of compensation if an NEO’s employment is terminated for “cause” under the restatement.terms of our NEO employment agreements, which includes, among other things, willful misconduct that violates company policy and is materially harmful to the reputation or business of the company; forfeiture and recovery of compensation in the event an NEO breaches applicable restrictive covenants; and potential downward adjustments by the ECC to pay opportunities or incentive plan payouts.
In connection with its review of our compensation forfeiture and recovery practices during fiscal 2019, the ECC considered shareholder perspectives, our peer group and market practice, proxy advisor guidelines, proposed regulations and other legal considerations, as well as cultural factors and risk considerations specific to TJX. As a result of this review, we updated our clawback policy as described above and reviewed and updated our approach to terminations of employment for “cause” in our employment agreements.
2018 Proxy Statement40 41The TJX Companies, Inc.
ANNUAL COMPENSATION RISK ASSESSMENT
As discussed inCompensation Program Risk Assessment on p. 11,12, we consider our compensation policies and practices, including our executive officers’ compensation program, as part of our annual enterprise risk assessment process. The ECC considers, among other things, what risks could be created or encouraged by our executive compensation plans and arrangements and how those potential risks are monitored, mitigated, and managed. In fiscal 2018,2019, the ECC determined that our overall compensation policies and practices do not give rise to risks that are reasonably likely to have a material adverse effect on TJX.
TAX AND ACCOUNTING CONSIDERATIONS
We have historically structured incentive compensation arrangements with a view toward qualifying them as performance-based compensation exempt from the deduction limitations under Section 162(m) of the Internal Revenue Code (Section 162(m)), although. However, we have viewed and continue to view the availability of a tax deduction as only one relevant consideration. The ECC believes that its primary responsibility is to provide a compensation program that attracts, retains, and rewards the executive talent necessary for our success.
Federal tax legislation enacted in December 2017 eliminated the Section 162(m) performance-based compensation exemption prospectively and made other changes to Section 162(m), but with asuch that compensation paid to our executive officers in excess of $1 million in fiscal 2019 and future years will not generally be deductible unless it qualifies for transition rule that preserves the performance-based compensation exemption forrelief applicable to certain arrangements and awards in place as of November 2, 2017. We intendHowever, there is no assurance that historical compensation intended to be exempt from Section 162(m) will be deductible in future years. Notwithstanding the fact that compensation may no longer be treated as exempt performance-based compensation or otherwise deductible under Section 162(m), the ECC expects to continue to administer arrangements and awards subject to this transition rule with a view toward preserving their eligibility for theemphasize performance-based compensation exemptionand believes that its primary responsibility is to the extent practicable and consistent with thenon-taxprovide a compensation program objectives noted above.that attracts, retains, incentivizes, and rewards the executive talent necessary for our success.
Compensation Committee Report
We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on these reviews and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report onForm10-K for the fiscal year ended February 3, 2018.2, 2019.
Executive Compensation Committee
Alan M. Bennett,Chairman
José B. AlvarezRosemary T. Berkery*
Jackwyn L. Nemerov
Willow B. Shire
*Ms. Berkery was appointed to the ECC in September 2018.
42 2019 Proxy StatementThe TJX Companies, Inc. 41
The following table provides information concerning compensation for our principal executive officer, our principal financial officer and our three other most highly paid executive officers during fiscal 20182019 (collectively, our named executive officers (NEOs)):
Name and Principal Position | Fiscal Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compen- | Total | Fiscal Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compen- | Total | ||||||||||||||||||||||||||||||||||
Ernie Herrman(6)
| 2018
| $ 1,619,232
| —
| $ 9,000,001
|
| $ 618,910
|
| $ 3,069,753
| $ 1,286,199
| $ 1,286,076
| $ 16,880,171
| |||||||||||||||||||||||||||||||||||||||||
Ernie Herrman | 2019 | $ 1,600,001 | — | $ 9,632,857 | — | $ 5,567,597 | $ 409,260 | $ 1,613,055 | $ 18,822,770 | |||||||||||||||||||||||||||||||||||||||||||
Chief Executive Officer and President | 2017
| 1,525,001
| —
| 9,000,025
|
| 613,574
|
| 5,036,974
| 793,306
| 1,567,986
| 18,536,866
| 2018 | 1,619,232 | — | 9,000,001 | $ 618,910 | 3,069,753 | 1,286,199 | 1,286,076 | 16,880,171 | ||||||||||||||||||||||||||||||||
2016 | 1,382,309 | — | 14,106,551 | 527,072 | 3,614,627 | 160,103 | 390,093 | 20,180,755 | 2017 | 1,525,001 | — | 9,000,025 | 613,574 | 5,036,974 | 793,306 | 1,567,986 | 18,536,866 | |||||||||||||||||||||||||||||||||||
Scott Goldenberg
| 2018
| 905,770
| —
| 3,068,400
|
| 279,813
|
| 962,645
| 483,738
| 133,767
| 5,834,133
| 2019 | 931,156 | — | 3,579,297 | — | 1,390,128 | 253,255 | 276,116 | 6,429,952 | ||||||||||||||||||||||||||||||||
SEVP, Chief Financial Officer | 2017
| 813,462
| —
| 2,751,700
|
| 277,323
|
| 1,293,405
| 374,162
| 245,798
| 5,755,850
| 2018 | 905,770 | — | 3,068,400 | 279,813 | 962,645 | 483,738 | 133,767 | 5,834,133 | ||||||||||||||||||||||||||||||||
2016 | 738,463 | — | 2,101,500 | 285,546 | 1,151,396 | 131,427 | 226,875 | 4,635,207 | 2017 | 813,462 | — | 2,751,700 | 277,323 | 1,293,405 | 374,162 | 245,798 | 5,755,850 | |||||||||||||||||||||||||||||||||||
Carol Meyrowitz(7)
| 2018
| 1,053,846
| —
| 5,000,035
|
| —
|
| 3,040,563
| 4,217,594
| 43,190
| 13,355,228
| |||||||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | 2019 | 1,040,000 | — | 5,000,065 | — | 3,629,064 | 1,519,967 | 71,981 | 11,261,077 | |||||||||||||||||||||||||||||||||||||||||||
Executive Chairman | 2017
| 1,000,002
| —
| 5,000,075
|
| —
|
| 4,226,712
| 4,232,666
| 43,514
| 14,502,969
| 2018 | 1,053,846 | — | 5,000,035 | — | 3,040,563 | 4,217,594 | 43,190 | 13,355,228 | ||||||||||||||||||||||||||||||||
2016 | 1,575,002 | — | 10,000,030 | 631,618 | 5,706,608 | 1,597,465 | 48,974 | 19,559,697 | 2017 | 1,000,002 | — | 5,000,075 | — | 4,226,712 | 4,232,666 | 43,514 | 14,502,969 | |||||||||||||||||||||||||||||||||||
Michael MacMillan(8)
| 2018
| 1,114,648
| —
| 3,068,400
|
| 279,813
|
| 1,280,382
| 213,073
| 260,891
| 6,217,207
| |||||||||||||||||||||||||||||||||||||||||
SEVP, Group President | 2017
| 1,052,309
| —
| 3,144,800
|
| 277,323
|
| 1,730,730
| 413,079
| 562,149
| 7,180,390
| |||||||||||||||||||||||||||||||||||||||||
2016 | 1,003,847 | — | 2,802,000 | 285,546 | 1,613,318 | 185,561 | 1,182,833 | 7,073,105 | ||||||||||||||||||||||||||||||||||||||||||||
Richard Sherr
| 2018
| 1,070,195
| —
| 3,068,400
|
| 322,773
|
| 1,027,233
| 563,104
| 150,210
| 6,201,915
| 2019 | 1,067,309 | — | 3,623,261 | — | 1,508,775 | 234,763 | 310,932 | 6,745,040 | ||||||||||||||||||||||||||||||||
SEVP, Group President | 2017
| 921,232
| —
| 3,144,800
|
| 319,955
|
| 1,393,079
| 410,892
| 272,812
| 6,462,770
| 2018 | 1,070,195 | — | 3,068,400 | 322,773 | 1,027,233 | 563,104 | 150,210 | 6,201,915 | ||||||||||||||||||||||||||||||||
2016 | 855,540 | — | 3,511,600 | 329,420 | 1,313,292 | 90,222 | 256,620 | 6,356,694 | 2017 | 921,232 | — | 3,144,800 | 319,955 | 1,393,079 | 410,892 | 272,812 | 6,462,770 | |||||||||||||||||||||||||||||||||||
Kenneth Canestrari | 2019 | 855,290 | — | 2,755,996 | — | 1,140,521 | 135,115 | 257,167 | 5,144,089 | |||||||||||||||||||||||||||||||||||||||||||
SEVP, Group President |
(1) | Reflects salary earned during the fiscal year, including any salary adjustments made during the fiscal year. Fiscal 2018 was a53-week year. |
(2) | Reflects the aggregate grant date fair value of stock and option awards, determined in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. Stock awards are valued based on the closing price of our common stock on the NYSE on the grant date. The grant date fair value of PSUs is reported based on the probable outcome of the performance conditions (target) on the grant date. Assuming performance at the maximum (200%) payout level, the value of PSUs granted in fiscal 2019 was: Mr. Herrman, $14,785,645; Mr. Goldenberg, $5,528,460; Ms. Meyrowitz, $7,600,047; Mr. Sherr, $5,518,415; and Mr. Canestrari, $4,249,875. Option awards are valued using the Black-Scholes option pricing model. The underlying valuation assumptions for equity awards granted during fiscal 2019 are further discussed in Note H to our audited financial statements filed with our Annual Report on Form10-K for fiscal 2019. All share and share-based numbers in this table (and subsequent tables) reflect the two-for-one stock split effected on November 6, 2018. |
(3) | Reflects amounts earned under both MIP and LRPIP. For fiscal |
(4) | Reflects the change in the actuarial present value of accumulated benefit obligations under our broad-based pension plan and our SERP. Under SEC rules, these pension values reflect actuarial assumptions described underPension Benefits, below. Our NEOs did not receive above-market or preferential earnings onnon-tax qualified deferred compensation. |
(5) | The table below provides additional details about the amounts listed under All Other Compensation for fiscal |
2018 Proxy Statement42 43The TJX Companies, Inc.
Name | Automobile Benefit | Reimbursement for Financial Planning Services | Employer Contributions or Credits Under Savings Plans(a) | Company Paid Amounts for Insurance/ Health(b) | Expatriate- Related Expenses(c) | Total All Other Compensation | Automobile Benefit | Reimbursement for Financial, Tax Planning and Legal Services | Employer Contributions Under Savings Plans(a) | Company Paid Amounts for Life Insurance(b) | Total All Other Compensation | |||||||||||||||||||||||||||||||||
Ernie Herrman | $ 36,594 | $ 1,500 | $ 1,246,941 | $ 1,041 | — | $ 1,286,076 | $35,904 | $10,605 | $1,565,505 | $1,041 | $1,613,055 | |||||||||||||||||||||||||||||||||
Scott Goldenberg | 36,594 | 1,500 | 94,632 | 1,041 | — | 133,767 | 35,904 | 1,500 | 237,671 | 1,041 | 276,116 | |||||||||||||||||||||||||||||||||
Carol Meyrowitz | 36,594 | 1,500 | 4,055 | 1,041 | — | 43,190 | 35,904 | 29,531 | 5,505 | 1,041 | 71,981 | |||||||||||||||||||||||||||||||||
Michael MacMillan | 37,756 | — | 87,877 | 6,178 | 129,080 | 260,891 | ||||||||||||||||||||||||||||||||||||||
Richard Sherr | 36,594 | 1,500 | 111,075 | 1,041 | — | 150,210 | 35,904 | 2,000 | 271,987 | 1,041 | 310,932 | |||||||||||||||||||||||||||||||||
Kenneth Canestrari | 35,904 | 1,500 | 218,722 | 1,041 | 257,167 |
(a) | Reflects matching contributions under our 401(k) plan for each NEO, matching credits under our ESP for each NEO (other than Ms. Meyrowitz) |
(b) | Reflects company-paid amounts under our U.S. management life insurance |
program.
Our NEOs were entitled under their employment agreements to participate in the SIP, MIP, and LRPIP and during fiscal 2019 received cash incentives and equity incentives only pursuant to these plans during fiscal 2018.plans. The employment agreements with Ms. Meyrowitz and Mr. Herrman provideprovided for target award opportunities during the term of the agreement of at least 150% of their respective base salaries for MIP and at least 100% of their respective base salaries for LRPIP, payment of reasonable fees of legal and financial advisors incurred in negotiating their agreements, and an automobile allowance commensurate with their positions. TheseThe employment agreements also provided for performance-based stock awardsagreement with Ms. Meyrowitz in effect during fiscal 20162019 provided for each executive in connection with our CEO transition and, starting in fiscal 2017, annual performance-based stock awards forwith a grant date value of $5 million that would be subject to satisfaction of performance criteria with a three-year performance vesting period, and the employment agreement with Ms. Meyrowitz that became effective at the start of fiscal 2020 provides for annual stock awards during the term of theher agreement as described in the CD&A on p. 41. Under his employment agreement, Mr. MacMillan was eligible for the company’s executive life insurance program and for any remaining benefits in connection with his prior international assignments, including applicable tax equalization benefits, and also was eligible to receive certain cash benefits (otherwise denominated in U.S. dollars) in Canadian dollars.39.
All of our NEOs were eligible to participate in ourtax-qualified defined benefit plan and were eligible to make deferrals to our 401(k) plan and our ESP for all or part of fiscal 2018.2019. All of our NEOs except Ms. Meyrowitz received matching credits under the ESP and were eligible to participate in our alternative SERP benefit for all or part of fiscal 2018.2019. Mr. Herrman received additional performance-based company credits for fiscal 20182019 under our ESP in connection withunder the terms of his employment agreement that became effective at the time of his transition to CEO,in effect during fiscal 2019, as described in the CD&A on p. 40.38. Ms. Meyrowitz participated in our primary SERP benefit. Mr. MacMillan was also eligible to participate in Canada-based retirement and savings programs, including the CESP, during fiscal 2018. Our NEOs were also entitled to receive an automobile benefit and to participate in fringe benefit plans and programs made available to executives generally (including Canada-based benefits for Mr. MacMillan).generally.
