UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant☒ Filed by a Party other than the Registrant☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
RALPH LAUREN CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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RALPH LAUREN CORPORATION
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A MESSAGE FROM OUR EXECUTIVE CHAIRMAN AND CHIEF CREATIVE OFFICER AND OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER
DEAR STOCKHOLDER:
You are cordially invited to join our 20192021 Annual Meeting of Stockholders to be held on Thursday, August 1, 2019July 29, 2021, at 9:30 a.m., Eastern Time.time. Our Annual Meeting will be a “virtual meeting” of stockholders, which will be conducted exclusively online via live webcast. By hosting our meeting virtually, we are ablewebcast, similar to expand participant access, improve communication with our stockholders, and reduce costs. This approach also enables participation from our global community and aligns with our strategic corporate goal to lead with digital and our broader sustainability goals.last year.
Your vote is very important. Whether you plan to participate in the Annual Meeting or not, please be sure to vote. Information concerning the matters to be considered and voted upon at the 20192021 Annual Meeting is set out in the attached Notice of 20192021 Annual Meeting and Proxy Statement.
ReflectingDEAR STOCKHOLDER:
The last year will be marked as particularly profound – with the world managing multiple crises across health, the economy and society all at once. While a backdrop none of us would have chosen, it has also been a time to focus on what matters most.
At Ralph Lauren, our first and primary focus has been ensuring the safety and security of our teams. We are incredibly proud of and inspired by their resilience, commitment and ongoing passion for our brand – all while dealing with the many challenges of the past year.
As we progressively emerge from the pandemic, we are a stronger business than when we came into it. Despite its disruptions, we fundamentally transformed the foundations of our Company in Fiscal 2021 – progressing on the first year of delivering againstgoals we set out in our Next Great Chapter strategy, we are encouraged byStrategic Plan to deliver sustainable long-term growth and value creation. We took decisive actions – specifically, we:
What’s more, we believe our brand and our Purpose are more relevant than ever, as the world embraces the kind of sales, operating income,luxury we stand for – one marked by optimism, hope, love and earnings per share. We returned to revenue growth one year ahead of plan, average unit retail was better than we expected across all regionstogetherness. Together, with our lifestyle positioning and channels, and we saw particular strength across our international regions and core product categories as we invested in product, marketing, and distribution. What drove these results was consistent focus and strong execution across eachthe breadth of our five strategic priorities:product portfolio, we are uniquely positioned to deliver value for our consumers and all of our stakeholders in Fiscal 2022 and beyond.
Lookinglook ahead, while the environment remains dynamic, we remainare clear on where we are headed. We are focused on delivering long-term,becoming an even more elevated, more direct-to-consumer, more digital, more global and a more diverse, equitable and sustainable growth and value creation by consistently placing the consumer at the center of our business, elevating and energizing our brands, and balancing growth and productivity across each of these areas.
Our Purpose is to inspire the dream of a better life through authenticity and timeless style. Everything we do – from the products we deliver to the experiences we create at our fashion shows, stores, and restaurants around the world – is an expression of this Purpose that has driven our brand for more than 50 years and will continue to inspire our everyday.Company.
Thank you for your ongoing support and continued interest in our Company. We look forward to engaging at our 20192021 Annual Meeting.
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| Ralph Lauren | Patrice Louvet | |
Executive Chairman and Chief Creative Officer | President and Chief Executive Officer | |
New York, New York
June 21, 201917, 2021
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NOTICE OF ANNUAL MEETING
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RALPH LAUREN CORPORATION
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NOTICE OF 20192021 ANNUAL MEETING OF STOCKHOLDERS
PURPOSE OF THE MEETING
The 20192021 Annual Meeting of Stockholders of Ralph Lauren Corporation, a Delaware corporation, will be held virtually via live webcast on Thursday, August 1, 2019,July 29, 2021, at 9:30 a.m., Eastern Time, atwww.virtualshareholdermeeting.com/RL2019RL2021, or at any postponement or adjournment of the meeting, for the following purposes:
| 1. | To elect |
| 2. | To ratify the appointment of Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the fiscal year ending |
| 3. | To approve, on an advisory basis, the compensation of our named executive officers and our compensation philosophy, policies, and practices as described herein; and |
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To transact such other business as may properly come before the meeting and any adjournments or postponements thereof. |
The foregoing items of business are described more fully in the accompanying Proxy Statement. Only holders of record of the Company’s Class A and Class B Common Stock at the close of business on June 3, 20191, 2021 are entitled to notice of, and to vote at, the 20192021 Annual Meeting of Stockholders and any adjournments or postponements thereof.
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
We will be using the Securities and Exchange Commission’s Notice and Access model, which allows us to make the proxy materials available on the Internet, as the primary means of furnishing proxy materials to stockholders. On or about June 21, 2019,17, 2021, we will mail to all stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions for accessing our proxy materials on the Internet and voting by telephone or on the Internet. The Notice of Internet Availability of Proxy Materials also contains instructions for requesting a printed set of proxy materials. The Proxy Statement, Annual Report on Form10-K for the fiscal year ended March 30, 2019,27, 2021, and Notice of Annual Meeting are available at:http://investor.ralphlauren.com.
YOUR VOTE IS IMPORTANT
Please vote promptly by signing, dating, and returning the enclosed proxy card or voting by telephone or on the Internet by following the instructions on your Notice of Internet Availability of Proxy Materials. In the event that a stockholder decides to participate in the online meeting, such stockholder may, if so desired, revoke the proxy by voting those shares when joining the meeting.
By Order of the Board of Directors,
AVERY S. FISCHER
Executive Vice President, General Counsel,Chief Legal Officer, and Secretary
New York, New York
June 21, 201917, 2021
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RALPH LAUREN CORPORATION
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains, and oral statements made at the 20192021 Annual Meeting of Stockholders and elsewhere from time to time by our representatives may contain, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the statements regarding, among other things, our current expectations about the Company’s future results and financial condition, revenues, store openings and closings, strategic plans, employee reductions, margins, expenses, earnings, and citizenship and sustainability goals, environmental and social goals, and plans for future executive remuneration, and are indicated by words or phrases such as “anticipate,” “outlook,” “estimate,” “expect,” “project,” “we believe,“believe,” “envision,” “goal,” “target,” “can,” “will,” and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company’s expectations and judgments and are subject to a number ofcertain risks and uncertainties, many of which are unforeseeable and beyond our control. The factors that could cause actual results to materially differ include, among others: the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, including those resulting from our decision to significantly reduce our global workforce during Fiscal 2021, and our ability to effectively transfer knowledge and maintain adequate controls and procedures during periods of transition; the impact to our business resulting from the COVID-19 pandemic, including periods of reduced operating hours and capacity limits and/or temporary closure of our stores, distribution centers, and corporate facilities, as well as those of our wholesale customers, licensing partners, suppliers, and vendors, and potential changes to consumer behavior, spending levels, and/or shopping preferences, such as willingness to congregate in shopping centers or other populated locations; our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; the impact to our business resulting from potential costs and obligations related to the early or temporary closure of our stores or termination of our long-term, non-cancellable leases; our ability to maintain adequate levels of liquidity to provide for our cash needs, including our debt obligations, tax obligations, capital expenditures, and potential payment of dividends and repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the impact to our business resulting from changes in consumers’ ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders, including business disruptions related to pandemic diseases such as COVID-19, civil and political unrest such as the recent protests in the U.S., and diplomatic tensions between the U.S. and China; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; our ability to successfully implement our long-term growth strategy; our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand ourdirect-to-consumer presence; our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to competitively price our products and create an acceptable value proposition for consumers; the impact to our business resulting from changes in consumers’ ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either abuild-up or shortage of inventory;access capital markets and maintain compliance with covenants associated with our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term,non-cancellable leases;existing debt instruments; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of
complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business; the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments withbetween the U.S. and China, as well as the trade agreement reached in December 2020 between the United Kingdom and the European Union, and any related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies; the impact to our business resulting from the United Kingdom’s decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates; the impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including wages, healthcare, and other benefit-related costs; our ability to secure our facilities and systems and thosethe ability of our third-party service providers to secure our respective facilities and systems from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, ransomware, or similar Internet or email events; our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms; changes in our tax obligations and effective tax rate due to a variety of other factors, including potential additional changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;
our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders; the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible; the potential impact on our operations and on our suppliers and customers resulting from natural orman-made disasters;or natural disasters, including pandemic diseases such as COVID-19, severe weather, geological events, and other catastrophic events; changes in our tax obligations and effective tax rate due to a variety of factors, including potential changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated; our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation; our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors’ expectations; our ability to maintain our credit profile and ratings within the financial community; our intention to introduce new products or brands, or enter into or renew alliances; changes in the business of, and our relationships with, major department storewholesale customers and licensing partners; our ability to achieve our goals regarding environmental, social, and governance practices, including those related to our human capital; our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations; our ability to achieve our goals regarding environmental, social, and governance practices; and other risk factors identified in the Company’s Annual Report on Form10-K, Form10-Q and Form8-K reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
RALPH LAUREN CORPORATION REFERENCES
In this document, we refer to Ralph Lauren Corporation as the “Company,” “we”, “us” or “our.” Our fiscal year ends on the Saturday closestimmediately before or after March 31. All references to March 31.“Fiscal 2023” represent the fiscal year ending April 1, 2023. All references to “Fiscal 2022” represent the fiscal year ending April 2, 2022. All references to “Fiscal 2021” represent the fiscal year endingended March 27, 2021. All references to “Fiscal 2020” represent the fiscal year endingended March 28, 2020. All references to “Fiscal 2019” represent the fiscal year ended March 30, 2019. All references to “Fiscal 2018” represent the fiscal year ended March 31, 2018. All references to “Fiscal 2017” represent the fiscal year ended April 1, 2017. All references to “Fiscal 2016” represent the fiscal year ended April 2, 2016. All references to “Fiscal 2015” represent the fiscal year ended March 28, 2015. All references to “Fiscal 2014” represent the fiscal year ended March 29, 2014.
NON-U.S. GAAP FINANCIAL MEASURES
The Company usesnon-U.S. generally accepted accounting principles (“U.S.-GAAP”U.S.- GAAP”) financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. In addition, as discussed in the “Executive Compensation Matters” section of the Proxy Statement, the Compensation & Organizational Development Committee usesnon-U.S. GAAP measures to set and certify the achievement of certain performance-based compensation goals. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers thenon-U.S. GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP and may be different fromnon-U.S. GAAP measures reported by other companies. See Appendix B to the Proxy Statement for reconciliation between thenon-U.S. GAAP financial measures and the most directly comparable U.S. GAAP measures.
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| AUDIT COMMITTEE REPORT | |||||||
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |||||||
| DELINQUENT SECTION 16(A) | |||||||
| DIRECTOR COMPENSATION | |||||||
| COMPENSATION DISCUSSION AND ANALYSIS | |||||||
| COMPENSATION COMMITTEE REPORT | |||||||
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Executive Employment Agreements and Compensatory Arrangements | ||||
Potential Payments Upon Termination or Change in Control Tables | ||||
| (PROPOSAL 2) RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
| 5 | | | 2021 PROXY STATEMENT |
PROXY SUMMARY
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RALPH LAUREN CORPORATION
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This summary highlights information contained elsewhere in this proxy statement. For more complete information about these topics, please review our Annual Report on Form10-K for Fiscal Year 20192021 and this entire Proxy Statement. We are mailing the Notice of 20192021 Annual Meeting of Stockholders and instructions on how to access this Proxy Statement (or, for those who request it, a hard copy of this Proxy Statement and the enclosed form of proxy) to our stockholders on or about June 21, 2019.17, 2021.
ABOUT RALPH LAUREN
Ralph Lauren Corporation (NYSE:RL) is a global leader in the design, marketing, and distribution of premium lifestyle products in the followingfive categories: apparel, footwear & accessories, home, fragrances, and hospitality. For more than 50 years, Ralph Lauren’s reputation and distinctive image have been consistently developed across an expanding number of products, brands, and international markets. The Company’s brand names, which include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children Chaps, and Club Monaco,Chaps, among others, constitute one of the world’s most widely recognized families of consumer brands. For more information, go tohttp://investor.ralphlauren.com.
SOLICITATION
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of the Company, for use in connection with the Annual Meeting of the Company’s Stockholders to be held on August 1, 2019July 29, 2021 (the “2019“2021 Annual Meeting”). This Proxy Statement, the accompanying Notice of Annual Meeting, proxy card, and the Company’s 20192021 Annual Report on Form10-K, or alternatively a Notice of Internet Availability of Proxy Materials (the “Internet Notice”“Notice of Internet Availability”), will be mailed to stockholders on or about June 21, 2019.17, 2021. The Board is soliciting your proxy in an effort to give all stockholders of record the opportunity to vote on matters that will be presented at the 20192021 Annual Meeting. This Proxy Statement provides you with information on these matters to assist you in voting your shares.
VIRTUAL STOCKHOLDER MEETING
The 20192021 Annual Meeting will be conducted exclusively online via live webcast, allowing all of our stockholders the option to participate in the live, online meeting from any location convenient to them, providing stockholder access to our Board and management and enhancing participation. Conducting the meeting virtually via live webcast to ensure stockholder access is especially important in light of the continued social distancing necessitated by the COVID-19 crisis.
Stockholders at the close of business on June 3, 20191, 2021 will be allowed to communicate with us and ask questions in our virtual stockholder meeting forum before and during the meeting. All directors and key executive officers are expected to be available to answer questions,participate in the meeting, and we are committed to acknowledging each question we receive. We believe a virtual meeting is fundamental to our strategic priority to “Lead“Leading with Digital,” as well as to our sustainabilitycitizenship and citizenshipsustainability goals. For further information on the virtual meeting, please see the “Questions and Answers About the Annual Meeting and Voting” section on page 103.105.
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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20192021 ANNUAL MEETING OF STOCKHOLDERS
Thursday, 9:30 a.m. Eastern Time | Held virtually online via live webcast at www.virtualshareholdermeeting.com/ |
Record Date:
| • Close of business on June | |||||
Participating in the Annual Meeting:
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| • Please note that stockholders will need their unique control number which appears on their Notice of Internet
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Virtual Meeting Highlights: | • | • To ensure access, all validated stockholders may submit questions in advance, beginning on June
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• Stockholders will be able to review the Rules of Conduct and other Meeting materials on the | • An audio replay of the
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| Voting: | • Only holders of record of the Company’s Class A and Class B Common Stock at the close of business on June | • Please authorize a proxy to vote your shares as soon as possible. If you are a beneficial owner of shares of our common stock, your broker will NOT be able to vote your shares with respect to any of the matters presented at the Meeting other than the ratification of the selection of our independent registered public accounting firm, unless you give your broker specific voting instructions.
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• You do not need to participate in the | • See the “Questions and Answers About the Annual Meeting and Voting” section on page
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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MATTERS TO BE VOTED ON
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DIRECTOR NOMINEES
| Name | Occupation | Age | Director Since | Independent | Other Current Public Company Directorships | Committees1 | Occupation | Age | Director Since | Independent | Other Current Public Company Directorships |
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Frank A. Bennack, Jr. | Executive Vice Chairman and Chairman of the Executive Committee The Hearst Corporation
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Joel L. Fleishman | Professor of Law and Public Policy Duke University
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Michael A. George | President and Chief Executive Officer Qurate Retail, Inc.
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Hubert Joly | Executive Chairman of the Board of Directors Best Buy Co., Inc.
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Hubert Joly2 | Formerly Executive Chairman of the Board of Directors Best Buy Co., Inc. | 61 | 2009 | | 1 |
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Linda Findley Kozlowski | President and Chief Executive Officer Blue Apron Holdings, Inc. | 48 | 2018 | | 1 | | |
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Patrice Louvet | President and Chief Executive Officer
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David Lauren | Chief Innovation Officer, Vice Chairman of the Board and Strategic Advisor to the CEO
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Angela Ahrendts | Formerly Senior Vice President, Retail Apple, Inc.
| 59 | 2018 | | 0 | Formerly Senior Vice President, Retail Apple, Inc. | 61 | 2018 | | 2 |
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John R. Alchin | Retired Executive Vice President and Co-Chief Financial Officer Comcast Corporation
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Arnold H. Aronson | Business Partner, Retail Strategies Kurt Salmon
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Dr. Joyce F. Brown | President Fashion Institute of Technology
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Linda Findley Kozlowski | President and Chief Executive Officer Blue Apron Holdings, Inc.
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Frank A. Bennack, Jr.3 | Executive Vice Chairman and Chairman of the Executive Committee The Hearst Corporation | 88 | 1998 | | 0 | | | |
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Valerie Jarrett4 | Senior Distinguished Fellow University of Chicago Law School | 64 | 2020 | | 3 | |
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Judith A. McHale | President and Chief Executive Officer Cane Investments, LLC | 72 |
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Robert C. Wright | Senior Advisor Lee Equity Partners, LLC
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Darren Walker | President Ford Foundation | 61 | 2020 | | 2 |
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| 1. | “A” refers to the Audit Committee of the Board (the “Audit Committee”), “C” refers to the Compensation & Organizational Development Committee of the Board (the “Compensation Committee”), |
| 2. | In Fiscal 2022, the Board refreshed the Lead Independent Director role and approved the appointment of Mr. |
| 3. | Mr. Bennack is currently a Class A Director and our current Lead Independent Director. He will stand for re-election to our Board at the 2021 Annual Meeting as a Class B director, after which he will no longer serve as our Lead Independent Director or as a member of the Compensation |
| 4. | Upon her appointment at |
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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2019 BUSINESSDIRECTOR NOMINEES HIGHLIGHTS
Delivered on our Strategic PlanOur Board is comprised of individuals with diverse business experiences, including financial expertise, active leadership, CEO experience in a variety of industries, international experience, product and channel experience, strong retail and digital commerce experience, and corporate citizenship, sustainability, regulatory and non-profit experience, and reflects diversity of gender, race, ethnicity, age, and international perspective. In the Board’s annual self-evaluation, one of the factors that the Board expressly considers is whether the membership of the Board provides an adequate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively.
During Fiscal 2019, under the leadership of our new President and CEO, Patrice Louvet, we continued to execute on our multi-year plan intended to build a foundation to strengthen our brand and drive sustainable, profitable sales growth (the “Strategic Plan”).
We successfully delivered on our Strategic Plan across the following key initiatives in Fiscal 2019:
Balanced Mix of Skills, Qualifications and | ||||||||||||||||||||||||
| Attributes/Experiences | CEO1 | International Experience | Other Public Company | Retail/ Consumer Products | Digital | Strategic Planning | Finance/ Capital Allocation | Marketing/ Sales | Legal/ Regulatory Governance | Citizenship & Sustainability | Philanthropy | Diversity | ||||||||||||
| Angela Ahrendts | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| John Alchin | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||
| Frank A. Bennack, Jr. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
| Michael A. George | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Valerie Jarrett | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
| Hubert Joly | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| Linda Findley Kozlowski | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| David Lauren | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Ralph Lauren | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Patrice Louvet | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Judith McHale | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Darren Walker | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
1 Current or former CEO experience, public and | ||||||||||||||||||||||||
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a summary of individual skill sets, see page 19.
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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2021 BUSINESS HIGHLIGHTS
Delivered Strong TSR Resultson our Next Great Chapter Strategic Plan in Fiscal 2021
During Fiscal 2019,2021, we delivered better than expected financial results ascontinued to execute on the strategies outlined in our five-year, Next Great Chapter Strategic Plan first announced in June 2018. This plan is intended to position the Company to deliver quality long-term sustainable growth and value creation. While the unforeseen impacts of COVID-19 significantly disrupted our operations in Fiscal 2021, we furtheredcontinued to deliver on several of our workcommitments in the third year of our Strategic Plan with gross margin expansion, raising average unit retail and improving quality of sales overall, all while continuing to strike the right balance between driving productivityprotect liquidity and growth. Our total shareholder return (“TSR”) for recent periods, relative toimprove our compensation comparator group and the S&P 500, is set forth below. For Fiscal 2019, we generated a TSR of 18.4% compared to the-7.8% and 7.3% gains for our compensation comparator group and the S&P 500, respectively.long-term operating cost structure. Results included:
1-Year TSR (%) Fiscal 2019
| 3-Year TSR (%) Fiscal 2017 – 2019
| 5-year TSR (%) Fiscal 2015 – 2019
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Ralph Lauren Corporation
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| 18.4%
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| 42.2%
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| -10.0%
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Compensation Comparator Group
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| -7.8%
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| -6.3%
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| -15.2%
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S&P 500 Index
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| 7.3%
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| 36.7%
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| 52.6%
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| – | Marketing investments increased to 6% of total revenues in Fiscal 2021, up from 4.5% last year, to support our brand elevation and drive consumer engagement, resulting in accelerated growth in global brand awareness and purchase intent |
| – | Strategically shifted investments toward innovative digital campaigns, including our Ralph Lauren x Bitmoji Collection with over 1 billion try-ons on Snapchat, virtual concert experience featuring Chance the Rapper, global Farfetch launch, our Spring ’21 Collection digital experience featuring a livestream concert with Janelle Monáe, CLOT x Polo Ralph Lauren collaboration with Edison Chen, and debut sponsorship of the Australian Open |
COMPENSATION OBJECTIVES, PRINCIPLES, AND PRACTICES
The key components of our executive compensation program for our Named Executive Officers (“NEOs”) consist of base salary, annual cash incentive,Energizing Core Products and long-term equity-based incentive opportunities. Our compensation plans are designed to link pay and performance, reward sustained business growth and results, and drive stockholder value. A majority of each NEO’s compensation isat-riskAccelerating Under-Developed Categories in the form of annual cash incentive and long-term equity-based awards, which pay out only if we achieve key Company financial goals focused on strengthening and elevating our brand and positioning the Company for long-term sustainable growth.
The charts on the next page show the balance of theat-risk elements that comprised the target total direct compensation for our NEOs.
| – | Average unit retail (“AUR”) across our direct-to-consumer network grew 26% for full year Fiscal 2021. All geographies exceeded our long-term targets of low- to mid-single digit annual AUR growth, led by more than 20% growth in both North America and Europe as we accelerated our brand elevation initiatives this year. |
| – | Continued to evolve our product mix to align with changing consumer preferences by region, including leveraging our core programs, driving our high-potential under-developed categories such as outerwear and fleece, and prudently building back into new seasonal assortments as consumer demand improves |
Key takeaways impacting executive compensation for Fiscal 2019 are:
| – | Expanded into new digital platforms including the launch of ‘The Lauren Look,’ our first subscription apparel rental service, offering consumers an innovative new channel to experience, engage and ultimately shop the Lauren Ralph Lauren brand as they build their personal wardrobes in a rapidly evolving retail landscape |
| – | Delivered sequential improvement across all geographies in the fourth quarter led by Asia and Europe, despite further government-mandated restrictions due to COVID-19 in both regions. North America comps strengthened into the end of the period, inflecting to positive 3% growth in the fourth quarter. |
| – | Strong continued momentum in the Chinese mainland, with Fiscal 2021 sales increasing more than 50% to the prior year and increasing more than 65% compared to Fiscal 2019 |
| – | Global digital revenue accelerated across both owned and wholesale digital channels and across all geographies in the fourth quarter driven by Connected Retail and new product initiatives, with owned digital sales increasing 52% to the prior year and total digital ecosystem sales up over 60% |
| – | Operating margins in our owned digital business expanded more than 1,000 basis points to last year for the full year. Digital margins were accretive to total company margin rate, with similar improvement across all regions. |
| – | Adjusted operating expenses decreased 16% to last year, driven by savings across compensation related expenses, rent and occupancy, travel and other expenses |
| – | Exceeded our lead time targets with approximately two-thirds of our products on lead times of six months or less, versus our long-term target of 50% by Fiscal 2023 and compared to 20% in Fiscal 2016 |
| – | Concluded our brand portfolio review with a definitive agreement to sell Club Monaco, enabling our teams to focus our resources on our core brands as part of our Next Great Chapter elevation strategy |
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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Our TSR for recent periods, relative to our compensation comparator group detailed on page 76 of the Compensation Discussion and Analysis (“CD&A”) and the S&P 500, is set forth below. TSR is based on stock price appreciation, plus dividends reinvested, with starting and ending share prices based on average closing stock prices for the 20 trading days ending immediately prior to the beginning and end of the performance period. Results are varied with the Company outperforming our compensation comparator group for the three- and five-year periods ended Fiscal 2021 but behind the comparator group in the one year period ended Fiscal 2021 and behind the S&P 500 Index for the one-, three-, and five-year periods ended Fiscal 2021.
COMPENSATION OBJECTIVES, PRINCIPLES, AND PRACTICES
The key components of our executive compensation program for our named executive officers (“NEOs”) consist of base salary, annual cash incentive, and long-term equity-based incentive opportunities. Our compensation plans are designed to link pay and performance, reward sustained business growth and results, and drive stockholder value. A majority of each NEO’s compensation is variable in the form of annual cash incentive and long-term equity-based awards. For Fiscal 2021, as we navigated through the extraordinary challenges during the COVID-19 pandemic, the Compensation Committee, in conjunction with its third-party independent compensation consultant, reviewed and approved temporary changes to the design of the Fiscal 2021 executive compensation programs with a focus on retaining and motivating our management team.
Key takeaways impacting executive compensation for Fiscal 2021 only are:
| – | Our Executive Chairman and Chief Creative Officer, Ralph Lauren, did not receive a salary in Fiscal 2021 in addition to forgoing his Fiscal 2020 bonus |
| – | Our President & CEO, Patrice Louvet, received a 50% reduction in salary for the first quarter of Fiscal 2021 |
| – | Every other NEO and each member of the Global Leadership Team, a group of approximately 140 business leaders across the Company, received at least a 20% reduction in salaries for the first quarter of Fiscal 2021 |
| 11 | | | 2021 PROXY STATEMENT |
PROXY SUMMARY | RALPH LAUREN CORPORATION |
| – | Our non-employee directors agreed to forgo their quarterly cash compensation for the first quarter of Fiscal 2021 |
impact COVID-19 might have on our industry and on our peers. As a result, we granted time-based Restricted Stock Units (“RSUs”) to all named executive officers. This change was temporary, and for Fiscal 2022 we will return to granting performance-based equity awards as part of our long-term incentives. |
The charts on page 13 show the balance of the variable and fixed elements that comprise the target total direct compensation for our NEOs.
| 2021 PROXY STATEMENT | | | 12 | |
PROXY SUMMARY | RALPH LAUREN CORPORATION |
| 13 | | | 2021 PROXY STATEMENT |
PROXY SUMMARY
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RALPH LAUREN CORPORATION
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GOVERNANCE HIGHLIGHTS
Our Board and management are committed to sound corporate governance. We have in place a comprehensive governance framework which incorporates the corporate governance requirements of the Sarbanes-Oxley Act of 2002, the U.S. Securities and Exchange Commission (the “SEC”), and the New York Stock Exchange (“NYSE”). While we meet the eligibility requirements, we do not rely on the exceptions from certain of the NYSE’s corporate governance listing requirements available to majority controlled companies. In keeping with good corporate governance practices, we maintain a majority of independent directors and our Board Committees are comprised solely of independent directors.
Special Meetings in Response to COVID-19– In response to the COVID-19 outbreak and related impact to our operations, financial condition and the safety and wellbeing of our employees, consumers and partners, the Board, the Finance Committee, and the Compensation Committee convened additional special meetings throughout the fiscal year to provide management with oversight, input, and guidance into crisis management and navigating the evolving impacts of COVID-19 on the Company to ensure that the strength of our global business endures over the long-term.
STOCKHOLDER ENGAGEMENT
ThroughoutIn Fiscal 2019,2021, we have continued our ongoing stockholder outreach efforts as we believe the input of our stockholders is an important driver in establishing our corporate governance, and compensation practices.
In Fiscal 2019, we connected meaningfully and regularly with our stockholders through our June 7, 2018 Investor Day in New York City, our outreach on compensation, and corporate governance practices ahead of the 2018 Annual Meeting of Stockholders, and various investor conferences,non-deal roadshows, and other special events for investors throughout the year.
Through this ongoing outreach, we have received and considered valuable feedback regarding a variety of stockholder-related matters and we are pleased to highlight our recent achievements:
GLOBAL CITIZENSHIP AND SUSTAINABILITY
Global citizenship and sustainability at Ralph Lauren Corporation is rooted in the heritage of our brand and our purpose to inspire the dream of a better life through authenticity and timeless style. We believe that delivering the next 50 years for Ralph Lauren means rethinking our impact on the environment and society. Recognizing this, we appointed a Chief Sustainability Officer in 2018 to formalize our sustainability program and steer us to a leadership position, and we expanded the duties of the Nominating Committee to oversee and provide guidance with respect to the Company’s environmental, social, and governance framework. Within the year, we undertook a detailed materiality analysis, refreshed our strategy, set goals, and developed a road map for improvement.practices.
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PROXY SUMMARY
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RALPH LAUREN CORPORATION
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AlthoughThrough this ongoing outreach, we have received and considered valuable feedback regarding a variety of stockholder-related matters and we are atpleased to highlight our recent achievements:
|  the short-term and long-term incentive plans in Fiscal 2022 and to also include Environmental, Social, and Governance (“ESG”) metrics in the short-term incentive plan. |
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PROXY SUMMARY | RALPH LAUREN CORPORATION |
GLOBAL CITIZENSHIP & SUSTAINABILITY
In 2019, we launched our renewed citizenship and sustainability strategy, Design the Change. Our strategy was built on the values and purpose that have defined our business for more than half a century and remain central to the authenticity of our commitment for the next 50+ years. We set ambitious goals and integrated this strategy into every part of our business with a focus in three key areas: Creating Timeless Style, Protecting the Environment, and Championing Better Lives. We regularly conduct materiality assessments to help identify and prioritize the citizenship and sustainability issues, risks and opportunities that matter most to our business and stakeholders. Our most recent assessment was conducted in Fiscal 2019 and our next assessment will occur in Fiscal 2022.
Create Timeless Style
Protect the Environment
Champion Better Lives
Following are select highlights from Fiscal 2021: setting a goal to achieve net zero greenhouse gas emissions by 2040; launching a circularity strategy that will inform our product development and support more circular systems in our industry by designing out waste and pollution, keeping products and materials in use and regenerating natural systems; producing more than one-third of our product units aligned to our sustainable materials criteria; reporting expanded workforce diversity data; and adding the Task Force on Climate-Related Financial Disclosures (TCFD) Index to this year’s report as well as reporting new carbon and water footprints.
Please see page 41 for more information. Our most recently published Global Citizenship & Sustainability Report covering Fiscal 2021 and related events prior to publication in Fiscal 2022 may be found on our corporate website at https://corporate.ralphlauren.com/citizenship-and-sustainability.
| 2021 PROXY STATEMENT | | | 16 | |
PROXY STATEMENT
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RALPH LAUREN CORPORATION
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PROXY STATEMENT FOR THE ANNUAL MEETING
OF STOCKHOLDERS
GENERAL INFORMATION REGARDING THE ANNUAL MEETING OF STOCKHOLDERS AND PROXY MATERIALS
This Proxy Statement is furnished to the stockholders of Ralph Lauren Corporation, a Delaware corporation, in connection with the solicitation by its Board of Directors of proxies for its 20192021 Annual Meeting to be held exclusively online via live webcast atwww.virtualshareholdermeeting.com/RL2019RL2021on Thursday, August 1, 2019,July 29, 2021, at 9:30 a.m., Eastern Time, or at any adjournments or postponements thereof. A proxy delivered pursuant to this solicitation may be revoked by the person executing the proxy at any time before it
before it is voted by giving written notice to our Secretary, by delivering a later dated proxy, or by voting online during the 20192021 Annual Meeting. The address of our principal executive offices is 650 Madison Avenue, New York, New York 10022.
This Proxy Statement, the Annual Report on Form10-K for the fiscal year ended March 30, 2019,27, 2021, and the Notice of Annual Meeting will be made available to our stockholders on our website,http://investor.ralphlauren.com, on or about June 21, 2019,17, 2021, and a full printed set of the proxy materials will be made available on request.
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PROPOSAL 1
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RALPH LAUREN CORPORATION
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Our Board is presently divided into two classes, with all directors being elected annually. Pursuant to our Amended and Restated Certificate of Incorporation, fourthree Class A Directors will be elected by the holders of Class A Common Stock and 10nine Class B Directors will be elected by the holders of Class B Common Stock, each to serve until the 20202022 Annual Meeting of Stockholders and until his or her successor is elected and qualified.
In 2018,Over the last few years, the Board expanded its size to 14 directors from 11 directors, increasing thehas undergone significant refreshment, resulting in a lower average tenure, younger average age, and broadened diversity of backgrounds, skills and experiencesexperiences. Through this refreshment, a number of directors joined the Board with key experiences and attributes, such as public company CEOs and individuals with experience in international sales and operations and digital and commercial business. In 2021, we elected two new directors, Valerie Jarrett and Darren Walker, to benefitour Board. At the Company. The same 142021 Annual Meeting, one of our long-tenured directors, have been nominatedJoel Fleishman, will not be standing forre-election, atand the 2019 Annual Meeting. Frank A. Bennack, Jr., Joel L. Fleishman,size of our Board will be reduced to 12 members. Michael A. George, and Hubert Joly, and Linda Findley Kozlowski have been nominated for election as Class A Directors. Ralph Lauren, Patrice Louvet, David Lauren, Angela Ahrendts, John R. Alchin, Arnold H. Aronson, Dr. Joyce F. Brown, Linda Findley Kozlowski,Frank A. Bennack, Jr., Valerie Jarrett, Judith A. McHale, and Robert C. WrightDarren Walker have been nominated for election as Class B Directors. In Fiscal 2017, we also appointed a
Directors.formal Lead Independent Director, Frank A. Bennack, Jr. In Fiscal 2022, the Board refreshed the Lead Independent Director role and approved the appointment of Hubert Joly to serve as the new Lead Independent Director, effective following Mr. Joly’s election as a director at the 2021 Annual Meeting of Stockholders. Mr. Bennack will continue to stand for re-election to our Board at the 2021 Annual Meeting as a Class B director. For more information on the directors, please see “Director Nominees” on page 8 in the Proxy Summary section, “Board Diversity” on page 33,40, and “Board of Directors Effectiveness” on page 28.33.
We know of no reason why any nominee would be unable or unwilling to serve. If any nominee becomes unable or unwilling to serve for any reason, our Board, based on the recommendation of the Nominating Committee, may either reduce the number of directors or designate a substitute nominee. If a substitute nominee is designated, the persons named in the enclosed proxy will vote all proxies that would otherwise be voted for the named nominee or nominees for the election of such substitute nominee or nominees.
OUR BOARD RECOMMENDS A VOTE FOR EACH NOMINEE AS A DIRECTOR TO HOLD OFFICE UNTIL THE 20202022 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL HIS OR HER SUCCESSOR IS ELECTED AND QUALIFIED.
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PROPOSAL 1
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RALPH LAUREN CORPORATION
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CLASS A DIRECTOR NOMINEES FOR ELECTION
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Age 59 Mr. George has been a director of the Company since May 2018. He has served as the President of QVC, Inc. (“QVC”) since November 2005 and as its Chief Executive Officer since April 2006. In 2018, he was named CEO of QVC’s parent, Liberty Interactive, which was subsequently renamed Qurate Retail, Inc. Mr. George previously held various positions with Dell, Inc. (“Dell”) from March 2001 to November 2005, most notably as the Chief Marketing Officer and Vice President and General Manager of Dell’s U.S. consumer business. Prior to that, Mr. George was a senior partner at McKinsey & Company and led the firm’s North American Retail Industry Group. Mr. George previously served on the board of directors of Brinker International, currently serves on the board of directors of Qurate Retail, Inc., chairs the board of directors of the National Retail Federation, and serves on the boards of several not-for-profit organizations. The Board has determined that Mr. George is an audit committee financial expert. Experience, Qualifications, Attributes and Skills Mr. George brings to our Board extensive business experience through his role as President and Chief Executive Officer of QVC and Chief Executive Officer of Qurate Retail Group. His distinguished career, including his prior experience at Dell and McKinsey, provides him with critical perspective on operational and strategic issues facing the retail industry. As a result of his service as a member of the boards of other public companies and not-for-profit organizations, he also provides our Board with valuable insights regarding governance and other significant matters that come before our Board. | |
| Hubert Joly Age 61 Mr. Joly has been a director of the Company since June 2009 and will serve as the Lead Independent Director of the Board following his election at the 2021 Annual Meeting. He is the former Chairman and Chief Executive Officer of Best Buy Co., Inc. (“Best Buy”) where he served from 2012 to 2020. In addition, Mr. Joly is currently a member of Johnson & Johnson’s Board of Directors, a senior lecturer at Harvard Business School, and a member of the board of trustees of the Minneapolis Institute of Art. Previously, he served as President and Chief Executive Officer of Carlson from 2008 to 2012, after he joined Carlson in 2004 as President and Chief Executive Officer of Carlson Wagonlit Travel. He also previously served as Executive Vice President, American Assets at Vivendi Universal from 2002 to 2004 and in various other positions at Vivendi Universal since 1999. He previously served on the boards of Carlson, The Rezidor Hotel Group, Carlson Wagonlit Travel, and the World Travel and Tourism Council. Experience, Qualifications, Attributes and Skills Mr. Joly brings to our Board extensive management and leadership experience obtained as Chairman and Chief Executive Officer of Best Buy, as a director of Johnson & Johnson, as a member of the faculty at Harvard Business School, and formerly as President and Chief Executive Officer of Carlson and Carlson Wagonlit Travel. His positions give him critical insights into the issues facing a large international corporation, as well as unique perspective on issues and opportunities facing a large multi-channel retailer. Based on his current and past positions at Best Buy, Johnson & Johnson, Harvard Business School, Carlson, Carlson Wagonlit Travel, Vivendi Universal, Electronic Data Systems, and McKinsey & Company, Mr. Joly possesses a deep understanding of international issues affecting us and he provides our Board with valuable insight in the areas of leadership, governance, finance, financial reporting, and strategic planning. | |
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PROPOSAL 1
| RALPH LAUREN CORPORATION |
 | Linda Findley Kozlowski Age 48 Ms. Kozlowski has been a director of the Company since August 2018. Ms. Kozlowski has served as the President, Chief Executive Officer of Blue Apron Holdings, Inc. (“Blue Apron”) since April 2019. Prior to that, she served as COO of Etsy, Inc., (“Etsy”) with responsibility for product, design, marketing. and customer engagement and acquisition. Prior to Etsy, Ms. Kozlowski was COO of Evernote, where she oversaw worldwide operations, and led cross-functional teams in offices across seven countries. Previously, she was based out of Hong Kong and led global marketing, business development, and customer service for Alibaba.com. She has also held leadership positions in communications firms including Fleishman-Hillard, Text 100, and Schwartz Communications. Ms. Kozlowski holds a Master’s degree in Journalism from UNC-Chapel Hill and an undergraduate degree in Corporate Communications from Elon University. Experience, Qualifications, Attributes and Skills Ms. Kozlowski has more than 25 years of experience in operations, international marketing, business development, public relations, and customer service. As President and CEO of Blue Apron, she is responsible for the entire strategy and operations of the business. As COO of Etsy, she was responsible for all revenue generating and go to market activities including product management, marketing, design, international expansion, and branding/communications. As COO of Evernote, she oversaw worldwide operations that drove revenue and global growth. She led cross-functional teams in offices across 10 countries. With a strong emphasis on global growth, Ms. Kozlowski’s work at Etsy included growth across North America, Asia, Europe, Africa, Latin America, and Russia. She drives strategies and programs that balance global efficiency with local teams. These programs drive both user-growth and monetization strategies, as well as scalable customer experience management to maintain brand and positive user engagement. | |
| 2021 PROXY STATEMENT | | | 20 | |
PROPOSAL 1 | RALPH LAUREN CORPORATION |
CLASS B DIRECTOR NOMINEES FOR ELECTION
 | Ralph Lauren Age 81 Mr. R. Lauren founded our business in 1967 and, for over five decades, has cultivated the iconography of America into a global lifestyle brand. He is currently our Executive Chairman and Chief Creative Officer and has been a director of the Company since prior to our initial public offering in 1997. He had previously been our Chairman and Chief Executive Officer since prior to our initial public offering in 1997 until November 2015. In addition, he was previously a member of our Advisory Board or the Board of Directors of our predecessors since their organization. Experience, Qualifications, Attributes and Skills Mr. R. Lauren is an internationally recognized fashion designer. His unique role as our Founder and Chief Creative Officer, as well as his experience as our previous Chief Executive Officer, provides our Board with valuable leadership, including in the areas of design, brand management, and marketing. Mr. R. Lauren’s contributions to us since the founding of our business have been instrumental in defining our image and direction. As one of the world’s most innovative design leaders and a fashion icon, his career has spanned over five decades that have resulted in numerous unique tributes for his role within the fashion industry. He is uniquely qualified to bring strategic insight, experience, and in-depth knowledge of our business and the fashion industry to the Board. | |
| Patrice Louvet Age 56 Mr. Louvet has served as our President and Chief Executive Officer since July 2017. Prior to joining the Company, he served as the Group President, Global Beauty, of Procter & Gamble Co. (“P&G”) since February 2015. Prior to that role, Mr. Louvet held successively senior leadership positions at P&G, including the roles of Group President, Global Grooming (Gillette), and President of P&G’s Global Prestige Business. Before he joined P&G, he served as a Naval Officer, Admiral Aide de Camp in the French Navy from 1987 to 1989. Mr. Louvet graduated from École Supérieure de Commerce de Paris and received his M.B.A. from the University of Illinois. He has served as a member of the board of directors of Bacardi Limited since July 2012 and as a member of the board of directors of the National Retail Federation since January 2020. Experience, Qualifications, Attributes and Skills Mr. Louvet brings significant leadership and business experience to the Board. His over 25 years in the consumer products industry, with oversight of multiple major global business units, have provided him with a deep understanding of building and growing brands. His position as the Company’s President and Chief Executive Officer provides our Board with valuable perspective into the issues and opportunities facing the Company. Mr. Louvet’s extensive background in managing internationally renowned prestige brands, along with his substantial experience in driving business transformation and innovation, provides our Board with critical strategic insights into our global business. | |
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PROPOSAL 1 | RALPH LAUREN CORPORATION |
 | David Lauren Age 49 Mr. D. Lauren is our Chief Innovation Officer, Strategic Advisor to the CEO, and Vice Chairman of the Board. From November 2010 to October 2016, he served as our Executive Vice President of Global Advertising, Marketing, and Communications. Prior to that, he served in numerous leadership roles at the Company with responsibility for advertising, marketing, and communications. He has been a director of the Company since August 2013. Mr. D. Lauren oversees the Company’s innovation strategy, processes, and capabilities to drive its brand strength and financial performance across all channels. He has been instrumental in growing the Company’s global digital commerce business and pioneering our technology initiatives. He serves on the board of directors of The National Museum of American History. Mr. D. Lauren is also the President of The Ralph Lauren Corporate Foundation (formerly known as The Polo Ralph Lauren Foundation). Before joining the Company in 2000, he was Editor-In-Chief and President of Swing, a general interest publication for Generation X. Mr. D. Lauren is the son of Mr. R. Lauren. Experience, Qualifications, Attributes and Skills Mr. D. Lauren brings strong leadership and business experience to our Board. He has been instrumental in the development of the Company’s digital commerce business and the use of innovative marketing to build the Company’s global fashion image as it has expanded internationally. Mr. D. Lauren has been recognized as a leader on the use of new technologies in retail marketing and on using digital platforms to market luxury brands. His in-depth knowledge of these areas and his current position as our Chief Innovation Officer and Vice Chairman of the Board provides our Board with valuable insight and perspective into our global digital, digital commerce, and technology initiatives. | |
| Angela Ahrendts Age 61 Ms. Ahrendts has been a director of the Company since August 2018. She most recently served as the Senior Vice President, Retail of Apple Inc. (“Apple”) from May 2014 through April 2019. Prior to Apple, Ms. Ahrendts joined Burberry Group plc in January 2006 where she served as a director and Chief Executive Officer beginning in July 2006. She also previously served as Executive Vice President at Liz Claiborne, Inc., as President of Donna Karan International, Inc., and as a member of the United Kingdom’s Prime Minister’s Business Advisory Council. Ms. Ahrendts currently serves on the board of directors of Airbnb, Inc., WPP plc., Charity: Water, and the How Institute for Society. Experience, Qualifications, Attributes and Skills Ms. Ahrendts brings to our Board substantial business and leadership experience. Her most recent position as Apple’s Senior Vice President, Retail and Online Stores, and her prior positions at multiple major fashion and apparel companies, such as Burberry, a luxury fashion company, Liz Claiborne, and Donna Karan, give her extensive experience with strategy, real estate and development, operations of physical stores, online stores and contact centers, as well as profound insights into the challenges and opportunities facing our industry. Her extensive background in guiding the retail strategy of renowned international brands, as well as her proven leadership track record in driving successful brand and business transformations, enable her to provide our Board with critical perspective and insight on business, operational, and strategic issues facing the Company. | |
| 2021 PROXY STATEMENT | | | 22 | |
PROPOSAL 1 | RALPH LAUREN CORPORATION |
 | John R. Alchin Age 73 Mr. Alchin has been a director of the Company since February 2007. He served as Executive Vice President and Co-Chief Financial Officer and Treasurer of Comcast Corporation, a broadband cable provider offering a variety of consumer entertainment and communication products and services, from November 2002 to December 2007. Prior to that, he served as Executive Vice President and Treasurer of Comcast Corporation from January 2000 to November 2002. Mr. Alchin joined Comcast Corporation in 1990 as Senior Vice President and Treasurer. He is currently a member of the board of trustees of BNY Mellon Funds Trust, the board of trustees of the Philadelphia Museum of Art (“PMA”), the board of trustees of The Barnes Foundation, and the advisory group of Catalyst Investors. Mr. Alchin also serves on the audit committee of BNY Mellon Funds Trust and as Chairman of the PMA finance committee. Prior to serving on the board of trustees of BNY Mellon Funds Trust, he served as a member of the board of directors and on the audit committee of BNY Hamilton Funds, Inc. The Board has determined that Mr. Alchin is an audit committee financial expert. Experience, Qualifications, Attributes and Skills Mr. Alchin brings to the Board substantial business and financial experience. His experience as a Co-Chief Financial Officer and Treasurer of Comcast Corporation, a major broadband cable operator and content and programming supplier, provides our Board with valuable insight in the areas of corporate finance and capital formation, financial reporting, investor relations, and treasury functions. Mr. Alchin’s financial expertise offers our Board a deep understanding of accounting and audit-related matters. In addition, his service as a member of the boards of various financial institutions provides our Board with perspective in the areas of corporate finance and governance matters. | |
| Frank A. Bennack, Jr.
