| • | | Registration on FormS-3. If we are eligible to file a registration statement on FormS-3, the holders of any then-outstanding registrable securities will have the right to demand that we file registration statements on FormS-3. This right to have registrable securities registered on FormS-3 will be subject to specified conditions and limitations.
INDEMNIFICATION OF DIRECTORS AND OFFICERS We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements, as well as our certificate of incorporation and bylaws, require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. OTHER RELATIONSHIPS Mr. Bergh, our President and CEO and Mr. Marc Rosen, our Executive Vice President and President of Levi Strauss Americas, are members of the Board of Directors of the Levi Strauss Foundation, which is not one of our consolidated entities. Mr. Seth R. Jaffe, our Executive Vice President and General Counsel, is Vice President and member of the Board of Directors of the Levi Strauss Foundation. We donated $9.9 million to the Levi Strauss Foundation in fiscal year 2020. NON-EMPLOYEE DIRECTOR COMPENSATION DURING FISCAL YEAR 2020 We provide compensation to our non-employee directors for the time and effort necessary to serve as a member of our Board of Directors. In addition, our non-employee directors are entitled to reimbursement of direct expenses incurred in connection with attending meetings of our Board of Directors or committees thereof. Compensation for members of our Board of Directors is reviewed by the Nominating, Governance and Corporate Citizenship Committee and approved by our Board of Directors. The Nominating, Governance and Corporate Citizenship Committee consults regularly with its compensation consultant, Exequity, which informs it of market trends and conditions, comments on market data relative to the non-employee directors’ current compensation, and provides perspective on other companies’ non-employee director compensation practices. In fiscal year 2020, director compensation consisted of an annual retainer paid in cash and equity compensation in the form of RSUs. Chairs of the committees of our Board of Directors also received an additional cash retainer, as described below. ANNUAL CASH RETAINER In fiscal year 2020, each non-employee director received compensation consisting of an annual cash retainer fee and was eligible to participate in the provisions of our Deferred Compensation Plan that apply to directors. In fiscal year 2020, Mr. Neal participated in our Deferred Compensation Plan. The annual retainer for our non-employee directors is at the rate of $100,000 per fiscal year; however, in view of the COVID-19 pandemic and in connection with other cost-reduction measures implemented by the Company, our Board of Directors eliminated its cash retainer compensation for the second quarter and one third of the third quarter of fiscal year 2020. 22 Table of Contents CORPORATE GOVERNANCE EQUITY COMPENSATION In fiscal year 2020, each non-employee director also received an annual equity award in the form of restricted stock units (“RSUs”) which are granted under our 2019 Equity Incentive Plan (the “2019 EIP”). The annual equity award value in the form of RSUs granted under our 2019 EIP was $155,000. Our non-employee directors have target stock ownership guidelines of $300,000 of equity ownership within five years of joining the Board of Directors. The RSUs vest in three equal installments after 13, 24 and 36 months following the grant date. If the director’s service terminates for reason other than cause after the first, but prior to full, vesting period, then any unvested portion of the award will fully vest as of the date of such termination. In addition, each director’s initial RSU grant includes a deferral delivery feature, under which the director will not receive the vested awards until six months following the cessation of service on our Board of Directors. Under the terms of our 2016 Equity Incentive Plan (the “2016 EIP”) and 2019 EIP, recipients of RSUs receive additional grants as a dividend equivalent when our Board of Directors declares a dividend to all shareholders. Dividend equivalents are subject to all the terms and conditions of the underlying RSU Award Agreement to which they relate. COMPENSATION OF COMMITTEE CHAIRS AND BOARD CHAIR In addition to the compensation described above, chairs of the committees of our Board of Directors receive an additional retainer fee in the amount of $20,000 for each of the Audit Committee and the Compensation Committee and $15,000 for each of the Finance Committee and the Nominating, Governance and Corporate Citizenship Committee; however, in view of the COVID-19 pandemic and in connection with other cost-reduction measures implemented by the Company, our chairs of the committees of our Board of Directors eliminated their cash retainer compensation for the second quarter and one third of the third quarter of fiscal year 2020. For fiscal year 2020, Mr. Neal was the Chair of our Board of Directors. The Chair of our Board of Directors is entitled to receive an additional annual retainer in the amount of $200,000, 50% of which is paid in cash and 50% of which is paid in the form of RSUs. The Chair of our Board of Directors may also receive the additional retainers earned by chairs of the committees of our Board of Directors, if applicable. In determining the Chair’s compensation, our Board of Directors reviewed compensation data and market trends as advised by its compensation consultant, Exequity. The Board of Directors also took into account the Chair’s additional role and responsibilities in interacting with our family shareholders over time. BOARD COMPENSATION TABLE The following table sets forth information regarding the compensation earned for service on our Board of Directors during fiscal year 2020 by our directors who were not also our named executive officers. Mr. Bergh, our President and CEO, did not receive any additional compensation for his service on our Board of Directors during fiscal year 2020. His compensation as a named executive officer is set forth under “Summary Compensation Table.” | FEES EARNED OR | STOCK | ALL OTHER | | NAME | PAID IN CASH | AWARDS(1) | COMPENSATION(2) | TOTAL | Stephen C. Neal(3) | $ 143,383 | $ 254,988 | $ 14,732 | $ 413,103 | Troy Alstead | 80,000 | 154,990 | 9,873 | 244,863 | Jill Beraud | 66,667 | 154,990 | 5,333 | 226,990 | Robert A. Eckert(4) | 80,000 | 154,990 | 25,702 | 260,692 | Spencer Fleischer(5) | 76,667 | 154,990 | 20,757 | 252,414 | David A. Friedman | 66,667 | 154,990 | 2,520 | 224,177 | Yael Garten(6) | 58,334 | 220,079 | 513 | 278,926 | Christopher J. McCormick | 66,667 | 154,990 | 4,820 | 226,477 | Jenny Ming | 66,667 | 154,990 | 13,758 | 235,415 | Patricia Salas Pineda(7) | 66,667 | 154,990 | 16,470 | 238,127 | Joshua E. Prime | 66,667 | 154,990 | 1,104 | 222,761 | Elliott Rodgers(8) | — | — | — | — |
(1) | These amounts reflect the aggregate grant date fair value of RSUs granted under the 2019 EIP in fiscal year 2020 computed in accordance with FASB ASC 718. See the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal year 2020 for the relevant assumptions used to determine these awards. The following table shows as of November 29, 2020, the aggregate number of outstanding RSUs held by each person who was a director in fiscal year 2020, which number includes any RSUs that were vested but deferred and RSUs that were not vested as of such date: |
| • | | Expenses of Registration. Subject to specified conditions and limitations, we will pay all expenses relating to any registration made pursuant to the registration rights agreement, other than underwriting discounts and commissions.
2021 PROXY STATEMENT 23 Table of Contents CORPORATE GOVERNANCE | AGGREGATE | NAME | OUTSTANDING RSUs | Stephen C. Neal | 54,460 | Troy Alstead | 62,379 | Jill Beraud | 33,790 | Robert A. Eckert | 78,795 | Spencer Fleischer | 45,266 | David A. Friedman | 26,026 | Yael Garten | 15,786 | Christopher J. McCormick | 36,851 | Jenny Ming | 74,680 | Patricia Salas Pineda | 69,383 | Joshua E. Prime | 19,536 | Elliott Rodgers | — |
(2) | This column includes the aggregate grant date fair value of dividend equivalents provided to each director in fiscal year 2020 in the following amounts: |
| FAIR VALUE OF DIVIDEND | | EQUIVALENT RSUs | NAME | GRANTED | Stephen C. Neal | $ 14,732 | Troy Alstead | 9,873 | Jill Beraud | 5,333 | Robert A. Eckert | 18,202 | Spencer Fleischer | 13,257 | David A. Friedman | 2,520 | Yael Garten | 513 | Christopher J. McCormick | 4,820 | Jenny Ming | 13,758 | Patricia Salas Pineda | 8,970 | Joshua E. Prime | 1,104 | Elliott Rodgers | — |
(3) | For fiscal year 2020, Mr. Neal was the Chair of our Board of Directors. Mr. Neal elected to defer 100% of his director’s fees under the Deferred Compensation Plan. | (4) | Mr. Eckert’s amount in the “All Other Compensation” column includes charitable matches of $7,500. | (5) | Mr. Fleischer’s amount in the “All Other Compensation” column includes charitable matches of $7,500. | (6) | Dr. Garten’s amount in the “Stock Awards” column includes the value of the initial RSU grant she received upon joining our Board, consistent with our standard Board | | compensation program. | (7) | Ms. Pineda’s amount in the “All Other Compensation” column includes charitable matches of $7,500. | (8) | Mr. Rodgers joined the Board of Directors on December 8, 2020. |
| • | | Termination of Registration Rights. The registration rights of any particular holder of registrable securities will not be available when such holder is able to sell all of his, her or its registrable securities during a90-day24 Table of Contents EXECUTIVE OFFICERS The following is a brief biography of each of our executive officers except for Mr. Bergh, whose biography is set forth under “Continuing Board of Directors” above. NAME | AGE | POSITION period pursuant to Rule 144 or other similar exemption from registration under the Securities Act. |
Payment of Certain Initial Public Offering Expenses
We paid certain expenses in connection with our initial public offering on behalf of the selling shareholders, including all underwriting discounts and commissions applicable to the sale of shares by the selling shareholders.
Director andCharles (Chip) V. Bergh | 63 | President, Chief Executive Officer Stock SalesWe have repurchased shares of our common stock for cash from directors and executive officers pursuant to contractual put and call arrangements, which arrangements terminated pursuant to their terms upon the completion of our initial public offering. The price per share was equal to the then-current fair market value, determined in accordance with our 2016 Equity Incentive Plan (“2016 EIP”). The stock repurchases that have occurred since November 27, 2017 are as follows:
| | | | | | | | | | | | | Name | | Date of Repurchase | | | Number of Shares | | | Price per Share | | Charles V. Bergh | | | 8/20/2018 | | | | 1,572,380 | | | | $11.83 | | Roy Bagattini | | | 3/6/2018 | | | | 91,500 | | | | 9.60 | | Seth M. Ellison | | | 2/8/2019 | | | | 120,000 | | | | 14.88 | | | | | 3/9/2018 | | | | 46,800 | | | | 9.60 | | Seth R. Jaffe | | | 3/5/2018 | | | | 34,000 | | | | 9.60 | | David Love | | | 2/11/2019 | | | | 87,630 | | | | 14.88 | | | | | 7/19/2018 | | | | 160,000 | | | | 11.83 | |
Indemnification of Directors and Officers
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements, as well as our certificate of incorporation and bylaws, require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.
Other Relationships
Mr. Bergh, our President and CEO, Mr. Haas Jr., a member of our board of directors, Ms. O’Neill, our Director
| Seth M. Ellison | 62 | Executive Vice President and President of Product, Innovation and Supply Chain, and Mr. Rosen, our Executive Vice President and President ofChief Commercial Officer | Direct-to-Consumer, are members of the board of directors of the Levi Strauss Foundation, which is not one of our consolidated entities. Seth R. Jaffe our | 64 | Executive Vice President and General Counsel is Vice President of the Levi Strauss Foundation. We donated $7.5 million to the Levi Strauss Foundation in fiscal year 2018.Mimi L. Haas, who retired from our board of directors in May 2018, has adaughter-in-law who was employed by us in anon-executive position during fiscal year 2018. This employee’s total compensation was $175,000 in fiscal year 2018.
BOARD OF DIRECTORS
Nominees for Election as Class III Directors
The following is a brief biography of each nominee for Class III director and a discussion of his or her specific experience, qualifications, attributes or skills that led the nominating, governance and corporate citizenship committee and our board of directors to recommend him or her as a nominee for Class III director.
Elizabeth O’Neill | 49 | | | | | | | | | NAME
| | AGE | | | | PRINCIPAL OCCUPATION | | | | | | | | Troy Alstead
| | 56 | | | | President and Chief Executive Officer, Table 47 and Ocean5
| | | | | | | | | | | | | Charles V. Bergh
| | 61 | | | | President and Chief Executive Officer, Levi Strauss & Co.
| | | | | | | | | | | | | Robert A. Eckert
| | 64 | | | | Operating Partner, FFL Partners, LLC
| | | | | | | | | | | | | Patricia Salas Pineda
| | 67 | | | | Retired; Former Group Vice President, Hispanic Business Strategy, Toyota Motor North America, Inc.
| | | | | |
| | | | | Troy Alstead, a director since 2012, is the President and Chief Executive Officer of Table 47 and Ocean5, a restaurant and social concept, and founder of the Ocean5 Foundation focused on raising awareness and funding for sustainability of the world’s oceans and seas. In February 2016, he retired from Starbucks Corporation after 24 years with the company, having most recently served as Chief Operating Officer. Mr. Alstead previously held the positions of Group President, Chief Financial Officer and Chief Administrative Officer of Starbucks. He joined Starbucks in 1992, and over the years served in a number of operational, general management and finance roles. Mr. Alstead spent a decade in Starbucks international business, including roles as Senior Leader of Starbucks International, President of Europe, Middle East and Africa headquartered in Amsterdam and Chief Operating Officer of Starbucks Greater China headquartered in Shanghai. Mr. Alstead currently serves as a director of Topgolf International, Inc. and Harley-Davidson, Inc. Mr. Alstead brings to our board of directors his broad financial and business perspective developed over many years in the global consumer goods industry.
|
| | | | | Charles V. Bergh, a director since he joined the company in September 2011, is our President and Chief Executive Officer. Prior to joining us, Mr. Bergh held a progression of leadership roles during his28-year career at Procter & Gamble. Mr. Bergh is also thenon-executive Chairman of HP Inc. He previously served on the board of directors for VF Corporation, the Singapore Economic Development Board and was a member of theUS-ASEAN Business Council, Singapore. Mr. Bergh’s position as our President and Chief Executive Officer and his past experience as a leader of large, global consumer brands make him well-suited to be a member of our board of directors.
|
| | | | | Robert A. Eckert, a director since 2010, is Operating Partner of FFL Partners, LLC, a private equity firm, since September 2014. Mr. Eckert is also Chairman Emeritus of Mattel, Inc., a role he has held since January 2013. He was Mattel’s Chairman and Chief Executive Officer from May 2000 until December 2011, and he continued to serve as its Chairman until December 2012. He previously worked for Kraft Foods, Inc. for 23 years, and served as President and Chief Executive Officer from October 1997 until May 2000. From 1995 to 1997, Mr. Eckert was Group Vice President of Kraft Foods, and from 1993 to 1995, Mr. Eckert was President of the Oscar Mayer foods division of Kraft Foods. Mr. Eckert is currently a director of McDonald’s Corporation, Amgen, Inc., Eyemart Express Holdings, LLC, Enjoy Beer Holdings, LLC and Quinn Company. Mr. Eckert was selected to join our board of directors due to his experience as a senior executive engaged with the dynamics of building global consumer brands through high performance expectations, integrity and decisiveness in driving businesses to successful results.
|
| | | | | Patricia Salas Pineda, a director since 1991, retired in October 2016 as Group Vice President of Hispanic Business Strategy for Toyota Motor North America, Inc., an affiliate of one of the world’s largest automotive firms, a position she held since May 2013. Previously, Ms. Pineda served Toyota Motor North America as Group Vice President of National Philanthropy and the Toyota USA Foundation from 2004 to 2013. During this period, Ms. Pineda also served as General Counsel and Group Vice President of Administration from 2006 to 2008 and as Group Vice President of Corporate Communications and General Counsel from 2004 to 2006. Prior to that, Ms. Pineda was Vice President of Legal, Human Resources and Government Relations, and Corporate Secretary of New United Motor Manufacturing, Inc. with which she had been associated since 1984. Ms. Pineda was selected as a member of our board of directors to bring her expertise in government relations and regulatory oversight, corporate governance and human resources matters. She is currently a Chairwoman and member of the Latino Corporate Directors Association, a director of Frontier Airlines and a member of the board of trustees of Earthjustice. Ms. Pineda also served as a member of the advisory board of the Latinos and Society Program at The Aspen Institute from September 2017 to October 2018. Her long tenure on our board of directors also provides valuable historical perspective.
|
Continuing Directors
The following is a brief biography of each director whose term will continue after the Annual Meeting.
| | | | | | | | | | NAME
| | AGE | | | PRINCIPAL OCCUPATION
| | | | Class I Directors:
| | | | | | | | | | | | | Jill Beraud
| | | 59 | | | Retired; Former Chief Executive Officer, Ippolita
| | | | | | | Spencer C. Fleischer
| | | 65 | | | Managing Partner, FFL Partners, LLC
| | | | | | | Christopher J. McCormick
| | | 63 | | | Retired; Former President and Chief Executive Officer, L.L. Bean, Inc.
| | | | | | | Stephen C. Neal
| | | 70 | | | Chairman, Cooley LLP
| | | | | | | Class II Directors:
| | | | | | | | | | | | | David A. Friedman
| | | 66 | | | Senior Principal, Emeritus Chief Executive Officer and Chair of the Board, Forell/Elsesser Engineers
| | | | | | | Peter E. Haas Jr.(1)
| | | 71 | | | President, Red Tab Foundation
| | | | | | | Jenny Ming
| | | 63 | | | Retired; Former President and Chief Executive Officer, Charlotte Russe Inc.
| | | |
(1) | Mr. Haas Jr. is expected to retire from our board of directors in September 2019. Mr. Prime was elected to our board of directors in July 2018, to be effective when Mr. Haas Jr. retires from our board of directors, to fill the resulting vacancy. See “Future Director” below.
|
| | | | | Jill Beraud, a director since 2013, most recently served as Chief Executive Officer of Ippolita, a privately-held luxury jewelry company with distribution inhigh-end department stores, flagship and eCommerce, from October 2015 until September 2018. Prior to Ippolita, Ms. Beraud was Executive Vice President for Tiffany & Co., with responsibility for its Global Retail Operations and oversight of strategic store development and real estate from October 2014 until June 2015. Prior to Tiffany & Co., Ms. Beraud was with Living Proof, Inc., a privately-held company that uses advanced medical and materials technologies to create hair care and skin care products for women, where she was Chief Executive Officer from December 2011 to October 2014. Prior to that, Ms. Beraud served as President of Starbucks/Lipton Joint Ventures and Chief Marketing Officer of PepsiCo Americas Beverages from July 2009 to June 2011, and PepsiCo’s Global Chief Marketing Officer from December 2008 to July 2009. Before PepsiCo, Ms. Beraud spent 13 years at Limited Brands in various roles, including Chief Marketing Officer of Victoria’s Secret and Executive Vice President of Marketing for its broader portfolio of specialty brands, including Bath & Body Works, C.O. Bigelow, Express, Henri Bendel and Limited Stores. Ms. Beraud was selected to join our board of directors due to her extensive marketing, social media and consumer branding experience, as well as her extensive managerial and operational knowledge in the apparel and other consumer goods industries. Ms. Beraud is a Class I director whose term expires in 2020.
|
| | | | | Spencer C. Fleischer, a director since 2013, is Managing Partner of FFL Partners, LLC, a private equity firm. Beforeco-founding FFL Partners, LLC in 1997, Mr. Fleischer spent 19 years at Morgan Stanley & Company as an investment banker and senior leader. During his time there, he led business units in Asia, Europe and the United States. Mr. Fleischer currently serves as a director of The Clorox Company and Eyemart Express Holdings, LLC. He was a director of American West Bank until October 2015 when it was acquired by Banner Corporation, and was thereafter a director of Banner Corporation until December 2016. Mr. Fleischer was selected to join our board of directors due to his broad financial and international business perspective developed over many years in the private equity and investment banking industries. Mr. Fleischer is a Class I director whose term expires in 2020.
|
| | | | | Christopher J. McCormick, a director since April 2016, most recently served as President and Chief Executive Officer of L.L. Bean, Inc. from 2001 until 2016. Mr. McCormick joined L.L. Bean in 1983, previously serving in a number of senior and executive level positions in advertising and marketing. Prior to becoming President and Chief Executive Officer of L.L. Bean, he was Senior Vice President and Chief Marketing Officer from 2000 to 2001. Mr. McCormick is a director of Big Lots!, Inc. and a former director of Sun Life Financial, Inc. Mr. McCormick brings to our board of directors his deep channel knowledge and eCommerce and direct marketing experience. Mr. McCormick is a Class I director whose term expires in 2020.
|
| | | | | Stephen C. Neal, a director since 2007, is the Chairperson of our board of directors, a position he has held since September 2011. He is also the Chairman of the law firm Cooley LLP, where he was also Chief Executive Officer from 2001 until January 1, 2008. In addition to his extensive experience as a trial lawyer on a broad range of corporate issues, Mr. Neal has represented and advised numerous boards of directors, special committees of boards and individual directors on corporate governance and other legal matters. Prior to joining Cooley in 1995, Mr. Neal was a partner of the law firm Kirkland & Ellis LLP. Mr. Neal is a director of NVIDIA Corporation. Mr. Neal brings to our board of directors deep knowledge and broad experience in corporate governance as well as his perspectives drawn from advising many companies throughout his career. Mr. Neal is a Class I director whose term expires in 2020.
|
| | | | | David A. Friedman, a director since July 2018, is a Senior Principal, Emeritus Chief Executive Officer and Chair of the Board, and past-President and Chief Executive Officer of Forell/Elsesser Engineers, with over 40 years of professional practice in structural and earthquake engineering. Mr. Friedman is the President and an active member of the board of directors for the Earthquake Engineering Research Institute, which disseminates lessons learned from earthquakes around the world, and served on its post-earthquake reconnaissance teams in Kobe, Japan in 1995 and Wenchuan, China in 2008. Mr. Friedman is also involved in many institutional, academic, philanthropic andnot-for-profit boards, including the San Francisco Foundation, the San Francisco Planning and Urban Research Association, the University of California, Berkeley Foundation, the Jewish Home of San Francisco and Build Change. Mr. Friedman is a licensed structural engineer in California, Nevada and British Columbia. Mr. Friedman was selected to join our board of directors due to his broad professional experience, as well as his extensive background with our company arising from his familial connection to our founder. Mr. Friedman is a Class II director whose term expires in 2021.
|
| | | | | Peter E. Haas Jr., a director since 1985, is a trustee and former President of the Walter and Elise Haas Fund, a director and President of the Red Tab Foundation, a director of the Levi Strauss Foundation and the Novato Youth Center Advisory Board, a Trustee Emeritus of the San Francisco Foundation, Vice President of the Peter E. Haas Jr. Family Fund and a member of the Advisory Board of North Marin Community Services. Mr. Haas Jr. was one of our managers from 1972 to 1989. He was Director of Product Integrity of The Jeans Company, one of our former operating units, from 1984 to 1989. He served as Director of Materials Management for Levi Strauss USA in 1982 and Vice President and General Manager in the Menswear Division in 1980. Mr. Haas Jr.’s background in numerous operational roles specific to our company and his familial connection to our founder enable him to engage in board deliberations with valuable insight and experience. Mr. Haas Jr. is a Class II director whose term expires in 2021.
|
| | | | | Jenny Ming, a director since September 2014, was President and Chief Executive Officer of Charlotte Russe Inc., a fast-fashion specialty retailer of apparel and accessories catering to young women, a position she held from October 2009 to February 2019. In February 2019, Charlotte Russe Inc. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. From March 1999 to October 2006, Ms. Ming served as President of Old Navy, a $7 billion brand in The Gap, Inc.’s portfolio, where she oversaw all aspects of Old Navy and its 900 retail clothing stores in the United States and Canada. Ms. Ming joined The Gap, Inc. in 1986, serving in various executive capacities at its San Francisco headquarters, and in 1994, she was a member of the executive team that launched Old Navy. Ms. Ming serves on the Boards of Directors of Paper Source and Tower Foundation. Ms. Ming was selected to join our board of directors due to her extensive operational and retail leadership experience in the apparel industry. Ms. Ming is a Class II director whose term expires in 2021.
|
Future Director
The following is a brief biography of Joshua E. Prime, age 42, who was elected to our board of directors in July 2018, to be effective when Mr. Haas Jr. retires from our board of directors, to fill the resulting vacancy.
| | | | | Joshua E. Primewas elected to our board of directors in July 2018, to be effective when Mr. Haas Jr. retires from our board of directors, which is expected to occur in September 2019. Mr. Prime serves as Partner, Idea Generation and Research, at Indaba Capital Management, L.P., where he has served since its founding in 2010. From 2007 to 2009, Mr. Prime was a manager of retail strategy for the Americas Region of Levi Strauss & Co. From 1999 to 2005, Mr. Prime served as an analyst in merger arbitrage, special situations and credit at Farallon Capital Management, L.L.C. Mr. Prime was selected to replace Mr. Haas Jr. on our board of directors due to his broad professional experience, including with our company, and his additional insight arising from his familial connection to our founder.
|
Non-Employee Director Compensation During Fiscal Year 2018
Historically, we have provided equity-based compensation to ournon-employee directors for the time and effort necessary to serve as a member of our board of directors. In addition, ournon-employee directors are entitled to reimbursement of direct expenses incurred in connection with attending meetings of our board of directors or committees thereof.
Compensation for members of our board of directors is reviewed by the nominating, governance and corporate citizenship committee and approved by our board of directors. The nominating,
governance and corporate citizenship committee consults regularly with its compensation consultant, Exequity, which informs it of market trends and conditions, comments on market data relative to thenon-employee directors’ current compensation, and provides perspective on other companies’non-employee director compensation practices. In fiscal year 2018, director compensation consisted of an annual retainer paid in cash and equity compensation in the form of RSUs. Chairpersons of the committees of our board of directors also received an additional cash retainer, as described below.
Annual Cash Retainer
In fiscal year 2018, eachnon-employee director received compensation consisting of an annual cash retainer fee of $100,000 and was eligible to participate in the provisions of our Deferred Compensation Plan that apply to directors. In fiscal year 2018, Mr. Neal and Mr. Fleischer participated in our Deferred Compensation Plan.
Equity Compensation
In fiscal year 2018, eachnon-employee director also received an annual equity award in the form of RSUs which are granted under our 2016 EIP. The annual equity award value in the form of RSUs granted under our 2016 EIP was $135,000. RSU recipients have target stock ownership guidelines of $300,000 worth of equity ownership within five years of participation in the program. The value of the RSUs is tracked against our share price as established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm.
RSUs are units, representing beneficial ownership interests, corresponding in number and value to a specified number of underlying shares of stock. The RSUs vest in three equal installments after 13, 24 and 36 months following the grant date. After the recipient of the RSU has held the shares issued in respect of an RSU for six months, he or she may require us to repurchase, or we may require the participant to sell to us, those shares of common stock. If the director’s service terminates for reason other than cause after the first, but prior to full, vesting period, then any unvested portion of the award will fully vest as of the date of such termination. In addition, each director’s initial RSU grant includes a deferral delivery feature, under which the director will not receive the vested awards until six months following the cessation of service on our board of directors.
Under the terms of our 2016 EIP, recipients of RSUs receive additional grants as a dividend equivalent when our board of directors declares a dividend to all shareholders. Therefore, all directors who held RSUs as of February 8, 2018 and as of October 5, 2018 received additional RSUs as a dividend equivalent. Dividend equivalents are subject to all the terms and conditions of the underlying RSU Award Agreement to which they relate.
Compensation of Committee Chairpersons
In addition to the compensation described above, chairpersons of the committees of our board of directors receive an additional retainer fee in the amount of $20,000 for each of the audit committee and the compensation committee and $15,000 for each of the finance committee and the nominating, governance and corporate citizenship committee.
Mr. Neal is the Chairperson of our board of directors and, as such, is entitled to receive an additional annual retainer in the amount of $200,000, 50% of which is paid in cash and 50% of
which is paid in the form of RSUs. The Chairperson of our board of directors may also receive the additional retainers earned by chairpersons of the committees of our board of directors, if applicable.