44 2019 Proxy StatementThe TJX Companies, Inc. 43
GRANTS OF PLAN-BASED AWARDS IN FISCAL 20182019
The following table reports potential payouts under our cash incentive plans and all other stock and option awards that were granted during fiscal 20182019 to our NEOs:
Name and
| Grant Date
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards($)(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards(#)
| All Other Stock Awards: Number of Shares of Stock or Units
| All Other Option Awards: Number of Securities Under- lying Options(#)
| Exercise or Base Price of Option Awards ($)(2)
| Grant Fair Value Stock and Option Awards ($)(3)
| |||||||||||||||||||||||||||||||||||||||
Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| |||||||||||||||||||||||||||||||||||||||||
Ernie Herrman | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(4) | — | $ | 2,428,848 | $ | 4,857,696 | |||||||||||||||||||||||||||||||||||||||||
LRPIP(5) | — | 1,600,000 | 3,200,000 | |||||||||||||||||||||||||||||||||||||||||||
Stock Options | 9/14/17 | 43,220 | $ | 73.21 | $ | 618,910 | ||||||||||||||||||||||||||||||||||||||||
Stock Awards(6) | 4/4/17 | — | 117,325 | — | 9,000,001 | |||||||||||||||||||||||||||||||||||||||||
Scott Goldenberg | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(4) | — | 498,173 | 996,347 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(5) | — | 500,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Stock Options | 9/14/17 | 19,540 | 73.21 | 279,813 | ||||||||||||||||||||||||||||||||||||||||||
Stock Awards(6) | 4/4/17 | — | 40,000 | — | 3,068,400 | |||||||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(4) | — | 1,580,770 | 3,161,539 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(5) | — | 1,040,000 | 2,080,000 | |||||||||||||||||||||||||||||||||||||||||||
Stock Options | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Stock Awards(6) | 4/4/17 | — | 65,181 | — | 5,000,035 | |||||||||||||||||||||||||||||||||||||||||
Michael MacMillan | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(4) | — | 603,181 | 1,206,363 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(5) | — | 700,000 | 1,400,000 | |||||||||||||||||||||||||||||||||||||||||||
Stock Options | 9/14/17 | 19,540 | 73.21 | 279,813 | ||||||||||||||||||||||||||||||||||||||||||
Stock Awards(6) | 4/4/17 | — | 40,000 | — | 3,068,400 | |||||||||||||||||||||||||||||||||||||||||
Richard Sherr | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(4) | — | 588,607 | 1,177,214 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(5) | — | 700,000 | 1,400,000 | |||||||||||||||||||||||||||||||||||||||||||
Stock Options | 9/14/17 | 22,540 | 73.21 | 322,773 | ||||||||||||||||||||||||||||||||||||||||||
Stock Awards(6) | 4/4/17 | — | 40,000 | — | 3,068,400 |
Name and Award Type
| Grant Date
| Estimated Future Payouts UnderNon-Equity Incentive Plan Awards($)(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards(#)
| All Other Stock Awards: Number of Shares of Stock or Units
| All Other Option Awards: Number of Securities Under- lying Options(#)
| Exercise or Base Price of Option Awards ($)
| Grant Date Fair Value Stock and Option Awards ($)(2)
| |||||||||||||||||||||||||||||||||||||||
Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| |||||||||||||||||||||||||||||||||||||||||
Ernie Herrman | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(3) | — | $ | 2,400,002 | $ | 4,800,003 | |||||||||||||||||||||||||||||||||||||||||
LRPIP(4) | — | 1,600,000 | 3,200,000 | |||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 4/3/18 | 44,898 | 179,590 | 359,180 | $ | 7,392,822 | ||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/3/18 | 54,416 | 2,240,035 | |||||||||||||||||||||||||||||||||||||||||||
Scott Goldenberg | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(3) | — | 512,136 | 1,024,272 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(4) | — | 500,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 4/3/18 | 16,788 | 67,150 | 134,300 | 2,764,230 | |||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/3/18 | 19,800 | 815,067 | |||||||||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(3) | — | 1,560,000 | 3,120,000 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(4) | — | 1,040,000 | 2,080,000 | |||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 4/3/18 | 23,078 | 92,312 | 184,624 | 3,800,023 | |||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/3/18 | 29,152 | 1,200,042 | |||||||||||||||||||||||||||||||||||||||||||
Richard Sherr | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(3) | — | 587,020 | 1,174,040 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(4) | — | 700,000 | 1,400,000 | |||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 4/3/18 | 16,757 | 67,028 | 134,056 | 2,759,208 | |||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/3/18 | 20,990 | 864,053 | |||||||||||||||||||||||||||||||||||||||||||
Kenneth Canestrari | ||||||||||||||||||||||||||||||||||||||||||||||
MIP(3) | — | 427,645 | 855,290 | |||||||||||||||||||||||||||||||||||||||||||
LRPIP(4) | — | 400,000 | 800,000 | |||||||||||||||||||||||||||||||||||||||||||
PSUs(5) | 4/3/18 | 12,905 | 51,620 | 103,240 | 2,124,937 | |||||||||||||||||||||||||||||||||||||||||
RSUs(6) | 4/3/18 | 15,330 | 631,059 |
(1) | Non-Equity Incentive Plan amounts above reflect short-term cash incentives granted under our MIP and long-term cash incentives granted under LRPIP. Our MIP and LRPIP are discussed above in the CD&A. |
(2) |
Reflects the aggregate grant date fair value of |
Reflects award opportunities under the fiscal |
Reflects award opportunities under the fiscal |
Reflects |
(6) | Reflects RSUs granted under the SIP discussed on p. 35 in the CD&A. |
2018 Proxy Statement44 45The TJX Companies, Inc.
In fiscal 2018,2019, we granted all equity incentives, including stock optionsPSUs and performance-based stock awards, under SIP. Our stock options have a maximum term of ten years from the grant date and generally vest in equal annual installments over three years and in the event of certain terminations of employment. In the event an NEO’s employment is terminated by reason of death, disability, or retirement at or after age 65 with five or more years of service, vested options generally remain exercisable for up to five years following termination, unless the option terminates on an earlier date pursuant to its terms. Following a retirement at or after age 65 with ten or more years of service, or a retirement at or after age 60 with twenty or more years of service, vested options generally remain exercisable for five years following termination and unvested options continue to vest for the three-year period following retirement on the same basis as if the NEO had not retired and generally remain exercisable for five years following retirement, unless the option terminates on an earlier date pursuant to its terms. In the event of any other termination, other than a termination for cause, vested options for our NEOs generally remain exercisable for up to six months following termination (as specifiedRSUs, under the terms of the option), unless the option terminates on an earlier date pursuant to its terms. All options, whether or not then vested, are forfeited on a termination for cause.
SIP. The performance-based stock awardsPSUs have both service-based and performance-based vesting conditions. For performance-based stock awardsPSUs granted to our NEOs in fiscal 2018,2019, the service-based conditions are satisfied by continuous employment through one or more specified dates or in the event of certain terminations of employment (as described below) and the performance-based conditions are tied to achievement of the targeted cumulativepre-tax income performanceEPS Growth and ROIC targets for the fiscal 2018-2020 LRPIP2019-2021 cycle, as described in the CD&A on p. 39.35. The entire unvested award is forfeited in whole or in part if achievement is below the specifiedthreshold vesting level. When shares of stock are vested and delivered under a participant’s performance-based stockPSU award, vests, the participant is entitled to any dividends (or dividend equivalents)equivalents for the restricted period.
The RSUs have service-based vesting conditions. For RSU awards granted to our NEOs in fiscal 2019, the service-based conditions are satisfied by continuous employment through April 10, 2021 or in the event of certain terminations of employment (as described below). When shares of stock are vested and delivered under an RSU award, the participant is entitled to any dividend equivalents for the restricted period.
46 2019 Proxy StatementThe TJX Companies, Inc. 45
OUTSTANDING EQUITY AWARDS AT FISCAL 20182019 YEAR-END
The following table provides information on outstanding option and stock awards held as of February 3, 20182, 2019 by our NEOs:
Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||||
Name
| Number of Securities Underlying Unexercised Options Exercisable (#)(1)
| Number of Securities Underling Unexercised Options Unexercisable (#)(1)
| Equity Incentive Plan Awards:
| Option Exercise Price ($)
| Option Expiration Date
| Number Shares Units of That Vested (#)(3)
| Market of Shares or Units of That Have Vested ($)(2)(3)
| Equity Incentive
| ||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Unearned Options
|
|
| Number of Unearned Shares, Units or Other That Have Not (#)(3)
|
|
| Market or Payout of Unearned Shares, or Other Rights That Have Not Vested ($)(2)(3)
|
| ||||||||||||||||||||||||||||||||
Ernie Herrman | ||||||||||||||||||||||||||||||||||||||||
53,140 | 0 | — | $ | 45.17 | 9/20/22 | |||||||||||||||||||||||||||||||||||
46,552 | 0 | — | 56.72 | 9/19/23 | ||||||||||||||||||||||||||||||||||||
44,230 | 0 | — | 59.70 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
24,267 | 12,133 | — | 72.54 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
14,057 | 28,113 | — | 75.04 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
0 | 43,220 | — | 73.21 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
200,186 | $ | 15,708,595 | 231,800 | $ | 18,189,346 | |||||||||||||||||||||||||||||||||||
Scott Goldenberg | ||||||||||||||||||||||||||||||||||||||||
6,468 | 0 | — | 56.72 | 9/19/23 | ||||||||||||||||||||||||||||||||||||
15,973 | 0 | — | 59.70 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
13,147 | 6,573 | — | 72.54 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
6,354 | 12,706 | — | 75.04 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
0 | 19,540 | — | 73.21 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
30,000 | 2,354,100 | 75,000 | 5,885,250 | |||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | ||||||||||||||||||||||||||||||||||||||||
108,320 | 0 | — | 26.555 | 9/07/21 | ||||||||||||||||||||||||||||||||||||
17,666 | 0 | — | 59.70 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
29,080 | 14,540 | — | 72.54 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
0 | 0 | 128,779 | 10,105,288 | |||||||||||||||||||||||||||||||||||||
Michael MacMillan | ||||||||||||||||||||||||||||||||||||||||
7,986 | 0 | — | 59.70 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
13,147 | 6,573 | — | 72.54 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
6,354 | 12,706 | — | 75.04 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
0 | 19,540 | — | 73.21 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
40,000 | 3,138,800 | 80,000 | 6,277,600 | |||||||||||||||||||||||||||||||||||||
Richard Sherr | ||||||||||||||||||||||||||||||||||||||||
15,167 | 7,583 | — | 72.54 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
7,330 | 14,660 | — | 75.04 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
0 | 22,540 | — | 73.21 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
40,000 | 3,138,800 | 80,000 | 6,277,600 |
2018 Proxy Statement 47
Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||||
Name
| Number of Securities Underlying Unexercised Options Exercisable (#)(1)
| Number of Securities Underling Unexercised Options Unexercisable (#)(1)
| Equity Incentive Plan Awards:
| Option Exercise Price ($)
| Option Expiration Date
| Number That Vested (#)(3)
| Market of Shares That Have Vested ($)(2)(3)
| Equity Incentive
| ||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Unearned Options
| Number of Unearned Shares, Units or Other That Have Not (#)(3)
| Market or Payout of Unearned Shares, or Other Rights That Have Not Vested ($)(2)(3)
| ||||||||||||||||||||||||||||||||||||||
Ernie Herrman | ||||||||||||||||||||||||||||||||||||||||
52,280 | — | — | $22.59 | 9/20/22 | ||||||||||||||||||||||||||||||||||||
93,104 | — | — | 28.36 | 9/19/23 | ||||||||||||||||||||||||||||||||||||
88,460 | — | — | 29.85 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
72,800 | — | — | 36.27 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
56,228 | 28,112 | — | 37.52 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
28,814 | 57,626 | — | 36.61 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
423,738 | $ | 20,720,788 | 414,240 | $ | 20,256,336 | |||||||||||||||||||||||||||||||||||
Scott Goldenberg | ||||||||||||||||||||||||||||||||||||||||
39,440 | — | — | 36.27 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
25,414 | 12,706 | — | 37.52 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
13,028 | 26,052 | — | 36.61 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
89,800 | 4,391,220 | 147,150 | 7,195,635 | |||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | ||||||||||||||||||||||||||||||||||||||||
216,640 | — | — | 13.28 | 9/07/21 | ||||||||||||||||||||||||||||||||||||
35,332 | — | — | 29.85 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
87,240 | — | — | 36.27 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
156,348 | 7,645,417 | 222,674 | 10,888,759 | |||||||||||||||||||||||||||||||||||||
Richard Sherr | ||||||||||||||||||||||||||||||||||||||||
15,166 | — | — | 36.27 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
14,660 | 14,660 | — | 37.52 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
15,028 | 30,052 | — | 36.61 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
100,990 | 4,938,411 | 147,028 | 7,189,669 | |||||||||||||||||||||||||||||||||||||
Kenneth Canestrari | ||||||||||||||||||||||||||||||||||||||||
31,920 | — | — | 29.85 | 9/10/24 | ||||||||||||||||||||||||||||||||||||
39,440 | — | — | 36.27 | 9/17/25 | ||||||||||||||||||||||||||||||||||||
25,414 | 12,706 | — | 37.52 | 9/15/26 | ||||||||||||||||||||||||||||||||||||
13,028 | 26,052 | — | 36.61 | 9/14/27 | ||||||||||||||||||||||||||||||||||||
65,330 | 3,194,637 | 111,620 | 5,458,218 |
(1) | All option awards have a maximum term of ten years from the grant date and vest in equal annual installments over three years, beginning on the first anniversary of the grant date, and upon certain employment terminations. |
46 The TJX Companies, Inc.
(2) | Market values reflect the closing price of our common stock on the NYSE on February |
(3) | The stock awards |
Name | Category | Number of Unvested Shares/Units | Performance Conditions(a) | Vesting Date(b) | ||||||
Ernie Herrman | ||||||||||
Fiscal |
| |||||||||
| PBSA | Fiscal | ||||||||
3/20(c) | ||||||||||
| PSU | Fiscal | 3/21(c) | |||||||
RSU | 54,416 | — | 4/ | |||||||
Career Shares | 140,372 | Fiscal 2017 MIP (Corporate) | Prorated annual vesting beginning 2/1/20(d) | |||||||
Scott Goldenberg | PBSA | 70,000 | Fiscal 2017-19 LRPIP | 4/1/19 | ||||||
PBSA | 80,000 | Fiscal 2018-20 LRPIP | 3/20(c) | |||||||
| PSU | Fiscal | 3/21(c) | |||||||
RSU | 19,800 | — | 4/ | |||||||
Carol Meyrowitz | PBSA | 127,196 | Fiscal2017-19 LRPIP | 4/ | ||||||
PBSA | 130,362 | Fiscal2018-20 LRPIP | 3/20(c) | |||||||
| PSU | Fiscal | 3/21(c) | |||||||
RSU | 29,152 | — | 4/ | |||||||
Richard Sherr | PBSA | 80,000 | Fiscal2017-19 LRPIP | 4/ | ||||||
PBSA | 80,000 | Fiscal 2018-20 LRPIP | 3/20(c) | |||||||
PSU | 67,028 | Fiscal 2019-21 PSU Goals | 3/21(c) | |||||||
RSU | 20,990 | — | 4/10/21 | |||||||
Kenneth Canestrari | PBSA | 50,000 | Fiscal 2017-19 LRPIP | 4/1/19 | ||||||
PBSA | 60,000 | Fiscal 2018-20 LRPIP | 3/20(c) | |||||||
PSU | 51,620 | Fiscal 2019-21 PSU Goals | 3/21(c) | |||||||
RSU | 15,330 | — | 4/10/21 |
(a) | The performance-based vesting conditions for PSUs are discussed on page 35 of the CD&A. Performance-based vesting conditions for PBSAs will be satisfied if performance under the applicable plan, as certified by the ECC, results in a payment of at least 67% of the target award payout for the performance period. If the payout is less than 67% for the performance period, a prorated portion of the unvested award will be forfeited. If no payout is achieved for the performance period, the entire unvested award will be forfeited. |
(b) | PBSAs and PSUs have service-based vesting conditions that will be satisfied by continued employment through the last day of the three-year performance |
(c) | Expected date of ECC certification of the applicable performance results, which typically occurs in March or April after the end of the performance cycle. |
(d) | Mr. Herrman’s performance-based career shares, granted in fiscal 2016 in connection with his transition to Chief Executive Officer, are restricted stock units that are scheduled to vest in full at the end of fiscal 2026 withpro-rated annual vesting beginning at the end of fiscal 2020, subject to his continued employment with TJX. Performance conditions for the career shares award were satisfied based on fiscal 2017 corporate MIP performance results. |
48 2019 Proxy StatementThe TJX Companies, Inc. 47
OPTION EXERCISES AND STOCK AWARDS VESTED DURING FISCAL 20182019
The following table provides information relating to option exercises and performance-based stock award vesting for our NEOs during fiscal 2018:2019:
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | ||||||||||||||||||||||||
Ernie Herrman | 70,380 | $ | 3,695,090 | 130,000 | $ 9,985,300 | 54,000 | $1,162,461 | 260,000 | $10,563,800 | |||||||||||||||||||||||
Scott Goldenberg | 0 | 0 | 30,000 | 2,304,300 | 44,882 | 547,379 | 60,000 | 2,437,800 | ||||||||||||||||||||||||
Carol Meyrowitz | 91,115 | 1,905,345 | 140,371 | 11,005,086 | — | — | — | — | ||||||||||||||||||||||||
Michael MacMillan | 16,391 | 333,547 | 40,000 | 3,072,400 | ||||||||||||||||||||||||||||
Richard Sherr | 9,213 | 116,913 | 40,000 | 3,072,400 | 44,994 | 244,665 | 80,000 | 3,250,400 | ||||||||||||||||||||||||
Kenneth Canestrari | 43,170 | 609,634 | 40,000 | 1,625,200 |
(1) | Represents the stock price on the NYSE at exercise minus the option exercise price multiplied by the number of shares acquired on exercise. |
(2) | Represents the fair market value of the shares on the vesting date, calculated as the closing stock price on the NYSE on the vesting date (or the previous business day if vesting occurred during a weekend) multiplied by the number of shares vesting. |
In the U.S., we have atax-qualified defined benefit plan, or Retirement Plan, and a nonqualified Supplemental Executive Retirement Plan, or SERP. We do not have a policy of granting extra years of credited service for purposes of these plans. Our Retirement Plan was closed to new hires as of February 1, 2006, although participants employed prior to that date continue to accrue benefits. We have not offered primary SERP benefits to any new participants in many years and do not currently intend to do so in the future, although we continue to offer an alternative SERP benefit to eligible participants whose Retirement Plan benefits are affected by certain limitations, as described below.
