(1)
| The fair market value options have an exercise price of $2.46, the fair market value of the common stock units granted were determined based on the award dollar value target divided by the stock price on the date of grant. Performance share units were awarded at the target level.In June 2017, performance shares were granted for thetwo-year period covering Fiscal 2018 and Fiscal 2019. The chart below sets forth the performance targets and actual results for Fiscal 2018 and Fiscal 2019, in thousands, which resulted in 38.8% of the performance share target award being earned. These earned shares are subject to an additional one year vesting period.
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighting | | | Threshold | | | Target | | | Max | | | Fiscal 2018 Actual | | | Fiscal 2019 Actual | | | Cumulative Results | | | Weighted Payout | | Adjusted EBITDA (1) | | | 75 | % | | $ | 212,000 | | | $ | 248,000-$258,000 | | | $ | 291,000 | | | $ | 114,900 | | | $ | 98,800 | | | $ | 213,700 | | | | 51.8 | % | New Business (2) | | | 25 | % | | $ | 151,000 | | | $ | 17,0006-$184,000 | | | $ | 207,000 | | | $ | 66,100 | | | $ | 53,300 | | | $ | 119,400 | | | | 0 | % | TOTAL | | | | 38.8 | % |
(1) | Adjusted EBITDA excludes Student Brands, MBS inventory adjustment.
|
(2)
| New Business means the annual sales (based upon the first full fiscal year budget) associated with new stores opened during the fiscal year consistent with what is reported in the Company’s annual report. The premium options have an exercise price of $5.00. |
(3)
| These awards were forfeited by Mr. Malhotra upon his resignation from the Company, effective as of November 30, 2020. |
Non-Plan Bonuses
Mr. Miller was awarded a retention bonus in the amount of $200,000 in Fiscal 2019. If Mr. Miller is terminated by the Company for “cause” or by Mr. Miller other than for “good reason” (as such terms are defined in the letter agreement between the Company and Mr. Miller dated April 12, 2017), in either case prior to March 1, 2020, Mr. Miller will be required to repay an amount equal to the retention bonus less any amounts withheld by the Company for income and employment taxes.
Other Components of Compensation 401(k) Plan.Plan. Each of our NEOs is entitled to participate in our tax-qualified defined contribution 401(k) plan on the same basis as all other eligible employees. The 401(k) plan provides our employees, including our NEOs, with a way to accumulate tax-deferred savings for retirement. The Company matches the contributions of participants, subject to certain criteria. Under the terms of the 401(k) plan, as prescribed by the Code, the contribution of any participating employee is limited to the lesser of 75% of annual salary before taxes or a maximum dollar amount ($ 19,00019,500 for 2019)2021), subject to a $6,000$6,500 increase for participants who are age 50 or older. As a result of the COVID-19 pandemic, in April 2020, upon the recommendation of management, the Compensation Committee suspended the Company’s 401(k) plan match for the remainder of Fiscal 2021. On July 25, 2021, the Compensation Committee approved the reinstatement of the Company’s 401(k) plan match, effective July 1, 2021. The amount of the Company’s matching contributions for each of our NEOs is set forth in footnotes to the “Summary Compensation Table” on page 34.36. We do not provide supplemental executive retirement benefits. Limited Perquisites and Other Compensation.Compensation. The Company’s NEOs are entitled to only the limited perquisites set forth in their employment agreements or letters and disclosed in the footnotes to the “Summary Compensation Table” on page 34.36. Mr. Henderson’s perquisites were part of his employment arrangements with MBS Textbook Exchange, LLC (“MBS”) and were assumed by the Company upon its acquisition of MBS in February 2017. Severance and Change of Control Payments and Benefits.Benefits. The Company has an employment agreement with Mr. Huseby and each of Messrs. Brover, Donohue, Malhotra and Miller have employment letter agreements that contain severance and change in control benefits. The agreements provide for certain severance payments and benefits upon termination of employment by the Company without cause or by the NEO for good reason (including upon termination within two years following a change of control). The triggering events that would result in the severance payments and benefits and the amount of those payments and benefits are intended to provide our NEOs with TABLE OF CONTENTS financial protection upon loss of employment and to support our executive retention goals and enable our NEOs to focus on the interests of the Company in the event of a potential change of control. Equity awards are subject to a “double-trigger” and vesting will only be accelerated if there is a termination of employment without” cause”without “cause” or for “good reason” following a change of control. The Company does not pay any tax gross-ups in connection with the severance payments. The Compensation Committee believes that the terms of the employment agreements, including triggering events and amounts payable, are competitive with severance protection being offered by other companies with whom we compete for highly qualified executives. The compensation that could be received by each of our NEOs upon termination or change of control is set forth in the “Potential Payments Upon Termination or Change of Control Table” on page 42.43. The material terms of these agreements are described in the “Narrative to the Summary Compensation Table” and the “Grants of Plan-Based Awards Table-Employment Arrangements with the Named Executive Officers.”
Executive Incentive Compensation Clawback Policy The Board of Directors has adopted the Executive Incentive Compensation Clawback Policy (the “Clawback Policy”). The Clawback Policy allows the Compensation Committee to take action to recover incentive compensation from certain key employees, including executive officers, in the event that the Company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements. The Clawback Policy only applies to incentive-based compensation paid in excess of what would have been paid or granted under the circumstances reflected by such restatement, and applies irrespective of the responsibility of the key employee for the accounting restatement. The Clawback Policy applies to all Section 16 officers and covers all incentive-based compensation (including cash and equity) paid or granted after adoption of the policy. Prohibition on Hedging and Pledging Transactions The Company’s Insider Trading Policy prohibits employees, including directors and executive officers, from hedging their ownership of Company stock, including selling Company stock short, buying or selling puts or calls or other derivative instruments related to Company stock. Directors and executive officers are also prohibited from pledging Company stock, purchasing Company stock on margin or incurring any indebtedness secured by a margin or similar account in which Company stock is held, without prior approval of the Audit Committee.