The following table sets forth information regarding the compensation earned for service on our board of directors during fiscal year 2018 by our directors who were not also our named executive officers. Mr. Bergh, our President and CEO, did not receive any additional compensation for his service on our board of directors during fiscal year 2018. His compensation as a named executive officer is set forth under “—Summary Compensation Table.” Mrs. Haas, whose compensation during fiscal year 2018 is set forth below, retired from our board of directors on May 20, 2018.
| | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash | | | Stock Awards(1) | | | All Other Compensation(2) | | | Total | | | | | | | Stephen C. Neal(3) | | $ | 215,000 | | | $ | 234,844 | | | $ | 34,169 | | | $ | 484,013 | | | | | | | | | | | | Troy Alstead | | | 120,000 | | | | 134,923 | | | | 17,087 | | | | 272,010 | | | | | | | | | | | | Jill Beraud | | | 100,000 | | | | 134,923 | | | | 10,512 | | | | 245,435 | | | | | | | | | | | | Robert A. Eckert(4) | | | 120,000 | | | | 134,923 | | | | 37,870 | | | | 292,793 | | | | | | | | | | | | Spencer Fleischer(5) | | | 115,000 | | | | 134,923 | | | | 28,680 | | | | 278,603 | | | | | | | | | | | | David A. Friedman(6) | | | 41,667 | | | | — | | | | — | | | | 41,667 | | | | | | | | | | | | Mimi L. Haas(7) | | | 50,000 | | | | — | | | | 3,375 | | | | 53,375 | | | | | | | | | | | | Peter E. Haas, Jr. | | | 100,000 | | | | 134,923 | | | | 11,990 | | | | 246,913 | | | | | | | | | | | | Christopher J. McCormick | | | 100,000 | | | | 134,923 | | | | 8,245 | | | | 243,168 | | | | | | | | | | | | Jenny Ming | | | 100,000 | | | | 134,923 | | | | 17,406 | | | | 252,329 | | | | | | | | | | | | Patricia Salas Pineda(8) | | | 100,000 | | | | 134,923 | | | | 28,732 | | | | 263,655 | | | | | | |
(1) | These amounts reflect the aggregate grant date fair value of RSUs granted under the 2016 EIP in fiscal year 2018 computed in accordance with FASB ASC 718. See the notes to our audited consolidated financial statements included in our Annual Report onForm 10-K for fiscal year 2018 for the relevant assumptions used to determine these awards. The grant date fair value of the RSUs is based on the fair market value of our common stock as of the grant date established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm, less future expected dividends during the vesting period. The following table shows as of November 25, 2018, the aggregate number of outstanding RSUs held by each person who was a director in fiscal year 2018, which number includes any RSUs that were vested but deferred and RSUs that were not vested as of such date:
|
| | | | | | | | | | Name
| | | | Aggregate Outstanding
RSUs | | | | | Stephen C. Neal
| | | | | 108,640 | | | | | | | | Troy Alstead
| | | | | 70,700 | | | | | | | | Jill Beraud
| | | | | 42,920 | | | | | | | | Robert A. Eckert
| | | | | 120,940 | | | | | | | | Spencer Fleischer
| | | | | 91,670 | | | | | | | | David A. Friedman
| | | | | — | | | | | | | | Mimi L. Haas
| | | | | — | | | | | | | | Peter E. Haas, Jr.
| | | | | 48,970 | | | | | | | | Christopher J. McCormick
| | | | | 35,850 | | | | | | | | Jenny Ming
| | | | | 81,780 | | | | | | | | Patricia Salas Pineda
| | | | | 89,210 | | | | |
(2) | This column includes the aggregate grant date fair value of dividend equivalents provided to each director in fiscal year 2018 in the following amounts:
|
| | | | | | | | | | Name
| | | | Fair Value of Dividend
Equivalent RSUs
Granted | | | | | Stephen C. Neal
| | | | $ | 26,669 | | | | | | | | Troy Alstead
| | | | | 17,087 | | | | | | | | Jill Beraud
| | | | | 10,512 | | | | | | | | Robert A. Eckert
| | | | | 30,370 | | | | | | | | Spencer Fleischer
| | | | | 21,180 | | | | | | | | David A. Friedman
| | | | | — | | | | | | | | Mimi L. Haas
| | | | | 3,375 | | | | | | | | Peter E. Haas, Jr.
| | | | | 11,990 | | | | | | | | Christopher J. McCormick
| | | | | 8,245 | | | | | | | | Jenny Ming
| | | | | 17,406 | | | | | | | | Patricia Salas Pineda
| | | | | 21,232 | | | | |
(3) | Mr. Neal is the Chairperson of our board of directors. Mr. Neal elected to defer 100% of his director’s fees under the Deferred Compensation Plan. Mr. Neal’s 2018 amount in the “All Other Compensation” column includes charitable matches of $7,500.
|
(4) | Mr. Eckert’s 2018 amount in the “All Other Compensation” column includes charitable matches of $7,500.
|
(5) | Mr. Fleischer elected to defer 100% of his director’s fees under the Deferred Compensation Plan. Mr. Fleischer’s 2018 amount in the “All Other Compensation” column includes charitable matches of $7,500.
|
(6) | Mr. Friedman joined the Board on July 27, 2018.
|
(7) | Mrs. Haas retired from the Board on May 20, 2018.
|
(8) | Ms. Pineda’s 2018 amount in the “All Other Compensation” column includes charitable matches of $7,500.
|
EXECUTIVE OFFICERS
The following is a brief biography of each of our executive officers except for Mr. Bergh, whose biography is set forth under “Board of Directors” above.
| | | | | | | | | | | | | NAME
| | AGE | | POSITION
| | | | | | | Charles V. Bergh
| | 61 | | President, Chief Executive Officer and Director
| | | | | | | | | | | Roy Bagattini
| | 56 | | Executive Vice President and President, Americas
| | | | | | | | | | | Seth M. Ellison
| | 60 | | Executive Vice President and President, Europe
| | | | | | | | | | | Seth R. Jaffe
| | 62 | | Executive Vice President and General Counsel
| | | | | | | | | | | David Love
| | 56 | | Executive Vice President and President, Asia, Middle East and Africa
| | | | | | | | | | | Elizabeth O’Neill
| | 47 | | Executive Vice President and President, Product, Innovation and Supply Chain
| | | | | | | | | | | Marc Rosen
| | 51 | | Executive Vice President and President,Direct-to-Consumer
| | | | | | | | | | | Harmit Singh
| | 56 | | Executive Vice President and Chief Financial Officer
| | | | |
| | | | | Roy Bagattini currently serves as our Executive Vice President and President of our Americas region, a position he has held since June 2016. Mr. Bagattini joined us in June 2013 as Executive Vice President and President for our Asia, Middle East and Africa region. Mr. Bagattini was Senior Vice President for Asia and Africa at Carlsberg Group, a leading brewing and beverage company, from 2009 to 2013. Prior to that, Mr. Bagattini served in a variety of executive and leadership roles in Russia, China, India and the United States for SABMiller plc, one of the world’s largest brewing companies, from 1991 to 2009.
|
| | | | | Seth M. Ellison currently serves as our Executive Vice President and President of our Europe region. Mr. Ellison joined us in September 2012 as Executive Vice President and President of the Global Dockers Brand before assuming his current role in July 2013. Prior to joining us, Mr. Ellison was Executive Vice President and Chief Commercial Officer at Alternative Apparel from February 2009 to July 2012. Before Alternative Apparel, Mr. Ellison was President of the Swimwear Group at Perry Ellis from 2005 to 2009, and held various leadership positions at NIKE, Inc. from 1996 to 2005, including Vice President and General Manager of Nike EMEA Apparel and President of Hurley.
|
| | | | | Seth R. Jaffe currently serves as our Executive Vice President and General Counsel. Mr. Jaffe served as Senior Vice President and General Counsel beginning in September 2011 before being appointed Executive Vice President in January 2018. Prior to joining us, Mr. Jaffe served as Senior Vice President, General Counsel and Secretary of Williams-Sonoma, Inc. from January 2002 to August 2011. From 2000 to 2001, Mr. Jaffe served as Chief Administrative Officer and General Counsel of CareThere, Inc., a healthcare technology company. He also held various legal roles at Levi Strauss & Co. from 1984 to 1999 with increasing responsibilities in the United States and Europe during that time.
|
| | | | | David Love currently serves as our Executive Vice President and President of our Asia, Middle East and Africa region, a position he has held since September 2016. Mr. Love assumed his current role after having served as Executive Vice President and Chief Supply Chain Officer since 2004. In 2015, Mr. Love also served as Chief Transformation Officer, leading ourcentrally-led cost-savings and global productivity initiative. Previously, Mr. Love was Vice President of our U.S. Supply Chain organization from 2001 to 2004 and Senior Director of Product Services for the U.S. Levi’s brand from 1999 to 2001. From 1981, when he joined us, to 2001, Mr. Love held various managerial positions.
|
| | | | | Elizabeth O’Neill currently serves as our Executive Vice President and President of Product, Innovation and Supply Chain, a position she has held since 2018. Ms. O’Neill joined us in September 2013 as Senior Vice President, Product Development & Sourcing, overseeing sourcing strategy and production of over 150 million units annually, produced in 20 countries with over 150 suppliers and vendors worldwide. Prior to joining us, Ms. O’Neill was at Gap, Inc., in leadership roles in both Gap Brand and Old Navy, overseeing sourcing and production management for Gap’s global brands, from 2001 to 2013. Ms. O’Neill previously spent several years at The Disney Store in Los Angeles and Abercrombie and Fitch in Ohio, holding positions in both merchandising and product management. Ms. O’Neill also serves on the board of directors of the Red Tab Foundation.
|
| | | | | Marc Rosen currently serves as our Executive Vice President and President ofDirect-to-Consumer, a position he has held since September 2018. He is responsible for leading our global retail stores and eCommerce business to drive new growth, consumer loyalty and sustainable profitability. Prior to this, he served as our Executive Vice President and President of Global eCommerce from May 2014 to August 2018. Mr. Rosen brings more than 20 years of retail and eCommerce leadership to the role, most recently as Senior Vice President of Global eCommerce atWal-Mart Stores, Inc., a role he held from January 2011 to April 2014. He was responsible for designing, building, operating and expandingWal-Mart’s eCommerce platforms globally. From January 2006 to December 2010, Mr. Rosen was Senior Vice President of Information Systems, with responsibility forWal-Mart’s global merchandising, supply chain and store systems. He also held senior leadership positions forWal-Mart’s international business unit and Ernst & Young LLP. He currently serves on the board of directors of Inspire Brands, Inc. Mr. Rosen also serves on the board of directors of the Levi Strauss Foundation.
|
| | | | | Harmit Singh currently serves as our Executive Vice President and Chief Financial Officer, a position he has held since January 2013. He is responsible for managing our finance, information technology, strategic sourcing and global business services functions globally. Previously, Mr. Singh was Executive Vice President and Chief Financial Officer of Hyatt Hotels Corporation from August 2008 to December 2012. Prior to that, he spent 14 years at Yum! Brands, Inc. in a variety of global leadership roles including Senior Vice President and Chief Financial Officer of Yum Restaurants International from 2005 to 2008. Before joining Yum!, Mr. Singh worked in various financial capacities for American Express India & Area Countries. Mr. Singh serves on the board of directors and the audit committee of OpenText Corporation. Mr. Singh served on the board of directors and was the audit committee chair of Avendra, LLC through August 2012. Mr. Singh served as a member of the board of directors and was the audit committee chair of Buffalo Wild Wings Inc., the owner, operator and franchisor of Buffalo Wild Wings restaurants, from October 2016 to February 2018 when the company was sold.
|
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This compensation discussion and analysis describes our compensation program, the compensation decisions we made thereunder and the reasoning underlying those decisions. This compensation discussion and analysis focuses on the compensation of our named executive officers, who in fiscal year 2018 were:
Charles V. Bergh, our President and Chief Operations Officer
| Marc Rosen | 52 | Executive Officer;Vice President and President, Levi Strauss Americas | Jennifer Sey | 52 | Executive Vice President and President, Brands | Harmit Singh our | 57 | Executive Vice President and Chief Financial Officer;Officer |
|
2021 PROXY STATEMENT25 Table of Contents EXECUTIVE OFFICERS 26 Table of Contents EXECUTIVE OFFICERS 2021 PROXY STATEMENT27 Table of Contents EXECUTIVE COMPENSATION 28 Table of Contents EXECUTIVE COMPENSATION COMPENSATION DISCUSSION & ANALYSIS This Compensation Discussion and Analysis describes our executive compensation program, the compensation decisions we have made under our program for fiscal year 2020, and the reasoning underlying those decisions. It focuses on the compensation of our named executive officers (“NEOs”), who in fiscal year 2020 were: Roy Bagattini, our
• | Charles (Chip) V. Bergh, President and Chief Executive Officer (“CEO”) | • | Harmit Singh, Executive Vice President and Chief Financial Officer (“CFO”) | • | Seth Ellison, Executive Vice President and President, Americas;Seth Ellison, our Executive Vice President and President, Europe; and
| • | David Love, our Executive Vice President and President, Asia, Middle East and Africa.Africa | • | Elizabeth O’Neill, Executive Vice President and President, Product, Innovation and Supply Chain |
Effective at the end of November 2020, Mr. Ellison assumed the role of Executive Vice President and Chief Commercial Officer and Ms. O’Neill assumed the role of Executive Vice President and Chief Operations Officer. Mr. Love retired in January 2021. EXECUTIVE SUMMARY COMPENSATION PHILOSOPHY AND OBJECTIVES Our executive compensation policies and programs are designed to drive shareholder value creation by motivating, retaining and attracting exceptional talent in pursuit of the company’s strategic goals. The continued strength of our company and our brands depends on the knowledge, capabilities, innovation, execution, and integrity of our leaders. Our compensation programs help create a high-performance, outcome-driven and principled culture by holding leaders accountable for delivering results, developing our employees and exemplifying our core values. In addition, we believe that our compensation policies and programs for leaders and employees are appropriately balanced, reinforcing both short-term and longer-term results, and as such do not incentivize behavior that would have a material adverse effect on the company. The Compensation Committee of our Board of Directors (the “Compensation Committee”) is responsible for overseeing our executive compensation practices. Each year, the Compensation Committee conducts a review of our compensation and benefits programs to assess whether the programs are aligned with our business strategies, the competitive practices of our peer companies and our shareholders’ interests. Our executive compensation philosophy, which applies to all members of our executive leadership team, has three key objectives: Attract, motivate, and retainhigh performing talent inan extremely competitivemarketplace | | Deliver competitivecompensation policies and programs are designed to support the forachievement of our strategic business plans by motivating, retaining annualand attracting exceptional talent. long-term results | | Align the interests of ourexecutives with those of ourshareholders, with a majority ofexecutive compensation “at risk” | | | | | | | | | | | Our ability to achieve our strategic business plans and compete effectively in the marketplace dependsis highly dependent on the knowledge, capabilitiesquality, diversity, focus and integrityengagement of our leaders. Our compensation programs help create a high-performance, outcome-driven and principled culture by holding leaders accountable for delivering results, developing our employees and exemplifying our core values. In addition, we believe our compensation policies and programs for leaders and employees are appropriately balanced, reinforcing short-term and long-term results, and as such would not drive behavior that would have an adverse effect on our business.The compensation committee is responsible for overseeing our executive compensation practices. Each year, the compensation committee conducts a review of our compensation and benefits programs to assess whether the programs are aligned with our business strategies, the competitive practices of our peer companies and our shareholders’ interests.
Compensation Philosophy and Objectives
Our executive compensation philosophy, which applies to all membersemployees.
| | A high proportion of our executive leadership team, focuses compensation is based on the following key goals:Motivate, retain, and attract high performing talent in an extremely competitive marketplace.
| ○ | | Our ability to achieve our strategic business plans and compete effectively in the marketplace is based on our ability to motivate, retain, and attract exceptional leadership talent in a highly competitive talent market.
|
Deliver competitive compensation for achievement of annual and long-term results.
| ○ | | We provide competitive total compensation opportunities that are intended to motivate, retain, and attract a highly capable and results-driven executive team, with the majority of compensation based on the achievements of long-term performance results.
|
Align the interests of ourperformance.
| | Our incentive programs are designed to reward executives with those of our shareholders. | ○ | | Our programs offer compensation incentives that are intended to motivate executives to enhance total shareholder return.for enhancing shareholder value, both outright and in comparison to peer companies. These programs align certain elements of
|
| compensation with our achievement of corporate growth objectives (including defined financial targets and increases in shareholder value) as well as individual performance.
|
Policies and Practices for Establishing Compensation Packages
Elements of Compensation
The compensation committee establishes the elements of compensation for our executives after an extensive review of market data on the executives from the peer group described below. The compensation committee reviews each element of compensation independently and in the aggregate to determine the right mix of elements, and associated amounts, for each executive that it believes best helps us further our goals of motivating and retaining our executives, achieving our strategic business plans and enhancing total shareholder return.
A consistent approach is used across the executive leadership team when establishing each compensation element. However, the compensation committee (and, with respect to our CEO, our board of directors) maintains flexibility to exercise its independent judgment in how it applies the standard approach to each executive, taking into account unique considerations existing at an executive’s time of hire, promotion or annual performance review, and the current and future estimated value of previously granted long-term incentive awards, both performance and time-vested.
Competitive Peer Group
In determining the design and the amount of each element of compensation, the compensation committee, with the assistanceachievement of its compensation consultant, conducts a thorough annual review of competitive market information. The compensation committee reviews data from major published surveyscorporate growth objectives (including defined financial targets and proxy information of peer companiesincreases in the consumer products, apparelshareholder value) as well as individual business unit, functional, and retail industry segments. The peer group comprises companies with median revenue and other industry related characteristics (such as apparel, retail and select consumer products companies with premium branded products) that are comparable to us and that we compete with for executive talent. The peer group used in establishing our executives’ fiscal year 2018 compensation packages is presentedimpact.
|
The following section describes how our executive compensation programs are structured to achieve those objectives. 2021 PROXY STATEMENT29 Table of Contents EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION PROGRAM OVERVIEW MIX OF COMPENSATION We structure our compensation so that approximately 90% of our CEO’s compensation and approximately 70% of our other NEOs’ total compensation is linked to company performance, including net revenues, earnings, share price and total shareholder return, and other key financial results. For fiscal year 2020, our NEOs’ total compensation consisted of the following: KEY ELEMENTS OF COMPENSATION Below we have provided a brief description of the key executive compensation elements used in our programs. A more comprehensive explanation, including detail for each element of our NEOs’ fiscal year 2020 total compensation, is provided in “2020 Executive Compensation Structure and Decisions” below. | | | Company Name
| Abercrombie & Fitch Co.*
| | Hanesbrands Inc.*
| American Eagle Outfitters, Inc.*
| | J. C. Penney Company, Inc.
| Ascena Retail Group, Inc.*
| | L Brands, Inc.*
| Burberry Group Plc
| | Lululemon Athletica, Inc.*
| Carter’s, Inc.
| | Mattel, Inc.
| The Clorox Company
| | NIKE, Inc.*
| Coach, Inc.*
| | Nordstrom, Inc.
| Columbia Sportswear Company*
| | PVH Corp.*
| Dillard’s, Inc.
| | Ralph Lauren Corporation*
| Foot Locker, Inc.
| | Under Armour, Inc.*
| G-IIICOMPONENT | DESCRIPTION Apparel Group, Inc.* | | VF Corporation
| The Gap, Inc.*
| | Williams-Sonoma, Inc.
| Guess? Inc.*
| | Wolverine World Wide, Inc.*
|
|
30 Table of Contents EXECUTIVE COMPENSATION COMPETITIVE BENCHMARKING The Compensation Committee establishes the elements of compensation for our executives after an extensive review of compensation market data from the peer group described below. The Compensation Committee reviews each element of compensation independently and in the aggregate to determine the right mix of elements, and associated amounts, for each executive that it believes best helps us further our goals of motivating and retaining our executives, achieving our strategic business plans, and enhancing total shareholder return. A consistent approach is used across the executive leadership team when establishing each compensation element. However, the Compensation Committee (and the Board with respect to the CEO) maintains flexibility to exercise its independent judgment in how it applies the standard approach to each executive, taking into account unique considerations existing at an executive’s time of hire, promotion or annual performance review, and the current and future estimated value of previously granted long-term incentive awards, both performance and time-vested. COMPETITIVE PEER GROUP In determining the design and the amount of each element of compensation, the Compensation Committee, with the assistance of its compensation consultant, conducts a thorough annual review of competitive market information. The Compensation Committee reviews data from major published surveys and proxy information of peer companies in the consumer products, apparel and retail industry segments. The peer group consists of companies with median revenue and other industry related characteristics (such as apparel, retail and select consumer products companies with premium branded products) that are comparable to us and that we compete with for executive talent. As part of this review in fiscal year 2020, the Compensation Committee decided to remove Ascena Retail Group and J. C. Penney Company from its peer group due to changes in their financial situations. The peer group used in establishing our executives’ fiscal year 2020 compensation packages is presented below. COMPANY NAME | | | | Abercrombie & Fitch Co.* | Dillard’s, Inc. | L Brands, Inc.* | Ralph Lauren Corporation* | American Eagle Outfitters, Inc.* | Foot Locker, Inc. | Lululemon Athletica, Inc.* | Tapestry, Inc.* | Burberry Group Plc | G-III Apparel Group, Inc.* | Mattel, Inc. | Under Armour, Inc.* | Carter’s, Inc.* | The Gap, Inc.* | NIKE, Inc.* | VF Corporation* | The Clorox Company | Guess? Inc.* | Nordstrom, Inc. | Williams-Sonoma, Inc. | Columbia Sportswear Company* | Hanesbrands Inc.* | PVH Corp.* | Wolverine World Wide, Inc.* |
In addition to the companies noted with an asterisk (*) in the table above, the following companies are part of an expanded peer group for purposes of measuring total shareholder return for the performance-based restricted stock units granted in fiscal year 2020 that are further described in the “Performance-based RSUs” below. The Compensation Committee determined that these companies are most appropriate for determining relative total shareholder return because they represent an array of competitors with global operations. COMPANY NAME | | | | Adidas AG | Esprit Holdings Limited | Hennes & Mauritz | Pac Sun | Aeropostale, Inc. | Express Inc. | Hugo Boss AG | Quiksilver Inc. | The Buckle, Inc. | Fast Retailing | Inditex | RTW Retailwinds | Capri Holdings | Fossil Group Inc. | Oxford Industries Inc. | Urban Outfitters Inc. |
ESTABLISHING COMPENSATION LEVELS ESTABLISHING COMPENSATION FOR EXECUTIVES OTHER THAN THE CEO While the Compensation Committee uses peer group market data percentiles as reference points in setting executive compensation, the Compensation Committee does not target specific benchmark percentiles for any element of compensation or total direct compensation for the executive officers. Instead, the Compensation Committee uses a number of factors in determining compensation for our executives in a manner that it believes best helps us further our goals of motivating and retaining our executives, achieving our strategic business plans, and enhancing total shareholder return. The factors considered in establishing compensation for our executives include, among others, our financial performance, the individual’s performance in the prior year, the scope of each individual’s responsibilities, internal and external pay equity, the guidelines used for setting annual cash, long-term and total compensation for the executives, succession planning strategies, and data regarding pay practices and trends. 2021 PROXY STATEMENT31 Table of Contents EXECUTIVE COMPENSATION The CEO conducts an annual performance review of each executive and makes recommendations to the Compensation Committee about the structure of the executive compensation program. The Compensation Committee carefully considers the CEO’s recommendations. The Compensation Committee also consults with its compensation consultant, Exequity, an independent board advisory firm, which informs the Compensation Committee of market trends and conditions, comments on market data relative to each executive’s current compensation, and provides perspective on other company executive compensation practices. ESTABLISHING THE CEO COMPENSATION PACKAGE Annually, the Board’s Nominating, Governance and Corporate Citizenship Committee assesses the CEO’s performance and submits its performance assessment to the Compensation Committee. The Compensation Committee then reviews the performance assessment and peer group compensation data. The Compensation Committee also consults with its compensation consultant, Exequity, which informs the Compensation Committee, comments on market data relative to the CEO’s current compensation and provides perspective on other companies’ CEO compensation practices. Based on all of these inputs, the company’s performance, and the guidelines used for setting annual cash, long-term and total compensation for the other executives, the Compensation Committee prepares a recommendation to the full Board on all aspects of the CEO’s compensation. The full Board then considers the Compensation Committee’s recommendation and approves the final compensation package for the CEO. The CEO is not present during discussions regarding his compensation package, and does not vote on matters relating to his compensation package. COMPENSATION BEST PRACTICES
2020 SAY ON PAY RESULTS – OVERWHELMING SUPPORT At the 2020 Annual Meeting, over 99% of the votes cast were in favor of the advisory proposal. | We held a shareholder advisory vote on executive compensation in 2020, commonly referred to as a “say-on-pay vote,” which resulted in shareholder approval by over 99% of the votes cast on the advisory proposal. We take the views of our shareholders seriously and view this vote result as an indication that the principles of our executive compensation program are strongly supported by our shareholders. |
Additionally, in 2019 our shareholders indicated their approval of the Board of Directors’ recommendation that we solicit a say-on-pay vote on an annual basis. Our Board of Directors has adopted a policy that is consistent with that preference and, accordingly, we are holding a say-on-pay vote at this annual meeting. A “say-on-frequency” vote is required every six years, and as such, our next say-on-frequency vote will be in 2025. 32 Table of Contents EXECUTIVE COMPENSATION 2020 EXECUTIVE COMPENSATION STRUCTURE AND DECISIONS PERFORMANCE-BASED COMPENSATION GOALS VS. ACHIEVEMENT (dollars in millions) Adjusted EBIT, Inventory Turns and Net Revenues amounts are calculated using the foreign exchange rates used in our annual 2020 financial plan at the time the Compensation Committee set the targets. COVID-RELATED COMPENSATION DECISIONS The COVID-19 pandemic negatively impacted our financial performance significantly due to global store closures, both Levi’s stores and those operated by wholesale customers. In response, the Compensation Committee took a number of steps to align the compensation of executives to the changed external landscape while also adjusting certain aspects of our pay programs to ensure that the incentives would continue to achieve meaningful long-term value creation. As an initial step, management and the Board of Directors took actions to reduce costs and ensure a strong cash reserve, given the possibility of an extended period with significantly lower revenues, as well as the overall uncertainty regarding the severity and duration of the pandemic. The Compensation Committee then shifted its focus to retaining executives and motivating them to achieve long-term value for the company and its shareholders. Some adjustments to the compensation components were made, but the overall structure and design of the compensation plan remained intact. The actions taken included: • | Reduction in base salary: Reduced CEO salary by 50% and other executive salaries by 25% for four months as part of cost reductions and cash saving measures. | • | Did not change FY20 AIP metrics: Did not modify the financial goals or metrics for the performance-based RSUs (“PRSUs”)fiscal year 2020 AIP. This resulted in the financial components of the AIP, representing 75% of the target, paying out at zero. Individual recognition was made across the company for the unprecedented work done by all employees, especially in light of the extraordinary teamwork accomplished to respond to the sudden and unique challenges of the pandemic. | • | Did not modify outstanding FY18 PRSU metrics. Did not modify the goals or metrics for the PRSUs granted in fiscal year 2018 that are further described below under “—Elements2018. This resulted in the financial matrix component of Compensation—Long-Term Incentives—Performance-Based RSUs.”the PRSUs, representing 50% of the target, paying out at zero. | • | Modified outstanding FY19 and FY20 PRSU metrics. Modified the metrics used for the outstanding fiscal year 2019 and 2020 PRSUs due to the impact of 2020 performance on the overall three-year value of the awards, including the resulting diminishment in retention value. The Compensation Committee recognized the need to make adjustments to the outstanding awards to re-align them with the new business landscape while remaining consistent with our compensation committee determined that these companies are most appropriate for determining relative total shareholder return because they represent an array of competitors with global operations.philosophy and objectives. For more information, see “COVID-19 Impact on Outstanding PRSUs” below. |
2021 PROXY STATEMENT33 | Adidas AG
| | Kate Spade & Company
| Esprit Holdings Limited
| | Michael Kors
| Express Inc.
| | New York & Co.
| Fast Retailing
| | Oxford Industries Inc.
| Fossil Group Inc.
| | Perry Ellis, International Inc.
| Hennes & Mauritz
| | Quiksilver Inc.
| Hugo Boss AG
| | The Buckle, Inc.
| Inditex
| | Urban Outfitters Inc.
|
Establishing Compensation for Executives Other Than the CEO
While the compensation committee uses peer group market data percentiles as reference points in setting executive compensation, it does not target specific benchmark percentiles for any element of compensation or total direct compensation for the executive officers. Instead, the compensation committee uses a number of factors in determining compensation for our executives in a manner that it believes best helps us further our goals of motivating and retaining our executives, achieving our strategic business plans, and enhancing total shareholder return. The factors considered in establishing compensation for our executives include, among others, our performance, the individual’s performance in the prior year, the scope of each individual’s responsibilities, internal and external pay equity, the guidelines used for setting annual cash, long-term and total compensation for the executives, succession planning strategies, and data regarding pay practices and trends.
The CEO conducts an annual performance review of each executive and makes recommendations to the compensation committee about the structure of the executive compensation program and individual arrangements. The compensation committee carefully considers the CEO’s recommendation and also consults with its compensation consultant, Exequity, an independent board advisory firm, which informs the compensation committee of market trends and conditions, comments on market data relative to each executive’s current compensation, and provides perspective on other company executive compensation practices.
Establishing the CEO Compensation Package
Annually, the nominating, governance and corporate citizenship committee assesses the CEO’s performance and submits its performance assessment to the compensation committee. The compensation committee then reviews the performance assessment and peer group compensation data. The compensation committee also consults with its compensation consultant, Exequity, which informs the compensation committee of market trends and conditions, comments
on market data relative to the CEO’s current compensation, and provides perspective on other companies’ CEO compensation practices. Based on all of these inputs, our performance, and the guidelines used for setting annual cash, long-term and total compensation for the other executives, the compensation committee prepares a recommendation to our full board of directors on all aspects of the CEO’s compensation. Our full board of directors then considers the compensation committee’s recommendation and approves the final compensation package for the CEO.
Role of the Compensation Consultant in Compensation Decisions
The compensation committee has engaged Exequity to provide it with periodic advice on the compensation program structure and individual compensation arrangements for all executives. The consultant was selected by the compensation committee in its sole discretion and does not provide any other services to us. The consultant attends meetings of the compensation committee from time to time, presents an annual briefing on general and retail-industry compensation trends and developments, and is available to the compensation committee outside of meetings as necessary. The consultant reports directly to the compensation committee, although it meets with management from time to time to obtain information necessary to advise the compensation committee.
In addition, the compensation committee periodically reviews its relationship with its independent compensation consultant. The compensation committee believes that the consultant is able to provide it with independent advice.
Elements of Compensation
The primary elements of compensation for our executives including our named executive officers
|
Table of Contents EXECUTIVE COMPENSATION ELEMENTS OF COMPENSATION The primary elements of compensation for our executives including our NEOs are: awards
• | Base Salary; | • | Awards under our annual incentive planAnnual Incentive Plan (“AIP”); and | • | Long-Term Incentive (“LTI”) Awards. |
BASE SALARY In its review of the base salary for each executive, the Compensation Committee primarily focuses on market data for individuals in similar roles with comparable experience to ensure that the fixed component of compensation is competitive in the marketplace, but the Compensation Committee does not benchmark to a specific percentile within that data. The Compensation Committee also takes into account the relative compensation within the executive group when setting base salaries. For fiscal year 2020, the Compensation Committee approved an increase for the executive team that is approximately the average 3% salary increase budgeted for all U.S. employees. The table below summarizes base salaries during fiscal years 2020 and 2019 for our named executive officers. NAME | | BASE SALARY AS OF NOVEMBER 29, 2020 | | BASE SALARY AS OF NOVEMBER 24, 2019 | Charles (Chip) V. Bergh | | $1,480,000 | | $1,435,000 | Harmit Singh | | 890,000 | | 850,000 | Seth Ellison | | 840,000 | | 800,000 | David Love | | 760,000 | | 742,000 | Elizabeth O’Neill1 | | 725,000 | | |
1 | Ms. O’Neill was not a named executive officer in fiscal year 2019. |
COVID-19 IMPACT ON BASE SALARIES Due to the uncertainty of the size and impact of COVID-19 on our business, the Compensation Committee took immediate steps to reduce costs and ensure a solid cash reserve. Effective in May 2020, the Compensation Committee approved a temporary reduction of the annual base salaries for the CEO of 50% and for the other named executive officers of 25% as well as salary reductions among the leadership of the company. Not until after a stronger understanding of the financial impact of the pandemic, an assessment of the position of the company and the start of re-openings of various segments of the business were the salaries restored, in September 2020. ANNUAL INCENTIVE PLAN Our AIP provides our executives and other eligible employees an opportunity to share in any success that they help create by aligning annual incentive compensation with annual performance. The AIP encourages the achievement of our internal annual business goals and rewards attainment of those goals based on company, operating segment and individual performance as measured against those annual objectives. The alignment of the AIP with our internal annual business goals is intended to motivate all participants to achieve and exceed our annual performance objectives. Actual AIP bonus payments were based on the following two components: Financial Performance and Individual Performance. 34 Table of Contents EXECUTIVE COMPENSATION COMPONENTS | AIP OPPORTUNITY | FINANCIAL PERFORMANCE | long-term incentive awards.
Base SalaryFor Bergh, Singh and O’Neill
The objective of base salary is to reward each executive for his or her current contributions to us, reflect the scope of the executive’s role and responsibilities and compensate each executive for his or her expectedday-to-day75% performance, as well as provide fixed compensation that generally reflects what the market pays to individuals in similar roles with comparable experience. The compensation committee, and for the CEO, our board of directors, retains the authority to exercise its independent judgment in establishing the base salary levels for each executive. The compensation committee reviews base salaries for executives on an annual basis in the first fiscal quarter considering the factors described above under “—Compensation Discussion and Analysis—Policies and Practices in Establishing Compensation Packages—Establishing Compensation for Executives Other Than the CEO,” and as needed in connection with promotions or other changes in responsibilities.