Under our Retirement Plan, participants accrue a benefit payable as an annuity at retirement. Once participation has commenced, after an initialone-year eligibility period, the amount accrued each year, expressed as a life annuity commencing at age 65, is 1% of eligible compensation (base salary and MIP awards) up to a periodically adjusted limit ($128,000133,000 in calendar 20182019 and $124,000$128,000 in calendar 2017)2018) and 1.4% of eligible compensation in excess of that limit. For years of service in excess of 35, the accrual rate is 1% per year of eligible compensation. Compensation for any year in excess of another periodically adjusted limit, currently $275,000,$280,000, is disregarded for these purposes. Eligible participants are also entitled to supplemental credits. Benefits under the Retirement Plan generally vest after five years of vesting service. A vested participant who retires or whose employment terminates prior to age 65 with at least ten years of vesting service may elect to receive a reduced annuity benefit commencing at age 55 or later. If the participant dies before commencing his or her benefit, apre-retirement death benefit is payable to the participant’s surviving spouse.
Under our SERP, the primary benefit provides participants who retire at or after age 55 with at least ten years of service a benefit equal to the value of an annuity commencing at age 65 providing annual payments up to a maximum of 50% of the participant’s final average earnings, less other employer-provided retirement benefits and social security benefits. The primary SERP benefit is adjusted for interest for participants who retire after age 65. Ms. Meyrowitz is the only one of our NEOs eligible for a SERP primary benefit and has accrued the full benefit except for any increases related to final average earnings.the interest adjustment noted above. Under her employment agreement, Ms. Meyrowitz is entitled to specified interest rate averaging assumptions if more favorable than her primary benefit under existing SERP terms. In determining final average earnings, the primary SERP includes base salary and MIP, but not LRPIP, and uses the highest average of five years over the preceding ten years. The alternative SERP benefit provides participants whose Retirement Plan benefits are affected by Internal Revenue Code benefit limitations with the amount of the benefits lost by reason of those limitations. Participants who are eligible for the primary benefit are eligible to receive the alternative benefit in lieu of the primary benefit if it provides a greater benefit at the time of retirement or other termination of employment.
2018 Proxy Statement 49
Benefits under SERP are payable following retirement or other termination of employment in installments or in certain other forms of actuarially equivalent value, including a lump sum. If the participant dies prior to retirement or other termination of employment, apre-retirement death benefit is payable to the participant’s surviving spouse.
48 The TJX Companies, Inc.
PENSION BENEFITS FOR FISCAL 20182019
The following table provides information on pension benefits for our NEOs eligible for these benefits as of February 3, 2018.2, 2019. All of our NEOs are fully vested in their Retirement Plan and SERP benefits.
Name | Plan Name | Number of Years of Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments Made During Last Fiscal Year | Plan Name | Number of Years Service(1) | Present Value of Accumulated Benefit(2) | Payments Made During Last Fiscal Year | ||||||||||||||||||||||||||||||||||||
Ernie Herrman | Retirement Plan | 28 | $ | 670,268 | — | Retirement Plan | 29 | $ | 692,990 | — | ||||||||||||||||||||||||||||||||||
SERP (Alternative) | 28 | 4,495,932 | — | SERP (Alternative) | 29 | 4,882,470 | — | |||||||||||||||||||||||||||||||||||||
Scott Goldenberg | Retirement Plan | 25 | 799,888 | — | Retirement Plan | 26 | 847,567 | — | ||||||||||||||||||||||||||||||||||||
SERP (Alternative) | 25 | 1,532,791 | — | SERP (Alternative) | 26 | 1,738,367 | — | |||||||||||||||||||||||||||||||||||||
Carol Meyrowitz | Retirement Plan | 31 | 977,840 | — | Retirement Plan | 32 | 1,030,110 | — | ||||||||||||||||||||||||||||||||||||
SERP (Primary) | 20 | 36,345,924 | — | SERP (Primary) | 20 | 37,813,621 | — | |||||||||||||||||||||||||||||||||||||
Michael MacMillan | Retirement Plan | 12 | 335,611 | — | ||||||||||||||||||||||||||||||||||||||||
SERP (Alternative) | 12 | 1,847,938 | — | |||||||||||||||||||||||||||||||||||||||||
Richard Sherr | Retirement Plan | 25 | 755,010 | — | Retirement Plan | 26 | 790,031 | — | ||||||||||||||||||||||||||||||||||||
SERP (Alternative) | 25 | 2,095,205 | — | SERP (Alternative) | 26 | 2,294,947 | — | |||||||||||||||||||||||||||||||||||||
Kenneth Canestrari | Retirement Plan | 25 | 536,690 | — | ||||||||||||||||||||||||||||||||||||||||
SERP (Alternative) | 25 | 1,102,309 | — |
(1) | Participants in our Retirement Plan and our alternative SERP benefit program began to accrue credited service upon participation in the plans, generally after one year of service with TJX. Service credited for purposes of our primary SERP benefit is based on years of service with TJX but with a maximum of 20 years of service. |
(2) | Under SEC rules, for purposes of calculating the present value of the accumulated pension benefits in the Pension Benefits table we assumed that each NEO commences his or her benefit at age 65 (or current age, if older than 65) and we used the same assumptions used and described in Note I to our audited financial statements filed with our Annual Report on Form10-K for fiscal |
NONQUALIFIED DEFERRED COMPENSATION PLANS
We have an Executive Savings Plan, or ESP, which is a nonqualified deferred compensation plan available to key employees and our directors. Under the ESP, our NEOs and other eligible Associates can elect to defer up to 20% of base salary and up to 100% of any MIP and LRPIP awards and our directors can elect to defer annual retainers. Our NEOs (other than Ms. Meyrowitz) were eligible during all or a portion of fiscal 20182019 to receive matching credits on base salary deferrals of up to 10% of base salary, with an enhanced level of matching credits generally based on the executive’s job level, age and/or pension eligibility for a period of up to 15 years. For calendar 2017,2018, the potential match for these executives was 100% (or, for Mr. Herrman, 150%) of their eligible deferrals, plus, if our MIP performance resulted in a payout between 90% and 125% (or higher) of the target corporate award opportunities for fiscal 2018,2019, an additional match ranging from 50% to 150% (or, for Mr. Herrman, ranging from 50% to 200%) of their eligible deferrals. NoOur NEOs (other than Ms. Meyrowitz) earned this additional performance-based match was earnedat 150% (or, for Mr. Herrman, 200%) based on fiscal 20182019 corporate MIP results. Matching employer credits are 100% vested after five years of plan participation, at age 55, or upon a change of control or separation from service by reason of death or disability. Eligible participants are also entitled to supplemental employer credits.
50 The TJX Companies, Inc.
As of February 3, 2018,2, 2019, all NEOs with ESP employer credits were fully vested. For fiscal 2018,2019, under his employment agreement, Mr. Herrman was eligible for additional performance-based employer credits and received the full credit of $1 million based on fiscal 20172019 corporate MIP results as discussed above in the CD&A. All amounts deferred or credited to a participant’s account under the ESP are notionally invested in mutual funds or other market investments selected by the participant. Although not required by the ESP, it has been our practice to purchase the investments notionally invested under the participants’ accounts to help meet our future obligations under the ESP.
2019 Proxy Statement 49
Under the ESP, amounts deferred (and earnings on those amounts) are generally distributed following termination of employment unless the participant has elected an earlier distribution date, which may be no earlier than January 1st of the second year following the year of the deferral. Vested employer matching credits (and earnings on those amounts) are generally distributed at, or on a deferred basis following, a participant’s separation from service. Distributions are generally made in a lump sum payment, but a participant may elect to be paid in annual installments over a period of not more than ten years. Amounts vested under the ESP prior to January 1, 2005 (and earnings on those amounts) can be distributed at the participant’s request prior to termination of employment in a lump sum distribution of 85% of the vested account, with the remaining 15% forfeited.
Mr. MacMillan was eligible to participate in the Canadian Executive Savings Plan, or CESP, a deferred compensation plan for eligible employees of TJX Canada. Under the CESP, participants can contribute a portion of their base earnings to a trust fund maintained in Canada and receive notional matching employer credits, including a performance-based match based on TJX Canada MIP results. Supplemental amounts may also be contributed or credited to CESP. CESP contributions are invested, and matching credits are notionally invested, in mutual funds or other market investments selected by the participant. Mr. MacMillan holds amounts previously deferred under the CESP in connection with his prior service with TJX Canada, and again became eligible to participate in this plan during fiscal 2018 in connection with his move to Canada. Mr. MacMillan has a current right to his participant contributions to the CESP (and earnings on those amounts) and a right to employer matching credits (and earnings on those amounts) upon termination of employment. Distributions of matching credits are generally made in a lump sum or up to ten annual installments.
Through December 31, 2007, we offered eligible key employees and directors the opportunity to participate in the General Deferred Compensation Plan, or GDCP, another U.S. nonqualified deferred compensation plan. Ms. Meyrowitz is a vested participant in this plan. Under the GDCP, participants could defer all or a portion of base salary and MIP and LRPIP awards or, in the case of directors, retainers and meeting fees, which deferrals are credited with notional interest at an annually adjusted rate based on an average yield of Treasury securities during the prior year. For calendar 2017,2018, this rate was 1.82%2.33%. No further deferrals were permitted beginning with fiscal 2009 compensation, but previously deferred amounts continue to be credited with notional interest amounts.
Amounts deferred under the GDCP on or after January 1, 2005 (and earnings on those amounts) that had not been distributed prior to January 1, 2009 are distributed under the terms of the ESP, as described above. Amounts deferred under the GDCP prior to January 1, 2005 (and earnings on those amounts) are distributed in a lump sum during employment or following termination of service as elected by the participant, or, for participants whose employment terminates at or after age 55, in a lump sum or in installments upon or following termination as elected by the participant (with all payments completed by the tenth anniversary of termination of service). Upon a change of control, each participant receives the entire amount credited to his deferred account in a lump sum payment.
2018 Proxy Statement 51
NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2018
2019
The following table provides information on fiscal 20182019 nonqualified deferred compensation plans for our NEOs:
Name and Plan Name
| Executive Contributions in Last FY(1)
| Registrant Contributions in Last FY(2)
| Aggregate Earnings in Last FY(3)
| Aggregate Withdrawals/ Distributions
| Aggregate Balance at Last FYE(4)
| Executive Contributions in Last FY(1) | Registrant Contributions in Last FY(2) | Aggregate Earnings in Last FY(3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE(4) | ||||||||||||||||||||||||||||
Ernie Herrman | ||||||||||||||||||||||||||||||||||||||
ESP | $ | 161,923 | $ | 1,242,885 | $ | 221,651 | — | $ | 6,925,286 | $160,000 | $1,560,000 | $264,379 | — | $8,909,664 | ||||||||||||||||||||||||
Scott Goldenberg | ||||||||||||||||||||||||||||||||||||||
ESP | 90,577 | 90,577 | 508,570 | — | 3,451,270 | 93,116 | 232,166 | 69,059 | — | 3,845,611 | ||||||||||||||||||||||||||||
Carol Meyrowitz | ||||||||||||||||||||||||||||||||||||||
GDCP | — | — | 12,017 | — | 657,276 | — | — | 15,620 | — | 672,896 | ||||||||||||||||||||||||||||
ESP | 210,769 | — | 595,248 | — | 4,288,180 | 208,000 | — | (74,496) | — | 4,421,684 | ||||||||||||||||||||||||||||
Michael MacMillan | ||||||||||||||||||||||||||||||||||||||
ESP | 16,308 | 16,308 | 523,920 | — | 3,818,584 | |||||||||||||||||||||||||||||||||
CESP(5) | 46,682 | 54,362 | 101,471 | — | 483,202 | |||||||||||||||||||||||||||||||||
Richard Sherr | ||||||||||||||||||||||||||||||||||||||
ESP | 192,635 | 107,020 | 610,428 | — | 4,758,181 | 192,116 | 266,481 | (454,524) | — | 4,762,254 | ||||||||||||||||||||||||||||
Kenneth Canestrari | ||||||||||||||||||||||||||||||||||||||
ESP | 102,635 | 213,217 | 16,218 | — | 1,871,244 |
(1) | Reflects notional credits to participant accounts in |
(2) | Reflects notional credits to participant accounts. Amounts include the performance-based credits earned |
(3) | Reflects notional market-based earnings on deferrals and other amounts credited to the account of plan participants under the ESP, and notional interest under the GDCP |
50 The TJX Companies, Inc.
(4) | The aggregate balance includes deferrals of income for prior fiscal years. Amounts deferred by individuals who were NEOs for the fiscal year of the deferral were included in the compensation reported for those individuals in the compensation tables in prior proxy statements. The aggregate balance also includes earnings on amounts deferred and performance-based credits earned under the ESP |
52 The TJX Companies, Inc.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
We believe that providing severance and change of control benefits helps us attract and retain high quality executives and protect our other business interests, as discussed further in the CD&A.
Potential Payments under our Employment Agreements.Agreements and Severance Plan. Each of our NEOs in fiscal 20182019 was party to an employment agreement providingand participated in our Severance Plan. The terms of these agreements and the Severance Plan provide for payments in connection with the specified termination or change of control events, the material terms of which areas summarized below.