Executive Stock Ownership and Retention Guidelines The
In 2016, the Compensation Committee has adopted executive stock ownership targets (“Stock Ownership Targets”) based on a multiple of annual salary as follows: Chief Executive Officer-five times; all other NEOs-two times; and all other Section 16 officers-one time. Officers are required to retain 50% of net after-tax shares earned from equity grants until the Stock Ownership Target is met (“Retention Guidelines”). Only vested and fully-owned shares owned by an officer directly or indirectly through the 401(k) plan, immediate family members or trusts or similar arrangements count toward the Stock Ownership Targets. The Compensation Committee reviews progress toward the Stock Ownership Targets and compliance withannually. Although, none of the Retention Guidelines annually. | | | | | | | | | | | | | | Named Executive Officer | | Stock Ownership Targets
as a Multiple of Salary
| | In Compliance
with Retention
Guidelines
Yes/No | | | | Michael P. Huseby
| | 5 x
| | Yes
| | | | Barry Brover
| | 2 x
| | Yes
| | | | Thomas Donohue
| | 2 x
| | Yes
| | | | Kanuj Malhotra
| | 2 x
| | Yes
| | | | Michael C. Miller
| | 2 x
| | Yes
|
named executive officers have met the Stock Ownership Targets, each is making satisfactory progress toward achieving the target. Compensation Policies and Practices as Related to Risk Management With the assistance of its compensation consultant, the Compensation Committee conducted its risk assessment of the Company’s incentive compensation plans covering employees. The Compensation Committee evaluated the levels of risk-taking to determine whether they are appropriate in the context of the Company’s strategic objectives, the overall compensation arrangements, and the Company’s overall risk profile. The Compensation Committee believes the following elements of the Company’s executive compensation program mitigate potential risks: —
| a balance among short- and long-term incentives; cash and equity based compensation; and fixed and variable pay; |
—
| multiple performance metrics; |
—
| the “Stock Ownership Guidelines” and holding guidelines; |
TABLE OF CONTENTS —
| the Company’s anti-hedging and pledging policies; and |
—
| limited change-in-control benefits. |
The Compensation Committee concluded the Company has a balanced pay-for-performance executive compensation program that does not encourage excessive risk-taking and the Company does not maintain compensation policies and practices that are reasonably likely to have a material adverse effect on the Company.
Tax and Accounting Considerations Section 162(m) of the Internal Revenue Code, as in effect prior to the adoption in December 2017 of The Tax Cuts and Jobs Act (the “TCJA”), includes a performance-based compensation exception to its limits on the deductibility of compensation in excess of $1 million earned by specified executive officers of publicly held companies. The TCJA eliminated the performance-based compensation exception, so that for Fiscal 20192021 all compensation paid to specified executive officers in excess of $1 million will be nondeductible (except for any amounts that qualify as performance-based that have been grandfathered pursuant to the written binding contract transition rule under the TCJA).nondeductible. Roles of the Compensation Committee, Management, and our Compensation Consultant in Determining the Compensation of our Named Executive Officers
Roles of the Compensation Committee and Management The Compensation Committee is responsible for establishing, implementing and overseeing our compensation program, and reviews and approves our compensation philosophy and objectives. The Compensation Committee also annually reviews and approves annual base salary levels, annual incentive opportunity levels, long-term incentive opportunity levels, employment and severance agreements and any special or supplemental benefits for each of the NEOs and any other executive officers, Section 16 officers and employees of the Company earning a base salary of $400,000 or more. The compensation of our Chairman and Chief Executive Officer is determined by the Compensation Committee in executive session. The Chairman and Chief Executive Officer reviews the performance of each of our other executive officers and makes compensation recommendations to the Compensation Committee. The Compensation Committee considers all key elements of compensation separately and also reviews the full compensation package of each executive officer.
Role of the Compensation Consultant The Compensation Committee has retained Mercer, a wholly-owned subsidiary of Marsh & McLennan Companies, Inc., to assist with the committee’s responsibilities related to the Company’s executive compensation program and the director compensation program. Mercer’s engagement by the Compensation Committee includes reviewing and recommending the structure of our compensation program and advising on all significant aspects of executive compensation, including base salaries, annual incentives and long-term equity incentives for executives. At the request of the Compensation Committee, Mercer collects relevant market data to allow the Compensation Committee to compare components of our compensation program to those of our peers, provides information on executive compensation trends and implications and makes other recommendations to the Committee regarding our executive compensation program. Our management, Chief Executive Officer (on certain occasions), Senior Vice President, Human Resources, General CounselChief Legal Officer and the chair of the Compensation Committee, meet with representatives of Mercer before Compensation Committee meetings. In making its final decisions regarding the form and amount of compensation to be paid to the executives, the Compensation Committee considers the information gathered by and recommendations of Mercer. Mercer’s fees for executive and director compensation consulting to the Compensation Committee in Fiscal 20192021 were approximately $365,641. MMC Securities$286,148, Mercer Investments, LLC, a subsidiary of Marsh & McLennan Companies, Inc., provides advisory services to the Company’s Benefits Committee, which administers the Company’s 401(k) plan, and other human resource services for which the Company paid approximately $28,432.$50,000. The Company also paid Marsh & McLennan Companies, Inc., the parent company of Mercer, for insurance brokerage services totaling approximately $600,913.$165,000. The Compensation Committee has assessed the independence of Mercer taking into account the following factors identified by the SEC and NYSE as bearing upon independence: (i) Mercer’s provision of other services to the Company; (ii) the fees Mercer received for such services as a percentage of the revenues of Marsh & McLennan, Mercer’s parent; (iii) the policies and procedures of Mercer that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the Mercer consultants with a member of the Compensation Committee; (v) any TABLE OF CONTENTS of our stock owned by the Mercer consultants; and (vi) any business or personal relationship of the Mercer consultants or Mercer with any of our executive officers. The Compensation Committee concluded that no conflict of interest exists with respect to its engagement of Mercer. Compensation Committee Report The Compensation Committee reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee as of that date recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. | | | Compensation Committee | Compensation Committee
| | | | | | | David G. Golden,Chair |
Daniel A. DeMatteo |
John R. Ryan |
Jerry Sue Thornton
Lowell W. Robinson |
The Company is required to provide the ratio of the annual total compensation of the Company’s CEO to the median annual total compensation of all employees under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with Item 402(u) of SEC Regulation S-K.For Fiscal 2019,2021, the median annual total compensation of our employees,median employee, excluding our CEO, was $3,728$8,799 and the annual total compensation of our CEO was $4,496,072.$4,234,170. Accordingly, the ratio of the CEO’s annual total compensation to the median annual total compensation of all employeesour median employee was 1,206:481:1. The
To determine our median employee, the Company used the employee population of 10,4226,409 on the final day of the payroll year, April 30, 2019.May 1, 2021. Temporary, seasonal, and part timepart-time employees make up 66%45% of the Company’s total population and on average work less than 15 hours per week. As permitted under SEC rules, we excluded employees in India as de minimis. We used cash compensation (base salary, overtime and cash bonuses paid during Fiscal 2019)2021) to determine the median employee in our population. When we include only our full time “permanent” staff as of April 30, 2019,May 1, 2021, our median employee’s annualized total compensation was $39,208$41,676 for Fiscal 2019.2021. Under this calculation, the CEO pay ratio is 115:101:1. We believe this is a more representative indication of how our CEO pay compares to that of our workforce. (Note this population totals 3,577)2,685).