Age
Mr. Bennack has been a director of the Company since January 1998 and
Experience, Qualifications, Attributes and Skills
Mr. Bennack brings to our Board a distinguished career and extensive business experience as Executive Vice Chairman of Hearst, one of the nation’s largest private companies engaged in a broad range of publishing, broadcasting, cable networking, and diversified communications activities. His current position as Hearst’s Executive Vice Chairman and previous position as Chief Executive Officer gives him critical insights into the operational issues facing a large corporation and provides our Board with valuable experience in the areas of finance, financial reporting, and strategic planning. As a result of his current and past service as a member of the boards of other various public companies andnon-profit organizations, he provides our Board with perspective with respect to governance and other important matters that come before our Board. Mr. Bennack has been a member of our Board since 1998, and therefore, his extensive knowledge of our business is a valuable aspect of his service on our Board.
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CLASS B DIRECTOR NOMINEES FOR ELECTION
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PROPOSAL 1
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Experience, Qualifications, Attributes and Skills
Ms. McHale brings to the Board extensive business and management experience. Through her
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PROPOSAL 1 | RALPH LAUREN CORPORATION |
 | Darren Walker Age 61 Darren Walker has been a director of the Company since July 2020. Mr. Walker has served since 2013 as president of the Ford Foundation (“Ford”), one of the world’s largest foundations with an endowment of $14 billion. He is also the co-founder and chair of the US Impact Investing Alliance, and serves as a member of the board of directors of PepsiCo, Inc., Square, Inc., Carnegie Hall, National Gallery of Art, Lincoln Center for the Performing Arts, Friends of the High Line, and Friends of Art & Preservation in Embassies. Before joining Ford, Mr. Walker was vice president at the Rockefeller Foundation, overseeing global and domestic programs, and COO of the Abyssinian Development Corporation—Harlem’s largest community development organization. Earlier, he had a decade-long career in finance at UBS and with the law firm Cleary Gottlieb Steen & Hamilton. Experience, Qualifications, Attributes and Skills Mr. Walker brings to our Board insight into the role of business in society gained through his role as President of Ford Foundation and leadership in many nonprofit and philanthropic organizations. Through his experience with an international network of diverse social and community initiatives, he provides the Board with a unique perspective on human capital management and talent development and insights on sustainability and public policy matters that are particularly valuable as the Company continues to focus on its sustainability and people and culture goals. | |
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OVERVIEW OF CORPORATE GOVERNANCE
To ensure that our Board reflects an appropriate mix of attributes, qualifications, experience, and skills and continues to provide effective oversight of the Company’s strategy and performance, the Nominating Committee of the Board focuses on director succession and tenure. Over the last few years, the Board has undergone significant refreshment, resulting in a lower average tenure, younger average age, and broadened diversity of backgrounds, skills and experiences. Through this refreshment, a number of directors joined the Board with key experiences and attributes, such as public company CEOs and individuals with experience in international sales and operations and digital and commercial business. In 2021, we were pleased to elect two outstanding new directors, Valerie Jarrett and Darren Walker, to our Board who each brings extensive experience in critical areas, including corporate citizenship, sustainability, regulatory governance, government affairs, and finance expertise, and greatly complements the depth of knowledge and experience on our Board. At the 2021 Annual Meeting, one of our long-tenured directors, Joel Fleishman, will not be standing for re-election, and the size of our Board will be reduced to 12 members. In addition to refreshing the Board’s composition generally, the Board regularly adjusts its committee chair and committee membership assignments. This promotes strong committee leadership and independence as well as director development and succession planning. After the 20192021 Annual Meeting, our Board of Directors will be comprised of the following members:
Mr. Ralph Lauren is the controlling stockholder of the Company with a majority ownership of the Company’s Class B Common Stock. Mr. R. Lauren founded Ralph Lauren Corporation in 1967, and has led our vision, strategy, and development over the years into the robust and growing company we are today following our 50th anniversary.after more than 54 years. The Board of Directors believes it is appropriate for Mr. R. Lauren to be Chairman of the
Board, in an executive capacity, as he continues, with Mr. Louvet, to drive the strategic vision of our Company and to actively participate in setting our financial objectives and investment priorities. The Board also appointed Mr. R. Lauren’s son, David Lauren, as Vice Chairman of the Board in October 2016 to increasedeepen his involvementengagement with our Company in a boardroom capacity.and the Board and lend his perspective to strategy, brand development, and innovation discussions at the Board level. Mr. Louvet has been a member of our Board since 2017 when he joined the Company as President and Chief Executive Officer.
In Fiscal 2017, we also appointed a formal Lead Independent Director, Frank A. Bennack, Jr. to provide strong, independent leadership for the Board and serve as a liaison between our Board and management. In Fiscal 2022, the Board refreshed the Lead Independent Director role and approved the appointment of Hubert Joly to serve as the new Lead Independent Director, effective following Mr. Joly’s election as a director at the 2021 Annual Meeting of Stockholders. Mr. Joly brings extensive experience and proven leadership to the role as a director for twelve years on our Board and current Chair of our Finance Committee. Mr. Bennack serves on three ofwill continue to stand for re-election to our Board at the four committees of the Board and takes an active role in all governance matters.2021 Annual Meeting as a Class B director.
Our Board and management are committed to sound corporate governance. We have in place a comprehensive corporate governance framework which incorporates the corporate governance requirements of the Sarbanes-Oxley Act of 2002, the SEC, and the NYSE. While we meet the eligibility requirements, we do not rely on the exceptions from certain of the NYSE’s corporate governance listing requirements available to majority controlled companies. In keeping with good corporate governance practices, we maintain a majority of independent directors and our Board Committees are comprised solely of independent directors.
In addition, pursuant to the Company’s governing documents, each share of Class B Common Stock currently owned by Mr. R. Lauren will be automatically converted into one share of Class A Common Stock upon transfer to a person who is not Mr. R. Lauren, a member of his family, or an entity that is not owned by, or established for the benefit of, Mr. R. Lauren or members of his family. Following such conversion of all Class B Common Stock, the rights of holders of all outstanding common stock will be identical. Once converted into Class A Common Stock, the Class B Common Stock will never be reissued.
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Our corporate governance practices include:
Board Composition, Policies and Practices
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• Appointed Lead Independent Director; Lead Independent Director role to be refreshed following the 2021 Annual Meeting of Stockholders
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• Board refreshment efforts to align with corporate strategy, including addition of three directors in 2018 with CEO experience and strong digital commerce and retail expertise, and the addition of two new diverse directors in Fiscal 2021 with extensive corporate citizenship, sustainability, regulatory governance, government affairs, and finance expertise
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Board Engagement
| • Regular executive sessions of independent directors
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• Annual Board and Committee self-evaluations and formal evaluation of each Director prior to Annual Meeting
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• Enhanced engagement in strategy, including
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• Extensive involvement in COVID-19 pandemic risk management, including special meetings on mitigating financial, operational, and human capital risk exposures associated with the global outbreak | ||
• Active engagement with diversity and inclusion initiatives as part of corporate culture oversight | ||
Board Committees
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• Renamed and enhanced Nominating
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Stockholder Engagement
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• Board and Committee refreshment, enhanced focus on sustainability, and | ||
• Participation by Lead Independent Director in stockholder outreach when requested
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In addition, the key components of our corporate governance framework are set forth in the following documents:
Each of the above documents is available on our investor relations website athttp://investor.ralphlauren.comby clicking on “Corporate Governance.” Copies of these documents are available to stockholders without charge upon written request to our Investor Relations Department, 650 Madison Avenue, New York, New York 10022. Only the Board or a committeeCommittee of the Board with specific delegated authority, as appropriate, may grant a waiver under our codes of ethics to any director or executive officer, and any such waiver, or any amendments to our codes of ethics, will be promptly posted on our website.
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Separate Chairman and CEO Roles
The Board believes that the Company’s current leadership structure, in which the roles of the Chairman and the CEO are separate, is appropriate for the Company at this time, taking into consideration the Company’s evolving needs, corporate strategy, and operating environment. The separation of the Chairman and CEO roles enables the CEO to focus on the business, operations, and strategy of the Company, and allows the Company to leverage the Chairman’s experience, perspective, and vision to serve the best interests of our stockholders. This structure, together with a strong Lead Independent Director, has proven particularly beneficial at this time given the complex and dynamic consumer and retail landscape in light of the COVID-19 pandemic.
Lead Independent Director
At the end of Fiscal 2017, the Board appointed a Lead Independent Director to provide strong, independent leadership for the Board.
At the beginning of Fiscal 2022, the Board refreshed the Lead Independent Director role and approved the appointment of Hubert Joly to serve as the new Lead Independent Director, effective following Mr. Joly’s election as a director at the 2021 Annual Meeting of Stockholders. Mr. Joly brings extensive experience and proven leadership to the role as a director for twelve years on our Board and current Chair of our Finance Committee.
Under our Corporate Governance Policies, key responsibilities of the Lead Independent Director include, among other duties:
DIRECTOR INDEPENDENCE ANDNON-MANAGEMENT DIRECTOR MEETINGS
Our Board believes that a majority of our directors should be independent, and has determined that all
non-management director nominees are independent: Angela Ahrendts, John R. Alchin, Arnold Aronson, Frank A. Bennack, Jr., Dr. Joyce F. Brown, Joel L. Fleishman, Michael A. George, Valerie Jarrett, Hubert Joly, Linda Findley Kozlowski, Judith A. McHale, and Robert C. Wright.Darren Walker. Each of the current members of our Audit Committee, Compensation Committee, Nominating Committee, and Finance Committee detailed below are independent.
In considering the independence of our independent directors, we considered, among other factors, charitable contributions to entities affiliated with our independent directors and commercial transactions conducted, from time to time, in the ordinary course of business between us and certain entities affiliated with these directors. In the case of each of our independent directors, any such transactions have substantially the same terms as are prevailing at the time for comparable businesses and the indirect interest of the independent director in the charitable contribution or transaction, if applicable, was found to be immaterial and in amounts that do not impair the independence of the relevant director under our Corporate Governance Policies and the NYSE’s corporate governance listing standards. Our guidelines for determining directors’ independence are set forth as Appendix A to this Proxy Statement.
At each of our regularly scheduled Board and committeeCommittee meetings, thenon-management, independent directors participate in an executive session without any members of the Company’s management present. In Fiscal 2019,2021, our independent directors met together as a Board, without any
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management representatives present, at least once per quarter. During these executive sessions of independent directors, our Lead Independent Director, or the Chairs of each of the Audit Committee, the Compensation
Committee, the Nominating Committee, and the Finance Committee presided on a rotating basis based on the topics to be discussed. In addition, our independent directors also met together in executive session without any management representatives present after regularly scheduled meetings of the Audit Committee, the Compensation Committee, the Nominating Committee, and the Finance Committee.
MEETINGS AND DIRECTOR ATTENDANCE
| Type of Meeting | Number of Meetings and Director Attendance | |
| 2020 Annual Meeting of Stockholders | Our directors are expected to attend each Annual Meeting of Stockholders. All directors nominated for election at the 2020 Annual Meeting of Stockholders attended the meeting. | |
| Meetings of: | In Fiscal 2021: | |
• the Board; • the Audit Committee; • the Nominating Committee; • the Compensation Committee; and • the Finance Committee. | • our Board met eight times and conducted two additional executive sessions; | |
• our Audit Committee met six times; | ||
• our Nominating Committee met four times; | ||
• our Compensation Committee met six times; and | ||
• our Finance Committee met nine times. | ||
All of the members of our Board attended at least 90% of the required meetings held by the Board and the Committees of the Board on which he or she served. The Board and its Committees also act from time to time by unanimous written consent in lieu of meetings. | ||
Special Meetings in Response to COVID-19:In response to the COVID-19 outbreak and related impact to our operations, financial condition and the safety and wellbeing of our employees, consumers and partners, the Board, the Finance Committee, and the Compensation Committee convened additional special meetings throughout the fiscal year to provide management with oversight, input, and guidance into crisis management and navigating the evolving impacts of COVID-19 on the Company to ensure that the strength of our global business endures over the long-term. | ||
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INDEPENDENT COMMITTEES OF THE BOARD OF DIRECTORS
AllWe require all four of our Board committeesCommittees to consist solely of independent directors — the Audit Committee, the Compensation Committee, the Nominating Committee, and the Finance Committee. The table below indicates the current membership of our committees.Committees prior to any composition changes slated to follow the 2021 Annual Meeting.
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Angela Ahrendts |
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Frank A. Bennack, Jr.1 |
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| 1. | Upon his election as a Class B Director at the 2021 Annual Meeting, Mr. Bennack will no longer serve on the Compensation Committee. |
| 2. | Mr. Fleishman is not standing for re-election at the 2021 Annual Meeting. |
| 3. | Upon her appointment at the 2021 Annual Meeting, the Board expects to appoint Ms. Jarrett to the Nominating Committee. |
| 4. | Upon his appointment as Lead Independent Director following the 2021 Annual Meeting, Mr. Joly will be invited to attend all Committee meetings. |
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Audit Committee
Compensation Committee
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In addition, the Compensation Committee maintains oversight in the development of succession plans for certain key executive positions within our senior management, including the Chief Executive Officer and Executive Chairman, regularly meeting in executive session to evaluate internal and external candidates, presenting them to the full Board, and performing succession modeling. The Compensation Committee may reviewIt also reviews and provideprovides guidance on certain of our programs relating to our diversity, talent review, and leadership development. The Compensation Committee consults, as needed, with third-party compensation consultants, and may form and delegate its authority to subcommittees when appropriate.
The Compensation Committee oversees any stock ownership guidelines applicable to senior management and non-employee directors, and reviews and recommends to the Nominating Committee any changes to the compensation of the non-employee directors.
Nominating Committee
Role of the Nominating Committee. The Nominating Committee identifies individuals qualified to become directors, recommends director nominees to the Board, develops and recommends corporate governance policies to the Board, recommendsnon-employee director compensation to the Board, reviews related party transactions, exercises oversight of the evaluation of the members of the Board and committees, recommends to the Board policies and principles for Chief Executive Officer succession, selection and performance reviews, and reviews the Company’s
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Nominating Committee
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COVID-19 Committee Engagement
Fiscal 2021, in conjunction with the Committee’s outside compensation consultant. |
BOARD OF DIRECTORS EFFECTIVENESS
Independent Board Assessment
In Fiscal 2018 and Fiscal 2021, the Nominating Committee engaged an independent third-party consultant to conduct individual interviews with each director, including management members of the Board, and to perform an objective analysis of the Board’s governance structure, evaluation process, and overall effectiveness.
Since receiving the results of the Fiscal 2018these independent third-party assessment,assessments, the Nominating Committee has conducted a quarterly Board Effectiveness Review to ensure implementation of certain recommendations from the assessment, such as:
Director Orientation program conducted throughout Fiscal 2019 for new directors, consisting ofone-on-one meetings with senior management and extensive written materials to familiarize the new directors with the Company’s business, financial performance, strategic plans, compensation programs, and corporate governance policies and practices; and
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familiarize the new directors with the Company’s business, financial performance, strategic plans, compensation programs, and corporate governance policies and practices; and |
Notably, the Fiscal 2018these independent assessment hasassessments have led to a focus on Board exposure to management and deeper engagement with business strategy, which the Board intends to continue to emphasize. In Fiscal 2019,2021, this effort has included, among other actions:
Board Effectiveness is a continuing focus, and the Nominating Committee anticipates utilizing this approachperforming an independent assessment periodically to obtain an independent assessmentsreview and analysis of its performance. When the Nominating Committee engages a third party to assist it, the Committee approves the fees that we pay for these services.
Focus on Strategy, Diversity and Succession Planning
Our Board is actively engaged with the Company’s strategy, and during 2020, the Board was actively engaged in monitoring the impact of COVID-19 on the Company’s strategy. Our entire Board acts as a strategy committee as it reviews and oversees progress on the Company’s Strategic Plan quarterly, including during executive sessions without Company management present.
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Annually, the Board conducts anin-depth review of the Company’s long-term strategic plan, performance, and capital structure. The Finance Committee additionally takes a morein-depth and active role in strategy as it receives abi-annual updateregular updates on strategy KPIskey performance indicators (“KPIs”) and periodically reviews the alignment between our risk management program and our strategic priorities.
These discussions arehave also been traditionally enhanced with experiences scheduled outside the regular meetings at our headquarters, such as market or store visits, which provide theprovided our directors with an opportunity to see live the Company’s operations, to assess firsthand the execution and impact of the Company’s strategy, and to engage with senior leaders throughout the Company to deepen their understanding of our business. Visits to the field will be planned again post the COVID-19 pandemic. Furthermore, afull-day strategy meeting is scheduled annually for the Finance Committee, annually, and all members of the Board are invited to attend.
In September and December 2020 and in January 2021, all independent members of the Board attended special meetings of the Finance Committee on the Next Great Chapter Strategic Plan and deep dives into the plan’s strategic pillars. The Finance Committee has since received follow-up updates at its regular quarterly meetings and at several additional special meetings on strategy.
Strategy remains at the forefront of our robust succession planning process. With a focus on evolving the Board with respect to the Company’s strategy, the Nominating Committee regularly reviews the skills and experience of the Board in consideration of the Board’s needs for the upcoming year regarding strategy, the
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appropriate size, and the current composition of the Board in light of independence, diversity of backgrounds, age, availability of service, and tenure of its members, among other attributes.
Given the global economic and social conditions of unrest in Fiscal 2021, our Board was actively engaged in the oversight of our corporate culture and is continuously focused on developing a diverse culture that is aligned with our long-term mission and strategy. During 2020 to date, the Board received regular updates on our continued efforts to strengthen our diversity and inclusion (“D&I”) efforts across all race, ethnicity, gender and sexual orientation landscapes to ensure that equal leadership and development opportunities were available for all employees. The Board has also been regularly informed of the work of our management Global D&I Steering Committee that is directly accountable for executing on our D&I strategies to provide a robust structural framework to advise and act upon our commitments to racial equality.
The Board is also actively engaged in succession planning with regard to senior management, including the Executive Chairman and the President and Chief Executive Officer. The Compensation Committee regularly reviews and considers such succession plans, and reports on such plans and potential candidates during executive session of the full Board. The Compensation Committee members and members of senior management regularly meet to evaluate internal and external candidates, acquaint such candidates with members of the Board, and perform succession modeling.
Board and Committee Evaluations
Pursuant to the Company’s Corporate Governance Guidelines and the Charters of each of the Board’s Committees, the Board and each of its Committees conducts an evaluation at least annually.
Our processes enable directors to provide anonymous and confidential feedback on topics including:
To promote effectiveness of the Board, the results of the Board evaluation are reviewed and addressed by the Nominating Committee in executive session and then by the full Board in an executive session led by the Chair of the Nominating Committee and the Lead Independent Director. The results of each Committee’s evaluation are discussed at an executive session of the applicable Committee and further discussed by the full Board as appropriate. Before the Board nominates any director forre-election at the Annual Meeting, the Nominating Committee conducts a formal annual evaluation to ensure each director has the appropriate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively.
These evaluations, as well as the Fiscal 2018 and 2021 independent third-party assessment described above, have had a meaningful impact on Board refreshment and succession planning. As a testament to the effectiveness of these assessments, in Fiscal 2019 and Fiscal 2020, the Board added three new independent directors, two of whom are female, prioritized deeper Board engagement with Company strategy, enhanced access to global management across various levels, refreshed the composition of the committeesCommittees of the Board, and enhanced director education. Board refreshment continued in Fiscal 2021 with the addition of two new diverse directors. These refreshment efforts demonstrate the Board’s focus on ensuring that each member of the Board brings the necessary skills and areas of expertise to contribute to discussions on the Company’s strategic initiatives and to oversee the risks that face our business and as they evolve.
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BOARD OF DIRECTORS OVERSIGHT OF RISK
Our management is responsible for understanding and managing the risks that we face in our business, and the Board is responsible for overseeing management’s overall approach to risk management. The involvement of the full Board in reviewing our strategic objectives and business plans is a significant element of the Board’s assessment of management’s approach and tolerance for risk. In addition, the committeesCommittees of the Board report to the full Board at regularly scheduled Board meetings on any identified material risks within that committee’sCommittee’s area of responsibilities.
In Fiscal 2021, each Committee reviewed a quarterly Enterprise Risk Management report setting forth the risks overseen by each Committee of the Board.
The Audit Committee has responsibility for oversight of the Company’s financial statements and financial reporting related risks, including those related to our accounting, auditing, and financial reporting practices, as well as cybersecurity risks. In addition to the Committee’s quarterly review of the Company’s cybersecurity program, the Audit Committee held a special meeting on cybersecurity during Fiscal 2021.
The Finance Committee has responsibility for oversight of the Company’s financial condition and the assessment of financial strategic risks, including the adequacy of any policies, procedures, and controls designed by management to assess and manage these risks.
The Compensation Committee has responsibility for the oversight of our compensation policies and practices, including conducting annual risk assessments, and evaluating and approving our executive compensation and benefit plans and programs.
The newly enhanced Nominating Committee has responsibility for the oversight of the Company’s governance structure, including succession planning, and has been enhanced to oversee environmental, social, and governance risks applicable to the Company, including citizenship and sustainability issues, and will reportreports regularly to the full Board on these risks and opportunities. In addition to the Committee’s quarterly review of the Company’s citizenship and sustainability risk, in May 2021, the
Committee reviewed the Company’s annual Design the Change report and its Climate Risk Report, also presented to the full Board.
The Board also receives regular reports from our CEO, CFO, General Counsel,Chief Legal Officer, and other key members of senior management regarding various enterprise risk management issues, including operational, strategic, legal, and regulatory, cybersecurity and global information systems, internal audit, financial and reputational risks. Certain
It is also informed and engaged when new risks that are under the purview of a particular Committee are monitored by that Committee, which then reportsarise. For example, in response to the fullCOVID-19 global pandemic outbreak, the Board as appropriate.received reports from a cross-functional team of executive officers and members of management to assess risks to our business and to implement the steps necessary to navigate the impact of the pandemic on our employees, consumers, and the communities in which we operate globally. The input of the Board and the Finance Committee was actively sought in special meetings throughout Fiscal 2021 to counsel management on strategies to position the Company to weather the impacts of the global pandemic and emerge in a strong position post COVID-19.
The Company believes that the Board’s leadership structure, discussed in detail under “Company Leadership Structure” on pages 25page 29 of this Proxy Statement, supports the risk oversight function of the Board by providing for a separate role for the chairman
of the Board and the CEO, and open communication between management and the Board facilitated by a Lead Independent Director. In addition, seasoned independent directors chair each of the Board’s four Committees, which providein-depth focus on certain categories of risks.
OVERVIEW OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE RISK OVERSIGHT
We believe that delivering the next 50 years for our Company means carefully managing our impact on the environment and society, and further believe our performance is inextricably linked to the sustainability of the world in which we operate. As a result, the full Board considers sustainability to be a vital element of the Company’sour business strategy and its oversight thereof. Recently, we have made strides in ensuring this oversight is as robust as possible, with the following enhancements in our programs, policies, and practices:
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possible, with the following enhancements in our programs, policies, and practices:
For more information, please see the map of the Company’s sustainability risks in our most recently published Global Citizenship and& Sustainability Report covering Fiscal 20192021 and significant events prior to publication in Fiscal 20202022 available on our corporate website athttps://www.corporate.ralphlauren.com.
ANALYSIS OF RISKS ARISING FROM COMPENSATION POLICIES AND PROGRAMS
TheAt the beginning of Fiscal 2021, consistent with its annual review process, the Compensation Committee has reviewed an assessment by management of our compensation programs and practices for our employees, including our executive andnon-executive programs and practices. This annual assessment focused on program design features and controls to evaluate whether such programs encourage unnecessary or excessive risk taking, and how policies and programs are structured to mitigate any such risks. Initial uncertainties surrounding the COVID-19 pandemic and the related market volatility affected many of our compensation decisions in Fiscal 2021. The Compensation Committee, in conjunction with its third-party independent compensation consultant, reviewed and approved temporary changes to the design of the Fiscal 2021 executive compensation programs with a focus on retaining and motivating our management team as we navigated through these extraordinary challenges during the crisis.
Selected key elements of our compensation programs that were reviewed include the following:
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Clawback Policy.We have adopted a clawback policy applicable to our NEOs. Under our clawback policy, the Compensation Committee may, in its reasonable discretion, require a NEO to reimburse us for the amount of any payment previously received by such officer under our cash incentive bonus plan as well as our long-term equity plan if, as a result of such officer’s intentional misconduct or gross negligence, we are required to restate our financial statements.
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As a result of this review, the Compensation Committee determined that any risks that may result from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on our Company.
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DIVERSITY AND DIRECTOR NOMINATING PROCEDURES
Our Board is comprised of individuals with diverse backgrounds, skill sets and business experiences, including financial expertise, active leadership, CEO experience in a variety of industries, international experience, product experience, and most recentlychannel experience, strong retail and digital commerce experience.experience, and most recently corporate citizenship, sustainability, regulatory governance and government affairs expertise. Our Board members also have extensive experience on the boards of other companies and organizations, which provides an understanding of different business strategies and challenges. In seeking new Board members, we focus on adding diverse backgrounds and new skills and experiences necessary to oversee the Company’s business strategy and initiatives and fulfill the Board’s risk oversight obligations. At the 2018 Annual Meeting, we were pleased to elect three new outstanding individuals to our Board, Angela Ahrendts, Michael A. George, and Linda Findley Kozlowski, each of whom brings extensive experience in retail and the digital space. In Fiscal 2021, we continued to focus on diversity of backgrounds, skill sets and experiences on our Board with the additions of Valerie Jarrett and Darren Walker, each of whom is an expert on citizenship and philanthropy and were first recommended for election to our Board by a third-party search firm. As part of our Board refreshment efforts, Mr. Fleishman, a long-tenured member of our Board, will not stand for re-election at the 2021 Annual Meeting. These
additions Board refreshment changes are aligned with the strategic initiatives of our Chairman and our CEO and have beenare complementary to the depth of knowledge and experience currently on our Board.
The Nominating Committee identifies and evaluates candidates for nomination as directors and submits its recommendations to the full Board for its consideration. The Nominating Committee, guided by the membership criteria established by the Board in our Corporate Governance Policies, seeks highly qualified candidates who combine a broad spectrum of experience and expertise with a reputation for integrity. We maintain a majority of independent directors, and the Board considers a number of factors in selecting director candidates. Although we do not have a formal policy concerning diversity considerations, the Nominating Committee seeks nominees with a broad range of experience from a variety of industries and professional disciplines, such as finance, professional services, retail, digital commerce, technology, and technology,corporate citizenship, along with a diversity of gender, race, ethnicity, national origin, age, and geographic location in determining the appropriate composition of the Board and identifying director nominees. When the Nominating Committee identifies an area in which the Board may benefit from greater representation, it may focus its candidate search on particular experience, background, or diversity characteristics, including gender, racial, ethnic, and geographical attributes.
In addition, the Board considers the contributions the individual can make to the Board and management as we strive for a body of directors reflecting different genders, racial and ethnic backgrounds, and professional experiences and expertise necessary for the Board to fulfill its responsibilities and leading to a more effective oversight and decision-making process. In the Board’s annual self-evaluation, one of the factors that the Board expressly considers is whether the membership of the Board provides an adequate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively.
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Board Diversity Matrix
As presented in the chart below, we believe our Board offers a diverse range of key skills and experience to provide effective oversight of the Company and create long-term sustainable growth for our Company through successful execution of the Company’s strategic plan. This high-level summary is not intended to be an exhaustive list of each director nominee’s contributions to the Board.
Balanced Mix of Skills, Qualifications and Experience | ||||||||||||||||||||||||
| Attributes/Experiences | CEO1 | International Experience | Other Public Company | Retail/ Consumer Products | Digital | Strategic Planning | Finance/ Capital Allocation | Marketing/ Sales | Legal/ Regulatory Governance | Citizenship & Sustainability | Philanthropy | Diversity | ||||||||||||
| Angela Ahrendts | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| John Alchin | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||
| Frank A. Bennack, Jr. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
| Michael A. George | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Valerie Jarrett | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
| Hubert Joly | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| Linda Findley Kozlowski | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| David Lauren | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Ralph Lauren | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
| Patrice Louvet | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| Judith McHale | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Darren Walker | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
1 Current or former CEO experience, public and private | ||||||||||||||||||||||||
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CORPORATE GOVERNANCE
|
RALPH LAUREN CORPORATION
|
Role of Nominating Committee in Director Nomination
The Nominating Committee solicits and receives suggestions for, as well as comments upon, director candidates from other directors, including the Executive Chairman of the Board and the Lead Independent Director, and usually engages third parties either to assist in the search for director candidates or to assist in gathering information regarding director candidates’ background, experience, and skills.
The Nominating Committee will consider candidates recommended by our directors, members of management and stockholders, and will evaluate candidates properly recommended by stockholders on the same basis as other candidates. Candidates should have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Upon receiving a stockholder recommendation, the Nominating Committee will initially determine the need for additional or replacement members of the Board and then evaluate the candidate based on the information it receives with the stockholder recommendation or that it may otherwise acquire, and may, in its discretion, consult with the Executive Chairman, the Lead Independent Director and other members of our Board. If the Nominating Committee determines that a more comprehensive evaluation is warranted, it may obtain additional information about the director candidate’s background and experience, including by means of interviews with the candidate.
Our stockholders may recommend candidates at any time, but the Nominating Committee requires recommendations for election at an annual meeting of stockholders to be submitted to the Nominating Committee no later than 120 days before the first anniversary of the date of the proxy statement sent to stockholders in connection with the previous year’s Annual Meeting of Stockholders in order to be considered for nomination by the Nominating Committee. The Nominating Committee believes this deadline is appropriate and in our best interests and those of our stockholders because it ensures that it has sufficient time to evaluate properly all proposed candidates. Therefore, to submit a candidate for consideration for nomination at the 20202022 Annual
Meeting of Stockholders, a stockholder must submit the
recommendation, in writing, by February 20, 2020.17, 2022. The written notice must include:
Recommendations must be sent to the Nominating, Governance, Citizenship & Sustainability Committee, Office of the Secretary/Legal Department, Ralph Lauren Corporation, 650 Madison Avenue,100 Metro Boulevard, Nutley, New York, New York 10022.Jersey, 07110.
Our stockholders may directly nominate an individual for election as a director at an annual meeting of stockholders by complying with the nominating procedures set forth in our Fourth Amended and RestatedBy-laws, which are described below under the caption “Additional Matters — Stockholder Proposals for the 20202021 Annual Meeting of Stockholders.”
GLOBAL CITIZENSHIP AND& SUSTAINABILITY
AlthoughIn 2019, we are atlaunched our renewed citizenship and sustainability strategy, Design the beginning of this journey,Change. Our strategy is built on the values and purpose that have defined our business for more than half a century, underline the authenticity of our commitment. In Fiscal 2019, we undertook a detailed materiality analysis, refreshed our strategy, set goals, and developed a road map for improvement. Our strategy,Design the Change, is both a commitment and a journey to accelerate our work across citizenship and sustainability at Ralph Lauren. Itit is based on our belief that, together with our industry, we can deliver the change required to create a positive impact in society and a more sustainable future.
We set ambitious goals and integrated our strategy into every part of our business with a clear focus on three pillars: Creating Timeless Style, Protecting the Environment and Championing Better Lives. Following are highlights from our strategy and achievements from Fiscal 2021. To learn more, read our full Fiscal 2021
| |
CORPORATE GOVERNANCE
|
RALPH LAUREN CORPORATION
|
Design the Change is focused on three areas where we can make the greatest contributions: Creating Timeless Style, Protecting the Environment, and Championing Better Lives and introduces 16 new citizenship and sustainability goals to keep us moving forward and make meaningful progress in every part of our business.
In addition to sharing more about our renewed strategy and goals, below are some highlights and achievements from Fiscal 2019.Global Citizenship & Sustainability Report available at https://corporate.ralphlauren.com/ citizenship-and-sustainability.
Create Timeless Style
Ralph Lauren products are designed with a sense of timelessness. We create iconic garments that our consumers treasure for a lifetime by matching longevity of style with quality of manufacture. We aspire to use responsibly sourced and sustainable materials that prolong product life while requiring less from our planet.
One of the key ways we aim to deliver on this is through our approach to design. By 2020,Anchored in our long-standing vision of timeless style, in Fiscal 2021, we launched a comprehensive circular strategy. The strategy informs our product development to support more circular systems in our industry by designing out waste and pollution, keeping products and materials in use and regenerating natural systems. Relatedly, we have an ongoing learning program for all of our design, product development, and merchant teams will receive annual training on sustainable, circular, inclusive, and culturally aware design.
One exampleAdditionally, in Fiscal 2021, we launched our Design with Intent program which aims to identify and pursue opportunities to be intentional and impactful with all that Ralph Lauren represents—from product inception to marketing. We have a unique space within our creative community that brings in diverse voices to inform the choices we make and the stories we tell.
Guided by our sustainable raw material road map, we are working toward our 2025 goals for overall sourcing and specific material types. In Fiscal 2021, 33 percent of units produced met our sustainable material criteria—up from 11 percent in Fiscal 2020. We are increasingly using materials in a way that addresses social and environmental outcomes, protects biodiversity, advances animal welfare and continuously improves the traceability of our commitmentraw materials. Our focus on quality and authenticity drives us to look for more sustainable product is the Earth Polo, a shirt crafted from an innovative fabric produced entirely from plastic bottlesraw materials—always with durability, craftsmanship and is partperformance in mind.
Furthermore, we continued to increase transparency and traceability of our commitmentmaterial use by:
As we work toward our 2025 goal of eliminating the use of hazardous chemicals in our productssupply chain and packaging by 2025. Each Polofollowing our adoption of the ZDHC Manufacturing Restricted Substances List (MRSL) in Fiscal 2020, in Fiscal 2021 we shared the MRSL and broader guidance on chemical management with all our suppliers. We also rolled out chemical inventory management tools with our strategic and key wet processing facilities to increase visibility of chemical usage and move toward full MRSL conformance.
In Fiscal 2021, we also began formalizing our approach to creating more sustainable spaces in our stores. Our goal is to ensure all the key elements in our new store interiors—including fixtures, displays, flooring, hangers and signage—are sustainably sourced and made from approximately 12 plastic bottles — which may have otherwise ended up in oceans or landfills —materials that minimize environmental impact and uses a completely waterless dyeing process.
Knowing where our materials come from, and how they are made, is key to creating our products sustainably. Our responsible sourcing program guides our commitment to sustainable materials and traceability and focuses on our priority raw materials and eliminating waste across the production process. This year, we added a new step to our design process that encourages our designers to review excess fabrics from previous seasons when fabricating new lines.
We also began developing a sustainable fiber road map, including new policies, partnerships, and goals. For example, by 2025 all of our cotton will be sustainably sourced, which includes Better Cotton Initiative (BCI), organic, recycled, transitional, and U.S. grown.maximize occupant health.
Protect the Environment
We work to mitigate our impact on the environment by driving positive change through collaboration and innovation. Our aim is to create the highest quality products with minimal harm to the environment. This starts with our suppliers and extends to our distribution, packaging, stores, and offices. We are committed to addressing the most pressing environmental issues facing our industry and society, includingand through ongoing innovation and strong partnerships, we are working across our value chain to reduce our climate and water impacts, and avoid waste.
By 2020, we will set science-basedBuilding on our existing goal of reducing absolute greenhouse gas reduction targets for(GHG) emissions across our operations and supply chain.chain by 30% compared to Fiscal 2020 levels, we have set a goal to achieve net zero emissions by 2040. As part of this, we have published a Net Zero Commitment Statement that details how we will achieve this target. Our actions are in line with our pledge to the climate goals identified in the Paris Agreement.
| 2021 PROXY STATEMENT | | | 42 | |
CORPORATE GOVERNANCE | RALPH LAUREN CORPORATION |
Tackling the complex issue of climate change and driving sustainable change requires partnership. We are signatories to We Are Still In, the Business Ambition for 1.5°C Campaign, the UN Fashion Industry Charter for Climate Action, the G7 Fashion Pact and RE100. In Fiscal 2019,2021, we continuedadded our support to offset 10 percentthe America is All In policy statement, joining thousands of domestic electricity emissions by purchasing renewable energy certificates throughU.S. communities, businesses and institutions calling for and committing to a clean recovery in the U.S. Environmental Protection Agency Green Power Partnership. By 2020, we intend to set a renewable energy goal and join RE100, strengthening our global renewable energy sourcing strategy.wake of COVID-19.
We are committed to reducereducing water consumption across our value chain and to safeguard and preserve water resources in the communities where we operate. To minimize water used during manufacturing, we are partnering with our suppliers and leading innovators who will set our business and the industry on a course for significant water reductions and water quality improvements. Last year, we also partnered with GiveMeTapOur goal is to help fund the construction of water pump systems in Ghana, sharing with our employees the powerful impact that access to clean water can have on a community. By 2025, we will achieve at least a 20 percent reduction in total water use across our operations and value chain by 2025.
In Fiscal 2021, we continued to collaborate with the World Wildlife Fund (WWF) to advance our work in this area and set a comprehensive strategy for water stewardship and water use reductions in our value chain. We analyzed our value chain through the WWF Water Risk Filter to map key areas of water risk and develop a water footprint. We also identified opportunities for watershed conservation, reduced water consumption and improved community access to water.
Additionally, in Fiscal 2021, we introduced Color on Demand. This new multi-phased platform is composed of a set of innovative technologies that will enable the recycling and reuse of all water from the dyeing process, establishing the world’s first scalable zero wastewater cotton dyeing system. In addition to significant water savings, Color on Demand dramatically reduces the amount of chemicals, dye, time and energy used in the cotton dyeing process.
As we work to become a more circular business, we are integrating zero-waste principles across our operations and supply chain. We aim to reduce excess inventory, keep materials in use for as long as possible and minimize our operational waste. As part of this, one of our goals is to achieve zero waste to landfill across our distribution centers by 2023. We have made progress against our goal. In Fiscal 2021, we worked with local recycling vendors to divert over 18,000 pounds of hangers from landfill at our North Carolina distribution center. We also began using recyclable corn board pallets for our internal distribution center activities, and aim to expand this in Fiscal 2022. We diverted all
creative props and other decorative assets from landfill through recycling, sale to staff and donation to Habitat for Humanity, universities and other charities.
Additionally, in our offices and with suppliers, we initiated several new practices in Fiscal 2021 to reduce and recycle waste from samples and fabric scrap. We are reducing the number of samples being created and shipped by working with suppliers to test their materials in-house rather than sending samples to third parties. We are also increasing the use of digitization so suppliers can create new products virtually and reducing sampling components, color approvals and related transportation. We also started a partnership with Fabscrap to recycle fabric trim and samples in our offices. In Fiscal 2021, we recycled and reused over 20,000 pounds of fabric waste.
Environmentally responsible packaging is an essential part of a circular future. By 2025, our goal is that all our packaging material will be recyclable, reusable or sustainably sourced, which includes packaging made from post-consumer or post-industrial recycled content, or that is Forest Stewardship Council (FSC) certified.
In Fiscal 2021, 54 percent of our packaging volume and 71 percent of our stock-keeping units (SKUs) met at least one of our sustainable packaging criteria. In Fiscal 2022, we will be implementing a regular, standardized reporting process for our suppliers to allow us to track sustainable aspects of our packaging across brands, packaging types and regions throughout the year.
Champion Better Lives
We aim to create a more equitable world and positively impact the lives of people in our workforce, communities and supply chain.
This goal shapes the work experience we create for our employees and the standards we demand of our suppliers and is the driving force behind our community investments.
We are committed to uniting and inspiring the communities within our Company as well as those in which we serve by amplifying voices and perspectives to create a culture of belonging, ensuring inclusion and fairness for all.
| | | |
CORPORATE GOVERNANCE
|
RALPH LAUREN CORPORATION
|
To address the waste generated by our industry and our business, from production through to packaging, we are working to eliminate waste at our owned facilities, including distribution centers and stores, as well as across our product lifecycle. By 2023, we will achieve zero waste to landfill across our distribution centers. Our packaging reduction efforts are also underway. In Fiscal 2019,2021, we launched aneco-friendly packaging optionestablished a governance and working group structure in order to take more thoughtful and sustained action for all orders made through RalphLauren.com. We also made global progressracial equity. As part of this work, we set a goal to improve retail packaging; as of Fiscal 2019, our global branded retail packaging was made from 79 percent recycled content. In Fiscal 2019, we began eliminating hangers from flat-packed items being shipped from global factories to our distribution centers, and we reduced the number of hangers in our North American deliveries. By 2025, 100ensure at least 20 percent of our packaging material willGlobal Leadership Team be recyclable or sustainably sourced.
Champion Better Lives
We celebrate individualityfrom underrepresented race and champion people to achieve the life they want to have. This dream shapes the work experience we create for our employees and the standards we demandethnic groups by 2023. As of our suppliers, and is the driving force behind our community investments.
We commit to meaningfully engaging our communities through our work across cancer care as well as our global employee volunteerism program. In Fiscal 2019, our employees donated more than 14,000 hours of time and talent tonon-profit organizations through Ralph Lauren Gives Back. By 2025, we will increase our volunteer hours by 25 percent compared to a Fiscal 2018 baseline.
2021, this figure stood at 13 percent. Additionally, in Fiscal 2020,2021, we sold our corporate jet and donated the proceeds, approximately $21 million, to the Polo Ralph Lauren Foundation (the “Foundation”). The Foundation will use this funding over time to drive support of its key areas of focus and to contribute to creating positive and meaningful impacts in society.
We also strive to increase opportunities for women inexpanded our workforce globally,diversity data disclosure to include additional gender and also for female factory workers in our supply chain. In Fiscal 2019, our global
workforce was 64 percent female, with women holding 53 percent of Senior Directorethnicity breakdowns by corporate and above positions. We are implementing strategic recruiting practices to increasenoncorporate roles and leadership levels, including the diversity of our leadership. In line with our Parity.org pledge, all interviews for open VP and above positions will include female candidates. Beginning in Fiscal 2020, we will extend this commitment to include interviewing diverse candidates for every open VP and above position.
Board of Directors. In Fiscal 2019, we continued to work closely2021, 64 percent of our global workforce was female and 60 percent of our U.S. workforce was from underrepresented race and ethnic groups, consistent with Better Work, an international organization focused on improving working conditionsrepresentation from Fiscal 2020.
Further detail and additional highlights can be found in the garment industry, to advance gender equality and promote women’s economic empowerment with our suppliers.
Our most recently published Global Citizenship and& Sustainability Report covering Fiscal 20192021 and significantrelated events prior to publication in Fiscal 20202022 may be found on our corporate website athttps://www.corporate.ralphlauren.comcorporate.ralphlauren.com/citizenship-and-sustainability..
Stockholders and interested parties may contact any of our directors, including the Executive Chairman of the Board, the Lead Independent Director, the Chairs of the Board’s independent committees, any committeeCommittee of the Board, the Board’snon-management directors as a group or the entire Board, by writing to them as follows:
Name(s)/Title(s), c/o Legal Department and Office of the Corporate Secretary, Ralph Lauren Corporation, 650 Madison Avenue, New York, New York 10022.