In its review of the base salary for each executive, the compensation committee primarily focuses on market data for individuals in similar roles with comparable experience to ensure that the fixed
component of compensation is competitive in the marketplace, but the committee does not benchmark to a specific percentile within that data. The compensation committee also takes into account the relative compensation within the executive group when setting base salaries. For fiscal year 2018, the compensation committee approved for the executive team an increase of approximately the average percentage salary increase budgeted for all U.S. employees. Mr. Ellison received an additional base salary adjustment to recognize continued strong financial performance for the Europe region and to position him appropriately relative to other region executives employed by us.
The table below summarizes base salaries during fiscal years 2018 and 2017 and changes that occurred during the year for our named executive officers.
| | | | | | | | | Name | | Base Salary as of November 25, 2018(1) | | | Base Salary as of November 26, 2017 | | Charles V. Bergh | | $ | 1,435,000 | | | $ | 1,390,000 | | Harmit Singh | | | 800,000 | | | | 773,000 | | Roy Bagattini | | | 800,000 | | | | 773,000 | | Seth Ellison | | | 768,000 | | | | 686,000 | | David Love | | | 720,000 | | | | 700,000 | |
(1) | The base salary for each of Mr. Bergh, Mr. Singh, Mr. Bagattini, Mr. Ellison and Mr. Love were increased in February 2018 as part of the annual performance review by approximately the percentage increase generally applicable for all U.S. employees. The base salary increase for Mr. Ellison was to recognize continued strong financial performance and to position him appropriately relative to the other executives of the company
|
Annual Incentive Plan
Our AIP provides our executives and other eligible employees an opportunity to share in any success that they help create by aligning annual incentive compensation with annual performance. Our AIP encourages the achievement of our internal annual business goals and rewards attainment of those goals based on company, operating segment and individual performance as measured against those annual objectives. The alignment of our AIP with our internal annual business goals is intended to motivate all participants to achieve and exceed our annual performance objectives. Actual AIP bonus payments were based on the following two components:
Financial Performance
In the case of Mr. Bergh and Mr. Singh, 75% of their total AIP opportunity was based on the financial performance of our
the company as a whole. whole | | For Mr. Bagattini, Mr. Ellison and Mr. Love 25%based on the financial performance of the company as a combinationwhole 50%based on the financial performance of company (weighted 25%) and their respective operating segment performance (weighted 50%) was used to calculate their actual financial performance achievement. Company performance is based 50% on total company earnings before interest and taxes, or Adjusted EBIT, excluding charitable contribution expense, 15% on inventory turns and 35% on net revenues. Operating segment financial performance is based 50% on segment operating income, as determined under generally accepted accounting principles in the United States (“GAAP”), 15% on inventory turns and 35% on net revenues. Performance measures are described in more detail below under “—Elements of Compensation—Annual Incentive Plan—Performance Measures.” | INDIVIDUAL PERFORMANCE | For all NEOs Individual Performance25%
25% of each executive’s total opportunity was based on individual objectives to recognize achievement of other organizational goals.
|
PERFORMANCE MEASURES | COMPANY FINANCIAL PERFORMANCE | | | | OPERATING SEGMENT FINANCIAL PERFORMANCE | | |
Financial performance above minimum thresholds is required before any bonus payout is made to executives. The table below describes the target AIP participation rate and potential AIP payout range for each named executive officer.
NAME | | 2020 TARGET AIP PARTICIPATION RATE AS A PERCENTAGE OF BASE SALARY | | POTENTIAL AIP participation rate and potential AIP payout range for each named executive officer. Mr. Bergh’s AIP target percentage of base salary was higher to ensure competitiveness and to recognize the impact of his role on company performance relative to the other executives.PAYOUT RANGE AS A PERCENTAGE OF BASE SALARY | Charles (Chip) V. Bergh | | 175% | | 0-350% | Harmit Singh | | 100% | | 0-200% | Seth Ellison | | 80% | | 0-160% | David Love | | 80% | | 0-160% | Elizabeth O’Neill | | 80% | | 0-160% |
AIP FINANCIAL PERFORMANCE MEASURES | | | | | | | | | Name
| | 2018 Target
AIP
Participation
Rate as a
Percentage of
Base Salary | | | Potential
AIP Payout
Range as a
Percentage
of Base
Salary | | Charles V. Bergh
| | | 160 % | | | | 0-320 % | | Harmit Singh
| | | 100 % | | | | 0-200 % | | Roy Bagattini
| | | 80 % | | | | 0-160 % | | Seth Ellison
| | | 80 % | | | | 0-160 % | | David Love
| | | 80 % | | | | 0-160 % | |
Performance Measures
Our priorities for fiscal year 2018 were to drive business growth and create shareholder value. Our fiscal year 2018
Our priorities for fiscal year 2020 were to drive business growth and create shareholder value. Our 2020 AIP funding goals were aligned with these key priorities through the use of three performance measures: • | Adjusted EBIT excluding charitable contribution expense, and regional operating income. For purposes of our performance measures, Adjusted EBIT,, anon-GAAP financial measure, is determined bydefined as net income (loss) excluding from operating income as determined under GAAP, the following: restructuringtax (benefit) expense, interest expense, other (income) expense, net, curtailment gainsunderwriter commission paid on behalf of selling stockholders, impact of changes in fair value on cash-settled stock-based compensation, COVID-19 related inventory costs and losses from our postretirement medical plan in the United Statesother charges, and pension plans worldwide,restructuring and certain management-defined unusual orrelated charges, severance and other; | • | non-recurring items;Net Revenues a GAAP financial measure, is defined as gross product sales, minusnet of allowance for estimated returns, discounts and allowances,retailer promotions and other similar incentives, plus licensing revenue; and | • | Inventory Turns anon-GAAP, an operating measure defined as the average inventory balance for the year divided by the averagetrailing 12 month cost of goods sold per day.divided by the 13 month average inventory. |
We used these measures because we believe they are key drivers in increasing shareholder value and because every AIP participant can impact them in some way. Adjusted EBIT is used as an indicator of our earnings performance. Net Revenues are used as an indicator of our growth. Inventory Turns measures how quickly we can convert inventory to sales on a timely basis. These measures may change from time to time based on business priorities. The Compensation Committee approves the minimum, target and maximum goals for each measure each year. The reward for meeting the AIP goals is set by the Compensation Committee. If target goal levels are not met but financial performance reaches minimum thresholds, participants may receive partial payouts to recognize their efforts that contributed to company and/or business unit performance. The table below shows the fiscal year 2020 total company performance goals at target for each of our three performance measures and the actual fiscal year 2020 payout percentage. Adjusted EBIT, Net Revenues and Inventory Turns goals for each operating segment were set using the same methodology as the company goals. Due to the impact of the COVID-19 pandemic, both the total company and the applicable operating segment goals did not meet the minimum thresholds. 2021 PROXY STATEMENT35 Table of Contents EXECUTIVE COMPENSATION Dollars in millions | ADJUSTED EBIT GOAL | INVENTORY TURNS | NET REVENUES GOAL | ACTUAL PERCENTAGE ACHIEVED AFTER ADJUSTMENTS* | Total Company | $669 | 3.10 | $6,195 | 0% |
* | The actual percentage achieved results are weighted 50% for Adjusted EBIT, is used as an indicator of our earnings performance,15% for Inventory Turns and 35% for Net Revenues, are used as an indicatorrespectively. Actual results also exclude the impact of foreign currency exchange rate fluctuations on our growth and Inventory Turns, which replaced Day Sales in Inventory for fiscal year 2018, measures how quickly we can convert inventory to sales on a timely basis. These measures may change from time to time based on business priorities. Inventory Turns, a more commonly used inventory metric among our peer companies, was introduced in 2018 to continue the focus of program participants on inventory management. The compensation committee approves the minimum, target andmaximum goals for each measure each year. The reward for meeting theresults. See “Actual AIP goals is set by the compensation committee. If target goal levels are not met but financial performance reaches minimum thresholds, participants may receive partial payouts to recognize their efforts that contributed to company and/or business unit performance.
The table below shows the fiscal year 2018 total company performance goals at target for each of our three performance measures and the actual fiscal year 2018 payout percentage. Adjusted EBIT, excluding charitable contribution expense, Net Revenues and Inventory Turns goals for each operating segment were set using the same methodology as our goals.
| | | | | | | | | | | | | | | | | | | Adjusted EBIT Goal | | | Inventory Turns | | | Net Revenues Goal | | | Actual Percentage Achieved After Adjustments(1) | | | | (dollars in millions) | | Total company | | $ | 539.0 | | | | 2.97 | | | $ | 5,270.0 | | | | 154 % | |
(1) | The actual percentage achieved results are weighted 50% for Adjusted EBIT, excluding charitable contribution expense, 15% for Inventory Turns and 35% for Net Revenues, respectively. Actual results also exclude the impact of foreign currency exchange rate fluctuations on our business results. See “—Elements of Compensation—Annual Incentive Plan—Actual AIP Awards”awards” below for details of the calculation
|
At the close of the fiscal year, the compensation committeecalculation.
|
At the close of the fiscal year, the Compensation Committee reviews and approves the final AIP payout results based on the level of attainment of the designated financial measures at the operating segment and total company levels. The Compensation Committee’s review includes an analysis of the fundamentals of the underlying business performance and adjustments for items that are not indicative of ongoing results. Such adjustments may include external factors or internal business decisions that may have impacted financial results during the year. For example, Adjusted EBIT, Inventory Turns and Net Revenues are expressed using the foreign exchange rates used in our annual 2020 financial plan at the time the Compensation Committee set the targets, which exclude the effects of foreign currency because we believe that period-to-period changes in foreign rates can cause our reported results to appear more or less favorable than business fundamentals indicate. AIP INDIVIDUAL PERFORMANCE MEASURES Executives were also eligible to receive bonuses based on individual performance. For executives other than the CEO, individual performance and resulting individual performance payout percentage are based on the CEO’s assessment of the executive’s performance against his or her annual objectives and performance relative to his or her internal peers. The CEO’s individual performance is based on the Compensation Committee’s and the Nominating, Governance and Corporate Citizenship Committee’s assessment of Mr. Bergh’s performance against his annual objectives, and the Compensation Committee’s assessment of his leadership in fiscal year 2020. Based on all of these inputs, the Compensation Committee prepares a recommendation to the full Board on the CEO’s individual performance. The full Board then considers the Compensation Committee’s recommendation and approves the final individual performance payout percentage for the CEO. These objectives are not stated in quantitative terms, and a particular weighting is not assigned to any one of these individual goals. The objectives are not established in terms of how difficult or easy they are to attain; rather, they are used in assessing the overall quality of the individual’s achievement of each objective. For fiscal year 2020, these CEO objectives originally focused on four key strategies: (1) drive the profitable core; (2) expand for more; (3) strengthen position as a leading omni-channel retailer; and (4) enhance operational excellence. However, due to the COVID-19 pandemic, the Compensation Committee shifted the focus of the individual performance objectives to the team’s response to the crisis and the changing business landscape. COVID-19 IMPACT ON FY20 AIP PAYOUT During the first quarter of the year, we were tracking near target for the financial goals set out in the AIP. However, the impact of COVID-19, primarily during the second and third quarters, resulted in financial outcomes that did not meet the threshold for a payout for the company and operating segment portions of the AIP. The Compensation Committee discussed excluding the impact of COVID-19 from the financial results, but determined that the design of the AIP already allowed for payments for the individual portion of the AIP which was consistent with the design of the plan and the company’s philosophy of awarding compensation for achieving results. Therefore, no COVID-19 adjustment was made to the 2020 AIP. 36 Table of Contents EXECUTIVE COMPENSATION 2020 AIP PERFORMANCE VS. PLAN Adjusted EBIT, Inventory Turns and Net Revenues amounts are calculated using the foreign exchange rates used in our annual 2020 financial plan at the time the Compensation Committee set the targets. ACTUAL 2020 AIP AWARDS For fiscal year 2020, the company’s financial performance applicable to each named executive officer’s AIP goals did not meet the threshold necessary for a payout for that component. Accordingly, AIP payouts reflect only the assessment of individual performance outcomes. The individual performance percentage assigned to each named executive officer below represents the assessment of the CEO, except for Mr. Bergh who was assessed by the NGCC. The individual performance percentages recognize the extraordinary team efforts, crisis leadership, and new initiatives undertaken due to the COVID-19 outbreak rather than highlighting specific individual achievements. In particular, the company was able to adjust its business to deliver solid financial results under the circumstances, while protecting its balance sheet and putting in place initiatives that it believes will allow it to emerge from the crisis as a stronger and more profitable company. The table below shows the inputs used for the calculation of the actual bonus for fiscal year 2020 for each eligible named executive officer. NAME | | BASE SALARY | | | AIP TARGET | | | ACTUAL PERCENTAGE ACHIEVED: TOTAL COMPANY | | | ACTUAL PERCENTAGE ACHIEVED: BUSINESS UNIT | | ACTUAL PERCENTAGE ACHIEVED: INDIVIDUAL PERFORMANCE | | | ACTUAL BONUS(1) | | Charles (Chip) V. Bergh | | $ | 1,480,000 | | | | 175% | | | | 0% | | | | N/A | | | | 200% | | | $ | 1,295,000 | | Harmit Singh | | $ | 890,000 | | | | 100% | | | | 0% | | | | N/A | | | | 200% | | | $ | 445,000 | | Seth Ellison | | $ | 840,000 | | | | 80% | | | | 0% | | | | 0 | % | | | 200% | | | $ | 336,000 | | David Love | | $ | 760,000 | | | | 80% | | | | 0% | | | | 0 | % | | | 200% | | | $ | 304,000 | | Elizabeth O’Neill | | $ | 725,000 | | | | 80% | | | | 0% | | | | N/A | | | | 200% | | | $ | 290,000 | |
(1) | Except for Messrs. Bergh and approves the final AIP payout results based on the level of attainment of the designated financial measures at the business unitSingh and total company levels. The compensation committee’s review includes an analysis of the fundamentals of the underlying businessMs. O’Neill for whom Total Company performance is weighted 75%, Total Company performance is weighted 25% and adjustments for items that are not indicative of ongoing results. Such adjustments may include external factors or internal business decisions that may have impacted financial results during the year.Business Unit performance is weighted 50%. For example, Adjusted EBIT, excluding charitable contribution expense, operating segment operating income and Net Revenues are expressed in constant currencies (i.e., excluding the effects of foreign currency), since we believeperiod-to-period changes in foreign exchange rates can cause our reported results to appear more or less favorable than business fundamentals indicate.all executives, Individual Performance Measures Executives were eligible to receive bonuses based on individual performance. For executives other than the CEO, individual performance and resulting individual performance payout percentage are based on the CEO’s assessment of the executive’s performance against his or her annual objectives and performance relative to his or her internal peers. The CEO’s individual performance is based on the compensation committee’s assessment of Mr. Bergh’s performance against his annual objectives, including the nominating, governance and corporate citizenship committee’s assessment of the CEO’s performance against annual objectives, and the compensation committee’s assessment of his leadership in fiscal year 2018. Based on all of these inputs, the compensation committee prepares a recommendation to our full board of directors on the CEO’s individual performance. Our full board of directors then considers the compensation committee’s recommendation and approves the final individual performance payout percentage for the CEO. Individual annual objectives comprise priority areas identified for fiscal year 2018. These objectives are not stated in quantitative terms, and a particular weighting is not assigned to any one of these individual goals. The objectives are not established in terms of how difficult or easy they are to attain; rather, they are used in assessing the overall quality of the individual’s achievement of each
objective. For fiscal year 2018, these objectives focused on four key strategies: (1) drive the profitable core, (2) expand for more, (3) strengthen position as a leading omni-channel retailer and (4) enhance operational excellence.
Actual AIP Awards
For fiscal year 2018, financial performance applicable to each named executive officer’s AIP payouts generally exceeded expectations, and AIP payouts reflect the assessment of individual performance outcomes. The individual performance percentage assigned to each named executive officer below represents the assessment of the CEO, except for Mr. Bergh who is assessed by the compensation committee of performance against the objectives described above under “—Elements of Compensation—Annual Incentive Plan—Individual Performance Measures.” The table below shows the inputs used for the calculation of the actual bonus for fiscal year 2018 for each eligible named executive officer.
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | Base Salary | | | AIP Target | | | Actual Percentage Achieved: Total Company | | | Actual Percentage Achieved: Operating Segment | | | Actual Percentage Achieved: Individual Performance | | | Actual Bonus(1) | | Charles V. Bergh | | $ | 1,435,000 | | | | 160 | % | | | 154 | % | | | N/A | | | | 175 | % | | $ | 3,656,380 | | Harmit Singh | | | 800,000 | | | | 100 | | | | 154 | | | | N/A | | | | 175 | | | | 1,274,000 | | Roy Bagattini | | | 800,000 | | | | 80 | | | | 154 | | | | 145 | % | | | 150 | | | | 950,400 | | Seth Ellison | | | 768,000 | | | | 80 | | | | 154 | | | | 185 | | | | 200 | | | | 1,112,064 | | David Love | | | 720,000 | | | | 80 | | | | 154 | | | | 129 | | | | 110 | | | | 751,680 | |
weighted 25%. |
(1) | Except for Mr. Bergh and Mr. Singh, for whom total company performance is weighted 75%, total company performance is weighted 25% and operating segment performance is weighted 50%. For all executives, Individual Performance is weighted 25%.
LONG-TERM INCENTIVES The Compensation Committee believes a large part of an executive’s compensation should be linked to long-term shareholder value creation as an incentive for sustained, profitable growth. Therefore, our long-term incentive awards for our executives are in the form of equity awards, both performance and time-vested, and provide reward opportunities competitive with those offered by companies in the peer group for similar jobs. Consistent with the other elements of compensation, the Compensation Committee does not target specific benchmark percentiles for long-term incentive awards for our executives and uses a number of factors in establishing the long-term incentive award levels for each individual, including a review of each individual’s accumulated vested and unvested awards, the current and potential realizable value over time using stock appreciation assumptions, vesting schedules, comparison of individual awards between executives and in relation to other compensation elements, market data, shareholder dilution and accounting 2021 PROXY STATEMENT37 |
Long-Term Incentives
The compensation committee believes a large part of an executive’s compensation should be linked to long-term shareholder value creation as an incentive for sustained, profitable growth. Therefore, long-term incentive awards for our executives are in the form of equity awards, both performance and time-vested, and provide reward opportunities competitive with those offered by companies in the peer group for similar jobs. Consistent with the other elements of compensation, the compensation committee does not target specific benchmark percentiles for long-term incentive awards for our executives and uses a number of factors in establishing the long-term incentive award levels for each individual, including a review of each individual’s accumulated vested and unvested awards, the current and potential realizable value over time using stock appreciation assumptions, vesting schedules, comparison of individual awards between executives and in relation to other compensation elements, market data, shareholder dilution and accounting expense. Should we deliver against our long-term goals, the long-term equity incentive awards become a significant portion of the total compensation of each executive. For more information on the fiscal year 2018 long-term equity grants, see “2018 Grants of Plan-Based Awards.” Stock-based awards are granted under our 2016 EIP, which enables the compensation committee to select from a variety of stock awards, including stock options, restricted stock, RSUs and stock appreciation rights (“SARs”).
The grant date fair value of long-term incentive awards granted to executives in 2018 was delivered as 25% SARs, 25% RSUs, and 50% PRSUs. The compensation committee chose this mix of equity-based awards to align the interests of executives to our shareholders. The terms of the grants made to our executives to date provide for stock settlement only. Prior to our initial public offering, when awards were settled in stock, the shares issued were subject to the terms of the company’s Stockholders’ Agreement, including restrictions on transfer. In addition, prior to our initial public offering, after the participant had held shares issued under the 2016 EIP for six months, he or she could require the company to repurchase, or the company could require the participant to sell to the company, such shares of common stock. The value of shares repurchased or sold back to the company was established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm. The company’s obligations to repurchase shares under the 2016 EIP are subject to certain restrictive covenants in our various debt agreements. See the notes to our audited consolidated financial statements included in our Annual Report on Form10-K for fiscal year 2018 for more details.
Stock Appreciation Rights
SARs are typically granted annually (or, in the case of new executives, at the compensation committee meeting generally held in February or July following the date they join us or first become an executive) with four-year vesting periods and exercise periods of up to seven years. See “Outstanding Equity Awards at 2018 FiscalYear-End” for details concerning the Service SARs vesting schedule, including any individual variations from the typical four-year vesting period). SARs provide value to the executive only if the price of our stock increases. During fiscal year 2018, SARs accounted for 25% of each executive’s total 2018 annual long-term incentive grant value.
Restricted Stock Units
RSUs are typically granted annually (or, in the case of new executives, at the compensation committee meeting generally held in February or July following the date they join the company or first become an executive) with a four-year vesting period. See “Outstanding Equity Awards at 2018 FiscalYear-End” for details concerning the RSUs’ vesting schedule, including any individual variations from the typical four-year vesting period). During fiscal year 2018, RSUs accounted for 25% of each executive’s total 2018 annual long-term incentive grant value
Performance-Based RSUs
PRSUs replaced performance-based SARs in fiscal year 2017 to better align with the grant practices of our peer group. PRSUs are typically granted annually (or, in the cash of new executives, at the compensation committee meeting generally held in February or July following the date they join the company or first become an executive) with a three-year vesting period. See “Outstanding Equity Awards at 2018 FiscalYear-End” for details concerning the PRSUs’ vesting schedule. Like performance-based SARs, PRSUs continue to drive greater accountability for the achievement of our strategic plan and create long-term value for shareholders. During fiscal year 2018, PRSUs accounted for 50% of each executive’s total 2018 annual long-term incentive grant value. The key features of the 2018
Table of Contents EXECUTIVE COMPENSATION expense. Should we deliver against our long-term goals, the long-term equity incentive awards become a significant portion of the total compensation of each executive. For more information on the 2020 long-term equity grants, see the 2020 Grants of Plan-Based Awards table. Until the time of our initial public offering of Class A common stock in March 2019 (the “IPO”), stock-based awards were granted under our 2016 Equity Incentive Plan (“2016 EIP”). From and after the IPO, stock-based awards have been made under our 2019 Equity Incentive Plan (the “2019 EIP”). Both the 2016 EIP and the 2019 EIP enable the Compensation Committee to select from a variety of stock awards, including stock options, restricted stock, RSUs, and SARs. LTI TARGET LEVELS The LTI mix for executives in 2020 was 25% SARs, 25% RSUs, and 50% “PRSUs”. The Compensation Committee chose this mix of equity-based awards to align the interests of executives to our shareholders. STOCK APPRECIATION RIGHTS SARs are typically granted annually (or, in the case of a new executive, generally at the Compensation Committee meeting next held following the date they join the company or first become an executive) with a four-year vesting period and a ten-year term. (See the table entitled “Outstanding Equity Awards at 2020 Fiscal Year-End” for details concerning the SARs vesting schedule, including any individual variations from the typical four-year vesting period.) SARs provide value to the executive only if the price of our stock increases. During fiscal year 2020, SARs accounted for 25% of each executive’s total fiscal year 2020 annual LTI grant value. RESTRICTED STOCK UNITS RSUs are typically granted annually (or, in the case of a new executive, generally at the Compensation Committee meeting next held following the date they join the company or first become an executive) with a four-year vesting period. (See the table entitled “Outstanding Equity Awards at 2020 Fiscal Year-End” for details concerning the RSUs’ vesting schedule.) During fiscal year 2020, RSUs accounted for 25% of each executive’s total fiscal year 2020 annual LTI grant value. PERFORMANCE-BASED RSUS PRSUs are typically granted annually (or, in the case of a new executive, generally at the Compensation Committee meeting next held following the date they join the company or first become an executive) with a three-year vesting period. (See the table entitled “Outstanding Equity Awards at 2020 Fiscal Year-End” for details concerning the PRSUs’ vesting schedule.) We believe PRSUs drive greater accountability for the achievement of the strategic plan of the company and create long-term value for shareholders. During fiscal year 2020, PRSUs accounted for 50% of each executive’s total fiscal year 2020 annual grant value. The key features of the 2020 PRSUs are described below: • | PRSUs give the executive the right (subject to the compensation committee’sCompensation Committee discretion to reduce but not increase awards beyond the maximum opportunity) to vest in a number of RSUs based on achievement against performance goals over a three-year performance | period. Actual shares that will vest, if any, will vary based on achievement of the performance goals at the end of the three years. The three-year performance period was designed to discourage short-term risk taking and reinforce the link between the interests of our shareholders and our executives over the long-term. |
• | At the time of grant, in early 2020, 50% of the number of actual PRSUs that would vest at the end of three years iswas based on the company’s total shareholder return (“TSR”) over the three-year performance period covering fiscal year 2020 through fiscal year 2022 relative to the expanded peer group approved by the Compensation Committee in January 2020 as listed above under “Competitive peer group”. Using interpolation, TSR performance in the top, middle and bottom third of the peer group would yield a payout of 125% to 200%, 50% to 125%, and 0%, respectively. | • | At the time of grant, the remaining 50% of the number of PRSUs that would vest at the end of three years was based on the following two internal performance metrics over the three-year performance period covering fiscal years 2018year 2020 through 2020:fiscal year 2022: (1) ourthe company’s average margin of net earnings adjusted(adjusted for certain items such as interest and taxes;taxes), and (2) thea target compound annual growth rate (“CAGR”) of the company’s Net Revenues. The potential payout range as a percentage of this portion of the target award was 0% to 200%. The impact of COVID-19 rendered achievement of the internal performance metrics impossible. In order to provide executives with a line of sight on achievable goals, the Compensation Committee replaced the internal financial metrics with the company’s relative total shareholder return as described above. Therefore, 100% of the 2020 PRSUs’ vesting is aligned with shareholders and is based on three-year relative TSR. | • | If earned at target, 100% of the PRSUs would vest at the end of the three-year performance period. | |
The Board has the ability under the 2019 EIP to make adjustments in the method of calculating the attainment of performance goals for a performance period. 38 Table of Contents EXECUTIVE COMPENSATION 2018 PERFORMANCE-BASED RSUS—ACHIEVEMENT OF PERFORMANCE OBJECTIVES As described in our Annual Report on Form 10-K for fiscal year 2018, we granted performance-based RSUs during fiscal year 2018 that were based on the same initial performance metrics described above for the fiscal year 2020 PRSUs except that the performance period covered fiscal year 2018 through fiscal year 2020. The potential vesting range as a percentage of the target award was 0% to 200%. The table below summarizes the goals at target for each of the two internal performance measures and our actual achievement. | | AVERAGE MARGIN OF NET EARNINGS GOAL | | CAGR OF NET REVENUES GOAL | | ACTUAL PERCENTAGE ACHIEVED AFTER ADJUSTMENT FOR FINANCIAL COMPONENT (50%) | | 3-YEAR RELATIVE TSR PERFORMANCE | | ACTUAL PERCENTAGE ACHIEVED FOR TSR COMPONENT (50%) | | TOTAL FINAL PAYOUT | Total Company | | 10.3% | | 5.8% | | 0% | | 97th Percentile | | 193.2% | | 96.6% |
The actual percentage achieved was 193.2% for the 50% based on relative TSR, which, when combined with the two performance measures, resulted in a weighted attainment of 96.6%. Based on internal performance and relative TSR achievement levels, the fiscal year 2018 performance-based RSUs (for which the three-year performance cycle has been completed) vested as follows: NAME | | TARGET PERFORMANCE- BASED RSUS | | ACTUAL PERCENTAGE ACHIEVED AFTER ADJUSTMENT | | VESTED PERFORMANCE- BASED RSUS | Charles (Chip) V. Bergh | | 350,260 | | 96.6% | | 338,351 | Harmit Singh | | 75,520 | | 96.6% | | 72,952 | Seth Ellison | | 62,500 | | 96.6% | | 60,375 | David Love | | 52,080 | | 96.6% | | 50,309 | Elizabeth O’Neill | | 36,450 | | 96.6% | | 35,210 |
COVID-19 IMPACT ON OUTSTANDING PRSUS Prior to second quarter of fiscal year 2020, we were on track to achieve a payout for the financial component of the PRSU awards. The Compensation Committee discussed the impact of COVID-19 on the outstanding awards and made decisions with respect to each of the outstanding PRSUs. The three-year relative TSR component, representing 50% of the awards, was not impacted because it still effectively measured how the company performed compared to its peers which were also all impacted by COVID-19. However, the global pandemic resulted in a failure to meet the financial performance measures (the remaining 50% of the awards) of the 2018 PRSUs and the highly likely failure to meet the financial performance measures for the 2019 and 2020 PRSUs as well, in each case over their entire respective three-year performance periods. The Compensation Committee recognized the extraordinary impact of COVID-19 to the business and its financial performance while also factoring in other circumstances such as the initial public offering that took place in 2019, the need to balance accountability for results with competitiveness and adhering to the company’s compensation philosophy and principles around the need to motivate and retain existing employees. The Compensation Committee ultimately made decisions intended to create alignment with shareholders while maintaining a strong line of sight as to a reasonable payout based on performance resulting in long-term value creation. The following decisions were made considering the financial component portion of outstanding PRSUs for awards made in fiscal years 2018, 2019 and 2020. FINANCIAL COMPONENT OF 2018 PRSUS (50% OF AWARD) No changes or adjustments were made to either the company’s average margin of net earnings or target CAGR of the company’s Net Revenues to result in a 0% payout for this portion of the award. Although the failure to meet the financial results was viewed as a result outside the control of the actions of the management, the Compensation Committee also factored in the large stock price increase due to the initial public offering and overall performance of the award resulting in a near target number of shares vesting and the realized value of the entire long-term incentive package exceeding the initial grant-date fair value estimates. An adjustment to the financial goals or metrics to achieve an above target payout was not viewed by the Compensation Committee as appropriate in light of all the circumstances. 2021 PROXY STATEMENT39 Table of Contents EXECUTIVE COMPENSATION FINANCIAL COMPONENT OF 2019 PRSUS (50% OF AWARD) The Compensation Committee determined to adjust the metrics for the financial component of the fiscal year 2019 PRSUs due to the impact COVID-19 is expected to have on multiple years of the performance period, as well as the importance of aligning executives with the long-term objectives of the company. Because the previously approved goals no longer fit the new objectives brought about by the situation in fiscal year 2020, the three-year measurement of financial goals were replaced to reflect the achievement of financial goals in only fiscal year 2019 while also using a relative measure to recognize the challenge of setting financial goals in fiscal year 2020 and 2021 amidst an uncertainty around the impact COVID-19 had and will have on the results. • | 1/3 of the financial component is based on achievement of fiscal year 2019 targets for 1) the company’s average margin of net revenues.earnings (adjusted for certain items such as interest and taxes), and 2) CAGR of the company’s Net Revenues. The potential payout range as a percentage of this portion of the target award is 0% to 200%. | • | 2/3 of the number of actual PRSUs that vestfinancial component is based on our total shareholder returnthe company’s relative TSR over the three-yeartwo-year performance period covering fiscal years 2018year 2020 through 2020fiscal year 2021 relative to the expanded peer group approved by the compensation committeeCompensation Committee in January 2018 as listed above under “—Compensation Discussion and Analysis—Policies and Practices for Establishing Compensation Packages—Competitive Peer Group.”2019. Using interpolation, total shareholder returnTSR performance in the top, middle and bottom third of the peer group yields a payout of 125% to 200%, 50% to 125%, and 0%, respectively. |