The SEC rules do not specify a single methodology for identifying the median employee or calculating the CEO pay ratio. Since other companies use different assumptions, adjustments, or estimates in their own calculation, disclosure and methodology is inconsistent across companies. Therefore, our CEO pay ratio is not comparable to another company’s CEO pay ratio. OurWe believe our information and pay ratio calculation is a reasonable good faith estimate, based on our methodology and SEC rules as required for disclosure. Unless otherwise stated, the compensation tables included in this section reflect amounts paid or payable or awards granted to our NEOs by the Company under the Company’s compensation plans and programs during Fiscal 2017,2019, Fiscal 20182020 and Fiscal 2019.2021. Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Fiscal Year | | | Salary (1) | | | Bonus (2) | | | Stock Awards (3) | | | Non-Equity Incentive Plan Compensation (4) | | | All Other Compensation (5) | | | Total | | Michael P. Huseby | | | 2019 | | | $ | 1,100,000 | | | $ | — | | | $ | 1,858,467 | | | $ | 1,501,500 | | | $ | 36,105 | | | $ | 4,496,072 | | Chairman and Chief Executive Officer | | | 2018 | | | $ | 866,923 | | | $ | 250,000 | | | $ | 3,299,995 | | | $ | 1,320,000 | | | $ | 38,425 | | | $ | 5,775,343 | | | | 2017 | | | $ | 500,000 | | | $ | — | | | $ | 1,687,495 | | | $ | 852,000 | | | $ | 35,194 | | | $ | 3,074,689 | | Barry Brover | | | 2019 | | | $ | 560,962 | | | $ | — | | | $ | 536,310 | | | $ | 462,583 | | | $ | 37,268 | | | $ | 1,597,123 | | Executive Vice President, Operations; Former Chief Financial Officer | | | 2018 | | | $ | 535,000 | | | $ | — | | | $ | 749,996 | | | $ | 314,982 | | | $ | 38,370 | | | $ | 1,638,348 | | | | 2017 | | | $ | 530,385 | | | $ | 439,998 | | | $ | 562,498 | | | $ | 289,903 | | | $ | 41,752 | | | $ | 1,864,536 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas Donohue | | | 2019 | | | $ | 462,462 | | | $ | — | | | $ | 223,466 | | | $ | 212,333 | | | $ | 13,050 | | | $ | 911,311 | | Executive Vice President, Chief Financial Officer | | | 2018 | | | $ | 435,000 | | | $ | 50,000 | | | $ | 249,995 | | | $ | 143,550 | | | $ | 6,416 | | | $ | 884,961 | | | | 2017 | | | $ | 433,462 | | | $ | 132,222 | | | $ | 393,754 | | | $ | 141,810 | | | $ | 10,913 | | | $ | 1,112,161 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kanuj Malhotra | | | 2019 | | | $ | 523,400 | | | $ | — | | | $ | 625,693 | | | $ | 362,716 | | | $ | 12,750 | | | $ | 1,524,559 | | Executive Vice President, Corporate Development | | | 2018 | | | $ | 523,400 | | | $ | — | | | $ | 749,996 | | | $ | 591,442 | | | $ | 7,640 | | | $ | 1,872,478 | | | | 2017 | | | $ | 523,400 | | | $ | 527,785 | | | $ | 478,117 | | | $ | 298,600 | | | $ | 11,193 | | | $ | 1,839,095 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Patrick Maloney (6) | | | 2019 | | | $ | 767,000 | | | $ | 657,448 | | | $ | 934,073 | | | $ | — | | | $ | 1,876,765 | | | $ | 4,235,286 | | Former Executive Vice President, Operations | | | 2018 | | | $ | 767,000 | | | $ | — | | | $ | 1,499,997 | | | $ | 743,032 | | | $ | 39,333 | | | $ | 3,049,362 | | | | 2017 | | | $ | 767,000 | | | $ | 377,775 | | | $ | 1,725,744 | | | $ | 620,791 | | | $ | 37,048 | | | $ | 3,528,358 | | Michael C. Miller | | | 2019 | | | $ | 496,154 | | | $ | 200,000 | | | $ | 446,927 | | | $ | 273,000 | | | $ | 16,481 | | | $ | 1,432,562 | | Executive Vice President, Corporate Strategy and General Counsel | | | 2018 | | | $ | 475,000 | | | $ | — | | | $ | 349,999 | | | $ | 285,000 | | | $ | 6,904 | | | $ | 1,116,903 | | | | 2017 | | | $ | 9,135 | | | $ | 50,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 59,135 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael P. Huseby
Chairman and Chief Executive Officer
| | | 2021 | | | $1,031,250 | | | $— | | | $1,260,976 | | | $1,625,673 | | | $290,000 | | | $26,271 | | | $4,234,170 | | 2020 | | | $1,089,423 | | | $— | | | $1,979,996 | | | $— | | | $247,500 | | | $37,040 | | | $3,353,959 | | 2019 | | | $1,100,000 | | | $— | | | $1,858,467 | | | $— | | | $1,501,500 | | | $36,105 | | | $4,496,072 | Thomas D. Donohue
Executive Vice President, Chief Financial Officer