Communications received in this manner will be handled in accordance with the procedures approved by ournon-management directors, who have also requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, such as spam, junk mail and mass mailings, product complaints, product inquiries, new product suggestions, resumés and other forms of job inquiries, surveys and business solicitations or advertisements. In addition, material that is threatening, illegal, or similarly unsuitable will be excluded, with the provision that any communication that is filtered out will be available to anynon-management director upon request.
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AUDIT COMMITTEE COMMUNICATIONS
Complaints and concerns relating to accounting, internal control over financial reporting or auditing matters may be communicated to the Audit Committee, which consists solely of independentnon-employee directors, through the Office of the Secretary/Legal Department as described above under “Director Communications.” Any such communication may be anonymous. All complaints and concerns will be reviewed by the Audit Committee or a designated member of the Audit Committee. If the Audit Committee or its member designee determines that a reasonable basis exists for conducting a formal investigation, the Audit Committee will direct and supervise the investigation, and may retain independent
legal counsel, accountants, and other advisors as it deems necessary. Confidentiality will be maintained to the fullest extent consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee.
We will not discharge, demote, suspend, threaten, harass or in any manner discriminate or retaliate against any employee in the terms and conditions of his or her employment or otherwise to the extent prohibited by law based upon any lawful actions of such employee with respect to good faith reporting of complaints regarding accounting, internal controls or auditing matters.
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AUDIT COMMITTEE REPORT
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RALPH LAUREN CORPORATION
|
The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s consolidated financial statements, the Company’s compliance with legal and regulatory requirements, the Company’s system of internal control over financial reporting, and the qualifications, independence, and performance of the Company’s internal and independent registered public accounting firm. The Audit Committee has the sole authority and responsibility to select, evaluate, and, when appropriate, replace the Company’s independent registered public accounting firm. The Audit Committee currently is composed of five independent directors and operates under a written charter adopted by the Audit Committee and ratified by the Board.
Management is responsible for the Company’s financial reporting process, including the Company’s internal control over financial reporting, and for the preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP. Ernst & Young, as the Company’s independent registered public accounting firm for Fiscal 2019,2021, was responsible for auditing those financial statements and expressing its opinion as to the fairness of the financial statement presentation in accordance with U.S. GAAP, and the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to oversee and review these processes. The Audit Committee is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations, or U.S. GAAP or as to auditor independence. The Audit Committee relies, without independent verification, on the information provided to us and on the representations made by management and the independent registered public accounting firm.
In this context, the Audit Committee has met and held discussions with management and Ernst & Young, the Company’s independent registered public accounting firm for Fiscal 2019.2021. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with U.S. GAAP, and the Audit Committee has reviewed and discussed with management, the Company’s internal auditors, and Ernst & Young the Company’s consolidated financial statements for Fiscal 20192021 and
the Company’s internal control over financial reporting. The Audit Committee also discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 1301 (formerly known as Statement on Auditing Standards No. 61)16), as amended (Communications with Audit Committees). Ernst & Young provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence, and the Audit Committee discussed their independence with them. In determining Ernst & Young’s independence, the Audit Committee considered whether their provision ofnon-audit services to the Company was compatible with maintaining independence. The Audit Committee received regular updates on Ernst & Young’s fees and the scope of audit andnon-audit services it provided. All such services were provided consistent with applicable rules and the Company’spre-approval policies and procedures.
Based on our discussions with management, the Company’s internal auditors, and Ernst & Young, and our review of the audited financial statements, including the representations of management and Ernst & Young with respect thereto, and subject in all cases to the limitations on our role and responsibilities referred to above and set forth in the Audit Committee Charter, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements for Fiscal 20192021 be included in the Company’s Annual Report on Form10-K.
The Audit Committee also approved, subject to stockholder ratification, the selection of Ernst & Young as the Company’s independent registered public accounting firm for Fiscal 2020.2022.
Members of the Audit Committee
John R. Alchin(Committee Chair)
Frank A. Bennack, Jr.
Dr. Joyce F. Brown
Michael A. George
Valerie Jarrett
Linda Findley Kozlowski
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SECURITY OWNERSHIP
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RALPH LAUREN CORPORATION
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of the Record Date by: (i) each of our NEOs, (ii) each director and director nominee, (iii) each stockholder who is known by us to beneficially own in excess of five percent of any class of our voting securities and (iv) all directors and executive officers as a group. Except as otherwise indicated, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by such person. The rules of the SEC consider a person to be the “beneficial owner” of any securities over which the person has or shares voting power or investment power. In addition, a person is deemed to be the beneficial owner of securities if that person has the right to acquire beneficial ownership of such securities within 60 days, including through conversion or exercise of an option or other right. Unless otherwise indicated below, the address of each stockholder is 650 Madison Avenue, New York, New York 10022. As of the Record Date, there were 693650 holders of record of our Class A Common Stock.
| Class A Common Stock | Class B Common Stock 1 | Voting Power of Total Common Stock % | ||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock 1 |
Voting Power
| Number
| %
| Number
| %
| %
| |||||||||||||||||||||||||||||||||
Number
| %
| Number
| %
| %
| ||||||||||||||||||||||||||||||||||||
Ralph Lauren |
| 823,8512 |
|
| 1.58% |
|
| 25,381,2803 |
|
| 100% |
|
| 83.23% |
|
| 380,4622 |
|
| * |
| 24,881,2763 |
|
| 100% |
|
| 83.78% |
| |||||||||||
Patrice Louvet |
| 22,5904 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 26,5074 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Jane Nielsen |
| 32,4545 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 30,2365 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Valérie Hermann |
| 49,2356 |
|
| * |
|
| — |
|
| — |
|
| * |
| |||||||||||||||||||||||||
Andrew Howard Smith |
| 3,3156 |
|
| * |
| — |
| — |
| * |
| ||||||||||||||||||||||||||||
David Lauren
|
| 31,7907,8
|
|
| *
|
|
| — 8
|
|
| —
|
|
| *
|
|
| 30,6417 |
|
| * |
| — 8 |
| — |
|
| * |
| ||||||||||||
Angela Ahrendts |
| 09 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,5219 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
John R. Alchin |
| 19,74510 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 20,63110 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Arnold H. Aronson |
| 12,17711 |
|
| * |
|
| — |
|
| — |
|
| * |
| |||||||||||||||||||||||||
Frank A. Bennack, Jr. |
| 23,50412 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 24,39011 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Dr. Joyce F. Brown |
| 7,82013 |
|
| * |
|
| — |
|
| — |
|
| * |
| |||||||||||||||||||||||||
Joel L. Fleishman |
| 11,76814 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 11,43412 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Michael A. George |
| 1,81515 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 8,10613 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Valerie Jarrett |
| — |
|
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||
Hubert Joly |
| 13,51516 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 14,40114 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Linda Findley Kozlowski |
| 017 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,52115 |
|
| — |
| — |
| — |
| — |
| |||||||||||||
Judith A. McHale |
| 7,69718 |
|
| * |
|
| — |
|
| — |
|
| * |
|
| 8,58316 |
|
| * |
| — |
| — |
| * |
| |||||||||||||
Robert C. Wright
|
| 24,13819
|
|
| *
|
|
| —
|
|
| —
|
|
| *
|
| |||||||||||||||||||||||||
Darren Walker
|
| —17
|
|
| —
|
|
| —
|
|
| — |
|
| — |
| |||||||||||||||||||||||||
The Vanguard Group |
| 6,801,79120 |
|
| 13.11% |
|
| — |
|
| — |
|
| 2.22% |
|
| 4,641,57818 |
|
| 9.5% |
| — |
| — |
| 1.6% | ||||||||||||||
BlackRock, Inc. |
| 4,137,37721 |
|
| 7.97% |
|
| — |
|
| — |
|
| 1.35% |
|
| 3,917,71319 |
|
| 8.1% |
| — |
| — |
| 1.3% | ||||||||||||||
Renaissance Technologies LLC
|
| 3,586,20022
|
|
| 6.91%
|
|
| —
|
|
| —
|
|
| 1.17%
|
| |||||||||||||||||||||||||
All directors and executive officers as a group (17 persons23)
| 1,094,91224 | 2.10% | 25,381,2803 | 100% | 84.94% | |||||||||||||||||||||||||||||||||||
JPMorgan Chase & Co. |
| 3,254,79220 |
|
| 6.7% |
| — |
| — |
| 1.1% | |||||||||||||||||||||||||||||
All directors and executive officers as a group (15 persons)
|
| 563,74821
|
|
| 1.16%
|
|
| 24,881,2763
|
|
| 100%
|
|
| 83.84%
|
| |||||||||||||||||||||||||
* Less than 1.01.0%
| 1. | Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock. Each share of Class B Common Stock will be automatically converted into one share of Class A Common Stock upon transfer to a person who is not Mr. R. Lauren or a member of his family, or an entity that is not owned by, or established for the benefit of, Mr. R. Lauren, or members of his family. |
| 2. | For Mr. R. Lauren, includes |
Does not include (i) unvested performance-based stock awards with respect to |
| |
SECURITY OWNERSHIP
|
RALPH LAUREN CORPORATION
|
|
| 3. | Includes (i) 11,499,906 shares of Class B Common Stock held by a revocable trust of which Mr. R. Lauren is the sole trustee and sole beneficiary, (ii) 879,044 shares of Class B Common Stock held by a revocable trust of which Mr. R. Lauren’s spouse, Mrs. Ricky Lauren, is the sole trustee and sole beneficiary, (iii) an aggregate of 4,289,028 shares of Class B Common Stock held by trusts established for the benefit of Mr. R. Lauren’s descendants and of which Mrs. R. Lauren is a trustee and of which Mr. R. Lauren has the power to remove and replace the trustees, provided that Mr. R. Lauren may not serve as the replacement trustee and the replacement trustee is not related or subordinate to Mr. R. Lauren, (iv) 2,370,956 shares of Class B Common Stock held by a trust established for the benefit of Mrs. R. Lauren’s descendants and of which Mr. R. Lauren has the power to remove and replace the trustees, provided that Mr. R. Lauren and Mrs. R. Lauren may not serve as the replacement trustees, and (v) |
| 4. | For Mr. Louvet, does not include (i) unvested performance-based stock awards with respect to |
July 3, 2022), (iii) 53,833 RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered August 15, 2023), and (iv) 53,832 RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered in three equal annual installments beginning on August 15, 2021). |
| 5. | For Ms. Nielsen, does not include (i) unvested performance-based stock awards with respect to |
| 6. | For Mr. Smith, includes options vested as of the Record Date or within 60 days thereafter representing the right to purchase 3,315 shares of Class A Common Stock. Does not include (i) unvested performance-based stock awards with respect to 34,885 shares of Class A Common Stock, a portion of which are subject to upward or downward adjustment, (ii) |
|
| 7. | For Mr. D. Lauren, includes options vested as of the Record Date or within 60 days thereafter representing the right to purchase |
| 8. | An aggregate amount of |
| subordinate to Mr. R. Lauren and Mr. R. Lauren may not serve as manager. |
| 9. | For Ms. Ahrendts, does not include |
| 10. | For Mr. Alchin, |
| 11. | For Mr. |
| 12. | For Mr. |
| 13. | For |
| 14. | For Mr. |
| 15. | For |
| 16. | For |
| 17. | For |
| 18. |
|
|
According to a Schedule 13G/A filed on February |
According to a Schedule 13G/A filed on February |
| |
DELINQUENT SECTION 16(A)
|
RALPH LAUREN CORPORATION
|
According to a Schedule 13G filed on |
Includes |
|
| awards, a portion of which are subject to upward or downward adjustment, (ii) |
DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers to file initial reports of ownership and reports of changes in ownership of our Class A Common Stock with the SEC and to provide copies of these reports to us. These filing requirements also apply to certain beneficial owners of more than 10 percent of our Class A Common Stock. To our knowledge, based solely on our review of the copies of Section 16(a) reports furnished to us during and with respect to Fiscal 20192021 and on written representations from certain reporting persons, all reportable transactions during Fiscal 20192021 were reported on a timely basis.
| |
DIRECTOR COMPENSATION
|
RALPH LAUREN CORPORATION
|
For Fiscal 2019,2021, the compensation fornon-employee directors was as follows:
Type of Compensation |
Compensation Amount | |
Annual retainer for eachnon-employee director1
| $80,000
| |
Additional annual retainer for Lead Independent Director1
| $50,000
| |
Additional annual retainer for the Chair of each Board Committee1 |
• Chair of the Audit Committee: $30,000 • Chair of the Compensation Committee: $30,000 • Chair of the Nominating Committee: $20,000 • Chair of the Finance Committee: $20,000
| |
Annual retainer for member of each Board Committee1 |
• Audit Committee Member: $15,000 • Compensation Committee Member: $15,000 • Nominating Committee Member: $10,000 • Finance Committee Member: $10,000
| |
Annual equity award2
|
Target equity value of $140,000, which is delivered in the form of restricted stock units of Class A Common Stock. These restricted stock units vest on the one year anniversary of the grant.
| |
| 1. | The annual retainers are paid to thenon-employee directors in quarterly installments in arrears. |
| 2. | The annual equity award tonon-employee directors is awarded on the date of the Annual Meeting of Stockholders each year to thosenon-employee directors who join the Board on the date of the Meeting or have served as directors |
In response to the COVID-19 global pandemic, our non-employee directors have forgone their quarterly cash compensation for the first quarter of Fiscal 2021.
Our Board and Compensation Committee believe it is important for our NEOs, key members of our senior management team, and ournon-employee directors to build and maintain a long-term ownership position in the Company, to further align their financial interests with those of our stockholders, and to encourage the creation of long-term value. The Compensation Committee has established stock ownership guidelines for ournon-employee directors, our NEOs, and select other members of our senior management group. Further details on the guidelines for NEOs and certain members of our senior management group are provided in “Compensation Discussion and Analysis—Executive Stock Ownership Guidelines.”
The current stock ownership guidelines for thenon-employee directors are as follows:
| 49 | | | 2021 PROXY STATEMENT |
DIRECTOR COMPENSATION | RALPH LAUREN CORPORATION |
We reimburse ournon-employee directors for reasonable travel and other related expenses to attend Board and committee meetings and for director education courses.Non-employee directors are also provided with a merchandise discount on most of our products.
| | | | |
DIRECTOR COMPENSATION
|
RALPH LAUREN CORPORATION
|
The following table provides information concerning the compensation of those individuals who served as ournon-employee directors during Fiscal 2019.2021. Directors who are our employees receive no compensation for their services as directors and do not serve on any committees of the Board. Note that the each of the Directors below who served in the first quarter on Fiscal 2021 agreed to forego their fee for that quarter due to the impact of the COVID-19 crisis.
Name | Fees Earned or Paid in Cash 1 ($) | Stock Awards 2 ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation 3 ($) | Total ($) | Fees Earned or Paid in Cash 1 ($) | Stock Awards 2 ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation 3 ($) | Total ($) | ||||||||||||||||||||||||||||||||
Angela Ahrendts
|
|
60,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,000
|
|
75,000
|
|
140,004
|
|
—
|
—
|
—
| —
|
|
215,004
|
| ||||||||||||||
John R. Alchin
|
|
120,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
310,950
|
|
101,250
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
|
244,502
|
| ||||||||||||||
Arnold H. Aronson
|
|
85,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
275,950
|
| |||||||||||||||||||||||||
Frank A. Bennack, Jr
|
|
180,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
370,950
|
|
127,500
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
| 270,752
|
| ||||||||||||||
Dr. Joyce F. Brown
|
|
115,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
305,950
|
| |||||||||||||||||||||||||
Dr. Joyce F. Brown4
|
26,250
|
|
—
|
|
—
|
—
|
—
|
3,248
|
|
29,498
|
| |||||||||||||||||||||||||||||||||||
Joel L. Fleishman
|
|
120,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
310,950
|
|
75,000
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
|
218,252
|
| ||||||||||||||
Michael George
|
|
110,000
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250,000
|
|
112,500
|
|
140,004
|
|
—
|
—
|
—
|
—
|
|
252,504
|
| ||||||||||||||
Valerie Jarrett
|
47,500
| �� |
|
—
|
|
—
|
—
|
—
|
—
|
| 47,500
|
| ||||||||||||||||||||||||||||||||||
Hubert Joly
|
|
125,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
315,950
|
|
93,750
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
|
237,002
|
| ||||||||||||||
Linda Findley Kozlowski
|
|
72,500
|
|
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
212,500
|
|
90,000
|
|
140,004
|
|
—
|
—
|
—
|
—
|
| 230,004
|
| ||||||||||||||
Judith A. McHale
|
|
110,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
300,950
|
|
90,000
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
|
233,252
|
| ||||||||||||||
Robert C. Wright
|
|
90,000
|
|
|
186,661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289
|
|
|
280,950
|
| |||||||||||||||||||||||||
Darren Walker
|
67,500
|
|
140,004
|
|
—
|
—
|
—
|
3,248
|
|
210,752
|
| |||||||||||||||||||||||||||||||||||
Robert C. Wright4 |
22,500
|
|
—
|
|
—
|
—
|
—
|
3,248
|
|
25,748
|
| |||||||||||||||||||||||||||||||||||
| 1. | Reflects the pro-rata amount of fees paid in arrears for Fiscal |
| 2. |
|
| 3. | This amount represents deferred cash dividends paid during Fiscal |
| 4. | Dr. Brown and Mr. Wright departed the Board of Directors following the 2020 Annual Meeting of Stockholders, but received compensation in connection with their service in the second quarter of Fiscal 2021 from June 28, 2020 to September 26, 2020. |
| | | |
DIRECTOR COMPENSATION
|
RALPH LAUREN CORPORATION
|
At the end of Fiscal 2019,2021, each individual who served as anon-employee director during Fiscal 20192021 held options to purchase shares of our Class A Common Stock, restricted shares, and/or restricted stock units of our Class A Common Stock as follows:
| Options 1 | Restricted Stock 2 | Restricted Stock Units 3 | Options 1 | Restricted Stock | Restricted Stock Units | |||||||||||||||||||
Angela Ahrendts
|
|
—
|
|
|
—
|
|
|
1,093.96
|
|
|
—
|
|
|
—
|
|
|
1,987
|
| ||||||
John R. Alchin
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
|
|
834
|
|
|
—
|
|
|
1,987
|
| ||||||
Arnold H. Aronson
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
| |||||||||||||||
Frank A. Bennack, Jr.
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
|
|
834
|
|
|
—
|
|
|
1,987
|
| ||||||
Dr. Joyce F. Brown
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
| |||||||||||||||
Dr. Joyce F. Brown2
|
|
834
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Joel L. Fleishman
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
|
|
834
|
|
|
—
|
|
|
1,987
|
| ||||||
Michael George
|
|
—
|
|
|
—
|
|
|
1,093.96
|
|
|
—
|
|
|
—
|
|
|
1,987
|
| ||||||
Valerie Jarrett3
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Hubert Joly
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
|
|
834
|
|
|
—
|
|
|
1,987
|
| ||||||
Linda Findley Kozlowski
|
|
—
|
|
|
—
|
|
|
1,093.96
|
|
|
—
|
|
|
—
|
|
|
1,987
|
| ||||||
Judith A. McHale
|
|
1,635
|
|
|
1,278
|
|
|
1,518.64
|
|
|
834
|
|
|
—
|
|
|
1,987
|
| ||||||
Robert C. Wright
|
|
2,358
|
|
|
1,278
|
|
|
1,518.64
|
| |||||||||||||||
Darren Walker
|
|
—
|
|
|
—
|
|
|
1,987
|
| |||||||||||||||
Robert C. Wright2
|
|
834
|
|
|
—
|
|
|
—
|
| |||||||||||||||
| 1. | Represents outstanding options granted to non-employee directors |
| 2. |
|
| 3. |
|
| | | | |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
COMPENSATION DISCUSSION & ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) explains our executive compensation programs as they pertain tofor the following individuals, all of whom were deemed to be NEOs during Fiscal 2019.2021.
Name | Title | |||||
Ralph Lauren |
| Executive Chairman and Chief Creative Officer | ||||
Patrice Louvet |
| President and Chief Executive Officer (“CEO”) | ||||
Jane Nielsen |
|
| ||||
Howard Smith
|
| Chief Commercial Officer | ||||
| ||||||
David Lauren |
| Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and | ||||
The CD&A includes the following:
| What’s included? | |
| Highlights of our executive compensation program, including Fiscal 2021 compensation decisions and actions taken in response to the pandemic, how we connect pay with performance and company achievements, and an overview of our executive compensation governance practices | |
Stockholder Feedback and Compensation Committee Response | Our stockholder engagement process and Compensation Committee consideration of Say on Pay votes, and a preview of our Fiscal 2022 executive compensation program | |
Governance | Summary of the factors considered by the Compensation Committee in compensation goal setting, the key participants in our executive compensation process and the role each plays in decision-making | |
Key Components of Executive | A description of the principal elements of our executive compensation program, including pay mix and specific details regarding decisions made within each element | |
All Other Compensation, Executive Stock Ownership Guidelines, and Related Considerations | A summary of employee benefits and perquisites, Fiscal 2021 stock ownership guidelines, and other related compensation considerations | |
Overview of Performance-based Compensation ProgramsCOVID-19 Pandemic Impact and Actions Taken
The Compensation Committee strongly believesFiscal 2021 was an unprecedented year that our compensation practices accomplish the goal ofpay-for-performance by rewarding our executivespresented extraordinary challenges for the achievement of both short-termglobal economy, our industry and long-term financial and strategic performance goals. To align our executives’ compensation with stockholders’ interests, the Compensation Committee has concluded that a majority of our executives’ compensation should beat-risk—in the form of annual cash incentive and long-term equity-based awards.
Compensation Program Philosophy & Objectives
We maintain competitive executive compensation programs designed to reward sustained business growth and results. These programs are intended to drive stockholder valueCompany as we navigated through the following principles:
that highlighted racial injustice in our society and raised awareness of long-term equity awards.
Pay for Performance: Key Takeaways for Fiscal 2019
Inmanaging our response to stockholder feedback and in order to align with our strategic plan and drive value creation for our stockholders, we changed the performance measures in the Short-Term and Long-Term Incentive Plans.pandemic.
| | | |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
From the outset of the global pandemic, our priority has been to ensure the safety and well-being of our employees, consumers and the communities in which we operate around the world. We demonstrated this by forming a global business continuity task force that met every day at the beginning of the crisis to get a pulse on the pandemic, as we temporarily closed stores and developed processes and protocols on returning to work safely when the stores reopened. We successfully implemented COVID-19 related policies and protocols for our employees so that the reopening process was consistent across all stores around the world, with 25% capacity limits in the stores, mandatory employee and customer masks, marked queues with social distancing guidelines outside stores, plexiglass at the registers, and the ability for customers to shop from the outside queues and have the purchase brought out to them. As a token of gratitude for their work during the COVID-19 pandemic, we provided a one-time $1,000 bonus to each of our global frontline workers in June 2021. Additionally, we made COVID-19 vaccines available in our North Carolina Health Clinic with over 400 employees receiving their first dose onsite. In June 2021 we provided a 401(k) supplemental match of 2% to eligible participants in the U.S. 401(k) retirement plan.
In response to racial injustice and the related social unrest movements in our society, we reintroduced unconscious bias training, implemented an internal Black Advisory Council and put in place forums to facilitate open dialogue and programs and resources to bring awareness to key issues. Our Fiscal 2019 financial metrics2021 Global Citizenship & Sustainability Report added a new goal to increase representation of underrepresented groups in our short-term bonus plan included:global leadership team. We conducted four pulse surveys on targeted topics for our employees during Fiscal 2021 to check in on their well-being and to ensure we were on track with our actions to demonstrate our care for our employees.
We are committed to an ongoing safe and inclusive environment for our employees. Some key policies and benefits in place to ensure the care of our employees include:
Our Fiscal 2019 financial metrics in our long-term equity plan included:
We delivered better than expected financial results in Fiscal 2019, resulting in above-target payouts in both our Short-Term and Long-Term Incentive Plans with the following Fiscal 2019 financial results:
Company Achievements: Key Takeaways for Fiscal 2019
Delivered On Our Next Great Chapter Strategic Plan in Fiscal 2019
On June 7, 2018, as part of our Investor Day, we announced our Next Great Chapter Strategic Plan. The Strategic Plan is our multi-year plan intended to position the Company to deliver long-term sustainable growth and value creation. For Fiscal 2019, we delivered on our commitments in the first year of our Strategic Plan with a return to positive revenue growth, a year ahead of our plan, and better than expected operating margin expansion, all while continuing to raise average unit retail and improve quality of sales overall. Results included:
|
|
Employee Assistance Program (EAP) where all employees and family members can access one-on-one confidential counseling 24 hours a day; Flexible Work Arrangements which help employees face the challenges of managing work, family and life-related issues by empowering them with increased flexibility in their work schedules; We encourage employees to utilize their paid time off, including sabbaticals; and Fair Treatment Policy to provide a comfortable and consciously inclusive work environment for everyone regardless of gender identity and expression, race, ethnicity, religion, national origin, sexual orientation, age, marital status, disability, or any other category protected by applicable law. In Fiscal 2021, we gave back to the community by donating $10 million toward emergency pandemic relief, producing and donating 250,000 masks and 25,000 isolation gowns to workers on the frontline, and donating 3 million clothing products to support frontline workers and families in need around the world. The Board of Directors and executive leadership team closely monitored the impacts of the pandemic on our business and operations, and management swiftly took action to adjust the Company’s strategic plan accordingly with the intent to support future growth and profitability, and to realign its cost structure. Due to the timing of our fiscal year, March 29, 2020 through March 27, 2021, the pandemic significantly impacted results for the entire fiscal year. While our business was adversely affected by the pandemic, we nevertheless made significant progress executing on our goals and positioning the Company to exit the crisis with strength and positioned for future growth. |
| | | | |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
Initial uncertainties surrounding the pandemic and the related market volatility affected many of our compensation decisions, especially as the beginning of the pandemic coincided with the start of the Company’s fiscal year when final decisions are typically made regarding executive compensation for the upcoming year. As a result, the Compensation Committee, in conjunction with its third-party independent compensation consultant, reviewed and approved temporary changes to the design of the Fiscal 2021 executive compensation programs with a focus on retaining and motivating our management team as we navigated through these extraordinary challenges during the crisis. We took a thoughtful approach to balance retaining talent with being mindful of capping payouts in the midst of furloughs and layoffs. The temporary changes made to the Fiscal 2021 compensation programs described below, specifically, in our annual bonus program goals and the type of long-term incentives awarded, were intended to refocus our management team on protecting the health and safety of our teams and customers, stabilizing our environment and preserving our cash, and focusing on the strategies to ensure we could emerge from the crisis with strength and drive growth.
Based on market uncertainty and the financial impact to the Company, the Compensation Committee approved salary reductions, with mutual agreement by our named executive officers as outlined on page 58.
Other key actions included:
|
|
|
|
|
|
$1.25 billion in |
|
|
|
| Pause of all |
|
|
|
|
Delivered Strong TSROn Our Next Great Chapter Strategic Plan in Fiscal 20192021
Our TSR for recent periods, relativeDuring Fiscal 2021, we continued to execute on the strategies outlined in our compensation comparator group detailedfive-year, Next Great Chapter Strategic Plan first announced in June 2018. This plan is intended to position the Company to deliver quality long-term sustainable growth and value creation. While the unforeseen impacts of COVID-19 significantly disrupted our operations in Fiscal 2021, we continued to deliver on page 51several of our commitments in the CD&Athird year of our Strategic Plan with gross margin expansion, raising average unit retail and the S&P 500, is set forth below. For Fiscal 2019, we generated a strong TSRimproving quality of 18.4% comparedsales overall, all while continuing to the-7.8% loss for our compensation comparator groupprotect liquidity and the 7.3% gain for the S&P 500.
1-Year TSR (%) Fiscal 2019
|
3-Year TSR (%) Fiscal 2017 – 2019
|
5-year TSR (%) Fiscal 2015 – 2019
| ||||||||||
Ralph Lauren Corporation
|
|
18.4%
|
|
|
42.2%
|
|
|
-10.0%
|
| |||
Compensation Comparator Group
|
|
-7.8%
|
|
|
-6.3%
|
|
|
-15.2%
|
| |||
S&P 500 Index
|
|
7.3%
|
|
|
36.7%
|
|
|
52.6%
|
| |||
| | | |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
improve our long-term operating cost structure. Results included:
| – | Marketing investments increased to 6% of total revenues in Fiscal 2021, up from 4.5% last year, to support our brand elevation and drive consumer engagement, resulting in accelerated growth in global brand awareness and purchase intent |
| – | Strategically shifted investments toward innovative digital campaigns, including our Ralph Lauren x Bitmoji Collection with over 1 billion try-ons on Snapchat, virtual concert experience featuring Chance the Rapper, global Farfetch launch, our Spring ’21 Collection digital experience featuring a livestream concert with Janelle Monáe, CLOT x Polo Ralph Lauren collaboration with Edison Chen, and debut sponsorship of the Australian Open |
| – | Average unit retail (“AUR”) across our direct-to-consumer network grew 26% for full year Fiscal 2021. All geographies exceeded our long-term targets of low- to mid-single digit annual AUR growth, led by more than 20% growth in both North America and Europe as we accelerated our brand elevation initiatives this year. |
| – | Continued to evolve our product mix to align with changing consumer preferences by region, including leveraging our core programs, driving our high-potential under-developed categories such as outerwear and fleece, and prudently building back into new seasonal assortments as consumer demand improves |
| – | Expanded into new digital platforms including the launch of ‘The Lauren Look,’ our first subscription apparel rental service, offering consumers an innovative new channel to experience, engage and ultimately shop the Lauren Ralph Lauren brand as they build their personal wardrobes in a rapidly evolving retail landscape |
| – | Delivered sequential improvement across all geographies in the fourth quarter led by Asia and Europe, despite further government-mandated restrictions due to COVID-19 in both regions. North America comps strengthened into the end of the period, inflecting to positive 3% growth in the fourth quarter. |
| – | Strong continued momentum in the Chinese mainland, with Fiscal 2021 sales increasing more than 50% to the prior year and increasing more than 65% compared to Fiscal 2019 |
| – | Global digital revenue accelerated across both owned and wholesale digital channels and across all geographies in the fourth quarter driven by Connected Retail and new product initiatives, with owned digital sales increasing 52% to the prior year and total digital ecosystem sales up over 60% |
| – | Operating margins in our owned digital business expanded more than 1,000 basis points to last year for the full year. Digital margins were accretive to total company margin rate, with similar improvement across all regions. |
| – | Adjusted operating expenses decreased 16% to last year, driven by savings across compensation related expenses, rent and occupancy, travel and other expenses |
In June 2018, we announced an increase to our quarterly dividend payments from $0.50 per share to $0.625 per share resulting in a new annual dividend of $2.50 per share.
| – | Exceeded our lead time targets with approximately two-thirds of our products on lead times of six months or less, versus our long-term target of 50% by Fiscal 2023 and compared to 20% in Fiscal 2016 |
On the same day, we announced that the Company’s Board of Directors authorized an additional $1.0 billion stock repurchase program permitting the Company to purchase shares of Class A Common Stock. During Fiscal 2019, we repurchased approximately 3.8 million shares of our Class A Common Stock utilizing approximately $470 million of our aggregate stock repurchase authorizations of $1.1 billion.
We returned approximately $660 million in cash to stockholders in Fiscal 2019 through dividends and repurchases.
In May 2019, we again increased our quarterly dividend to $0.6875 per share resulting in a new annual dividend of $2.75 per share. We also received authorization from the Board of Directors for an additional $600 million in stock repurchases and we plan to repurchase approximately $600 million of stock in Fiscal 2020.
| – | Concluded our brand portfolio review with a definitive agreement to sell Club Monaco, enabling our teams to focus our resources on our core brands as part of our Next Great Chapter elevation strategy |
How We Connected Pay to Performance for Fiscal 2019
In Fiscal 2019, we delivered better than expected financial results, resulting in above-target payouts in both our Short-Term and Long-Term Incentive Plans as detailed below:
Annual Cash Incentive Bonus:
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Performance Measure
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Weighting
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Performance Results1 as a % of Target
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Amount Paid as
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Executive Officer Annual Incentive Plan (EOAIP)
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NIBT
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60%
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106%
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153% for Mr. R. Lauren
139% for Mr. Louvet2
168% for other NEOs2 | ||||||||
Corporate Revenue
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20%
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103%
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Company-wide SG&A as a % of Revenue
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20%
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101%
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(1) Includes impact of adjustments, in accordance with adjustment language approved by the Compensation Committee, including restructuring and other charges pursuant to the Strategic Plan. See Appendix B fornon-GAAP reconciliations. (2) Includes impact, if any, of the strategic objective, which can adjust bonus payment by-10% to +10%. For Fiscal 2019, there was a plus 10% adjustment for the strategic goal of global digital revenue as the performance expectation exceeded target level. Any adjustment in annual bonus attributable to the strategic goal is not applicable to Mr. R. Lauren. With the exception of Mr. Louvet, maximum payout for all NEOs is 200% of target. For Mr. Louvet, maximum payout is 150% of target.
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Long-term Equity-Based Incentives:
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Performance Measure
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Performance Period
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Performance Results1
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Amount Paid as a % of Target
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Performance Share Units (PSUs) (applicable to Mr. R. Lauren, Ms. Nielsen, Ms. Hermann, and Mr. D. Lauren)
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Cumulative EPS
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Fiscal 2017 – Fiscal 2019
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108%
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138%2
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Additional PSUs (applicable to Ms. Hermann only)
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Cumulative EPS
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Q3 and Q4 Fiscal 2017–Fiscal 2019
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107%
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136%3
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Performance-based Restricted Stock Units (PRSUs) (applicable to Mr. Louvet, Ms. Nielsen, Ms. Hermann, and Mr. D. Lauren)
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ROIC
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Fiscal 2019 |
Exceeded threshold level
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100%4
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COMPENSATION DISCUSSION AND ANALYSIS
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RALPH LAUREN CORPORATION
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Total Shareholder Return (TSR) Performance
Our TSR for recent periods, relative to our compensation comparator group detailed on page 76 of the CD&A and the S&P 500, is set forth below. TSR is based on stock price appreciation, plus dividends reinvested, with starting and ending share prices based on average closing stock prices for the 20 trading days ending immediately prior to the beginning and end of the performance period. Results are varied with the Company outperforming our compensation comparator group for the three- and five-year periods ended Fiscal 2021 but behind the comparator group in the one-year period and behind the S&P 500 Index for the one-, three-, and five-year periods ended Fiscal 2021.
Preserved Cash
As a result of the COVID-19 outbreak and related impact to our operations, the Company took pre-emptive actions to preserve cash and strengthen its liquidity while navigating the evolving global pandemic. As a result, we temporarily halted any incremental share repurchases during the COVID-19 crisis, having completed our re-purchase program in Fiscal 2020. We
also suspended our quarterly dividends during the crisis, beginning in Fiscal 2021.
In May 2021, we announced that the Board of Directors approved to reinstate our regular quarterly cash dividends of $0.6875 per share beginning in Fiscal 2022 resulting in an annual dividend of $2.75 per share, in-line with pre-pandemic levels.
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Compensation Program Philosophy & Objectives
We maintain competitive executive compensation programs designed to attract and retain highly qualified talented employees and reward sustained business growth and results. These programs are intended to drive stockholder value through the following principles:
Strong pay-for-performance alignment by rewarding progress on our highest priority strategic goals, balancing the needs of our five stakeholder groups: Our Employees, Our Customers and Our Brand, Our Shareholders, Our Partners, and Our Communities
Attain competitive compensation practices and levels on total compensation, as well as within each compensation component
Strike the right balance of variable and fixed pay by awarding a meaningful portion of compensation in variable rather than fixed pay, with a significant portion in the form of long-term equity awards
Maintain globally consistent bonus and stock targets to support movement of talent and internal pay equity
Reward and motivate top talent, including high performers and those with high potential
Inspire creativity and collaboration (“one team”, “one strategy”)
Design a simple, consistent, and transparent plan
Compensation Decisions in Fiscal 2021
Base Salary
Based on market uncertainty and the financial impact to the Company, the Compensation Committee approved salary reductions, with mutual agreement by our NEOs:
| 2021 PROXY STATEMENT | 58 | |
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Overview of Performance-based Compensation Programs for Fiscal 2021
The Fiscal 2021 program design was driven by the following guiding principles established in March 2020 at the onset of the COVID-19 pandemic:
Flexibility – we are in uncharted territory and business as usual plan design will not work
Financial Incentives – financial incentives will continue to be an important part of executive remuneration and retention
Fair and Equitable – consider Fiscal 2021 financial impact to all employees
Stakeholder Interests – design considers each of our 5 stakeholders:
Our Employees – an engaged and enabled workforce; managing employee health and wellbeing; clear and consistent resources and communication,
Our Customers and our Brand – Brand integrity and consumer perception of our Brand; stay true in our purpose to re-establish the dream of a better life,
Our Shareholders – preserving the long-term health of the Company and defining the plan to restart cash returns to shareholders,
Our Partners – protecting our strategic and key partners, and
Our Communities – Social and Sustainability achievements
Simple – keep program simple to focus on what matters most
How we Changed Our Annual Bonus Plan in Fiscal 2021
Due to the initial uncertainties at the beginning of the pandemic, which approximated the beginning of our fiscal year, the Committee concluded that setting financial targets was not a practical option. As a temporary solution, our short-term bonus plan for Fiscal 2021 was driven by quantitative and qualitative key performance indicators (“KPIs”) that considered all stakeholders and supported the Company’s enterprise-wide efforts to maximize its operations, reduce costs and leave the Company better positioned when more normal business operations resume (including employee health and safety). In order to reassess the KPIs as the year progressed, we established two six-month performance intervals. In this way, we were able to reset existing goals and add more quantitative goals mid-year as we continued to navigate through the evolution of the pandemic, the political landscape in North America and the issues of social justice worldwide as shown below in the details of our KPI performance.
Determination of the bonus payout was based on the average of the progress against the KPIs for each of the performance intervals and any payout was conditioned
on being able to pay for bonuses based on an assessment of the Company’s financial position at the end of the fiscal year. The payout maximum for all employees on the Fiscal 2021 short-term bonus plan was reduced to 125% of target, compared to 200% of target in prior years for all employees, with the exception of our CEO, whose previous payout maximum was 150% of target.
As noted below in “Overview of Executive Compensation Governance Practices – Looking Forward to Fiscal 2022”, we will return to 100% quantitative financial goals for our short-term bonus plan for Fiscal 2022.
Bonus Payout
As intended and approved by the Compensation Committee at the beginning of the fiscal year, the bonus payout was based on the average of the performance assessment of the KPIs set for the first half of the year and the second half of the year as determined by the Compensation Committee. Determination of the progress made against the KPIs for the first half of the year was reviewed and approved by the Compensation Committee in November 2020 and determination of the progress made for the second half of the year was
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
reviewed and approved by the Compensation Committee in May 2021. The Compensation Committee and management assessed the financial situation of the Company at the end of the fiscal year and determined bonuses could be paid.
Progress made against KPIs set in the context of our 5 stakeholders is noted in detail under “Key Components of Executive Compensation – Annual Cash Incentive Awards – Fiscal 2021” and was determined by the Compensation Committee to be slightly above target for the two performance intervals. However, the Compensation Committee elected to limit bonus payout to target level and, as a result, approved bonus payout at 100% target level for Fiscal 2021 for each NEO.
How we Changed Long-Term Incentives Granted in Fiscal 2021
When considering long-term incentives, the Committee did not believe that setting multi-year financial goals was a viable program design for Fiscal 2021. The beginning of our fiscal year, March 29, 2020, coincided with the approximate beginning of the pandemic in the United States. At this time, the stock market was extremely volatile and there was limited information available regarding the future impact COVID-19 might have on our industry and peers. Also, as a global company, the pandemic affected our regions at different times which may not have been the case with our peers. Due to the many uncertainties regarding potential time period and impact of the pandemic, an absolute measure could not reasonably be determined, and a relative measure for new long-term awards was not considered to be reliable during a period of extreme volatility.
As a result, we granted time-based Restricted Stock Units (“RSUs”) to all NEOs in Fiscal 2021 as a temporary solution. The time period for vesting was set equivalent to the prior performance-based equity awards granted to each NEO with three-year cliff vesting for Mr. R. Lauren’s grants, three-year cliff vesting for half of the awards to the other NEO awards and three-year pro-rata annual vesting for the second half of the award. As noted below in “Overview of Executive Compensation Governance Practices – Looking Forward to Fiscal 2022” we plan to return to granting performance-based equity awards as part of our long-term grants in Fiscal 2022.
Impact of COVID-19 on Our Fiscal 2021 Performance
Due to the timing of our fiscal year, which began on March 29, 2020 and ended on March 27, 2021, COVID-19 significantly impacted our financial results for the entire fiscal year.
As a result of the ongoing uncertainties and impact the pandemic would have on long-term financial goals, during Fiscal 2021, the existing metrics under outstanding long-term equity Performance Share Unit (“PSU”) awards granted prior to COVID-19 in Fiscal 2019 and Fiscal 2020 were reviewed by the Committee in regular and special meetings during Fiscal 2021. A portion of these awards were based on three-year relative Total Shareholder Return (“TSR”) goals. We made no changes to these PSU awards.
Other PSUs awards contingent on achieving Return on Invested Capital (“ROIC”) and Earnings per Share (EPS) goals for Fiscal 2021 and Fiscal 2022 were set prior to the pandemic. The Committee, in conjunction with its outside compensation consultant, reviewed each award and considered:
In light of COVID-19 and the significant, adverse, uncontrollable impact it had on our performance, the Committee evaluated the key considerations and made the decision to modify these awards’ performance metrics and related payouts in a manner that was fair and balanced, giving consideration to the current environment, while preserving the intended long-term incentive and retention value without creating a windfall. In that regard, the Committee determined that the payout for all modified in-flight awards would be capped at 100% target.
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
The awards and pandemic-related compensation decisions are summarized below.
LTI Award | Original Performance Measure | Fiscal Years | Compensation Decision | |||
Fiscal 2019 PSUs-ROIC1 | Cumulative three-year Return on Invested Capital (“ROIC”) | 2019 – 2021 | Replace Fiscal 2021 ROIC goal with three-year relative TSR goal. Payout capped at 100% target. | |||
Fiscal 2019 PSUs-TSR1 | Three-year relative TSR to comparator group of | 2019 – 2021 | No change | |||
Fiscal 2020 PSUs-ROIC1 | Cumulative three-year ROIC | 2020 – 2022 | Replace Fiscal 2021 and 2022 ROIC goals with | |||
Fiscal 2020 PSUs-TSR1 | Three-year relative TSR to comparator group of companies | 2020 – 2022 | No change | |||
Fiscal 2020 PSUs-EPS2 | Cumulative three-year Earnings per Share (“EPS”) | 2020 – 2022 | Replace Fiscal 2021 and 2022 EPS goals with three-year relative TSR goal. Payout capped at 100% target. | |||
| 1 | Represents 50% of annual equity award for Mr. R. Lauren and 25% of annual equity award for the |
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SummaryFiscal 2021 Payout of Performance-based Long-term Equity-Based Incentives
Fiscal 2019 PSUs-ROIC and Fiscal 2019 PSUs-TSR vested in May 2021 as follows:
| • | The relative TSR results for the Fiscal 2019 PSUs-TSR were above median at the 53.33rd percentile of the comparator group and paid at 108.33% of target. |
The actual payout detail earned for Fiscal 2019 PSUs-ROIC and Fiscal 2019 PSUs-TSR are further described below under “Key Components of Executive Compensation – Previously Awarded Long-Term Equity-Based Incentives that Vested in May 2021”.
| 61 | | | 2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Overview of Executive Compensation Governance Practices
We seek to maintain high standards with respect to the governance of our executive compensation programs. Key features of our compensation policies and practices that aim to drive performance and align with stockholder interests are highlighted below:below.
Our Compensation Practices (What we do)
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At-Risk Compensation:Our incentive-based compensation represents a significant portion of our executives’ compensation (90% or more for both our Executive Chairman and Chief Creative Officer and our President and CEO).
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Annual Review:We conduct an annual review of our executive compensation program to ensure it rewards executives for performance against clear metrics that align with our
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Stock Ownership Guidelines:We require our NEOs and other select members of our senior management to own a meaningful amount of our Common Stock, worth one to six times their base salary, depending on their positions.
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Regular Review of Programs with Top Institutional Investors:We
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Double Trigger Vesting:We provide for double-trigger vesting following a
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Regular Review of Share Utilization:We regularly evaluate share utilization levels and review the dilutive impact of stock compensation.