FINANCIAL COMPONENT OF 2020 PRSUS (50% OF AWARD) Similar to the reasons discussed above for the 2019 PRSUs, the Compensation Committee determined to adjust the metrics for the financial component of the 2020 PRSUs as the company found itself only a few months into the three-year performance period before the financial goals no longer aligned executives with the line of sight necessary to achieve long-term shareholder returns. Accordingly, the three-year measurement of internal financial goals were replaced with the three-year relative TSR performance, shifting the award to be 100% based on three-year relative TSR. LONG-TERM INCENTIVE GRANT PRACTICES We do not have any program, plan, or practice to time equity grants to take advantage of the release of material information. During fiscal year 2020, equity awards were granted in January to executive officers at one of our regularly scheduled Compensation Committee meetings. OTHER PAY PRACTICES INSIDER TRADING POLICY; NO HEDGING OR PLEDGING Directors and executive officers must comply with our Insider Trading Policy and may not engage in any transaction in our securities without first obtaining pre-clearance of the transaction from our General Counsel or Chief Compliance Officer. No director, executive officer or other employee is permitted to (i) engage in short sales, transactions in put options, call options or other derivative securities on an exchange or in any other organized market, or in any other inherently speculative transactions with respect to our stock, (ii) transact through mechanisms that hedge against our securities or (iii) hold our securities in a margin account or otherwise pledging our securities as collateral for a loan. These provisions are part of our overall program to prevent any of our directors, officers or employees from trading on material non-public information. CLAWBACK POLICY Effective November 2019, the Compensation Committee adopted a clawback policy in order to further align the interests of employees with the interests of our shareholders and strengthen the link between total compensation and the company’s performance. The clawback policy provides that in the event the company is required to prepare an accounting restatement for any fiscal quarter or year commencing after the adoption of the policy due to material noncompliance with any financial reporting requirement, the company may in its sole discretion seek to recover and clawback from any current or former executive up to the full amount of affected compensation during the three fiscal years preceding the date on which the company was required to prepare an accounting restatement. 40 If earned at target, 100%
Table of Contents EXECUTIVE COMPENSATION EXECUTIVE STOCK OWNERSHIP GUIDELINES Our Board has adopted stock ownership guidelines to align the interests of the company’s executives with the interests of the company’s shareholders and to further promote the company’s commitment to sound corporate governance. The guidelines provide the following: Executive officers are expected to achieve the stock ownership levels under these guidelines within the later of the fifth anniversary of the company’s initial public offering or the fifth anniversary of the individual’s hire or promotion to executive officer. Eligible Shares include: (i) shares owned outright or “beneficially owned” within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (including, without limitation, shares held in trust for the benefit of such executive and/or members of his or her immediate family residing in the same household); (ii) vested shares under any deferred compensation plan or subject to any stock awards held by such executive; and (iii) unvested shares subject to any non-performance based restricted stock units held by such executive. If the executive officer is not in compliance within the stated timeframe, the officer will be prohibited from selling more than 50% of any shares acquired through the vesting, settlement, or exercise of stock awards, other than the minimal number of shares needed to pay applicable withholding taxes and/or exercise prices. BENEFITS AND PERQUISITES Executives generally are eligible for the same health and welfare insurance plans offered to all employees such as medical, dental, supplemental life, long-term disability and business travel insurance. In addition, although not a significant part of total compensation, the company provides limited perquisites to executives. The primary perquisite provided to the executives is a flexible allowance to cover expenses such as auto-related expenses, financial and tax planning, legal assistance and excess medical costs. The company also pays for an annual medical exam for its executives and other members of its executive leadership team. Like many of the companies in the peer group, the company also offers a non-qualified supplement to the 401(k) plan, which is not subject to the Internal Revenue Service limitations, through a Deferred Compensation Plan for Executives and Outside Directors (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a U.S. non-qualified, unfunded tax deferred savings plan provided to senior level executives, including our named executive officers, and the outside directors. Mr. Ellison, who was based in Belgium, and Mr. Love, who was based in Singapore, in connection with their roles as Executive Vice President & President of our Europe region and Executive Vice President & President of our Asia, Middle East and Africa region, respectively, were provided certain benefits under our global assignment program, including a housing allowance to cover the cost of rent and utilities. The benefits and perquisites received by our named executive officers and their value are described in more detail in the footnotes to the Summary Compensation Table. TAX AND ACCOUNTING CONSIDERATIONS TAX DEDUCTIBILITY Section 162(m) of the Code, or Section 162(m), limits the amount that we may deduct for federal tax purposes with respect to compensation paid to “covered employees” to $1 million per covered employee per year. The U.S. Tax Cuts and Jobs Act, or the Tax Act, enacted in December 2017, made certain changes to Section 162(m). Under the prior law, compensation that qualified as “performance-based compensation” under Section 162(m) was not subject to this deduction limitation. Pursuant to the Tax Act, this exception for “performance-based compensation” was repealed with respect to taxable years beginning after December 31, 2017, except for certain transition relief for compensation provided pursuant to a written binding contract that was in effect on November 2, 2017. As a result, compensation paid to our covered employees in excess of $1 million per year generally will not be deductible unless, among other requirements, it qualifies for the transition relief provided by the Tax Act. As a newly public company, we may benefit from a transition rule under Section 162(m), such that the deduction limit generally does not apply to compensation paid pursuant to plans and arrangements that were in effect at the time of our IPO, subject to certain exceptions. Because of uncertainties as to the application and interpretation of Section 162(m) and the final regulations recently issued on December 18, 2020 thereunder, no assurance can be given that any compensation paid by us will be deductible. We will continue to monitor the applicability of Section 162(m) to our ongoing compensation arrangements. 2021 PROXY STATEMENT41 Table of Contents EXECUTIVE COMPENSATION While we are mindful of the benefit of full tax deductibility of compensation, we also value the flexibility of compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, we may approve compensation that may not be fully deductible. ACCOUNTING Under ASC 718, the company is required to estimate and record an expense for each award of equity compensation (including stock options and RSUs) over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718. SEVERANCE AND CHANGE IN CONTROL BENEFITS The terms of Mr. Bergh’s severance and change in control benefits were determined during the negotiation of his employment agreement in 2011 at the time he was hired. As part of this negotiation, the Compensation Committee determined that the benefits and structure of these benefits were within normal competitive practice, reasonable and appropriate for the circumstances, and necessary to attract Mr. Bergh to the company. Enhanced termination benefits in the case of a change in control of the company were included in his employment agreement for the same reasons and to help ensure retention of Mr. Bergh in the case of a potential or actual change in control. On January 28, 2020, the Board adopted and approved a Senior Executive Severance Plan (the “New Severance Plan”), effective January 28, 2020, for eligible executives who are direct reports to, and including, our President and Chief Executive Officer. The New Severance Plan supersedes our prior Severance Plan for our Worldwide Leadership Team (“WLT Severance Plan”). Except as noted below, the New Severance Plan provides for the same benefits as the WLT Severance Plan. A summary of the New Severance Plan is set forth in the section entitled “Potential Payments Upon Termination, Change In Control or Corporate Transaction—Severance Plan.” The New Severance Plan also provides that eligible employees who terminate employment without cause or for Good Reason are deemed to continue employment during the severance period for determining vesting with respect to performance-based long-term incentive awards, with such awards, if vested, being paid on a pro-rata basis measured from the beginning of the performance period through the employee’s actual date of separation. The New Severance Plan also provides that “Good Reason” as defined under the plan would include a material reduction in the eligible employee’s target annual bonus, except to the extent such reduction applied to all eligible employees. Our severance arrangements are meant to provide a reasonable and competitive level of financial transitional support to executives who are terminated involuntarily without cause or voluntarily resign for good reason. Severance benefits are not payable upon a change in control if the executive is still employed by or offered a comparable position with the surviving entity. While compensation decisions affect potential payouts under these severance arrangements, these arrangements generally did not affect such decisions as these severance provisions are conditional and may never come into effect. More information about the severance benefits payable to our named executive officers under our severance arrangements is set forth in the section titled “Potential Payments Upon Termination, Change In Control or Corporate Transaction”. AWARDS GRANTED UNDER 2016 EQUITY INCENTIVE PLAN In the event of a Corporate Transaction, as defined in our 2016 Equity Incentive Plan, in which the surviving corporation assumes or continues the outstanding long-term incentive program or substitutes similar awards for outstanding awards, such awards will continue to vest in accordance with their terms and any applicable employment agreement or severance plan. In the event of a Corporate Transaction in which the surviving corporation does not assume or continue the outstanding long-term incentive program or substitute similar awards for such outstanding awards, the vesting schedule of all awards held by executives that are still employed upon the Corporate Transaction will be accelerated in full as of a date prior to the effective date of the transaction as determined by the Board. This accelerated vesting structure in the event awards are not assumed or substituted by the surviving company is designed to encourage the executives to remain employed with the company through the date of the Corporate Transaction and to ensure that the equity incentives awarded to the executives are not eliminated by the surviving company. AWARDS GRANTED UNDER 2019 EQUITY INCENTIVE PLAN In the event of a Transaction, as defined in our 2019 Equity Incentive Plan, our Board will have the discretion to determine the treatment of equity awards. 42 Table of Contents EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended November 29, 2020 and this proxy statement on Schedule 14A. Robert A. Eckert (Chairperson) Troy Alstead Jill Beraud Patricia Salas Pineda The material in this Compensation Committee report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION In fiscal year 2020, no member of the Compensation Committee was a current officer or employee of ours. There are no Compensation Committee interlocks between us and other entities involving our executive officers and our board members who serve as executive officers of those other entities. 2021 PROXY STATEMENT43 Table of Contents Executive Compensation EXECUTIVE COMPENSATION TABLES SUMMARY COMPENSATION TABLE The following table provides compensation information for our fiscal year 2020 named executive officers. The table also shows compensation information for fiscal years 2019 and 2018 for those current named executive officers who also were named executive officers during either of those years. NAME AND PRINCIPAL POSITION | | YEAR | | SALARY(1) | | BONUS | | OPTION AWARDS(2) | | STOCK AWARDS(3) | | NON-EQUITY INCENTIVE PLAN COMPENSATION(4) | | CHANGE IN PENSION VALUE AND NON-QUALIFIED DEFERRED COMPENSATION EARNINGS(5) | | ALL OTHER COMPENSATION(6) | | TOTAL | Charles (Chip) V. Bergh, | President and Chief Executive Officer | | | 2020 | | $1,414,423 | | $— | | $1,806,248 | | $5,768,946 | | $1,295,000 | | $— | | $356,493 | | $10,641,110 | | | 2019 | | 1,435,000 | | — | | 1,806,241 | | 5,579,165 | | 2,933,140 | | — | | 428,265 | | 12,181,811 | | | 2018 | | 1,426,346 | | — | | 1,681,246 | | 5,040,066 | | 3,656,380 | | — | | 391,045 | | 12,195,083 | Harmit Singh, | Executive Vice President and Chief Financial Officer | | | 2020 | | $ 882,308 | | $— | | $ 449,997 | | $1,452,874 | | $445,000 | | $— | | $177,315 | | $3,407,494 | | | 2019 | | 840,577 | | — | | 399,976 | | 1,235,542 | | 1,032,750 | | — | | 190,045 | | 3,698,890 | | | 2018 | | 794,808 | | — | | 362,483 | | 1,086,695 | | 1,274,000 | | — | | 157,905 | | 3,675,891 | Seth Ellison, | | | | | | | | | Executive Vice President and President, Europe | | | 2020 | | $775,769 | | $— | | $374,996 | | $1,210,707 | | $336,000 | | $— | | $5,104,370 | | $7,801,842 | | | 2019 | | 794,092 | | — | | 324,980 | | 1,003,663 | | 1,059,200 | | — | | 3,831,273 | | 7,013,208 | | | 2018 | | 752,231 | | — | | 299,983 | | 899,344 | | 1,112,064 | | — | | 908,794 | | 3,972,416 | David Love, | Executive Vice President and President, Asia, Middle East and Africa | | | 2020 | | $756,538 | | $— | | $299,996 | | $968,539 | | $304,000 | | $— | | $1,126,154 | | $3,455,227 | | | 2019 | | 737,854 | | — | | 274,983 | | 849,277 | | 550,564 | | — | | 606,380 | | 3,019,058 | | | 2018 | | 716,154 | | — | | 249,977 | | 749,405 | | 751,680 | | — | | 571,286 | | 3,038,502 | Elizabeth O’Neill,(7) | Executive Vice President and President, Global Product | | | 2020 | | $720,192 | | $— | | $249,995 | | $807,116 | | $290,000 | | $— | | $120,732 | | $2,188,036 |
(1) | Due to the impact of COVID-19, the company temporarily reduced salaries for a fourth month period from May through August for Mr. Bergh by 50% and the other named executive officers by 25%. Executives were allowed to use accrued vacation days to offset the reduction. | (2) | These amounts reflect the aggregate grant date fair value for awards of SARs granted to the recipient under our 2016 and 2019 EIP, computed in accordance with Accounting Standards Codification 718 issued by the Financial Accounting Standards Board, or FASB ASC 718. These amounts reflect the grant date fair value, and do not represent the actual value that may be realized by the executives. For a description of the assumptions used to determine the compensation cost of our awards, see the notes to our audited consolidated financial statements. | (3) | These amounts reflect the aggregate grant date fair value for RSU and PRSU awards. This column also includes the grant date fair value of the target number of PRSUs vest at the end ofthat may be earned for the three-year performance period.Our boardperiod beginning with fiscal year 2018. If maximum performance conditions are achieved over the entire three-year period, the grant date fair values for PRSUs granted in fiscal year 2020 would be $5,755,193 for Mr. Bergh, $1,449,541 for Mr. Singh, $1,207,929 for Mr. Ellison, $966,317 for Mr. Love and $805,264 for Ms. O’Neill. For a description of directors has the discretionassumptions used to determine the compensation cost of our awards, see the notes to our audited consolidated financial statements.
| (4) | The amounts in this column reflect the cash incentive amounts earned by the executives under our 2016 EIP to make adjustmentsAIP. | (5) | No above-market or preferential interest rate options are available under our deferred compensation programs. See “—Executive Retirement Plans—Non-Qualified Deferred Compensation” for additional information on deferred compensation earnings. |
| | | | 44 | |
Table of Contents Executive Compensation (6) | The amounts shown in the method of calculating the attainment of performance goalsAll Other Compensation column for a performance period.2016 Performance-Based SARs
We granted performance-based SARs during fiscal year 20162020 are detailed in the table below (see “—Compensation Discussion and Analysis” for more details on the items in the table below):
|
NAME | | EXECUTIVE PERQUISITES(a) | | RELOCATION(b) | | 401(k) PLAN MATCH(c) | | DEFERRED COMPENSATION MATCH(d) | | TAX PAYMENTS(e) | | CHARITABLE MATCH | | TOTAL | Charles (Chip) V. Bergh | | $ 24,233 | | $ — | | $ 21,375 | | $ 310,885 | | $ — | | $— | | $ 356,493 | Harmit Singh | | 28,561 | | — | | 21,375 | | 127,379 | | — | | — | | 177,315 | Seth Ellison | | 21,858 | | 181,043 | | 21,375 | | 121,842 | | 4,758,252 | | — | | 5,104,370 | David Love | | 56,829 | | 346,800 | | 21,375 | | 81,783 | | 619,367 | | — | | 1,126,154 | Elizabeth O’Neill | | 27,119 | | — | | 21,375 | | 72,238 | | — | | — | | 120,732 |
| (a) | For Mr. Bergh, this amount reflects a payment for parking, a health club membership subsidy, an allowance intended to cover legal, financial and/or other incidental business related expenses, annual physicals, imputed income for insurance, event tickets, and a car allowance. For Mr. Singh, this amount includes parking, a health club membership subsidy, an allowance intended to cover legal, financial and/or other incidental business related expenses, annual physicals, and imputed income for insurance. For Mr. Ellison, this amount includes a payment for parking, an annual allowance intended to cover legal, financial and/or other incidental business related expenses, and imputed income for insurance. For Mr. Love, this amount includes a payment for parking, an annual allowance intended to cover legal, financial and/or other incidental business related expenses, imputed income for insurance, event tickets, and a transportation allowance of $30,385. For Ms. O’Neill, this amount includes a payment for parking, an annual allowance intended to cover legal, financial and/or other incidental business related expenses, imputed income for insurance, and event tickets. | | (b) | For Mr. Ellison and Mr. Love, these amounts reflect payments in connection with their international assignment. | | (c) | These amounts reflect company matching contributions under our 401(k) Plan. | | (d) | These amounts reflect company matching contributions under our Deferred Compensation Plan. | | (e) | For Mr. Ellison this amount is primarily a result of additional tax payments to the United Kingdom arising from Mr. Ellison’s exercise of SARs and his UK tax residency status changing upon his assignment term exceeding 5 years. For Mr. Love, these amounts reflect tax reimbursements for the tax liability of allowances and benefits they received in connection with their international assignments. |
(7) | Ms. O’Neill was not a named executive officer prior to fiscal year 2020. |
Table of Contents Executive Compensation 2020 GRANTS OF PLAN-BASED AWARDS The following table provides information on all plan-based awards granted to each of our named executive officers during fiscal year 2020. The awards and the unvested portion of SARs identified below are also reported under “Outstanding Equity Awards at 2020 Fiscal Year-End.” | | | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | | ALL OTHER STOCK AWARDS: | | ALL OTHER OPTION AWARDS: | | EXERCISE | | GRANT DATE | | | | | | | | | | | | | | | | | NUMBER OF | | NUMBER OF | | OR BASE | | FAIR VALUE | | | | | | | | | | | | | | | | | SHARES OF | | SECURITIES | | PRICE OF | | OF STOCK | | | | | | | | | | | | | | | | | STOCK OR | | UNDERLYING | | OPTION | | AND OPTION | | | GRANT | | THRESHOLD | | TARGET | | MAXIMUM | | THRESHOLD | | TARGET | | MAXIMUM | | UNITS(3) | | OPTIONS(4) | | AWARDS(5) | | AWARD(6) | NAME | | DATE | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($) | | ($) | Charles (Chip) | | N/A | | | | $ 2,590,000 | | $ 5,180,000 | | | | | | | | | | | | | | | V. Bergh | | 1/28/2020 | | | | | | | | — | | 183,374 | | 366,748 | | | | | | | | $4,029,644 | | | 1/28/2020 | | | | | | | | | | | | | | | | 275,763 | | $ 19.70 | | 1,806,248 | | | 1/28/2020 | | | | | | | | | | | | | | 91,687 | | | | | | 1,739,302 | Harmit Singh | | N/A | | | | 890,000 | | 1,780,000 | | | | | | | | | | | | | | | | | 1/27/2020 | | | | | | | | — | | 44,444 | | 88,888 | | | | | | | | 1,019,101 | | | 1/27/2020 | | | | | | | | | | | | | | | | 65,789 | | 20.25 | | 449,997 | | | 1/27/2020 | | | | | | | | | | | | | | 22,222 | | | | | | 433,773 | Seth Ellison | | N/A | | | | 672,000 | | 1,344,000 | | | | | | | | | | | | | | | | | 1/27/2020 | | | | | | | | — | | 37,036 | | 74,072 | | | | | | | | 849,235 | | | 1/27/2020 | | | | | | | | | | | | | | | | 54,824 | | 20.25 | | 374,996 | | | 1/27/2020 | | | | | | | | | | | | | | 18,518 | | | | | | 361,471 | David Love | | N/A | | | | 608,000 | | 1,216,000 | | | | | | | | | | | | | | | | | 1/27/2020 | | | | | | | | — | | 29,628 | | 59,256 | | | | | | | | 679,370 | | | 1/27/2020 | | | | | | | | | | | | | | | | 43,859 | | 20.25 | | 299,996 | | | 1/27/2020 | | | | | | | | | | | | | | 14,814 | | | | | | 289,169 | Elizabeth | | N/A | | | | 580,000 | | 1,160,000 | | | | | | | | | | | | | | | O’Neill | | 1/27/2020 | | | | | | | | — | | 24,690 | | 49,380 | | | | | | | | 566,142 | | | 1/27/2020 | | | | | | | | | | | | | | | | 36,549 | | 20.25 | | 249,995 | | | 1/27/2020 | | | | | | | | | | | | | | 12,345 | | | | | | 240,974 |
(1) | The amounts shown in these columns reflect the estimated potential payment levels for the fiscal 2020 performance period under the AIP, further described under “—Compensation Discussion and Analysis.” The potential payouts were performance-based and, therefore, were completely at risk. The potential target and maximum payment amounts assume achievement of 100% and 200%, respectively, of the individual objectives of the AIP. Each executive received a bonus under the AIP, which is reported in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.” | (2) | For each executive, the amounts shown in these columns reflect, in shares, the target and maximum amounts for PRSUs subject to a three-year performance period beginning in fiscal year 2020 that wereis further described under “—Compensation Discussion and Analysis.” The potential awards are performance-based and, therefore, completely at risk. | (3) | Reflects service-based RSUs granted in fiscal year 2020 under the 2019 EIP. Please see footnotes in the table entitled “Outstanding Equity Awards at 2020 Fiscal Year-End” for details concerning the RSUs’ vesting schedule. | (4) | Reflects service-based SARs granted in fiscal year 2020 under the 2019 EIP. Please see footnotes in the table entitled “Outstanding Equity Awards at 2020 Fiscal Year-End” for details concerning the SARs’ vesting schedule. | (5) | The exercise price is based on the same performance metrics described above for PRSUs but covered the period from the beginning of fiscal year 2016 through the end of fiscal year 2018 (1) 50% of the SARs vest based on our average margin of net earnings over the three-year period (adjusted for certain items such as interest and taxes), and the target CAGR in our net revenues over the three-year period, equally weighted; and (2) 50% based on our total shareholder return over the three-year period. The potential vesting range as a percentage of the target award was 0% to 150%.The table below summarizes the goals at target for each of the two performance measures and our actual adjusted achievement. The actual percentage achieved was 100% for the 50% based on the internal performance metrics and 150% for the 50% based on relative total shareholder return, for a weighted attainment of 125%.
| | | | | | | | | | | | | | | Average Margin of Net Earnings Goal | | | CAGR of Net Revenues Goal | | | Actual Percentage Achieved After Adjustment | | Total company | | | 11.0 % | | | | 2.9 % | | | | 125.0 % | |
Based on the 125% achievement level as set forth in the table above, the fiscal year 2016 performance-based SARs (for which the three year performance cycle has been completed) vested as follows:
| | | | | | | | | | | | | Name | | Target Performance- Based SARs | | | Actual Percentage Achieved After Adjustment | | | Vested Performance- Based SARs | | Charles V. Bergh | | | 1,645,950 | | | | 125.0 | % | | | 2,057,430 | | Harmit Singh | | | 355,050 | | | | 125.0 | % | | | 443,810 | | Roy Bagattini | | | 619,730 | | | | 125.0 | % | | | 774,650 | | Seth Ellison | | | 183,870 | | | | 125.0 | % | | | 229,830 | | David Love | | | 164,840 | | | | 125.0 | % | | | 206,050 | |
Long-Term Incentive Grant Practices
We do not have any program, plan, or practice to time equity grants to take advantage of the release of material,non-public information. Prior to our initial public offering, our common stock had not been listed on any stock exchange since 1985. Accordingly, the price of a sharefair market value of our common stock for all purposes, including settingas of the exercise price of SARs, wasgrant date established by our boardBoard of directorsDirectors based on factors including the most recent valuation conducted by a third-party valuation firm.
| (6) | The valuation process was typically conducted three timesvalue of a year, with interim valuations occurring from time to timeRSU, PRSU or SAR award is based on shareholder and company needs. Seethe fair value as of the grant date of such award determined in accordance with FASB ASC 718. Please refer to the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for more information aboutfiscal year 2020 for the relevant assumptions used to determine the valuation process.Benefits and Perquisites
Executives generally are eligible for the same health and welfare insurance plans offered to all employees such as medical, dental, supplemental life, long-term disability and business travel insurance. In addition, although not a significant part of total compensation, we provide limited perquisites to executives. The primary perquisite provided to the executives is a flexible allowance to cover expenses such as auto-related expenses, financial and tax planning, legal assistance and excess medical costs. We also require and pay for an annual medical exam for our executives and other members of our executive leadership team. Like manyawards. The grant date fair value of the companies in the peer group, we also offer anon-qualified supplement to the 401(k) plan, which is not subject to the Internal Revenue Service limitations, through our Deferred CompensationEquity Incentive Plan for Executives and Outside Directors (“Deferred Compensation Plan”), which is a U.S.non-qualified, unfunded tax deferred savings plan provided to senior level executives, including our named executive officers, and the outside directors.
Mr. Ellison, whoAwards is based in Belgium, and Mr. Love, who is based in Singapore, in connection with their roles as Executive Vice President & Presidenton the fair market value of our Europe region and Executive Vice President & President of our Asia, Middle East and Africa region, respectively, are provided certain benefits under our global assignment program, including a housing allowance to cover the cost of rent and utilities.
See “—Summary Compensation Table” for more detail.
Tax and Accounting Considerations
We have structured our compensation program in a manner intended to comply with Section 409A of the Code. Because our common stock was not registered on any exchange prior to our initial public offering, we were not subject to Section 162(m)as of the Code in fiscal year 2018.
Severance and Change in Control Benefits
The termsgrant date established by our Board of Mr. Bergh’s severance and change in control benefits were determinedDirectors based on factors including the most recent valuation conducted by a third-party valuation firm less future expected dividends during the negotiationvesting period, multiplied by the target number of hisshares that may be earned.
|
| | | | 46 | |
Table of Contents Executive Compensation OUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR-END The following table shows all outstanding equity awards held by each of our named executive officers as of November 29, 2020. The vesting schedule for each grant is shown following this table. | | SAR AWARDS | NAME | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED SARs EXERCISABLE | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED SARs UNEXERCISABLE(1) | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED SARs | | SAR EXERCISE PRICE(2) | | SAR EXPIRATION DATE | Charles (Chip) V. Bergh | | 1,396,220 | | — | | — | | $7.43 | | 2/4/2022 | | | 1,886,790 | | — | | — | | 7.43 | | 2/4/2022 | | | 2,057,430 | | — | | — | | 6.10 | | 2/9/2023 | | | 2,468,930 | | — | | — | | 6.10 | | 2/9/2023 | | | 755,570 | | 251,860 | (a) | — | | 6.90 | | 2/1/2024 | | | 321,590 | | 321,580 | (b) | — | | 9,60 | | 1/30/2025 | | | 100,980 | | 302,920 | (c) | — | | 14.88 | | 1/29/2029 | | | — | | 275,763 | (e) | — | | 19.70 | | 1/28/2030 | Harmit Singh | | 337,020 | | — | | — | | 7.43 | | 2/4/2022 | | | 455,430 | | — | | — | | 7.43 | | 2/4/2022 | | | 443,810 | | — | | — | | 6.10 | | 2/9/2023 | | | 532,580 | | — | | — | | 6.10 | | 2/9/2023 | | | 162,740 | | 54,240 | (a) | — | | 6.90 | | 2/1/2024 | | | 69,340 | | 69,330 | (b) | — | | 9.60 | | 1/30/2025 | | | 22,360 | | 67,080 | (c) | — | | 14.88 | | 1/29/2029 | | | — | | 65,789 | (d) | — | | 20.25 | | 1/27/2030 | Seth Ellison | | 159,830 | | — | | — | | 6.10 | | 2/9/2023 | | | 73,620 | | 36,810 | (a) | — | | 6.90 | | 2/1/2024 | | | 57,380 | | 57,380 | (b) | — | | 9.60 | | 1/30/2025 | | | 18,170 | | 54,500 | (c) | — | | 14.88 | | 1/29/2029 | | | — | | 54,824 | (d) | — | | 20.25 | | 1/27/2030 | David Love | | 138,420 | | — | | — | | 7.43 | | 2/4/2022 | | | 187,050 | | — | | — | | 7.43 | | 2/4/2022 | | | 206,050 | | — | | — | | 6.10 | | 2/9/2023 | | | 247,270 | | — | | — | | 6.10 | | 2/9/2023 | | | 110,430 | | 36,810 | (a) | — | | 6.90 | | 2/1/2024 | | | 47,820 | | 47,810 | (b) | — | | 9.60 | | 1/30/2025 | | | 15,370 | | 46,120 | (c) | — | | 14.88 | | 1/29/2029 | | | — | | 43,859 | (d) | — | | 20.25 | | 1/27/2030 | Elizabeth O’Neill | | 69,740 | | 23,250 | (a) | — | | 6.90 | | 2/1/2024 | | | 33,470 | | 33,470 | (b) | — | | 9.60 | | 1/30/2025 | | | 13,980 | | 41,920 | (c) | — | | 14.88 | | 1/29/2029 | | | — | | 36,549 | (d) | — | | 20.25 | | 1/27/2030 |
(1) | The following sets forth the vesting schedule for unvested outstanding SAR awards and generally depends upon continued employment agreement in 2011 atthrough the time he was hired. As part of this negotiation, the compensation committee determined that the benefits and structure of these benefits were within normal competitive practice, reasonable and appropriate for theapplicable vesting date. Other circumstances and necessary to attract Mr. Bergh to us. Enhanced termination benefitsunder which such awards will vest are described in the case of a change in control of our company were included in his employment agreement for the same reasons and to help ensure retention of Mr. Bergh in the case of a potential or actual change in control.In October 2016, our board of directors approved new severance benefits, effective March 1, 2017 (our “Severance Plan”), for the executive leadership team, including our named executive officers. Our Severance Plan supersedes all of our prior policies and practices that provided for severance, separation pay and separation benefits for covered executives except with respect to benefits under Mr. Bergh’s employment agreement that apply to his equity awards.
Our Severance Plan is meant to provide a reasonable and competitive level of financial transitional support to executives who are terminated involuntarily without cause or voluntarily resign for good reason. Severance benefits are not payable upon a change in control if the executive is still employed by or offered a comparable position with the surviving entity.
While compensation decisions affect potential payouts under these severance arrangements, these arrangements generally did not affect such decisions as these severance provisions are conditional and may never come into effect.