| | | 2021 | | | $557,693 | | | $— | | | $343,903 | | | $443,365 | | | $175,000 | | | $1,855 | | | $1,521,816 | | 2020 | | | $500,000 | | | $— | | | $329,994 | | | $— | | | $42,500 | | | $12,670 | | | $885,164 | | 2019 | | | $462,462 | | | $— | | | $223,466 | | | $— | | | $212,333 | | | $13,050 | | | $911,311 | Michael C. Miller
Chief Legal Officer and Executive Vice President, Corporate Development & Affairs, and Secretary
| | | 2021 | | | $557,693 | | | $— | | | $343,903 | | | $443,365 | | | $175,000 | | | $1,470 | | | $1,521,431 | | 2020 | | | $500,000 | | | $— | | | $329,994 | | | $— | | | $42,500 | | | $1,470 | | | $873,964 | | 2019 | | | $496,154 | | | $200,000 | | | $446,927 | | | $— | | | $273,000 | | | $16,481 | | | $1,432,562 | David Henderson
Executive Vice President Strategic Services, and President, MBS Textbook Exchange, LLC
| | | 2021 | | | $526,923 | | | $— | | | $223,536 | | | $155,178 | | | $160,000 | | | $29,151 | | | $1,094,788 | | 2020 | | | $500,000 | | | $— | | | $329,994 | | | $— | | | $42,500 | | | $37,608 | | | $910,102 | | 2019 | | | $500,000 | | | $— | | | $469,274 | | | $— | | | $225,600 | | | $40,531 | | | $1,235.405 | Jonathan Shar
Executive Vice President, BNED Retail
| | | 2021 | | | $526,923 | | | $— | | | $447,073 | | | $310,355 | | | $160,000 | | | $1,778 | | | $1,446,129 | | 2020 | | | $400,000 | | | $— | | | $209,998 | | | $— | | | $30,000 | | | $12,670 | | | $652,668 | | 2019 | | | $304,616 | | | $150,000 | | | $171,697 | | | $— | | | $200,000 | | | $5,458 | | | $831,771 | Kanuj Malhotra(6)
Executive Vice President, Corporate Development
| | | 2021 | | | $362,112 | | | $— | | | $343,903 | | | $443,365 | | | $199,000 | | | $1,142,869 | | | $2,491,249 | | 2020 | | | $523,400 | | | $— | | | $389,995 | | | $— | | | $327,125 | | | $12,670 | | | $1,253,190 | | 2019 | | | $523,400 | | | $— | | | $625,693 | | | $— | | | $362,716 | | | $12,750 | | | $1,524,559 |
(1)
| This column represents base salary earned during each fiscal year 2019. year. |
(2)
| This column represents, a retention bonus paid inwith respect to Fiscal 2019 of $200,000 to Mr. Miller; management transition bonuses earned in Fiscal 2019 of $657,448 paid to Mr. Maloney and in Fiscal 2018 of $250,000 and $50,000 paid to Messrs. Huseby and Donohue, respectively; a signing bonus earned in Fiscal 2017 of $50,000 to Mr. Miller; discretionary bonuses earned in Fiscal 2017 of $100,000, $132,222 and $150,000, paid to Messrs. Brover, Donohue and Malhotra, respectively; and retention payments earned in Fiscal 2017 of $339,998, $377,785, and $377,775 paid to Messrs. Brover, Malhotra, and Maloney, respectively. |
(3) | This column represents the aggregate2021, cash-settled phantom shares. The grant date fair value of stock awards granted computed in accordance with Financial Accounting Standards Board of Directors (“FASB”) Accounting Standards Codification (“ASC”) 718,Compensation-Stock Compensation (“ASC 718”). The stock awards value is determined to be the fair market value of the underlying Company shares on the grant date, which is determined based on the closing price of the Company’s Common Stock on the grant date. These amounts reflect an estimate of the
|
| grant date fair value and may not be equivalent to the actual value recognized by the NEO. The amounts reported inNEO. |
(3)
| This column represents the Summary Compensation Table for the performance-based awards assume a future payoutdollar value of options granted at the target level and may not represent the amounts that the NEOs will actually realize from the awards. Whether and to what extent an NEO realizes value with respect to these performance-based awards will depend on our actual performance and the NEO’s continued employment. If our performance results in a future payout at the maximum level (150% of target), the aggregate grant dateaverage fair value of the performance-based stock awards granted in 2019 would be as follows: Mr. Huseby-$1,500,018; Mr. Brover-$224,994; Mr. Donohue-$93,750; Mr. Malhotra-$262,504; Mr. Maloney-$391,881; and Mr. Miller-$187,492.price. |
(4)
| This column represents the dollar value of performance-based annual incentive compensation earned for fiscal year. year. |
(5)
| This column represents the value of all other compensation, as detailed in the table below. |
(6)