• | Termination Other than for Cause or Constructive Termination: If we terminate an NEO’s employment other than for cause or the executive terminates employment in connection with a forced relocation of more than 40 miles (referred to as a constructive termination), the executive would be entitled to 24 months of continued base salary and any automobile allowance; cash payments in an amount sufficient after taxes to cover the cost of any COBRA continuation of health benefits during the salary continuation |
Under the employment agreements with Mr. Herrman and Ms. Meyrowitz that became effective at the beginning of fiscal 2020, and under the employment agreements with each other NEO as amended in February 2019, a termination for cause generally includes the following, subject to the qualifications set forth in the agreements: material and willful dishonesty in the performance of duties, conviction of a felony, willful neglect of material duties, material and continuing conflict of interest, willful misconduct that violates company policy and is materially harmful to the reputation or business of the company, or a breach of applicable restrictive covenants. Under these agreements or our Severance Plan, upon a termination for cause, our NEOs would not be entitled to any separation benefits other than vested retirement benefits and, assuming no breach of applicable restrictive covenants, vested deferred compensation benefits and vested stock option awards under the SIP.
• | Death or Disability: Upon a termination of employment by reason of death or disability, each NEO (or his or her legal representative) would be entitled to the same benefits as are described above for a termination other than for cause, except that salary continuation would be subject to adjustment for any long-term disability benefits, the MIP award would be paid at target without proration, any stock option acceleration would be determined under the terms of the applicable award, and Mr. Herrman would be eligible for the additional performance-based credit under the ESP for the year of termination if applicable performance goals are met. |
• | Retirement or Voluntary Termination: Our NEOs would not be entitled to |
2019 Proxy Statement 51
• | End of Contract Term: For each of our NEOs a termination occurring on the last day of the agreement term would be treated as a termination other than for cause unless we make an offer of continued service in a comparable position. |
• | Change of Control: Upon a change of control of TJX (with or without a termination of employment), each NEO would be entitled to receive a lump sum settlement at target of MIP and LRPIP awards for which the performance period or cycle had not ended, plus any benefits |
2018 Proxy Statement 53
• | Change of Control Followed by Qualifying |
A qualifying termination for these purposes includes a termination by us other than for cause, by the executive for good reason (as defined in the agreements), or a termination by reason of death or disability, in each case within 24 months following a change of control without regard to the scheduled term of the agreement. A qualifying termination does not include a voluntary termination without good reason.
In addition to the amounts described above, the executives would remain entitled to vested and accrued, but unpaid, compensation and benefits (including earned but unpaid amounts under MIP and LRPIP) and to any SIP or deferred compensation benefits (as described below). Mr. MacMillan would be eligible for any remaining expatriate benefits associated with his prior international assignments following a termination of employment. In connection with his move to Canada, Mr. MacMillan would be eligible under his employment agreement to receive certain cash benefits (otherwise denominated in U.S. dollars) in Canadian dollars and for any continued coverage under TJX’s executive life insurance program. Our NEOs would not be entitled to any taxgross-up payment for any “golden parachute” excise tax on change of control benefits, but payments and benefits to each executive would be reduced if and to the extent such a reduction would have put the executive in a betterafter-tax position.
Potential Acceleration or Continued Vesting of Unvested EquityLong-Term Incentive Awards. Under the terms of stock awards granted under the SIP, NEOs and other participants who retire at or after age 65 with ten or more years of service, or who retire at or after age 60 with twenty or more years of service (such retirement, a “special service retirement”) are eligible for continued vesting of PSUs and PBSAs to the extent applicable goals are met (with the award adjusted, as applicable, to reflect the period of service during the performance period based on the rules described in footnote 3 to the table below) and for settlement of RSUs (with the award adjusted, if applicable, based on full years completed in the three-year service period). As of the end of fiscal 2019, Ms. Meyrowitz, Mr. Goldenberg, and Mr. Sherr satisfied the requirements for a special service retirement. Upon a termination due to death or disability, each of our NEOs would be entitled to acceleration of PSUs at target level of performance, Mr. Herrman and Ms. Meyrowitz would be entitled to acceleration of PBSAs, and our NEOs other than Mr. Herrman and Ms. Meyrowitz would be entitled to continued vesting of PBSAs to the extent applicable performance goals are met (in each case, with the award adjusted, if applicable, to reflect the period of service during the performance period based on the rules described in footnote 3 to the table below); our NEOs eligible for special service retirement would be entitled to settlement of RSUs on the same basis as retirement; and our NEOs not eligible for special service retirement would be eligible for acceleration of RSUs (with the award adjusted, if applicable, based on full years completed in the three-year service period). In the event of a termination without cause or a constructive termination, Mr. Herrman and Ms. Meyrowitz would
52 The TJX Companies, Inc.
be entitled to continued vesting of PSUs and PBSAs to the extent applicable performance goals are met (with the award adjusted, as applicable, to reflect the period of service during the performance period based on the rules described in footnote 3 to the table below); our NEOs eligible for special service retirement would be entitled to settlement of RSUs on the same basis as retirement; and Mr. Herrman would be eligible for acceleration of RSUs (with the award adjusted, if applicable, based on full years completed in the three-year service period).
For stock option awards granted under the SIP, upon a termination due to death or disability each of our NEOs would be entitled to partial acceleration of any unvested stock options granted more than three months prior to the date of termination; Mr. Herrman would be entitled to continued vesting of his fiscal 2016-2018 LRPIP-based stock award to the extent applicable performance goals are mettermination, and acceleration of his other LRPIP-based stock awards; Ms. Meyrowitz would be entitled to acceleration of her stock awards; and each of our NEOs, other than Mr. Herrman and Ms. Meyrowitz, would be entitled to continued vesting of stock awards to the extent applicable performance goals are met. In the event ofupon a termination without cause or a constructive termination Mr. Herrman and Ms. Meyrowitz would be entitled to full acceleration of any unvested stock options and continued vesting of LRPIP-based stock awards to the extent applicable performance goals are met.options. Following a termination of employment, at the end of fiscal 2018, each of the executives would have been able to exercise vested options in accordance with applicable post-termination exercise periods. Uponperiods, and NEOs and other participants eligible for special service retirement at(including, as of the end of fiscal 2018,2019, Ms. Meyrowitz, Mr. Goldenberg Mr. Sherr, and Mr. MacMillanSherr) would have beenbe eligible for continued vesting of outstanding options, in accordance with the terms described above under footnote 1 to the GrantsOutstanding Equity Awards at Fiscal 2019 Year-End table.
For LRPIP awards starting with the fiscal 2019-2021 LRPIP cycle, under terms established by the ECC, NEOs and other LRPIP participants eligible for a special service retirement (including, as of Plan-Based Awards table, and for continued vestingthe end of fiscal 2017-2019 LRPIP-based stock awards2019, Ms. Meyrowitz, Mr. Goldenberg and fiscal 2018-2020 LRPIP-based stock awardsMr. Sherr) are eligible for benefits under LRPIP following retirement to the extent applicable LRPIP goals are met. In each of these circumstances, the potential acceleration or continued vesting of unvested LRPIP-based stock awards held by our NEOs would be subject to proration,met and adjusted, if applicable, based on the rules described in footnote 3 to the table below. Similar terms apply to PSUs and RSUs under our new compensation program forfull fiscal 2019 described aboveyears completed in the CD&A.three-year LRPIP cycle.
As described in the CD&A, newUnvested equity awards granted in September 2015 or laterunder the SIP do not include automatic full accelerated vesting upon a change of control of TJX. Instead, performance conditions for performance-based stock awardsPSUs and PBSAs will be deemed satisfied at target upon the change of control (with settlement of the award to the extent the original service conditions were satisfied), and any unvested PSUs, RSUs, PBSAs and stock options and performance-based stock awards will vest in full upon the change of control if not continued or assumed in the transaction or, if continued or assumed, in the event of a qualifying termination of
54 The TJX Companies, Inc.
employment following the change of control. A qualifying termination for these purposes includes an involuntary termination without cause or a termination for good reason within 24 months following the change of control. Equity awards granted before September 2015 vest in full upon a change of control of TJX.
Except as described above in connection with a change of control of TJX, Mr. Herrman’s performance-based career shares award is not eligible for acceleration or continued vesting in connection with any termination of employment.
Potential Acceleration of Unvested Deferred Compensation. As noted above underNonqualified Deferred Compensation Plans, any unvested employer credit accounts under the ESP also vest in full upon a change of control or termination of employment due to death or disability, and any accounts under GDCP will be paid upon a change of control. As of the end of fiscal 2019, all of our NEOs were fully vested in their ESP employer credit accounts. Our NEOs were also eligible for SERP benefits described above underPension Benefits, based on the actuarial assumptions specified in the plan and, in the case of Ms. Meyrowitz, her employment agreement. Upon a change of control, Ms. Meyrowitz would also be entitled to a lump sum payment of her vested SERP benefit, determined, if more favorable to her, under actuarial assumptions specified in the agreement representing early commencement of her unreduced benefit (which did not result in any estimated enhancement value as of the end of fiscal 2019).
Related Provisions. EachUnder the terms of their employment agreements and the Severance Plan, each NEO agreed tonon-solicitation andnon-competition provisions that operate during the term of employment and for 24 months thereafter, and to confidentiality provisions during and after employment. Benefits under the employment agreements, the Severance Plan, and SERP, as well as benefits attributable to the enhanced employer credits at or above the Senior Executive Vice President level under the ESP (including Mr. Herrman’s additional performance-based credits), are also conditioned on compliance with restrictive covenants. Upon a change of control, our NEOs would no longer be subject to any covenant not to compete following a termination of employment.
For LRPIP awards starting with the fiscal 2019-2021 LRPIP cycle, under terms established by the ECC, NEOs and other LRPIP participants who retire at or after age 65 with ten or more years Each NEO has also acknowledged our amended clawback policy, which continues to apply to executive officers following a termination of service, or who retire at or after age 60 with twenty or more years of service, will be eligibleemployment for benefits under LRPIP to the extent applicable LRPIP goals are met and adjusted, if applicable, to reflect the participant’s period of service during the performance period. These LRPIP benefits are conditioned on compliance with applicable restrictive covenants.any reason.
The agreements and plans include terms designed to comply with the deferred compensation provisions of Section 409A of the Internal Revenue Code (Section 409A), including provisions that would delay certain termination-related benefits for six months beyond termination of employment and alternative payment provisions that could apply in connection with a change of control not described in Section 409A.
20182019 Proxy Statement 5553
The following table sets forth aggregate estimated payment obligations to each of our NEOs, assuming that the triggering events had occurred on February 3, 2018,2, 2019, all pursuant to the terms of TJX’s plans and each executive’s employment agreement as in effect on such date.
Triggering Event and Payments(1)Payments(1)
Ernie Herrman | Scott Goldenberg | Carol Meyrowitz | Michael MacMillan | Richard Sherr | Ernie Herrman | Scott Goldenberg | Carol Meyrowitz | Richard Sherr | Kenneth Canestrari | |||||||||||||||||||||||||||||||
Death/Disability | ||||||||||||||||||||||||||||||||||||||||
Severance | $ | 3,200,000 | $ | 1,800,000 | $ | 3,150,000 | $ | 2,199,185 | $ | 2,100,000 | $ | 3,200,000 | $ | 1,872,000 | $ | 3,150,000 | $ | 2,140,000 | $ | 1,720,000 | ||||||||||||||||||||
MIP/LRPIP(2) | 3,978,848 | 998,173 | 2,594,103 | 1,303,181 | 1,155,274 | 4,000,002 | �� | 1,012,136 | 2,600,000 | 1,287,020 | 827,645 | |||||||||||||||||||||||||||||
Acceleration of Option Awards(3) | 75,517 | 36,597 | 32,884 | 36,597 | 42,222 | |||||||||||||||||||||||||||||||||||
Acceleration or Continued Vesting of Stock Awards(3) | 19,812,355 | 5,374,500 | 8,566,873 | 6,455,533 | 6,455,533 | |||||||||||||||||||||||||||||||||||
Health, Life, and/or Automobile Benefits | 145,113 | 124,909 | 124,909 | 74,491 | 124,909 | |||||||||||||||||||||||||||||||||||
Total(4) | 27,211,833 | 8,334,179 | 14,468,769 | 10,068,987 | 9,877,938 | |||||||||||||||||||||||||||||||||||
Acceleration or Continued Vesting of Equity Awards(3) | 11,060,249 | 3,897,256 | 9,577,813 | 3,913,241 | 2,972,955 | |||||||||||||||||||||||||||||||||||
Other Benefits(4) | 151,572 | 115,116 | 122,280 | 122,280 | 122,280 | |||||||||||||||||||||||||||||||||||
Total(5) | 18,411,823 | 6,896,508 | 15,450,093 | 7,462,541 | 5,642,880 | |||||||||||||||||||||||||||||||||||
Retirement or Voluntary Termination | ||||||||||||||||||||||||||||||||||||||||
LRPIP(2) | — | — | 1,013,333 | — | — | — | 166,667 | 1,040,000 | 233,333 | — | ||||||||||||||||||||||||||||||
Continued Vesting of Option Awards(3) | — | 185,340 | 86,222 | 185,340 | 213,811 | |||||||||||||||||||||||||||||||||||
Continued Vesting of Stock Awards(3) | — | 2,935,875 | 8,566,873 | 1,058,767 | 3,204,033 | |||||||||||||||||||||||||||||||||||
Continued Vesting of Equity Awards(3) | — | 4,244,946 | 9,577,813 | 4,314,330 | — | |||||||||||||||||||||||||||||||||||
Total | — | 3,121,215 | 9,666,428 | 1,244,107 | 3,417,844 | — | 4,411,613 | 10,617,813 | 4,547,663 | — | ||||||||||||||||||||||||||||||
Termination without Cause/Constructive Termination | ||||||||||||||||||||||||||||||||||||||||
Severance | 3,200,000 | 1,800,000 | 3,150,000 | 2,199,185 | 2,100,000 | 3,200,000 | 1,872,000 | 3,150,000 | 2,140,000 | 1,720,000 | ||||||||||||||||||||||||||||||
MIP/LRPIP(2) | 1,550,000 | 500,000 | 1,013,333 | 700,000 | 566,667 | 1,600,000 | 500,000 | 1,040,000 | 700,000 | 400,000 | ||||||||||||||||||||||||||||||
Acceleration of Option Awards(3) | 395,713 | — | 86,222 | — | — | |||||||||||||||||||||||||||||||||||
Continued Vesting of Stock Awards(3) | 19,812,355 | — | 8,566,873 | — | — | |||||||||||||||||||||||||||||||||||
Health, Life and/or Automobile Benefits | 145,113 | 124,909 | 124,909 | 74,491 | 124,909 | |||||||||||||||||||||||||||||||||||
Acceleration or Continued Vesting of Equity Awards(3) | 11,829,350 | 3,780,173 | 9,577,813 | 3,778,160 | — | |||||||||||||||||||||||||||||||||||
Other Benefits(4) | 151,572 | 115,116 | 122,280 | 122,280 | 122,280 | |||||||||||||||||||||||||||||||||||
Total | 25,103,181 | 2,424,909 | 12,941,337 | 2,973,676 | 2,791,576 | 16,780,922 | 6,267,289 | 13,890,093 | 6,740,440 | 2,242,280 | ||||||||||||||||||||||||||||||
Change of Control | ||||||||||||||||||||||||||||||||||||||||
Settlement of MIP/LRPIP | 3,125,000 | 1,000,000 | 2,040,000 | 1,400,000 | 1,200,000 | 3,200,000 | 1,000,000 | 2,080,000 | 1,400,000 | 800,000 | ||||||||||||||||||||||||||||||
Settlement or Acceleration of Stock Awards(3) | 10,567,375 | 5,374,500 | 8,566,873 | 6,455,533 | 6,455,533 | |||||||||||||||||||||||||||||||||||
Settlement of Stock Awards(3) | — | 3,780,173 | 9,577,813 | 3,778,160 | — | |||||||||||||||||||||||||||||||||||
Total | 13,692,375 | 6,374,500 | 10,606,873 | 7,855,533 | 7,655,533 | 3,200,000 | 4,780,173 | 11,657,813 | 5,178,160 | 800,000 | ||||||||||||||||||||||||||||||
Change of Control followed by Qualifying Termination | ||||||||||||||||||||||||||||||||||||||||
Change of Control Benefits (see above) | 13,692,375 | 6,374,500 | 10,606,873 | 7,855,533 | 7,655,533 | 3,200,000 | 4,780,173 | 11,657,813 | 5,178,160 | 800,000 | ||||||||||||||||||||||||||||||
Acceleration of Option Awards(3) | 395,713 | 185,340 | 86,222 | 185,340 | 213,811 | |||||||||||||||||||||||||||||||||||
Acceleration of Stock Awards(3) | 24,186,739 | 3,056,088 | 1,725,287 | 3,190,167 | 3,190,167 | |||||||||||||||||||||||||||||||||||
Acceleration of Equity Awards(3) | 31,488,008 | 4,996,122 | 2,965,273 | 5,122,380 | 6,784,394 | |||||||||||||||||||||||||||||||||||
Severance | 8,000,000 | 2,790,000 | 6,270,000 | 3,408,737 | 3,255,000 | 8,000,000 | 2,901,600 | 6,270,000 | 3,317,000 | 2,580,000 | ||||||||||||||||||||||||||||||
Deferred Compensation Enhancement(5) | — | — | 2,373,125 | — | — | |||||||||||||||||||||||||||||||||||
Health, Life, and/or Automobile Benefits | 140,314 | 130,566 | 130,566 | 80,673 | 130,566 | |||||||||||||||||||||||||||||||||||
Other Benefits(4) | 146,458 | 122,978 | 125,281 | 125,281 | 125,281 | |||||||||||||||||||||||||||||||||||
Reduction to MaximizeAfter-Tax Benefit(6) | — | (305,599 | ) | — | — | — | — | (936,619 | ) | — | — | (1,467,488 | ) | |||||||||||||||||||||||||||
Total(4) | 46,415,141 | 12,230,895 | 21,192,073 | 14,720,450 | 14,445,077 | |||||||||||||||||||||||||||||||||||