More information about the severance benefits payable to our named executive officers under our Severance Plan is set forth under “Potentialsection entitled “—Potential Payments Upon Termination, Change In Control or Corporate Transaction.”
In the event of a Corporate Transaction, as defined in our 2016 EIP, in which the surviving corporation assumes or continues the outstanding long-term incentive program or substitutes similar awards for outstanding awards, such awards will continue to vest in accordance with their terms and any applicable employment agreement or severance plan. In the event of Corporate Transaction in which the surviving corporation does not assume or continue the outstanding long-term incentive program or substitute similar awards for such outstanding awards, the vesting schedule of all awards held by executives that are still employed upon the Corporate Transaction will be accelerated in full as of a date prior to the effective date of the transaction as determined by our board of directors. This accelerated vesting structure in the event awards are not assumed or substituted by the surviving company is designed to encourage the executives to remain employed with us through the date of the Corporate Transaction and to ensure that the equity incentives awarded to the executives are not eliminated by the surviving company.
Summary Compensation Table
The following table provides compensation information for our fiscal year 2018 named executive officers. The table also shows compensation information for fiscal years 2017 and 2016 for those current named executive officers who also were named executive officers during either of those years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary | | | Bonus(2) | | | Option Awards(3) | | | Stock Awards(4) | | | Non-Equity Incentive Plan Compensation(5) | | | Change in Pension Value and Non-qualified Deferred Compensation Earnings(6) | | | All Other Compensation(7) | | | Total | | Charles V. Bergh, | | | 2018 | | | $ | 1,426,346 | | | $ | — | | | $ | 1,681,246 | | | $ | 5,040,066 | | | $ | 3,656,380 | | | $ | — | | | $ | 391,045 | | | $ | 12,195,083 | | President and Chief Executive Officer | | | 2017 | | | | 1,382,769 | | | | — | | | | 1,624,985 | | | | 4,993,851 | | | | 2,741,080 | | | | — | | | | 340,653 | | | | 11,083,338 | | | | 2016 | | | | 1,343,077 | | | | — | | | | 6,872,672 | | | | — | | | | 2,400,000 | | | | — | | | | 341,996 | | | | 10,957,745 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Harmit Singh, | | | 2018 | | | $ | 794,808 | | | $ | — | | | $ | 362,483 | | | $ | 1,086,695 | | | $ | 1,274,000 | | | $ | — | | | $ | 157,905 | | | $ | 3,675,891 | | Executive Vice President and Chief Financial Officer | | | 2017 | | | | 768,842 | | | | — | | | | 349,989 | | | | 1,075,518 | | | | 933,398 | | | | — | | | | 146,403 | | | | 3,274,150 | | | | 2016 | | | | 746,538 | | | | — | | | | 1,482,519 | | | | — | | | | 832,500 | | | | — | | | | 152,649 | | | | 3,214,206 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Roy Bagattini, | | | 2018 | | | $ | 794,808 | | | $ | — | | | $ | 274,993 | | | $ | 824,329 | | | $ | 950,400 | | | $ | — | | | $ | 1,128,027 | | | $ | 3,972,557 | | Executive Vice President and President, Americas(1) | | | 2017 | | | | 768,842 | | | | — | | | | 237,498 | | | | 729,876 | | | | 684,878 | | | | — | | | | 1,269,116 | | | | 3,690,210 | | | | 2016 | | | | 690,433 | | | | 1,000,000 | | | | 2,615,134 | | | | — | | | | 504,000 | | | | — | | | | 1,451,783 | | | | 6,261,350 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Seth Ellison, | | | 2018 | | | $ | 752,231 | | | $ | — | | | $ | 299,983 | | | $ | 899,344 | | | $ | 1,112,064 | | | $ | — | | | $ | 908,794 | | | $ | 3,972,416 | | Executive Vice President and President, Europe | | | 2017 | | | | 673,166 | | | | — | | | | 237,498 | | | | 729,876 | | | | 978,236 | | | | — | | | | 381,742 | | | | 3,000,518 | | | | 2016 | | | | 609,808 | | | | — | | | | 767,741 | | | | — | | | | 792,120 | | | | — | | | | 472,432 | | | | 2,642,101 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David Love, | | | 2018 | | | $ | 716,154 | | | $ | — | | | $ | 249,977 | | | $ | 749,405 | | | $ | 751,680 | | | $ | — | | | $ | 571,286 | | | $ | 3,038,502 | | Executive Vice President and President, Asia, Middle East and Africa | | | 2017 | | | | 700,289 | | | | — | | | | 237,498 | | | | 729,876 | | | | 589,400 | | | | — | | | | 515,393 | | | | 2,772,456 | |
(1) | Prior to June 1, 2016, Mr. Bagattini was paid in Singapore Dollars. For presentation purposes of his compensation for 2016, the average exchange rates of the last month of fiscal year 2016 were used to convert Mr. Bagattini’s compensation paid in Singapore Dollars into U.S. Dollars.
|
(2) | Mr. Bagattini received aone-time relocation bonus of $1,000,000 in June 2016, which is reflected in the Bonus column for 2016.
|
(3) | These amounts reflect the aggregate grant date fair value for awards of SARs, including prior awards of performance-based SARs, granted to the recipient under our 2016 EIP, computed in accordance with Accounting Standards Codification 718 issued by the Financial Accounting Standards Board, or FASB ASC 718. These amounts reflect the grant date fair value, and do not represent the actual value that may be realized by the executives. For a description of the assumptions used to determine the compensation cost of our awards, see the notes to our audited consolidated financial statements.
|
(4) | These amounts reflect the aggregate grant date fair value for RSU and PRSU awards. For fiscal years 2018 and 2017, this column also includes the grant date fair value of the target number of PRSUs that may be earned for the three-year performance period beginning with fiscal year 2017. If maximum performance conditions are achieved over the entire three-year period, the grant date fair values for PRSUs granted in fiscal year 2018 would be $5,040,066 for Mr. Bergh, $1,086,695 for Mr. Singh, $824,329 for Mr. Bagattini, $899,344 for Mr. Ellison and $749,405 for Mr. Love. For a description of the assumptions used to determine the compensation cost of our awards, see the notes to our audited consolidated financial statements.
|
(5) | The amounts in this column reflect the cash incentive amounts earned by the executives under our AIP.
|
(6) | No above-market or preferential interest rate options are available under our deferred compensation programs. See “—Executive RetirementPlans—Non-Qualified Deferred Compensation” for additional information on deferred compensation earnings. : |
(7) | (a) | The amounts shown in the All Other Compensation column for fiscal year 2018 are detailed in the table below (see “—Compensation Discussion and Analysis” for more details on the items in the table below):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive Perquisites(a) | | | Relocation(b) | | | 401(k) Plan Match(c) | | | Deferred Compensation Match(d) | | | Tax Payments(e) | | | Charitable Match(f) | | | Total | | Charles V. Bergh | | $ | 50,960 | | | $ | — | | | $ | 20,417 | | | $ | 297,140 | | | $ | 2,528 | | | $ | 20,000 | | | $ | 391,045 | | Harmit Singh | | | 21,670 | | | | — | | | | 20,417 | | | | 114,199 | | | | 1,619 | | | | — | | | | 157,905 | | Roy Bagattini | | | 19,898 | | | | — | | | | 19,821 | | | | 91,155 | | | | 997,153 | | | | — | | | | 1,128,027 | | Seth Ellison | | | 15,000 | | | | 123,265 | | | | 18,875 | | | | 115,910 | | | | 635,744 | | | | — | | | | 908,794 | | David Love | | | 80,433 | | | | 307,549 | | | | 20,417 | | | | 80,694 | | | | 81,293 | | | | 900 | | | | 571,286 | |
(a) | For Mr. Bergh, this amount reflects a payment for home security services, parking, a health club membership subsidy, event tickets, an allowance intended to cover legal, financial and/or other incidental business related expenses, and a car allowance. For Mr. Singh, this amount includes parking, a health club membership subsidy and an annual allowance intended to cover legal, financial and/or other incidental business related expenses. For Mr. Bagattini, this amount includes parking, a health club membership subsidy, event tickets and an allowance intended to cover legal, financial and/or other incidental business related expenses. For Mr. Ellison, this amount is an annual allowance intended to cover legal, financial and/or other incidental business related expenses. For Mr. Love, this amount reflects an allowance intended to cover legal, financial and/or other incidental business related expenses, parking, and a car allowance of $60,000.
|
(b) | For Mr. Ellison and Mr. Love, these amounts reflect payments in connection with their international assignment.
|
(c) | These amounts reflect company matching contributions under our 401(k) Plan.
|
(d) | These amounts reflect company matching contributions under our Deferred Compensation Plan.
|
(e) | For Mr. Bergh and Mr. Singh, these amounts reflect tax reimbursements in connection with annual physicals under our Executive Medical Exam benefit. For Mr. Bagattini, this amount reflects tax reimbursements to equalize his income to the same tax levels had he remained in Singapore. For Mr. Ellison and Mr. Love, these amounts reflect tax reimbursements for the tax liability of allowances and benefits they received in connection with their international assignments.
|
(f) | These amounts reflect company matching under our Matching Gift Program, available to all employees.
|
2018 Grants of Plan-Based Awards
The following table provides information on all plan-based awards granted to each of our named executive officers during fiscal year 2018. The awards and the unvested portion of SARs identified below are also reported under “Outstanding Equity Awards at 2018 FiscalYear-End.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | | | All Other Option Awards: Number of Securities Underlying Options(4) (#) | | | Exercise or Base Price of Option Awards(5) ($) | | | Grant Date Fair Value of Stock and Option Award(6) ($) | | | | | | | | | | Name | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | Charles V. Bergh | | | N/A | | | | | | | $ | 2,296,000 | | | $ | 4,592,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2018 | | | | | | | | | | | | | | | | — | | | | 350,260 | | | | 700,520 | | | | | | | | | | | | | | | $ | 3,435,350 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 643,170 | | | $ | 9.60 | | | | 1,681,246 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 175,130 | | | | | | | | | | | | 1,604,716 | | Harmit Singh | | | N/A | | | | | | | | 800,000 | | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2018 | | | | | | | | | | | | | | | | — | | | | 75,520 | | | | 151,040 | | | | | | | | | | | | | | | | 740,700 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 138,670 | | | | 9.60 | | | | 362,483 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,760 | | | | | | | | | | | | 345,995 | | Roy Bagattini | | | N/A | | | | | | | | 640,000 | | | | 1,280,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2018 | | | | | | | | | | | | | | | | — | | | | 57,290 | | | | 114,580 | | | | | | | | | | | | | | | | 561,900 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 105,200 | | | | 9.60 | | | | 274,993 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,640 | | | | | | | | | | | | 262,429 | | Seth Ellison | | | N/A | | | | | | | | 614,400 | | | | 1,228,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2018 | | | | | | | | | | | | | | | | — | | | | 62,500 | | | | 125,000 | | | | | | | | | | | | | | | | 613,000 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 114,760 | | | | 9.60 | | | | 299,983 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 31,250 | | | | | | | | | | | | 286,344 | | David Love | | | N/A | | | | | | | | 576,000 | | | | 1,152,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2018 | | | | | | | | | | | | | | | | — | | | | 52,080 | | | | 104,160 | | | | | | | | | | | | | | | | 510,801 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 95,630 | | | | 9.60 | | | | 249,977 | | | | | 1/30/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,040 | | | | | | | | | | | | 238,604 | |
(1) | The amounts shown in these columns reflect the estimated potential payment levels for the fiscal 2018 performance period under the AIP, further described under “—Compensation Discussion and Analysis.” The potential payouts were performance-based and, therefore, were completely at risk. The potential target and maximum payment amounts assume achievement of 100% and 200%, respectively, of the individual objectives of the AIP. Each executive received a bonus under the AIP, which is reported in the Summary Compensation Table under the column entitled“Non-Equity Incentive Plan Compensation.”
|
(2) | For each executive, the amounts shown in these columns reflect, in shares, the target and maximum amounts for PRSUs subject to a three-year performance period beginning in fiscal 2018 that is further described under “—Compensation Discussion and Analysis.” The potential awards are performance-based and, therefore, completely at risk.
|
(3) | Reflects service-based RSUs granted in 2018 under the 2016 EIP. Please see footnotes in the table entitled “Outstanding Equity Awards at 2018 FiscalYear-End” for details concerning the RSUs’ vesting schedule.
|
(4) | Reflects service-based SARs granted in 2018 under the 2016 EIP. Please see footnotes in the table entitled “Outstanding Equity Awards at 2018 FiscalYear-End” for details concerning the SARs’ vesting schedule.
|
(5) | The exercise price is based on the fair market value of our common stock as of the grant date established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm.
|
(6) | The value of a RSU, PRSU or SAR award is based on the fair value as of the grant date of such award determined in accordance with FASB ASC 718. Please refer to the notes to our audited consolidated financial statements included in our Annual Report on Form10-K for fiscal year 2018 for the relevant assumptions used to determine the valuation of our awards. The grant date fair value of the Equity Incentive Plan Awards is based on the fair market value of our common stock as of the grant date established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm less future expected dividends during the vesting period, multiplied by the target number of shares that may be earned.
|
Outstanding Equity Awards at 2018 FiscalYear-End
The following table shows all outstanding equity awards held by each of our named executive officers as of November 25, 2018. The vesting schedule for each grant is shown following this table.
| | | | | | | | | | | | | | | | | | | | | | | | | SAR Awards | | Name | | Number of Securities Underlying Unexercised SARs Exercisable | | | Number of Securities Underlying Unexercised SARs Unexercisable(1) | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned SARs(2) | | | SAR Exercise Price(3) | | | SAR Expiration Date | | Charles V. Bergh | | | 1,439,390 | | | | — | | | | | | — | | | $ | 3.78 | | | | 2/5/2020 | | | | 2,878,780 | | | | — | | | | | | — | | | | 3.78 | | | | 2/5/2020 | | | | 965,770 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 1,931,540 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 1,396,220 | | | | — | | | | | | — | | | | 7.43 | | | | 2/4/2022 | | | | 1,768,860 | | | | 117,930 | | | (a) | | | — | | | | 7.43 | | | | 2/4/2022 | | | | — | | | | — | | | | | | 1,645,950 | | | | 6.10 | | | | 2/9/2023 | | | | 1,697,380 | | | | 771,550 | | | (b) | | | — | | | | 6.10 | | | | 2/9/2023 | | | | 251,860 | | | | 755,570 | | | (d) | | | — | | | | 6.90 | | | | 2/1/2024 | | | | — | | | | 643,170 | | | (e) | | | — | | | | 9.60 | | | | 1/30/2025 | | Harmit Singh | | | 246,210 | | | | — | | | | | | — | | | | 3.78 | | | | 2/5/2020 | | | | 220,270 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 440,520 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 337,020 | | | | — | | | | | | — | | | | 7.43 | | | | 2/4/2022 | | | | 426,960 | | | | 28,470 | | | (a) | | | — | | | | 7.43 | | | | 2/4/2022 | | | | — | | | | — | | | | | | 355,050 | | | | 6.10 | | | | 2/9/2023 | | | | 366,140 | | | | 166,440 | | | (b) | | | — | | | | 6.10 | | | | 2/9/2023 | | | | 54,250 | | | | 162,730 | | | (d) | | | — | | | | 6.90 | | | | 2/1/2024 | | | | — | | | | 138,670 | | | (e) | | | — | | | | 9.60 | | | | 1/30/2025 | | Roy Bagattini | | | 9,480 | | | | 14,240 | | | (a) | | | — | | | | 7.43 | | | | 2/4/2022 | | | | — | | | | — | | | | | | 183,870 | | | | 6.10 | | | | 2/9/2023 | | | | 11,490 | | | | 86,190 | | | (b) | | | — | | | | 6.10 | | | | 2/9/2023 | | | | — | | | | — | | | | | | 435,860 | | | | 6.85 | | | | 7/13/2023 | | | | 27,240 | | | | 272,420 | | | (c) | | | — | | | | 6.85 | | | | 7/13/2023 | | | | — | | | | 110,430 | | | (d) | | | — | | | | 6.90 | | | | 2/1/2024 | | | | — | | | | 105,200 | | | (e) | | | — | | | | 9.60 | | | | 1/30/2025 | |
| | | | | | | | | | | | | | | | | | | | | | | | | SAR Awards | | Name | | Number of Securities Underlying Unexercised SARs Exercisable | | | Number of Securities Underlying Unexercised SARs Unexercisable(1) | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned SARs(2) | | | SAR Exercise Price(3) | | | SAR Expiration Date | | Seth Ellison | | | 18,970 | | | | 14,240 | | | (a) | | | — | | | | 7.43 | | | | 2/4/2022 | | | | — | | | | — | | | | | | 183,870 | | | | 6.10 | | | | 2/9/2023 | | | | 22,990 | | | | 86,190 | | | (b) | | | — | | | | 6.10 | | | | 2/9/2023 | | | | — | | | | 110,430 | | | (d) | | | — | | | | 6.90 | | | | 2/1/2024 | | | | — | | | | 114,760 | | | (e) | | | — | | | | 9.60 | | | | 1/30/2025 | | David Love | | | 157,830 | | | | — | | | | | | — | | | | 3.78 | | | | 2/5/2020 | | | | 315,650 | | | | — | | | | | | — | | | | 3.78 | | | | 2/5/2020 | | | | 93,190 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 186,370 | | | | — | | | | | | — | | | | 6.45 | | | | 2/5/2021 | | | | 138,420 | | | | — | | | | | | — | | | | 7.43 | | | | 2/4/2022 | | | | 175,350 | | | | 11,700 | | | (a) | | | — | | | | 7.43 | | | | 2/4/2022 | | | | — | | | | — | | | | | | 164,840 | | | | 6.10 | | | | 2/9/2023 | | | | 169,990 | | | | 77,280 | | | (b) | | | — | | | | 6.10 | | | | 2/9/2023 | | | | 36,810 | | | | 110,430 | | | (d) | | | — | | | | 6.90 | | | | 2/1/2024 | | | | — | | | | 95,630 | | | (e) | | | — | | | | 9.60 | | | | 1/30/2025 | |
(1) | The following sets forth the vesting schedule for unvested outstanding SAR awards and generally depends upon continued employment through the applicable vesting date. Other circumstances under which such awards will vest are described in the section entitled “—Potential Payments Upon Termination, Change In Control or Corporate Transaction.”:
|
(a) SARs vested 25% on February 4, 2016 and then monthly over the remaining 36 months.
(b) SARs vested 25% on February 9, 2017 and then monthly over the remaining 36 months.
(c) SARs vested 25% on July 13, 2017 and then monthly over the remaining 36 months.
(d) SARs vested 25% on February 1, 2018 and then annually over the remaining three years.
(e)
| | (b) | SARs vested 25% on January 30, 2019 and then annually over the remaining three years.(2) | Represents the target number of SARs that may be earned under the performance-based SAR award program (see “—Compensation Discussion and Analysis” for more details) that vest at the end of a three-year performance period.
| | (c) | SARs vested 25% on January 29, 2020 and then annually over the remaining three years. | | (d) | SARs will vest 25% on January 27, 2021 and then annually over the remaining three years. | | (e) | SARs will vest 25% on January 28, 2021 and then annually over the remaining three years. |
Table of Contents Executive Compensation (3) | The SAR exercise prices reflect the fair market value of our common stock as of the grant date as established by our board of directors
(2) | The SAR exercise prices reflect the fair market value of our common stock as of the grant date as established by our Board of Directors based on factors including the most recent valuation conducted by a third-party valuation firm. |
| | STOCK AWARDS | NAME | | YEAR | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(1) | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(2) | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)(3) | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(4) | Charles (Chip) V. Bergh | | 2020 | | 91,687 | (b) | $1,756,723 | | | | | | | 2019 | | 91,060 | (c) | 1,744,710 | | | | | | | 2018 | | 87,560 | (d) | 1,677,650 | | | | | | | 2020 | | | | | | 183,374 | (b) | $3,513,446 | | | 2019 | | | | | | 242,850 | (c) | 4,653,006 | | | 2018 | | | | | | 350,260 | (d) | 6,710,982 | Harmit Singh | | 2020 | | 22,222 | (a) | 425,774 | | | | | | | 2019 | | 20,170 | (c) | 386,457 | | | | | | | 2018 | | 18,880 | (d) | 361,741 | | | | | | | 2020 | | | | | | 44,444 | (a) | 851,547 | | | 2019 | | | | | | 53,780 | (c) | 1,030,425 | | | 2018 | | | | | | 75,520 | (d) | 1,446,963 | Seth Ellison | | 2020 | | 18,518 | (a) | 354,805 | | | | | | | 2019 | | 16,380 | (c) | 313,841 | | | | | | | 2018 | | 15,620 | (d) | 299,279 | | | | | | | 2020 | | | | | | 37,036 | (a) | 709,610 | | | 2019 | | | | | | 43,690 | (c) | 837,100 | | | 2018 | | | | | | 62,500 | (d) | 1,197,500 | David Love | | 2020 | | 14,814 | (a) | 283,836 | | | | | | | 2019 | | 13,860 | (c) | 265,558 | | | | | | | 2018 | | 13,020 | (d) | 249,463 | | | | | | | 2020 | | | | | | 29,628 | (a) | 567,672 | | | 2019 | | | | | | 36,970 | (c) | 708,345 | | | 2018 | | | | | | 52,080 | (d) | 997,853 | Elizabeth O’Neill | | 2020 | | 12,345 | (a) | 236,530 | | | | | | | 2019 | | 12,600 | (c) | 241,416 | | | | | | | 2018 | | 9,110 | (d) | 174,548 | | | | | | | 2020 | | | | | | 24,690 | (a) | 473,060 | | | 2019 | | | | | | 33,610 | (c) | 643,968 | | | 2018 | | | | | | 36,450 | (d) | 698,382 |
(1) | RSUs vest ratably over a four-year period. The vesting schedule for unvested outstanding stock awards generally depends upon continued employment through the applicable vesting date. Other circumstances under which such awards will vest are described in the section entitled “Potential Payments Upon Termination, Change In Control or Corporate Transaction.” |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Awards | | Name | | Year | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units of Stock That Have Not Vested ($)(4) | | Charles V. Bergh | | | 2018 | | | | 175,130 | | | (a) | | $ | 2,556,898 | | | | | | | | | | | | | | | 2017 | | | | 235,500 | | | (b) | | | 3,438,300 | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | 350,260 | | | (a) | | $ | 5,113,796 | | | | | 2017 | | | | | | | | | | | | | | 471,010 | | | (b) | | | 6,876,746 | | Harmit Singh | | | 2018 | | | | 37,760 | | | (a) | | | 551,296 | | | | | | | | | | | | | | | 2017 | | | | 50,720 | | | (b) | | | 740,512 | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | 75,520 | | | (a) | | | 1,102,592 | | | | | 2017 | | | | | | | | | | | | | | 101,440 | | | (b) | | | 1,481,024 | | Roy Bagattini | | | 2018 | | | | 28,640 | | | (a) | | | 418,144 | | | | | | | | | | | | | | | 2017 | | | | 34,420 | | | (b) | | | 502,532 | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | 57,290 | | | (a) | | | 836,434 | | | | | 2017 | | | | | | | | | | | | | | 68,840 | | | (b) | | | 1,005,064 | | Seth Ellison | | | 2018 | | | | 31,250 | | | (a) | | | 456,250 | | | | | | | | | | | | | | | 2017 | | | | 34,420 | | | (b) | | | 502,532 | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | 62,500 | | | (a) | | | 912,500 | | | | | 2017 | | | | | | | | | | | | | | 68,840 | | | (b) | | | 1,005,064 | | David Love | | | 2018 | | | | 26,040 | | | (a) | | | 380,184 | | | | | | | | | | | | | | | 2017 | | | | 34,420 | | | (b) | | | 502,532 | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | 52,080 | | | (a) | | | 760,368 | | | | | 2017 | | | | | | | | | | | | | | 68,840 | | | (b) | | | 1,005,064 | |
(1) | (a) | 2020 grant RSUs will vest 25% on January 27, 2021 and then the remainder annually over the remaining three years. | | (b) | 2020 grant RSUs will vest 25% on January 28, 2021 and then the remainder annually over the remaining three years. | | (c) | 2019 grant RSUs vested 25% on January 30, 2020 and then the remainder annually over the remaining three years. | | (d) | RSUs vest ratably over a four-year period. The vesting schedule for unvested outstanding stock awards generally depends upon continued employment through the applicable vesting date. Other circumstances under which such awards will vest are described in the section entitled “Potential Payments Upon Termination, Change In Control or Corporate Transaction.”
|
(a) 2018 grant RSUs vested 25% on January 30, 2019 and then the remainder annually over the remaining three years.
(b) 2017
|
(2) | Represents the number of stock awards multiplied by $19.16, the closing stock price as of November 27, 2020. | (3) | Represents the target number of shares that may be earned under the performance-based RSU award program (see “Compensation Discussion and Analysis” for more details) that vest at the end of a three-year performance period, subject to certification of performance results in the first quarter of fiscal 2021. |
| (a) | 2020 grant performance-based RSUs cliff vest on February 1, 2020.(2) | Represents the number of stock awards multiplied by $14.60, the fair market value of our common stock as of November 30, 2018 as established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm. January 27, 2023. |
(3) | Represents the target number of shares that may be earned under the performance-based RSU award program (see “Compensation Discussion and Analysis” for more details) that vest at the end of a three-year performance period, subject to certification of performance results in the first quarter of fiscal 2020.
| | (b) | 2020 grant performance-based RSUs cliff vest on January 28, 2023. |
(a) 2018
| | (c) | 2019 grant performance-based RSUs cliff vest on January 30, 2021.(b) 20172022.
| | (d) | 2018 grant performance-based RSUs will cliff vest on February 1, 2020.(4) | Represents the number of stock awards multiplied by $14.60, the fair market value of our common stock as of November 25, 2018 as established by our board of directors based on factors including the most recent valuation conducted by a third-party valuation firm.
|
SAR Exercises
The following table shows all SARs exercised and the value realized upon exercise by each of our named executive officers for fiscal year 2018, based on the difference between the share price of our common stock and the SAR exercise price on the date of exercise.
| | | | | | | | | Name | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise | | Charles V. Bergh | | | 3,118,600 | | | $ | 29,938,688 | | Harmit Singh | | | — | | | | — | | Roy Bagattini | | | 177,690 | | | | 1,843,402 | | Seth Ellison | | | 463,110 | | | | 5,476,642 | | David Love | | | 194,500 | | | | 2,300,029 | |
Employment Agreements
Mr. Bergh
We have an employment agreement with Mr. Bergh effective September 1, 2011, as amended by each of the amendments effective May 8, 2012 and January 30, 2018. The agreement initially provided for an annual base salary2021.
|
(4) | Represents the number of $1,200,000 and an AIP target participation ratestock awards multiplied by $19.16, the closing stock price as of 135%, which have since been adjusted, and may be further adjusted, pursuant to annual review. For fiscal year 2018, his base salary and target participation rate under our AIP were $1,435,000 and 160% of base salary, respectively.Mr. Bergh also participates in our 2016 EIP. This element of Mr. Bergh’s compensation for fiscal year 2018November 27, 2020.
|
| | | | 48 | |
Table of Contents Executive Compensation SAR EXERCISES AND STOCK VESTED The following table shows all SARs exercised and the value realized upon exercise and all stock awards vested and the value realized upon vesting by each of our named executive officers for fiscal year 2020, based on the difference between the share price of our common stock and the SAR exercise price on the date of exercise (in the case of SARs) or the share price of our common stock on the date of vesting (in the case of stock awards). | | SAR AWARDS | | STOCK AWARDS | NAME | | NUMBER OF SHARES ACQUIRED ON EXERCISE | | VALUE REALIZED ON EXERCISE | | NUMBER OF SHARES ACQUIRED ON VESTING | | VALUE REALIZED ON VESTING | Charles (Chip) V. Bergh | | 1,958,239 | | $38,968,954 | | 933,374 | | $18,723,743 | Harmit Singh | | 612,182 | | 10,948,569 | | 203,468 | | 4,081,208 | Seth Ellison | | 126,380 | | 2,393,935 | | 138,852 | | 2,784,566 | David Love | | — | | — | | 136,702 | | 2,742,185 | Elizabeth O’Neill | | — | | — | | 89,012 | | 1,784,863 |
EMPLOYMENT AGREEMENTS MR. BERGH We have an employment agreement with Mr. Bergh effective September 1, 2011, as amended by each of the amendments effective May 8, 2012 and January 30, 2018. The agreement initially provided for an annual base salary of $1,200,000 and an AIP target participation rate of 135%, which have since been adjusted, and may be further adjusted, pursuant to annual review. For fiscal year 2020, his base salary and target participation rate under our AIP were $1,480,000 and 175% of base salary, respectively. Mr. Bergh also participates in our 2019 EIP. This element of Mr. Bergh’s compensation for fiscal year 2020 is reflected and discussed under “—Compensation Discussion and Analysis.” Mr. Bergh’s employment agreement also provides for certain severance and termination benefits that are described below under “—Potential Payments Upon Termination, Change In Control or Corporate Transaction.” Mr. Bergh is eligible to receive standard healthcare, life insurance and long-term savings program benefits, as well as relocation program benefits. He also receives benefits under our various executive perquisite programs consistent with that provided to his predecessor. Mr. Bergh’s employment is at-will and may be terminated by us or by him at any time. Mr. Bergh does not receive any separate compensation for his services as a member of our Board of Directors. OTHER NAMED EXECUTIVE OFFICERS For our named executive officers other than the CEO, we have employment arrangements that provide for annual base salary and participation in our AIP, which are subject to annual review and adjustment, and participation in our 2019 EIP. These elements of compensation for fiscal year 2020 are reflected and discussed under “Compensation Discussion and Analysis.” Executives also received standard healthcare, life insurance and long-term savings program benefits, as well as benefits under our various executive perquisite programs. Employment of executives is reflected and discussed under “—Compensation Discussion and Analysis.” Mr. Bergh’s employment agreement also provides for certain severance and termination benefits that are described below under “—Potential Payments Upon Termination, Change In Control or Corporate Transaction.”
Mr. Bergh is eligible to receive standard healthcare, life insurance and long-term savings program benefits, as well as relocation program benefits. He also receives benefits under our various executive perquisite programs consistent with that provided to his predecessor.
Mr. Bergh’s employment isat-will and may be terminated by us or by him at any time. Mr. Bergh does not receive any separate compensation for his services as a member of our board of directors.
Other Named Executive Officers
For our named executive officers other than the CEO, we have employment arrangements that provide for annual base salary and participation in our AIP, which are subject to annual review and adjustment, and participation in our 2016 EIP. These elements of compensation for fiscal year 2018 are reflected and discussed under “Compensation Discussion and Analysis.”
Executives also received standard healthcare, life insurance and long-term savings program benefits, as well as benefits under our various executive perquisite programs.