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Clawback Policy:Our NEOs are subject to a robust recoupment policy in the event the Company is required to restate its financial statements, providing the right to recoup granted, earned, and vested awards with a look-back period.
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Independent Consultant:We work with an independent compensation consultant retained by the Compensation
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Independent Compensation Committee:Our Compensation Committee is composed solely of independent directors
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| Caps on Incentive Payouts: We have caps on maximum payouts under our short-term and long-term incentive plans. | |||||
Our Prohibited Compensation Practices (What we don’t do)
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No Guaranteed Increases:We do not guarantee salary increases or annual incentives for our NEOs.
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No Repricing Without Stockholder Approval:We do not reprice or exchange for cash underwater stock options without stockholder approval.
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No Hedging or Pledging:We prohibit the hedging or pledging of the Company’s stock by directors, officers, or other employees of the Company.
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No Discount Grants:We do not provide for grants of any equity below fair market value.
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No
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COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
STOCKHOLDER FEEDBACK AND COMPENSATION COMMITTEE RESPONSE
We are committed to our ongoing stockholder outreach efforts andas the input of our stockholders is an important driver of our corporate governance and compensation practices. We actively seek to engage with our stockholders to ensure that we are responsive to their views and priorities in shaping our compensation plan designs and adopting best practices. Periodically, the Compensation Committee receives a report on engagement with our stockholders and the Board receives regular investor feedback from our various analyst meetings.
In Fiscal 2019, we connected meaningfully with our stockholders:
| • | Recap our response to the pandemic |
Through this ongoing outreach, we have received and considered valuable feedback regarding a variety of stockholder-related matters and have adopted a number of significant changes to our compensation program and corporate governance practices. For example:
| • |
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| • | Review our compensation programs and the changes we made as a direct result of the pandemic |
| • | Discuss our Board evolution |
In making executive compensation decisions during Fiscal 2019,2021, two new diverse Directors, Mr. Darren Walker and Ms. Valerie Jarrett, joined the Compensation Committee consideredBoard following the resultsdeparture of thenon-binding, advisory proposal on our executive compensation philosophy, policies, and practices(“Say-on-Pay”) as set forth in our 2018 Proxy Statement. At our 2018 Annual Meeting of Stockholders, we received 90% stockholder support for our executive compensation program. During Fiscal 2019, we have continued to strengthen the alignment of compensation with our strategic priorities and stockholder interests and are committed to adhering to ourpay-for-performance philosophy. After considering ourSay-on-Pay voting results, investor feedback, alignment of our compensation programs with the long-term interests of our stockholders, and advice from its Compensation Consultant, the Compensation Committee made changes to the short- and long-term executive compensation programs effective Fiscal 2019 as described below. In considering the performance measures, we focused on connecting our compensation metrics to our current business strategy which is focused on long-term, sustainable growth and value creation to ensure our executives are focusing on results that support this strategy. For our long-term awards, we strove for a healthy balance between rewarding our executives for the return provided to the Company while also ensuring a critical link to stockholder returns.
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
| • | Discuss our diversity, citizenship and sustainability efforts |
Say on Pay Advisory Vote
In making executive compensation decisions during Fiscal 2021, the Compensation Committee considered the results of the non-binding, advisory proposal on our executive compensation philosophy, policies, and practices (“Say-on-Pay”) as set forth in our 2020 Proxy Statement. At our 2020 Annual Meeting of Stockholders, we received 97% stockholder support for our executive compensation program.
Looking Forward to Fiscal 2022
The Compensation Committee, in conjunction with its third-party independent compensation consultant, reviewed and approved changes to the design of the Fiscal 2022 compensation programs, to align with our strategy to return to sustainable revenue and earnings growth as we emerge from the pandemic. Based on feedback from our stockholders we received in Fiscal 2021, the Compensation Committee determined that we will utilize financial measures in our performance-based compensation programs and we will also include ESG metrics as summarized below.
The Fiscal 2022 financial metrics for our short-term incentive plan will include corporate revenue and corporate operating profit margin. We will introduce ESG metrics as the strategic goal modifier. The metrics will be tied to the Company making progress on key goals, including climate, water and diversity.
The performance measures in the Fiscal 2022 – Fiscal 2024 PSUs will be three-year cumulative operating profit margin and three–year relative TSR. These metrics support alignment with the long-term interests of our stockholders.
The relative TSR comparator group includes retail peers, certain department stores, and other well branded companies. Except for the removal of TJX Companies, Inc., the comparator group for Fiscal 2022 contains the same companies as used in Fiscal 2019 and 2020 with four new additional companies that operate in our industry – Levi Strauss, Lululemon, Abercrombie & Fitch and G-III Apparel.
The comparator group for relative TSR is shown below.
Abercrombie & Fitch | L Brands, Inc. | Nordstrom, Inc. | Urban Outfitters, Inc. | |||
Capri Holdings Limited | Levi Strauss | PVH Corp. | V.F. Corporation | |||
Dillard’s, Inc. | Lululemon | RH (Restoration Hardware, Inc.) | Williams-Sonoma, Inc. | |||
The Gap, Inc. | Macy’s Inc. | Tapestry, Inc. | ||||
G-III Apparel | Nike, Inc. | Under Armour, Inc. | ||||
| 2021 PROXY STATEMENT | | | | |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
Changes in Short-Term Incentive Plan Design for Fiscal 2019
To align with our strategy to return to sustained revenue and earnings growth and to promote sustainable long-term stockholder value, our Fiscal 2019 financial metrics included corporate NIBT, corporate revenue, and company-wide SG&A expenses (excluding marketing and advertising).
Corporate revenue was added as a performance measure to further align the compensation of our NEOs with the strategy to elevate and grow the brand through evolving our product and marketing and expanding our international and digital presence.
SG&A expenses (excluding marketing and advertising) was added as a performance measure tore-emphasize the importance of expense management as we strive to work in new ways to drive productivity and agility.
Global digital revenue was also added as our new strategic goal as we continued to drive sales growth and market share in our digital business. Expanding our digital presence globally is one of our key initiatives. As in the past, the strategic goal was applicable to all NEOs excluding Mr. R. Lauren. Performance relative to our strategic goal results in the adjustment of bonuses upwards or downwards by 10% for Fiscal 2019.
Changes in Long-Term Incentive Plan Design for Fiscal 2019
Performance Share Units (“PSUs”) are a key component of our long-term equity plan design linking pay with performance and aligning management’s interests with stockholders.
In order to further align with our long-term business strategy, the performance measures in the Fiscal 2019—Fiscal 2021 PSUs were changed to three-year cumulative ROIC and three–year relative TSR. These metrics do not overlap with those in our Short-Term Incentive Plan and support alignment with the long-term interests of our stockholders.
The comparator group which was used for relative TSR is shown below.
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Looking Forward to Fiscal 2020
As we enter the second year of our Strategic Plan, the Fiscal 2020 compensation plan design remains aligned with our strategy to return to high quality, sustainable revenue, and earnings growth, evolve our product and marketing, and expand our digital and international presence. Based on the positive stockholder feedback we received on our Fiscal 2019 plan design changes, the Compensation Committee has determined that the performance measures and plan design for our short-term and long-term incentive plans for Fiscal 2020 will remain consistent with Fiscal 2019 as summarized below.
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The Fiscal 2020 financial metrics for our short-term incentive plan will include corporate NIBT corporate revenue, and company-wide SG&A expenses (excluding marketing and advertising). Global digital revenue will continue to be the strategic goal. Performance relative to our strategic goal results in the adjustment of bonuses upwards or downwards by 10% for Fiscal 2020.
The performance measures in the Fiscal 2020—Fiscal 2022 PSUs will be three-year cumulative ROIC and three–year relative TSR. These metrics do not overlap with those in our Short-Term Incentive Plan and support alignment with the long-term interests of our stockholders.
The comparator group which will be used for relative TSR includes retail peers, certain department stores, and other well branded companies and is the same comparator group as for Fiscal 2019.
Effective March 31, 2019, Ms. Nielsen was promoted from Executive Vice President, Chief Financial Officer to Executive Vice President, Chief Operating Officer and Chief Financial Officer. This appointment was made in support of Ms. Nielsen’s role in our Strategic Plan to drive sustainable, long-term growth and value creation. We entered into a new employment agreement with Ms. Nielsen effective March 31, 2019 with an increased compensation arrangement commensurate with her new appointment. See “Executive Employment Agreements and Compensatory Arrangements,” below for a more detailed description of the payments and benefits provided under Ms. Nielsen’s new employment agreement.
EXECUTIVE COMPENSATION GOVERNANCE
Compensation GoalsettingGoal Setting
We areOur Fiscal 2021 began March 29, 2020, coinciding with the global impact of the COVID-19 pandemic affecting the retail industry, market volatility, and the way we work and live. Due to these challenges, the Compensation Committee, in conjunction with its third-party independent compensation consultant, reviewed and approved the design of the Fiscal 2021 compensation programs, in the first quarter of Fiscal 2021, with the purpose to continue to retain and incentivize our leadership team during this unprecedented time.
Our short-term bonus plan was driven by KPIs that took into consideration all stakeholders. These KPIs support the Company’s enterprise-wide efforts to maximize its operations, reduce costs and leave the Company better positioned with its customers when more normal business operations resume (including employee health and safety).
Related to our long-term stock plan, and due to the many uncertainties regarding the length, extent and potential impact of the pandemic, an absolute measure could not reasonably be determined, and a high performing organizationrelative measure for new long-term awards was not considered to be reliable during a period of extreme volatility. As a result, we granted time-based RSUs to all NEOs in Fiscal 2021.
These changes were temporary and our practice isdesigned to set challenging goals for our annualreprioritize and long-term incentive compensation. Thefocus management on managing and emerging from the crisis. As noted under, “Looking Forward to Fiscal 2022”, we plan to return to include quantitative financial goals set forin our Fiscal 2019 executive compensationincentive plans to align with and support our multi-year Strategic Plan as we continue to focus on winning over a new generation of customers, energizing core products and accelerating under-developed categories, driving targeted expansion in our regions and channels, leading with digital, and operating with discipline to fuel growth. Senior management establishes overall parameters for growth and profitability after assessing our business opportunities and risks given the global consumer and retail landscape. The Strategic Plan is further refined to reflect input from our business units. Our Board of Directors oversees the strategic planning process and approves the final plan, ensuring that the assumptions are thoroughly reviewed. The Strategic Plan is subject to further review and approval by the Audit Committee of the Board.
Our incentive plan targets are set at levels that align with the approved Strategic Plan and the financial guidance we provide to investors. At the time the financial goals are established, the Compensation
Committee, in consultation with its independent compensation consultant, considers a variety of qualitative and quantitative factors, including the financial impact of incentive payouts above and below target before establishing minimum and maximum financial goals and the corresponding payout levels for incentives.Plan.
Determination of Compensation for Executives
Accordingly, while the Compensation Committee considers, among other things, competitive market compensation paid by other companies in our industry in establishing compensation programs, the Compensation Committee does not set executive compensation at, or near, any particular target percentile within a peer group. Instead, the Compensation Committee uses compensation market data across multiple comparator groups as a consideration in setting our executive compensation levels.
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Role of the Compensation Committee
In addition to its responsibilities to, among other things, review and administer our compensation plans and to maintain oversight of the development of succession plans for certain key executive positions within our senior management, the Compensation Committee is responsible for reviewing and approving the employment agreements, as applicable, for each of our NEOs, which include their salary, bonus, and certain other compensation components. In determining the long-term incentive component of the compensation for each of our NEOs pursuant to each of their employment agreements, as applicable, the Compensation Committee considered, among such other factors as it deemed relevant, our performance, long-term stockholder returns, the value of similar incentive awards to executive officers at comparable companies and the awards given to each of our NEOs
in pastprior years. As noted above under “Executive Compensation Governance—Governance – Determination of Compensation for Executives—Executives – Market Data,” while the Compensation Committee considers market information, the Compensation Committee believes that considerations
| 65 | | | 2021 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
unique to our Company have a greater impact in setting executive compensation. On an annual basis, the Compensation Committee also reviews and approves the corporate performance goals and objectives relevant to the compensation payable to our NEOs. Subject to previously approved applicable obligations in an employment agreement, the Compensation Committee also reviews and approves, on an annual basis, the compensation of key members of our senior management, and reviews and approves the corporate performance goals and objectives relevant to the compensation payable to each of them. In addition, the Compensation Committee regularly reviews the design and structure of our executive compensation programs to ensure that management’s interests are closely aligned with stockholders’ interests and that the compensation programs are designed to further our strategic priorities, including our fair treatment and diversity and inclusion efforts.
The Compensation Committee is also responsible for gathering and reviewing data, and making recommendations to the Nominating Committee, regarding the appropriate level ofnon-employee director compensation. The Nominating Committee then recommendsnon-employee director compensation to the Board.
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Determining Compensation for Mr. R. Lauren, our Executive Chairman and Chief Creative Officer. TheDue to the acute severity of the COVID-19 impact to the business in Fiscal 2021, the Compensation Committee in consultation with its independent compensation consultantheld regular and independent outside counsel, determinedspecial meetings during Fiscal 2021 to discuss and review the compensation structure under Mr. R. Lauren’s employment agreement, effective asimpact of adjusting the performance measures of the beginning of Fiscal 2018. Mr. R. Lauren serves as both Chief Creative Officer and Executive Chairman. These factors were taken into account with respect to setting Mr. R. Lauren’s compensation opportunity during Fiscal 2018, which did not changeCompany’s outstanding long-term equity awards granted in Fiscal 2019 and Fiscal 2020 prior to COVID-19 before making the terms set forth in his employment agreement.
This role is unique, and Mr. R. Lauren’s compensation package is basedchanges to outstanding PSUs described above under “Executive Summary – Impact of COVID-19 on several factors including:
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Determining Compensation for Mr. Louvet, our President and Chief Executive Officer. In Fiscal 2018, the Company entered into an employment agreement with Mr. Louvet, who joined the Company as President and CEO in July 2017. In determining the compensation for Mr. Louvet, the Compensation Committee, in consultation with its independent compensation consultant and independent outside counsel, also considered, among other things, Mr. Louvet’s strong global brand leadership experience, prior compensation, achievements at his former employer, the Company’s internal pay equity and his expected future contributions in his role with us.
Determining Compensation for our Other NEOs. In determining the compensation of our other NEOs, the Compensation Committee considered the impact, scope of responsibility and leadership structure required to support the ongoing global transformation and long-term growth of our business in an increasingly complex global environment.
Role of the Compensation Consultants
We engage our compensation consultants to assist in reviewing our overall compensation strategy and total compensation package and to provide input on the competitive market for executive talent, evolving executive and director compensation market practices, program design and regulatory compliance. The Compensation Committee retains an independent compensation consulting firm, Steven Hall & Partners (“SHP”),Korn Ferry, to provide guidance in connection with the development and
evaluation of compensation philosophy, policies and practices and significant executive compensation decisions. The Compensation Committee has the sole authority to retain and terminate the independent compensation consulting firm and approve the firm’s fees and other retention terms. SHP does not provideKorn Ferry provides other services to Ralph Lauren Corporation which must be approved by the Company orCompensation Committee. Executive compensation fees collected during Fiscal 2021 were $111,816 and fees collected for other services were $220,026 for executive assessments, an insight survey as part of employee engagement services, and to provide European sales incentive plan consulting. The Compensation Committee has made an assessment under the Company’sfactors set forth in the NYSE rules and concluded that Korn Ferry is independent and that the firm’s work for the Compensation Committee does not raise any conflicts of interest. In making this assessment, the Committee considered other services that Korn Ferry provides to management.
In Fiscal 2019,2021, the Compensation Committee engaged SHPKorn Ferry to provide such independent advisory services, which is discussed in the “Executive Employment Agreements and Compensatory Arrangements” section.section below. The Compensation Committee meets with SHPKorn Ferry regularly and as needed, in the Compensation
Committee’s sole discretion and the consultant assists the Committee by:
In addition to
| 2021 PROXY STATEMENT | | | 66 | |
Separate from the Compensation Committee’s consultant, during Fiscal 2019, our Company’s management
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Management continued to retain the services of Compensation Advisory Partners, LLC (“CAP”), as its compensation consultant. CAP’s role is to assist
management in the development and analysis of executive compensation matters.
Factors in Determining Compensation for Executives
Determining Compensation for Mr. R. Lauren, our Executive Chairman and Chief Creative Officer. In response to the global pandemic, the CompensationCommittee and Mr. R. Lauren mutually agreed that Mr. R. Lauren would forgo his Fiscal 2020 bonus which would have been $6,000,000 and his entire Fiscal 2021 base salary pursuant to an amendment to his employment agreement. The Compensation Committee, in consultation with its third-party independent compensation consultant and independent outside counsel, determined the compensation structure under Mr. R. Lauren’s employment agreement, effective as of the beginning of Fiscal 2018. Mr. R. Lauren serves as both Chief Creative Officer and Executive Chairman. These factors were considered when setting Mr. R. Lauren’s compensation opportunity during Fiscal 2021 and the terms set forth in his employment agreement. Mr. R Lauren’s role is unique and critical, and his compensation package is based on several factors including:
Chief Creative Officer | Executive Chairman | |||||
As the chief designer, Mr. R. Lauren’s compensation package is also based on the Company’s review of the compensation of other Chief Creative Officers. The Compensation Committee believes that Mr. R. Lauren’s leadership, aesthetic vision, direction and the public’s association of his name and likeness with our branded products are unparalleled and integral components of our success, and that his contributions to our longstanding, consistent achievement over five decades have been, and continue to be, instrumental in creating long-term stockholder value. | As Executive Chairman of the Board, Mr. R. Lauren works with the CEO to set overall vision, strategy, financial objectives, and investment priorities for the business. Mr. R. Lauren also continues to mentor our design team and provide guidance in areas that are important to the Company, including growth in new business categories, creative talent, advertising, and marketing. | |||||
Strategic Vision Mr. R. Lauren not only drives the vision and strategy of a unique, complex, global organization with distribution channels in multiple product categories and countries, but he is also the founder, creator and name behind our brands for over 53 years and the value of the impact of his leadership to the creative talent of the organization is very significant. | ||||||
Celebrated Achievements Mr. R. Lauren’s unique, critical role as Chief Creative Officer brings to us his extraordinary and rare talent that is unrivaled by others in our industry. His career has resulted in numerous tributes for his contributions to the fashion industry, including the Council of Fashion Designers of America’s four highest honors: • Lifetime Achievement Award; • Womenswear Designer of the Year Award; • Menswear Designer of the Year Award; and • Retailer of the Year Award. | ||||||
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Determining Compensation for Mr. Louvet, our President and Chief Executive Officer. In response to the global COVID-19 pandemic, Mr. Louvetreduced his Fiscal 2021 salary by 50% during the first quarter of Fiscal 2021. In Fiscal 2018, the Company entered into an employment agreement with Mr. Louvet, who joined the Company as President and CEO in July 2017. In determining the compensation for Mr. Louvet, the Compensation Committee, in consultation with its independent compensation consultant and independent outside counsel, also considered, among other things, Mr. Louvet’s strong global brand leadership experience, prior compensation, achievements at his former employer, the Company’s internal pay equity and his expected future contributions in his role with us.
Determining Compensation for our Other NEOs. In response to the globalCOVID-19 pandemic, the other NEOs reduced their salaries by 20% in the first quarter of Fiscal 2021. In determining the compensation of our other NEOs, the Compensation Committee considered the impact, scope of responsibility and leadership structure required to support the ongoing global transformation and long-term growth of our business in an increasingly complex global environment.
Employment Agreements
In general, we have a longstanding practice of entering into employment agreements with our executive officers and select members of senior management. We believe that employment agreements provide greater assurance of continuity and retention of critical creative
and operating talent in a highly competitive industry. All of our NEOs have employment agreements other than Mr. D. Lauren. Employment agreements for our NEOs were reviewed and approved by the Compensation Committee, and in consultation with its independent compensation consultant and the Committee’s independently retained legal advisors
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whenever when requested and reviewed and approved with Mr. R. Lauren and Mr. Louvet or his predecessor with respect to our other NEOs. The terms of Mr. D. Lauren’s compensation arrangement were determined based on his role in the organization and were also reviewed and approved by the Compensation Committee.
The guidelines for salary, bonus, and certain other compensation components for each NEO with an employment agreement are set forth in his or her respective employment agreement. The agreements also provide for certain benefits, including those in the event of various termination or change in control situations. We believe that providing for certain benefits in change in control situations enhances the value of the business by preserving the continuity of management during these potential situations and by focusing our senior executives on our long-term
priorities. Effective March 31, 2019, Ms. Nielsen was promoted from Executive Vice President, Chief Financial Officer to Executive Vice President, Chief Operating Officer and Chief Financial Officer. This appointment was made in support of Ms. Nielsen’s role in our Strategic Plan to drive sustainable, long-term growth and value creation. We entered into a new employment agreement with Ms. Nielsen effective March 31, 2019 with an increased compensation arrangement commensurate with her new appointment.
See “Executive Employment Agreements and Compensatory Arrangements,” “Summary Compensation Table” and “Potential Payments Upon Termination or Change in Control” below for a more detailed description of the payments and benefits provided under each NEO’s employment agreement and other compensatory arrangements.
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
KEY COMPONENTS OF EXECUTIVE COMPENSATION
The principal elements of our senior executive compensation programs are summarized in the following table and described in more detail below.
Compensation Element | Performance-Based | Fiscal 2021 Objective | ||
| Base Salary | Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled employees.
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| Annual Cash Incentive Awards | R | Motivate and reward employees
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Long-Term Equity-Based Incentive Awards | R | Align
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COMPENSATION DISCUSSION AND ANALYSIS
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Overview of Performance-based Compensation Programs Pay Mix
The charts below show the components and allocation of theat-risk variable and fixed elements that comprisedcomprise the target total direct compensation for our NEOsNEOs. Total direct annual compensation represents base salary plus target bonus and target annual equity. This chart does not reflect salary reductions taken during Fiscal 2021 further discussed under “Executive Summary – Compensation Decisions in Fiscal 2019.2021 – Base Salary”.
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COMPENSATION DISCUSSION AND ANALYSIS
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Compensation Element: Base Salary
We pay base salaries to attract and retain talented executives and to provide a fixed base of cash compensation. Base salaries for each of our NEOs are determined and approved by the Compensation Committee. In general, base salaries may be reviewed periodically by the Compensation Committee and are provided in each NEO’s employment agreement, other than for Mr. D. Lauren, who does not have an employment agreement.
Fiscal 2019: Base Salary
As of the end of Fiscal 2019,2021, the annual base salaries for our NEOs remain unchanged from Fiscal 2018 and were as follows:
Name / Title | Fiscal 2018 Base Salary ($) | Fiscal 2019 Base Salary ($) | % Increase | Fiscal 2020 Base Salary ($) | Fiscal 2021 Base Salary ($) | % Increase | |||||||||||||||||||||
Ralph Lauren Executive Chairman and Chief Creative Officer
| 1,750,000 | 1,750,000 | 0% | | 1,750,000 | | 0 | | NA | 1 | |||||||||||||||||
Patrice Louvet President and CEO
| 1,250,000 | 1,250,000 | 0% | ||||||||||||||||||||||||
Patrice Louvet CEO
| | 1,250,000 | | 1,250,000 | | 0 | %2 | ||||||||||||||||||||
Jane Nielsen COO and CFO
| 990,000 | 990,000 | 0% | | 1,050,000 | | 1,050,000 | | 0 | %3 | |||||||||||||||||
Valérie Hermann Brand Group President
| 1,050,000 | 1,050,000 | 0% | ||||||||||||||||||||||||
Howard Smith Chief Commercial Officer
| | 1,050,000 | | 1,050,000 | | 0 | %3 | ||||||||||||||||||||
David Lauren Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and Head of the Polo Ralph Lauren Foundation
| 850,000 | 850,000 | 0% | ||||||||||||||||||||||||
David Lauren Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation | | 850,000 | | 850,000 | | | 0 | %3 | |||||||||||||||||||
| 1. | Mr. R. Lauren did not receive a base salary in Fiscal 2021. |
| 2. | Mr. Louvet’s base salary was reduced by 50% in the first quarter of Fiscal 2021. |
| 3. | Ms. Nielsen, Mr. Smith and Mr. D. Lauren’s respective base salaries were reduced by 20% in the first quarter of Fiscal 2021. |
Compensation Element: Short-Term Annual Cash Incentive Awards
In Fiscal 2019,2021, all of our NEOs participated in the EOAIP,Executive Officer Annual Incentive Plan (“EOAIP”), a stockholder-approved, short-term cash incentive bonus plan, in which the Compensation Committee determines the eligible EOAIP participants from among our executive officers. The EOAIP is designed to promote strong executive decision-making and achievement that supports the realization of significant overall Company financial goals. Key features of the EOAIP are as follows:
| Payouts | Payouts are based on different levels of achievement, which include threshold, target, stretch and maximum levels, established by the Compensation Committee each year.
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In Fiscal
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Threshold |
The minimum level of performance that is required before the bonus plan pays out at 50% of the target
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Target
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Maximum | Achievement at a superior level of performance.
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COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
| Compensation Committee Process and Authority | Process: Each year, we engage in an extensive and deliberate process to establish our performance measures and performance targets which are subject to Compensation Committee approval in consultation with its independent consultant. For Fiscal 2021 only, as a result of the pandemic, these measures were in the form of KPIs, with both qualitative and quantitative goals as further described above under Annual Cash Incentive Awards – Fiscal 2021. At the end of the fiscal year, the following approval process takes place: • Based upon the degree of achievement, the Compensation Committee approves the annual cash incentive bonuses payable to each NEO under the EOAIP, as applicable; • The Compensation Committee believes that the performance of each of our NEOs is represented by the Company’s performance results and individual performance is not considered in determining their bonuses. Authority: The Compensation Committee has the authority to: • Determine the eligible EOAIP participants from among our executive officers; • Establish the performance goals at the beginning of the fiscal year. For Fiscal 2021 only, performance goals were in the form of KPIs established in May 2020 for the first half of the fiscal year and November 2020 for the second half of the fiscal year; • Establish the required achievement levels against pre-determined performance goals under the EOAIP; and • Exercise discretion to reduce or eliminate, but not increase, the bonus amounts payable under the EOAIP. Modifications to previously granted PSUs: • Due to the acute severity of the COVID-19 impact to the business in Fiscal 2021, the Compensation Committee held regular and special meetings during Fiscal 2021 to discuss and review the impact of adjusting the performance measures of the Company’s outstanding long-term equity awards granted in Fiscal 2019 and Fiscal 2020 prior to COVID-19. These Performance Share Unit (“PSUs”) awards included performance measures for Fiscal 2021 and Fiscal 2022 set prior to the pandemic. The Committee, in conjunction with its outside compensation consultant, reviewed each award. • In consultation with its third-party independent compensation consultant, the Committee exercised its authority to approve modifications to certain of these awards in March 2021. Details of modification are further described above under “Executive Summary - Impact of COVID-19 on Our Fiscal 2021 Performance.” |
Annual Cash Incentive Awards – Fiscal 2021
As approved by the Compensation Committee at the beginning of our fiscal year, below is a summary of the temporary design of our Fiscal 2021 bonus program as shaped by the COVID-19 pandemic:
| • | Payout range: Threshold at 50% of target (no change from Fiscal 2020) and Maximum at 125% of target (reduced from 200%1 maximum in Fiscal 2020) |
| - | Our Employees, |
| - | Our Customers and our Brand, |
| - | Our Shareholders, |
| - | Our Partners, and |
| - | Our Communities |
| 1 | Maximum payout was reduced from 150% of target to 125% of target for Mr. Louvet |
Bonus Payouts for Fiscal 2021. Each of our NEOs was eligible for a bonus inFiscal 2021 dependent on the financial situation of the Company at the end of the fiscal year. The Compensation Committee and management assessed the financial situation of the Company at the end of the fiscal year along with the progress made on our KPIs for each of our stakeholders during the year and determined that bonuses could be paid.
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COMPENSATION DISCUSSION AND ANALYSIS
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Progress made against KPIs set in the context of our 5 stakeholders are noted in the chart below and was determined by the Compensation Committee to be slightly above target for each of the two performance intervals. The Compensation Committee limited bonus payouts to target level and, as a result, approved bonus payout at 100% of target for Fiscal 2021.
Stakeholders | Second Half of Fiscal 2021 – Progress in the following areas | |||
Our Employees An engaged and enabled workforce; managing employee health and wellbeing; clear and consistent resources and communication | • COVID-19 related policies and protocols • Employee Pulse survey scores • Black Advisory Council workstreams • Unconscious bias training | • Salary and Benefits reduction savings • Employee survey favorability rate • Deployment of unconscious bias training • Visibility of underrepresented talent and robust action plans | ||
Brand integrity and consumer perception of our Brand; stay true in | • Five brand equity score • Brand consideration and • New RLE customers • North America connected retail focus and | • Five brand equity score • Brand consideration and purchase intent • New RLE customers • Brand elevation; Average Unit Retail | ||
Our Shareholders Preserving the | • Liquidity position • Average Unit Retail (AUR) growth • Reduced Selling, General and Administrative (SG&A) expenses | • On track to restart dividend payment • On track to Gross Margin growth • Chaps license agreement • Global RL.com revenue growth • International customers size; Targeted wholesale doors; Off-price penetration | ||
Our Partners Protecting our strategic and key partners | • Share of our business in strategic and key suppliers • Process of cancellation and suspension of Fall orders with open and transparent communication • Financing program for our suppliers to help them manage their cash flow and address long-term gaps on worker wages and benefits • Responsible Purchasing Practices Policy | • Share of business in strategic & key suppliers • Suppliers integration to the interactive supplier portal (VMS) through Digitizing the Value Chain program | ||
Our Communities Social and Sustainability achievements | • Setting science-based targets • Tier 1 supplier facilities completion of Sustainable Coalition’s Higg Facility Environmental Module assessment • Wage management strategy • Black African American (BAA) Manifesto | • Sustainability:
•
•
• • Citizenship: Suppliers with baseline wage levels established. Women’s empowerment programs • D&I: Supplier D&I workstream | ||
Overall Assessment | Slightly above Target | Slightly above Target | ||
Annual Cash Incentive Awards – Fiscal 2019
Fiscal 2019 Corporate Performance Measures. For Fiscal 2019, under the EOAIP, the corporate performance measures selected were NIBT, corporate revenue, and SG&A expenses (excluding marketing and advertising). The Compensation Committee believes that these measures are aligned with stockholders’ interests, promote sustainable long-term stockholder value, and are aligned to the objectives of our Strategic Plan. The Fiscal 2019 financial targets were set at a level that would require a challenging level of performance and were aligned to support the financial guidance set forth in the Fiscal 2019 Strategic Plan communicated to stockholders. As part of our rigorous goalsetting process, in order to achieve target bonus payout for NIBT component, the Fiscal 2019 NIBT target was set higher than the Fiscal 2018 target and Fiscal 2018 actual results.
Once set by the Compensation Committee at the beginning of each fiscal year, the financial targets cannot be reset.
Global Digital Revenue as Additional Strategic Financial Goal with Potential 10% Adjustment upwards or downwards to Bonus. Each of the NEOs, except for
Mr. R. Lauren, may have their respective bonuses adjusted (upwards or downwards by 10%) based upon the degree of achievement of a previously established additional strategic financial goal. For Fiscal 2019, global digital revenue was selected by the Compensation Committee as the strategic financial goal to emphasize the importance of driving sales growth and market share in our digital business. The Fiscal 2019 target for global digital revenue was $744.6 million. Our results were above our target and also above apre-established threshold which resulted in a plus 10% adjustment for the strategic goal. The bonus payment for Mr. R. Lauren is based solely on actual financial performance against the Company’s overall performance measures, as selected by the Compensation Committee for the applicable fiscal year and is not adjusted based on performance against any additional strategic financial goal.
Bonus Payouts for Fiscal 2019. Each of our NEOs was eligible for a bonus in Fiscal 2019 when we reached threshold performance of the full year performance measures targets. The Company progressed well against its Strategic Plan initiatives and goals and delivered better than expected financial results which were above thepre-established targets and resulted in payment of bonuses greater than target to our NEOs.
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COMPENSATION DISCUSSION AND ANALYSIS
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The following table outlines our Fiscal 2019 EOAIP target goals compared to Fiscal 2018, and actual performance as measured against those goals.
Performance
| Performance Measure
| Target Goal
| Actual Performance1 ($ millions except
| Actual Compensation
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| Fiscal 2019 | NIBT (60% weight) | $708.2 | $751.3 | 153% for Mr. R. Lauren; 139% for Mr. Louvet; 168% for other NEOs | ||||||||
Corporate Revenue (20% weight)
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$6,132.9 |
$6,313.0 | ||||||||||
Company-wide SG&A as a % of Revenue (20% weight)
| 46.2% | 45.8% | ||||||||||
| Fiscal 2018 | NIBT (100% weight) | $604.7 | $658.5 | 159% for Mr. R. Lauren; 142% for Mr. Louvet; 175% for other NEOs
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The table below sets forth the target bonus and actual Fiscal 20192021 cash bonus for each of our NEOs:
Payout was capped at 100% of target for the NEOs based on discussions with the Compensation Committee.
Name / Title
| Target Bonus ($)
| Actual Fiscal 2019 Bonus ($)
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Ralph Lauren1 Executive Chairman and Chief Creative Officer | 6,000,000 | 9,180,000 | ||||||
Patrice Louvet1,2 President and CEO | 3,750,000 | 5,197,500 | ||||||
Jane Nielsen1,2 COO and CFO | 1,485,000 | 2,499,255 | ||||||
Valérie Hermann1,2 Brand Group President | 1,837,500 | 3,092,513 | ||||||
David Lauren1,2 Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and Head of the Polo Ralph Lauren Foundation | 637,500 | 1,072,913 | ||||||
| Name / Title | Target Bonus ($) | Actual Fiscal 2021 Bonus ($) | ||||||
Ralph Lauren1 Executive Chairman and Chief Creative Officer | | 6,000,000 | | | 6,000,000 | | ||
Patrice Louvet1 CEO | | 3,750,000 | | | 3,750,000 | | ||
Jane Nielsen1 COO and CFO | | 1,837,500 | | | 1,837,500 | | ||
Howard Smith1 Chief Commercial Officer | | 1,575,000 | | | 1,575,000 | | ||
David Lauren1 Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation | | 637,500 | | | 637,500 | | ||
| 1. | Target bonus amounts payable to |
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Compensation Element: Long-Term Equity-Based Incentives – Fiscal 2021
Long-term equity-based incentives are intended to align executive and stockholder interests and encourage strong executive decision-making that maximizes stockholder value creation over the long-term. The values, mix, and type of annual grants for each senior executive are discussed by management
and the Compensation Committee and ultimately approved by the Compensation Committee, in consultation with its third-party independent consultants,consultant, unless the terms have been previously approved and set forth in an employment agreement.
The determination of the mix and type of Mr. R. Lauren’s Fiscal 20192021 annual grant was provided under his employment agreement.
In Fiscal 2021, all equity awards to our NEOs were granted under our 2019 Stock Incentive Plan. These awards all provide the recipient with the opportunity to receive shares of our Class A Common Stock over a specified period. As noted earlier, when considering long-term incentives, the Committee did not believe that setting multi-year financial goals was a viable program design for Fiscal 2021. The beginning of our
fiscal year, March 29, 2020, coincided with the approximate beginning of the pandemic in the United States. At this time, the stock market was extremely volatile and there was limited information regarding the impact COVID-19 might have on our industry and on our peers. Also, as we are a global company, the pandemic affected our regions at different times which may not have been the case with our peers. Due to the many uncertainties regarding potential time period and impact of the pandemic, an absolute measure could not reasonably be determined, and a relative measure for new long-term awards was not considered to be reliable during a period of extreme volatility with potential differences among the situations of our peers.
As a result, we granted time-based RSUs to all NEOs in August 2020. The time-based vesting terms were established to be the same as previous performance-based equity granted to each NEO with three-year cliff vesting (RSUs-Cliff) for Mr. R. Lauren’s grant and three-year cliff vesting (RSUs-Cliff) for half of the other NEO awards and three-year pro-rata vesting (RSUs-Prorata) for the second half of the award. This change was temporary and we plan to return to include performance-based equity awards in Fiscal 2022.
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COMPENSATION DISCUSSION AND ANALYSIS
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Long-Term Equity-Based Incentives –The Fiscal 2019
In Fiscal 2019, all equity awards to our NEOs were granted under our 2010 Stock Incentive Plan. These awards all provide the recipient with the opportunity to receive shares of our Class A Common Stock over a specified period. The achievement of our performance goals for our performance-based equity awards is subject to adjustment to exclude the effect of certain unbudgeted events and unusual items or transactions, as permitted under the 2010 Stock Incentive Plan, in accordance with the rules established by the Compensation Committee at the beginning of each fiscal year.
During Fiscal 2019, these2021 awards consisted of:
Fiscal | Vesting | |||
Restricted Stock Units – Prorata |
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Restricted Stock Units – Cliff |
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Details regarding the PSUs and PRSUs are outlined below.In Fiscal 2021, each of our NEOs received long-term equity awards consisting of RSUs-Cliff and/or RSUs-Prorata granted on August 15, 2021.
Name / Title | RSUs-Cliff | RSUs-Prorata | ||||||
Ralph Lauren Executive Chairman and Chief Creative Officer
| 157,910 | — | ||||||
Patrice Louvet CEO
| 53,833 | 53,832 | ||||||
Jane Nielsen COO and CFO
| 21,533 | 21,534 | ||||||
Howard Smith Chief Commercial Officer
| 19,739 | 19,740 | ||||||
David Lauren Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation
| 3,948 | 3,948 | ||||||
PSUs-ROIC.Previously Awarded Long-Term Equity-Based Incentives that Vested in May 2021
Below is a table summarizing the goals, payout range, and achievement for the Fiscal 2019 PSUs. See Appendix B for a reconciliation to reported U.S. GAAP cumulative net income results.
Fiscal 2019 PSUs-Relative TSR: ROIC was introducedRelative TSR is used as a performance measure in Fiscal 2019 to align our executives with investment productivity and profitability which is important to the long sustainable growth of our Company. Awards granted in Fiscal 2019 may pay out from 0% to 200% of target based on three-year cumulative ROIC results (Fiscal 2019 – Fiscal 2021).
The performance and payout levels for the PSUs-ROIC are summarized as follows. The Compensation Committee believes the payout percentages for our PSUs provide an appropriate balance between the performance levels required relative to the level of payout, based on targets that require significant effort for achievement over a multi-year period. Once an award is granted in any fiscal year, thepre-established performance measures, performance goals, vesting schedule or payout schedule cannot be modified for that grant, unless otherwise approved by the Compensation Committee, during the applicable performance term.
Performance level
| % of Goal Achieved
| % of PSUs Vested
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Threshold | 90% | 50% | ||
Target | 100% | 100% | ||
Maximum | 110% | 200% | ||
No payout is earned for performance below threshold. Vesting is interpolated for performance between 90% and 100% of target, and for performance between 100% and 110% of target.
PSUs-Relative TSR. Relative TSR was introduced as a performance measure in Fiscal 2019 to align our executives with the interests of our stockholders. Awards granted in Fiscal 2019 maywere structured to pay out from 0% to 200% of target based on the performance of Ralph Lauren Corporationthe Company’s stock as compared to the performance of stock in a
comparator group of companies over the three-year performance period (Fiscal 2019 – Fiscal 2021). Relative TSR is based on stock price appreciation, plus dividends reinvested, with starting and ending share prices based on average closing stock prices for the 20 trading days ending immediately prior to the beginning and end of the performance period. If any comparator group companies are removed from the NYSE for any reason over the performance period, they are removed from the final performance calculation at the end of the performance period, such that the final TSR performance calculations may be based on fewer companies.
The performance and payout levels for the Fiscal 2019 PSUs-Relative TSR, applicable to all NEOs, for the performance period Fiscal 2019 – Fiscal 2021 are summarized as follows:
Performance Level | Relative TSR Performance | % of PSUs Vested | ||
Below Threshold | Below 30th Percentile | 0% | ||
Threshold | 30th Percentile | 50% | ||
Target | 50th Percentile | 100% | ||
Stretch | 70th Percentile | 150% | ||
Maximum | 90th Percentile and above | 200% | ||
Performance Results and Amount | 53.33rd Percentile | 108.33% | ||
No payout is earned for performance below threshold. The number of PSUs earned is interpolated on a linear basis for performance between Threshold and Target, between Target and Stretch, and between Stretch and Maximum.
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COMPENSATION DISCUSSION AND ANALYSIS
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The comparator group which was used for Relative TSR is shown below. The companies in the comparator group include luxury retail peers, certain department stores and apparel wholesalers, and other well branded companies.
Capri Holdings Limited | Macy’s, Inc. | RH (Restoration Hardware, Inc.) | Urban Outfitters, Inc. | |||
Dillard’s, Inc. | Nike, Inc. | Tapestry, Inc. | V.F. Corporation | |||
The Gap, Inc. | Nordstrom, Inc. | The TJX Companies, Inc. | Williams-Sonoma, Inc. | |||
L Brands, Inc. | PVH Corp. | |||||
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The
Fiscal 2019 PSUs-ROIC (modified award). PSU-ROIC awards that were granted in Fiscal 2019 vested in May 2021, based upon our achievement of financial goals for the three-year performanceperiod (Fiscal 2019 – Fiscal 2021). As discussed above, as determined by the Compensation Committee, the Fiscal 2021 ROIC goal was replaced with three-year relative TSR for Fiscal 2019 – Fiscal 2021. As a result, payout for two-thirds of the award was based on cumulative two-year adjusted
ROIC results for Fiscal 2019 – 2020 and payout levels for one-third of the award was based on three-year relative TSR for Fiscal 2019 – 2021. The three-year relative TSR goal used the same comparator companies, payout range and performance calculation as used in the Fiscal 2019 PSUs-Relative TSR, are summarized as follows:shown below. Payout for these Fiscal 2019 PSUs-ROIC (modified award) was limited to target payout.
Fiscal 2019 PSUs-ROIC (modified award):
Achievement Level-Cumulative ROIC | % Performance Target | Fiscal 2019 – 2020 Cumulative ROIC Goals | Percent of Target Award Earned | |||
Threshold | 90% | 51.0% | 50% | |||
Target | 100% | 56.7% | 100% | |||
Maximum | 110% | 62.4% | 200% | |||
Achievement | 106% | 60.1% | 159% | |||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
No payout is earned for performance below threshold. The number of PSUs earned is interpolated on a linear basis for performance between Threshold and Target, between Target and Stretch, and between Stretch and Maximum.
PRSUs. In Fiscal 2019, we granted PRSUs with a performance threshold for the first fiscal year of the three-year vesting period. The performance requirement acts as a minimum threshold for the PRSUs to vest on apro-rata basis at target levels over this three-year period. Vesting is contingent on continued service.
| Performance Measure | Performance Period | Performance
| Percent of | Amount | |||||||
| ||||||||||||
The performance threshold vesting requirement for Fiscal 2019 PRSUs was Fiscal 2019 ROIC adjusted results of 19.3%. Actual achievement for this goal was 30.9%, which was above the threshold level. See Appendix B fornon-GAAP reconciliations.
In Fiscal 2019, each of our NEOs received long-term equity awards consisting of PSUs-ROIC, PSUs-Relative TSR, and PRSUs, as applicable.
Name / Title | PSUs-ROIC1 | PSUs-Relative TSR1 | PRSUs1 | |||||||||
Ralph Lauren Executive Chairman and Chief Creative Officer
| 40,959 | 30,122 | — | |||||||||
Patrice Louvet President and CEO
| 13,963 | 10,786 | 27,927 | |||||||||
Jane Nielsen COO and CFO
| 4,654 | 3,595 | 9,309 | |||||||||
Valérie Hermann Brand Group President
| 4,654 | 3,595 | 9,309 | |||||||||
David Lauren Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and Head of the Polo Ralph Lauren Foundation
| 1,024 | 791 | 2,049 | |||||||||
|
PSUs – ROIC (applicable to all NEOs) | Cumulative ROIC | Fiscal 2019–Fiscal 2020 | | ||||||||||
| 159%2 | 100%4 for
all NEOs |
Previously Awarded Long-Term Equity-Based Incentives that Vested in May 2019
PSUs. PSU awards that were granted in Fiscal 2017 vested in May 2019, based upon our achievement ofpre-established financial goals for the three-year performance period (Fiscal 2017 – Fiscal 2019). The target for the Fiscal 2017 PSUs was based on the three-year plan established in early Fiscal 2017. In establishing the targets for the Fiscal 2017 PSUs, we required ongoing performance improvement during the three-year period. The Compensation Committee established the Fiscal 2017 PSUs financial targets for the three-year performance period, taking into consideration a new management team, restructuring of the Company to drive lower operating expenses, additional investment costs for systems and operational infrastructure, and challenging macro-economic conditions. Below is a table summarizing the goals, payout range, and achievement for the Fiscal 2017 PSUs. See Appendix B for a reconciliation to reported U.S. GAAP cumulative net income results.