| Mr. MaloneyMalhotra resigned from his position of Executive Vice President, Operations of the Company, effective as of April 27, 2019. November 30, 2020. The phantom shares and stock options reported were forfeited as of that date. |
TABLE OF CONTENTS All Other Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fiscal Year | | | Long-Term Disability Insurance(1) | | | Life and AD&D Insurance(2) | | | Car Allowance | | | 401(k) Company Match | | | Cell Phone | | | Total Other Income | | Michael P. Huseby | | | 2019 | | | $ | 13,086 | | | $ | 12,065 | | | $ | — | | | $ | 10,154 | | | $ | 800 | | | $ | 36,105 | | | | | 2018 | | | $ | 13,086 | | | $ | 12,108 | | | $ | — | | | $ | 13,231 | | | $ | — | | | $ | 38,425 | | | | | 2017 | | | $ | 13,086 | | | $ | 12,108 | | | $ | — | | | $ | 10,000 | | | $ | — | | | $ | 35,194 | | Barry Brover | | | 2019 | | | $ | 9,461 | | | $ | 2,969 | | | $ | 12,000 | | | $ | 12,038 | | | $ | 800 | | | $ | 37,268 | | | | | 2018 | | | $ | 9,950 | | | $ | 3,012 | | | $ | 18,000 | | | $ | 7,408 | | | $ | — | | | $ | 38,370 | | | | | 2017 | | | $ | 9,940 | | | $ | 3,012 | | | $ | 18,000 | | | $ | 10,800 | | | $ | — | | | $ | 41,752 | | Thomas Donohue | | | 2019 | | | $ | — | | | $ | 350 | | | $ | — | | | $ | 11,900 | | | $ | 800 | | | $ | 13,050 | | | | | 2018 | | | $ | — | | | $ | 393 | | | $ | — | | | $ | 6,023 | | | $ | — | | | $ | 6,416 | | | | | 2017 | | | $ | — | | | $ | 393 | | | $ | — | | | $ | 10,520 | | | $ | — | | | $ | 10,913 | | Kanuj Malhotra | | | 2019 | | | $ | — | | | $ | 350 | | | $ | — | | | $ | 11,000 | | | $ | 1,400 | | | $ | 12,750 | | | | | 2018 | | | $ | — | | | $ | 393 | | | $ | — | | | $ | 7,247 | | | $ | — | | | $ | 7,640 | | | | | 2017 | | | $ | — | | | $ | 393 | | | $ | — | | | $ | 10,800 | | | $ | — | | | $ | 11,193 | | Patrick Maloney | | | 2019 | | | $ | 3,462 | | | $ | 350 | | | $ | 18,000 | | | $ | 11,000 | | | $ | 1,400 | | | $ | 34,213 | (3) | | | | 2018 | | | $ | 10,320 | | | $ | 393 | | | $ | 18,000 | | | $ | 10,620 | | | $ | — | | | $ | 39,333 | | | | | 2017 | | | $ | 7,855 | | | $ | 393 | | | $ | 18,000 | | | $ | 10,800 | | | $ | — | | | $ | 37,048 | | Michael C. Miller | | | 2019 | | | $ | — | | | $ | 350 | | | $ | — | | | $ | 14,731 | | | $ | 1,400 | | | $ | 16,481 | | | | | 2018 | | | $ | — | | | $ | 328 | | | $ | — | | | $ | 6,577 | | | $ | — | | | $ | 6,905 | | | | | 2017 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Michael P. Huseby | | | 2021 | | | $13,086 | | | $11,985 | | | $— | | | $1,200 | | | $26,271 | | 2020 | | | $13,086 | | | $11,985 | | | $10,769 | | | $1,200 | | | $37,040 | | 2019 | | | $13,086 | | | $12,065 | | | $10,154 | | | $800 | | | $36,105 | Thomas D. Donohue | | | 2021 | | | $— | | | $270 | | | $385 | | | $1,200 | | | $1,855 | | 2020 | | | $— | | | $270 | | | $11,200 | | | $1,200 | | | $12,670 | | 2019 | | | $— | | | $350 | | | $11,900 | | | $800 | | | $13,050 | Michael C. Miller | | | 2021 | | | $— | | | $270 | | | $— | | | $1,200 | | | $1,470 | | 2020 | | | $— | | | $270 | | | $— | | | $1,200 | | | $1,470 | | 2019 | | | $— | | | $350 | | | $14,731 | | | $1,400 | | | $16,481 | David Henderson(3) | | | 2021 | | | $576 | | | $1,013 | | | $797 | | | $— | | | $2,386 | | 2020 | | | $576 | | | $1,013 | | | $10,430 | | | $— | | | $12,019 | | 2019 | | | $612 | | | $983 | | | $12,981 | | | $— | | | $14,576 | Jonathan Shar | | | 2021 | | | $— | | | $270 | | | $308 | | | $1,200 | | | $1,778 | | 2020 | | | $— | | | $270 | | | $11,200 | | | $1,200 | | | $12,670 | | 2019 | | | $— | | | $350 | | | $4,308 | | | $800 | | | $5,458 | Kanuj Malhotra(4) | | | 2021 | | | $— | | | $166 | | | $403 | | | $800 | | | $1,142,869 | | 2020 | | | $— | | | $270 | | | $11,200 | | | $1,200 | | | $12,670 | | 2019 | | | $— | | | $350 | | | $11,000 | | | $1,400 | | | $12,750 |
(1)
| This represents the premiums paid by the Company for the long-term disability insurance. |
(2)
| This represents the premiums paid by the Company for life and accidental death and dismemberment insurance. insurance. |
(3)
| This total does not include severance payments madeTotal other income for Mr. Henderson also includes 1) leased vehicle expense of $18,103; $17,178; and $17,484 for 2021, 2020 and 2019, respectively; and 2) reimbursement of country club fees of $8,662; $8,411; and $8,471 for 2021, 2020 and 2019, respectively.