Employment of executives isat-will and may be terminated by us or the executive at any time.
Executive Retirement Plans
Non-Qualified Deferred Compensation
Our Deferred Compensation Plan is a U.S.Table of Contents
Executive Compensation EXECUTIVE RETIREMENT PLANS NON-QUALIFIED DEFERRED COMPENSATION Our Deferred Compensation Plan is a U.S. non-qualified, unfunded deferred tax effective savings plan provided to the named executive officers, among other executives and the directors, as part of competitive compensation. Participants may elect to defer all or a portion of their base salary and AIP payment and may elect an in-service and/or retirement distribution. Executive officers who defer salary or bonus under this plan are credited with market-based returns depending upon the investment choices made by the executive applicable to each deferral. The investment options under the plan, which closely mirror the options provided under our qualified 401(k) plan, include a number of mutual funds with varying risk and return profiles. Participants may change their investment choices as frequently as they desire, consistent with our 401(k) plan. In addition, under our Deferred Compensation Plan, we provide a match up to 6% of eligible deferred compensation that cannot be provided under the qualified 401(k) plan due to IRS qualified plan compensation limits. The amounts in the table below reflect non-qualified contributions over the 401(k) limit by the executive officers and the resulting company match. The table below provides information on the non-qualified deferred compensation activity for each of our named executive officers for fiscal year 2020. NAME | | EXECUTIVE CONTRIBUTIONS IN LAST FISCAL YEAR(1) | | COMPANY CONTRIBUTIONS IN LAST FISCAL YEAR(2) | | AGGREGATE EARNINGS/ (LOSSES) IN LAST FISCAL YEAR(3) | | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS | | AGGREGATE BALANCE AT NOVEMBER 29, 2020(4) | Charles (Chip) V. Bergh | | $ 2,865,441 | | $ 310,885 | | $ 1,723,226 | | $ — | | $13,493,401 | Harmit Singh | | 101,904 | | 127,379 | | 191,263 | | — | | 1,612,494 | Seth Ellison | | 158,948 | | 121,842 | | 50,187 | | — | | 1,901,306 | David Love | | 70,791 | | 81,783 | | 571,329 | | — | | 4,704,634 | Elizabeth O’Neill | | 67,422 | | 72,238 | | 81,709 | | — | | 619,296 |
(1) | The executive contribution amounts were included in fiscal year 2020 compensation in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the “Summary Compensation Table,” as applicable. | (2) | Amounts reflect our Deferred Compensation Plan match contributions made by us and are reflected in the “All Other Compensation” column of the “Summary Compensation Table.” | (3) | None of the earnings/interest in this column are included in the “Summary Compensation Table” because they were not preferential or above market. | (4) | The following amounts were previously reported as compensation to the named executive officers among other executives and the directors, as part of competitive compensation.Participants may elect to defer all or a portion of their base salary and AIP payment and may elect anin-service and/or retirement distribution. Executive officers who defer salary or bonus under this plan are credited with market-based returns depending upon the investment choices made by the executive applicable to each deferral. The investment options under the plan, which closely mirror the options provided under our qualified 401(k) plan, include a number of mutual funds with varying risk and return profiles. Participants may change their investment choices as frequently as they desire, consistent with our 401(k) plan.
In addition, under our Deferred Compensation Plan, we provide a match up to 6% of eligible deferred compensation that cannot be provided under the qualified 401(k) plan due to IRS qualified plan compensation limits. The amounts in the table below reflectnon-qualified contributions over the 401(k) limit by the executive officers and the resulting company match.
The table below provides information on thenon-qualified deferred compensation activity for each of our named executive officers for fiscal year 2018.
| | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in last fiscal year(1) | | | Company Contributions in last fiscal year(2) | | | Aggregate Earnings/(Losses) in last fiscal year(3) | | | Aggregate Withdrawals/ Distributions | | | Aggregate Balance at November 25, 2018(4)(5) | | Charles V. Bergh | | $ | 237,712 | | | $ | 297,140 | | | $ | 23,463 | | | $ | — | | | $ | 3,629,738 | | Harmit Singh | | | 91,359 | | | | 114,199 | | | | (20,945 | ) | | | — | | | | 815,081 | | Roy Bagattini | | | 96,637 | | | | 91,155 | | | | (4,351 | ) | | | — | | | | 345,413 | | Seth Ellison | | | 171,936 | | | | 115,910 | | | | 13,155 | | | | — | | | | 1,201,285 | | David Love | | | 643,655 | | | | 80,694 | | | | (94,301 | ) | | | — | | | | 3,285,973 | |
(1) | The executive contribution amounts were included in fiscal year 2018 compensation in the “Salary” and“Non-Equity Incentive Plan Compensation” columns of the “Summary Compensation Table,” as applicable.
|
(2) | Amounts reflect our Deferred Compensation Plan match contributions made by us and are reflected in the “All Other Compensation” column of the “Summary Compensation Table.”
|
(3) | None of the earnings/interest in this column are included in the “Summary Compensation Table” because they were not preferential or above market.
|
(4) | The following amounts were previously reported as compensation to the named executive officers in the Summary Compensation Table for fiscal years prior to 2018: Mr. Bergh ($2,391,563), Mr. Singh ($538,978), Mr. Bagattini ($550,260), Mr. Ellison ($510,075) and Mr. Love ($1,197,037).
|
(5) | Our contribution on behalf of Mr. Bagattini to the international supplemental retirement savings plan for mobile employees ceased in 2016, with our contributions having been disclosed in the “All Other Compensation” column of the “Summary Compensation Table” for the relevant periods. The amount represented is the remaining active U.S. based plan.
|
Pay-Ratio Information
The annual total compensation of Mr. Bergh, our President and CEO, was $12,195,083 in fiscal year 2018, as reflected in the Summary Compensation Table. Based on reasonable estimates, the median annual total compensation of all employees of the Company and its consolidated subsidiaries, excluding our President and CEO, was $13,919Table for fiscal year 2018. Accordingly, for fiscal year 2018, the ratio of the annual total compensation of our Presidentyears prior to 2020: Mr. Bergh ($3,461,268), Mr. Singh ($965,912), Mr. Ellison ($1,116,031) and CEO to the median of the annual total compensation of all of our and our consolidated subsidiaries’ other employees was 876 to 1. Our median employee was a Retail Sales Associate located in a Retail Sales Outlet in the United States, who was part-time in fiscal year 2018.
We identified our median employee based on all taxable wages earned in fiscal year 2018 by each individual who we employed on August 31, 2018. We also converted all relevant employee compensation, on acountry-by-country basis, to U.S. Dollars based on the applicableMr. Love ($2,794,725).
|
PAY-RATIO INFORMATION The annual total compensation of Mr. Bergh, our President and CEO, was $10,641,110 in fiscal year 2020, as reflected in the Summary Compensation Table. Based on reasonable estimates, the median annual total compensation of all employees of the company and its consolidated subsidiaries, excluding our President and CEO, was $16,088 for fiscal year 2020. Accordingly, for fiscal year 2020, the ratio of the annual total compensation of our President and CEO to the median of the annual total compensation of all of our employees and our consolidated subsidiaries’ other employees was 661 to 1. Our median employee was a Stylist located in a Premium Store in the United States, who was part-time in fiscal year 2020. We identified our median employee based on all taxable wages earned in fiscal year 2020 by each individual who we employed on August 31, 2020. We also converted all relevant employee compensation, on a country-by-country basis, to U.S. Dollars based on the applicable year-end exchange rate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the CEO pay ratio disclosed above may not be comparable to the pay ratio reported by other companies, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratio. Potential Payments Upon Termination, Change In Control or CorporateTransaction
Employment Agreement with Mr. Bergh
On June 9, 2011, we entered into an employment agreement with Mr. Bergh in connection with Mr. Bergh joining us. See “Employment Agreements—Mr. Bergh.” As of November 25, 2018, the employment agreement provided that Mr. Bergh is eligible to receive certain benefits and payments upon his separation from us under certain circumstances pursuant to the terms of our Severance Plan and our 2016
| | | | 50 | |
Table of Contents Executive Compensation POTENTIAL PAYMENTS UPON TERMINATION, CHANGE IN CONTROL OR CORPORATE TRANSACTION The following sections include a description of the severance arrangements that were applicable as of November 29, 2020, the last day of our 2020 fiscal year. EMPLOYMENT AGREEMENT WITH MR. BERGH On June 9, 2011, we entered into an employment agreement with Mr. Bergh in connection with Mr. Bergh joining us. See “Employment Agreements—Mr. Bergh.” As of November 29, 2020, the employment agreement provided that Mr. Bergh is eligible to receive certain benefits and payments upon his separation from us under certain circumstances pursuant to the terms of our WLT Severance Plan and our 2019 EIP; provided however that if Mr. Bergh’s employment ceases due to an involuntary termination without Cause or voluntary termination for Good Reason upon or within two years following a Change in Control (each, as defined in his employment agreement), 100% of Mr. Bergh’s then unvested equity awards will vest in full, and all vested SARs will remain exercisable for 18 months following the date of his termination but no later than the original term/expiration date of the award. In addition, in the event that Mr. Bergh retires, or Mr. Bergh’s employment ceases due to an involuntary termination without Cause or voluntary termination for Good Reason at any time other than within two years following a Change in Control, 100% of his outstanding equity and other long-term incentive awards that have remained outstanding for at least 12 months will vest in full, and all vested SARs will remain exercisable for 18 months following the date of his termination but no later than the original term/expiration date of the award. Mr. Bergh’s right to the foregoing benefits is subject to his execution of an effective release of claims in favor of us and compliance with certain restrictive covenants. SENIOR EXECUTIVE SEVERANCE PLAN Our Senior Executive Severance Plan (“New Severance Plan”) provided for (i) 104 weeks of severance pay to Mr. Bergh and 78 weeks of severance pay to each of the other named executive officers based on their then current base salary rates, (ii) a pro-rated bonus, subject to actual financial performance but assuming individual performance at 100% of target, (iii) company paid premiums under our standard basic life insurance program of $10,000 over the duration of the severance period, up to a maximum of 18 months, and (iv) reasonable outplacement counseling and job search benefits, if the applicable executive’s employment ceases due to an involuntary termination without Cause or voluntary termination for Good Reason (each, as defined in our New Severance Plan, and each, a Qualified Termination). In addition, with respect to any time-based equity awards that have been held by the executive for more than 12 months, such awards will continue to vest if the executive remained employed for the number of months equal to the executive’s severance period (other than with respect to Mr. Bergh’s equity awards, which are subject to the terms of his employment agreement). If the executive’s employment ceases due to a Qualified Termination within 18 months following a Change in Control (as defined in our New Severance Plan), the severance period increases to 156 weeks for Mr. Bergh and 104 weeks for the other named executive officers and any performance-based equity awards shall fully vest and time-based equity awards will fully vest if not assumed (in each case, other than with respect to Mr. Bergh’s equity awards, which are subject to the terms of his employment agreement). Our New Severance Plan also provided that if the executive elects COBRA coverage, for the duration of the executive’s severance period, up to a maximum of 18 months, the executive will only be required to pay the same share of the applicable premium for medical coverage that would apply if the executive were participating in the medical plan as an active employee. Additionally, for each executive who is eligible to be covered by our retiree health benefits (if any), we will fully pay for retiree medical coverage for the duration of the executive’s severance payment period, up to a maximum of 18 months, reduced for any months in which the executive receives subsidized COBRA coverage. Each executive’s severance benefits are subject to the execution of a general release of claims agreement and will cease upon rehire by us or acceptance of a job with one of our competitors. 2018, 2019 AND 2020 EQUITY AWARDS With respect to equity awards granted in fiscal years 2018, 2019 and 2020, in the event that the executive officer’s employment terminates due to Retirement (as defined in the award agreement), any equity awards that have remained outstanding for at least 12 months will continue to vest through the remainder of the vesting period. In addition, in the event that the executive officer dies or his or her employment terminates due to Disability (as defined in the award agreement), 100% of his or her outstanding time-based equity awards granted in fiscal years 2018, 2019 and 2020 will vest in full, and all vested SARs will remain exercisable for 18 months following the date of his or her termination, but no later than the original term/expiration date of the award. In addition, in the event that Mr. Bergh retires,
Table of Contents Executive Compensation The information in the tables below reflects the estimated value of the compensation to be paid by us to each of the named executive officers in the event of his or her termination, Retirement, Change in Control termination, death, Disability or Corporate Transaction. The amounts shown below assume that each named individual was employed and that his or her termination, retirement, Change in Control termination, death, Disability or Corporate Transaction was effective as of November 29, 2020. The actual amounts that would be paid can only be determined at the time of the actual event. The amounts also assume a share price of $19.16 for all equity-based awards, which was the closing stock price as of November 27, 2020. CHARLES (CHIP) V. BERGH EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | | VOLUNTARY TERMINATION OR FOR CAUSE TERMINATION | | RETIREMENT | | TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON | | DEATH OR DISABILITY | | CHANGE IN CONTROL TERMINATION | | CORPORATE TRANSACTION | Compensation: | | | | | | | | | | | | | Severance(1) | | $ — | | $ — | | $ 4,255,000 | | $ — | | $ 13,505,000 | | $ — | Equity vesting(2) | | — | | 22,246,467 | | 22,246,467 | | 12,639,203 | | 27,516,636 | | 27,516,636 | Benefits: | | | | | | | | | | | | | COBRA and life insurance(3) | | — | | — | | 22,030 | | — | | 22,030 | | — |
(1) | Based on Mr. Bergh’s employment ceases due to an involuntary termination without Cause or voluntary termination for Good Reason at any time other than within two years following a Change in Control, 100% of his outstanding equity and other long-term incentive awards that have remained outstanding for at least 12 months will vest in full, and all vested SARs will remain exercisable for 18 months following the date of his termination but no later than the original term/expiration date of the award.Mr. Bergh’s right to the foregoing benefits is subject to his execution of an effective release of claims in favor of us and compliance with certain restrictive covenants.
Severance Plan
Our Severance Plan provides for (i) 104 weeks of severance pay to Mr. Bergh and 78 weeks of severance pay to each of the other named executive officers based on their then currentannual base salary rates, (ii) apro-rated bonus, subject toof $1,480,000 and his actual financial performance but assuming individual performance at 100% of target, (iii) company paid premiums under our standard basic life insurance program of $10,000 over the duration of the severance period, up to a maximum of 18 months,AIP award earned for fiscal year 2019. See “—Compensation Discussion and (iv) reasonable outplacement counseling and job search benefits, if the applicable executive’s employment ceases due to an involuntary termination without Cause or voluntary termination for Good Reason (each, as defined in our Severance Plan, and each, a Qualified Termination). Analysis.”
| (2) | In addition, with respect to any time-based equity awards that have been held by the executive for more than 12 months, such awards will continue to vest if the executive remained employed for the number of months equal to the executive’s severance period (other than with respect to Mr. Bergh’s equity awards, which are subject to the terms of his employment agreement). If the executive’s employment ceases due to a Qualified Termination within 18 months following a Change in Control (as defined in our Severance Plan), the severance period increases to 156 weeks for Mr. Bergh and 104 weeks for the other named executive officers and any performance-based equity awards shall fully vest and time-based equity awards will fully vest if not assumed (in each case, other than with respect to Mr. Bergh’s equity awards, which are subject to the terms of his employment agreement). Our Severance Plan also provides that if the executive elects COBRA coverage, for the duration of the executive’s severance period, up to a maximum of 18 months, the executive will only be required to pay the same share of the applicable premium for medical coverage that would apply if the executive were participating in the medical plan as an active employee. Additionally, for each executive who is eligible to be covered by our retiree health benefits (if any), we will fully pay for retiree medical coverage for the duration of the executive’s severance payment period, up to a maximum of 18 months, reduced for any months in which the executive receives subsidized COBRA coverage. Each executive’s severance benefits are subject to the execution of a general release of claims agreement and will cease upon rehire by us or acceptance of a job with one of our competitors.2016 EIP
Under our 2016 EIP, in the event of a Corporate Transaction (as defined in our 2016 EIP) in which the surviving corporation does not assume or continue the outstanding awards or substitute similar awards for the outstanding awards, theRetirement, assumes full vesting schedule of all awards held by executives that are still employed will be accelerated in full to a date prior to the effective time of the transaction as determined by our board of directors. If the SARs are not exercised at or prior to the effective time of the transaction, all rights to exercise them will terminate. In addition, any reacquisition or repurchase rights held by us with respect to outstanding stock awards shall lapse upon the effectiveness of the Corporate Transaction.
2017 and 2018 Equity Awards
With respect tounvested equity awards granted in fiscal years 2017 and 2018, in the event that the executive officer’s employment terminates due to Retirement (as defined in the award agreement), anytarget number of shares underlying performance-based equity awards that have remained outstanding for at least 12 months will continue to vest through the remainder of the vesting period. In addition, in the event that the executive officer dies or his employment terminates due to Disability (as defined in the award agreement), 100% of his
outstanding time-based equity awards granted in fiscal years 2017 and 2018 will vest in full, and all vested SARs will remain exercisable for 18 months following the date of his termination, but no later than the original term/expiration date of the award.
The information in the tables below reflects the estimated value of the compensation to be paid by us to each of the named executive officers in the event of his termination, Retirement, Change in Control termination, death, Disability or Corporate Transaction. The amounts shown below assume that each named individual was employed and that his termination, retirement, Change in Control termination, death, Disability or Corporate Transaction was effective as of November 25, 2018. The actual amounts that would be paid can only be determined at the time of the actual event. The amounts also assume a share price of $14.60 for all equity-based awards, which was established by our board of directors based on factors including a valuation conducted by a third-party valuation firm dated as of November 30, 2018.
Charles V. Bergh
| | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payments Upon Termination | | Voluntary Termination or for Cause Termination | | | Retirement | | | Termination Without Cause or Resignation for Good Reason | | | Death or Disability | | | Change in Control Termination | | | Corporate Transaction | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Severance(1) | | $ | — | | | $ | — | | | $ | 6,526,380 | | | $ | — | | | $ | 14,849,380 | | | $ | — | | Equity vesting(2) | | | — | | | | 23,537,258 | | | | 23,537,258 | | | | 15,028,937 | | | | 34,423,802 | | | | 34,423,802 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 20,792 | | | | — | | | | 20,792 | | | | — | |
(1) | Based on Mr. Bergh’s annual base salary of $1,435,000 and his actual AIP award earned for fiscal year 2018. See “—Compensation Discussion and Analysis.”
|
(2) | In the event of Retirement, assumes full vesting of unvested equity awards and the target number of shares underlying performance-based equity awards that have remained outstanding for at least 12 months. In the event of a Change in Control Termination, assumes full vesting of all unvested equity awards and the target number of shares underlying performance-based equity awards. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
|
(3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment.
|
Harmit Singh
| | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payments Upon Termination | | Voluntary Termination or for Cause Termination | | | Retirement | | | Termination Without Cause or Resignation for Good Reason | | | Death or Disability | | | Change in Control Termination | | | Corporate Transaction | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Severance(1) | | $ | — | | | $ | — | | | $ | 2,474,000 | | | $ | — | | | $ | 4,474,000 | | | $ | — | | Equity vesting(2) | | | — | | | | — | | | | 2,198,233 | | | | 3,238,179 | | | | 7,440,807 | | | | 7,440,807 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 20,792 | | | | — | | | | 20,792 | | | | — | |
(1) | Based on Mr. Singh’s annual base salary of $800,000 and his actual AIP award earned for fiscal year 2018. See “—Compensation Discussion and Analysis.”
|
(2) | In the event of a Termination Without Cause or Resignation for Good Reason, reflects vesting of all unvested time-based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 25, 2018. In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $2,583,616. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
|
(3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment.
|
Roy Bagattini
| | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payments Upon Termination | | Voluntary Termination or for Cause Termination | | | Retirement | | | Termination Without Cause or Resignation for Good Reason | | | Death or Disability | | | Change in Control Termination | | | Corporate Transaction | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Severance(1) | | $ | — | | | $ | — | | | $ | 2,150,400 | | | $ | — | | | $ | 3,830,400 | | | $ | — | | Equity vesting(2) | | | — | | | | — | | | | 1,541,478 | | | | 2,296,987 | | | | 10,462,442 | | | | 10,462,442 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 27,939 | | | | — | | | | 27,939 | | | | — | |
(1) | Based on Mr. Bagattini’s annual base salary of $800,000 and his actual AIP award earned for fiscal year 2018. See “—Compensation Discussion and Analysis.”
|
(2) | In the event of a Termination Without Cause or Resignation for Good Reason, reflects full vesting of all unvested time-based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 25, 2018. In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $1,841,498. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
|
(3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment.
|
Seth Ellison
| | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payments Upon Termination | | Voluntary Termination or for Cause Termination | | | Retirement | | | Termination Without Cause or Resignation for Good Reason | | | Death or Disability | | | Change in Control Termination | | | Corporate Transaction | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Severance(1) | | $ | — | | | $ | — | | | $ | 2,264,064 | | | $ | — | | | $ | 3,876,864 | | | $ | — | | Equity vesting(2) | | | — | | | | 2,357,907 | | | | 1,562,020 | | | | 2,382,893 | | | | 5,135,244 | | | | 5,135,244 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 17,134 | | | | — | | | | 17,134 | | | | — | |
(1) | Based on Mr. Ellison’s annual base salary of $768,000 and his actual AIP award earned for fiscal year 2018. See “—Compensation Discussion and Analysis.”
|
(2) | In the event of a Termination Without Cause or Resignation for Good Reason, reflects full vesting of all unvested time-based equity awards held more than 12 months that would otherwise vest in the 78 week period following November 25, 2018. In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $1,917,564. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
|
(3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment.
|
David Love
| | | | | | | | | | | | | | | | | | | | | | | | | Executive Benefits and Payments Upon Termination | | Voluntary Termination or for Cause Termination | | | Retirement | | | Termination Without Cause or Resignation for Good Reason | | | Death or Disability | | | Change in Control Termination | | | Corporate Transaction | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Severance(1) | | $ | — | | | $ | — | | | $ | 1,831,680 | | | $ | — | | | $ | 3,343,680 | | | $ | — | | Equity vesting(2) | | | — | | | | 2,357,907 | | | | 1,476,114 | | | | 2,211,177 | | | | 4,717,437 | | | | 4,717,437 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 31,739 | | | | — | | | | 31,739 | | | | — | |
(1) | Based on Mr. Love’s annual base salary of $720,000 and his actual AIP award earned for fiscal year 2018. See “—Compensation Discussion and Analysis.”
|
(2) | In the event of Termination Without Cause or Resignation for Good Reason, reflects full vesting of all unvested time-based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 25, 2018. In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $1,765,432. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
|
(3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment.
|
2019 Equity Incentive Plan
In January 2019, our board of directors adopted our 2019 EIP, which was approved by our shareholders in February 2019. Our 2019 EIP became effective in connection with our initial public offering.
Stock Awards
The 2019 EIP provides for the grant of incentive stock options, nonstatutory stock options, SARs, restricted stock awards, RSU awards, performance-based stock awards, and other forms of equity compensation, which are collectively referred to as stock awards. Additionally, the 2019 EIP provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other awards may be granted to employees, including officers, and tonon-employee directors and consultants.
Share Reserve
The limit on the number of shares of Class A common stock that may be issued pursuant to awards under the 2019 EIP is 40,000,000 shares.
If a stock award granted under the 2019 EIP expires or otherwise terminates without being exercised in full, or is settled in cash, the shares of Class A common stock not acquired pursuant to the stock award will again become available for subsequent issuance under the 2019 EIP, subject to the 40,000,000 limit noted above. In addition, the following types of shares under the 2019 EIP may become available for the grant of new stock awards under the 2019 EIP: (1) shares that are forfeited to or repurchased by us prior to becoming fully vested; (2) shares withheld to satisfy income or employment withholding taxes; or (3) shares used to pay the exercise or purchase price of a stock award. Shares issued under the 2019 EIP may be previously unissued shares or reacquired shares bought by us on the open market.
The maximum number of shares of Class A common stock subject to stock awards granted under the 2019 EIP or otherwise during any one fiscal year to anynon-employee director, taken together with any cash fees paid by the company to suchnon-employee director during such fiscal year for service on our board of directors, will not exceed $1.5 million in total value (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). The inclusion of this amount is meant to provide a shareholder-approved cap on the annual compensation anon-employee director could receive. However, our board of directors is not contemplatingnon-employee director compensation at this level at this time, and the cap should not be viewed as suggesting as such.
Administration
Our board of directors, or a duly authorized committee thereof, acts as the “plan administrator” and has the authority to administer the 2019 EIP. Our board of directors may delegate to one or more of our officers the authority to (1) designate employees (other than other officers) to be recipients of certain stock awards, (2) determine the number of shares of Class A common stock to be subject to such stock awards and (3) specify the other terms and conditions, including the strike price or purchase price and vesting schedule, applicable to such awards.
Types of Stock Awards That May be Awarded Under the 2019 Equity Incentive Plan
Stock Options
Incentive and nonstatutory stock options are evidenced by stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for a stock option, within the terms and conditions of the 2019 EIP, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of the Class A common stock on the date of grant. Options granted under the 2019 EIP vest at the rate specified by the plan administrator.
The plan administrator determines the term of stock options granted under the 2019 EIP, up to a maximum of ten years. Unless the terms of an option holder’s stock option agreement provide otherwise, if an option holder’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the option holder may generally exercise any vested
options for a period of three months following the cessation of service. If an option holder’s service relationship with us or any of our affiliates ceases due to disability or death, or an option holder dies within a certain period following cessation of service, the option holder or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a Change in Control Termination, assumes full vesting of all unvested equity awards and the target number of shares underlying performance-based equity awards. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
| (3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment. |
HARMIT SINGH EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | | VOLUNTARY TERMINATION OR FOR CAUSE TERMINATION | | RETIREMENT | | TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON | | DEATH OR DISABILITY | | CHANGE IN CONTROL TERMINATION | | CORPORATE TRANSACTION | Compensation: | | | | | | | | | | | | | Severance(1) | | $ — | | $ — | | $ 1,780,000 | | $ — | | $ 4,005,000 | | $ — | Equity vesting(2) | | — | | — | | 4,840,801 | | 2,789,187 | | 6,118,122 | | 6,118,122 | Benefits: | | | | | | | | | | | | | COBRA and life insurance(3) | | — | | — | | 22,030 | | — | | 22,030 | | — |
(1) | Based on Mr. Singh’s annual base salary of $890,000 and his actual AIP award earned for cause, options generally terminate immediately. An option holder’s stock option agreement may provide different provisions fromfiscal year 2020. See “—Compensation Discussion and Analysis.” | (2) | In the default provisions set forthevent of a Termination Without Cause or Resignation for Good Reason, reflects vesting of all unvested time- based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 29, 2020. In the event of a Change in Control Termination, assumes the equity awards are not assumed in the 2019 EIP.transaction and thus fully vest (with performance-based equity awards vesting at target). In nothe event may an option be exercised beyond the expiration of its term. Unless the plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order. An option holder may designate a beneficiary, however, who may exercise the option following the option holder’s death.Restricted Stock Awards
Restricted stockequity awards are evidenced by restricted stock award agreements adopted byassumed and the plan administrator. Class A common stock acquired underholder experiences a restricted stock award may, but need not, be subject to a share repurchase optionChange in our favor in accordance with a vesting schedule as determined byControl Termination, the plan administrator. Rights to acquire shares under a restricted stock award may be transferred only upon such terms and conditions as set by the plan administrator. Except as otherwise provided in the applicable award agreement, RSU awards that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason.
Restricted Stock Unit Awards
RSU awards are evidenced by RSU award agreements adopted by the plan administrator. An RSU award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the RSU award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a RSU award. Rights under an RSU award may be transferred only upon such terms and conditions as set by the plan administrator. RSU awards may be subject to vesting as determined by the plan administrator. Except as otherwise provided in the applicable award agreement, RSUs that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason.
Stock Appreciation Rights
SARs are evidenced by stock appreciation grant agreements adopted by the plan administrator. The plan administrator determines the strike price for a SAR, which generally cannot be less than 100% of the fair market value of the Class A common stock onvesting would be $3,328,935. In the dateevent of grant. UponDeath or Disability, assumes full vesting of all unvested time-based equity awards. In the exerciseevent of a SAR, we will payCorporate Transaction, assumes no termination of employment and no assumption of outstanding equity awards.
| (3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the participant an amountsame company/employee percentage sharing as during employment. |
| | | | 52 | |
Table of Contents Executive Compensation SETH ELLISON EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | | VOLUNTARY TERMINATION OR FOR CAUSE TERMINATION | | RETIREMENT | | TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON | | DEATH OR DISABILITY | | CHANGE IN CONTROL TERMINATION | | CORPORATE TRANSACTION | Compensation: | | | | | | | | | | | | | Severance(1) | | $— | | $ — | | $1,596,000 | | $ — | | $ 3,360,000 | | $ — | Equity vesting(2) | | — | | 3,881,096 | | 3,881,096 | | 2,201,301 | | 4,945,511 | | 4,945,511 | Benefits: | | | | | | | | | | | | | COBRA and life insurance(3) | | — | | — | | 55,280 | | — | | 55,280 | | — |
(1) | Based on Mr. Ellison’s annual base salary of $840,000 and his actual AIP award earned for fiscal year 2020. See “—Compensation Discussion and Analysis.” | (2) | In the event of a Termination Without Cause or Resignation for Good Reason, reflects full vesting of all unvested time-based equity awards held more than 12 months that would otherwise vest in cash or stock equal to (1) the excess78 week period following November 29, 2020. In the event of a Change in Control Termination, assumes the per share fair marketequity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the Class A common stock onvesting would be $2,744,210. In the dateevent of exercise overDeath or Disability, assumes full vesting of all unvested time-based equity awards. In the strike price, multiplied by (2) the numberevent of shares of Class A common stock with respect to which the SAR is exercised. A SAR granted under the 2019 EIP vests at the rate specified in the SAR agreement. The default post-a Corporate Transaction, assumes no termination of employment exercise periods areand no assumption of outstanding equity awards. | (3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment. |
DAVID LOVE EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | | VOLUNTARY TERMINATION OR FOR CAUSE TERMINATION | | RETIREMENT | | TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON | | DEATH OR DISABILITY | | CHANGE IN CONTROL TERMINATION | | CORPORATE TRANSACTION | Compensation: | | | | | | | | | | | | | Severance(1) | | $— | | $ — | | $ 1,444,000 | | $ — | | $3,040,000 | | $ — | Equity vesting(2) | | — | | 3,327,197 | | 3,375,446 | | 1,904,835 | | 4,178,706 | | 4,178,706 | Benefits: | | | | | | | | | | | | | COBRA and life insurance(3) | | — | | — | | 68,543 | | — | | 68,543 | | — |
(1) | Based on Mr. Love’s annual base salary of $760,000 and his actual AIP award earned for options, as described above. Unlessfiscal year 2020. See “—Compensation Discussion and Analysis.” Effective February 1, 2021, Mr. Love terminated his employment with the plan administrator provides otherwise, SARs generallycompany. In connection with his termination of employment, Mr. Love entered into a Separation Agreement containing terms that are not transferable except by will,materially consistent with the laws of descent and distribution, or pursuantcompensation that the company provided to its named executive officers upon a domestic relations order. A SAR holder may designate a beneficiary, however, who may exercise the SAR following the holder’s death.Performance Awards
The 2019 EIP permits the grant of performance-based stock and cash awards. The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates, or business segments, and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The performance goals may differ from participant to participant and from award to award.