Total(5) | 42,834,466 | 11,864,254 | 21,018,367 | 13,742,821 | 8,822,187 |
5654 The TJX Companies, Inc.
(1) | We used the following assumptions to calculate the payments set forth in the table: |
We assumed in each case that the termination was not for cause; the executive does not violate his or hernon-competition,non-solicitation, confidentiality, or other obligations to us following termination; the executive (other than Mr. MacMillan) receives COBRA continuation of health coverage for up to 18 months but does not receive health or life insurance coverage from another employer within the relevant periods; and the executive does not incur legal fees requiring reimbursement from us. We also assumed that any change of control would have qualified as a “change in control event” under Section 409A.
We valued performance-based stock awardsPSUs, RSUs, PBSAs, and stock options using $78.47,$48.90, the closing price of our common stock on the NYSE on February 2, 2018,1, 2019, the last business day of the fiscal year. For equity awards that would have accelerated or settled upon or continued vesting following the triggering event, we included the full value of all performance-based stock awardsPSUs, RSUs, or PBSAs ($78.4748.90 per share), plus the value of any accumulated dividends or dividend equivalents as of February 3, 20182, 2019 that would be payable upon the vesting ofwith respect to such awards, and the spread value ($78.4748.90 per share minus the option exercise price) for allin-the-money stock options. See the Outstanding Equity Awards table on p. 4746 for more information about these equity awards. Actual amounts that will be earned with respect to these equity awards may be different from the values included in the table.
• | In addition to the amounts described in this table, our NEOs were eligible for the benefits described above underPension Benefits andNonqualified Deferred Compensation Plans. As of February 2, 2019, the estimated amounts payable to Ms. Meyrowitz under SERP using the actuarial assumptions specified in the plan and her employment agreement would have produced higher lump sum benefit values than those shown in the Pension Benefits table above by $9,036. |
We did not include any amounts in respect of accrued but unpaid base salary or benefits; any amounts in respect of bonuses under MIP and LRPIP for performance periods ending on February 3, 2018 that were earned but remained unpaid as of that date; any amounts in respect of stock options that were notin-the-money or outstanding equity awards that were earned based on service and performance as of February 3, 2018 or that would not have accelerated upon or continued vesting following the triggering event; or, for Mr. MacMillan, any remaining tax equalization benefits or other expatriate-related amounts under our global mobility program.
We did not include any amounts in respect of accrued but unpaid base salary or benefits; any amounts in respect of bonuses under MIP and LRPIP for performance periods ending on February 2, 2019 that were earned but remained unpaid as of that date; any amounts in respect of outstanding equity awards that were earned based on service and performance as of February 2, 2019 or that would not have accelerated upon or continued vesting following the triggering event; or any deferred compensation amounts that would not have been enhanced upon or following the triggering event. |
(2) | The amount, for each executive, includes a prorated award for each applicable LRPIP cycle ending after February |
(3) | Equity awards include, where applicable, PSUs, RSUs, PBSAs and stock options. The value of continued vesting of |
(4) | Other benefits include amounts for continued health coverage, life insurance coverage and/or automobile benefits. For health care benefits, we estimated an amount sufficient after taxes to cover the cost of continuation of health coverage based on the COBRA rates in effect as of February 2, 2019 and assumed, in the case of a qualifying termination following a change of control, that employee contributions for health coverage will continue at rates in effect as of February 2, 2019. |
(5) | In the event of death on February |
2019.
(6) | In the case of a change of control (both with and without a termination of employment) occurring on February |
20182019 Proxy Statement 5755
At the end of fiscal 2018,2019, we operated over 4,0004,300 retail stores including more than 1,000 stores outside the U.S., and employed approximately 249,000270,000 Associates worldwide. More thanApproximately 86% of these Associates worked in our retail stores. Our total number of Associates, which is subject to seasonal variations, includes full-time, part-time, seasonal, and temporary employees. This workforce supports the execution of our flexibleoff-price business model, including the timing and frequency of store deliveries and the management of a rapidly changing mix of store inventory, throughout our global business.
Our CEO’s annual total compensation for fiscal 20182019 was $16,880,171$18,822,770 as reflectedreported in the Summary Compensation Table above. In accordance with SEC rules, the median of the annual total compensation of all employees (other than the CEO) was estimated to be $11,243$11,791 for fiscal 2018,2019, which resulted in an estimated ratio of 1,501:1,596:1. The median employee for purposes of this estimate was a part-time hourly retail store Associate. To identify the median employee for fiscal 2019 in accordance with theseSEC rules, we included all employees in our global operations as of the last day of fiscal 2018,2019, including full-time, part-time, seasonal, and temporary employees, and estimated annual total compensation for all of these employees based on calendar 20172018 payroll records in each jurisdiction, converting foreign currencies to U.S. dollars using an average annual exchange rate for calendar 2017.2018. As part of this process, we annualized earnings for employees, other than seasonal and temporary employees, who were hired during the fiscal year. As a result of this process, the fiscal 2019 median employee for purposes of our pay ratio estimate was a part-time hourly retail store Associate.
SEC rules allow companies to use a variety of methods and assumptions to estimate median employee compensation, and factors such as industry, geography, business model, and workforce composition will vary across companies. Accordingly, the information above may not be comparable to information reported by other companies.
5856 The TJX Companies, Inc.
For fiscal 2018,2019, ournon-employee directors were entitled to the following payments:compensation:
Annual retainer of $80,000$90,000 for eachnon-employee director
Additional annual retainer of $28,000 for the Audit Committee Chairman
Additional annual retainer of $15,000 for each Audit Committee member (other than the Chairman)
Additional annual retainer of $26,000 for the Chairman of the subcommittee of the Audit Committee
Additional annual retainer of $23,000 for the Executive Compensation Committee Chairman
Additional annual retainer of $10,000 for each Executive Compensation Committee member (other than the Chairman)
Additional annual retainer of $18,000 for the Corporate Governance Committee Chairman
Additional annual retainer of $8,000 for each Corporate Governance Committee member (other than the Chairman)
Additional annual retainer of $18,000 for the Finance Committee Chairman
Additional annual retainer of $8,000 for each Finance Committee member (other than the Chairman)
Additional annual retainer of $70,000 for the Lead Director
Two annual deferred stock awards for eachnon-employee director, each representing shares of our common stock valued at $80,000
Employee directors do not receive separate compensation for their service as directors. Members of the Executive Committee do not receive committee-specific compensation. Directors are reimbursed for customary expenses for attending Board and committee meetings. The deferred stock awards (including deferred dividend awards) are granted under the SIP.SIP and are prorated for non-employee directors who are first elected as a director on a date other than the date of the Company’s annual meeting. One of the deferred stock awards vests immediately and is payable with accumulated dividends in stock at the earlier of separation from service as a director or change of control. The second award vests based on a director’s continued service until the annual meeting next following the grant of the award (subject to possible earlier vesting in the event of a change of control if not continued or assumed in the transaction or if a qualifying termination of service as a director occurs following the change of control and prior to the scheduled vesting date), and is payable with accumulated dividends in stock upon vesting or, if an irrevocable advance election is made, at the same time as the first award. In the event that anon-employee director separates from service as a director prior to vesting in the second award, that award is forfeited.
Ournon-employee directors are eligible to defer their retainers under the ESP (described above inNonqualified Deferred Compensation Plans)Plans) but are not eligible for matching credits. Amounts deferred by directors under the ESP are notionally invested in mutual funds or other market investments. Participatingnon-employee directors may select a distribution date earlier than retirement from the Board, but no earlier than January 1st of the second year following the year of the deferral. During fiscal 2018,2019, Mr. Bennett and Ms. Nemerov deferred amounts under the ESP. Prior to January 1, 2008, ournon-employee directors were eligible to defer their retainers and fees in our GDCP (described above inNonqualified Deferred Compensation Plans)Plans), under which amounts deferred earn interest at a periodically adjusted market-based rate. Amounts deferred under the GDCP on or after January 1, 2005 (and earnings on those amounts) will be distributed under the terms of the ESP, as described above. Amounts deferred under the GDCP prior to January 1, 2005 (and earnings on those amounts) are scheduled to be paid upon or after leaving the Board. Mr. Bennett and Ms. Shire have amounts previously deferred under the GDCP. We do not provide retirement, health or life insurance benefits to ournon-employee directors.
20182019 Proxy Statement 5957
The following table provides information concerning compensation for ournon-employee directors for fiscal 2018.2019. Information about Mr. Herrman’s and Ms. Meyrowitz’s compensation for fiscal 20182019 is provided with that of the other NEOs in the CD&A and in the accompanying tables above.
DIRECTORSDIRECTOR COMPENSATION FOR FISCAL 20182019
Name
| Fees Earned or Paid In Cash
| Stock Awards(1)(2)
| Total
| Fees Earned or Paid In Cash | Stock Awards(1)(2) | Total | ||||||||||
Zein Abdalla
|
$ 96,000
|
$ 169,031
|
$
|
265,031
|
| $106,000 | $172,594 | $ | 278,594 | |||||||
José B. Alvarez
|
105,000
|
203,647
|
|
308,647
|
| |||||||||||
José B. Alvarez* | 38,544 | 55,277 | 93,821 | |||||||||||||
Alan M. Bennett
|
111,000
|
206,307
|
|
317,307
|
| 121,000 | 219,971 | 340,971 | ||||||||
Rosemary T. Berkery | 43,915 | 114,080 | 157,995 | |||||||||||||
David T. Ching
|
129,000
|
189,793
|
|
318,793
|
| 139,000 | 198,195 | 337,195 | ||||||||
Michael F. Hines
|
116,000
|
208,780
|
|
324,780
|
| 126,000 | 223,019 | 349,019 | ||||||||
Amy B. Lane
|
113,000
|
200,284
|
|
313,284
|
| 123,000 | 211,838 | 334,838 | ||||||||
Jackwyn L. Nemerov
|
90,000
|
160,602
|
|
250,602
|
| 105,319 | 164,283 | 269,602 | ||||||||
John F. O’Brien
|
150,000
|
220,089
|
|
370,089
|
| 160,000 | 235,551 | 395,551 | ||||||||
Willow B. Shire
|
108,000
|
223,269
|
|
331,269
|
| 118,000 | 239,472 | 357,472 |
* | Mr. Alvarez served on the Board until June 2018. |
(1) | Reflects the grant date fair value of annual deferred share awards totaling $160,000 (or, for Ms. Berkery, prorated deferred share awards granted at her election to the Board of Directors in September 2018) and annual credits of additional deferred shares in the amount of dividends accrued on deferred shares, determined in accordance with ASC Topic 718, disregarding the effect of estimated forfeitures and valued based on the closing price of our common stock on the NYSE on the grant date. |
(2) | The following table shows the number of shares subject to outstanding stock awards for ournon-employee directors as of February |
Name | Outstanding Stock Awards* | |||
Zein Abdalla | ||||
José B. Alvarez | ||||
Alan M. Bennett | ||||
Rosemary T. Berkery | 2,114 | |||
David T. Ching | ||||
Michael F. Hines | ||||
Amy B. Lane | ||||
Jackwyn L. Nemerov | ||||
John F. O’Brien | ||||
Willow B. Shire |
* | Includes awards of |
6058 The TJX Companies, Inc.
PROPOSAL 2: RATIFICATION OF AUDITOR
RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS AS
TJX’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 20192020
The Audit Committee of our Board of Directors has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending February 2, 2019.1, 2020. PwC has been retained as TJX’s independent registered public accounting firm since 1962. We are asking shareholders to ratify PwC’s appointment. A representative of PwC is expected to attend the Annual Meeting and will have the opportunity to make a statement if they wish to do so. The representative will also be available to answer questions from the shareholders. The members of the Audit Committee and Board believe that the continued retention of PwC to serve as the company’s independent external auditor is in the best interests of the company and its shareholders.
Your Board of Directors unanimously recommends that you vote FOR Proposal 2.
ADVISORY APPROVAL OF TJX’S EXECUTIVE COMPENSATION
The Compensation Discussion and Analysis (CD&A), compensation tables, and narrative discussion beginning on p. 2123 of this proxy statement describe our executive compensation program and the compensation of our NEOs for fiscal 2018. This year it includes a discussion of the focused shareholder engagement effort on executive compensation during fiscal 2018, a discussion of changes made by our ECC to the executive compensation program for fiscal 2019, in response to that engagement effort, as well asincluding an overview of our fiscal 2018 program design and details of the various elements of the program, the ECC’s decision making process and other information about our compensation governance. It also provides details of our fiscal 2019 performance to provide context for the compensation described in the CD&A and in the tables that follow it.