PSUs:
|
|
|
| ||||||||||
|
|
|
|
| |||||||||
| 1. | As a % of Target |
| 2. | Award based on achievement of cumulative |
Achievement Level
| % Performance Target
| Fiscal 2017-2019 Cumulative EPS Goals
| Percent of Target Award Earned
| |||||||||
Threshold
|
| 70%
|
|
| $12.35
|
|
| 75%
|
| |||
Target
|
| 100%
|
|
| $17.64
|
|
| 100%
|
| |||
Maximum
|
| 110%
|
|
| $19.40
|
|
| 150%
|
| |||
Achievement
|
| 108%
|
|
| $19.01
|
|
| 138%
|
| |||
Additional PSUs for Ms. Hermann. In connection with her employment agreement made effective September 22, 2016, Ms. Hermann was granted aone-time stock award in Fiscal 2017 in the form of PSUs which vested in May 2019, based on our achievement ofpre-established financial goals for thetwo-and-a-half-year performance period (Third and fourth quarter of Fiscal 2017 through Fiscal 2019). See Appendix B for a reconciliation to reported U.S. GAAP cumulative net income results.
Additional PSUs:
|
|
|
| |||||
|
|
|
|
| ||||
Award based on achievement of |
|
| 4. |
Although achievement was above target for both the cumulative two-year ROIC and three-year relative TSR goals, payout was capped at 100% target. |
Achievement Level
| % Performance Target
| Q3 and Q4 Fiscal 2017- Fiscal 2019 Cumulative EPS Goals
| Percent of Target Award Earned
| |||||||||
Threshold
|
| 70%
|
| $
| 10.48
|
|
| 75%
|
| |||
Target
|
| 100%
|
| $
| 14.97
|
|
| 100%
|
| |||
Maximum
|
| 110%
|
| $
| 16.47
|
|
| 150%
|
| |||
Achievement
|
| 107%
|
| $
| 16.06
|
|
| 136%
|
| |||
Employee Benefits and Perquisites
We provide a number of benefit plans to all eligible employees, including our NEOs. These benefits include programs such as medical, dental, life insurance, business travel accident insurance, short and long-term disability coverage and a 401(k) plan. In Fiscal 2019, we enhanced the benefit programs forWe continue to
engage all eligible employees, including our NEOs, to inspire and engage our workforce by providing such benefits as flexible work arrangements and sabbaticals. In Fiscal 2021, we expanded our medical benefits in the U.S. to our part-time employees, ensuring equitable benefits for our frontline workers. There are no supplemental retirement plans for our executives. We also provide a merchandise discount on most of our products to all our employees, including our NEOs, and our directors.
| 2021 PROXY STATEMENT | | | 76 | |
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
Other Benefits
We provide our NEOs with other benefits that we believe are reasonable, competitive, and consistent with our overall executive compensation programs. We believe that these benefits generally allow our executives to work more efficiently and promote our brand, and are legitimate business expenses.brand. The costs of these benefits constitute only a small percentage of each NEO’s total compensation. Our NEOs are eligible for financial counseling and, in the case of Mr. R. Lauren, Mr. Louvet, and Mr. D. Lauren, an annual executive physical. We provide the use of an automobile and driver to Mr. R. Lauren and Mr. Louvet and an annual car allowance for all other NEOs. Effective Fiscal 2021, Mr. R. Lauren assumed the personal costs of his automobile and driver.
In addition, pursuant to his employment agreement and for security purposes, Mr. R. Lauren is required to use private aircraft for any travel and is reimbursed for the expense of business travel. Also, under Mr. R. Lauren’s employment agreement, we will reimburse him up to a maximum aggregate amount of $200,000 for any expense incurred as a result of his use of his private aircraft, or other acceptable private aircraft, for personal
travel. Our other NEOs were permitted to use the company aircraftThe Company did not pay for personal travel on a limited basis. Nonefor any of ourthe other NEOs used the company aircraft for personal travel in Fiscal 2019.2021. In all cases, personal travel onpaid by the private aircraft or the company aircraftCompany is treated as imputed income to the executive. In Fiscal 2020, we sold our corporate jet and donated the proceeds, approximately $21 million, to the Polo Ralph Lauren Foundation. Mr. Louvet also receives a family education allowance as provided for in his employment agreement. See the “All Other Compensation” column of the “Summary Compensation Table” and related footnotes for a discussion of all perquisites and other personal benefits provided to our NEOs.
Ralph Lauren Expatriate Program
Ralph Lauren’s Expatriate Program is intended to ensure globally consistent and equitable treatment of assignees asked to relocate temporarily from one country to another. Our policy provides a series of core relocation benefits including coverage of moving expenses, shipment of household goods and personal effects, storage of goods, relocation allowance, language and cultural training, broker fee coverage and tax assistance. Our Expatriate Program also includes several flexible benefits that assignees can select based on their individual circumstances, including school search, pet shipment, auto loss, spousal/domestic partner assistance, property management and home lease cancellation. Assignees have up to one-year post assignment start to use the relocation benefits.
In connection with Mr. Howard Smith’s appointment as EVP, Chief Commercial Officer, he was relocated from Hong Kong to London, United Kingdom on April 1, 2019 under the Expatriate Program. He currently receives allowances for Goods & Services, Housing, Home Leave, Education Assistance, and Auto Coverage under the Expatriate Program and per the terms of his employment agreement. Benefits related to his participation in the program were paid in 2020 and may be paid in future years.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
Our Board and Compensation Committee believe it is important for key members of our senior management team to build and maintain a long-term ownership position in our Company to further align their financial interests with those of our stockholders and to encourage the creation of sustainable long-term value. Our compensation structure for these individuals provides for a significant percentage of compensation to be equity-based, which places a substantial portion of compensation at risk over a long-term period.
In June 2010, the Compensation Committee established stock ownership guidelines for ournon-employee directors, our NEOs, and select other members of our senior management group to further link the interests of these individuals with those of our stockholders. Further details on the guidelines fornon-employee directors are provided in the “Director Compensation” section.section above. Below is a summary of our current stock ownership guidelines for our NEOs:
Multiple of Salary Approach.The application of a multiple of salaryapproach is used to establish stock ownership targets. The guidelines for NEOs were based on competitive multiples of salary.
Determination of Shares. The minimum number of shares required isdetermined annually in June using the NEO’s applicable multiple and base salary as of
| |
COMPENSATION DISCUSSION AND ANALYSIS
|
RALPH LAUREN CORPORATION
|
|
The stock ownership targets in effect for Fiscal 2019 for our Executive Chairman and Chief Creative Officer and our President and CEO remained at six times base salary. The stock ownership targets for our other NEOs increased from two times base salary to three times base salary effective Fiscal 2019.
|
Shares directly or beneficially owned by an employee subject to the guidelines count toward the achievement of ownership guidelines, including
certain shares underlying vested RSUs that may not be distributed to Mr. R. Lauren until his employment is terminated.
Unvested time-based RSUs, and PRSUs with aone-year performance target, count toward the achievement of ownership targets.
All of our NEOs exceeded their respective Fiscal 20192021 stock ownership guidelines. As of the end of Fiscal 2019,2021, the following stock ownership targets were in effect for our NEOs:
Name
| Share Ownership Target Value
| |
Ralph Lauren,Executive Chairman and Chief Creative Officer
| 6 times base salary
| |
Patrice Louvet,
| 6 times base salary
| |
Jane Nielsen,COO and CFO
| 3 times base salary
| |
| 3 times base salary
| |
David Lauren,Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and
| 3 times base salary
| |
Gender Pay Equity
We are committed to equal pay for equal work regardless of gender and take a proactive approach to gender and ethnic pay equity at Ralph Lauren. Weand continually monitor and analyze our compensation programs to ensure fairness. As of Fiscal 2020, our female employees in the U.S. earned an average of 99 cents for fairness. This includes our partnershipevery $1 earned by males. In line with Parity.org’s best practices, we conduct a biennial assessment with an independent human capital management firm to analyze employee compensation acrossbased on gender and ethnicity in the company.United States. In a recent analysis of employee pay,Fiscal 2020, we found no statistically significant difference betweenthat 96 percent of our U.S. employees’ salaries fell within the equal pay of males and females in similarly situated
positions.parameters set by our model. We moved immediately to review instances where compensation fell outside the parameters. In Fiscal 2022, we will continueexpand our human capital assessment to assess and monitor employeeexamine gender pay practices to ensure fairness.equity for our global operations.
Ralph Lauren publishes an annual UK Gender Pay Gap report in line with UK legislation available on our investor relations website athttp://investor.ralphlauren.com. Our mean and median gender pay and bonusgaps are substantially better
than UK average figures. Between 2017 and 2018, we improved our gender pay balance by reducing our mean and median pay gaps. In 2018,2019, we significantly improvedreversed our overall gender pay mean gap with more women in senior management positions and increased the number of participants in our bonus gap by introducing a new bonus plan in a population with a high percentage of women.schemes.
|
|
|
Certain Tax Matters
The Internal Revenue Code generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s covered employees, including its NEOs. Historically, this limitation generally did not apply to compensation that met the tax code requirements for “qualifying performance-based” compensation. Accordingly, we designed annual cash bonus payments as well as long-term cash and equity incentives to satisfy the requirements for deductible compensation (but we reserved the right to pay compensation that does not qualify as deductible) by establishing a performance goal and the maximum amounts that could be granted to the executive officers. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was enacted, which, among other things, repealed the “qualifying performance-based” compensation exception described in this paragraph.exception. Following enactment of the Tax Act, we expect that compensation paid to our covered employees, including our NEOs, in excess of $1 million will not be deductible (except in accordance with certain limited exceptions).
Accounting Matters
Each element of the compensation paid to our executives is expensed in our financial statements as
| 2021 PROXY STATEMENT | | | 78 | |
COMPENSATION DISCUSSION AND ANALYSIS | RALPH LAUREN CORPORATION |
required by U.S. GAAP. The financial statement impact of various compensation awards is an important factor that the Compensation Committee considers in determining the amount, form, and design of each pay component for our executives.
Adjustment or Recovery of Awards
The EOAIP includes a formal policy regarding the recovery of awards granted under the EOAIP in connection with a restatement of our financial statements. Under this policy, if, as a result of a NEO’s intentional misconduct or gross negligence, we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws, the Compensation Committee may, in its reasonable discretion, require such executive to promptly reimburse us for the amount of any payment previously
received by the executive pursuant to the EOAIP that was earned or paid during the 12 month period following the earlier of the first public issuance or filing
with the SEC of any financial document embodying such financial reporting requirement that required such accounting restatement.
The Compensation Committee, composed entirely of independent directors, reviewed, and discussed the Compensation Discussion and Analysis (CD&A)(“CD&A”) with management and with the other members of the Board. Based on these reviews and discussions, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in our Annual Report onForm 10-K for the year ended March 30, 2019.27, 2021.
Members of the Compensation Committee:
Michael A. George
(Committee Chair)
Frank A. Bennack, Jr.
(Lead Independent Director of the Board)
Joel L. Fleishman
Hubert Joly
Linda Findley Kozlowski
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
EXECUTIVE COMPENSATION MATTERS
The following table sets forth a summary of all compensation awarded or paid to or earned by our NEOs for Fiscal 2019,2021, Fiscal 2018,2020, and Fiscal 2017.2019.
Name and Principal Position | Fiscal Year | Salary1 ($) | Bonus2 ($) | Stock Awards3 ($) | Option ($) | Non-Equity Incentive Plan Compensation5 ($) | Change in ($) | All Other ($) | Total8 ($) | Fiscal Year | Salary1 ($) | Bonus2 ($) | Stock Awards3 ($) | Option ($) | Non-Equity Incentive Plan Compensation5 ($) | Change in ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ralph Lauren Executive Chairman and |
|
2019 |
|
|
1,750,000 |
|
|
— |
|
|
10,999,993 |
|
|
— |
|
|
9,180,000 |
|
|
— |
|
|
289,532 |
|
|
22,219,525 |
|
| 2021 |
| — |
|
| — |
|
| 11,000,011 |
|
| — |
|
| 6,000,000 |
|
| — |
|
| 131,234 |
|
| 17,131,245 |
| |||||||||||||||||||
|
2018 |
|
|
1,750,000 |
|
|
— |
|
|
10,999,969 |
|
|
— |
|
|
9,560,440 |
|
|
— |
|
|
283,920 |
|
|
22,594,329 |
|
| 2020 |
| 1,750,000 |
| — |
|
| 10,999,955 |
|
| — |
|
| — |
| — |
|
| 291,319 |
| 13,041,274 | ||||||||||||||||||||||||
|
2017 |
|
|
1,750,000 |
|
|
— |
|
|
11,000,014 |
|
|
— |
|
|
0 |
|
|
— |
|
|
284,318 |
|
|
13,034,332 |
|
| 2019 |
| 1,750,000 |
| — |
|
| 10,999,993 |
|
| — |
|
| 9,180,000 |
|
| — |
|
| 289,532 |
|
| 22,219,525 |
| |||||||||||||||||||||
Patrice Louvet President and CEO |
|
2019 |
|
|
1,250,000 |
|
|
— |
|
|
7,266,200 |
|
|
— |
|
|
5,197,500 |
|
|
— |
|
|
137,984 |
|
|
13,851,684 |
|
| 2021 |
| 1,117,788 |
| — |
|
| 7,131,351 |
|
| — |
|
| 3,750,000 |
| — |
|
| 64,429 |
| 12,063,568 | |||||||||||||||||||||||
|
2018 |
|
|
937,500 |
|
|
3,384,888 |
|
|
15,348,733 |
|
|
— |
|
|
3,976,570 |
|
|
— |
|
|
144,345 |
|
|
23,792,036 |
|
| 2020 |
| 1,250,000 |
| — |
|
| 7,089,951 |
|
| — |
|
| 3,750,000 |
|
| — |
|
| 80,519 |
|
| 12,170,470 |
| |||||||||||||||||||||
Patrice Louvet President and CEO |
| 2019 |
| 1,250,000 |
| — |
|
| 7,266,200 |
| — |
|
| 5,197,500 |
| — |
|
| 137,984 |
| 13,851,684 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
2019 |
|
|
990,000 |
|
|
— |
|
|
2,421,966 |
|
|
— |
|
|
2,499,255 |
|
|
— |
|
|
26,694 |
|
|
5,937,915 |
|
| 2021 |
| 1,005,577 |
| — |
|
| 2,852,609 |
|
| — |
|
| 1,837,500 |
|
| — |
|
| 25,338 |
|
| 5,721,024 |
| |||||||||||||||||||||
|
2018 |
|
|
931,154 |
|
|
— |
|
|
2,332,596 |
|
|
— |
|
|
2,442,232 |
|
|
— |
|
|
24,698 |
|
|
5,730,680 |
|
| 2020 |
| 1,050,000 |
| — |
|
| 7,062,447 |
|
| — |
|
| 1,837,500 |
| — |
|
| 25,523 |
| 9,975,470 | ||||||||||||||||||||||||
Jane Nielsen COO and CFO |
|
2017 |
|
|
515,769 |
|
|
500,000 |
|
|
4,299,160 |
|
|
— |
|
|
979,665 |
|
|
— |
|
|
13,661 |
|
|
6,308,255 |
|
| 2019 |
| 990,000 |
| — |
|
| 2,421,966 |
|
| — |
|
| 2,499,255 |
|
| — |
|
| 26,694 |
|
| 5,937,915 |
| ||||||||||||||||||||
|
2019 |
|
|
1,050,000 |
|
|
— |
|
|
2,421,966 |
|
|
— |
|
|
3,092,513 |
|
|
— |
|
|
27,381 |
|
|
6,591,860 |
| ||||||||||||||||||||||||||||||||||||||||||||||
|
2018 |
|
|
984,615 |
|
|
— |
|
|
2,332,596 |
|
|
— |
|
|
3,012,819 |
|
|
— |
|
|
34,200 |
|
|
6,364,230 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Valérie Hermann Brand Group President |
|
2017 |
|
|
950,000 |
|
|
— |
|
|
4,712,705 |
|
|
— |
|
|
2,111,375 |
|
|
— |
|
|
18,462 |
|
|
7,792,542 |
| |||||||||||||||||||||||||||||||||||||||||||||
|
2019 |
|
|
850,000 |
|
|
— |
|
|
532,997 |
|
|
— |
|
|
1,072,913 |
|
|
— |
|
|
27,231 |
|
|
2,483,141 |
| ||||||||||||||||||||||||||||||||||||||||||||||
David Lauren Chief Innovation
|
|
2018 |
|
|
850,000 |
|
|
— |
|
|
513,308 |
|
|
— |
|
|
1,114,988 |
|
|
— |
|
|
26,100 |
|
|
2,504,396 |
| |||||||||||||||||||||||||||||||||||||||||||||
|
2017 |
|
|
850,000 |
|
|
— |
|
|
519,506 |
|
|
— |
|
|
809,625 |
|
|
— |
|
|
27,392 |
|
|
2,206,523 |
| ||||||||||||||||||||||||||||||||||||||||||||||
| 2021 |
| 1,005,577 |
| — |
|
| 2,614,952 |
|
| — |
|
| 1,575,000 |
| — |
|
| 4,437,331 |
|
| 9,632,860 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 |
| 1,050,000 |
| — |
|
| 3,991,369 |
| — |
|
| 1,575,000 |
| — |
|
| 1,494,390 |
|
| 8,110,759 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
David Lauren Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation |
| 2021
|
|
| 814,038 |
| — |
|
| 523,003 |
| — |
|
| 637,500 |
| — |
|
| 25,569 |
|
| 2,000,110 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
| 2020
|
|
| 850,000 |
| — |
|
| 519,828 |
| — |
|
| 637,500 |
| — |
|
| 23,885 |
| 2,031,213 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2019
|
|
| 850,000 |
| — |
|
| 532,997 |
| — |
|
| 1,072,913 |
| — |
|
| 27,231 |
|
| 2,483,141 |
| |||||||||||||||||||||||||||||||||||||||||||||||||
The amounts reported in this column represent base salaries paid to each of the NEOs for the applicable fiscal year as provided for in each of their respective employment agreements or compensation arrangements. See “Executive Employment Agreements and Compensatory Arrangements.” As discussed in the CD&A, under “Executive Summary – Compensation Decisions in Fiscal 2021- Base Salary”, the amounts in Fiscal 2021 reflect temporary salary reductions instituted during the fiscal year as a result of COVID-19. |
|
The stock-based compensation amounts shown in this column reflect the aggregate grant date fair value, assuming no risk of forfeiture, of RSU, PSU, |
|
| Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | ||||||||||||||
| PSUs-ROIC | PSUs-Relative TSR | PSUs | PSUs | |||||||||||||
Ralph Lauren | $ | 5,499,975 | $ | 5,500,018 | $ | 5,499,985 | $ | 5,500,007 | ||||||||
Patrice Louvet | $ | 1,775,601 | $ | 1,874,913 | $ | 4,944,849 | N/A | |||||||||
Jane Nielsen | $ | 591,825 | $ | 624,913 | $ | 574,962 | $ | 701,851 | ||||||||
Valérie Hermann | $ | 591,825 | $ | 624,913 | $ | 574,962 | $ | 1,171,323 | ||||||||
David Lauren | $ | 130,217 | $ | 137,498 | $ | 126,508 | $ | 128,348 | ||||||||
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
RSUs can only be paid out at Target. PRSUs can be paid at a range of zero to Target. No PSUs were granted in Fiscal 2021. If Performance were assumed to be achieved at the Maximum level for PSUs, the aggregate grant date fair value would increase by the following amounts: |
| Fiscal 2020 | Fiscal 2019 | |||||||||||||||||||
|
| PSUs-ROIC* | PSUs-Relative TSR | PSUs-EPS* | PSUs-ROIC* | PSUs-Relative TSR | |||||||||||||||
Ralph Lauren | $ | 0 | $ | 5,499,965 | N/A | $ | 0 | $ | 5,500,018 | |||||||||||
Patrice Louvet | $ | 0 | $ | 1,874,962 | N/A | $ | 0 | $ | 1,874,913 | |||||||||||
Jane Nielsen | $ | 0 | $ | 750,037 | $ | 0 | $ | 0 | $ | 624,913 | ||||||||||
Howard Smith | $ | 0 | $ | 687,512 | $ | 0 | N/A | N/A | ||||||||||||
David Lauren | $ | 0 | $ | 137,468 | N/A | $ | 0 | $ | 137,498 | |||||||||||
* Represents a modified PSU award where payout is capped at Target.
No stock options were granted in Fiscal |
The amounts reported in this column represent payments made under the EOAIP in June following the expiration of the fiscal year to which the payments relate. |
The named executive officers did not receive any above-market or preferential earnings on compensation deferred on a basis that is not tax qualified. See“Non-Qualified Deferred Compensation” table. |
The amounts reported in this column represent the aggregate dollar amount for each NEO of all other compensation for the year, including perquisites and other personal benefits. Under SEC rules, we are required to identify by type all perquisites and other personal benefits for a NEO if the total value for that individual equals or exceeds $10,000, and to report and quantify each perquisite or personal benefit that exceeds the greater of $25,000 or 10% of the total amount for that individual. |
In Fiscal |
In Fiscal |
In Fiscal |
In Fiscal 2021, Mr. Smith received perquisites and other personal benefits, including an automobile allowance and matching contributions under the Company’s 401(k) plan in addition to international assignment benefits ($4,411,993) which include allowances for goods and services, and housing, and tax equalization payments under our Expatriate Program described further in the Compensation Discussion and Analysis, under “All Other Compensation: Ralph Lauren Expatriate Program”. The |
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
The following table sets forth all plan-based awards granted to the NEOs in Fiscal 2021. No PSUs were granted in Fiscal 2021. Performance metrics of certain PSUs granted in Fiscal 2020 and Fiscal 2019 were changed during Fiscal 2021 as discussed in the CD&A, under “Executive Summary - Impact of COVID-19 on Our Fiscal 2021 Performance.” The related payout ranges were lowered for these PSUs with no incremental compensation cost as a result of these changes.
Estimated Possible Payouts Under | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
 |
|  |  |  |  |  |  |  |  |  |  | |||||||||||||||||||||||||||||||||||||||||
Ralph Lauren |
| 3,000,000
|
|
| 6,000,000
|
|
| 12,000,000
|
| |||||||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 3
|
| 20,480
|
|
| 40,959
|
|
| 81,918
|
|
| 5,499,975
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 4
|
| 15,061
|
|
| 30,122
|
|
| 60,244
|
|
| 5,500,018
|
| ||||||||||||||||||||||||||||||||||||||
Patrice Louvet |
| 1,875,000
|
|
| 3,750,000
|
|
| 5,625,000
|
| |||||||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 3
|
| 6,982
|
|
| 13,963
|
|
| 27,926
|
|
| 1,775,601
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 4
|
| 5,393
|
|
| 10,786
|
|
| 21,572
|
|
| 1,874,913
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 5
|
| 27,927
|
|
| 27,927
|
|
| 27,927
|
|
| 3,615,686
|
| ||||||||||||||||||||||||||||||||||||||
Jane Nielsen |
| 742,500
|
|
| 1,485,000
|
|
| 2,970,000
|
| |||||||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 3
|
| 2,327
|
|
| 4,654
|
|
| 9,308
|
|
| 591,825
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 4
|
| 1,798
|
|
| 3,595
|
|
| 7,190
|
|
| 624,913
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 5
|
| 9,309
|
|
| 9,309
|
|
| 9,309
|
|
| 1,205,229
|
| ||||||||||||||||||||||||||||||||||||||
Valérie Hermann |
| 918,750
|
|
| 1,837,500
|
|
| 3,675,000
|
| |||||||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 3
|
| 2,327
|
|
| 4,654
|
|
| 9,308
|
|
| 591,825
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 4
|
| 1,798
|
|
| 3,595
|
|
| 7,190
|
|
| 624,913
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 5
|
| 9,309
|
|
| 9,309
|
|
| 9,309
|
|
| 1,205,229
|
| ||||||||||||||||||||||||||||||||||||||
David Lauren |
| 318,750
|
|
| 637,500
|
|
| 1,275,000
|
| |||||||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 3
|
| 512
|
|
| 1,024
|
|
| 2,048
|
|
| 130,217
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 4
|
| 396
|
|
| 791
|
|
| 1,582
|
|
| 137,498
|
| ||||||||||||||||||||||||||||||||||||||
| 08/15/2018
| 5
|
| 2,049
|
|
| 2,049
|
|
| 2,049
|
|
| 265,282
|
| ||||||||||||||||||||||||||||||||||||||
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Ralph Lauren |
| 3,000,000 |
| 6,000,000 |
| 7,500,000 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 2 |
|
|
|
|
|
|
|
|
|
| 157,910 |
|
| 11,000,011 |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Patrice Louvet |
| 1,875,000 |
| 3,750,000 |
| 4,687,500 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 2 |
|
|
|
|
|
|
|
|
|
| 53,833 |
|
| 3,492,131 |
| |||||||||||||||||||||||||||||||||||
| 08/15/2020 | 3 |
|
|
|
|
|
|
|
|
|
| 53,832 |
|
| 3,639,221 |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Jane Nielsen |
| 918,750 |
| 1,837,500 |
| 2,296,875 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 2 |
|
|
|
|
|
|
|
|
|
| 21,533 |
| 1,396,839 |
| ||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 3 |
|
|
|
|
|
|
|
|
|
| 21,534 |
|
| 1,455,769 |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Howard Smith |
| 787,500 |
| 1,575,000 |
| 1,968,750 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 2 |
|
|
|
|
|
|
|
|
|
| 19,739 |
|
| 1,280,463 |
| |||||||||||||||||||||||||||||||||||
| 08/15/2020 | 3 |
|
|
|
|
|
|
|
|
|
| 19,740 |
|
| 1,334,489 |
| |||||||||||||||||||||||||||||||||||
David Lauren |
| 318,750 |
| 637,500 |
| 796,875 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 08/15/2020 | 2 |
|
|
|
|
|
|
|
|
|
| 3,948 |
|
| 256,106 |
| |||||||||||||||||||||||||||||||||||
| 08/15/2020 | 3 |
|
|
|
|
|
|
|
|
|
| 3,948 |
|
| 266,898 |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||
Represents grants of cash incentive awards under the Corporation’s EOAIP. See “Compensation Discussion and |
Represents the number of |
Represents |
|
|
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
EXECUTIVE EMPLOYMENT AGREEMENTS AND COMPENSATORY ARRANGEMENTS
Ralph Lauren’s Employment Agreement.During Fiscal 2019,2021, Ralph Lauren was employed as our Executive Chairman and Chief Creative Officer pursuant to an employment agreement made effective as of April 2, 2017 (the “R. Lauren Employment Agreement”), as amended June 16, 2020 (the “R. Lauren Amendment”). On June 16, 2021, the R. Lauren Employment Agreement (as previously amended) was further amended to extend its term by an additional five years, to April 3, 2027. The key terms of the R. Lauren Employment Agreement (as amended), except for the extended term, are identical to his previous agreement and are indicated below:
vesting upon the termination of his employment as discussed below in “Potential Payments Upon Termination or Change in Control—Ralph Lauren”). Three levels of achievement are used to determine vesting: threshold, target, and maximum. The threshold level, which is 70% of the financial goal, must be achieved in order for any PSUs to vest and be provided to him at the end of the applicable vesting period. If performance is at the threshold level, 75% of Mr. R. Lauren’s target shares plus accrued dividends will vest and be paid out. If performance is at the target level, which is 100% of the financial goal, then his target shares plus accrued dividends will vest and be paid out. If performance is at the maximum level, which is 110% or more of the financial goal, then 150% of the target shares plus accrued dividends will vest and be paid out. Vesting with respect to his PSUs shall be interpolated for performance between 70% and 110% of target goal(s) and none of his PSUs shall vest for performance below threshold goal(s). The aforementioned PSU award may be subject to different performance conditions as set by the Compensation Committee during any fiscal year so long as they are no less favorable than those applicable to PSUs granted to any other Named Executive Officers in respect of such fiscal year. |
Pursuant to the R. Lauren Amendment, his Fiscal 2021 equity award was granted in the form of restricted share units (“RSUs”) that vest based on his continued employment with us (except in certain circumstances subject to accelerated vesting upon the termination of his employment as discussed below in “Potential Payments Upon Termination or Change in Control—Ralph Lauren”).
| 83 | | | 2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
See “Potential Payments Upon Termination or Change in Control” for a discussion of severance and change in control payments payable to Mr. R. Lauren under the Lauren Employment Agreement, as modified by the R. Lauren Employment Agreement.Amendment.
Patrice Louvet’s Employment Agreement.During Fiscal 2019,2021, we employed Mr. Louvet as our President and Chief Executive Officer pursuant to an employment agreement dated May 11, 2017 and made effective as of July 3, 2017, and amended as of June 30,10, 2017 (the “Louvet Employment Agreement”), and as further amended on June 17, 2020 (the “2020 Louvet Amendment”). The key terms of the Louvet Employment Agreement are indicated below:
Equity Awards:Mr. Louvet is eligible to receive annual equity awards pursuant to the terms of the Company’s 2019 Stock Incentive Plan with an aggregate target value of $7.5 million.
|
|
|
|
See “Potential Payments Upon Termination or Change in Control” for a discussion of severance and change in control payments payable to Mr. Louvet under his employment agreement
Jane Nielsen’s Employment Agreement.During Fiscal 2019,2021, we employed Ms. Nielsen as our Chief Operating Officer and Chief Financial Officer pursuant to an employment agreement made effective as of September 7, 2016March 31, 2019 (the “Nielsen Employment Agreement”). After Fiscal 2019 concluded, we entered into an, as amended and restated employment agreement with Ms.on June 17, 2020 (the “2020 Nielsen effective as of March 31, 2019 (the “New Nielsen Employment Agreement”Amendment”). The key terms of the Nielsen Employment Agreement and the New Nielsen Employment Agreement are indicated below:
Valerie Hermann’s Employment Agreement. During Fiscal 2019, we employed Ms. Hermann as our Brand
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
Group President, pursuant to an employment agreement made effective as of April 4, 2016, and amended effective as of September 22, 2016, as our Brand Group President (the “Hermann Employment Agreement”). The key terms of the Hermann Employment Agreement are indicated below:
See “Potential Payments Upon Termination or Change in Control” for a discussion of severance and change in control payments payable to Ms. HermannNielsen under her employment agreement.
David Lauren’s Employment Terms.During Fiscal 2019,2021, David Lauren was employed on anat-will basis initially as our Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and HeadPresident of the Polo Ralph Lauren Foundation.Corporate Foundation, with the Chief Innovation Officer portion of his title changing during the third quarter of Fiscal 2021 to Chief Marketing Officer. Mr. D. Lauren does not have an employment agreement, and the terms of his compensation arrangement were reviewed and approved by the Compensation Committee. The key terms of Mr. D. Lauren’s employment arrangement are as follows:
See “Potential Payments Upon Termination or Change in Control” for a discussion of severance and change in control payments payable to Mr. D. Lauren under the terms of his employment.
Howard Smith’s Employment Agreement. During Fiscal 2021, we employed Mr. Smith as our Chief Commercial Officer pursuant to an employment agreement made effective as of March 31, 2019 (the “Smith Employment Agreement”). The key terms of the Smith Employment Agreement are indicated below:
(a) medical coverage under the Company’s global medical plan for expatriates; (b) a one-time net relocation allowance of $50,000 paid through the Company’s vendor that assists with relocations; (c) a goods and services annual allowance of $27,464, with any tax assessed borne by the Company; (d) a housing allowance of $107,509 per year, with any tax assessed borne by the Company; (e) an annual home leave allowance of $30,000, with any tax assessed borne by the Company; and (f) an education allowance of $30,000 per child annually, with any tax assessed borne by the Company.
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
The following table provides information concerning the unexercised stock options outstanding and unvested stock awards for each of our NEOs as of the end of Fiscal 2019.2021.
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options # Exercisable1 | Number of Securities Underlying Unexercised Options # Unexercisable2 | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Units of Stock That | Equity Have Not | Equity Plan Awards: Value of Units or Other Rights That | Number of Securities Underlying Unexercised Options # Exercisable1 | Number of Securities Underlying Unexercised Options # Unexercisable2 | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested14 ($) | Equity Have Not | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested14 ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ralph Lauren | 86,724 | 0 | 0 | $ | 140.975 | 07/16/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 71,199 | 0 | 0 | $ | 181.935 | 07/15/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 79,629 | 0 | 0 | $ | 159.680 | 07/14/2021 | 79,629 | 0 | 0 | $ | 159.680 | 07/14/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 181,219 | 3 | $ | 23,500,480 | 42,787 | 3 | $ | 5,226,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 117,724 | 11 | $ | 15,266,448 | 34,087 | 4 | $ | 4,164,068 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,706 | 12 | $ | 2,685,154 | 32,721 | 13 | $ | 3,997,197 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 45,682 | 13 | $ | 5,924,042 | 29,763 | 14 | $ | 3,635,848 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 157,910 | 5 | $ | 19,290,286 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrice Louvet | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 34,913 | 4 | $ | 4,527,518 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 75,534 | 11 | $ | 9,795,249 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 32,500 | 11 | $ | 4,214,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 30,132 | 5 | $ | 3,907,518 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,982 | 12 | $ | 905,426 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16,179 | 13 | $ | 2,098,093 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 27,927 | 6 | $ | 3,621,573 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jane Nielsen | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,790 | 3 | $ | 2,696,047 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,881 | 11 | $ | 1,670,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,450 | 7 | $ | 1,484,836 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,327 | 12 | $ | 301,765 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,393 | 13 | $ | 699,364 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,309 | 6 | $ | 1,207,191 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valérie Hermann | 9,129 | 0 | 0 | $ | 159.680 | 07/14/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,617 | 4 | $ | 1,636,173 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,396 | 3 | $ | 2,515,273 | 34,913 | 6 | $ | 4,264,972 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,685 | 8 | $ | 607,551 | 13,963 | 3 | $ | 1,705,720 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,159 | 9 | $ | 2,225,179 | 11,684 | 4 | $ | 1,427,317 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,881 | 11 | $ | 1,670,408 | 9,309 | 7 | $ | 1,137,187 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,450 | 7 | $ | 1,484,836 | 10,916 | 13 | $ | 1,333,499 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,327 | 12 | $ | 301,765 | 10,796 | 14 | $ | 1,318,839 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,393 | 13 | $ | 699,364 | 29,108 | 8 | $ | 3,555,833 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,309 | 6 | $ | 1,207,191 | 53,833 | 5 | $ | 6,576,239 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David Lauren | 2,676 | 0 | 0 | $ | 140.975 | 07/16/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,769 | 0 | 0 | $ | 181.935 | 07/15/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 53,832 | 9 | $ | 6,576,117 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jane Nielsen | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,566 | 0 | 0 | $ | 159.680 | 07/14/2021 | 4,654 | 3 | $ | 568,533 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,031 | 8 | $ | 133,700 | 3,894 | 4 | $ | 475,691 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,267 | 3 | $ | 553,345 | 3,103 | 7 | $ | 379,062 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,520 | 7 | $ | 326,794 | 23,127 | 10 | $ | 2,825,194 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,834 | 11 | $ | 367,513 | 6,813 | 15 | $ | 832,276 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,049 | 6 | $ | 265,714 | 4,367 | 13 | $ | 533,473 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 512 | 12 | $ | 66,396 | 4,319 | 14 | $ | 527,609 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,187 | 13 | $ | 153,930 | 11,644 | 8 | $ | 1,422,431 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,533 | 5 | $ | 2,630,471 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,534 | 9 | $ | 2,630,593 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Howard Smith | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,315 | 0 | 0 | $ | 159.680 | 07/14/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,482 | 11 | $ | 303,201 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,597 | 12 | $ | 2,271,810 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,724 | 3 | $ | 454,924 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,116 | 4 | $ | 380,651 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,813 | 15 | $ | 832,276 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,003 | 13 | $ | 489,006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,959 | 14 | $ | 483,631 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,674 | 8 | $ | 1,303,936 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,739 | 5 | $ | 2,411,316 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,740 | 9 | $ | 2,411,438 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 PROXY STATEMENT | | | 86 | |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options # Exercisable1 | Number of Securities Underlying Unexercised Options # Unexercisable2 | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested14 ($) | Equity Have Not | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested14 ($) | |||||||||||||||||||||||||||
David Lauren | ||||||||||||||||||||||||||||||||||||
| 4,566 | 0 | 0 | $ | 159.680 | 07/14/2021 | |||||||||||||||||||||||||||||||
| 1,024 | 3 | $ | 125,092 | |||||||||||||||||||||||||||||||||
| 857 | 4 | $ | 104,691 | |||||||||||||||||||||||||||||||||
| 683 | 7 | $ | 83,435 | |||||||||||||||||||||||||||||||||
| 801 | 13 | $ | 97,850 | |||||||||||||||||||||||||||||||||
| 792 | 14 | $ | 96,751 | |||||||||||||||||||||||||||||||||
| 2,134 | 8 | $ | 260,689 | |||||||||||||||||||||||||||||||||
| 3,948 | 5 | $ | 482,288 | |||||||||||||||||||||||||||||||||
| 3,948 | 9 | $ | 482,288 | |||||||||||||||||||||||||||||||||
| 1. | This column represents the number of shares of Class A Common Stock underlying exercisable options that have not been exercised at March |
This column represents the number of shares of Class A Common Stock underlying unexercisable options at March |
| 3. | Amount reflects Fiscal 2019 PSUs-ROIC for which the applicable performance goal was achieved as of March 27, 2021. Fiscal 2019 PSUs-ROIC are included at 100% of target reflecting actual performance achieved. These shares vested and were paid out on May 24, 2021. |
| 4. | Amount reflects Fiscal 2019 PSUs-TSR for which the applicable performance goal was achieved as of March 27, 2021. Fiscal 2019 PSUs-TSR are included at 108.33% of target reflecting actual performance achieved. These shares vested and were paid out on May 24, 2021. |
| 5. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. RSUs from this award were granted on August 15, 2020 and vest 100% on August 15, 2023. |
| 6. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. Mr. Louvet’s RSUs were granted on July 3, 2017 vest 100% on July 3, 2022. |
| 7. | Amount reflects the Fiscal 2019 PRSUs for which the applicable performance goal was achieved at the end of Fiscal 2019. The final tranche of the Fiscal 2019 PRSUs vested and were paid out on May 24, 2021. |
| 8. | Amount reflects the Fiscal 2020 PRSUs for which the applicable performance goal was achieved at the end of Fiscal 2020. The second tranche of the Fiscal 2020 PRSUs vested and were paid out on May 24, 2021. The final tranche of Fiscal 2020 PRSUs will vest after the end of Fiscal 2022, subject to continued service at that time with regard to each eligible recipient thereof. |
| 9. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. RSUs from this award were granted on August 15, 2020 and vest in three equal annual installments on the anniversary date of the grant. |
| 10. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. Ms. Nielsen’s RSUs were granted on March 31, 2019. RSUs from this award vest in three equal annual installments with the first installment vesting on the two-year anniversary of the grant date. The first tranche vested on March 31, 2021. |
| 11. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. Mr. Smith’s RSUs were granted on August 15, 2018. The final tranche vests on August 15, 2021. |
| 12. | Amount reflects the number of shares of Class A common stock represented by unvested RSUs subject to time-based vesting. Mr. Smith’s RSUs were granted on March 25, 2019. The RSUs from this award vests in four equal annual installments with the first installment vesting on the two-year anniversary of the grant date. The first tranche vested on March 25, 2021. |
| 13. | Amount reflects unearned Fiscal 2020 PSUs-ROIC which in accordance with SEC rules are included at threshold performance. See “Executive Employment Agreements and Other Compensatory Arrangements” and “Compensation Discussion and Analysis Executive Summary-Impact of COVID-19 on Our Fiscal 2021 Performance” for a description of the material terms of these PSUs. Where applicable, shares have been rounded to whole numbers. |
| 14. | Amount reflects unearned Fiscal 2020 PSUs-TSR which in accordance with SEC rules are included at threshold performance. See “Executive Employment Agreements and Other Compensatory Arrangements” and “Compensation Discussion and Analysis Executive Summary-Impact of COVID-19 on Our Fiscal 2021 Performance” for a description of the material terms of these PSUs. Where applicable, shares have been rounded to whole numbers. |
| 15. | Amount reflects unearned Fiscal 2020 PSUs-EPS grants to Ms. Nielsen and Mr. Smith, which in accordance with SEC rules are included at threshold performance. See “Executive Employment Agreements and Other Compensatory Arrangements” and “Compensation Discussion and Analysis Executive Summary-Impact of COVID-19 on Our Fiscal 2021 Performance” for a description of the material terms of these PSUs. Where applicable, shares have been rounded to whole numbers. |
| | | |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
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|
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|
|
|
|
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OPTION EXERCISES AND STOCK VESTED
The following table provides information concerning the exercises of stock options and vesting of stock awards during Fiscal 20192021 on an aggregated basis for each of our NEOs.
Option Awards
|
| Stock Awards
| Option Awards
|
| Stock Awards
| |||||||||||||||||||||||||||||||
Name
| Number of
| Value Realized
| Number of
| Value Realized
| Number of
| Value Realized
| Number of
| Value Realized
| ||||||||||||||||||||||||||||
Ralph Lauren1
|
| 100,000
|
| $
| 786,939
|
|
| 82,375
|
| $
| 11,079,703
|
|
| 0
|
| $
| 0
|
| 226,199 | $ | 17,288,902 | |||||||||||||||
Patrice Louvet2
|
| 0
|
| $
| 0
|
|
| 15,066
|
| $
| 2,060,200
|
|
| 0
|
| $
| 0
|
|
| 236,270
|
| $
| 18,041,627
|
| ||||||||||||
Jane Nielsen3
|
| 0
|
| $
| 0
|
|
| 20,790
|
| $
| 2,794,344
|
|
| 0
|
| $
| 0
|
|
| 38,179
|
| $
| 2,915,406
|
| ||||||||||||
Valérie Hermann4
|
| 0
|
| $
| 0
|
|
| 15,885
|
| $
| 2,172,305
|
| ||||||||||||||||||||||||
Howard Smith4
|
| 0
|
| $
| 0
|
|
| 40,696
|
| $
| 3,264,261
|
| ||||||||||||||||||||||||
David Lauren5
|
| 1,764
|
| $
| 14,830
|
|
| 4,481
|
| $
| 596,498
|
|
| 0
|
| $
| 0
|
|
| 8,187
|
| $
| 625,177
|
| ||||||||||||
|
Mr. R. Lauren has outstanding vested RSUs whose underlying shares of Class A Common Stock will not be delivered until Mr. R. Lauren’s separation from the Company or, if earlier, upon a change ofin control. These RSUs are eligible to receive dividend equivalents in the form of additional fully vested RSUs each time we pay an actual cash dividend on our outstanding shares. Additional RSUs of 2,003.77, 2,196.70, 2,352.64, and 2,661.944,016.96 were acquired respectively on April 13, 2018, July 13, 2018, October 12, 2018, and January 11, 2019.10, 2020. Market price (based on the average of the high and low sale price on eachthat day) was $112.145, $128.44, $120.51, and $107.06, respectively.$80.415.
Mr. Louvet acquired |
|
$76.36 and the table includes a cash payment of $57.27 in lieu of fractional shares representing .75 shares of Class A Common Stock.