Other Stock Awards
The plan administrator may grant other awards based in whole or in part by reference to our Class A common stock. The plan administrator will set the number of sharestermination under the stock award and all other terms and conditions of such awards.
Changes to Capital Structure
New Severance Plan. | (2) | In the event that there is a specified type of change in our capital structure, such as a stock splitTermination Without Cause or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reservedResignation for issuance under the 2019 EIP, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and number of shares that may be issued upon the exercise of incentive stock options and (4) the class and number of shares and exercise price, strike price, or purchase price, if applicable,Good Reason, reflects full vesting of all unvested time- based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 29, 2020 In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $2,273,870. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate Transaction, assumes no termination of employment and no assumption of outstanding stockequity awards. | (3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment. |
Table of Contents EXECUTIVE COMPENSATION ELIZABETH O’NEILL EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | | VOLUNTARY TERMINATION OR FOR CAUSE TERMINATION | | | RETIREMENT | | | TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON | | | DEATH OR DISABILITY | | | CHANGE IN CONTROL TERMINATION | | | CORPORATE TRANSACTION | | Compensation: | | | | | | | | | | | | | | | | | | | Severance(1) | | | $ — | | | | $ — | | | | $1,377,500 | | | | $ — | | | | $2,755,000 | | | | $ — | | Equity vesting(2) | | | — | | | | — | | | | 2,542,959 | | | | 1,437,139 | | | | 3,252,549 | | | | 3,252,549 | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | COBRA and life insurance(3) | | | — | | | | — | | | | 18,515 | | | | — | | | | 18,515 | | | | — | |
(1) | Based on Ms. O’Neill’s annual base salary of $725,000 and her actual AIP award earned for fiscal year 2020. See “—Compensation Discussion and Analysis.” | (2) | In the event of Termination Without Cause or Resignation for Good Reason, reflects full vesting of all unvested time- based equity awards held more than 12 months that would otherwise vest during the 78 week period following November 29, 2020 In the event of a Change in Control Termination, assumes the equity awards are not assumed in the transaction and thus fully vest (with performance-based equity awards vesting at target). In the event the equity awards are assumed and the holder experiences a Change in Control Termination, the value of the vesting would be $1,815,410. In the event of Death or Disability, assumes full vesting of all unvested time-based equity awards. In the event of a Corporate TransactionsTransaction, assumes no termination of employment and no assumption of outstanding equity awards. | (3) | Reflects 18 months of a COBRA subsidy and life insurance premiums at the same company/employee percentage sharing as during employment. |
2019 EQUITY INCENTIVE PLAN In January 2019, our Board of Directors adopted our 2019 EIP, which was approved by our shareholders in February 2019. Our 2019 EIP became effective in connection with our initial public offering in March 2019. STOCK AWARDS The 2019 EIP provides for the grant of incentive stock options, nonstatutory stock options, SARs, restricted stock awards, RSU awards, performance-based stock awards, and other forms of equity compensation, which are collectively referred to as stock awards. Additionally, the 2019 EIP provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants. SHARE RESERVE The limit on the number of shares of Class A common stock that may be issued pursuant to awards under the 2019 EIP is 40,000,000 shares. If a stock award granted under the 2019 EIP expires or otherwise terminates without being exercised in full, or is settled in cash, the shares of Class A common stock not acquired pursuant to the stock award will again become available for subsequent issuance under the 2019 EIP, subject to the 40,000,000 limit noted above. In addition, the following types of shares under the 2019 EIP may become available for the grant of new stock awards under the 2019 EIP: (1) shares that are forfeited to or repurchased by us prior to becoming fully vested; (2) shares withheld to satisfy income or employment withholding taxes; or (3) shares used to pay the exercise or purchase price of a stock award. Shares issued under the 2019 EIP may be previously unissued shares or reacquired shares bought by us on the open market. The maximum number of shares of Class A common stock subject to stock awards granted under the 2019 EIP or otherwise during any one fiscal year to any non-employee director, taken together with any cash fees paid by the company to such non-employee director during such fiscal year for service on our Board of Directors, will not exceed $1.5 million in total value (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). The inclusion of this amount is meant to provide a shareholder-approved cap on the annual compensation a non-employee director could receive. However, our Board of Directors is not contemplating non-employee director compensation at this level at this time, and the cap should not be viewed as suggesting as such. 54 Table of Contents EXECUTIVE COMPENSATION ADMINISTRATION Our Board of Directors, or a duly authorized committee thereof, acts as the “plan administrator” and has the authority to administer the 2019 EIP. Our Board of Directors may delegate to one or more of our officers the authority to (1) designate employees (other than other officers) to be recipients of certain stock awards, (2) determine the number of shares of Class A common stock to be subject to such stock awards and (3) specify the other terms and conditions, including the strike price or purchase price and vesting schedule, applicable to such awards. TYPES OF STOCK AWARDS THAT MAY BE AWARDED UNDER THE 2019 EQUITY INCENTIVE PLAN STOCK OPTIONS Incentive and nonstatutory stock options are evidenced by stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for a stock option, within the terms and conditions of the 2019 EIP, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of the Class A common stock on the date of grant. Options granted under the 2019 EIP vest at the rate specified by the plan administrator. The plan administrator determines the term of stock options granted under the 2019 EIP, up to a maximum of ten years. Unless the terms of an option holder’s stock option agreement provide otherwise, if an option holder’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the option holder may generally exercise any vested options for a period of three months following the cessation of service. If an option holder’s service relationship with us or any of our affiliates ceases due to disability or death, or an option holder dies within a certain period following cessation of service, the option holder or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate immediately. An option holder’s stock option agreement may provide different provisions from the default provisions set forth in the 2019 EIP. In no event may an option be exercised beyond the expiration of its term. Unless the plan administrator provides otherwise, options generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order. An option holder may designate a beneficiary, however, who may exercise the option following the option holder’s death. RESTRICTED STOCK AWARDS Restricted stock awards are evidenced by restricted stock award agreements adopted by the plan administrator. Class A common stock acquired under a restricted stock award may, but need not, be subject to a share repurchase option in our favor in accordance with a vesting schedule as determined by the plan administrator. Rights to acquire shares under a restricted stock award may be transferred only upon such terms and conditions as set by the plan administrator. Except as otherwise provided in the applicable award agreement, RSU awards that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason. RESTRICTED STOCK UNIT AWARDS RSU awards are evidenced by RSU award agreements adopted by the plan administrator. An RSU award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the RSU award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a RSU award. Rights under an RSU award may be transferred only upon such terms and conditions as set by the plan administrator. RSU awards may be subject to vesting as determined by the plan administrator. Except as otherwise provided in the applicable award agreement, RSUs that have not vested will be forfeited upon the participant’s cessation of continuous service for any reason. STOCK APPRECIATION RIGHTS SARs are evidenced by stock appreciation grant agreements adopted by the plan administrator. The plan administrator determines the strike price for a SAR, which generally cannot be less than 100% of the fair market value of the Class A common stock on the date of grant. Upon the exercise of a SAR, we will pay the participant an amount in cash or stock equal to (1) the excess of the per share fair market value of the Class A common stock on the date of exercise over the strike price, multiplied by (2) the number of shares of Class A common stock with respect to which the SAR is exercised. A SAR granted under the 2019 EIP vests at the rate specified in the SAR agreement. The default post- termination of employment exercise periods are the same as for options, as described above. Unless the plan administrator provides otherwise, SARs generally are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order. A SAR holder may designate a beneficiary, however, who may exercise the SAR following the holder’s death. 2021 PROXY STATEMENT 55 Table of Contents EXECUTIVE COMPENSATION PERFORMANCE AWARDS The 2019 EIP permits the grant of performance-based stock and cash awards. The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates, or business segments, and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The performance goals may differ from participant to participant and from award to award. OTHER STOCK AWARDS The plan administrator may grant other awards based in whole or in part by reference to our Class A common stock. The plan administrator will set the number of shares under the stock award and all other terms and conditions of such awards. CHANGES TO CAPITAL STRUCTURE In the event that there is a specified type of change in our capital structure, such as a stock split or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the 2019 EIP, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and number of shares that may be issued upon the exercise of incentive stock options and (4) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards. CORPORATE TRANSACTIONS In the event of certain specified significant corporate transactions (as defined in the 2019 EIP), the plan administrator shall take one or more of the following actions with respect to stock awards unless otherwise provided in an award agreement or any other written agreement between a participant and us: • | arrange for the surviving or acquiring entity or parent company to assume or continue the stock award or to substitute a similar stock award for the stock award; | • | arrange for the assignment of any reacquisition or repurchase rights held by us to the surviving or acquiring entity or parent company; | • | accelerate the vesting of the stock award and provide for its termination if not exercised (if applicable) at or prior to the effective time of the corporate transaction; | • | arrange for the lapse of any reacquisition or repurchase right held by us; | • | cancel or arrange for the cancellation of the stock award in exchange for such cash consideration, if any, as our boardBoard of directorsDirectors may deem appropriate or for no consideration; or | • | make a payment equal to the excess of (1) the value of the property the participant would have received upon exercise of the stock award over (2) the exercise price or strike price otherwise payable in connection with the stock award.The plan administrator is not obligated to treat all stock awards, even those that are of the same type, in the same manner.
Change in Control
|
The plan administrator is not obligated to treat all stock awards, even those that are of the same type, in the same manner. CHANGE IN CONTROL The plan administrator may provide, in an individual award agreement or in any other written agreement between a participant and us at the time of grant that the stock award will be subject to additional acceleration of vesting and exercisability or settlement in the event of a change in control (as defined in the 2019 EIP). AMENDMENT AND TERMINATION Our Board of Directors has the authority to amend, suspend, or terminate the 2019 EIP, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent and provided further that certain types of amendments will require the approval of our shareholders. No incentive stock options may be granted after the tenth anniversary of the date our Board of Directors adopts the 2019 EIP. EMPLOYEE STOCK PURCHASE PLAN In December 2018, our Board of Directors adopted our 2019 Employee Stock Purchase Plan (“ESPP”), which was approved by our shareholders in February 2019. Our ESPP became effective in connection with our initial public offering in March 2019. 56 Table of Contents EXECUTIVE COMPENSATION SHARE RESERVE Initially, the maximum number of shares of Class A common stock that may be issued under the ESPP is 12,000,000 shares. The ESPP includes an “evergreen” provision. Under the evergreen provision, the number of shares of Class A common stock reserved for issuance under the ESPP will automatically increase on January 1 of each year, beginning on January 1, 2020 and continuing through and including January 1, 2029, by the lesser of (1) 1% of the total number of shares of our Class A common stock outstanding on December 31 of the preceding calendar year, (2) 2,400,000 shares of Class A common stock, or (3) such lesser number of shares of Class A common stock as determined by our Board of Directors. Shares subject to purchase rights granted under the ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the ESPP. We have selected this figure based on an assumed burn rate of 1-3% over the next few years. However, our actual burn rate may differ from this estimate based on a number of factors, including number of participants, participant contribution elections, and the price of our stock at the time of purchase, and as such this estimate should not be viewed as predictive. The Board of Directors did not approve this automatic increase for the fiscal year ended November 29, 2020. ADMINISTRATION Our Board of Directors, or a duly authorized committee thereof, can administer the ESPP. Our Board of Directors has delegated its authority to administer the ESPP, including determination of participants and terms of offerings, to our Compensation Committee under the terms of such committee’s charter. LIMITATIONS Employees, including executive officers, and the employees of any of our designated affiliates are eligible to participate in the ESPP, provided they may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by the administrator: (1) customary employment with us or one of our affiliates for more than 20 hours per week and five or more months per calendar year or (2) continuous employment with us or one of our affiliates for a minimum period of time, not to exceed two years, prior to the first date of an offering. An employee may not be granted rights to purchase stock under the ESPP (a) if such employee immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our common stock or (b) to the extent that such rights would accrue at a rate that exceeds $25,000 worth of our stock for each calendar year that the rights remain outstanding. The ESPP is intended to qualify as an employee stock purchase plan under the Code. The administrator may specify offerings with a duration of not more than 27 months, and may specify one or more shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our Class A common stock will be purchased for the employees who are participating in the offering. The administrator, in its discretion, will determine the terms of offerings under the ESPP prior to the first day of any offering period. A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP. PAYROLL DEDUCTIONS The ESPP permits participants to purchase shares of Class A common stock through payroll deductions up to 15% of their earnings (up to 10% under the ESPP offerings currently in place). Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of the Class A common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares. Participation ends automatically upon termination of employment with us. CORPORATE TRANSACTIONS In the event of certain specified significant corporate transactions, such as a merger or change in control, a successor corporation may assume, continue or substitute each outstanding purchase right. If the successor corporation does not assume, continue or substitute for the outstanding purchase rights, the offering in progress will be shortened and a new exercise date will be set. The participants’ purchase rights will be exercised on the new exercise date and such purchase rights will terminate immediately thereafter. 2021 PROXY STATEMENT 57 Table of Contents EXECUTIVE COMPENSATION AMENDMENT AND TERMINATION Our Board of Directors has the authority to amend, suspend or terminate the ESPP, at any time and for any reason, provided certain types of amendments will require the approval of our shareholders. The ESPP will remain in effect until terminated by our Board of Directors in accordance with the terms of the ESPP. EQUITY COMPENSATION PLAN INFORMATION The following table provides certain information, as of November 29, 2020, with respect to our equity compensation plans. PLAN CATEGORY | | CLASS OF COMMON STOCK | | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(2) | | WEIGHTED- AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(3) | | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN 2)(4) | Equity compensation plans approved by security holders(1): | | Class A | | 2,876,014 | | $19.29 | | 46,423,683 | | | Class B | | 14,664,621 | | $ 7.39 | | — | Equity compensation plans not approved by security holders: | | — | | — | | — | | — | Total | | Class A and Class B | | 17,540,635 | | $ 8.07 | | 46,423,683 |
(1) | Includes our 2016 Equity Incentive Plan (“2016 EIP”), 2019 EIP).AmendmentEquity Incentive Plan (“2019 EIP”) and Termination
Our board of directors has the authority to amend, suspend, or terminate the 2019 EIP, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent and provided further that certain types of amendments will require the approval of our shareholders. No incentive stock options may be granted after the tenth anniversary of the date our board of directors adopts the 2019 EIP.
Employee Stock Purchase Plan
In December 2018, our board of directors adopted our 2019 Employee Stock Purchase Plan (“2019 ESPP”), which was approved by. No additional awards may be granted under our shareholders in February 2019. Our ESPP became effective2016 EIP.
| (2) | The number of shares includes SARs, RSUs and PRSUs based on target performance and includes shares of common stock to be issued in connection with our initial public offering.Share Reserve
Initially,certain deferred stock-settled director RSUs. The number of shares for SARs represents the maximum number of shares of Class Acommon stock the SARs would convert into if exercised on November 29, 2020 based on the market value of our common stock on that date, calculated based on the conversion formula as defined in the EIP.
| (3) | Only includes SARs, as RSUs and PRSUs do not have exercise prices associated with them. | (4) | Calculated based on the number of stock awards authorized upon the adoption of the 2019 EIP, less (a) the number of outstanding dilutive SARs (b) shares issued in connection with converted RSUs and (c) securities expected to be issued in the future upon conversion of outstanding RSUs. The 2019 EIP provides for an award pool of 40 million shares of common stock that may be issued undersubject to awards thereunder. The 46,423,683 figure in the ESPP is 12,000,000 shares.The ESPP includes an “evergreen” provision. Undertable reflects the evergreen provision, thepotential number of shares which could be issued pursuant to future awards under the 2019 EIP of Class A common stock reserved35,088,941 and pursuant to future issuances under the 2019 ESPP of 11,334,742. Note that the following shares may return to the 2019 EIP and be available for issuance under the ESPP will automatically increase on January 1 of each year, beginning on January 1, 2020 and continuing through and including January 1, 2029,in connection with a future award: (i) shares covered by the lesser of (1) 1% of the total number of shares of our Class A common stock outstanding on December 31 of the preceding calendar year, (2) 2,400,000 shares of Class A common stock,an award that expires or (3) such lesser number of shares of Class A common stock as determined by our board of directors. Shares subject to purchase rights granted under the ESPP that terminateotherwise terminates without having been exercised in full will not reduce the number offull; (ii) shares available for issuance under the ESPP. We have selected this figure based on an assumed burn rate of1-3% over the next few years. However, our actual burn rate may differ from this estimate based on a number of factors, including number of participants, participant contribution elections,that are forfeited or awards which are canceled and the price of our stock at the time of purchase, and as such this estimate should not be viewed as predictive.
Administration
Our board of directors, or a duly authorized committee thereof, can administer the ESPP. Our board of directors has delegated its authority to administer the ESPP, including determination of participants and terms of offerings, to our compensation committee under the terms of such committee’s charter.
Limitations
Employees, including executive officers, and the employees of any of our designated affiliates are eligible to participate in the ESPP, provided they may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by the administrator: (1) customary employment with us or one of our affiliates for more than 20 hours per week and five or more months per calendar year or (2) continuous employment with us or one of our affiliates for a minimum period of time, not to exceed two years, prior to the first date of an offering. An employee may not be granted rights to purchase stock under the ESPP (a) if such employee immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all classes of our common stock or (b) to the extent that such rights would accrue at a rate that exceeds $25,000 worth of our stock for each calendar year that the rights remain outstanding.
The ESPP is intended to qualify as an employee stock purchase plan under the Code. The administrator may specify offerings with a duration of not more than 27 months, and may specify one or more shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our Class A common stock will be purchased for the employees who are participating in the offering. The administrator, in its discretion, will determine the terms of offerings under the ESPP prior to the first day of any offering period.
A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP
Payroll Deductions
The ESPP permits participants to purchase shares of Class A common stock through payroll deductions up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of the Class A common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares. Participation ends automatically upon termination of employment with us.
Corporate Transactions
In the event of certain specified significant corporate transactions, such as a merger or change in control, a successor corporation may assume, continue or substitute each outstanding purchase right. If the successor corporation does not assume, continue or substitute for the outstanding purchase rights, the offering in progress will be shortened and a new exercise date will be set. The participants’ purchase rights will be exercised on the new exercise date and such purchase rights will terminate immediately thereafter.
Amendment and Termination
Our board of directors has the authority to amend, suspend or terminate the ESPP, at any time and for any reason, provided certain types of amendments will require the approval of our shareholders. The ESPP will remain in effect until terminated by our board of directorsregranted in accordance with the terms of the ESPP.
Equity Compensation Plan Information
The following table provides certain information, as2019 EIP; (iii) shares covered by an award that may only be settled in cash per the terms of November 25, 2018, with respectthe award which do not count against the 2019 EIP’s award pool; (iv) shares withheld to cover payment of an exercise price or cover applicable tax withholding obligations; (v) shares tendered to cover payment of an exercise price; and (vi) shares that are canceled pursuant to an exchange or repricing program.
|
58 Table of Contents AUDIT MATTERS SELECTION AND ENGAGEMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PRINCIPAL ACCOUNTANT FEES The following table represents aggregate fees billed to or incurred by us for professional services rendered by PwC, our independent registered public accounting firm, during fiscal years 2020 and 2019. All fees described below were pre-approved by the Audit Committee. | YEAR ENDED | | NOVEMBER 29, 2020 ($) | | NOVEMBER 24, 2019 ($) | Services provided: | (IN THOUSANDS) | Audit fees(1) | 7,728 | | 7,453 | Audit-related fees | — | | — | Tax fees(2) | 335 | | 564 | All other fees(3) | 5 | | 5 | Total fees | 8,067 | | 8,022 |
(1) | Audit fees include fees for the audit of our annual consolidated financial statements, quarterly reviews of interim consolidated financial statements and statutory audits. In 2020, audit fees include audit of internal control over financial reporting. Further, these include fees for services in support of issuing non-audit letters over financial information. | (2) | Tax fees are for services to assist in the preparation of our foreign tax returns and for the provision of tax advice. Tax fees included tax compliance fees of $131,000 and $475,000 in fiscal years 2020 and 2019, respectively. | (3) | All other fees consist of fees for other permissible services other than the services reported above, including fees for access to electronic accounting and audit reference materials. |
2021 PROXY STATEMENT 59 Table of Contents AUDIT MATTERS PRE-APPROVAL POLICIES AND PROCEDURES The Audit Committee is responsible for approving every engagement of our independent registered public accounting firm to provide audit or non-audit services for us before being engaged to provide those services. The Audit Committee’s pre-approval policy provides as follows: • | Once a year when the base audit engagement is reviewed and approved, management will identify all other services (including fee ranges) for which management knows or believes it will engage our independent registered public accounting firm for the next 12 months. Those services typically include quarterly reviews, statutory audits, specified tax matters, certifications to the 2016 EIP, our only equity compensation planslenders as required by financing documents and consultation on new accounting and disclosure standards. | • | If any new proposed engagement comes up during the year that was not pre-approved by the Audit Committee as discussed above, the engagement will require (i) specific approval of the chief financial officer and corporate controller (including confirming with counsel permissibility under applicable laws and evaluating potential impact on independence) and, if approved by management, (ii) approval of the Audit Committee. | • | The chair of the Audit Committee will have the authority to give such approval, but may seek full Audit Committee input and approval in effectspecific cases as of such date. | | | | | | | | | Plan Category | | Class of Common Stock | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | (c) Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | Equity compensation plans approved by security holders: | | Class A | | — | | — | | — | | | Class B | | 16,167,820(1) | | $10.78(2) | | 38,251,240(3) | Equity compensation plans not approved by security holders: | | — | | — | | — | | — | Total | | Class A and Class B | | 16,167,820 | | $10.78 | | 38,251,240 |
he or she may determine. |
(1) | Represents the number of shares of Class B common stock the SARs and stock-settled director RSUs would convert into if exercised on November 25, 2018, calculated based on the conversion formula as defined in the 2016 EIP and the fair market value of our common stock on that date as determined by an independent third party.
The Audit Committee has determined that the rendering of services other than audit services by PwC is compatible with maintaining the principal accountant’s independence. REPORT OF THE AUDIT COMMITTEE The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended November 29, 2020 with our management. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended November 29, 2020. Troy Alstead Spencer C. Fleischer Yael Garten Christopher J. McCormick Elliott Rodgers Jenny Ming The material in this report of the Audit Committee is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 60 (2) | Includes only SARs and stock-settled director RSUs.
(3) | Calculated based on the number of stock awards authorized upon the adoption of the 2016 EIP, less (a) the number of outstanding dilutive SARs (b) shares issued in connection with converted RSUs and (c) securities expected to be issued in the future upon conversion of outstanding RSUs. The 2016 EIP provides for an award pool of 80 million shares of common stock that may be subject to awards thereunder. The 38,251,240 figure in the table reflects the potential number of shares which could be issued pursuant to future awards. Note that the following shares may return to the 2016 EIP and be available for issuance in connection with a future award: (i) shares covered by an award that expires or otherwise terminates without having been exercised in full; (ii) shares that are forfeited or awards which are canceled and regranted in accordance with the terms of the 2016 EIP; (iii) shares covered by an award that may only be settled in cash per the terms of the award which do not count against the 2016 EIP’s award pool; (iv) shares withheld to cover payment of an exercise price or cover applicable tax withholding obligations; (v) shares tendered to cover payment of an exercise price; and (vi) shares that are canceled pursuant to an exchange or repricing program.
|
SECURITY OWNERSHIP OF CERTAIN
Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of our Class A common stock and Class B common stock as of February 26, 2021 by: (i) each of our directors and each nominee for director; (ii) each of our named executive officers; (iii) all of our directors and executive officers as a group; and (iv) each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our Class A common Stock and Class B common stock. The mailing address for each shareholder in the table below is c/o Levi Strauss & Co., 1155 Battery Street, San Francisco, CA 94111. NAME OF BENEFICIAL OWNER | | CLASS A SHARES | | % | | CLASS B SHARES | | % | | % OF TOTAL VOTING POWER+ | DIRECTORS: | | | | | | | | | | | Troy Alstead(1) | | 51,691 | | * | | 14,231 | | * | | * | Jill Beraud(2) | | 7,260 | | * | | 108,671 | | * | | * | Robert A. Eckert(3) | | 7,260 | | * | | 173,628 | | * | | * | Spencer Fleischer(4) | | 7,260 | | * | | 89,537 | | * | | * | David A. Friedman(5) | | 417,258 | | * | | 2,753,470 | | * | | * | Yael Garten | | — | | — | | — | | — | | — | Christopher J. McCormick(6) | | 7,264 | | * | | 50,950 | | * | | * | Jenny Ming(7) | | 7,264 | | * | | 91,204 | | * | | * | Stephen C. Neal(8) | | 11,883 | | * | | 397,522 | | * | | * | Patricia Salas Pineda(9) | | 107,464 | | * | | 30,941 | | * | | * | Joshua E. Prime(10) | | — | | — | | 5,952,316 | | 1.9 | | 1.8 | Elliott Rodgers | | — | | — | | — | | — | | — | NAMED EXECUTIVE OFFICERS: | | | | | | | | | | | Charles V. Bergh(11) | | 2,623,868 | | 3.2 | | 7,372,057 | | 2.3 | | 2.3 | David Love(12) | | 1,418 | | * | | 694,781 | | * | | * | Harmit Singh(13) | | 2,128 | | * | | 1,489,623 | | * | | * | Seth M. Ellison(14) | | 1,773 | | * | | 259,231 | | * | | * | Elizabeth O’Neill(15) | | 1,182 | | * | | 107,726 | | * | | * | Directors and executive officers as a group (19 persons)(16) | | 3,269,805 | | 4.0 | | 19,815,833 | | 6.2 | | 6.1 | 5% OR GREATER SHAREHOLDERS: | | | | | | | | | | | Mimi L. Haas | | — | | — | | 43,859,262 | | 13.7 | | 13.4 | Margaret E. Haas(17) | | — | | — | | 43,495,810 | | 13.6 | | 13.3 | Robert D. Haas(18) | | — | | — | | 37,285,471 | | 11.7 | | 11.4 | Peter E. Haas Jr.(19) | | — | | — | | 36,690,755 | | 11.5 | | 11.2 | Peter E. Haas Jr. Family Fund(20) | | — | | — | | 26,367,700 | | 8.3 | | 8.1 | Daniel S. Haas(21) | | — | | — | | 24,248,068 | | 7.6 | | 7.4 | Jennifer C. Haas(22) | | — | | — | | 21,250,908 | | 6.7 | | 6.5 |
* | Represents beneficial ownership of less than 1%. | + | Represents the voting power with respect to all shares of our Class A common stock and Class B common stock, as of May 17, 2019 by: (i) each of our directors (including our future director, Mr. Prime) and each nominee for director; (ii) each of our named executive officers; (iii) all of our directors (including our future director, Mr. Prime) and executive officersvoting together as a group; and (iv) each person, or group of affiliated persons, who is known by us to beneficially own more than 5%single class. Each share of our Class A common Stockstock is entitled to one vote per share, and each share of our Class B common stock is entitled to ten votes per share. Our Class A common stock and Class B common stock will vote together on all matters (including the election of directors) submitted to a vote of our shareholders, except under limited circumstances described in our certificate of incorporation. | (1) | Includes 8,771 shares of Class A or Class B common stock. The mailing address for each shareholder instock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the table below is c/o Levi Strauss & Co., 1155 Battery Street, San Francisco, CA 94111. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Class A | | Class B | | % of Total Voting Power† | Name of Beneficial Owner | | Shares | | % | | Shares | | % | Directors: | | | | | | | | | | | | | | | | | | | | | | | | | | Troy Alstead | | | | — | | | | | — | | | | | 77,410 | | | | | * | | | | | * | | Jill Beraud | | | | — | | | | | — | | | | | 77,410 | | | | | * | | | | | * | | Robert A. Eckert | | | | — | | | | | — | | | | | 89,220 | | | | | * | | | | | * | | Spencer Fleischer | | | | — | | | | | — | | | | | 19,600 | | | | | * | | | | | * | | David A. Friedman(1) | | | | — | | | | | — | | | | | 3,692,080 | | | | | 1.1 | | | | | 1.0 | | Peter E. Haas Jr.(2) | | | | — | | | | | — | | | | | 42,000,280 | | | | | 12.0 | | | | | 11.8 | | Christopher J. McCormick | | | | — | | | | | — | | | | | 19,600 | | | | | * | | | | | * | | Jenny Ming | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | Stephen C. Neal | | | | — | | | | | — | | | | | 267,870 | | | | | * | | | | | * | | Patricia Salas Pineda | | | | — | | | | | — | | | | | 158,890 | | | | | * | | | | | * | | Joshua E. Prime(3) | | | | — | | | | | — | | | | | 1,271,750 | | | | | * | | | | | * | | Named Executive Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | Charles V. Bergh(4) | | | | — | | | | | — | | | | | 9,323,399 | | | | | 2.7 | | | | | 2.6 | | David Love(5) | | | | — | | | | | — | | | | | 1,374,184 | | | | | * | | | | | * | | Harmit Singh(6) | | | | — | | | | | — | | | | | 1,943,773 | | | | | * | | | | | * | | Seth M. Ellison(7) | | | | — | | | | | — | | | | | 404,963 | | | | | * | | | | | * | | Roy Bagattini(8) | | | | — | | | | | — | | | | | 841,082 | | | | | * | | | | | * | | Directors and executive officers as a group (19 persons)(9) | | | | — | | | | | — | | | | | 61,652,009 | | | | | 17.6 | | | | | 17.4 | | 5% or Greater Shareholders: | | | | | | | | | | | | | | | | | | | | | | | | | | Mimi L. Haas | | | | — | | | | | — | | | | | 56,908,690 | | | | | 16.2 | | | | | 16.1 | | Margaret E. Haas(10) | | | | — | | | | | — | | | | | 43,495,810 | | | | | 12.4 | | | | | 12.3 | | Robert D. Haas(11) | | | | — | | | | | — | | | | | 39,312,360 | | | | | 11.2 | | | | | 11.1 | | Peter E. Haas Jr. Family Fund(12) | | | | — | | | | | — | | | | | 26,367,700 | | | | | 7.5 | | | | | 7.4 | | Daniel S. Haas(13) | | | | — | | | | | — | | | | | 23,086,830 | | | | | 6.6 | | | | | 6.5 | | Jennifer C. Haas(14) | | | | — | | | | | — | | | | | 20,264,470 | | | | | 5.8 | | | | | 5.7 | |
* | Represents beneficial ownership of less than 1%.
|
† | Represents the voting power with respect to all shares of our Class A common stock and Class B common stock, voting together as a single class. Each share of our Class A common stock is entitled to one vote per share, and
|
| each share of our Class B common stock is entitled to ten votes per share. Our Class A common stock and Class B common stock will vote together on all matters (including the election of directors) submitted to a vote of our shareholders, except under limited circumstances described in our certificate of incorporation.
|
(1) | Includes an aggregate of 1,464,540 shares held in trusts, of which Mr. Friedman isco-trustee, for the benefits of others and for which Mr. Friedman shares voting and investment power. Mr. Friedman disclaims beneficial ownership of these 1,464,540 shares.
|
(2) | Includes 26,367,700 shares held by the Peter E. Haas Jr. Family Fund, of which Mr. Haas is Vice President, for the benefit of charitable entities, and for which Mr. Haas shares voting and investment power. Includes an aggregate of 4,636,810 shares held by trusts, of which Mr. Haas is trustee, for the benefit of others and for which Mr. Haas has sole voting and investment power. Includes 400,000 shares held by Mr. Haas’ spouse for which Mr. Haas has no voting or investment power. Mr. Haas disclaims beneficial ownership of these 5,036,810 shares.
|
(3) | Includes 1,049,250 shares held by Mr. Prime’s spouse for which Mr. Prime has no voting or investment power. Includes an aggregate of 173,160 shares held in custodial accounts, of which Mr. Prime’s spouse is custodian, for the benefit of others and for which Mr. Prime has no voting or investment power. Mr. Prime disclaims beneficial ownership of these 1,222,410 shares. Also includes 10,000 shares held in a trust, of which Mr. Prime and Mr. Prime’s spouse areco-trustees and share voting and investment power.
|
(4) | Includes the number of shares that Mr. Bergh has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(5) | Includes the number of shares that Mr. Love has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(6) | Includes the number of shares that Mr. Singh has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(7) | Includes the number of shares that Mr. Ellison has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(8) | Includes the number of shares that Mr. Bagattini has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(9) | Includes 12,797,249 shares that our executive officers have the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of May 17, 2019.
|
(10) | Includes an aggregate of 19,784,900 shares held in trusts and a limited liability company, of which Ms. Haas is trustee and manager, respectively, for the benefit of others and for which Ms. Haas has sole voting and investment power. Includes 7,861,220 shares held by the Margaret E. Haas Fund and 844,680 shares held by the Lynx Foundation, of which Ms. Haas is board chair, for the benefit of charitable entities and for which Ms. Haas shares voting and investment power. Ms. Haas disclaims beneficial ownership of these 28,490,800 shares.
|
(11) | Includes 15,127,030 shares held by a trust, of which Mr. Haas is trustee, for the benefit of others and for which Mr. Haas has sole voting and investment power. Includes 8,550,820 shares held by Mr. Haas’ spouse for which Mr. Haas has no voting or investment power. Includes an aggregate of 1,685,630 shares held in trusts, of which Mr. Haas’ spouse is trustee, for the benefit of others and for which Mr. Haas has no voting or investment power. Mr. Haas disclaims beneficial ownership of these 25,363,480 shares. Also includes 247,760 shares held in a trust, of which Mr. Haas and his spouse areco-trustees, for which Mr. Haas and his spouse share voting and investment power.
|
(12) | Peter E. Haas Jr. is a Vice President of this fund. The shares are also included in Mr. Haas’ ownership amounts as referenced above. Mr. Haas disclaims beneficial ownership of these shares.
|
(13) | Includes 4,590,350 shares held in a trust for the benefit of others and for which Mr. Haas has sole voting and investment power. Mr. Haas disclaims beneficial ownership of these 4,590,350 shares.
|
(14) | Includes 5,506,590 shares held in a custodial account and a limited liability company, of which Ms. Haas is custodian and manager, respectively, for the benefit of others and for which Ms. Haas has sole voting and investment power. Ms. Haas disclaims beneficial ownership of these 5,506,590 shares.
|
OTHER INFORMATION
Householdingsettlement of Proxy Materials
The SECwhich has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy materialswith respect to two or more shareholders sharing the same address by delivering a single set of proxy materialsaddressed to those shareholders.This process, which is commonly referred to as householding, potentially means extra convenience forshareholders and cost savings for companies.