The Board of Directors, as required pursuant to Section 14A of the Exchange Act, is asking shareholders to cast anon-binding, advisory vote indicating their approval of that compensation by voting FOR the following resolution:
That the shareholders of The TJX Companies, Inc. APPROVE, on an advisory basis, the compensation paid to the company’s named executive officers (NEOs), as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis (CD&A), compensation tables, and narrative discussion. |
As described in more detail in the CD&A, we believe a key component of our continued success is developing and retaining talent that can execute the fundamentals of ouroff-price business model throughout our complex global operations and drive our long-term strategy. To support this strategy, our overall compensation program is designed to drive long-term profitable and sustainable growth, foster teamwork and management stability, and support our leadership succession plans. Our program is also intended to attractsustain our competitive position in a highly competitive and retain top talent; motivate executives to achieve our business objectives; reward performance; emphasize variable, performance-based compensation; support succession planningchanging retail environment, promote Associate engagement and effective leadership transitions;retention, foster alignment with shareholder interests, and maintain pay practices that alignfocus on business execution and long-term results. We encourage you to review the interests of our Associates and shareholders.CD&A.
The Board is asking shareholders to support this proposal. We encourage you to review the CD&A, including the design changes to our fiscal 2019 program that respond to the shareholder feedback we received. Although the vote we are asking you to cast isnon-binding, the ECC and the Board value the views of our shareholders. The Board and ECC will consider the outcome of this vote when determining future compensation arrangements for our NEOs, as they have done every year.
Your Board of Directors unanimously recommends that you vote FOR Proposal 3 to approve,
on an advisory basis, executive compensation.
20182019 Proxy Statement 6159
PROPOSAL 4: SHAREHOLDER PROPOSAL
REPORT ON COMPENSATION DISPARITIES BASED ON RACE, GENDER, OR ETHNICITY
We received the following proposal from Zevin Asset Management, LLC, 11 Beacon2 Oliver Street, Suite 1125,806, Boston, Massachusetts 02108,02109, on behalf of David Fenton,Carol A. Reisen, a beneficial owner of 8602,420 shares of our common stock, the Benedictine Sisters of Mount St. Scholastica, 801 South 8th Street, Atchison, Kansas 66002, a beneficial owner of 1,774 shares of our common stock, the Benedictine Sisters of Virginia, Saint Benedict Monastery, 9535 Linton Hall Road, Bristow, Virginia 20136, a beneficial owner of 490 shares of our common stock, the Benedictine Sisters of Cullman, Alabama, 916 Convent Road NE, Cullman, Alabama 35055, a beneficial owner of 367 shares of our common stock, Proxy Impact, 5011 Esmond Avenue, Richmond, California 94805, on behalf of Sarah Peter, a beneficial owner of at least $2,000 of our common stock, JLens Investor Network, c/o JCPA, 116 East 27th Street, New York, New York 10016, on behalf of the Hammerman Family Revocable Inter Vivos Trust, a beneficial owner of at least $2,000 of our common stock, and Friends Fiduciary Corporation, 1650 Arch Street, Suite 1904, Philadelphia, Pennsylvania 19103, a beneficial owner of at least $2,000 of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting.
As explained below, your Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
Whereas:Whereas: The median income for women working full time in the U.S. is reportedly approximately 8081 percent of that of their male counterparts. According to Economic Policy Institute, average hourly wages for black men are 78 percent of those of similarly situated white men. Wages for black women are 66 percent of those of comparable white men and 88 percent of those received by white women.
Women hold just over one half of retail industry positions, but women are underrepresented in higher paying retail management positions and overrepresented in low paying front line jobs. According to Demos, “retail employers pay Black and Latino full-time retail salespersons just 75 percent of the wages of their white peers.”
Stubborn pay gaps have attracted attention from national media and policymakers. Regulatory risk exists as theThe Paycheck Fairness Act, pendingintroduced in Congress, would aim to improve company-level transparency and strengthen penalties for equal pay violations. California, Maryland, Massachusetts, and New York and Maryland have passed strongenacted significant changes to their equal pay legislation.laws. United Kingdom rules require large companies to publish average gender pay gaps.
Proper attention to inclusion and equity promotes effective human capital management. According to McKinsey, companies in the top quartiles for gender and racial/ethnic diversity were more likely to have financial returns above the industry median (“Why diversity matters,” McKinsey, 2015). In a 2013 Catalyst report, racial and gender diversity were positively associated with more customers, increased sales revenue, and greater relative profits. (“Why Diversity Matters,” Catalyst, 2013).
Leading companies are addressing diversity and inclusion via pay equity. In 2014, Gap Inc released data showing wage parity between male and female workers. Amazon, Apple, Costco, Intel, and Starbucks have committed to report on gender pay gaps. Intel and Microsoft have begun publishingpublished pay gap data covering gender and race.
TJX reports that people of color account for 56 percent of the Company’sits U.S. workforce but only 32 percent of its managers. TJX has taken steps to promote diversity; however, there is no reporting on gender, race, or ethnic pay gaps.
Investors seek clarity on how TJX manages risks and opportunities related to pay equity.
60 The TJX Companies, Inc.
Resolved:Resolved: Shareholders request that TJX prepare a report (at reasonable cost, in a reasonable timeframe, and omitting proprietary and confidential information) on the Company’s policies and goals to identify and reduce inequities in compensation due to gender, race, or ethnicity within its workforce. Gender-, race-, or ethnicity -basedethnicity- based inequities are defined as the difference, expressed as a percentage, between the earnings of each demographic group in comparable roles.
Supporting Statement:Statement: A report adequate for investors to assess strategy and performance would include: (1) an aggregated, anonymized chart ofEEO-1 EE0-1 data identifying employees according to gender and race in the major EEOC-defined job categories, listing numbers or percentages in each category; (2) the percentage pay gap between groups (using a similar chart or square matrix); (3) discussion of policies addressing any gaps and quantitative reduction targets; and (4) the methodology used to identify pay inequities, omitting proprietary information.
62 The TJX Companies, Inc.
STATEMENT OF THE BOARD OF DIRECTORS IN RESPONSE TO PROPOSAL 4
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because TJX recently published disclosure that meets an essential objective of the proposal’s request. In March 2019, we have designed a compensation structure intendedreported that, in the United States, accounting for job title, geography, and full or part time status, we found, on average, no meaningful difference in base pay between male and female Associates at TJX. In addition, we are expanding our analysis of our United States workforce to payinclude race/ethnicity and intend to provide disclosure about our Associates competitively and equitably based on their skills, qualifications, roles, and abilities and because this proposal would not enhance our existing commitment to fostering a diverse and inclusive culture.findings by the end of 2020.
As a large, complex, and global business, we believe it is important to our success in the long-term that our workforce be inclusive and reflect the diversity of our customers and the communities we serve. We have broadnon-discrimination policies, and we strive for diversity at all levels of our organization. We continue to work on initiatives that further embed inclusion as one of our core values, as it impacts not only our ability to recruit and retain Associates, but also reflects our team-based culture. To that end, in addition to our existing learning and training initiatives on diversity and inclusion, we recently developed additional inclusion pilot programs that are currently underway. These include an online unconscious bias training and diversity and inclusion guides for Associates, managers, and human resources.
Women and people of color are an important part of our workplace diversity and represent an increasing percentage of our leadership team. We are proud to report that, around the world, women hold approximately 65% of our managerial positions, which we define as Assistant Store Manager and above, and approximately 51% of our leadership positions, which we define as Assistant Vice President and above. Averaged over the past three years, women earned 76% of all our promotions globally. In our more senior leadership positions, over the past three years, on average, women earned 51% of the promotions into Senior Vice President roles, 40% of the promotions into Vice President roles, and 58% of the promotions into Assistant Vice President roles. In the United States, approximately 56% of all our Associates and 32% of our Associates in managerial positions are members of racially or ethnically diverse groups.
We are proud of the recognition we have received for our diversity and inclusion efforts. In 2017, we received a score of 100 on the Corporate Equality Index of the U.S.-based Human Rights Campaign, and we were listed as a top 50 employer by Equal Opportunity magazine. As discussed in further detail in our annual corporate responsibility report, which is available on our website, tjx.com, in the Responsibility section, we provide and promote inclusion-related learning and training initiatives on diversity; sponsor several Associate Resource Groups organized for networking and career development, including Women Adding Value Everyday (WAVE) and The Multicultural Coalition; and partner with organizations, including the National Council of La Raza and the National Urban League, to supplement our internal training and recruitment initiatives, among other efforts.
We believe it is imperative that we focus on attractingattract and retainingretain the best talent for TJX at all levels and in all functions, and we strivefunctions. We have designed a compensation structure intended to provide compensation that is both competitivepay our Associates competitively in the market and equitable acrossequitably based on their skills, qualifications, role, and abilities.
We have long-standing processes in place to evaluate our diverse workforce.compensation practices. We set objective pay targets by position and periodically conduct general periodic compensation reviews, to ensure thatwhich often include benchmarking of our compensation structure is working as intended. Furthermore, ouragainst a number of metrics. Our incentive plans emphasize objective, performance-based pay and team-based execution of our business goals across the company.
We remainhave expanded our efforts to include a gender pay equity analysis of our United States workforce and are further expanding our pay equity analysis in the United States to include race and ethnicity. We also adopted a policy not to ask Associate applicants about their prior compensation history during the hiring process in the United States.
We intend to monitor our processes and review our data periodically to support our goal of continuing to compensate our Associates equitably based on their skills, qualifications, role, and abilities.
At TJX, we are firmly committed to pay equity and providing attractive and accessible opportunities throughout our ongoing effortsorganization for our Associates to maintain fair pay practices, promote diversity, and to foster a diverse and inclusive culture where all Associates feel welcomed, valued forfulfill their contributions, and fully engaged with our business.potential. Given our approach to our compensation program, our recent disclosure, and our multipronged diversity and inclusion efforts,commitment to expand our disclosure, we do not believe that the requested report would not offer shareholders meaningful additional information or further our diversity, inclusion, and pay equity goals.information.
Your Board of Directors unanimously recommends that you vote AGAINST Proposal 4.
20182019 Proxy Statement 6361
PROPOSAL 5: SHAREHOLDER PROPOSAL
AMENDING TJX’S CLAWBACK POLICY
We received the following proposal from Comerica Bank & Trust, National Association, 411 W. Lafayette Boulevard, MC 3464, Detroit, Michigan 48226, in its capacity as trustee of the Trowel Trades Large Cap Equity Index Fund, a beneficial owner of at least $2,000 of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting.
As explained below, your Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
RESOLVED: Shareholders of The TJX Companies, Inc. (the “Company”), urge the Board of Directors’ Executive Compensation Committee to amend the company’s compensation clawback policy, as applied to senior executives, to add that the Committee will review and determine whether to seek recoupment of incentive compensation paid, granted or awarded to a senior executive if, in the Committee’s judgment, certain conduct resulted in a violation of law or company policy and caused financial or reputational harm to the company, and if a senior executive either engaged in the conduct or failed in his or her responsibility to manage or monitor the conduct or risks, with the company to disclose to shareholders the circumstances of any recoupment or decision not to pursue recoupment in these situations.
“Recoupment” includes both recovery of compensation already paid and forfeiture, recapture, reduction or cancellation of amounts awarded or granted over which the company retains control. This policy should operate prospectively and be implemented so as not to violate any contract, compensation plan, law or regulation.
SUPPORTING STATEMENT: As long-term shareholders, we believe that compensation policies should promote sustainable value creation. We agree with former GE general counsel Ben Heineman Jr. that recoupment policies are “a powerful mechanism for holding senior leadership accountable to the fundamental mission of the corporation: proper risk taking balanced with proper risk management and the robust fusion of high performance with high integrity.” (http//: blogs.law.harvard.edu/corpgov/2010/08/13/making-sense-out-of-clawbacks/)
The company’s current clawback policy allows recoupment of certain incentive pay from a corporate officer if financial results are required to be restated due to material noncompliance with any financial reporting requirement as a result of misconduct.
In our view, a recoupment policy that is limited to accounting and financial reporting noncompliance is too narrow.
We view recoupment as an important remedy for other kinds of conduct that may not lead to a restatement, but may nonetheless harm the company’s reputation and prospects, as well as its shareholders. We also believe a clawback policy should apply without regard to “materiality,” an element of the current policy.
The reason for a stronger policy is illustrated by the political and reputational risks TJX is incurring from its association with what a USA Today investigation calledmodem-day indentured serv[itude ]” in the Los Angeles and Long Beach port trucking industry. https://www.usatoday.com/pages/interactives/news/rigged-forced-into-debt-worked-past-exhaustion-left-with-nothing/. The report documented how truck drivers, including those moving products destined for retail stores, are pressured to violate hours of service standards, pay for their own insurance, repairs, and fuel, and to sign“lease-to-own” agreements that do not allow them to keep the truck or recover their investment if they quit or are fired. The report prompted four U.S. Senators to write to TJX asking about its knowledge of labor violations in the port trucking industry and its plans to cut ties with offending companies.
64 The TJX Companies, Inc.
STATEMENT OF THE BOARD OF DIRECTORS IN RESPONSE TO PROPOSAL 5
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because the company has already adopted a customary recoupment policy and implemented compliance programs that adequately address senior executive conduct.
Our existing incentive compensation clawback policy, which is described above on p. 41, was adopted by our Board of Directors after a review of market practice and proposed SEC rules. The policy allows the Board (or a Committee of the Board) to seek recovery or forfeiture of incentive compensation from a current or former executive officer in the event of a material restatement of our financial results if the Board reasonably determines such officer engaged in knowing or intentional fraudulent or illegal conduct that materially contributed to the need for the restatement. Under this policy, the Board will evaluate the circumstances and may seek recoupment of the portion of such executive officer’s incentive compensation that would not have been earned had performance been measured on the basis of the restated results. The policy covers incentive compensation received by or vested in the executive officer during the three-year period leading up to the determination that the restatement was required.
Under our clawback policy, the Board has reasonable discretion to act. This helps ensure that recoupment would be in the best interests of the company and our shareholders, while avoiding the vague and imprecise standards advocated by the proposal. Public disclosure of determinations under our clawback policy would be made in compliance with SEC rules and other applicable laws and otherwise at the Board’s discretion in order to balance investors’ interest in receiving the information with applicable legal, commercial, and privacy concerns.
Our clawback policy is not the sole basis for remedies the company may have in the event of executive misconduct and does not limit the company’s ability to pursue, under the terms of our executive agreements and compensation plans, the adjustment or recovery of compensation in other circumstances. Further, we have implemented compliance policies that extend throughout our organization, such as our Associate Global Code of Conduct, as well as those that apply specifically to our executive officers, such as our Code of Ethics for TJX Executives. These policies require our executive officers to commit themselves to, among other things, acting with honesty and integrity; proactively promoting ethical behavior; and providing constituents with information that is accurate, complete, objective, relevant, timely, and understandable. We believe that the reputational risks described in the proposal are adequately managed by our current practices. Our Board of Directors is responsible for overseeing our enterprise risk management function, which includes oversight of matters that may present material risk to our reputation, among other things.
The Board believes that our current compensation structure strikes the right balance to motivate executive officers to drive long-term profitable and sustainable growth, while discouraging illegal or unethical conduct through our clawback policy and other means. Further, the proposal’s imprecise standards could undermine our ability to compete for and retain executive talent, in part because we do not believe it is consistent with prevalent peer practices. Accordingly, as we believe our current policy and practices are effective, we believe that the amendment requested by the proposal is unnecessary and would not add meaningful value to the policies and processes already in place.
Your Board of Directors unanimously recommends that you vote AGAINST Proposal 5.
2018 Proxy Statement 65
PROPOSAL 6: SHAREHOLDER PROPOSAL
SUPPLY CHAIN POLICYREPORT ON PRISON LABOR
We received the following proposal from NorthStar Asset Management, Inc. Funded Pension Plan, P.O. Box 301840, Boston, Massachusetts 02130, a beneficial owner of 8192,024 shares of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting.