Mr. Smith acquired 4,340 shares upon vesting of his RSUs, with a market price of $65.205 on May 15, 2020; 2,482 shares upon vesting of his RSUs, with a market price of $69.66 on August 15, 2020; 3,515 shares upon vesting of his RSUs, with a market price of $71.26 on September 25, 2020; and 6,199 shares upon vesting of his RSUs, with a market price of $115.015 on March 25, 2021. In connection with the vesting of |
$61.09 in lieu of fractional shares representing .80 shares of Class A Common Stock.
|
|
|
|
NON-QUALIFIED DEFERRED COMPENSATION
The following table provides information with respect to our defined contribution andnon-tax-qualified compensation deferral plans for each of our NEOs.
|
|
|
|
| ||||||
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|
|
|
|
| |||||
|
|
|
|
|
| |||||
|
|
|
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|
| |||||
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|
|
| |||||
| ||||||||||
| Name |
Executive | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
Ralph Lauren
|
| —
|
|
| 323,024
| 1
|
| 24,293,904
| 2
|
| —
|
|
| 56,968,670
| 3
| |||||
Patrice Louvet
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Jane Nielsen
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
David Lauren
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Valérie Hermann | — | — | — | — | — | |||||||||||||||
Represents the value of Mr. R. Lauren’s additional RSUs that are granted each time we pay an actual cash dividend on our outstanding shares. Additional RSUs of |
The amount reflected for Mr. R. Lauren represents appreciation/depreciation accumulated on vested but not delivered RSUs. Appreciation/ depreciation accumulated on vested but not delivered RSUs is not included in the Summary Compensation Table as the RSUs do not receive any above-market or preferential earnings. |
Mr. R. Lauren’s RSUs are valued at |
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Ralph Lauren.Under the R. Lauren Employment Agreement, in the event of termination without cause or resignation for good reason (as defined in the R. Lauren Employment Agreement and as defined below), Mr. R. Lauren would be entitled to receive, within 30 days following the date of termination, a lump sum cash payment equal to the sum of: (i) two years’ base salary; (ii) any accrued but unpaid compensation as of the date of termination; and (iii) two times the average annual bonus paid to him for the two fiscal years immediately preceding the year of his termination of employment (however, if he elects to transition to Executive Chairman, the amount described in this clause (iii) would no longer be payable in connection with a subsequent termination of employment). In addition, Mr. R. Lauren would be entitled to receive apro-rated portion of the bonus he would otherwise have received for the fiscal year in which his termination of employment occurred, payment of which would be made when bonuses are paid to our other executives. Any unvested stock options would continue to vest on their scheduled vesting dates, and any vested stock options shall be exercisable until the later of one year from the date of termination or 30 days from the date the options become vested and exercisable, but in any event not later than the expiration date of the option. Any unvested RPSUsrestricted performance share units (“RPSUs”) and PSUs will vest based on actual performance over the applicable performance period as if Mr. R. Lauren had remained employed to the applicable vesting certification date. Also, we will be obligated to continue to provide him with office facilities and secretarial assistance, welfare and medical plan coverage and use of a car and driver during thetwo-year severance period (however, any medical plan coverage would be limited to the first 18 months of the severance period unless he elects to continue participation in such plan for the remainder of the severance period, provided that there are no adverse tax consequences to the Company).
In the event that his employment terminates due to his death or disability, Mr. R. Lauren or his estate will be entitled to receive all payments due to him through the date of his death or termination due to disability, including apro-rated bonus for the fiscal year of termination paid at the same time as bonuses are paid
to our other executives. With respect to his unvested stock options, RSUs, RPSUs and PSUs, such awards shall
vest immediately (at target, in the case of RPSUs and PSUs) and, in the case of his stock options, shall be exercisable until the earlier of three years from the date of termination or the expiration date of the option, and in the case of his RSUs, RPSUs and PSUs, shall be payable in shares of Class A Common Stock no later than 30 days after the vesting date; provided that if termination is based on death and occurs in the last year of the performance period, the unvested RPSUs and PSUs will vest and be paid out based on actual performance during the performance period as if Mr. R. Lauren had remained employed to the applicable vesting certification date.
If he terminates his employment for any reason, other than for good reason, death or disability, or if we terminate his employment for cause (but not including a termination by reason of the Company’snon-renewal of the R. Lauren Employment Agreement, as described below), then Mr. R. Lauren will only receive any accrued but unpaid compensation as of the date of termination (including for any prior fiscal year, and including base salary through the date of termination). In addition, any unvested RPSUs and PSUs held by him pursuant to his employment agreement shall be forfeited. Further, any vested but unexercised stock options shall be forfeited only if termination of employment is for cause, and otherwise they shall remain exercisable for one year from the date of termination of employment if such termination is by Mr. R. Lauren for other than good reason.
If his employment terminates at the end of the term by reason of our failure to offer to extend the term or offer to enter into a new employment agreement on substantially the same terms as in the R. Lauren Employment Agreement, then he will be entitled to receive: (i) any accrued and unpaid compensation as of the date of termination; and (ii) his bonus for the fiscal year ending on the last day of the term. In addition, Mr. R. Lauren’s unvested and unexercised stock options and unvested RPSUs and PSUs shall vest and/or become exercisable in the same manner as if he resigned for good reason or if we terminated his employment without cause. In addition, following any termination of employment, to the extent not previously paid or provided, the Company will timely pay or provide Mr. R. Lauren any other amounts or benefits required to be paid or provided to him (or that he is eligible to receive) under any plan, program, policy,
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
required to be paid or provided to him (or that he is eligible to receive) under any plan, program, policy, practice or contract of the Company and its affiliates through the date of his termination.
In the event that a change in control precedes the termination of Mr. R. Lauren’s employment, he will continue to receive, upon termination of employment, the same amounts in the same manner as described in the paragraphs above. In addition, any unvested stock options granted under the 1997 Stock Incentive Plan and any unvested RSUs and RPSUs granted prior to the R. Lauren Employment Agreement would immediately vest upon a change in control. Under the R. Lauren Employment Agreement, Mr. R. Lauren’s RPSUs and PSUs granted during the term of the R. Lauren Employment Agreement would not immediately vest upon a change in control.
The R. Lauren Amendment modified the above termination payments as follows: (i) any unvested RSUs granted to Mr. R. Lauren in 2021 would, if applicable, be treated in the same manner upon termination of employment as Mr. R. Lauren’s unvested PSUs and PRSUs; (ii) upon termination of employment, the portion of his severance based on his base salary would, if applicable, disregard his reduced base salary rate in Fiscal 2021; and (iii) the portion of his severance based on prior years’ bonus would, if applicable, be based on the bonuses for the most recent fiscal years that are not affected by the R. Lauren Amendment (i.e., would not take into account Fiscal 2021 or Fiscal 2020).
The above described amounts payable to him are subject to his compliance with the following restrictive covenants: (i) not to compete with us for two years following the termination of his employment; (ii) not to solicit any of our employees for three years following the termination of his employment; (iii) not to disparage us for three years following the termination of his employment; and (iv) not to disclose any of our confidential information. The R. Lauren Employment Agreement also provides that for the duration of Mr. R. Lauren’s employment and for three years following the termination of his employment, we will not (and will use reasonable best efforts to cause our senior executives and Board members to not) disparage Mr. R. Lauren.
Under the R. Lauren Employment Agreement, cause is defined as: (A) the willful and continued failure by him to substantially perform his duties after demand for substantial performance is delivered by us that
specifically identifies the manner in which we believe he has not substantially performed his duties; or (B) his conviction of, or plea of nolo contendere to, a crime (whether or not involving us) constituting a felony; or (C) willful engaging by him in gross misconduct relating to his employment that is materially injurious to us or subjects us, monetarily or otherwise or which subjects, or if generally known, would subject us to public ridicule or embarrassment. Further, no act, or failure to act, shall be considered “willful” unless done, or omitted to be done, by Mr. R. Lauren not in good faith and without reasonable belief that his action or omission was in our best interest. Notwithstanding the forgoing, Mr. R. Lauren shall not be deemed to have been terminated
for cause without: (x) reasonable written notice to him setting forth the reasons for our intention to terminate him for cause, (y) an opportunity for him, together with his counsel, to be heard before the Board and (z) delivery to him of a specific termination notice from the Board that states that in the good faith opinion of the Board, he was guilty of the conduct set forth in clauses (A), (B) or (C) above, and specifying the particulars thereof in detail. In addition, in the event that the Board has so determined, in good faith, that cause exists, the Board shall have no obligation to terminate Mr. R. Lauren’s employment if the Board determines in its sole discretion that such a decision not to terminate his employment is in our best interest.
Under the R. Lauren Employment Agreement, good reason is defined to mean: (A) a material diminution in Mr. R. Lauren’s duties, assignment to him of a title or duties inconsistent with his position as our Executive Chairman of the Board and Chief Creative Officer, or a material diminution of his authority; (B) a material reduction in his salary; or (C) our failure to comply with any material provision of his employment agreement; provided that the events described in clauses (A), (B) and (C) above will not constitute good reason unless such diminution, reduction or failure (as applicable) has not been cured within 30 days after notice of such noncompliance has been given by Mr. R. Lauren to us.
If necessary to comply with Section 409A of the Code, any severance payments will be subject to a six monthsix-month delay in payment. The R. Lauren Employment Agreement clarifies that settlement of any RPSUs or PSUs in the case of a termination due to disability may also be delayed to the extent required to comply with Section 409A of the Code.
| 2021 PROXY STATEMENT | | | 90 | |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
Patrice Louvet.Under the Louvet Employment Agreement, if we terminate Mr. Louvet’s employment for any reason other than death, disability, or cause (as defined in the Louvet Employment Agreement and as described below), or Mr. Louvet voluntarily terminates his employment for good reason (as defined in the Louvet Employment Agreement and as described below), he would be entitled to receive 400% of his base salary per year for a severance period equal to two years.years, payable in equal installments on a monthly basis. In addition, he will vest in any unvested portion of theLouvet-One-Time-Stock-Award (as defined in the Louvet Employment Agreement) with only service-basedservice based vesting conditions as of the date of termination
|
|
|
of his employment, and any unvested portion of theLouvet-One-Time-Stock Award with performance-basedperformance based vesting conditions held by him will vest at the end of the applicable performance period, subject to the Company meeting the applicable performance goals.
Mr. Louvet will also be entitled to continue his participation during the severance period in any group medical or dental insurance plans in which he participated prior to termination. In addition, he will be entitled to receive any unpaid annual bonus for the fiscal year ended prior to the date of termination.
If Mr. Louvet voluntarily terminates his employment without good reason, or if we terminate his employment for cause, he will be entitled to receive only his base salary through the date of termination and any unpaid annual bonus for the fiscal year ended prior to the date of termination. In the event of his termination due to his death or disability, he or his estate will be entitled to receive all payments due to him through the date of his death or termination due to disability, any unpaid annual bonus for the fiscal year ended prior to the date of termination and he shall also be entitled to have theLouvet-One-Time-Stock-Award be treated in the same manner as termination without cause, and he shall also receive apro-rata EOAIP bonus for the year of termination based on actual performance.
If the Company terminates Mr. Louvet’s employment without cause or he terminates his employment for good reason, in either case within 12 months following a Changechange in Controlcontrol (as defined in the Louvet Employment Agreement), then he will be entitled to receive a lump sum amount equal to the total amount of cash severance he would receive if his employment was
terminated without cause. In addition, any outstanding equity awards held by him will immediately vest (such immediate vesting shall also occur shouldupon a termination of Mr. Louvet’s employment be terminated in contemplation of a Changechange in Control,control, and the Changechange in Controlcontrol actually occurs). For purposes of such vesting, any performance-based equity awards would be treated as if the target performance level was achieved. Pursuant to the Louvet Employment Agreement, to the extent that the aggregate present value of any payments or benefits payable to him that constitute “parachute payments” under Section 280G of the Code (the “parachute amount”) would exceed 2.99 times his “base amount” (as defined for purposes of Section 280G of the Code), then such payments and benefits shall be
reduced to the extent necessary so that the parachute amount is equal to 2.99 times his base amount (provided, that no reduction shall apply if he would retain, on a netafter-tax basis, a greater amount than he would have retained, on a netafter-tax basis, after applying such reduction).
Under the Louvet Employment Agreement, the above-describedabove described amounts and stock awards to be provided to him are subject to his compliance with the following restrictive covenants: (i) not to compete with us for one year following the termination of his employment; (ii) not to solicit any of our employees for two years following the termination of his employment; (iii) not to disparage us for seven years following the end of the employment term (and indefinitely with respect to Mr. R. Lauren and members of his family); and (iv) not to disclose any of our confidential information.
Under the Louvet Employment Agreement, cause is defined to mean: (1) the willful and continued failure by Mr. Louvet to substantially perform his duties hereunder after demand for substantial performance is delivered to him by us that specifically identifies the manner in which we believe he has not substantially performed his duties hereunder, (2) Mr. Louvet’s conviction of, or plea of nolo contendere to, a crime (whether or not involving the Company) constituting any felony, (3) the willful engaging by Mr. Louvet in gross misconduct relating to his employment that is materially injurious to the Company, monetarily or otherwise, or which subjects or if generally known would subject the Company to public ridicule. Notwithstanding the foregoing, his employment may be terminated for cause only by act of the Board and, in any event, his employment shall not be deemed
| 91 | | | 2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
to have been terminated for cause without (x) reasonable written notice to Mr. Louvet setting forth the reasons for the Company’s intention to terminate for cause, (y) the opportunity to cure (if curable) within 30 days of such written notice and (z) an opportunity for him, together with his counsel, to be heard by the Board.
Under the Louvet Employment Agreement, good reason is defined to mean a termination of employment by Mr. Louvet within one (1) year following the occurrence of (A) a material diminution in or adverse alteration to his title as CEO, base salary, benefits, position, or duties (provided that the exercise of Mr. R. Lauren of any authority permitted under the Louvet Employment
|
|
|
Agreement shall not constitute a material diminution in, or material adverse alteration to, the Executive’s “position” or “duties” for this purpose), (B) the relocation of his principal office outside the area which comprises a 50 mile radius from New York City, (C) a failure of the Company to comply with any material provision of the Louvet Employment Agreement, or (D) the Company requires the Executive to report to any person other than the current Executive Chairman or to the Board; provided, that the events described in clauses (A), (B), (C) and (D) above shall not constitute good reason (1) until Mr. Louvet provides written notice to the Company of the existence of such diminution, change, reduction, relocation or failure within 90 days of its occurrence and (2) unless such diminution, change, reduction or failure (as applicable) has not been cured within 30 days after written notice of such noncompliance has been given by Mr. Louvet to the Company.
If necessary to comply with Section 409A of the Code, any severance payments will be subject to a six monthsix-month delay in payment.
Jane Nielsen. The New Nielsen Employment Agreement is identical to the Nielsen Employment Agreement with respect to payments upon termination or a change in control, except as noted below. Under the Nielsen Employment Agreement, if we terminate Ms. Nielsen’s employment for any reason other than death, disability or cause (as defined in the Nielsen Employment Agreement and as described below), or she voluntarily terminates her employment for good reason (as defined in the Nielsen Employment Agreement and as described below), she will be entitled to continue to receive, in accordance with our normal payroll practices, an amount equal to her base salary for a severance period equal to the longer of the balance of the term (up to a maximum of
two years) and theone-year period commencing on the date of such termination, plus an amount, payable at the end of the severance period, equal to 150%175% of her base salary, (under the New Nielsen Employment Agreement, the amount is equal to 175% of her base salary), plus apro-rata EOAIP bonus for the year of termination based on actual performance. In addition, she will vest in any unvested stock options, RSUs and other equity awards with only service-based vesting conditions as of the date of termination of her employment, and any unvested equity awards with performance-based vesting conditions held by her will
vest on their originally scheduled vesting date or dates, as applicable, subject to the Company meeting the applicable performance goals. Ms. Nielsen will also be entitled to continue her participation during the severance period in any group medical or dental insurance plans in which she participated prior to termination. In addition, Ms. Nielsen will be entitled to receive any unpaid annual bonus for the fiscal year ended prior to the date of termination.
If sheMs. Nielsen voluntarily terminates her employment without good reason, or if we terminate her employment for cause, she will be entitled to receive only her base salary through the date of termination. In the event of her termination due to her death or disability, Ms. Nielsen or her estate will be entitled to receive all payments due to her through the date of her death or termination due to disability, and she shall also be entitled to have her equity awards be treated in the same manner as termination without cause, and she shall also receive apro-rata EOAIP bonus for the year of termination based on actual performance.
Under the Nielsen Employment Agreement, ifIf the Company terminates her employment without cause, or Ms. Nielsen voluntarily terminates her employment for good reason, in each case within 12 months following a change in control of the Company (as defined in the Nielsen Employment Agreement), then, in lieu of the foregoing amounts, she will be entitled to receive a lump sum amount, payable within 15 days after the termination of her employment, equal to two times the sum of her then current annual base salary and thetarget bonus she was paid for the most recently completed fiscal year immediately prior to her termination (in the New Nielsen Employment Agreement, instead of the prior year’s bonus the base salary would be added to her target bonus).termination. In addition, in such event, any unvested stock options, RSUs and other equity awards held by Ms. Nielsen will immediately vest. In the case of any performance-based equity awards, the accelerated vesting would be calculated as if the target performance level was achieved. Under the New Nielsen Employment Agreement, Ms. Nielsen shall also be entitled to the above amounts if she is terminated by the Company without cause in contemplation of a change in control, and the change of control actually occurs.
Under the Nielsen Employment Agreement, the above-described amounts and stock awards to be provided to
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
entitled to the above amounts if she is terminated by the Company without cause in contemplation of a change in control, and the change in control actually occurs.
The above described amounts and stock awards to be provided to her are subject to her compliance with the following restrictive covenants: (i) not to compete with us for one year following the termination of her employment; (ii) not to solicit any of our employees for one year following the termination of her employment; (iii) not to disparage us following the termination of her employment; and (iv) not to disclose any of our confidential information.
Under the Nielsen Employment Agreement, cause is defined as: (A) the willful and continued failure by Ms. Nielsen to substantially perform her duties hereunder after demand for substantial performance is delivered to her that specifically identifies the manner in which we believe she has not substantially performed her duties; (B) her conviction of, or plea of nolo contendere to, a crime (whether or not involving the Company) constituting any felony; (C) her willful engagement in gross misconduct relating to her employment that is materially injurious to the Company, monetarily or otherwise, or which subjects, or if generally known, would subject, the Company to public ridicule. Under this definition, no act, or failure to act, on Ms. Nielsen’s part shall be considered “willful” unless done, or omitted to be done, by her not in good faith and without reasonable belief that her action or omission was in the best interest of the Company. Notwithstanding the foregoing, Ms. Nielsen’s employment may be terminated for cause only upon (x) reasonable written notice to her setting forth the reasons for the Company’s intention to terminate her for cause; (y) the opportunity to cure (if curable) within 30 days of such written notice; and (z) an opportunity for Ms. Nielsen, together with her counsel, to be heard by the Company.
Under the Nielsen Employment Agreement, good reason is defined as a termination of employment by her within 60 days following the occurrence of: (A) a material diminution in or material adverse alteration to her title, base salary, or position (the New Nielsen Agreement also includes a material diminution or material adverse alternation to herannual bonus percentage, duties or annual bonus percentage,position, provided that a removal of particular business units or functions from her purview, responsibility or management that does not alter her role as the Company’s Chief Financial Officer (or, under the New Nielsen Employment Agreement, her role as the
Company’s Executive Vice President, Chief Operating Officer and Chief Financial Officer)Officer shall not
constitute a material diminution in or material adverse alteration to her position for this purpose; (B) the relocation of her principal office outside the area which comprises a 50 mile radius from New York City; (C) a failure of the Company to comply with any material provision of the Nielsen Employment Agreement; or (D) Ms. Nielsen being required to report to anyone other than the Chief Executive Officer or the Chairman, provided that the events described in clauses (A), (B), (C) and (D) above shall not constitute good reason (i) until Ms. Nielsen provides written notice to the Company of the existence of such diminution, alteration, relocation, failure or requirement within 90 days of the date she learned of its occurrence (or, if sooner, the date she would have learned of the occurrence had she exercised reasonable diligence); and (ii) unless such diminution, alteration, relocation, failure or requirement (as applicable) has not been cured within 30 days after written notice of such noncompliance has been given by Ms. Nielsen to the Company.
If necessary to comply with Section 409A of the Code, any severance payments will be subject to a six monthsix-month delay in payment.
Valérie Hermann.Howard Smith. Under the HermannSmith Employment Agreement, if we terminate Ms. Hermann’sMr. Smith’s employment for any reason other than death, disability or cause (as defined in the HermannSmith Employment Agreement and as described below), or Ms. Hermannhe voluntarily terminates herhis employment for good reason (as defined in the HermannSmith Employment Agreement and as described below), shehe will be entitled to continue to receive, in accordance with our normal payroll practices, an amount equal to herhis base salary for a severance period equal to the longer of the balance of the term (up to a maximum of two years) and theone-year period commencing on the date of such termination,eighteen months, plus an amount, payable at the end of the severance period, equal to 175%150% of herhis base salary, plus apro-ratasalary. EOAIP bonus for the year of termination based on actual performance. In addition, she will vest in any unvested stock options, RSUs and other equity awards with only service-based vesting conditions as of the date of termination of her employment, and any unvested equity awards with performance-based vesting conditions held by her will vest on their originally scheduled vesting date or dates, as applicable, subject to the Company meeting the applicable performance goals. Ms. Hermann
Mr. Smith will also be entitled to continue herhis participation during the
|
|
|
severance period in any group medical or dental insurance plans in which shehe participated prior to termination. In addition, she will be entitled to receive any unpaid annual bonus for the fiscal year ended prior to the date of termination.
If Ms. HermannMr. Smith voluntarily terminates herhis employment without good reason, or if we terminate herhis employment for cause, shehe will be entitled to receive only herhis base salary through the date of termination. In the event of herhis termination due to herhis death or disability, Ms. Hermann or her estate will be entitled to receive all payments due to her through the date of her death or termination due to disability, and she shall also be entitled to have her equity awards be treated in the same manner as described above as if her employment was terminated by the Company without cause.
Under the Hermann Employment Agreement, if the Company terminates her employment without cause, or Ms. Hermann voluntarily terminates her employment for good reason, in each case within 12 months following a change in control of the Company (as defined in the Hermann Employment Agreement), then, in lieu of the foregoing amounts, Ms. Hermann will be entitled to receive a lump sum amount, payable within 15 days after the termination of her employment, equal to two times the sum of her then current annual base
salary and the bonus she was paid for the most recently completed fiscal year immediately prior to her termination. In addition, in such event, any unvested stock options, RSUs and other equity awards held by her will immediately vest. In the case of any performance-based equity awards, the accelerated vesting would be calculated as if the target performance level was achieved, and such immediate vesting shall also occur should her employment be terminated in contemplation of a change in control, and the change in control actually occurs.
Under the Hermann Employment Agreement, the above-described amounts and stock awards to be provided to her are subject to her compliance with the following restrictive covenants: (i) not to compete with us for one year following the termination of her employment; (ii) not to solicit any of our employees for one year following the termination of her employment; (iii) not to disparage us following the termination of her employment; and (iv) not to disclose any of our confidential information.
Under the Hermann Employment Agreement, cause is defined as: (A) intentional failure by Ms. Hermann to perform the duties of her employment agreement (other than due to disability), provided that the conduct shall not constitute cause unless such failure by her to perform her duties has not been cured to our satisfaction, in our sole discretion, within 15 days after we have given notice of such failure to Ms. Hermann; or (B) an act of fraud, embezzlement, theft, breach of fiduciary duty, or any other material misconduct or any violation of law (other than a traffic violation) committed by Ms. Hermann; or (C) any intentional action by her causing material damage to or misappropriation of our assets; or (D) her wrongful disclosure of our material confidential information; or (E) her engagement in any competitive activity which would constitute a breach of the Hermann Employment Agreement and/or of her duty of loyalty; or (F) her breach of any of our material employment policies, provided that the breach shall not constitute cause unless such failure by her to perform her duties has not been cured to our satisfaction, in our sole discretion, within 15 days after we have given notice of such breach to Ms. Hermann; or (G) performance by her of her employment duties in a manner deemed by us, in our sole discretion, to be grossly negligent; or (H) the commission of any act by her, whether or not performed in the workplace, which subjects us to public ridicule or embarrassment, or is materially detrimental or damaging to our reputation, goodwill, or relationships with our customers, suppliers, vendors, licensees or employees.
Under the Hermann Employment Agreement, good reason is defined as a termination of employment by Ms. Hermann within 150 days following the occurrence of: (A) a material diminution in or adverse alteration to her title, base salary, position, or duties, it being acknowledged and understood that if the Company discontinues any brand, label, product category, or line of business, any changes to Ms. Hermann’s duties and responsibilities solely as a result of such discontinuation shall not be deemed a material diminution or adverse alteration, and it being further acknowledged and understood that the removal from Ms. Hermann’s purview of responsibility of any other brand, label, product category, or line of business to which she consents in writing shall not be deemed a material diminution or adverse alteration, provided in each caseMr. Smith
| | | |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
or his estate will be entitled to receive all payments due to him through the date of his death or termination due to disability. Further, he will be entitled to receive a pro-rated amount, based on the percentage of time that herhas elapsed during the applicable performance periods, of the unvested RSUs and PSUs held by him, which shall vest at the end of the applicable performance period, subject to our achievement of pre-established financial goals.
Under the Smith Employment Agreement, if the Company terminates his employment without cause, or Mr. Smith voluntarily terminates his employment for good reason, in each case within 12 months following a change in control of the Company (as defined in the Smith Employment Agreement), then, in lieu of the foregoing amounts, he will be entitled to receive a lump sum amount, payable within 15 days after the termination of his employment, equal to two times the sum of his then current annual base salary and prior fiscal year’s bonus immediately prior to his termination. In addition, in such event, any unvested stock options, RSUs and other equity awards held by Mr. Smith will immediately vest. In the case of any performance-based equity awards, the accelerated vesting would be calculated as if the target performance level was achieved.
The above described amounts and stock awards to be provided to him are subject to his compliance with the following restrictive covenants: (i) not to compete with us for one year following the termination of his employment; (ii) not to solicit any of our employees for one year following the termination of his employment; (iii) not to disparage us following the termination of his employment; and (iv) not to disclose any of our confidential information.
Under the Smith Employment Agreement, cause is defined as: (i) failure by Mr. Smith to perform the duties of his employment agreement (other than due to disability), provided that the conduct shall not constitute cause unless such failure by him to perform his duties has not been cured to our satisfaction, in our sole discretion, within fifteen (15) days after notice of such failure has been given by us to Mr. Smith; or (ii) an act of fraud, embezzlement, theft, breach of fiduciary duty, dishonesty, or any other misconduct or any violation of law (other than a traffic violation) committed by Mr. Smith; or (iii) any action by him
causing damage to or misappropriation of our assets; or (iv) his wrongful disclosure of our confidential information; or (v) his engagement in any competitive activity which would constitute a breach of his employment agreement and/or of his duty of loyalty; or (vi) his breach of any of our employment policies; or (vii) performance by him of his employment duties in a manner deemed by us, in our sole discretion, to be grossly negligent; or (viii) the commission of any act by him, whether or not performed in the workplace, which subjects or, if publicly known, would be likely to subject us to public ridicule or embarrassment, or would likely be detrimental or damaging to our reputation, goodwill, or relationships with our customers, suppliers, vendors, licensees or employees.
Under the Smith Employment Agreement, good reason is defined as a termination of employment by him within 60 days following the occurrence of: (A) a material diminution in or material adverse alteration to his title, base salary, or role Brand Group President isposition, provided that a removal of particular business units or functions from his purview shall not otherwise changed;constitute a material diminution in or material adverse alteration to his position for this purpose; (B) the relocation of herhis principal office outside the area which comprises a 50 mile radius from either New York City, London, or toGeneva; or (C) a city in which the principal executive officesfailure of the Company are not then located; (C) our failure to comply with any material provision of the HermannSmith Employment Agreement; or (D) we require her to report to anyone other than our Chief Executive Officer or the Board;Agreement, provided that the events described in clauses (A), (B), (C) and (D)(C) above shall not constitute good reason until (i) until Ms. HermannMr. Smith provides written notice to usthe Company of the existence of such diminution, alteration, relocation, or failure or reporting change within 6030 days of the date he learned of its occurrenceoccurrence; and (ii) unless such diminution, alteration, relocation, failure, or reporting changefailure (as applicable) has not been cured within 30 days after written notice of such noncompliance has been given by Mr. Smith to us by Ms. Hermann.the Company.
If necessary to comply with Section 409A of the Code, any severance payments will be subject to a six monthsix-month delay in payment.
David Lauren.If we terminate Mr. D. Lauren not based on poor job performance and without just cause, he would be entitled to continue to receive, in accordance with our normal payroll practices, an amount equal to his base salary for a severance period of one year. Under the Company’s severance pay plan for employees in the United States, just cause is defined to mean: (i) any
| 2021 PROXY STATEMENT | | | 94 | |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
(1) Any act or omission by anthe employee resulting or intended to result in personal gain at the
expense of the Company; (ii) theemployer; (2) The performance by the employee of his or her employment duties in a manner deemed by the Companyemployer to be grossly negligent; provided that the employee had previously received a written warning identifying the problem and outlining a course of corrective action, has been given a reasonable opportunity to correct his or her performance, and has failed or refused to do so; or (iii) thenegligent (3) The improper disclosure by the employee of proprietary or confidential information or trade secrets of the Company,Employer, or intellectual property which the Companyan employer is under a duty to protect, including software licensed to the Companyan Employer under agreements prohibiting disclosure; or (iv) misconduct(4) Misconduct by the employee, including, but not limited to, fraud, falsification of Companyemployer records, failure to comply with Companyemployer policies, rules or guidelines (including a violation of the Company’sEmployer’s business code of conduct), harassment, excessive absenteeism, dishonesty, insubordination, theft, violent acts or threats of violence, or possession of alcohol or narcotics on the property of the Company,any employer, or the use of any of the Company’sEmployer’s property, facilities or services for
illegal purposes; (5) Violation of any material written employer policy; or (v) the(6) The commission of a criminalan act by the employee, whether or not performed in the workplace, which subjects, or if generally known, would subject the Companyany employer to public ridicule or embarrassment; or (vi) documented poor job performance.embarrassment.
In connection with his receipt of severance, and per the Company’s practice under its severance pay plan, Mr. D. Lauren would be required to comply with the following restrictive covenants: (i) not to solicit any of our employees for one year following the termination of his employment; (ii) not to disparage us following the termination of his employment; and (iii) not to disclose any of our confidential information.
If necessary to comply with Section 409A of the Code, any severance payments will be subject to a six monthsix-month delay in payment.
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLES
The following tables reflect incremental payments and benefits that would be owed by the Company to each of our NEOs beyond what they had earned as of March 30, 201927, 2021 upon termination of their employment under certain circumstances or in the event of a change in control, assuming that:
|
The tables do not includenon-qualified deferred compensation, if any, that would be paid to the NEOs, which is set forth in the“Non-Qualified Deferred Compensation” table. In addition, the tables do not include the value of vested but unexercised stock options as of March 30, 2019.27, 2021.
Executive Chairman and Chief Creative Officer - Ralph Lauren |
Executive Chairman and Chief Creative Officer - Ralph Lauren |
| Executive Chairman and Chief Creative Officer - Ralph Lauren |
| ||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & | Total | ||||||||||||||||||||||||||||||||||||
By the Company for Cause/by the Executive Without Good Reason |
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
| ||||||||||
By the Company Without Cause/by the Executive for Good Reason |
$ |
3,500,000 |
|
$ |
9,560,440 |
4 |
$ |
46,704,296 |
5 |
$ |
996,322 |
|
$ |
60,761,058 |
| $ | 3,500,000 | $ | 18,740,440 | 4 | $ | 43,627,346 | 5 | $ | 1,040,470 | $ | 66,908,256 | |||||||||||||
Death or Disability |
$ |
0 |
|
$ |
0 |
|
$ |
46,704,296 |
|
$ |
0 |
|
$ |
46,704,296 |
| |||||||||||||||||||||||||
Change in Control with Termination6 |
$ |
3,500,000 |
|
$ |
9,560,440 |
|
$ |
46,704,296 |
|
$ |
996,322 |
|
$ |
60,761,058 |
| |||||||||||||||||||||||||
| 1. | In the event of a termination by the Company without cause or by Mr. R. Lauren for good reason and pursuant to his employment agreement, we would provide a lump sum cash payment equal to two times his base salary without regard to his reduced base salary rate in Fiscal 2021, payable within 30 days following the date of termination. |
| 2. | Represents the value associated with the acceleration or continuation (as the case may be) of the vesting of equity awards. In the case of RSUs and PSUs (including associated dividend equivalent units on such award), the value was based on the NYSE closing price of Class A Common Stock on March |
| 3. | Represents the cost of providing welfare and medical benefits, office facilities and secretarial assistance, and the use of a car and driver through the applicable severance period. |
| 4. | Represents two times the average annual bonus paid to Mr. R. Lauren for the two fiscal years immediately preceding the year of |
| 5. | If |
| 6. | In the event of a |
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
President and Chief Executive Officer - Patrice Louvet |
President and Chief Executive Officer - Patrice Louvet |
|
President and Chief Executive Officer - Patrice Louvet |
| ||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||||||||||||||||||||||
By the Company for Cause/by the Executive Without Good Reason |
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
| $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
By the Company Without Cause/by the Executive for Good Reason |
$ |
10,000,000 |
|
$ |
0 |
|
$ |
14,054,459 |
4 |
$ |
41,079 |
|
$ |
24,095,538 |
| $ | 10,000,000 | $ | 0 | $ | 4,264,972 | $ | 42,797 | $ | 14,307,769 | |||||||||||||||
Death or Disability |
$ |
0 |
|
$ |
0 |
|
$ |
29,391,799 |
5 |
$ |
0 |
|
$ |
29,391,799 |
| $ | 0 | $ | 0 | $ | 21,670,003 | 4 | $ | 0 | $ | 21,670,003 | ||||||||||||||
Change in Control with Termination |
$ |
10,000,000 |
|
$ |
0 |
|
$ |
33,945,815 |
|
$ |
41,079 |
|
$ |
43,986,894 |
| $ | 10,000,000 | $ | 0 | $ | 30,438,241 | $ | 42,797 | $ | 40,481,038 | |||||||||||||||
| 1. | In the event of a termination by the Company without cause or by Mr. Louvet for good reason and pursuant to his employment agreement, we would provide a monthly cash payment equal to four times his monthly base salary for two years. In the event of a |
| 2. | Represents the value associated with the acceleration or continuation (as the case may be) of the vesting of equity awards. In the case of RSUs, PSUs, |
| 3. | Represents the cost of providing medical and dental benefits during applicable severance period. |
| 4. | If |
|
Chief Operating Officer and Chief Financial Officer - Jane Nielsen |
Chief Operating Officer and Chief Financial Officer - Jane Nielsen |
|
Chief Operating Officer and Chief Financial Officer - Jane Nielsen |
| ||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||||||||||||||||||||||
Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||||||||||||||||||||||
By the Company for Cause/by the Executive Without Good Reason |
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
| $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
By the Company Without Cause/by the Executive for Good Reason |
$ |
1,423,125 |
|
$ |
1,485,000 |
4 |
$ |
7,942,641 |
5 |
$ |
31,629 |
|
$ |
10,882,395 |
| $ | 1,575,000 | $ | 1,837,500 | 4 | $ | 14,681,922 | 5 | $ | 33,065 | $ | 18,127,487 | |||||||||||||
Death or Disability |
$ |
0 |
|
$ |
0 |
|
$ |
7,942,641 |
5 |
$ |
0 |
|
$ |
7,942,641 |
| $ | 0 | $ | 0 | $ | 14,681,922 | 5 | $ | 0 | $ | 14,681,922 | ||||||||||||||
Change in Control with Termination |
$ |
1,980,000 |
|
$ |
4,884,464 |
6 |
$ |
7,942,641 |
|
$ |
31,629 |
|
$ |
14,838,734 |
| $ | 2,100,000 | $ | 3,675,000 | 6 | $ | 14,681,922 | $ | 33,065 | $ | 20,489,987 | ||||||||||||||
| 1. | In the event of a termination by the Company without cause or by Ms. Nielsen for good reason and pursuant to her employment agreement, we would continue to pay Ms. Nielsen for the longer of (a) the balance of her employment agreement |
|
|
|
|
|
|
|
|
Brand Group President - Valérie Hermann |
| |||||||||||||||||||
Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & | Total | ||||||||||||||||
By the Company for Cause/by the Executive Without Good Reason |
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
| |||||
By the Company Without Cause/by the Executive for Good Reason |
$ |
1,312,500 |
|
$ |
1,837,500 |
4 |
$ |
11,691,560 |
5 |
$ |
30,801 |
|
$ |
14,872,361 |
| |||||
Death or Disability |
$ |
0 |
|
$ |
0 |
|
$ |
11,691,560 |
5 |
$ |
0 |
|
$ |
11,691,560 |
| |||||
Change in Control with Termination |
$ |
2,100,000 |
|
$ |
6,025,638 |
6 |
$ |
11,691,560 |
|
$ |
30,801 |
|
$ |
19,847,999 |
| |||||
|
| 2. | Represents the value associated with the acceleration or continuation (as the case may be) of the vesting of equity awards. In the case of RSUs, PSUs and PRSUs, the value was based on the NYSE closing price of Class A Common Stock on March |
| 3. | Represents the cost of providing medical and dental benefits during applicable severance period. |
| 4. | Represents 175% of base salary. |
| 5. | If |
| 6. | Represents two times the target bonus in effect immediately prior to termination. |
| 97 | | | 2021 PROXY STATEMENT |
EXECUTIVE COMPENSATION MATTERS | RALPH LAUREN CORPORATION |
Chief Commercial Officer - Howard Smith |
| |||||||||||||||||||
| Cash Severance - Base Salary1 | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites3 | Total | ||||||||||||||||
By the Company for Cause/by the Executive Without Good Reason | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
By the Company Without Cause/by the Executive for Good Reason | $ | 1,575,000 | $ | 1,575,000 | 4 | $ | 0 | $ | 23,527 | $ | 3,173,527 | |||||||||
Death or Disability | $ | 0 | $ | 0 | $ | 9,902,412 | 5 | $ | 0 | $ | 9,902,412 | |||||||||
Change in Control with Termination | $ | 2,100,000 | $ | 3,150,000 | 6 | $ | 13,117,541 | $ | 23,527 | $ | 18,391,068 | |||||||||
| 1. | In the event of a termination by the Company without cause or by Mr. Smith for good reason and pursuant to his employment agreement, we would continue to pay Mr. Smith his base salary for eighteen months. In the event of a qualifying termination in connection with a change in control, we would provide for a lump sum payment equal to two times his base salary. |
| 2. | Represents the value associated with the acceleration or continuation (as the case may be) of the vesting of equity awards. In the case of RSUs, PSUs and PRSUs, the value was based on the NYSE closing price of Class A Common Stock on March 26, 2021, which was $122.16. |
| 3. | Represents the cost of providing medical and dental benefits during applicable severance period. |
| 4. | Represents 150% of base salary payable at the end of the severance period. |
| 5. | If maximum performance for applicable PSUs is reached, the value would increase by $1,318,473. |
| 6. | Represents two times the bonus paid for the fiscal year prior to |
Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and Head of the Polo Ralph Lauren Foundation - David Lauren |
| |||||||||||||||||||||||||||||||||||||||
Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation - David Lauren |
Chief Branding and Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and President of the Ralph Lauren Corporate Foundation - David Lauren |
| ||||||||||||||||||||||||||||||||||||||
| Cash Severance - Base Salary | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites | Total | ||||||||||||||||||||||||||||||||||||
Cash Severance - Base Salary | Cash Severance - Bonus | Vesting of Equity Awards2 | Continuation of Other Benefits & Perquisites | Total | ||||||||||||||||||||||||||||||||||||
By the Company for Just Cause/by the Executive |
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
| $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||
By the Company Without Just Cause1 |
$ |
850,000 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
850,000 |
| $ | 850,000 | $ | 0 | $ | 0 | $ | 0 | $ | 850,000 | |||||||||||||||
Death or Disability |
$ |
0 |
|
$ |
0 |
|
$ |
1,518,553 |
3 |
$ |
0 |
|
$ |
1,518,553 |
| $ | 0 | $ | 0 | $ | 1,276,328 | 3 | $ | 0 | $ | 1,276,328 | ||||||||||||||
Change in Control with Termination |
$ |
850,000 |
|
$ |
0 |
|
$ |
1,852,608 |
|
$ |
0 |
|
$ |
2,702,608 |
| $ | 850,000 | $ | 0 | $ | 1,919,378 | $ | 0 | $ | 2,769,378 | |||||||||||||||
| 1. | In the event of a termination by the Company without just cause, we would continue to pay Mr. D. Lauren his base salary for one year. |
| 2. | Represents the value associated with the acceleration or continuation (as the case may be) of the vesting of equity awards. In the case of RSUs, PSUs and PRSUs the value was based on the NYSE closing price of Class A Common Stock on March |
| 3. | If |
| |
EXECUTIVE COMPENSATION MATTERS
|
RALPH LAUREN CORPORATION
|
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the following disclosure provides the relationship of the annual total compensation of our median employee to the annual total compensation of our CEO, Mr. Louvet. The following ratio, as of our last completed fiscal year, is a reasonable estimate calculated in a manner consistent with SEC rules which permit the use of estimates, assumptions, and adjustments, and is based on the following methodology.
Determination of the Median Employee
In 2018, weWe selected February 28, 20182021 as the date on which to determine our median employee. At that time, includingIncluding all full-time, part-time, temporary, and seasonal employees, our workforce was comprised of 23,38120,036 employees in 2730 countries globally. None of the permitted exemptions under the SEC rules were used. We determined the estimated median based upon total cash received and selected a small group of employees around this estimated median. We then chose a median employee whom we felt was reasonably representative of our median employee.
Under the SEC’s rules, a company is required to identify its median employee only once every three years so long as there have been minimal changes to its employee population or employee compensation arrangements that the company reasonably believes would not have a meaningful impact on its pay ratio. We believe that we have not had any such changes in Fiscal 2019 that would have impacted our pay ratio. However, due to a material change in annual compensation of our median employee from Fiscal 2018, we have substituted a similarly situated employee as permitted by SEC rules.
Our employees work in various locations, with a large portion of employees in stores on a part-time or seasonal basis. These roles are critical to our business as they allow us the flexibility to best address our customer demands. At the Company, it is important to provide flexible work opportunities for our employees, so they can balance work with other life commitments.
We utilized annualized total cash received as compiled from our payroll records to identify the median employee. Annualized total cash received includes wages, bonuses, commissions, and overtime paid. Compensation in foreign currencies was converted to USD based on exchange rates used in our financial reporting.
We determined the estimated median based upon total cash received and selected a small group of employees around this estimated median. We then chose a median employee whom we felt was reasonably representative of our median employee.
Calculation of Annual Total Compensation
For purposes of the pay ratio, both the CEO and median employee’s annual total compensation were calculated consistent with the disclosure requirements under the Summary Compensation Table.
| |
CERTAIN RELATIONSHIPS AND TRANSACTIONS
|
RALPH LAUREN CORPORATION
|
CERTAIN RELATIONSHIPS AND TRANSACTIONS
WRITTEN RELATED PARTY TRANSACTIONS POLICY
We have adopted a written related party transactions policy detailing the policies and procedures relating to transactions which may present actual, potential, or perceived conflicts of interest and may raise questions as to whether such transactions are consistent with the best interests of us and our stockholders. The Nominating Committee must review and approve or ratify any deemed related party transaction proposed to be entered into by our executive officers or directors.
Under our related party transactions policy, any relationship, arrangement or transactions between us and (i) a director, (ii) an executive officer, (iii) a person known by us to be a beneficial owner of more than 5% of our Common Stock, or (iv) a person known by us to be an immediate family member of any of the foregoing (each of the foregoing clauses (i)-(iv) a “Related Party”), is deemed to be a related party transaction. Under our related party transactions policy, the following transactions are not deemed to be a related party transaction:
We and certain of the Lauren Family Members (as defined below) are parties to a Registration Rights Agreement entered into on June 9, 1997 pursuant to which the Lauren Family Members have certain demand registration rights in respect of shares of Class A Common Stock (including the shares of Class A Common Stock issuable upon conversion of the shares of Class B Common Stock held by them). The Lauren Family Members may make a demand to register their shares once every nine months. The Lauren Family Members also have an unlimited number of piggyback registration rights in respect of their shares. The piggyback registration rights allow the holders to include all or a portion of the shares of Class A Common Stock issuable upon conversion of their shares of Class B Common Stock under any registration statement filed by us, subject to certain limitations.
We are required to pay all expenses (other than underwriting discounts and commissions of the Lauren Family Members and taxes payable by the Lauren Family Members) in connection with any demand registration, as well as any registration pursuant to the exercise of piggyback rights. We must also indemnify the Lauren Family Members and any underwriters against certain liabilities, including liabilities arising under the Securities Act of 1933, as amended.
As used in this Proxy Statement, the term “Lauren Family Members” includes only the following persons: (i) Ralph Lauren and his estate, guardian, conservator or committee; (ii) the spouse of Mr. R. Lauren and her estate, guardian, conservator or committee; (iii) each descendant of Mr. R. Lauren (a “Lauren Descendant”) and their respective estates, guardians, conservators or committees; (iv) each Family Controlled Entity (as defined below); and (v) the trustees, in their respective capacities as such, of each Lauren Family Trust (as defined below). The term “Family Controlled Entity” means (i) anynot-for-profit corporation if at least a majority of its board of directors is composed of Mr. R. Lauren, Mr. R. Lauren’s spouse and/or Lauren Descendants; (ii) any other corporation if at least a majority of the value of its outstanding equity is owned
| |
CERTAIN RELATIONSHIPS AND TRANSACTIONS
|
RALPH LAUREN CORPORATION
|
majority of the value of its outstanding equity is owned by Lauren Family Members; (iii) any partnership if at least a majority of the economic interest of its partnership interests are owned by Lauren Family Members; and (iv) any limited liability or similar company if at least a majority of the economic interest in the company is owned by Lauren Family Members. The term “Lauren Family Trust” includes trusts, the primary beneficiaries of which are Mr. R. Lauren, Mr. R. Lauren’s spouse, Lauren Descendants, Mr. R. Lauren’s siblings, spouses of Lauren Descendants and their respective estates, guardians, conservator or committees and/or charitable organizations, provided that if the trust is a wholly charitable trust, at least a majority of the trustees of such trust consist of Mr. R. Lauren, the spouse of Mr. R. Lauren and/or Lauren Family Members.