This year, a number of brokers with account holders who are shareholders will be householding our proxy materials. A single set of proxy materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate set of proxy materials, please notify us or your broker. Direct your written request to Levi Strauss & Co., Attn: Investor Relations, 1155 Battery Street, San Francisco, CA 94111, or call (800)438-0349. Shareholders who currently receive multiple copies of proxy materials at their address and would like to request householding of their communications should contact their brokers.
Other Matters
Our board of directors knows of no other matter that will be presented for considerationdeferred at the Annual Meeting. If any other matter is properly brought beforeelection of the Annual Meeting, your proxyholder will vote your shares usingdirector until his or her best judgment.
By Order ofretirement from the Board of Directors,
Nita T. Dudley
Corporate Secretary
San Francisco, California
June 5, 2019
| | | | | | | | | | | | | | | | | Your vote matters – here’s how to vote!
You may vote online or by phone instead of mailing this card.
| | | |
| | Votes submitted electronically must be received by 11:00 p.m., Pacific Time, on July 9, 2019.
| | | |
| | Online
Go towww.investorvote.com/LEVI or scan the QR code – login details are located in the shaded bar below.
| | | |
| | Phone
Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada
| | | |
| | Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/LEVI
| Using ablack ink pen, mark your votes with anX as shown in this example.
Please do not write outside the designated areas.
| | ☒ | | |
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
| | | | | | | A | | Proposals | | | The Board of Directors recommends a voteFOR all of the listed nominees. | | +
| 1. The election as Class III directors of the four nominees named in the Proxy Statement. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Withhold | | | | | | For | | Withhold | | | | | | | | | | | | | | | 01 - Troy Alstead | | ☐ | | ☐ | | | | 03 - Robert A. Eckert | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02 - Charles (“Chip”) V. Bergh | | ☐ | | ☐ | | | | 04 - Patricia Salas Pineda | | ☐ | | ☐ | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends a voteFOR Proposal 2. | | The Board of Directors recommends a voteFOR Proposal 4. | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | For | | Against | | Abstain | | | | | 2. | | Advisory vote to approve executive compensation. | | ☐ | | ☐ | | ☐ | | 4. | | Ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal year 2019. | | | | ☐ | | ☐ | | ☐ | | | | |
| | | | | | | | | | | | | | | | | The Board of Directors recommends a vote in favor of1 YEAR for Proposal 3. | | | | | | | | | | | | | | | | | | | | 1 Year | | 2 Years | | 3 Years | | Abstain | | | | | | | 3. | | Advisory vote on the preferred frequency of future shareholder advisory votes on executive compensation. | | ☐
| | ☐ | | ☐ | | ☐ | | | | | | or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. |
2021 PROXY STATEMENT61 | | | B | | Authorized Signatures – This section must be completed for your vote to be counted. – Date and Sign Below |
Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (2) | Includes 8,780 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (3) | Includes 26,634 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (4) | Includes 8,780 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (5) | Includes an aggregate of 835,930 shares held in trusts, of which Mr. Friedman is co-trustee, for the benefit of others and for which Mr. Friedman shares voting and investment power. Includes 160,000 shares held by the Friedman Family Foundation for the benefit of charitable entities. Mr. Friedman disclaims beneficial ownership of these 995,930 shares. Also includes 4,841 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (6) | Includes 19,136 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (7) | Includes 69,375 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (8) | Includes 52,356 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (9) | Includes 38,205 shares of Class A or Class B common stock issuable pursuant to restricted stock units and/or dividend equivalent rights that vested within 60 days of February 26, 2021, the settlement of which has been deferred at the election of the director until his or her retirement from the Board of Directors, or would vest within 60 days of February 26, 2021 if the director resigns or if the director’s service is terminated without cause. | (10) | Includes 1,049,250 shares held by Mr. Prime’s spouse for which Mr. Prime has no voting or investment power. Includes an aggregate of 173,160 shares held in custodial accounts, of which Mr. Prime’s spouse is custodian, for the benefit of others and for which Mr. Prime has no voting or investment power. Includes 4,680,566 shares held in trusts for which Mr. Prime is trustee, for the benefit of others. Mr. Prime disclaims beneficial ownership of these 5,902,976 shares. Also includes 10,000 shares held in a trust, of which Mr. Prime and Mr. Prime’s spouse are co-trustees and share voting and investment power. | (11) | Includes the number of shares that Mr. Bergh has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (12) | Includes the number of shares that Mr. Love has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (13) | Includes the number of shares that Mr. Singh has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (14) | Includes the number of shares that Mr. Ellison has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (15) | Includes the number of shares that Ms. O’Neill has the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (16) | Includes 9,207,942 shares that our executive officers have the right to acquire pursuant to outstanding SARs that may be exercised within 60 days of February 26, 2021. | (17) | Includes an aggregate of 19,784,900 shares held in trusts and a limited liability company, of which Ms. Haas is trustee and manager, respectively, for the benefit of others and for which Ms. Haas has sole voting and investment power. Includes 7,861,220 shares held by the Margaret E. Haas Fund and 844,680 shares held by the Lynx Foundation, of which Ms. Haas is board chair, for the benefit charitable entities and for which Ms. Haas shares voting and investment power. Ms. Haas disclaims beneficial ownership of these 28,490,800 shares. | (18) | Includes 23,179,324 shares held by trusts, of which Mr. Haas is trustee, for the benefit of others and for which Mr. Haas has sole voting and investment power. Includes 4,099,541 shares held by Mr. Haas’ spouse for which Mr. Haas has no voting or investment power. Includes an aggregate of 6,108,189 shares held in trusts, of which Mr. Haas’ spouse is trustee, for the benefit of others and for which Mr. Haas has no voting or investment power. Mr. Haas disclaims beneficial ownership of these 33,387,054 shares. | (19) | Includes 26,367,700 shares held by the Peter E. Haas Jr. Family Fund, of which Mr. Haas Jr. is Vice President, for the benefit of charitable entities, and for which Mr. Haas Jr. shares voting and investment power. Includes an aggregate of 4,636,810 shares held by trusts, of which Mr. Haas Jr. is trustee, for the benefit of others and for which Mr. Haas Jr. has sole voting and investment power. Includes 400,000 shares held by Mr. Haas Jr.’s spouse for which Mr. Haas Jr. has no voting or investment power. Mr. Haas Jr. disclaims beneficial ownership of these 31,404,510 shares. | (20) | Peter E. Haas Jr. is a Vice President of this fund. The shares are also included in Mr. Haas Jr.’s ownership amounts as referenced above. Mr. Haas Jr. disclaims beneficial ownership of these shares. | (21) | Includes 3,199,630 shares held in a trust for the benefit of others and for which Mr. Haas has sole voting and investment power. Mr. Haas disclaims beneficial ownership of these 3,199,630 shares. | (22) | Includes 5,506,590 shares held in a custodial account and a limited liability company, of which Ms. Haas is custodian and manager, respectively, for the benefit of others and for which Ms. Haas has sole voting and investment power. Ms. Haas disclaims beneficial ownership of these 5,506,590 shares. |
62 | Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and greater than 10% shareholders to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors, and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, all Section 16(a) filing requirements applicable to its officers, directors, and greater than 10% shareholders were complied with, except for one inadvertent late report relating to one transaction for Mr. Gavin Brockett. 2021 PROXY STATEMENT63 Table of Contents QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING WHY DID I RECEIVE A ONE-PAGE NOTICE IN THE MAIL REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A FULL SET OF PROXY MATERIALS? Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. This method of distribution makes our process more efficient and less costly, and limits our impact on the environment. Accordingly, we are sending an Important Notice Regarding the Availability of Proxy Materials (the “Proxy Availability Notice”) to our shareholders of record. All shareholders will have the ability to access the proxy materials on the website referred to in the Proxy Availability Notice free of charge or request to receive a printed set of the proxy materials for the 2021 Annual Meeting of Shareholders (the “annual meeting”). Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Proxy Availability Notice. We intend to mail the Proxy Availability Notice on or about March 9, 2021 to all shareholders of record entitled to vote at the annual meeting. We expect that this proxy statement and the other proxy materials will be available to shareholders on or about March 9, 2021. WILL I RECEIVE ANY OTHER PROXY MATERIALS BY MAIL? We may send you a proxy card, along with a second Proxy Availability Notice, on or after March 12, 2021. WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY AVAILABILITY NOTICE? If you receive more than one Proxy Availability Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Proxy Availability Notices to ensure that all of your shares are voted. WHAT ARE WE HAVING A VIRTUAL ONLY MEETING? This year in light of the continued public health impact of the COVID-19 pandemic, we will again hold the annual meeting in a virtual-only format, which will be conducted over the internet via live webcast. In addition, we anticipate that we will continue to hold our annual meetings using a virtual-only format in future years, even after the pandemic, as we have found that a virtual format is more environmentally friendly, allows greater shareholder participation and decreases the costs of holding the meeting. We intend to hold our virtual annual meetings in a matter that affords you the same general rights and opportunities to participate as you would have at an in-person meeting. WHO CAN VOTE AT THE ANNUAL MEETING? Only shareholders of record at the close of business on February 26, 2021 (the “Record Date”) will be entitled to vote at the annual meeting. On the Record Date, there were 80,774,783 shares of Class A common stock and 319,050,011 shares of Class B common stock outstanding and entitled to vote. HOW DO I ATTEND THE ANNUAL MEETING? The annual meeting will be held live via the internet on Wednesday, April 21, 2021 at 10:30 a.m., Pacific Time, at www.virtualshareholdermeeting.com/LEVI2021. You will not be able to attend the meeting in person. Participation in and attendance at the annual meeting is limited to shareholders of record as of the Record Date. Online access will begin at 10:15 a.m., Pacific Time, on April 21, 2021, and we encourage you to access the annual meeting prior to the start time. A list of shareholders of record will be available for inspection by shareholders of record during the normal business hours for ten days prior to the annual meeting for any legally valid purpose at our corporate headquarters at 1155 Battery Street, San Francisco, CA 94111. The shareholder list will also be available during the annual meeting prior to the start time. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/LEVI2021, you must enter the 16-digit control number found next to the label “Control Number” for the postal mail recipients or within the body of the email sending you the proxy statement. If your shares are held in the name of a bank, broker or other holder of record, you should follow the instructions provided by your bank, broker or other holder of record to be able to participate in the annual meeting. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/LEVI2021. | | | | 64 | |
Table of Contents QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING HOW CAN I ACCESS THE WEBCAST OF THE ANNUAL MEETING? We plan to offer a live webcast of the annual meeting at www.virtualshareholdermeeting.com/LEVI2021. To access the webcast, go to this website and follow the instructions provided. The webcast will be recorded and available for replay at this website through May 21, 2021. WHAT AM I VOTING ON? There are three matters scheduled for a vote at the annual meeting: • | Proposal 1: Election of the following four nominees recommended by our Board of Directors as Class II directors: David A. Friedman, Yael Garten, Jenny Ming and Joshua E. Prime. | • | Proposal 2: Advisory vote on executive compensation. | • | Proposal 3: Ratification of the selection of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending November 28, 2021. |
WHAT IF ANOTHER MATTER IS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING? Our Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the annual meeting, your proxyholder will vote your shares using his or her best judgment. WILL I BE ABLE TO ASK QUESTIONS AT THE ANNUAL MEETING? You will be able to submit written questions during the annual meeting by following the instructions that will be available on the annual meeting website during the annual meeting. Only questions pertinent to meeting matters of the Company will be answered during the meeting, subject to time constraints. Questions that are substantially similar may be grouped together to avoid repetition. WHAT ARE MY VOTING OPTIONS? | | | | | | | • | Proposal 1: You may vote FOR the election of all nominees recommended by our Board of Directors as Class II directors or you may WITHHOLD your vote for any nominee you specify. | • | Proposal 2: You may vote FOR or AGAINST the advisory vote on executive compensation. | • | Proposal 3: You may vote FOR or AGAINST the ratification of the selection of PwC as our independent registered public accounting firm for the fiscal year ending November 28, 2021. | Date (mm/dd/yyyy) – Please print date below. | | | | Signature 1 –Please keep signature within the box. | | | | Signature 2 –Please keep signature within the box. |
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE? The table below sets forth the unanimous recommendation of our Board of Directors for each of the three matters scheduled for a vote at the annual meeting. | PROPOSAL | UNANIMOUS RECOMMENDATION OF OUR BOARD OF DIRECTORS | / / | | | | | | 1. | | Election of Class II Directors | FOR all of the nominees | | 2. | | Advisory Vote on Executive Compensation | FOR | | 3. | | Ratification of Selection of Independent Registered Public Accounting Firm | FOR | | | | | |
HOW MANY VOTES DO I HAVE? On each matter scheduled for a vote at the annual meeting, you have one vote for each share of Class A common stock you own and ten votes for each share of Class B common stock you own, in each case as of the Record Date. Table of Contents QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING HOW DO I VOTE? • | Shareholder of Record: Shares Registered in Your Name. If on the Record Date your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a shareholder of record. As a shareholder of record, you may vote at the annual meeting or vote by proxy over the telephone, through the internet or by using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the annual meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the annual meeting and vote through the internet even if you have already voted by proxy, as your proxy is revocable at your option. |
| | | | | OVER THE TELEPHONE | | THROUGH THE INTERNET | | USING A PROXY CARD | | | | | | | | | | | • Call 1-800-690-6903 and follow the recorded instructions (you will need the voter control number from your proxy card) • Your vote must be received by 8:59 p.m., Pacific Time, on April 20, 2021 | | Before the Meeting • Visit www.proxyvote.com to vote online (you will need the voter control number from your proxy card or the Proxy Availability Notice) • Your vote must be received by 8:59 p.m., Pacific Time, on April 20, 2021 During the Meeting • Visit www.virtualshareholdermeeting.com/LEVI2021 to vote online (you will need the voter control number from your proxy card or at the Proxy Availability Notice) | | • Complete, sign, date and return the proxy card that may be delivered • Your proxy card must be mailed by April 7, 2021 | | | | | |
• | Beneficial Owner: Shares Registered in the Name of Broker or Bank. If on the Record Date your shares were held in an account at a brokerage firm, bank or other similar agent rather than in your name, then you are the beneficial owner of shares held in street name and a voting instruction form, together with the Proxy Availability Notice, are being forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent regarding how to vote the shares in your account. Simply complete and mail the voting instruction form to ensure that your vote is counted. Alternatively, you may vote over the telephone or through the internet as instructed by your broker, bank or other agent. You are also invited to attend the annual meeting. For admission to the annual meeting, follow the instructions from your broker, bank or other agent included with the Proxy Availability Notice. To vote at the annual meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with the Proxy Availability Notice, or contact that organization to request a proxy form. |
032LED
Internet proxy voting allows you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your voting instructions. Note that you must bear any costs associated with your internet access, such as usage charges. |
CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?
q• IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. | q- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NoticeShareholder of 2019 Annual MeetingRecord: Shares Registered in Your Name. Yes. You may revoke your proxy at any time before the final vote at the annual meeting. You may revoke your proxy in any one of Shareholders
Levi’s Plaza,the following ways. Your most current proxy is the one that is counted.
|
| • | You may grant a subsequent proxy over the telephone or through the internet. | | • | You may submit another properly completed proxy card with a later date. | | • | You may send a timely written notice that you are revoking your proxy to our Corporate Secretary at 1155 Battery Street, San Francisco, CA 9411194111. | | • | You may attend the annual meeting and vote through the internet. Simply attending the annual meeting will not, by itself, revoke your proxy. |
• | Beneficial Owner: Shares Registered in the Name of Broker or Bank. To revoke your proxy, follow the instructions provided by your broker, bank or other agent. |
| | | | 66 | |
Table of Contents QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING WHAT HAPPENS IF I DO NOT VOTE, OR IF I VOTE BY PROXY WITHOUT GIVING SPECIFIC VOTING INSTRUCTIONS? If you are a shareholder of record and do not vote by proxy at the annual meeting, your shares will not be voted. If you voted by proxy without marking voting selections, your shares will be voted: Proxy Solicited
• | Proposal 1: FOR the election of all of the nominees recommended by our Board of Directors as Class II directors. | • | Proposal 2: FOR the advisory vote on executive compensation. | • | Proposal 3: FOR the ratification of the selection of PwC as our independent registered public accounting firm for Annual Meetingthe fiscal year ending November 28, 2021. |
If any other matter is properly brought before the annual meeting, your proxyholder will vote your shares using his or her best judgment. WHAT HAPPENS IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME AND I DO NOT PROVIDE MY BROKER OR BANK WITH VOTING INSTRUCTIONS? If you are a beneficial owner of shares held in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent may still be able to vote your shares in its discretion. Under the rules of the New York Stock Exchange (the “NYSE”), brokers, banks and other securities intermediaries that are subject to NYSE rules may use their discretion to vote uninstructed shares with respect to matters considered to be routine under NYSE rules, but not with respect to non-routine matters. Because Proposals 1 and 2 are considered to be non-routine under NYSE rules, your broker, bank or other agent may not vote your shares on those proposals in the absence of your voting instructions. Because Proposal 3 is considered to be routine under NYSE rules, your broker, bank or other agent may vote your shares on this proposal in its discretion, even if you do not provide voting instructions. If you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the proxy materials you receive from your broker, bank or other agent. WHAT ARE BROKER NON-VOTES? As discussed above, if you are a beneficial owner of shares held in street name and you do not instruct your broker, bank or other agent how to vote your shares on matters deemed to be non-routine under NYSE rules, your broker, bank or other such agent cannot vote your shares. These un-voted shares are counted as broker non-votes. Because Proposals 1 and 2 are considered to be non-routine under NYSE rules, we expect broker non-votes to exist in connection with those proposals. If you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the proxy materials you receive from your broker, bank or other agent. HOW MANY VOTES ARE NEEDED TO APPROVE EACH PROPOSAL? The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes. PROPOSAL NUMBER | | PROPOSAL DESCRIPTION | | VOTE REQUIRED FOR APPROVAL | | EFFECT OF ABSTENTIONS(1) | | EFFECT OF BROKER NON-VOTES(2) | 1 | | Election of Shareholders – July 10, 2019Seth R. Jaffe and Nita T. Dudley, or eachClass II directors
| | The four nominees receiving the most FOR votes will be elected (WITHHOLD votes will have no effect) | | N/A | | No effect | 2 | | Advisory vote on executive compensation | | FOR votes from the holders of them, each witha majority of the voting power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present at the Annual Meetingmeeting or represented by proxy and entitled to vote | | No effect | | No effect | 3 | | Ratification of Shareholdersselection of Levi Strauss & Co.independent registered public accounting firm | | FOR votes from the holders of a majority of the voting power of the shares present at the meeting or represented by proxy and entitled to vote | | No effect | | N/A |
(1) | Abstentions will not be counted toward the vote total for Proposals 2 and 3. Abstentions will therefore have no effect on these proposals. | (2) | Broker non-votes will not be counted toward the vote total for Proposals 1 and 2. Broker non-votes will therefore have no effect on these proposals. Because Proposal 3 is considered to be heldroutine under NYSE rules, if you hold your shares in street name, your broker, bank or other agent may vote your shares on July 10, 2019 or at any postponement or adjournment thereof.Proxies must be mailed by July 1, 2019. Phone or onlinethis proposal in its discretion, even if you do not provide voting must be completed by 11:00 p.m., Pacific Time, on July 9, 2019. See reverse for instructions.
Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR Proposals 1, 2, and 4 and in favor of one year for Proposal 3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
|
Table of Contents QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING | | | C | | Non-Voting ItemsWHAT IS THE QUORUM REQUIREMENT? A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if shareholders holding a majority of the voting power of the outstanding shares entitled to vote are present at the annual meeting or represented by proxy. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other agent) or if you vote at the annual meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the chair of the annual meeting or the holders of a majority of the voting power of the shares present at the annual meeting in person or represented by proxy may adjourn the annual Meeting to another date. HOW CAN I FIND OUT THE RESULTS OF THE VOTING AT THE ANNUAL MEETING? Preliminary voting results will be announced at the annual meeting. We expect to publish final voting results on a Form 8-K within four business days of the annual meeting. If final voting results are not available to us in time to do so, we intend to publish preliminary voting results on a Form 8-K within four business days of the annual meeting and to publish final voting results on an additional Form 8-K within four business days of the final voting results becoming known to us. WHO IS PAYING FOR THIS PROXY SOLICITATION? This proxy is being solicited by the Company. Our directors and employees may solicit proxies in person, by telephone or by other means of communication. We will pay for the entire cost of soliciting proxies. Our directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokers, banks and other agents for the cost of forwarding these proxy materials to beneficial owners. WHAT PROXY MATERIALS ARE AVAILABLE THROUGH THE INTERNET? The notice of annual meeting, proxy statement and our annual report to shareholders are available free of charge at www.proxyvote. com. I SHARE AN ADDRESS WITH ANOTHER SHAREHOLDER, AND WE RECEIVED ONLY ONE PROXY AVAILABILITY NOTICE. HOW DO I OBTAIN ANOTHER PROXY AVAILABILITY NOTICE? We have adopted a procedure approved by the SEC called householding, under which we can deliver a single Proxy Availability Notice to multiple shareholders who share the same address unless we receive contrary instructions from one or more of the shareholders. This procedure reduces our printing and mailing costs, and our impact on the environment. See “Other Information—Householding of Proxy Materials.” WHEN ARE SHAREHOLDER PROPOSALS FOR INCLUSION IN OUR PROXY MATERIALS FOR NEXT YEAR’S ANNUAL MEETING OF SHAREHOLDERS DUE? The 2022 annual meeting of shareholders is scheduled to be held on April 20, 2022. Shareholders wishing to present a proposal for inclusion in our proxy materials for such meeting pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must submit their proposals so that they are received by us at our principal executive offices no later than November 9, 2021 and must otherwise comply with the requirements of Rule 14a-8 in order to be considered for inclusion in our proxy materials for the 2022 annual meeting of shareholders. Nominations or proposals should be sent in writing to our Corporate Secretary at 1155 Battery Street, San Francisco, CA 94111. WHEN ARE OTHER PROPOSALS AND DIRECTOR NOMINATIONS FOR NEXT YEAR’S ANNUAL MEETING OF SHAREHOLDERS DUE? The 2022 annual meeting of shareholders is scheduled to be held on April 20, 2022. Shareholders wishing to nominate a candidate for election to our Board of Directors or propose other business at an annual meeting other than pursuant to Rule 14a-8 of the Exchange Act must submit a written notice so that it is received by us at our principal executive offices no earlier than the close of business on December 22, 2021 nor later than the close of business on January 21, 2022 provided, however, that if next year’s annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after April 20, 2022, your proposal must be submitted not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of such meeting is first made. Nominations or proposals should be sent in writing to our Corporate Secretary at 1155 Battery Street, San Francisco, CA 94111. You are advised to review our amended and restated bylaws, which contain additional requirements about advance notice of director nominations and shareholder proposals. A complete copy of our amended and restated bylaws is available under the “Governance” tab of our website at investors.levistrauss.com. | | | | 68 | |
| | | | | | | | | Change of Address– Please print new address below.
| | | | | | Meeting Attendance | | | | | Mark box to the right if you plan to attend the Annual Meeting.
Table of Contents OTHER INFORMATION HOUSEHOLDING OF PROXY MATERIALS The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for the Proxy Availability Notice or other proxy materials with respect to two or more shareholders sharing the same address by delivering a single Proxy Availability Notice or set of proxy materials addressed to those shareholders. This process, which is commonly referred to as householding, potentially means extra convenience for shareholders and cost savings for companies. This year, a number of brokers with account holders who are shareholders will be householding our proxy materials. A single Proxy Availability Notice will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Proxy Availability Notice, please notify us or your broker. Direct your written request to Levi Strauss & Co., Attn: Investor Relations, 1155 Battery Street, San Francisco, CA 94111, or call (800) 438-0349. Shareholders who currently receive multiple copies of Proxy Availability Notices at their address and would like to request householding of their communications should contact their brokers. OTHER MATTERS 2020 ANNUAL REPORT AND SEC FILINGS Our financial statements for the year ended November 29, 2020 are included in our 2020 Annual Report, which we will make available to shareholders at the same time as this proxy statement. Our 2020 Annual Report and this proxy statement are posted on our website at investors.levistrauss.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Investor Relations, 1155 Battery Street, San Francisco, CA 94111. Our Board of Directors knows of no other matter that will be presented for consideration at the annual meeting. If any other matter is properly brought before the annual meeting, your proxyholder will vote your shares using his or her best judgment. By Order of the Board of Directors, Blair Markovic Corporate Secretary San Francisco, California | | ☐ LEVI STRAUSS & CO. P.O. BOX 7215 SAN FRANCISCO, CA 94120
VOTE BY INTERNET Before the Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 8:59 P.M. Pacific Time on April 20, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During the Meeting - Go to www.virtualshareholdermeeting.com/LEVI2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 8:59 P.M. Pacific Time on April 20, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | D32656-P48839 | KEEP THIS PORTION FOR YOUR RECORDS | | | | | DETACH AND RETURN THIS PORTION ONLY | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ⬛ | | + |
The Board of Directors recommends a vote FOR all the listed nominees. | | | | 1. | The election as Class II directors of the four nominees named in the Proxy Statement. | | | | | Nominees: | For | | Withhold | | 1a. | David A. Friedman | ☐ | | ☐ | | 1b. | Yael Garten | ☐ | | ☐ | | 1c. | Jenny Ming | ☐ | | ☐ | | 1d. | Joshua E. Prime | ☐ | | ☐ | The Board of Directors recommends a vote FOR Proposal 2. | For | Against | Abstain | 2. | Advisory vote to approve executive compensation. | ☐ | ☐ | ☐ | |
The Board of Directors recommends a vote FOR Proposal 3. | For | Against | Abstain | 3. | Ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal year 2021. | ☐ | ☐ | ☐ |
NOTE: Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
| | Signature [PLEASE SIGN WITHIN BOX] | Date |
| | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. Levi Strauss & Co. Annual Meeting of Shareholders April 21, 2021 10:30 A.M. Pacific Time www.virtualshareholdermeeting.com/LEVI2021 Seth R. Jaffe and Blair Markovic, or each of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if present, at the Annual Meeting of Shareholders of Levi Strauss & Co. to be held at 10:30 A.M., Pacific Time, on April 21, 2021 at www.virtualshareholdermeeting.com/LEVI2021, or any postponement or adjournment thereof. Proxies must be mailed by April 7, 2021. Phone or online voting must be completed by 8:59 P.M., Pacific Time, on April 20, 2021. See reverse for instructions. Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR Proposals 1, 2, and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)
|
|
|
|
|
|
|
|