As explained below, your Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
WHEREAS:Financial and operational risks related to the The use of services derived from or sale of goods produced with prison labor,through correctional industries (prison labor) can pose financial and operational risks including reputational damage, litigation, and supply chain disruption, can adversely affectlitigation, and reputational damage;
Prison labor (both voluntary and involuntary) is often deployed in a manner that involves prisoner mistreatment and is frequently compared to modern slavery. Although companies benefit from low overhead expenses when inmates work for the company or its suppliers, companies have experienced public backlash, boycotts, and long-term brand name and reputation harm from a connection to prison labor;
Prisoners are involved in producing a variety of products such as furniture, circuit boards, packaging materials, electronic equipment, and providing services such as call center or shipping services. U.S. prisoners may be paid as little as $0.23-$1.15 per hour for work that sometimes occurs in unsafe or unhealthy conditions, and in some prison industries inmates may be coerced into working by threat of punishment for declining work;
Prompted by our shareholder value;
Our company’sengagement in 2017-2018, TJX modified its Vendor Code of Conduct appears to prohibit forced prison labor: “Our vendors must not use involuntary or forced labor, whether in the form of prison labor, indentured labor, bonded labor, labor acquired through slavery or human trafficking, or otherwise”;
However, prison labor in the United States and other countries where TJX goods are sourced can beclarify that it prohibits both forced and voluntary. Although slavery and involuntary servitude were abolished byvoluntary prison labor. However, beyond the 13th Amendment, an exception was made for “punishment for crime”;
Some U.S. prisoners are paid$0.23-$1.15 per hour, however in the U.S. and worldwide many inmates are often forcedselect few factories that TJX uses to work for no compensation, in unsafe or unhealthy conditions;
Companies enjoy low overhead costs when inmates make consumer products on their behalf, including furniture, clothing, food products, and packaging materials;
Watchdogs assert that prison labor is often deployed in an inhumane manner, failing to balance company cost savings with prisoner mistreatment. These issues can undermine a retailer’s reputation. In 2015, Whole Foods experienced significant backlash when customers learned that prisoner-made products were sold in stores;
Our Company has a factory auditing program which appears to only apply to factories manufacturingmanufacture products that TJX designs, and itthere is unclear whetherno routine auditing process or verification that suppliers adhere to this company policy. Although TJX could theoretically terminate a relationship with a supplier in the Company also surveysgreater network, shareholders are concerned that TJX does not have a routine audit mechanism forvoluntaryprison labor or verifies the absence of all forms detection of prison labor in the entire vendorgreater network of vendors;
Other retailers such as Whole Foods and brands such as Victoria’s Secret have experienced severe public backlash and boycotting in when prison labor was publicly identified in its supply chain;chain by an activist, TJX may only be notified of supply chain issues when they reach a crisis level;
Careful review of our supply chain for voluntary and involuntary prison labor would help ensure that TJX suppliers are consistent with Company policies and minimize risks to TJX’s reputation and shareholder value.
RESOLVED:Shareholders of TJX urge the Board of Directors to adopt a policy committingproduce an annual report to shareholders on prison labor, at reasonable cost and omitting proprietary information, assessing the Company to: a) Survey all suppliers to identify sourceseffectiveness of current company policies for preventing instances of prison labor in the Company’scompany’s supply chain; b) Developchain.
SUPPORTING STATEMENT: Shareholders recommend that the report:
Include annual quantitative metrics regarding the number of supplier audits conducted by the Company which evaluated whether prison labor is present in the supply chain, as well as the summary of those results.
Evaluate any risks to finances, operations, and reputation related to prison labor in the TJX supply chain.
62 The TJX Companies, Inc.
STATEMENT OF THE BOARD OF DIRECTORS IN RESPONSE TO PROPOSAL 5
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because it believes the production of an annual report on prison labor would be an inefficient use of company resources that would not result in meaningful information or benefit to our shareholders.
Our policy prohibits our vendors from using prison labor when manufacturing products produced for sale in our stores or online. Our Vendor Code of Conduct, which is a key component of TJX’s global social compliance program and which embraces internationally recognized principles designed to protect the interests of the workers who manufacture the products we sell, prohibits our merchandise vendors from using “voluntary or involuntary prison labor…or any forms of involuntary or forced labor.” These principles have been informed by, and in many instances incorporate, human rights, labor rights, and anti-corruption standards enunciated by the United Nations and other respected international bodies.
We place great importance on our Vendor Code of Conduct. By its terms, it applies to our merchandise vendors as well as to subcontractors and any other third parties our vendors may use in the production or distribution of goods we offer for sale. Its terms apply additional criteriaeven if a vendor maintains its own code of conduct, monitoring, or guidelines for suppliers regardingethical sourcing guidelines.
Violation of our Vendor Code of Conduct may result in corrective action, our cancellation of purchase order(s), and/or termination of our business relationship with the vendor. However, we consider the use of prison labor;labor in the manufacturing of products we sell a ‘zero-tolerance’ issue. Our policy is to immediately discontinue use of a factory if prison labor were to be found.
Our Vendor Code of Conduct historically required that merchandise vendors not use prison labor in any form. In 2018, we amended our Vendor Code of Conduct to make our position more explicit. We posted the amended Vendor Code of Conduct to our publicly-available website and c) Report to our vendor intranet site, which centralizes the communications of our business standards and requirements to our vendors. We also updated our Global Social Compliance Manual, which is distributed to our vendors and buying agents, to communicate this clarification. We continue to maintain our long-running social compliance training programs with our merchants, buying agents, vendors, and factory management involved in the manufacturing of products that we design covering many topics, including our policy prohibiting the use of any prison labor. As stated under our Vendor Code of Conduct, factories manufacturing the products that we design undergo periodic audits to evaluate adherence to our Vendor Code of Conduct, and all such audits conducted for TJX include questions intended to identify the use of prison labor.
We believe the actions we have taken through our global social compliance program are sufficient and believe that producing an annual report specific to prison labor as requested by the proposal would be unnecessary in light of our existing policies, practices, and sourcing model. Accordingly, we do not believe that the requested report would provide meaningful information or benefit to our shareholders.
Your Board of Directors unanimously recommends that you vote AGAINST Proposal 5.
2019 Proxy Statement 63
PROPOSAL 6: SHAREHOLDER PROPOSAL
REPORT ON HUMAN RIGHTS RISKS
We received the following proposal from the Priests of the Sacred Heart, U.S. Province, 7373 S. Highway 100, P.O. Box 289, Hales Corners, Wisconsin 53130, a beneficial owner of 9,800 shares of our common stock, and the Sisters of St. Dominic, 5635 Erie Street, Racine, Wisconsin 53402, a beneficial owner of 74 shares of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting.
As explained below, your Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
WHEREAS, recent global estimates found that 16 million people are trapped in conditions of forced labor in extended private sector supply chains, generating over $150 billion in profits for illegal labor recruiters and employers through underpayment of wages. Of these workers, over 70% are in debt bondage and forced to work in industries such as manufacturing. Migrant workers globally are prime targets for exploitation, including discrimination, retaliation, debt bondage, illegal deductions from wages and confiscated or restricted access to personal documents, limiting workers’ freedom of movement leading to forced labor and human trafficking.
Corporations have a responsibility to respect human rights within company-owned operations and through business relationships. This expectation is delineated in the United Nations Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector. Societal expectations have increased requiring companies to conduct human rights due diligence, informed by the core international human rights instruments, to assess, identify, prevent, and mitigate adverse human rights impacts. Regulatory requirements in the State of California, the United Kingdom, Australia and France require companies to report on their actions to eradicate human trafficking and slavery. Any company directly or indirectly employing migrant workers must have a policy that assesses if workers are being recruited into debt bondage, forced labor and, ultimately, slavery.
The 2018 Corporate Human Rights Benchmark gives TJX Companies, Inc. (TJX) an overall score of 13.8 out of 100. This compares poorly with scores from peer companies Marks & Spencer (70), Gap (52), and Hennes & Mauritz (50). TJX’s Vendor & Supplier Code of Conduct does prohibit the use of forced labor, slavery and human trafficking in the company’s supply chains and the company has posted a report on its website in accordance with the California Transparency Supply Chains Act (SB 657). However, TJX’s has no formal commitment to respect human rights or remedy adverse impacts; no clear evidence of Board commitment, management incentives, or engagement with stakeholders; does not disclose whether it embeds respect for human rights in company culture and management systems, conducts human rights risks assessments, or implements processes to ensure no child or forced labor, freedom of association and collective bargaining, and payment of a living wage.
Given the company’s lack of risk mitigation and disclosure, investors have insufficient information to gauge how well the company is addressing this serious risk to the company and to workers.
RESOLVED, that shareholders no later than June 30, 2019,request the Board of Directors of TJX to report, at reasonable cost and omitting proprietary information, on TJX’s progress in implementing the policy.
SUPPORTING STATEMENT:The Proponent recommends that the company’s progress report include:
a) Suppliers using prison labor with compulsory, uncompensated, or severely undercompensated work programs,
b) Suppliers using prison labor fromprivately-run prisons;its supply chain by December 2019.
6664 The TJX Companies, Inc.
SUPPORTING STATEMENT: In developing the report, the Company could consider:
Human rights principles used to frame the use of prison labor;assessment;
Frequency of assessment;
Methodology used to track audit, and measure supplier performance;performance on forced labor risks; and
How the results of the assessment are incorporated into company policies and extent of consultation with relevant stakeholders in connection with the policy development and implementation.decision-making.
Examples for possible guidelines or criteria could include: consideration of a minimum wage and/or overtime pay for inmate laborers, safety/health conditions, supplier-providedjob-matching programs for inmates upon release.
STATEMENT OF THE BOARD OF DIRECTORS IN RESPONSE TO PROPOSAL 6
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because it believes the adoption ofreport requested by the requested policy and report is an inefficient use of company resources thatproposal would not result in usefulmeaningful information or benefit to our shareholders.
We prohibit allbelieve that our social compliance program supports the execution of our vendors from using prison labor when manufacturing products that we sellflexible, off-price business model responsibly, with integrity, and in our stores. compliance with all applicable laws, rules, and regulations.
Our Vendor Code of Conduct whichis a key component of TJX’s global social compliance program. It reflects the company’s core values of honesty, integrity, and treating others with dignity and respect and embraces internationally recognized principles designed to protect the interests of the workers who manufacture products for sale in our stores prohibits our vendors from using “voluntary or involuntary prison labor…or any forms of involuntary or forced labor.” Theonline. These principles have been informed by, and in many instances incorporate, human rights, labor rights, and anti-corruption standards enunciated by the United Nations and other respected international bodies.
Specifically, the Vendor Code of Conduct, which, by its terms, applies to all of ourmerchandise vendors, as well as allto subcontractors and any other third parties our vendors may use in the production or distribution of goods offeredwe offer for sale in our stores. It appliesstores or online:
prohibits the use of forced labor, including indentured labor, bonded labor, labor acquired through slavery or human trafficking, voluntary or involuntary prison labor, and any forms of involuntary or forced labor;
requires vendors to respect the rights and dignity of their employees, and notes that human rights abuses will not be tolerated;
prohibits discrimination on the basis of gender; race; color; national origin; age; religious, ethnic, or cultural beliefs; and any other prohibited basis;
requires vendors to abide by all applicable laws relating to wages and benefits and to pay the legally prescribed minimum wage or the prevailing industry wage, whichever is higher;
prohibits the use of child labor; and
requires that vendors respect the rights of their workers to freely associate and bargain collectively where such rights are recognized by law.
We place great importance on our Vendor Code of Conduct. The terms of our Vendor Code of Conduct apply even if a vendor appliesmaintains its own code of conduct, monitoring, or ethical sourcing guidelines.
A vendor’s violation Violation of our Vendor Code of Conduct may result in corrective action, our cancellation of purchase order(s), and/or termination of our business relationship with the vendor. Moreover, thereHowever, findings of slave or forced labor and human trafficking are several issues that we consider‘zero-tolerance’ issues, including the use of prison labor in the manufacturing of products for sale in our stores.each ‘zero-tolerance’ issues. Our policy is to terminate immediately our relationship withdiscontinue use of a factory where prisonslave or forced labor or human trafficking is found.
Our Vendor CodeTo advance the objectives of Conduct has historically required that vendors not use prison labor in any form. Nevertheless, upon receipt of this proposal,our social compliance program, we amended our Vendor Code of Conduct to make more explicit our position. We immediately posted the amended Vendor Code of Conductregularly provide education and training to our publicly-available website and to our vendor intranet site, which centralizes our communications of our business standards and requirements to our vendors. We also updated our Global Social Compliance Manual, which is distributed to our vendors and buying agents. Our long-running social compliance trainings with ourmerchants, buying agents, vendors, and factory management that cover many topics, including our policy prohibiting the use of any prison labor, continue.
We believe the actions we have taken to prohibit the use of prison laborinvolved in the manufacturemanufacturing of products that we sell indesign. We believe that this helps these parties to develop meaningful processes consistent with our stores are sufficientexpectations.
Our mission is to deliver great value to our customers every day, and we believe that the shareholder’s request thatrelationships we survey eachhave built with our vendors have been a key factor in the success of our over 20,000 vendors around the globe regarding this practice would be costly, time-consuming, unnecessary, and impracticable in light ofbusiness. We believe that our existing policies,current social compliance practices and sourcing model.policies, including our Vendor Code of Conduct, reflect our commitment to operating our off-price business model responsibly and ethically. Accordingly, we do not believe that the requested policy and report is an effectivewould result in meaningful information or prudent use of corporate resources that would serve the best interest ofbenefit to our shareholders.
Your Board of Directors unanimously recommends that you vote AGAINST Proposal 6.
20182019 Proxy Statement 6765
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of February 3, 20182, 2019 with respect to our equity compensation plans:
Plan Category
| Number of securities to be issued upon exercise of outstanding options, warrants and rights(a)
| Weighted-average exercise price of outstanding options, warrants and rights(b)
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))(c)
| Number of securities to be issued upon exercise of outstanding options, warrants and rights(a) | Weighted-average exercise price of outstanding options, warrants and rights(b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))(c) | ||||||||||||||||||
Equity compensation plans approved by security holders
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29,187,510
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$55.03
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26,557,537
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| 53,083,157 | $32.02 | 46,317,530 | ||||||||||||
Equity compensation plans not approved by security holders
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—
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—
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—
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| — | — | — | ||||||||||||
Total
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29,187,510
|
|
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$55.03
|
|
|
26,557,537
|
| 53,083,157 | $32.02 | 46,317,530 |
We use one equity compensation plan, the Stock Incentive Plan (or SIP). The number of securities available for issuance under the SIP was most recently approved by shareholders in 2013. Securities reported in column (a) include outstanding options, performance share unit awards, and restricted stock unit awards as well as outstanding deferred stock awards where the underlying shares have not been issued. The weighted-average exercise price in column (b) takes into account option awards but not the 1,557,7034,029,804 shares subject to other awards.
For additional information concerning our equity compensation plan see Note H to our consolidated financial statements included in our Annual Report on Form10-K for fiscal 2018.2019.
6866 The TJX Companies, Inc.
VOTING REQUIREMENTS AND PRACTICES
VOTING REQUIREMENTS
Quorum: A majority of the shares outstanding and entitled to vote at the meeting is required for a quorum for the meeting.