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(4)
| Total other income for Mr. Malhotra also includes $1,141,500 paid to Mr. Maloney, which totaled $1,842,552, and which is included inMalhotra pursuant to the “All Other Compensation” columnterms of the Summary Compensation Table on page 34. For information regarding payments made tohis resignation letter. See “Resignation Letter Agreement with Mr. Maloney in connection with his retirement see “Severance Arrangement for Mr. Maloney” on page 39.Malhotra.” |
2019TABLE OF CONTENTS 2021 Grants of Plan-Based Awards Table The following table provides additional information about non-equity incentive awards and equity incentive awards granted to our NEOs by the Company during Fiscal 2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Value of Stock and Option Awards ($) | | Name | | Award(1) | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | Michael P. Huseby | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | 90,417 | | | | 180,834 | | | | 271,251 | | | | | | | $ | 1,000,012 | | | AIP | | | 7/19/18 | | | $ | 825,000 | | | $ | 1,650,000 | | | $ | 2,475,000 | | | | | | | | | | | | | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 153,845 | | | $ | 858,455 | | Barry Brover | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | 13,562 | | | | 27,124 | | | | 40,686 | | | | | | | $ | 149,996 | | | AIP | | | 7/19/18 | | | $ | 254,167 | | | $ | 508,333 | | | $ | 762,500 | | | | | | | | | | | | | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 69,232 | | | $ | 386,315 | | Thomas Donohue | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 62,500 | | | AIP | | | 7/19/18 | | | $ | 116,667 | | | $ | 233,333 | | | $ | 350,000 | | | | 5,651 | | | | 11,302 | | | | 16,953 | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,847 | | | $ | 160,966 | | Kanuj Malhotra | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | 15,823 | | | | 31,646 | | | | 47,469 | | | | | | | $ | 175,002 | | | AIP | | | 7/19/18 | | | $ | 261,700 | | | $ | 523,400 | | | $ | 785,100 | | | | | | | | | | | | | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 80,769 | | | $ | 450,691 | | Patrick Maloney | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | 23,622 | | | | 47,243 | | | | 70,865 | | | | | | | $ | 261,254 | | | AIP | | | 7/19/18 | | | $ | 479,375 | | | $ | 958,750 | | | $ | 1,438,125 | | | | | | | | | | | | | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 120,577 | | | $ | 672,820 | | Michael C. Miller | | PS | | | 7/19/18 | | | | | | | | | | | | | | | | 11,302 | | | | 22,603 | | | | 33,905 | | | | | | | $ | 124,995 | | | AIP | | | 7/19/18 | | | $ | 150,000 | | | $ | 300,000 | | | $ | 450,000 | | | | | | | | | | | | | | | | | | | | | | | RSU | | | 9/26/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 57,694 | | | $ | 321,933 | |
2021.Michael P. Huseby | | | AIP | | | | | | $756,250 | | | $1,134,375 | | | $1,512,500 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 670,732 | | | | | | | | | $1,260,976 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 568,417 | | | $2.46 | | | $898,099 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 568,417 | | | $5.00 | | | $727,574 | Thomas D. Donahue | | | AIP | | | | | | $255,000 | | | $382,500 | | | $510,000 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 182,927 | | | | | | | | | $343,903 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $2.46 | | | $244,936 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $5.00 | | | $198,429 | Michal C. Miller | | | AIP | | | | | | $255,000 | | | $382,500 | | | $510,000 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 182,927 | | | | | | | | | $343,903 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $2.46 | | | $244,936 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $5.00 | | | $198,429 | David Henderson | | | AIP | | | | | | $233,750 | | | $350,625 | | | $467,500 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 118,902 | | | | | | | | | $233,536 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 54,258 | | | $2.46 | | | $85,728 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 54,258 | | | $5.00 | | | $69,450 | Jonathon Shar | | | AIP | | | | | | $233,750 | | | $350,625 | | | $467,500 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 237,805 | | | | | | | | | $447,073 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 108,516 | | | $2.46 | | | $171,455 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 108,516 | | | $5.00 | | | $138,900 | Kanuj Malhotra | | | AIP | | | | | | $275,000 | | | $412,500 | | | $550,000 | | | | | | | | | | | | | | PS | | | 9/22/20 | | | | | | | | | | | | 182,927 | | | | | | | | | $343,903 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $2.46 | | | $244,936 | | Options | | | 9/22/20 | | | | | | | | | | | | | | | 155,023 | | | $5.00 | | | $198,429 |
(1)
| Forms of awards granted to executive officers during Fiscal 20192021 include PerformancePhantom Shares (“PS”), bonus payments under the Company’s Annual Incentive Plan (“AIP”) and Restricted Stock UnitsOptions (“RSUs”Options”). |
(2)
| These columns represent the threshold payout level, target payout level and maximum payout level for the performance-based incentive compensation awards under the Company’s AIP. For additional information regarding the performance-based annual incentive compensation program, see the discussion in the “Compensation Discussion and Analysis-Overview of Compensation Program Design-Performance-Based Annual Incentive Compensation” section of this Proxy Statement. |
(3) | These columns represent the threshold payout level, target payout level and maximum payout level for the Performance Shares issued under the Company’s Long-Term Incentive Plan. For additional information regarding the Performance Shares, see the discussion in the “Compensation Discussion and Analysis-Overview of Compensation Program Design- Long-Term Equity Incentives-Performance Shares” section of this Proxy Statement.