OTHER AGREEMENTS, TRANSACTIONS, AND RELATIONSHIPS
In connection with the reorganization that preceded our initial public offering in June 1997, we and our stockholders entered into a stockholders’ agreement (the “Stockholders’ Agreement”) which sets forth certain voting and other agreements for the period prior to completion of the initial public offering. All of the provisions of the Stockholders’ Agreement terminated upon completion of the initial public offering, except for certain provisions relating to certain tax matters with respect to our predecessor entities, certain restrictions on transfers of shares of Common Stock and indemnification and exculpation provisions.
We have entered into indemnification agreements with each of our directors and certain executives. The indemnification agreements require, among other things, that we indemnify our directors and some executives against certain liabilities and associated expenses arising from their service as our directors and executives and reimburse certain related legal and other expenses. In the event of our change in control (as defined therein), we will, upon request by an indemnitee under the agreements, create and fund a trust for the benefit of such indemnitee sufficient to satisfy reasonably anticipated claims for indemnification.
Under our Code of Business Conduct and Ethics, all of our employees and officers are required to promptly report any potential relationships, actions, or
transactions, including those involving immediate family members, which reasonably could be expected to give rise to a conflict of interest to their manager and our legal department. In addition, employees who intend to seek additional employment of any kind while remaining our employee are required to notify their managers of their interest and obtain approval from them before accepting such other employment. Our directors are required to disclose any actual or potential conflicts of interest to the Executive Chairman of the Board and our General Counsel.Chief Legal Officer. All directors are required to recuse themselves from any Board discussion or decision affecting their personal, business, or professional interests.
In connection with our adoption of the “RRL” trademarks, pursuant to an agreement with us, Mr. R. Lauren retained the royalty-free right to use as trademarks “Ralph Lauren,” “Double RL” and “RRL” in perpetuity in connection with, among other things, beef and living animals. The trademarks “Double RL” and “RRL” are currently used by the Double RL Company, an entity wholly owned by Mr. R. Lauren. In addition, Mr. R. Lauren has reserved the right to engage in personal projects involvingnon-Company related film or theatrical productions through RRL Productions, Inc., a company wholly-owned by Mr. R. Lauren.
Jerome Lauren, the brother of Mr. R. Lauren, served as our Executive Vice President of Men’s Design until September 2016. Pursuant to the terms of J. Lauren’s separation agreement and release, he received $4,260,000 in cash severance payments through the end of his severance period, of which $462,500 was paid in Fiscal 2017, $925,000 was paid in Fiscal 2018, and $2,872,500 was paid in Fiscal 2019. Beginning in October 2016, the Company engaged J. Lauren as a consultant. In his role as a consultant to the Company, J. Lauren was compensated by the Company in the approximate amount of $925,080$2,083,570 in Fiscal 20192021 in exchange for services rendered. Mr. D. Lauren, our Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and HeadPresident of The Polothe Ralph Lauren Corporate Foundation, is Mr. R. Lauren’s son. Information regarding Mr. D. Lauren’s compensation and stock-based awards may be found under the “Executive Compensation Matters” section of this Proxy Statement.
| |
PROPOSAL 2
|
RALPH LAUREN CORPORATION
|
OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has appointed Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm to audit our financial statements and our subsidiaries for Fiscal 2020.2022. A resolution will be presented at the meeting to ratify their appointment.
Ernst & Young has served continuously as our auditors since 2008. All services provided by Ernst & Young, our independent registered public accounting firm for Fiscal 2019,2021, have been reviewed with the Audit Committee to confirm that the performance of such services was consistent with the regulatory requirements for auditor independence.
Independent Auditor Fees
The Audit Committee has adopted a policy governing thepre-approval by the Audit Committee of all services, audit andnon-audit, to be provided to us by our independent registered public accounting firm. Under the policy, the Audit Committee has generallypre-approved the provision by our independent registered public accounting firm of specific audit, audit-related, tax and othernon-audit services, subject to the fee limits established from time to time by the Audit Committee, as being consistent with auditor independence. The provision of all other services, and all generallypre-approved services in excess of the applicable fee limits, by the independent registered public accounting firm must be specificallypre-approved by the Audit Committee on acase-by-case basis. Our Chief Financial Officer is required to determine if any request or application for services proposed to be performed by the independent registered public accounting firm has the generalpre-approval of the Audit Committee, and the Audit Committee must be updated at each regularly scheduled meeting of the generallypre-approved services performed by the independent registered public accounting firm since the Audit Committee’s last regularly scheduled meeting. Requests or applications to provide services that require the specific
pre-approval of the Audit Committee must be submitted to the Audit Committee by both the independent registered public accounting firm and our Chief Financial Officer, and both must advise the Audit Committee as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence. The Audit Committee may delegate either type ofpre-approval authority to one or more of its members, and has currently delegated such authority to the Audit Committee’s Chair. Allpre-approved decisions made by the delegated member or members must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee approves the professional services rendered for us by Ernst & Young, including associated fees and the general reimbursement by the Company for expenses incurred in connection with these services. Aggregate fees for professional services rendered for us by Ernst & Young for Fiscal 20192021 and Fiscal 20182020 were:
| Fiscal 2021 | Fiscal 2020 | |||||||||||||||
Fiscal 2019
|
Fiscal 2018
| |||||||||||||||
Audit fees
|
$
|
4,615,100
|
|
$
|
4,445,000
|
| $ | 4,985,100 | $ | 5,248,700 | ||||||
Audit-related fees
|
|
1,469,600
|
|
|
1,145,200
|
| 559,600 | 1,020,500 | ||||||||
Tax fees
|
|
2,407,700
|
|
|
2,208,500
|
| 2,580,300 | 2,629,700 | ||||||||
All other fees
|
|
—
|
|
|
—
|
| — | — | ||||||||
Total
|
$
|
8,492,400
|
|
$
|
7,798,700
|
| $ | 8,125,000 | $ | 8,898,900 | ||||||
| |
PROPOSAL 2
|
RALPH LAUREN CORPORATION
|
Representatives from Ernst & Young will be present at the meeting, will have the opportunity to make a statement and will be available to respond to appropriate questions by stockholders.
The affirmative vote of a majority of the total votes cast at the 20192021 Annual Meeting and entitled to vote is needed to ratify Ernst & Young’s appointment. If the stockholders do not ratify the appointment of Ernst & Young, the selection of the independent auditor will be reconsidered by the Audit Committee of the Board.
OUR BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2020.2022.
| 103 | | | | |
PROPOSAL 3
|
RALPH LAUREN CORPORATION
|
COMPENSATION
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, a resolution will be presented at the 20192021 Annual Meeting to enable our stockholders to approve, on a discretionary andnon-binding basis, the compensation of our NEOs and our compensation philosophy, policies and practices as disclosed in the “Compensation Discussion and Analysis,” the accompanying compensation tables, and the related narrative disclosure in this Proxy Statement.
This proposal, commonly known as aSay-on-Pay proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this Proxy Statement. Accordingly, you may vote on the following resolution at the 20192021 Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, our NEOs’ compensation and our compensation philosophy, policies and practices as described in the “Compensation Discussion and Analysis” and the tabular disclosure regarding each NEO’s compensation (together with the accompanying narrative disclosure) in the Proxy Statement for this meeting.”
In considering their vote, stockholders are encouraged to read the “Compensation Discussion and Analysis,” the accompanying compensation tables, and the related narrative disclosure. Although this vote is advisory, and therefore nonbinding, the Board and the Compensation Committee expect to take into account the outcome of the vote when considering future executive compensation decisions, to the extent that they can determine the cause or causes of any significant negative voting results.
As described in detail under “Compensation Discussion and Analysis,” our compensation programs are designed to motivate our executives to achieve excellent results for us. We believe that our compensation program, with our balance of base salary, performance-based cash bonuses, and performance conditions for equity awards, encourages and rewards sustained performance that is aligned with long-term stockholder interests.
OUR BOARD RECOMMENDS A VOTE FOR THE PROPOSAL, ON AN ADVISORY BASIS, APPROVING THE COMPENSATION OF OUR NEOs AND OUR COMPENSATION PHILOSOPHY, POLICIES, AND PRACTICES AS DESCRIBED HEREIN.
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|
|
PROPOSAL TO ADOPT THE 2019 LONG-TERM STOCK INCENTIVE PLAN
GENERAL
On May 16, 2019, the Board of Directors of the Company (the “Board”) adopted the Company’s 2019 Long-Term Stock Incentive Plan (the “2019 Stock Incentive Plan”), a copy of which is attached to this Proxy Statement as Appendix C, subject to stockholder approval at the Annual Meeting. The 2019 Stock Incentive Plan will replace the Ralph Lauren Corporation 2010 Amended and Restated Long-Term Stock Incentive Plan (the “2010 Stock Incentive Plan”) under which the Company currently awards equity compensation to officers, employees, andnon-employee directors. The Board recommends a voteFOR the approval of the 2019 Stock Incentive Plan.
REASONS WHY YOU SHOULD VOTE IN FAVOR OF THE APPROVAL OF THE 2019 STOCK INCENTIVE PLAN
The Board of Directors recommends a vote for the approval of the 2019 Stock Incentive Plan because it believes the plan is in the best interests of the Company and its stockholders and contains features that are consistent with sound corporate governance practices, including the following:
| | | | |
|
|
The following table show information regarding outstanding options and full-value awards as of June 3, 2019, the record date for the Annual Meeting, under the Company’s 2010 Stock Incentive Plan.
Outstanding Options (#) | Weighted Average Exercise Price ($) | Weighted Average Remaining Years of Contractual Life (#) | Unvested Full Value Awards (#) | |||||||||
798,715
| 162.37 | 1.3 | 2,266,751 | * | ||||||||
|
As of June 3, 2019, there were 2,829,044 shares that remained available for issuance under the 2010 Stock Incentive Plan that are not already subject to outstanding awards under the 2010 Stock Incentive Plan.
The following table illustrates the potential dilutive impact of the additional shares of Class A Common Stock (“Shares”) being requested under the 2019 Stock Incentive Plan:
SHARE AUTHORIZATION (SHARES IN MILLIONS) | ||||||||
Total Shares Available | Equity Dilution: Percent of Shares Outstanding2 | |||||||
Shares available for future awards as of June 3, 20191
| 2.83 | 3.7% | ||||||
Requested increase to shares available in the 2019 Stock Incentive Plan
| 1.20 | 1.6% | ||||||
Shares available for future awards if the 2019 Stock Incentive Plan is approved
| 4.03 | 5.2% | ||||||
|
|
The following table provides information regarding our annual “burn rate” (see footnote 3 to the table below) for the past three fiscal years:
BURN RATE (SHARES IN MILLIONS) | ||||||||||||
Fiscal Year | Awards Granted1 | Basic Weighted Average Number of Common Shares Outstanding2 | Burn Rate3 | |||||||||
2019
| 0.86 | 80.6 | 1.1% | |||||||||
2018
| 0.89 | 81.7 | 1.1% | |||||||||
2017
| 1.04 | 82.7 | 1.3% | |||||||||
|
|
|
Stock option exercise prices and stock appreciation right (“SAR”), grant prices will not be lower than the fair market value on the grant date. The 2019 Stock Incentive Plan prohibits granting stock options with exercise prices and SARs with strike prices lower than the fair market value of a share of our Common Stock on the grant date, except in connection with the issuance or assumption of awards in connection with certain mergers, consolidations, acquisitions of property or stock or reorganizations.
No repricing or exchange without stockholder approval. The 2019 Stock Incentive Plan prohibits the repricing of outstanding stock options or SARs (or the cancelling of stock options or SARs in exchange for other awards or cash that would cause the stock options or SARs to not qualify for equity accounting treatment) without stockholder approval, except in connection with certain corporate transactions involving the Company.
|
|
|
If the holders of a majority of the common stock of the Company present in person or represented by proxy and entitled to vote at the Annual Meeting of Stockholders approve the 2019 Stock Incentive Plan, the
2019 Stock Incentive Plan, will become effective and no further grants of awards will be made under the 2010 Stock Incentive Plan. If such approval by the Company’s stockholders is not obtained, the 2010 Stock Incentive Plan will continue as it currently exists, the 2019 Stock Incentive Plan will never become effective, and the purpose of the 2019 Stock Incentive Plan to promote the interests of the Company and its stockholders, as set forth below, may not be achieved.
SUMMARY OF THE 2019 STOCK INCENTIVE PLAN FEATURES
The following summary of the material features of the 2019 Stock Incentive Plan, is qualified in its entirety by reference to the specific language of 2019 Stock Incentive Plan.
Administration. The 2019 Stock Incentive Plan provides that it will be administered by a committee (the “Committee”) which will either be the full Board or a committee of two or more members of the Board designated by the Board to administer the 2019 Stock Incentive Plan, each of whom is required to be a“Non-Employee Director” (within the meaning of Rule16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to the extent Rule16b-3 is applicable to the Company and the 2019 Stock Incentive Plan; provided, that the Committee may delegate to one or more officers of the Company the authority to grant awards to participants who are not officers or directors of the Company subject to Section 16 of the Exchange Act and to make certain determinations under the 2019 Stock Incentive Plan. The mere fact that a Committee member fails to qualify as aNon-Employee Director or outside director (within the meaning of Rule16b-3) will not invalidate any award made by the Committee which award is otherwise validly made
|
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|
|
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|
In addition, with respect to the Shares reserved for issuance under the 2019 Stock Incentive Plan, no Shares in excess of the maximum reserve may be issued in the form of incentive stock options. The market value of the Shares is $113.38 (the NYSE closing price of the Shares as of June 18, 2019, the latest practicable date).
The 2019 Stock Incentive Plan would maintain the limits with respect to awards granted to certain individuals. If any Shares covered by an award granted under the 2019 Stock Incentive Plan are forfeited, or if an award granted under the Plan has expired, terminated or been canceled for any reason whatsoever (other than by reason of exercise or vesting), then the Shares covered by such award shall again be, or shall become, Shares with respect to which awards may be granted hereunder. In addition, Shares delivered in full or partial payment of any tax withholding obligation, shall be deducted from the number of Shares delivered to the Participant pursuant to such award for purposes of determining the number of Shares acquired pursuant to the Plan; provided, that notwithstanding the foregoing, in no event shall any of the following Shares again be made available for issuance in respect of awards under the Plan: (i) Shares not issued
|
|
|
or delivered as a result of the net settlement of an outstanding SAR or option; (ii) Shares used to pay the exercise price, strike price or withholding taxes in respect of an outstanding SAR or option; or (iii) Shares repurchased on the open market with the proceeds of the exercise price of an option.
|
|
|
|
|
|
|
|
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the 2019 Stock Incentive Plan and the disposition of Shares acquired pursuant to the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state and local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant. For these reasons, Participants are urged to consult their own tax advisors with respect to the consequences of their participation in the 2019 Stock Incentive Plan.
Options. No income will be realized by a participant upon grant of a NSO. Upon the exercise of a NSO, the participant will realize ordinary compensation
|
|
|
|
Pursuant to currently applicable rules under Section 16(b) of the Exchange Act, the grant of an option (and not its exercise) to a person who is subject to the reporting and short-swing profit provisions under Section 16 of the Exchange Act (a “Section 16 Person”) begins thesix-month period of potential short-swing liability. The taxable event for the exercise of an option that has been outstanding at least six months ordinarily will be the date of exercise. If an option is exercised by a Section 16 Person within six months after the date of grant, however, taxation ordinarily will be deferred until the date which is six months after the date of grant, unless the person has filed a timely election pursuant to Section 83(b) of the Code to be taxed on the date of exercise. Under current rules promulgated under Section 16(b) of the Exchange Act, the six month period of potential short-swing liability may be eliminated if the option grant (i) is approved in advance by the Company’s board of directors (or a committee composed solely of two or moreNon-Employee Directors) or (ii) is approved in advance, or subsequently ratified by the Company’s stockholders no later than the next annual meeting of stockholders. Consequently, the taxable event for the exercise of an option that satisfies either of the conditions described in clauses (i) or (ii) above will be the date of exercise.
The Code requires that, for treatment as an ISO, Shares acquired through the exercise of an ISO cannot be disposed of before the later of (i) two years from the date of grant of the option, or (ii) one year from the date of exercise. ISO holders will generally incur no U.S.
federal income tax liability at the time of grant or upon exercise of such options. However, the spread at exercise will be an “item of tax preference” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the participant does not dispose of the Shares before two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the Shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to the Company for U.S. federal income tax purposes in connection with the grant or exercise of an ISO. If, within two years following the date of grant or within one year following the date of exercise, the holder of Shares acquired through the exercise of an ISO disposes of such Shares, the participant will generally realize ordinary compensation income at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the Share on the date of initial exercise or the amount realized on the subsequent disposition of the Shares, and such amount will generally be deductible by the Company for U.S. federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an otherwise qualifying ISO becomes first exercisable in any one year for Shares having a value in excess of $100,000 (based on the grant date value), the portion of the ISO in respect of such excess Shares will be treated as a NSO for U.S. federal income tax purposes.
The payment by a participant of the exercise price, in full or in part, with previously acquired Shares will not affect the tax treatment of the exercise described above. No gain or loss generally will be recognized by the participant upon the surrender of the previously acquired Shares to the Company, and the Shares received by the participant, equal in number to the previously surrendered Shares, will have the same tax basis as the Shares surrendered to the Company and will have a holding period that includes the holding period of the Shares surrendered. The value of the Shares received by the participant in excess of the number of Shares surrendered to the Company will be taxable ordinary compensation income to the participant. Such additional Shares will have a tax basis
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|
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equal to the fair market value of such additional Shares as of the date ordinary income is realized, and will have a holding period that begins on the date ordinary compensation income is realized.
|
New Plan Benefits. The number of Shares that will actually be awarded under the 2019 Stock Incentive Plan is not currently determinable. Generally, awards to be granted in the future under the 2019 Stock Incentive Plan are at the discretion of the Committee. Although annual target equity values are provided in the respective employment agreements of Mr. R. Lauren, Mr. Louvet, Ms. Nielsen, and Ms. Hermann, as well as ournon-employee directors, it is not possible to determine the benefits or amount they would receive under the 2019 Stock Incentive Plan. As such, it is not possible to determine the benefits or the amounts to be received
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under the 2019 Stock Incentive Plan by the Company’s officers, employees, or third party service providers. The following table sets forth the target grant value that will be received by or allocated to each of the following under the 2019 Stock Incentive Plan by contract. Other future awards that may be granted in the discretion of the Committee are not determinable.
New Plan Benefits Table
Ralph Lauren Corporation 2019 Long-Term Stock Incentive Plan
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EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of March 30, 2019, regarding compensation plans under which the Company’s equity securities are authorized for issuance:
| (a) | (b) | (c) | ||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of such outstanding options, warrants and rights | 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
| 3,491,022 | (1) | $ | 162.53 | (2) | 2,858,998 | (3) | |||||
Equity compensation plans not approved by security holders
| — | — | — | |||||||||
Total
| 3,491,022 | $ | 162.53 | 2,858,998 | ||||||||
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REQUIRED VOTE
Under relevant New York Stock Exchange rules relating to approval of equity compensation plans, approval of the 2019 Stock Incentive Plan will require the affirmative vote of a majority of the votes cast on this Proposal, provided that the total votes cast on the Proposal represent over 50% in interest of all securities entitled to vote on the Proposal. Applicable Treasury Regulations require the affirmative vote of a majority of the votes cast on the issue at the Annual Meeting to
approve the performance based provisions of the 2019 Stock Incentive Plan.
OUR BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE 2019 STOCK INCENTIVE PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A CONTRARY CHOICE IN THEIR PROXIES.
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QUESTIONS AND ANSWERS
|
RALPH LAUREN CORPORATION
|
ABOUT THE ANNUAL MEETING
AND VOTING
Why did I receive these proxy materials?
You received these proxy materials because you were a stockholder of the Company on June 3, 2019,1, 2021, the record date (the “Record Date”) for the Annual Meeting of the Company’s Stockholders to be held on August 1, 2019July 29, 2021 (the “2019“2021 Annual Meeting” or “Meeting”). At the 20192021 Annual Meeting, stockholders will be asked to vote on several items of business. Since it is not practical or convenient for all stockholders to participate in our live Meeting webcast, our Board of Directors (the “Board”) is seeking your proxy to vote on these matters.
How do I participate in the Company’s 20192021 Annual Meeting of Stockholders?
ThisFor the third year, the 20192021 Annual Meeting will be conducted exclusively virtually via live webcast atwww.virtualshareholdermeeting.com/RL2019,RL2021, (the “Annual Meeting Website”), in a fashion similar to our priorin-person meetings. We are committed to our Strategic Plan to “Leadand “Leading with Digital” and our sustainability and citizenship goals, and believe a virtual stockholders meeting best encompasses these objectives while also ensuring access for all stockholders. For the first time,third year, all stockholders, regardless of size, resources, or physical location, eligible to attend the 20192021 Annual Meeting will be able to participate via webcast and will be able to communicate with us and ask questions before and during the Meeting. Providing access virtually is especially important in light of the social distancing necessitated by COVID-19.
How can I ask questions during the Meeting?
As part of the Annual Meeting, we will hold a live webcast Q&A session, during which we intend to answer all questions submitted before or during the Meeting in accordance with the Meeting’s Rules of Conduct (available on the Annual Meeting Website) which are pertinent to the Company and the Meeting matters, as time permits. Consistent with our prior in-person annual meetings, all questions submitted in accordance with the Rules of Conduct will be generally addressed in the order received and we limit each
stockholder to one question in order to allow us to answer questions from as many stockholders as possible. Answers to any such questions that are not addressed during the Meeting will
be published following the meeting onhttp://investor.ralphlauren.com.Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once. Questions regarding personal matters, including general economic, political, or product questions, that are not directly related to the business of the Company are not pertinent to Meeting matters and therefore will not be answered. If there are matters of individual concern to a stockholder and not of general concern to all stockholders, or if a question posed was not otherwise answered, we provide an opportunity for stockholders to contact us separately after the Meeting through our Investor Relations websitehttp://investor.ralphlauren.com.
Questions may be submitted prior to the Meeting atwwwwww.proxyvote.com .proxyvote.comor you may submit questions in real time during the Meeting using our Annual Meeting Website. Please note that stockholders will need their unique control number which appears on their Notice of Internet Notice,Availability, the proxy card (printed in the box and marked by the arrow), and the instructions that accompanied the proxy materials in order to access these sites. Beneficial stockholders who do not have a control number may gain access to the meeting by logging into their broker, brokerage firm, bank, or other nominee’s website and selecting the shareholder communications mailbox to link through to the Meeting. Instructions should also be provided on the voting instruction card provided by your broker, bank, or other nominee.
We want to be sure that all our stockholders are afforded the same rights and opportunities to participate as they would at anin-person meeting, so all of our board members and executive officers are expected to join the Meeting and be available for questions, and we are committed to acknowledging each relevant question we receive pursuant to our Rules of Conduct (available on the Annual Meeting Website). If you are eligible to attend the 20192021 Annual Meeting, but cannot submit your question usingwww.proxyvote.comwww.proxyvote.com or the Annual Meeting Website, please contact our Investor Relations Department at (212)813-7868 for accommodations.
What can I do if I need technical assistance during the Meeting?
If you encounter any difficulties accessing the virtual Meeting webcast, please call the technical support number that will be posted on the Annual Meeting Websitelog-in page.
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QUESTIONS AND ANSWERS
|
RALPH LAUREN CORPORATION
|
What can I do if I need technical assistance during the Meeting?
If you encounter any difficulties accessing the virtual Meeting webcast, please call the technical support number that will be posted on the Annual Meeting Website log-in page.
If I can’t participate in the live Meeting webcast, can I vote or listen to it later?
You may vote your shares electronically before the meeting by visitingwww.proxyvote.comand following the instructions on your proxy card. You do not need to access the Meeting webcast to vote if you submitted your vote via proxy in advance of the Meeting. An audio replay of the Meeting, including the questions answered during the meeting, will be available onhttp://investor.ralphlauren.comuntil the 20202022 Annual Meeting of Stockholders. Additional information about how to vote your shares and participate in our Meeting webcast can be found in the General Information section of this proxy statement.
What is the “Notice and Access” model and why did the Company elect to use it?
We are making the proxy materials available to stockholders on the Internet under the Securities and Exchange Commission’s (“SEC”) Notice and Access model. On or about June 21, 2019,17, 2021, we will mail to all stockholders a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) in lieu of mailing a full printed set of the proxy materials. Accordingly, our proxy materials are first being made available to our stockholders on our website,http://investor.ralphlauren.com, on or about June 21, 2019.17, 2021. The Notice of Internet Availability includes instructions for accessing the proxy materials and voting by telephone or on the Internet. You will also find instructions for requesting a full printed set of the proxy materials in the Notice of Internet Availability.
We believe the electronic method of delivery under the Notice of Internet Availability model will decrease postage and printing expenses, expedite delivery of proxy materials to you and reduce our environmental impact, and we encourage you to take advantage of the availability of the proxy materials on the Internet. If you received the Notice of Internet Availability but would like to receive a full printed set of the proxy materials in the mail, you may follow the instructions in the Notice of Internet Availability for requesting such materials.
How can I get electronic access to the proxy materials?
The Notice of Internet Availability will provide you with instructions for viewing our proxy materials for the 20192021 Annual Meeting on the Internet usingwww.proxyvote.comand requesting that we send proxy materials to you by
email. The proxy materials are also available on our website athttp://investor.ralphlauren.comor on our Annual Meeting Website
Who is entitled to vote?
Only holders of record of shares of our Class A Common Stock and Class B Common Stock (together, the “Common Stock”) at the close of business on the Record Date are entitled to notice of, and to vote at, the 20192021 Annual Meeting and adjournments or postponements thereof. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available for inspection by appointment at the Company’s headquarters 10 days prior to the 2021 Annual Meeting and in electronic form on the day of the 2021 Annual Meeting at www.virtualshareholdermeeting.com/RL2021. The presence, in person or by proxy, of the holders ofone-third of the total number of shares of Common Stock outstanding on the Record Date will constitute a quorum for the transaction of business at the 20192021 Annual Meeting.
On the Record Date, there were 51,898,90848,613,512 outstanding shares of Class A Common Stock and 25,381,28024,881,276 outstanding shares of Class B Common Stock. Except for the election of directors, the Class A Common Stock and Class B Common Stock vote together as a single class on all matters presented for the consideration of our stockholders, with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes. The Class A Common Stock is publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “RL.” The Class B Common Stock is owned by Ralph Lauren and entities owned by, or established for the benefit of, Mr. R. Lauren, or members of his family.
What is the difference between a “stockholder of record” and a stockholder who holds stock in “street name?”
If you hold shares of the Company directly in your name with our transfer agent, Computershare, you are a “stockholder of record” or “registered stockholder.” The
| 2021 PROXY STATEMENT | | | 106 | |
QUESTIONS AND ANSWERS | RALPH LAUREN CORPORATION |
Notice of Internet Availability has been sent directly to you by the Company or by our representative.
If you own your shares indirectly through a broker, bank, or other financial institution, your shares are said to be held in “street name.” Technically, your bank or broker will vote those shares. In this case, the Notice of Internet Availability has been forwarded to you by your broker, bank, other financial institution, or other designated representative. Through this process, your bank or broker collects voting instructions from all of its customers who hold shares of the Company and then submits those votes to us.
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What are broker discretionary voting and brokernon-votes?
For shares held in “street name,” when a broker or bank does not receive voting instructions from its customers, the question arises whether the broker or bank nonetheless has the discretion to vote those shares.
For routine matters, the NYSE gives brokers and banks the discretion to vote, even if they have not received voting instructions from their customers or the “beneficial owners” of such shares. In this Proxy Statement, only the ratification of our independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”) (Proposal 2), is a matter considered routine by the NYSE.
Fornon-routine matters, the NYSE prohibits brokers and banks from casting votes on behalf of the beneficial owners if they have not received voting instructions. When the bank or broker is unable to vote under these rules, it reports the number of unvoted shares to us as “brokernon-votes.” In this Proxy Statement, the election of directors (Proposal 1), and the advisory vote on executive
compensation (Proposal 3), and the approval of the 2019 Long-Term Stock Incentive Plan (Proposal 4) are matters considerednon-routine by the NYSE. As a result, on each of these items, if you hold your shares in street name, your shares will be voted only if you give instructions to your bank or broker.
What are my voting options and what vote is needed to pass the proposals included in this Proxy Statement?
Only votes cast “FOR” a nominee will be counted in the election of directors. Votes that are withheld with respect to one or more nominees will result in those nominees receiving fewer votes but will not count as a vote against the nominees. You have the right to vote “FOR” or “AGAINST,” or to “ABSTAIN” from voting in connection with Proposals 2 3 and 4.3. The following table summarizes each proposal, the Board’s recommendation, the affirmative vote required for approval and whether broker discretionary voting is allowed.
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QUESTIONS AND ANSWERS
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RALPH LAUREN CORPORATION
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Proposal Number | Proposal | Board Recommendation | Affirmative Vote Required for Approval | Broker Discretionary Voting Allowed | ||||||
1 | Election of Directors: | FOR ALL | Plurality vote | No | ||||||
• Three directors (the “Class A Directors”) will be elected by a plurality vote of the shares of Class A Common Stock present in person or by proxy at the 2021 Annual Meeting and eligible to vote. | ||||||||||
• Nine directors (the “Class B Directors”) will be elected by a plurality vote of the shares of Class B Common Stock present in person or by proxy at the 2021 Annual Meeting and eligible to vote. | ||||||||||
2 | Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for Fiscal 2022. | FOR | Majority of votes cast | Yes | ||||||
3 | Approval, on an advisory basis, of the compensation of our named executive officers and our compensation philosophy, policies and practices. | FOR | Majority of votes cast | No | ||||||
How will brokernon-votes and abstentions be counted?
Brokernon-votes and abstentions are counted for purposes of determining whether a quorum is present. Only “FOR” and “AGAINST” votes are counted for purposes of determining the votes cast in connection with each proposal. Therefore, brokernon-votes and abstentions will not be counted as a vote “FOR” the
election of directors in Proposal 1 and will have no effect on determining whether the affirmative vote constitutes a majority of the votes cast with respect to ProposalsProposal 3 and 4 and, in the case of abstentions, Proposal 2. Because brokers are entitled to vote on Proposal 2, we do not anticipate any brokernon-votes with respect to this proposal.
| | | | |
ADDITIONAL MATTERS
|
RALPH LAUREN CORPORATION
|
PROXY PROCEDURE AND EXPENSES OF SOLICITATION
We will retain an independent tabulator to receive and tabulate the proxies and independent inspectors of election to certify the results.
All expenses incurred in connection with the solicitation of proxies will be borne by us. We will reimburse brokers, fiduciaries, custodians and other nominees for their costs in forwarding proxy materials to beneficial owners of Common Stock held in their names.
Solicitation may be undertaken by mail, telephone, personal contact or other similar means by our directors, officers, and employees without additional compensation. In addition, we have engaged the firm of Okapi Partners to assist in the solicitation of proxies for the Meeting and will pay Okapi Partners a fee of approximately $20,000,$18,000 plus reimbursement ofout-of-pocket expenses. The address of Okapi Partners is 1212 Avenue of the Americas, 24th Floor, New York, New York 10036. If you need assistance in completing your proxy card or voting by telephone or on the Internet, or have questions regarding the 20192021 Annual Meeting of Stockholders, please contact Okapi Partners at (877) (212) 297-0720274-8654 or by email at info@okapipartners.com.
STOCKHOLDER PROPOSALS FOR THE 20202022 ANNUAL MEETING OF STOCKHOLDERS
Stockholders intending to present a proposal at the 20202022 Annual Meeting of Stockholders and have it included in our proxy statement for that meeting must submit the proposal in writing to Ralph Lauren Corporation, Attention: Corporate Secretary/Legal Department, 650 Madison Avenue, New York 10022.100 Metro Boulevard, Nutley, NJ 07110. We must receive such proposals no later than February 22, 2020.17, 2022. It is suggested that proposals be submitted by certified mail, return receipt requested.
Stockholders intending to present a proposal at the 20202022 Annual Meeting of Stockholders without inclusion of the proposal in our proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in ourBy-laws. TheBy-laws
require, among other things, that a stockholder’s notice of such proposal or nomination be delivered personally or mailed to, and received at the office of the Company, addressed to the Corporate Secretary, by no earlier than 90 days and no later than 60 days before the first anniversary of the date of the prior year’s annual meeting of stockholders; provided, however, if (i) the annual meeting of stockholders is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the prior year’s annual meeting of stockholders or (ii) no annual meeting was held during the prior year, the notice must be received (x) no earlier than 90 days before such annual meeting and (y) no later than the later of 60 days before such annual meeting and the tenth day after the notice of such annual meeting was made.
A stockholder’s notice to us must include the information required under ourBy-laws, including a full description of such proposal (including all information that would be required in connection with such proposal under the SEC’s proxy rules if such proposal were the subject of a proxy solicitation and the written consent of each nominee for election to the Board named therein (if any) to serve if elected) and the name, address and number of shares of Common Stock held of record or beneficially as of the record date for such meeting by the person proposing to bring such proposal before the meeting.
Nothing in this section shall be interpreted or construed to require the inclusion of information about any stockholder proposal in our Proxy Statement.
DELIVERY OF STOCKHOLDERS’ MATERIALS AND HOUSEHOLDING
You can help us to save further printing and mailing expenses by consenting to receive notices and other materials electronically. If you are a stockholder of record, you may sign up for this service by checking the appropriate box on the accompanying proxy card. If you hold your shares through a bank, broker, or other holder of record, contact the record holder for information regarding electronic delivery of materials. Your consent to electronic delivery will remain in effect until you revoke it. If you choose electronic delivery, you may incur costs, such as telephone and Internet access charges, for which you will be solely responsible.
| | | |
ADDITIONAL MATTERS
|
RALPH LAUREN CORPORATION
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The SEC allows us to deliver a single copy of proxy materials to an address shared by two or more stockholders, unless the stockholders instruct us to the contrary. This delivery method, referred to as “householding,” can result in significant cost savings for us. We will promptly provide you another copy of these materials, without charge, upon written request to our Investor Relations Department, 650 Madison Avenue, New York, New York 10022. Our Investor Relations Department can be reached at (212)813-7868.
Stockholders of record sharing an address who receive multiple copies of proxy materials and wish to receive a single copy of such materials in the future should submit their request to us in the same manner. If you are the beneficial owner, but not the record holder, of our shares and wish to receive only one copy of the Proxy Statement related materials in the future, you need to contact your bank, brokerage firm or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address.
As of the date of this Proxy Statement, the Board knows of no matters other than those referred to in the accompanying Notice of Annual Meeting of Stockholders that may properly come before the meeting. If any stockholder proposal or other matter were to properly come before the meeting, including voting for the election of any person as a director in place of a nominee named herein who becomes unable to serve or for good cause will not serve or voting on a proposal omitted from this Proxy Statement pursuant to the rules of the SEC, all proxies received will be voted in accordance with the discretion of the proxy holders, unless a stockholder specifies otherwise in his or her proxy.
The form of proxy and the Proxy Statement have been approved by the Board and are being delivered to stockholders by its authority.
Ralph Lauren
Executive Chairman and Chief Creative Officer
New York, New York
June 21, 201917, 2021
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APPENDIX A
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RALPH LAUREN CORPORATION
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RALPH LAUREN CORPORATION
DEFINITION OF “INDEPENDENT” DIRECTORS
The Board has established these guidelines to assist it in determining whether or not directors have a material relationship with us for purposes of determining independence under the NYSE Corporate Governance Rules. In each case, the Board will broadly consider all relevant facts and circumstances and shall apply the following standards (in accordance with the guidance, and subject to the exceptions provided by, the NYSE in its Commentary to its Corporate Governance Rules where applicable).
| 1. | Employment and Commercial Relationships Affecting Independence. |
A director will not be independent if: (i) the director is, or has been within the last three years, an employee of the Company or any member of the Lauren Group; (ii) an immediate family member of the director is, or has been within the last three years, an executive officer of the Company; (iii) (A) the director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor; (B) the director is a current employee of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or an immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the listed Company’s audit within that time; (iv) the director has received, or has an immediate family member who has received, during any 12 month period within the last three years, more than $120,000 in direct compensation from the Company or any member of the Lauren Group, other than (x) director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) and (y) compensation received by an immediate family member for service as an employee of the Company
(other than as an executive officer); (v) the director or an immediate family member of the director is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation committee; or (vi) the director is a current employee, or an immediate family member of the director is a current executive officer, of a company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues.
In addition, a director will not be independent if his or her spouse, parent, sibling, or child is employed by us.
| 2. | Relationships Not Deemed to Impair Independence. |
Subject to Section (1) above, the following relationships are not deemed to be material relationships that would impair a director’s independence.
Non-management Directors.The director is anon-management director of another company that does business with us.
Commercial Relationships.The director is an employee or executive officer, or an immediate family member of the director is an executive officer, of another company that does business with us; provided in either case that:
(i) such business was entered into in the ordinary course of our business and on substantially the same terms as those prevailing at the time for comparable business with unaffiliated third parties; and
(ii) termination of the relationship in the normal course of business would not reasonably be expected to have a material adverse effect on the financial condition, results of operations or business of the other company.
Tax-Exempt Organization Relationships.The director (or an immediate family member of the director) serves as a director, officer, or trustee of atax-exempt organization, and the Company’s
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APPENDIX A
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RALPH LAUREN CORPORATION
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discretionary charitable contributions to the organization do not exceed the greater of $1 million or 2% of the organization’s aggregate annual charitable receipts during the organization’s preceding fiscal year. (Any automatic matching by the Company of employee charitable contributions are not included in the Company’s contributions for this purpose.)
| 3. | Disclosure. |
For relationships that are either not covered by, or do not satisfy, these guidelines, the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be made by the directors satisfying all the independence guidelines set forth above. We will explain in our next proxy statement
thereafter the basis for any Board determination that any such relationship was immaterial.
| 4. | Definitions. |
For purposes of these guidelines, the (i) term “immediate family member” shall have the meaning ascribed to it by the NYSE Corporate Governance Rules (including the Commentary thereto), (ii) the term “the Company” includes any entity in our consolidated group, (iii) the “Lauren Group” consists of Ralph Lauren, any member of his immediate family or any entity controlled by Ralph Lauren or members of his immediate family, and (iv) the term “executive officer” has the same meaning specified for the term “officer” in Rule16a-1(f) under the Securities Exchange Act of 1934, as amended.
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APPENDIX B
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RALPH LAUREN CORPORATION
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RECONCILIATION OF CERTAINNON-U.S. GAAP FINANCIAL MEASURES*
The following tables reconcile certain financial measures disclosed within this Proxy Statement for the fiscal periods presented, including the Company’s gross profit, gross profit as a percentage of net revenues (“GM%”), selling, general, and administrative (“SG&A”) expenses, SG&A as a percentage of net revenues (“SG&A%”), net income (loss) before income taxes (“NIBT”), net income (loss) per dilutive chare (“dilutive EPS”), and return on invested capital (“ROIC”), as approved by the Company’s Compensation Committee for the fiscal periods presented.Committee.