Election of directors: A nominee receiving a majority of the votes properly cast at the meeting for the nominee’s election (meaning he or she receives more votes cast ‘for’ than cast ‘against’) will be elected director. As described above inMajority Voting in theBoard Service at TJX section, we require any incumbent director standing for election to provide an irrevocable contingent resignation to be considered by the Board if the director receives a greater number of votes ‘against’ his or her election than votes ‘for’ such election. You may vote ‘for’ or ‘against’ each of the nominees for director in Proposal 1 or abstain from voting for one or more nominees for director.
Other proposals: All other proposals require the approval of a majority of the votes properly cast at the meeting (meaning the proposal is approved if there are more votes properly cast ‘for’ than cast ‘against’). You may vote ‘for’ or ‘against’ one or more of the other proposals. You may also abstain from voting on any of the proposals.
VOTING YOUR SHARES
If you owned TJX common stock at the close of business on April 9, 2018,8, 2019, the record date for our record date,2019 Annual Meeting, you are entitled to vote at the meeting. Each of the 626,927,9471,214,749,126 shares of common stock outstanding on the record date is entitled to one vote. There are multiplemany ways to vote your shares.
If you are a shareholder of record (meaning you hold TJX shares registered in your name) please follow the instructions on the enclosed proxy card to indicate how you would like to vote your shares voted.shares. You may vote online or by telephone (using the toll-free telephone number provided) or sign and return the proxy card by mail.
If you are a street name holder, sometimes referred to as a beneficial holder (meaning you own TJX shares through a bank, broker, or other third party), please refer to the voting instruction card or other enclosures provided by that third party with this proxy statement to see how and when to provide voting directions for your shares. (Online or telephone voting may be permitted.)
Both shareholders of record and street name holders may vote in person at the meeting. If you are a shareholder of record (or representing a shareholder of record), you may vote in person at the meeting withmust bring proper documentation that demonstrates you were a TJX shareholder at the close of business on April 9, 20188, 2019 or hold a valid proxy for the annual meeting from such a shareholder. If you are a street name holder (or representing a street name holder), you will need tomust bring proof of your beneficial ownership as of April 9, 2018,8, 2019, such as a brokerage account statement showing your ownership on that date or similar evidence of ownership.ownership, or hold a valid proxy for the annual meeting from the shareholder.
If you vote your shares by mail, telephone, or online, your shares will be voted in accordance with your directions.
If you are a record holder and vote your proxy for the 20182019 Annual Meeting by mail, telephone, or online, but do not indicate specific choices for some or all proposals as part of that process, your shares will be voted as follows:
FOR the election of the director nominees (Proposal 1),
FOR the ratification of the appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal 20192020 (Proposal 2),
FOR the advisory approval of TJX’s executive compensation (thesay-on-pay vote) (Proposal 3), and
AGAINST each of the shareholder proposals (Proposal 4 through Proposal 6).
2019 Proxy Statement 67
The persons named as proxies will also be able to vote your shares at postponed or adjourned meetings. If any director nominee should become unavailable, your shares will be voted for another nominee selected by the Board or for only the remaining nominees.
2018 Proxy Statement 69
However, if you are a street name holder, note that banks, brokers, and other third parties are not permitted to vote your shares on any matter other than the ratification of the appointment of the independent registered public accounting firm (Proposal 2) without instruction from you. If your shares are held in the name of a bank, broker, or other third party and you do not instruct the bank, broker, or other third party on how to vote your shares with respect to the election of the director nominees (Proposal 1), or any of Proposals 3 through 6, or if you abstain from voting on any matter, your shares will not be counted as having been voted on that matter. Your shares will therefore have no effect on the outcome of the vote, but will be counted as in attendance at the meeting for purposes of a quorum.
CHANGING OR REVOKING YOUR PROXY
If you are a shareholder of record, you may change or revoke your proxy at any time before it is voted at the Annual Meeting by voting later online or by telephone, returning a later-dated proxy card by mail, or delivering a written revocation to the Corporate Secretary of TJX at our corporate offices at:
Corporate Secretary
c/o Office of the Secretary/Legal Department
The TJX Companies, Inc.
770 Cochituate Road
Framingham, Massachusetts 01701
If you are a street name holder, you should refer to the voting instruction card provided with this proxy statement or contact your broker, bank, or other third party holder of record for instructions on how to change or revoke your vote. You also should have a choice of methods to change or revoke your voting instructions before the meeting.
PROPOSALS AND NOMINATIONS FOR THE NEXT ANNUAL MEETING
PROPOSALS TO BE INCLUDED IN NEXT YEAR’S PROXY STATEMENT
A shareholder who intends to present a proposal for business other than director nominations at the 20192020 Annual Meeting of Shareholders and who wishes the proposal to be included in our proxy materials for that meeting pursuant to Rule14a-8 under the Exchange Act must submit the proposal in writing to us so that we receive it no later than December 27, 20182019 and must otherwise comply with SEC rules in order for the proposal to be eligible for inclusion in our proxy materials for that meeting.
A shareholder who wishes to nominate a director at the 20192020 Annual Meeting of Shareholders and who wishes the nomination to be included in our proxy materials for that meeting must notify us in writing no earlier than November 27, 20182019 and no later than December 27, 2018.2019. The notice must be given in the manner and must include the information and representations required by our by-laws. Our by-laws, which are available on our website, tjx.com, describe the requirements for nominating directors at the annual meeting.
70 The TJX Companies, Inc.
PROPOSALS NOT TO BE INCLUDED IN NEXT YEAR’S PROXY STATEMENT
A shareholder who intends to present a proposal for business at the 20192020 Annual Meeting of Shareholders but who does not wish the proposal to be included in our proxy materials for that meeting must provide written notice of the proposal to us no earlier than February 5, 20192020 and no later than March 7, 2019. Notices must be given in the manner and must include the information and representations required by ourby-laws. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements of our by-laws.6, 2020. A shareholder who wishes to nominate a director at the 20192020 Annual Meeting of Shareholders but who does not wish the nomination to be included in our proxy materials for that meeting must notify us in writing no earlier than February 5, 20192020 and no later than March 7, 2019.6, 2020. Notices must be given in the manner and must include the information and representations required by our by-laws.
68 The TJX Companies, Inc.
At the time of mailing of this proxy, we do not know of any other matter that may come before the Annual Meeting and do not intend to present any other matter. However, if any other matters properly come before the meeting or any adjournment or postponement, the persons named as proxies will have discretionary authority to vote the shares represented by the proxies in accordance with their own judgment, including the authority to vote to adjourn the meeting.
We will bear the cost of solicitation of proxies. We have retained Morrow Sodali LLC to assist in soliciting proxies by mail, telephone, and personal interview for a fee of $11,500, plus expenses. Our officers and other Associates may also assist in soliciting proxies in those manners.a similar manner.
20182019 Proxy Statement 7169
DEFINITIONS
We define comparable store sales (comp sales)(“comp sales”) to be sales of stores that have been in operation for all or a portion of two consecutive fiscal years, or in other words, stores that are starting their third fiscal year of operation. We calculate comp sales on a 52-week basis by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and stores that have changed in size are generally classified in the same way as the original store, and we believe that the impact of these stores on the consolidated comp percentage is immaterial.
Sales excluded from comp sales (“non-comp sales”) consists of: new
New stores—stores (stores that have not yet met the comp sales criteria); storescriteria, which represents a substantial majority of non-comp sales
Stores that are closed permanently or for an extended period of time; and salestime
Sales from our e-commerce businesses, meaning Sierra Trading Post (including stores), tjmaxx.com, and tkmaxx.com. tkmaxx.com
We determine which stores are included in the comp sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year unless a store is closed permanently or for an extended period during that fiscal year.
Comp sales of our foreign segments are calculated by translating the current year’s comp sales of our foreign segments at the same exchange rates used in the prior year. This removes the effect of changes in currency exchange rates, which we believe is a more accurate measure of segment operating performance. The method for calculating comp sales varies across the retail industry, therefore our measure of comp
Comp sales may not be comparablereferred to as “same store” sales by other retail companies.
We define customer traffic to be the number of transactions in stores included in the comp sales calculation.
The way we define these financial measures may not be comparable to similarly titled measures used by other entities.
NOTES ON CHARTS
Annual Sales Growth, p. 30.1 and p. 26. Peer group averages are based on sales reported for the comparable period to TJX’s fiscal year-end.year-end other than Nike, Procter & Gamble, and Starbucks, which are based on sales reported as of the end of their respective fiscal years. For fiscal 2018 measures, TJX’s fiscal 2018 revenue is reported on a 53-week basis. Peerbasis; peer group data is on a reported basis and may include 52-week figures. Nike and Starbucks figures are based on the last four quarters reported; Procter Gamble figures are excluded because it experienced a corporate event that resulted in restated financial statement. TJX’s adjusted growth for fiscal 2018 on a52-week basis is 6.3%, with an estimated impact of approximately 170 basis points from the 53rd week.
Earnings Per Share, p. 30. For the EPS1 and Adjusted EPS chart on p. 30, see26. See below for reconciliations of TJX adjusted EPS to GAAP EPS.
RECONCILIATIONS
Earnings Per Share.Adjusted earnings per share (EPS) of TJX excludes from diluted EPS from continuing operations computed in accordance with U.S. generally accepted accounting principles (GAAP) the followingbelow positive and negative effects of items that affect comparability between periods. TJX EPS values reflect the two-for-one stock split effected in November 2018. Several of the peer group members also report adjusted EPS, which were used in calculating the five-year adjusted EPS growth rate for our fiscal 20182019 peer group. Peers might not calculate adjusted EPS in the same way we do. Adjusted EPS for our peers includes GAAP EPS for years in which no adjusted EPS was reported.
2019 Proxy Statement A-1
For TJX EPS:
Fiscal 20122009 adjusted EPS of $1.99$0.50 excludes the negative impactbenefit of $0.06$0.01 per share related to a provision for expenses related to the data intrusion and $0.01 per share from the A.J. Wright consolidationa tax-related adjustment from GAAP EPS of $1.93.
Fiscal 2013 adjusted EPS of $2.47 excludes an estimated $0.08 per share benefit from the 53rd week from GAAP EPS of $2.55.
Fiscal 2014 adjusted EPS of $2.83 excludes an $0.11 per share tax benefit from GAAP EPS of $2.94.$0.52.
Fiscal 2015 adjusted EPS of $3.16$1.58 excludes the negative impact of a second quarter debt extinguishment charge of $0.01 per share on GAAP EPS of $3.15.$1.57.
Fiscal 2017 adjusted EPS of $3.53$1.77 excludes the negative impact of $0.07$0.04 per share from a third quarter debt extinguishment charge and a pension settlement charge from GAAP EPS of $3.46.$1.73.
Fiscal 2018 adjusted EPS of $3.85$1.93 excludes $0.17$0.09 per share from benefits related to the 2017 Tax Cuts and Jobs Act, offset by charges from a special, discretionary bonus to eligible,non-bonus plan Associates; incremental contributions to TJX’s defined contribution retirement plans; and contributions to TJX’s charitable foundations; an estimated $0.11$0.06 per share benefit from the 53rd week; and a $0.10$0.05 per share impairment charge related to Sierra Trading Post from GAAP EPS of $4.04.$2.02.
Fiscal 2019 adjusted EPS of $2.11 excludes $0.34 per share from benefits related to the 2017 Tax Cuts and Jobs Act and a $0.02 per share pension settlement charge from GAAP EPS of $2.43.
A-2 The TJX Companies, Inc.
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q IF YOU HAVE NOT VOTED ONLINEOR VIA TELEPHONE,VOTING BY MAIL, PLEASE VOTE, DATE, AND SIGN ON THE REVERSE SIDE OF THIS CARD,q
FOLD ALONG THE PERFORATION, ANDCARD. DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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The Board recommends a voteFOR Proposals 2 and 3:
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
2. | Ratification of appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal 2019 | ☐ | ☐ | ☐ | 3. | Advisory approval of TJX’s executive compensation (the say-on-pay vote) | ☐ | ☐ | ☐ |
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For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
4. | Shareholder proposal for a report on compensation disparities based on race, gender, or ethnicity | ☐ | ☐ | ☐ | 5. | Shareholder proposal for amending TJX’s clawback policy | ☐ | ☐ | ☐ | |||||||||||||
6. | Shareholder proposal for a supply chain policy on prison labor | ☐ | ☐ | ☐ |
The TJX Companies, Inc.
2018 Annual Meeting of Shareholders
Tuesday, June 5, 2018, 9:00 a.m. (local time)
Hilton Garden Inn Montreal Centre-Ville
380 Sherbrooke St. West,
Montreal, Quebec, H3A 0B1, Canada
q IF YOU HAVE NOT VOTED ONLINEOR VIA TELEPHONE, PLEASE VOTE, DATE, AND SIGN BELOW,q
FOLD ALONG THE PERFORATION, AND DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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A | Management Proposals
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The Board recommends a voteFOR each of the nominees: | + | |||||||||||||||||||||||
1. Election of Directors: | For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | |||||||||||||||
01 - Zein Abdalla | ☐ | ☐ | ☐ | 02 - Alan M. Bennett | ☐ | ☐ | ☐ | 03 - Rosemary T. Berkery | ☐ | ☐ | ☐ | |||||||||||||
04 - David T. Ching | ☐ | ☐ | ☐ | 05 - Ernie Herrman | ☐ | ☐ | ☐ | 06 - Michael F. Hines | ☐ | ☐ | ☐ | |||||||||||||
07 - Amy B. Lane | ☐ | ☐ | ☐ | 08 - Carol Meyrowitz | ☐ | ☐ | ☐ | 09 - Jackwyn L. Nemerov | ☐ | ☐ | ☐ | |||||||||||||
10 - John F. O’Brien | ☐ | ☐ | ☐ | 11 - Willow B. Shire | ☐ | ☐ | ☐ |
The Board recommends a voteFOR Proposals 2 and 3:
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
2. | Ratification of appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal 2020 | ☐ | ☐ | ☐ | 3. | Advisory approval of TJX’s executive compensation (the say-on-pay vote) | ☐ | ☐ | ☐ |
B
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Shareholder Proposals
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The Board recommends a voteAGAINST Proposals 4, 5, and 6: | ||||||||||||||||||||||||
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||
4. | Shareholder proposal for a report on compensation disparities based on race, gender, or ethnicity | ☐ | ☐ | ☐ | 5. | Shareholder proposal for a report on prison labor | ☐ | ☐ | ☐ | |||||||||||||
6. | Shareholder proposal for a report on human rights risks | ☐ | ☐ | ☐ |
031UTD
The TJX Companies, Inc.
2019 Annual Meeting of Shareholders
Tuesday, June 4, 2019, 8:00 a.m. (local time)
Courtyard Marriott
342 Speen Street
Natick, Massachusetts 01760
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.envisionreports.com/TJX |
q IF VOTING BY MAIL, PLEASE VOTE, DATE, AND SIGN BELOW. DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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2019 Annual Meeting of Shareholders | ||
Proxy Solicited by Board of Directors for Annual Meeting - June | ||
Ernie Herrman, Scott Goldenberg, Mary B. Reynolds, and | ||
Shares represented by this proxy will be voted by the | ||
(Items to be voted appear on reverse side.) |
C | Authorized Signatures | |||
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Please sign exactly as |
Date (mm/dd/yyyy) | Signature 1 | Signature 2 |
/ / |
D | Non-Voting Items |
Change of Address | Comments | |||
∎ | IF VOTING BY MAIL, PLEASE COMPLETE BOTH SIDES OF THIS CARD.
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