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Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table
Employment Arrangements with the Named Executive Officers
The Company has entered into an employment agreement or employment letter with each of the NEOs and compensation of each of these NEOs is based on their respective employment agreement or employment letter, as the case may be, as well as their job responsibilities. The Company entered into an employment agreement with Mr. Huseby on June 26, 2015 in connection with theSpin-Off, and entered into an amended and restated employment agreement with Mr. Huseby on July 19, 2017 in connection with his role as Chief Executive Officer and Chairman of the Board effective as of September 19, 2017. The employment agreement provides severance payments and benefits upon termination of employment by the Company without “cause” or by the NEO for “good reason” (including upon termination within two years following a change of control). The employment agreement has atwo-year term and renews automatically for one year unless either party gives notice ofnon-renewal at least three months prior to automatic renewal. The Company entered into employment letters outlining employment terms with each of Messrs. Brover, Donohue, MalhotraMiller, Henderson and MillerShar on June 19, 2019. The employment letters provide the officers with severance payments and benefits upon termination of employment by the Company without “cause” or by the NEO for “good reason” (including upon termination within two years following a change of control). TABLE OF CONTENTS Employment Arrangements-General Provisions Pursuant to their employment agreement or letters, the annual base salaries of Messrs. Huseby, Brover, Donohue, MalhotraMiller, Henderson and MillerShar can be no less than $1,100,000, $610,000, $500,000, $523,400 and $500,000, respectively, during the terms of their employment. Each of Messrs. Huseby, Brover, Donohue, MalhotraMiller, Henderson and MillerShar are eligible for a minimum target annual incentive compensation award of not less than 150%, 100%85%, 85% , 100% and 85% , and 75%, respectively, of his base salary, as determined by the Compensation Committee. On April 1, 2020, as a result of the unusual circumstances surrounding the COVID-19 pandemic, Mr. Huseby voluntarily agreed to a temporary reduction of his base salary of 25%, effective April 13, 2020, which continued through September 19, 2020. On September 23, 2020, the Board and Mr. Huseby agreed to amend Mr. Huseby’s employment agreement to (i) extend the term of the agreement to September 19, 2022; (ii) reduce Mr. Huseby’s annual target bonus from 150% to 125% of his base salary; and (iii) use Mr. Huseby’s annual target bonus (rather than average annual bonuses for prior years) where applicable for purposes of calculating severance amounts, which treatment is consistent with the employment agreements with the Company’s other executive officers. The employment agreements or employment letters also provide that the NEO is eligible for grants of equity-based awards under the Barnes & Noble Education, Inc. Equity Incentive Plan. With respect to Messrs. Brover, Donohue, MalhotraMiller, Henderson and Miller,Shar the amounts of such grants are determined by the Compensation Committee, and with respect to Mr. Huseby, the amount of such equity award shall have an aggregate target value of 300% of his base salary. The employment agreement for Mr. Huseby and the employment letter for Mr. Brover also provideprovides for $1,000,000 of life insurance and long-term disability (providing for monthly payments of $12,800) payable during the disability period through the earlier of death or the attainment of age 65. Each of our NEOs is entitled to all other benefits afforded to executive officers and employees of the Company. Under their respective employment agreements or employment letters with the Company, our NEOs are subject to certain restrictive covenants regarding competition, solicitation, confidentiality and disparagement. Mr. Huseby’s agreement contains non-competition and non-solicitation covenants that apply during the employment term and for the two-year period following the termination of employment. Messrs. Brover, Donohue, MalhotraMiller and MillerHenderson are restricted by a non-competition and non-solicitation covenant during their term of employment and for a one-year period thereafter. The confidentiality and non-disparagement covenants apply during the term of each respective employment letters of each NEO and at all times thereafter.
Employment Arrangements-Severance and Change of Control Benefits Mr. Huseby’s employment agreement provides that he may be terminated by the Company upon death or disability or for “cause”, and by Mr. Huseby without “good reason”. If Mr. Huseby’s employment is terminated by the Company upon death, disability or for “cause,” or by the NEO without “good reason”, Mr. Huseby is entitled to payment of base salary through the date of death, disability or termination of employment. If the employment of Messrs. Huseby, Brover, Donohue, MalhotraMiller, Henderson or MillerShar is terminated by the Company without “cause” or by the NEO for “good reason,” the NEO is entitled, provided he signs a release of claims against the Company, to alump-sum severance payment equal toone-time (or, in the case of Mr. Huseby, two times) (a) annual base salary,salary; (b) with respect to Mr. Huseby, the average of annual incentive compensation actually paid to Mr. Huseby with respect to the three completed years preceding the date of termination, and with respect to Messrs. Brover, Donohue, Malhotra and Miller, the target annual incentive compensation for the fiscal year in which termination takes place,place; and (c) the cost of benefits. Further, if the employment of any NEO is terminated by the Company without “cause” or by the NEO for “good reason” within two years (or the remainder of his term of employment under his employment agreement, whichever is longer) following a “change of control” of the Company, the NEO is entitled, regardless of whether he signs a release of claims against the Company, to alump-sum severance payment equal to two times (or, in the case of Mr. Huseby, three times) (a) annual base salary,salary; (b) with respect to Mr. Huseby, the average of annual incentive compensation actually paid to Mr. Huseby with respect to the three completed years preceding the date of termination, and with respect to Messrs. Brover, Donohue, Malhotra and Miller, the target annual incentive compensation for the fiscal year in which termination takes place,place; and (c) the cost of benefits. However, if such severance payments trigger the “golden parachute” excise tax under Sections 280G and 4999 of the Code, the severance benefits for an NEO would be reduced if such reduction would result in a greaterafter-tax benefit to him. Except as otherwise provided by the applicable award agreement, if the successor company assumes or substitutes for an outstanding equity award, such award will continue in accordance with its applicable terms and will not be accelerated. Under the restricted stock unit award agreements, if the holder were terminated other than for “cause” at any time following a change of control, then the unvested restricted stock units underlying the award would immediately vest.
TABLE OF CONTENTS Under the award agreements executed under the Barnes & Noble Education, Inc. Equity Incentive Plan, “change of control” generally has the same meaning as provided under the Barnes & Noble Education, Inc. Equity Incentive Plan and means any of the following: (a) a change in the ownership of the Company; (b) a change in the effective control of the Company; or (c) a change in the ownership of a substantial portion of the Company’s assets, in each case, within the meaning of Section 409A of the Code and the regulations promulgated thereunder. Under
“Cause” is defined by reference to the restricted stock unitindividual’s employment agreement or letter, and if there is no agreement or letter, the applicable award agreements, “cause”agreement, and generally means (a) a material failure by the holder to perform his or her duties (other than as a result of incapacity due to physical or mental illness) during his or her employment with the Company after written notice of such breach or failure and the holder failed to cure such breach or failure to the Company’s reasonable satisfaction within five days after receiving such written notice; or (b) any act of fraud, misappropriation, misuse, embezzlement or any other material act of dishonesty in respect of the Company or its funds, properties, assets or other employees. The estimated payments to be made by the Company to our NEOs in the event of a change of control are set forth on page 42 in the “Potential Payments Upon Termination or Change of Control Table” on page 43.