Fiscal Years Ended
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March 30, 2019
| March 31, 2018
| April 1, 2017
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NIBT
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Dilutive EPS
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NIBT
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Dilutive EPS
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NIBT
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Dilutive EPS
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3 Year Cumulative Dilutive EPS
| ||||||||||||||||||||||||||||||||||
(millions)
| (millions)
| (millions)
| ||||||||||||||||||||||||||||||||||||||
As Reported (GAAP basis)
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$
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582.5
|
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$
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5.27
|
|
$
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489.2
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$
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1.97
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$
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(104.9
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)
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$
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(1.20
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)
|
$
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6.04
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Restructuring and other charges
|
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130.1
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1.26
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108.0
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0.90
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318.6
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2.67
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4.83
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Impairment of assets
|
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25.8
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0.25
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50.0
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0.42
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|
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253.8
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2.54
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|
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3.21
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Restructuring-related inventory charges
|
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7.2
|
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0.07
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7.6
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0.06
|
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197.9
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1.89
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2.02
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U.S. tax reform enactment-related charges
|
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—
|
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0.34
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|
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—
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2.68
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—
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—
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3.02
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Reversal of income tax reserve resulting from a change in tax law
|
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—
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|
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—
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|
|
—
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—
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|
|
—
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|
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(0.19
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)
|
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(0.19
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)
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As Adjusted(Non-GAAP basis for press release)(a)
|
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745.6
|
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7.19
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654.8
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6.03
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665.4
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5.71
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18.93
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Other operational charges
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5.7
|
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|
0.06
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|
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3.7
|
|
|
0.04
|
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(3.3
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)
|
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(0.02
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)
|
|
0.08
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As Adjusted(Non-GAAP basis for bonus payout)
|
$
|
751.3
|
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$
|
7.25
|
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$
|
658.5
|
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$
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6.07
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$
|
662.1
|
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$
|
5.69
|
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$
|
19.01
|
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| Operating Expenses | |||||||||||
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| Fiscal Years Ended | |||||||||||
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| March 27, 2021 |
| March 28, 2020 | |||||||||
| (millions) | ||||||||||||
As Reported (GAAP basis) | $ | (2,905.0 | ) |
|
|
| $ | (3,336.3 | ) | |||
Restructuring and other charges | 170.5 |
|
|
| 67.2 | |||||||
Impairment of assets | 96.0 |
|
|
| 31.6 | |||||||
COVID-19-related bad debt expense (benefit) | (41.4 | ) |
|
|
| 56.4 | ||||||
As Adjusted (Non-GAAP basis)(a) | $ | (2,679.9 | ) |
|
|
| $ | (3,181.1 | ) | |||
Fiscal |
|
| Fiscal Year Ended |
| Fiscal 2019—2020 Cumulative ROIC %(b) | |||||||||||||||||||||||||||||||||||||||||
|
| March 28, 2020 |
| March 30, 2019 |
| ||||||||||||||||||||||||||||||||||||||||
|
| Net Income | Inventories | P&E(a) | ROIC%(b) |
| Net Income | Inventories | P&E(a) | ROIC%(b) |
| ||||||||||||||||||||||||||||||||||
| (millions) | (millions) | |||||||||||||||||||||||||||||||||||||||||||
As Reported (GAAP basis) | $ | 384.3 | $ | 736.2 | $ | 979.5 |
|
|
|
|
|
| $ | 430.9 | $ | 817.8 | $ | 1,039.2 |
|
|
|
|
|
|
|
|
| |||||||||||||||||
Restructuring and other charges(c) | 67.2 | — | — |
|
|
|
|
|
| 130.1 | — | 11.6 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Impairment of assets | 38.7 | — | 16.8 |
|
|
|
|
|
| 25.8 | — | 25.8 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Non-routine inventory charges | 159.5 | 144.5 | — |
|
|
|
|
|
| 7.2 | 7.2 | — |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
COVID-19 bad debt expense | 56.4 | — | — |
|
|
|
|
|
| — | — | — |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Income tax provision | (199.9 | ) | — | — |
|
|
|
|
|
| (6.5 | ) | — | — |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
As Adjusted (Non-GAAP basis for press release)(d) | 506.2 |
|
|
|
|
|
|
|
|
|
|
|
| 587.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other operational charges, net of tax(e) | 41.9 |
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
As Adjusted (Non-GAAP basis) | $ | 548.1 | $ | 880.7 | $ | 996.3 | 29.2 | % |
|
|
| $ | 587.5 | $ | 825.0 | $ | 1,076.6 | 30.9 | % |
|
|
| 60.1% | |||||||||||||||||||||
| * | Defined terms used herein are consistent with those used in the accompanying Proxy Statement. |
| | | |
APPENDIX B
|
RALPH LAUREN CORPORATION
|
Fiscal Years Ended |
Three Months Ended | 2.5 Year Cumulative Dilutive
| ||||||||||||||||||||||||||||||||||||||||||||||||||
March 30, 2019
| March 31, 2018
| December 31, 2016
| April 1, 2017
| |||||||||||||||||||||||||||||||||||||||||||||||||
NIBT
| Dilutive
| NIBT
| Dilutive
| NIBT
| Dilutive
| NIBT
| Dilutive
| |||||||||||||||||||||||||||||||||||||||||||||
(millions)
| (millions)
| (millions)
| (millions)
| |||||||||||||||||||||||||||||||||||||||||||||||||
As Reported (GAAP basis)
|
$
|
582.5
|
|
$
|
5.27
|
|
$
|
489.2
|
|
$
|
1.97
|
|
$
|
123.1
|
|
$
|
0.98
|
|
$
|
(268.5
|
)
|
$
|
(2.48
|
)
|
$
|
5.74
|
| |||||||||||||||||||||||||
Restructuring and other charges
|
|
130.1
|
|
|
1.26
|
|
|
108.0
|
|
|
0.90
|
|
|
66.7
|
|
|
0.64
|
|
|
124.7
|
|
|
1.20
|
|
|
4.00
|
| |||||||||||||||||||||||||
Impairment of assets
|
|
25.8
|
|
|
0.25
|
|
|
50.0
|
|
|
0.42
|
|
|
10.3
|
|
|
0.10
|
|
|
197.1
|
|
|
1.89
|
|
|
2.66
|
| |||||||||||||||||||||||||
Restructuring-related inventory charges
|
|
7.2
|
|
|
0.07
|
|
|
7.6
|
|
|
0.06
|
|
|
14.4
|
|
|
0.14
|
|
|
48.5
|
|
|
0.47
|
|
|
0.74
|
| |||||||||||||||||||||||||
U.S. tax reform enactment-related charges
|
|
—
|
|
|
0.34
|
|
|
—
|
|
|
2.68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.02
|
| |||||||||||||||||||||||||
Reversal of income tax reserve resulting from a change in tax law
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.19
|
)
|
|
(0.19
|
)
| |||||||||||||||||||||||||
As Adjusted(Non-GAAP basis for press release)(a)
|
|
745.6
|
|
|
7.19
|
|
|
654.8
|
|
|
6.03
|
|
|
214.5
|
|
|
1.86
|
|
|
101.8
|
|
|
0.89
|
|
|
15.97
|
| |||||||||||||||||||||||||
Other operational charges
|
|
5.7
|
|
|
0.06
|
|
|
3.7
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
(0.01
|
)
|
|
0.09
|
| |||||||||||||||||||||||||
As Adjusted(Non-GAAP basis for compensation payout)
|
$
|
751.3
|
|
$
|
7.25
|
|
$
|
658.5
|
|
$
|
6.07
|
|
$
|
214.5
|
|
$
|
1.86
|
|
$
|
100.2
|
|
$
|
0.88
|
|
$
|
16.06
|
| |||||||||||||||||||||||||
|
Fiscal Years Ended
| ||||||||||||||||||||||||||||||||||||
March 30, 2019
| March 31, 2018
| |||||||||||||||||||||||||||||||||||
Net
| Gross
| GM%
| SG&A
| SG&A%
| Net
| Gross
| GM%
| |||||||||||||||||||||||||||||
(millions)
| (millions)
| (millions)
| ||||||||||||||||||||||||||||||||||
As Reported (GAAP basis)
|
$
|
6,313.0
|
|
$
|
3,886.0
|
|
|
61.6
|
%
|
$
|
(3,168.3
|
)
|
|
50.2
|
%
|
$
|
6,182.3
|
|
$
|
3,751.7
|
|
|
60.7
|
%
| ||||||||||||
Restructuring-related inventory charges
|
|
—
|
|
|
7.2
|
|
|
0.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
|
0.1
|
%
| ||||||||||||
Marketing and advertising expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272.8
|
|
|
-4.3
|
%
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
Other operational charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
-0.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
As Adjusted(Non-GAAP basis)
|
$
|
6,313.0
|
|
$
|
3,893.2
|
|
|
61.7
|
%
|
$
|
(2,892.8
|
)
|
|
45.8
|
%
|
$
|
6,182.3
|
|
$
|
3,759.3
|
|
|
60.8
|
%
| ||||||||||||
|
|
|
Fiscal Year Ended March 30, 2019
| ||||||||||||||||
Net Income
| Inventories
| P&E(a)
| ROIC%(b)
| |||||||||||||
(millions)
| ||||||||||||||||
As Reported (GAAP basis)
|
$
|
430.9
|
|
$
|
817.8
|
|
$
|
1,039.2
|
| |||||||
Restructuring and other charges(c)
|
|
130.1
|
|
|
—
|
|
|
11.6
|
| |||||||
Impairment of assets
|
|
25.8
|
|
|
—
|
|
|
25.8
|
| |||||||
Restructuring-related inventory charges
|
|
7.2
|
|
|
7.2
|
|
|
—
|
| |||||||
Income tax provision(d)
|
|
(6.5
|
)
|
|
—
|
|
|
—
|
| |||||||
As Adjusted(Non-GAAP basis)
|
$
|
587.5
|
|
$
|
825.0
|
|
$
|
1,076.6
|
|
|
30.9
|
%
| ||||
P&E = Property & Equipment, Net |
ROIC% is calculated as Net Income divided by (Inventories + Property & Equipment, Net) |
Restructuring and other charges for Fiscal 2019 includes a loss on sale of property of $11.6 million related to the sale of one of the Company’s distribution centers in North America. |
|
| (e) | Other operational charges, net of tax, |
This Proxy Statement includes certainnon-U.S. GAAP financial measures relating to the impact of charges and other items as described herein. Adjustments made during Fiscal 2021 included bad debt expense adjustments related to COVID-19 business disruptions, restructuring-related charges, impairment of assets, and certain other charges primarily related to rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements have not yet expired. Adjustments made during Fiscal 2020 included inventory-related charges and bad debt expense related to COVID-19 business disruptions, restructuring-related charges, impairment of assets, and certain other charges primarily related to the charitable donation of the net cash proceeds received from the sale of the Company’s corporate jet, and rent and occupancy costs associated with certain previously exited real estate locations for which the related lease agreements had not yet expired. Additionally, the Fiscal 2020 income tax (provision) benefit reflects a one-time benefit recorded in connection with Swiss tax reform. Adjustments made during Fiscal 2019 include restructuring-related charges, impairment of assets, and certain other charges primarily related to the Company’s new sabbatical leave program, depreciation expense associated with the Company’s former Polo store at 711 Fifth Avenue in New York City, and itsa customs audit. Additionally, the Fiscal 2019 income tax provision was adjusted for the impact of U.S. tax reform enactment-related charges. Adjustments made during Fiscal 2018 include restructuring-related charges, impairment of assets, and certain other charges primarily related to depreciation expense associated with the Company’s former Polo store at 711 Fifth Avenue in New York City, its customs audit, the departure of Mr. Stefan Larsson as the Company’s President and Chief Executive Officer and as a member of its Board of Directors effective as of May 1, 2017, and the reversal of reserves associated with the settlement of certainnon-income tax issues. Additionally, the Fiscal 2018 income tax (provision) benefit was adjusted for the impact of U.S. tax reform enactment-related charges. Adjustments made during Fiscal 2017 include restructuring-related charges, impairment of assets, and certain other charges recorded in connection with the anticipated settlement of certainnon-income tax issues, and the departure of Mr. Larsson. Additionally, the Fiscal 2017 income tax benefit (provision) was adjusted for the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior year withholding tax. Refer to the Company’s Fiscal 2019,2021, Fiscal 2018,2020, and Fiscal 20172019 Forms10-K for additional discussion regarding these charges. The Compensation Committee also approved adjustments for certain other operational charges during Fiscal 2019, Fiscal 2018,2020, providing partial relief for COVID-19 and Fiscal 2017.Hong Kong protest business disruptions.
Included in this Appendix B is a reconciliation between thenon-U.S. GAAP financial measures and the most directly comparable U.S. GAAP measures before and after these charges. The related tax effects were calculated using the respective statutory tax rates for each applicable jurisdiction. The Company usesnon-U.S. GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. In addition, the Compensation Committee usesnon-U.S. GAAP measures to set and certify the achievement of certain performance-based compensation goals. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers thenon-U.S. GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP and may be different fromnon-U.S. GAAP measures reported by other companies.
|
|
|
2019 LONG-TERM STOCK INCENTIVE PLAN
RALPH LAUREN CORPORATION
2019 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1.PURPOSE AND HISTORY. The purposes of this Ralph Lauren Corporation 2019 Long-Term Stock Incentive Plan are to promote the interests of the Ralph Lauren Corporation and its stockholders by (i) attracting and retaining exceptional directors, officers and other employees and third party service providers of the Company and its Subsidiaries, as defined below; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company. The Plan was originally adopted by the Company’s Board of Directors on May 16, 2019, subject to the approval of the Company’s stockholders at the Company’s 2019 annual meeting of stockholders, and applies to awards granted after such approval.
SECTION 2.DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below:
“Affiliate” shall mean (i) any Person that, directly or indirectly, is controlled by, or controls or is under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.
“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or Other Stock-Based Award.
“Award Agreement” shall mean any agreement, contract, or other instrument or document, in any form (written or electronic) as determined by the Committee (including, without limitation, a Board or Committee resolution, an employment agreement, a notice, a certificate or a letter), evidencing any Award or the terms and conditions thereof, which may, but need not, be executed or acknowledged by a Participant.
“Board” shall mean the Board of Directors of the Company.
“Cause” shall mean in the case of a particular Award, unless the applicable Award Agreement states otherwise, (i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined in any employment or consulting agreement between the Participant and the Company or an Affiliate in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “Cause” contained therein): (A) failure by the Participant to perform the duties of the Participant to the Company or an Affiliate (other than due to his or her Disability), provided that such conduct shall not constitute Cause unless and until such failure by Participant to perform his or her duties has not been cured to the satisfaction of the Company, in its sole discretion, within fifteen (15) days after notice of such failure has been given by the Company to Participant; (B) an act of fraud, embezzlement, theft, breach of fiduciary duty, dishonesty, or any other misconduct or any violation of law (other than a traffic violation) committed by the Participant; (C) any action by the Participant causing damage to or misappropriation of the Company’s assets; (D) the Participant’s wrongful disclosure of confidential information of the Company or any of its Affiliates; (E) the Participant’s breach of (x) anynon-competition,non-solicitation,non-disparagement or other restrictive covenants to which he or she is subject under any employment or consulting agreement or otherwise, and/or (y) the Participant’s duty of loyalty; (F) the Participant’s breach of any employment policy of the Company, including, but not limited to, conduct relating to falsification of business records, violation of the Company’s code of business conduct & ethics, harassment, creation of a hostile work environment, excessive absenteeism, insubordination, violation of the Company’s policy on drug & alcohol use, or violent acts or threats of violence; (G) performance by the Participant of his or her employment duties in a manner deemed by the Committee, in its sole discretion, to be grossly
| | | 114 | |
|
|
negligent; or (H) the commission of any act by the Participant, whether or not performed in the workplace, which subjects or, if publicly known, would be likely to subject the Company to public ridicule or embarrassment, or would likely be detrimental or damaging to the Company’s reputation, goodwill, or relationships with its customers, suppliers, vendors, licensees or employees. Any determination of whether Cause exists shall be made by the Committee in its sole discretion.
“Change in Control” shall mean the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets (but in no event less than 50% in current value of assets) of the Company to any “person” or “group” (as such terms are used in Sections 12(d)(3) and 13(d)(2) of the Exchange Act other than Permitted Holders; (ii) any person or group is or becomes the “beneficial owner” (as defined in Rules12d-3 and12d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all Shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50 percent of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise; provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (I) any acquisition by the Company or any Affiliate, (II) any acquisition by any employee benefit plan sponsored or maintained by the Company or any Affiliate, (III) any acquisition by one or more of the Permitted Holders, or (IV) any acquisition which complies with clauses (A), (B) and (C) of subsection (v) below; (iii) during any period of twelve (12) consecutive months, Present and/or New Directors cease for any reason to constitute a majority of the Board; (iv) the Permitted Holders’ beneficial ownership of the total voting power of the voting stock of the Company falls below 30 percent and either Ralph Lauren is not nominated for a position on the Board, or he stands for election to the Board and is not elected; (v) the consummation of a reorganization, recapitalization, merger, consolidation, statutory share exchange or similar form of corporate
transaction involving the Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), except that such event will not constitute a Change in Control if immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the entity resulting from such Business Combination (the “Surviving Company”), or (y) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of the board of directors (or the analogous governing body) of the Surviving Company (the “Parent Company”), is represented by the Shares that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which the shares of voting stock of the Company were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power was among the holders of the Shares that were outstanding immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Company or the Parent Company, or one or more Permitted Holders), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous governing body) (or, if there is no Parent Company, the Surviving Company) and (C) at least a majority of the members of the board of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) following the consummation of the Business Combination were Board members at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination; or (vi) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Committee” shall mean either (i) the Board or (ii) a committee of the Board designated by the Board to administer the Plan and composed of not less two
|
|
|
directors, each of whom is required to be a“Non-Employee Director” (within the meaning of Rule16b-3) to the extent Rule16b-3 is applicable to the Company and the Plan. If at any time such a committee has not been so designated, the Board shall constitute the Committee.
“Company” shall mean the Ralph Lauren Corporation, together with any successor thereto.
“Disability” shall mean that as a result of a Participant’s incapacity due to physical or mental illness, the Participant shall have been (or the Committee reasonably determines that the Participant is reasonably likely to be) absent and unable to perform the duties of the Participant’s position on a full-time basis for an entire period of six consecutive months.
“Effective Date” shall mean the date on which this Plan is approved by the Stockholders of the Company at the Company’s 2019 annual meeting of Stockholders.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Fair Market Value” shall mean, (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (B) with respect to the Shares, as of any date, (i) the mean between the high and low sales prices of the Shares (provided that the Committee may in its discretion use the closing sales price) as reported on the New York Stock Exchange for such date (or if not then trading on the New York Stock Exchange, the mean between the high and low sales price of the Shares (provided that the Committee may in its discretion use the closing sales price) on the stock exchange orover-the-counter market on which the Shares are principally trading on such date), or if, there were no sales on such date, on the closest preceding date on which there were sales of Shares or (ii) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.
“Full Value Award” shall mean an Award which is other than in the form of an Option or Stock Appreciation Right, and that is settled by the issuance of Shares.
“Good Reason” shall mean in the case of a particular Award, unless the applicable Award Agreement states otherwise, (i) the Participant having “good reason” to terminate his or her employment or service, as defined in any employment or consulting agreement between the Participant and the Company or an Affiliate in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “good reason” contained therein), Good Reason shall not apply to such Participant.
“Incentive Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that meets the requirements of Section 422 of the Code or any successor provision thereto.
“New Directors” shall mean any directors whose election by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company who, at the time of such vote, were either Present Directors or New Directors but excluding any such individual whose initial assumption of office occurs solely as a result of an actual or threatened proxy contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board.
“Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is not an Incentive Stock Option.
“Option” shall mean an Incentive Stock Option or aNon-Qualified Stock Option.
“Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.
“Participant” shall mean any Person eligible to receive an Award under Section 5 of the Plan and selected by the Committee to receive an Award under the Plan.
“Performance Award” shall mean any right granted under Section 9 of the Plan.
“Permitted Holders” shall mean, as of the date of determination, (i) any and all of Ralph Lauren, his spouse, his siblings and their spouses, and
|
|
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descendants of any of them (whether natural or adopted) (collectively, the “Lauren Group”) and (ii) any trust established and maintained primarily for the benefit of any member of the Lauren Group and any entity controlled by any member of the Lauren Group.
“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
“Plan” shall mean this Ralph Lauren Corporation 2019 Long-Term Stock Incentive Plan.
“Present Directors” shall mean individuals who at the beginning of any one year period were members of the Board.
“Prior Plan” shall mean the Ralph Lauren Corporation 2010 Long-Term Stock Incentive Plan, as amended.
“Restricted Stock” shall mean any Share granted under Section 8 of the Plan.
“Retirement” shall mean a Participant’s separation of employment or service with the Company that, as determined by the Committee or as provided for in an Award Agreement, is deemed to be a ‘Retirement.’
“Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.
“Rule16b-3” shall mean Rule16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.
“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall include the Staff thereof.
“Shares” shall mean the shares of Class A Common Stock of the Company, $.01 par value, or such other securities of the Company (i) into which such common shares shall be changed by reason of a recapitalization, merger, consolidation,split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b).
“Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.
“Subsidiary” shall mean (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.
“Substitute Awards” shall have the meaning specified in Section 4(c).
“Third Party Service Provider” means any consultant, agent, advisor, or independent contractor who is a natural person and who renders services to the Company, a Subsidiary, or an Affiliate, that (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.
SECTION 3.EFFECTIVE DATE AND ADMINISTRATION.
(a) The Plan shall be effective as of the Effective Date. The expiration date of the Plan, on and after which date no Awards may be granted hereunder, shall be the tenth anniversary of the Effective Date; provided, however, that such expiration shall not affect Awards then outstanding, and the terms and conditions of the Plan shall continue to apply to such Awards.
(b) The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee;
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(vii) interpret, administer reconcile any inconsistency, correct any default and/or supply any omission in the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(c) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder.
(d) The mere fact that a Committee member shall fail to qualify as a“Non-Employee Director” within the meaning of Rule16b-3 shall not invalidate any award made by the Committee which award is otherwise validly made under the Plan.
(e) No member of the Board, the Committee or any employee or agent of the Company (each such person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission) to the fullest extent permitted by law. Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made under the Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person, and the Company shall advance to such Indemnifiable Person any such expenses promptly upon written request (which request
shall include an undertaking by the Indemnifiable Person to repay the amount of such advance if it shall ultimately be determined as provided below that the Indemnifiable Person is not entitled to be indemnified); provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or By Laws. The foregoing right of indemnification shall not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the Company’s Amended and Restated Certificate of Incorporation or By Laws, as a matter of law, individual indemnification agreement or contract or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless.
(f) Notwithstanding the foregoing, the Committee may delegate, to the fullest extent permitted under the Delaware General Corporation Law or other applicable law (in a manner consistent with Section 157(c) of the Delaware General Corporation Law), to one or more officers of the Company (i) the authority to grant awards to Participants who are not officers or directors of the Company subject to Section 16 of the Exchange Act or (ii) the authority to make certain determinations permitted or required to be made by the Committee under the Plan (including, without limitation, determinations relating to the existence of Cause or Disability).
(g) Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. Any such actions by the Board shall be subject to the applicable rules of the New York Stock Exchange or any
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other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. In any such case, the Board shall have all the authority granted to the Committee under the Plan.
SECTION 4.SHARES AVAILABLE FOR AWARDS.
(a)SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with respect to which Awards may be granted under the Plan shall be the sum (such sum, the “Absolute Share Limit”) of (a) the number of Shares remaining available for issuance as of the Effective Date under the Prior Plan that were not subject to outstanding awards under the Prior Plan plus (b) 1,200,000; the maximum amount of Awards that may be granted to any Participant who is a director of the Company but not an employee of the Company in any fiscal year may not exceed a number for which the total grant-date fair value of those Awards when added to such Participant’s cash compensation for that fiscal year exceeds $750,000 in total compensation for such Participant in that fiscal year; the maximum number of Shares with respect to any Awards that may be granted to any Participant in any fiscal year shall be 1,000,000. In addition, of the Shares reserved for issuance under the Plan pursuant to this Section 4(a), no more than the Absolute Share Limit may be issued pursuant to Incentive Stock Options. If, after the Effective Date of the Plan, any Shares covered by an Award granted under the Plan or an award granted under the Prior Plan, or to which such an Award relates, are forfeited, or if an Award granted under the Plan (or an award granted under the Prior Plan) is forfeited or otherwise expires, terminates or is canceled for any reason whatsoever without the delivery of Shares, then the Shares covered by such Award (or award granted under the Prior Plan) shall again be, or shall become, Shares with respect to which Awards may be granted hereunder. In addition, Shares delivered (either directly or by means of attestation or withholding) in full or partial payment of any tax withholding obligation, shall be deducted from the number of Shares delivered to the Participant pursuant to such Award (or award granted under the Prior Plan) for purposes of determining the number of Shares acquired pursuant to the Plan; provided, that notwithstanding the foregoing, in no event shall any of the following Shares again be made available for issuance in respect of Awards under the Plan: (i) Shares not issued or delivered as a result of
the net settlement of an outstanding Stock Appreciation Right or Option; (ii) Shares used to pay the exercise price, strike price or withholding taxes in respect of an outstanding Stock Appreciation Right or Option; or (iii) Shares repurchased on the open market with the proceeds of the exercise price of an Option.
(b)ADJUSTMENTS. Notwithstanding any provisions of the Plan to the contrary, in the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,split-up,spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee in its discretion to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) which may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including without limitation adjusting any or all of the limitations in Section 4(a) of the Plan), (iii) the terms of any outstanding Award, including, without limitation, (1) the number of Shares or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate (2) the grant or exercise price with respect to any Award or (3) any applicable performance measures, (iv) if deemed appropriate, make provision for a payment in cash, Shares, other securities or other property, or any combination thereof, to the holder of an outstanding Award in consideration for the cancellation of such Award which, in the case of Options and Stock Appreciation Rights shall equal the excess if any, of the Fair Market Value of the Shares (which if applicable may be based upon the price per Share received or to be received by other stockholders of the Company in such event) subject to such Options or Stock Appreciation
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Rights over the aggregate exercise price or strike price of such Options or Stock Appreciation Rights (it being understood that, in such event, any Option or Stock Appreciation Right having a per Share exercise price or strike price equal to, or in excess of, the Fair Market Value of a Share subject thereto may be canceled and terminated without any payment or consideration therefor), and (v) accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time (which shall not be required to be more than ten (10) days) for Participants to exercise outstanding Awards prior to the occurrence of such event (and any such Award not so exercised shall terminate upon the occurrence of such event);
PROVIDED, however, that no such adjustment is required to the extent that the Committee determines it would subject a Participant to any additional tax imposed under Section 409A of the Code. Any adjustment in Incentive Stock Options under this Section 4(b) (other than any cancellation of Incentive Stock Options) shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 4(b) shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule16b-3 under the Exchange Act. Any such adjustment shall be conclusive and binding for all purposes.
(c)SUBSTITUTE AWARDS. Subject to Section 11(b), Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards shall not be counted against the aggregate number of Shares available for Awards under the Plan.
(d)SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares, Shares purchased on the open market, or by private purchase, or a combination of the foregoing. Following the Effective Date, no further awards shall be granted under any Prior Plan.
(e)FULL VALUE AWARDS. Except with respect to a maximum of five percent (5%) of the Shares authorized under the Plan, any Full Value Awards that vest solely on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting that is any more rapid than annual pro rata vesting over a three (3) year period, and any Full Value Awards that vest upon the attainment of performance goals shall provide for a performance period of at least twelve (12) months. The vesting of Full Value Awards may only be accelerated upon (i) death, Disability, Retirement or other termination of employment or service of the Participant or (ii) a Change in Control, subject to Section 11(b).
SECTION 5.ELIGIBILITY. Any director, officer or employee of, or Third Party Service Provider to, the Company or any of its Subsidiaries (including any prospective director, officer, employee or Third Party Service Provider) shall be eligible to be designated a Participant.
SECTION 6. STOCK OPTIONS.
(a)GRANT. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the exercise price therefor and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, or to grantNon-Qualified Stock Options, or to grant both types of Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. All Options when granted under the Plan are intended to beNon-Qualified Stock Options, unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as aNon-Qualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating toNon-Qualified Stock Options.
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(b)EXERCISE PRICE. The Committee shall establish the exercise price at the time each Option is granted, which exercise price shall be set forth in the applicable Award Agreement, but shall be no less than the Fair Market Value of a Share at the date of grant.
(c)EXERCISE. Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement or thereafter. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable after the tenth anniversary of the grant date. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities laws, as it may deem necessary or advisable.
(d)PAYMENT. No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefor is received by the Company. Such payment may be made (i) in cash, or its equivalent or (ii) by tendering to the Company Shares valued at Fair Market Value at the time the Option is exercised, which are not the subject of any pledge or other security interest or which have such other characteristics, if any, as may be determined by the Committee (this may include through an “attestation” procedure satisfactory to the Committee, or (iii) subject to such rules as may be established by the Committee, by instructing the Company to withhold the Shares otherwise deliverable upon exercise of the Option the number of Shares having a value equal to the exercise price being paid thereby or (iv) subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price, or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price.
(e)NOTIFICATION UPON DISQUALIFYING DISPOSITION OF AN INCENTIVE STOCK OPTION. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the
date he or she makes a disqualifying disposition of any Shares acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of any Shares acquired pursuant to any Incentive Stock Option before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any Shares acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such Shares.
(f)MINIMUM VESTING REQUIREMENT. Notwithstanding the foregoing, any Award of Options shall not provide for the vesting of any portion of the Award before the (1) year anniversary of the Date of the Grant of the Options. The vesting of Awards of Options may only be accelerated upon (A) death, Disability, Retirement or other termination of employment or service of the Participant or (B) a Change in Control, subject to Section 11(b).
SECTION 7.STOCK APPRECIATION RIGHTS.
(a)GRANT. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the strike price thereof (which for each Stock Appreciation Right shall be no less than the Fair Market Value of a Share at the date of grant) and the conditions and limitations applicable to the exercise thereof and the other terms and conditions of such Awards. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later time.
(b)EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle the Participant to receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right
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over the strike price thereof. The Committee shall determine whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares.
(c)OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the term, methods of exercise, methods and form of settlement, and any other terms and conditions of any Stock Appreciation Right; PROVIDED, HOWEVER, that no Stock Appreciation rights shall be exercisable after the tenth anniversary of the date of its grant. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.
(d)MINIMUM VESTING REQUIREMENT. Notwithstanding the foregoing, any Award of Stock Appreciation Rights shall not provide for the vesting of any portion of the Award before the (1) year anniversary of the Date of the Grant of the Stock Appreciation Rights. The vesting of Awards of Stock Appreciation Rights may only be accelerated upon (A) death, Disability, Retirement or other termination of employment or service of the Participant or (B) a Change in Control, subject to Section 11(b).
SECTION 8.RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
(a)GRANT. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and the other terms and conditions of such Awards.
(b)TRANSFER RESTRICTIONS. Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except, in the case of Restricted Stock, as provided in the Plan or the applicable Award Agreements. Upon the grant of Restricted Stock, the Committee shall cause a stock certificate registered in
the name of the Participant to be issued or shall cause Shares to be registered in the name of the Participant and held in book-entry form subject to the Company’s directions. The Committee may also require that certificates issued in respect of Shares of Restricted Stock be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company. Upon the lapse of the restrictions applicable to such Shares of Restricted Stock, the Company shall deliver such certificates to the Participant or the Participant’s legal representative or otherwise deliver the Shares in a commercially reasonable manner. Subject to the restrictions set forth in this Section 8 and the applicable Award Agreement, the Participant generally shall have the rights and privileges of a stockholder as to such Restricted Stock, including without limitation the right to vote such Restricted Stock. To the extent Shares of Restricted Stock are forfeited, any stock certificates issued to the Participant evidencing such shares shall be returned to the Company, and all rights of the Participant to such Shares and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company.
(c)PAYMENT. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a Share. Restricted Stock Units shall be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. Dividends paid on any Shares of Restricted Stock may be paid directly to the Participant, withheld by the Company subject to vesting of the Restricted Shares pursuant to the terms of the applicable Award Agreement, or may be reinvested in additional Shares of Restricted Stock or in additional Restricted Stock Units, as determined by the Committee in its sole discretion.
(d)MINIMUM VESTING REQUIREMENTS. Notwithstanding the foregoing, (i) except as provided in Section 4(e), any Awards of Shares of Restricted Stock and/or Restricted Stock Units that are Full Value Awards and vest solely on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting that is any more rapid than annual pro rata vesting over a three (3) year period, and any Awards of Shares of Restricted Stock and/or Restricted Stock Units that are Full Value
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Awards and vest upon the attainment of performance goals (whether or not combined with other conditions) shall provide for a performance period of at least twelve (12) months; and (ii) the vesting of Awards of Shares of Restricted Stock and/or Restricted Stock Units that are Full Value Awards may only be accelerated upon (A) death, Disability, Retirement or other termination of employment or service of the Participant or (B) a Change in Control, subject to Section 11(b).
SECTION 9.PERFORMANCE AWARDS.
(a)GRANT. The Committee shall have sole and complete authority to determine the Participants who shall receive a “Performance Award,” which shall consist of a right which is (i) denominated in cash or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine.
(b)TERMS AND CONDITIONS. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award. The Committee in its discretion may reduce or eliminate any individual’s or group of individuals’ Performance Awards at any time prior to the vesting date regardless of whether the Performance Award achieved its performance goals.
(c)PAYMENT OF PERFORMANCE AWARDS. Performance Awards may be paid in a lump sum or in installments following the close of the performance period or, in accordance with procedures established by the Committee, on a deferred basis.
(d)MINIMUM VESTING REQUIREMENTS. Notwithstanding the foregoing, (i) except as provided in Section 4(e), any Performance Awards that are Full Value Awards and vest upon the attainment of performance goals shall provide for a performance period of at least twelve (12) months; and (ii) the vesting of Performance Awards that are Full Value Awards may only be accelerated upon (A) death Disability, Retirement or other termination of
employment or service of the Participant or (B) a Change in Control, subject to Section 11(b).
SECTION 10.OTHER STOCK-BASED AWARDS.
(a)GENERAL. The Committee shall have authority to grant to Participants an “Other Stock-Based Award,” which shall consist of any right which is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with the requirements for an exemption under Rule16b-3 and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award, including the price, if any, at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan.
(b)DIVIDEND EQUIVALENTS. In the sole and complete discretion of the Committee, an Award, whether made as an Other Stock-Based Award under this Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities or other property on a current or deferred basis; provided, that no dividend equivalents shall be payable in respect of outstanding (i) Options or Stock Appreciation Rights or (ii) unearned Awards subject to performance conditions (other than or in addition to the passage of time) (although dividend equivalents may be accumulated in respect of unearned Awards and paid at the time or after such Awards are earned and become payable or distributable).
(c)MINIMUM VESTING REQUIREMENTS. Notwithstanding the foregoing, (i) except as provided in Section 4(e), any “Other Stock-Based Awards” that are Full Value Awards and vest solely on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting that is any more rapid than annual pro rata vesting over a three (3) year period, and any “Other Stock-Based Awards” that are Full Value Awards and vest upon the
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attainment of performance goals shall provide for a performance period of at least twelve (12) months; and (ii) the vesting of “Other Stock-Based Awards” that are Full Value Awards may only be accelerated for (A) death, Disability, Retirement or other termination of employment or service of the Participant or (B) a Change in Control, subject to Section 11(b).
SECTION 11.AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that (a) no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if such approval is necessary to comply with the listing requirement of any national securities exchange on which the Shares are then listed or any tax or regulatory requirement applicable to the Plan; and provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary, and (b) no material revision to the Plan shall be made without stockholder approval. A “material revision” shall mean: (i) a material increase in the number of Shares available under the Plan (other than an increase solely to reflect a reorganization, stock split, merger,spin-off or similar transaction); (ii) an expansion of the types of Awards available under the Plan; (iii) a material expansion of the class of employees, directors or other service providers eligible to participate in the Plan; (iv) a material extension of the term of the Plan; (v) a material change to the method of determining the exercise price of Options or strike price of Stock Appreciation Rights granted under the Plan; and (vi) the deletion or limitation of any provision prohibiting repricing of Options or Stock Appreciation Rights.
(b)AMENDMENTS TO AWARDS. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, and without contravention of any mandatory provision of the Plan, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration,
suspension, discontinuance, cancellation or termination that would materially impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary; and provided, further, that, without stockholder approval, except as otherwise permitted under Section 4(b), (i) no amendment or modification may reduce the exercise price of any Option or the strike price of any Stock Appreciation Right, (ii) the Committee may not cancel any outstanding Option or Stock Appreciation Right and replace it with a new Option or Stock Appreciation Right (with a lower exercise price or strike price, as the case may be) or other Award or cash in a manner which would be reportable on the Company’s proxy statement as Options or Stock Appreciation Rights which have been “repriced” (as such term is used in Item 402 of RegulationS-K promulgated under the Exchange Act) and (iii) the Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any applicable stock exchange on which the securities of the Company are listed. Further, notwithstanding any provision of the Plan to the contrary, except as set forth in the provision below, the Committee shall not exercise discretion to accelerate vesting of any Award granted under the Plan in a manner that contravenes the minimum vesting provisions of Section 4(e), Section 6(f), Section 7(d), Section 8(d), or Section 10(c); provided, however, that, notwithstanding any provision of the Plan to the contrary, the Committee shall have the authority, in its discretion, to provide for accelerated vesting, exercisability and distribution of any Awards held by a Participant under the Plan in the event of the Participants’ death or disability. Notwithstanding the foregoing, a change in tax treatment of an Option shall not be deemed to materially impair the rights of the Participant for purposes of this Section 11.
(c)ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL, NONRECURRING, OR OTHER UNANTICIPATED EVENTS. The Committee is hereby authorized to make adjustments to the terms and conditions of, and the criteria included in, Awards (including, without limitation, the actions described in Section 4(b) hereof) in recognition of unusual, nonrecurring or other unanticipated events affecting the Company or any
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Affiliate that are not reflective of normal, ongoing operations (including, without limitation, the events described in Section 4(b) hereof) or that affect the financial statements of the Company or any Affiliate, or of changes in applicable laws, rules, rulings, regulations, or other requirements of any governmental body or securities exchange or inter-deal quotation system, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
(d)FORFEITURE EVENTS. For purposes of this Section 11(d), a “named executive officer” means a Participant who is a named executive officer of the Company (as defined for purposes of the executive compensation disclosure rules of the Exchange Act). The Committee may specify in an Award that a named executive officer’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment, in the reasonable discretion of the Committee, upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of the named executive officer’s employment for cause, material violation of material written policies of the Company, or breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the named executive officer, as determined by the Committee in its reasonable discretion. In addition, with respect to an Award, if, as a result of a named executive officer’s intentional misconduct or gross negligence, as determined by the Committee in its reasonable discretion, the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, the Committee may, in its reasonable discretion, require the named executive officer to promptly reimburse the Company for the amount of any payment (whether in cash, Shares, other securities or other property) previously received by the named executive officer pursuant to any Award (or otherwise forfeit to the Company any outstanding Award) that was earned or accrued (or exercised or settled) during the twelve (12) month period following the earlier of the first public
issuance or filing with the United States SEC of any financial document embodying such financial reporting requirement that required such accounting restatement.
SECTION 12.CHANGE IN CONTROL. In the event that a Participant’s employment with the Company or service to the Company is terminated by the Company without Cause or by the Participant for Good Reason, in each case on or within 12 months following the date of a Change in Control, any outstanding Awards then held by such affected Participant which are unexercisable or otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may be, as of immediately prior to such termination of employment; provided, that in the event the vesting or exercisability of any Award would otherwise be subject to the achievement of performance conditions, a portion of any such Award that shall become fully vested and immediately exercisable shall be based on (a) actual performance through the date of termination as determined by the Committee or (b) if the Committee determines that measurements of actual performance cannot be reasonably assessed, the assumed achievement of target performance as determined by the Committee.
SECTION 13.GENERAL PROVISIONS.
(a)NONTRANSFERABILITY.
(i) Each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative.
(ii) No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(iii) Notwithstanding the foregoing, the Committee may in the applicable Award Agreement evidencing an Option granted under the Plan or at any time
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thereafter in an amendment to an Award Agreement provide that Options granted hereunder which are not intended to qualify as Incentive Stock Options may be transferred by the Participant to whom such Option was granted (the “Grantee”) without consideration, subject to such rules as the Committee may adopt to preserve the purposes of the Plan, to:
(A) the Grantee’s spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (collectively, the “Immediate Family”);
(B) a trust solely for the benefit of the Grantee and his or her Immediate Family; or
(C) a partnership or limited liability company whose only partners or stockholders are the Grantee and his or her Immediate Family members;
(each transferee described in clauses (A), (B) and (C) above is hereinafter referred to as a “Permitted Transferee”); PROVIDED that the Grantee gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Grantee in writing that such a transfer would comply with the requirements of the Plan and any applicable Award Agreement evidencing the option.
The terms of any option transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan or in an Award Agreement to an optionee, Grantee or Participant shall be deemed to refer to the Permitted Transferee, except that (a) Permitted Transferees shall not be entitled to transfer any Options, other than by will or the laws of descent and distribution; (b) Permitted Transferees shall not be entitled to exercise any transferred Options unless there shall be in effect a registration statement on an appropriate form covering the shares to be acquired pursuant to the exercise of such Option if the Committee determines that such a registration statement is necessary or appropriate, (c) the Committee or the Company shall not be required to provide any notice to a
Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Grantee under the Plan or otherwise and (d) the consequences of termination of the Grantee’s employment by, or services to, the Company under the terms of the Plan and applicable Award Agreement shall continue to be applied with respect to the Grantee, following which the Options shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.
(b)NO RIGHTS TO AWARDS. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).
(c)SHARE CERTIFICATES. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan (or, if applicable, a notice evidencing a book entry notation) pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates, as applicable, make appropriate reference to such restrictions.
(d)WITHHOLDING AND TAX RELATED MATTERS.
(i) A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to
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take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee may provide for additional cash payments to holders of Awards to defray or offset any tax arising from the grant, vesting, exercise or payments of any Award.
(ii) Without limiting the generality of clause (i) above, unless otherwise determined by the Committee, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise deliverable pursuant to the exercise or settlement of the Award a number of Shares with a Fair Market Value equal to such withholding liability.
(iii) Notwithstanding any provision of this Plan to the contrary, in connection with the transfer of an Award to a Permitted Transferee pursuant to Section 13(a) of the Plan, the Grantee shall remain liable for any withholding taxes required to be withheld upon the exercise of such Award by the Permitted Transferee.
(iv) No election by a Participant under Section 83(b) of the Code (to include in gross income in the year of grant the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made unless expressly permitted by the terms of the Award document or by action of the Committee in writing prior to the effectiveness of such election.
(e)409A OF THE CODE. Notwithstanding any provision of the Plan to the contrary, it is intended that the provisions of this Plan comply with Section 409A of the Code, and all provisions of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code. Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with this Plan or any other plan maintained by the Company (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any Affiliate shall have
any obligation to indemnify or otherwise hold such Participant (or any beneficiary) harmless from any or all of such taxes or penalties. Notwithstanding any provision of the Plan to the contrary and only to the extent required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code, if any Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Award in connection with a Participant’s “separation from service” that are “deferred compensation” subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the date of Participant’s “separation from service” (each as defined in Section 409A of the Code) or, if earlier, Participant’s date of death. Following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment date. With respect to any Award that is considered “deferred compensation” subject to Section 409A of the Code, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. Unless otherwise provided by the Committee, in the event that the timing of payments in respect of any Award (that would otherwise be considered “deferred compensation” subject to Section 409A of the Code) would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of any Award granted under the Plan is designated as separate payments.
(f)AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an Award Agreement which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including but not limited to the effect on such Award of the death, Disability, Retirement or termination of employment or service of a Participant and the effect, if any, of such other events as may be determined by the Committee.
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(g)NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of Options, Restricted Stock, Shares and other types of Awards provided for hereunder (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.
(h)NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting or other service relationship (including as a director) to, the Company or any Subsidiary or Affiliate. Further, the Company or a Subsidiary or Affiliate may at any time dismiss a Participant from employment or discontinue any such consulting or service relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
(i)NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock hereunder, the applicable Award shall specify if and to what extent the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Stock.
(j)GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of New York.
(k)SEVERABILITY. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law or regulation deemed applicable by the Committee, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(l)OTHER LAWS. The Committee may delay or refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover short-swing profits under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws.
(m)NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary or Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(n)NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(o)PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee or the senior human resource officer of the Company shall find that any Person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment
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due to such Person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee or the senior human resource officer of the Company so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such Person, or any other Person deemed by the Committee to be a proper recipient on behalf of such Person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(p)RELATIONSHIP TO OTHER BENEFITS. No payment or benefit under the Plan shall be taken into account in determining any benefits under any pension, Retirement, profit sharing, group insurance or other benefit plan of the Company or any Subsidiary except as otherwise specifically provided in such other plan.
(q)HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
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RALPH LAUREN CORPORATION 650 MADISON AVENUE NEW YORK, NY 10022 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. 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-GoMeeting - Go to www.virtualshareholdermeeting.com/RL2019RL2021 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. VOTE BY PHONE-1-800-690-6903PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. 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: E81322-P27044D55062-P57888 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY RALPH LAUREN CORPORATION For All Except Withhold All For All To withhold authority to vote for any individual All All Except nominee(s), mark "For“For All Except"Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR ALL number(s) of the nominee(s) on the line below. of the following: 1. Election of four (4)three (3) Class A Directors ! ! ! Nominees as Class A Directors: 01) Frank A. Bennack, Jr. 02) Joel L. Fleishman 03) Michael A. George 04)02) Hubert Joly 03) Linda Findley Kozlowski The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 2. Ratification of appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending March 28, 2020.April 2, 2022. 3. Approval, on an advisory basis, of the compensation of our named executive officers and our compensation philosophy, policies and practices as described in the accompanying Proxy Statement. 4. Approval of the 2019 Long-Term Stock Incentive Plan. For address changes and/or comments, please check this box and write them on ! the back where indicated. Please mark, date and sign exactly as your name appears hereon and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please write in the full corporate name and sign by a duly authorized officer. If shares are held jointly, each stockholder named should sign. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date For Against Abstain
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. E81323-P27044D55063-P57888 RALPH LAUREN CORPORATION CLASS LAUREN A COMMON CORPORATION STOCK PROXY ANNUAL MEETING PROXY OF STOCKHOLDERS THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The undersigned, revoking all previous proxies, hereby constitutes and appoints Jane Nielsen and Avery S. Fischer, and each of them, proxies with full power of substitution to vote for the undersigned all shares of Class A Common Stock of Ralph Lauren Corporation (the “Company”) that the undersigned would be entitled to vote at the 20192021 Annual Meeting of Stockholders to be held virtually via live webcast at www.virtualshareholdermeeting.com/RL2019RL2021 on August 1, 2019July 29, 2021 at 9:30 a.m. (Eastern Time)(local time), and at any adjournment or postponement thereof, upon the matters described in the accompanying Proxy Statement and, in such proxies’ discretion, upon any other business that may properly come before the meeting or any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR ALL” OF“FOR” THE PROPOSAL TO ELECT THE NOMINEES FOR ELECTION AS DIRECTORS; “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM; AND “FOR” THE PROPOSAL, ON AN ADVISORY BASIS, APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AND OUR COMPENSATION PHILOSOPHY, POLICIES AND PRACTICES AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT; AND “FOR” THE PROPOSAL APPROVING THE 2019 LONG-TERM STOCK INCENTIVE PLAN.STATEMENT. This proxy is continued on the reverse side. Please sign on the reverse side and return promptly. Address Changes/Comments: (If(Continued and to be marked, dated and signed, on the other side)
RALPH LAUREN CORPORATION 650 MADISON AVENUE NEW YORK, NY 10022 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you notedaccess 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/RL2021 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. VOTE BY PHONE - 1-800-690-6903 Use any Address Changes/Comments above,touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. 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: D55064-P57888 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY RALPH LAUREN CORPORATION For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR ALL of the following: 1. Election of nine (9) Class B Directors Nominees as Class B Directors: 01) Ralph Lauren 06) Frank A. Bennack, Jr. 02) Patrice Louvet 07) Valerie Jarrett 03) David Lauren 08) Judith A. McHale 04) Angela Ahrendts 09) Darren Walker 05) John R. Alchin The Board of Directors recommends you vote FOR the following proposals: For Against Abstain 2. Ratification of appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April 2, 2022. 3. Approval, on an advisory basis, of the compensation of our named executive officers and our compensation philosophy, policies and practices as described in the accompanying Proxy Statement. Please mark, date and sign exactly as your name appears hereon and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please mark corresponding boxwrite in the full corporate name and sign by a duly authorized officer. If shares are held jointly, each stockholder named should sign. 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 Form 10-K are available at www.proxyvote.com. D55065-P57888 RALPH LAUREN CORPORATION CLASS B COMMON STOCK PROXY ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The undersigned, revoking all previous proxies, hereby constitutes and appoints Jane Nielsen and Avery S. Fischer, and each of them, proxies with full power of substitution to vote for the undersigned all shares of Class B Common Stock of Ralph Lauren Corporation (the “Company”) that the undersigned would be entitled to vote at the 2021 Annual Meeting of Stockholders to be held via live webcast at www.virtualshareholdermeeting.com/RL2021 on July 29, 2021 at 9:30 a.m. (local time), and at any adjournment or postponement thereof, upon the matters described in the accompanying Proxy Statement and, in such proxies’ discretion, upon any other business that may properly come before the meeting or any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” THE PROPOSAL TO ELECT THE NOMINEES FOR ELECTION AS DIRECTORS; “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM; AND “FOR” THE PROPOSAL, ON AN ADVISORY BASIS, APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AND OUR COMPENSATION PHILOSOPHY, POLICIES AND PRACTICES AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. This proxy is continued on the reverse side.) Please sign on the reverse side and return promptly. (Continued and to be marked, dated and signed, on the other side)