Employment Arrangements-Defined Terms “Cause,” for purposes of the employment agreement and employment letters, generally means any of the following: (a) the NEO engaging in intentional misconduct or gross negligence that, in either case, is injurious to the Company; (b) the NEO’s indictment, entry of a plea of nolo contendere or conviction by a court of competent jurisdiction with respect to any crime or violation of law involving fraud or dishonesty (with the exception of misconduct based in good faith on the advice of professional consultants, such as attorneys and accountants) or any felony (or equivalent crime in anon-U.S. jurisdiction); (c) any gross negligence, intentional acts or intentional omissions by the NEO in connection with the performance of the NEO’s duties and responsibilities; (d) fraud, dishonesty, embezzlement or misappropriation in connection with the performance of the NEO’s duties and responsibilities; (e) the NEO engaging in any act of misconduct or moral turpitude reasonably likely to adversely affect the Company or its business; (f) the NEO’s abuse of or dependency on alcohol or drugs (illicit or otherwise) that adversely affects the NEO’s job performance; (g) the NEO’s willful failure or refusal to properly perform the duties, responsibilities or obligations of the NEO’s service for reasons other than disability or authorized leave, or to properly perform or follow any lawful direction by the Company; or (h) the NEO’s breach of the agreement or of any other contractual duty to, written policy of, or written agreement with, the Company. “Change of Control,” for purposes of the employment agreement and employment letters, generally means any of the following: (a) the Company’s directors immediately prior to a merger, consolidation, liquidation or sale of assets cease within two years thereafter to constitute a majority of the Company’s Board of Directors; (b) the Company’s directors immediately prior to a tender or exchange offer for the Company’s voting securities cease within two years thereafter to constitute a majority of the Company’s Board of Directors. The consummation of a corporate transaction constituting a Reorganization or a Sale, if such transaction requires the approval of the Company’s stockholders, subject to certain exceptions outlined in the agreement and letters; or (c) the acquisition by any person or group (other than the executive or his or her affiliates) of 40% or more of the Company’s voting securities. “Good Reason,” for purposes of the employment agreement and employment letters, generally means any of the following without the NEO’s written consent: (a) a material diminution of authority, duties or responsibilities; (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the NEO reports; (c) a reduction in current annual base salary or target annual bonus; (d) the relocation of the Company’s principal executive offices more than 50 miles from both New York City, New York and Basking Ridge, New Jersey; (e) a failure by the Company to make material payments under the agreement; (f) a reduction in title; or (g) a material reduction in the value of employee benefits following a Change of Control. Notwithstanding the foregoing, an NEO will only have grounds to resign for Good Reason if the NEO notifies the Company in writing with 60 days of the Good Reason occurrence, the Company does not cure such grounds within 30 days following receipt of notice, and the NEO actually resigns employment 30 days following the end of such cure period.
Severance Arrangement forResignation Letter Agreement with Mr. MaloneyMalhotra On December 13, 2018,November 9, 2020, Mr. MaloneyMalhotra resigned as Executive Vice President, Operations offrom the Company, effective as of April 27, 2019. On December 13, 2018, the Board of Directors appointed Mr. Brover to serveNovember 30, 2020, as Executive Vice President, Operationsa result of the Company, and Mr. Donohue to serve as Executive Vice President, Chief Financial Officerelimination of the Company, both effective as of January 1, 2019.his position. TABLE OF CONTENTS In connection with his resignation, the Company and Mr. MaloneyMalhotra entered into a retirementresignation letter agreement. Under the retirementresignation letter agreement, and consistent with Mr. Maloney’s employment agreement, effective April 27, 2019, Mr. MaloneyMalhotra received among other things, a lump sum payment of an amount equal to 1.0one times the sum of (i)(a) base salary ($767,000), (ii)550,000); (b) target annual bonus for Fiscal 2020 ($550,000); and (c) the average of the annual bonuses actually paid with respect to the three completed years preceding the date of Mr. Maloney’s termination of employment ($1,018,051) and (iii) the aggregate annual dollar amount of the payments made or to be made in respect of employee benefits car allowances and Company-paid life and disability insurance ($57,501),for eighteen months, totaling $1,842,552$1,141,500 in the aggregate. In addition, subject toMr. Malhotra also received a quarterly bonus for the terms and conditionssecond quarter of the retirement letter agreement, includingFiscal 2021 of $99,000. Mr. Maloney’s cooperation in the transition of his role, the Company agreed to pay Mr. Maloney a cash transition payment of $657,448. Mr. MaloneyMalhotra forfeited any unvested equity awards. As a condition to payment of all of the foregoing amounts, Mr. MaloneyMalhotra executed a release of claims in favor of the Company BNC, and its affiliates. Outstanding Equity Awards at Fiscal Year End The following table summarizes the equity awards the Company made to our NEOs that were outstanding as of the end of Fiscal 2019. The Company has not granted any stock options.2021. In accordance with the applicable SEC disclosure guidance, this table and the accompanying footnotes do not account for any awards that may have been exercised or have vested pursuant to their terms in the ordinary course since the end of Fiscal 2019. | | | | | | | | | | | | | | | | | | | | | Name | | Stock Award Grant Date | | | RSU/ PSU | | | Number of Shares or Units of Stock That Have Not Vested (1) | | | Market Value of Shares or Units of Stock That Have Not Vested (2) | | | Vesting Dates | | Michael P. Huseby | | | 9/16/2016 | | | | RSU | | | | 38,661 | | | $ | 170,108 | | | | 9/16/19 | | | | | 7/19/2017 | | | | PSU | | | | 82,077 | | | $ | 361,138 | | | | 7/19/20 | | | | | 9/19/2017 | | | | RSU | | | | 187,394 | | | $ | 824,534 | | | | 9/19/19, 9/19/20 | | | | | 7/19/2018 | | | | PSU | | | | 180,834 | | | $ | 795,670 | | | | 7/19/21 | | | | | 9/26/2018 | | | | RSU | | | | 153,845 | | | $ | 676,918 | | | | 9/26/19, 9/26/20, 9/26/21 | | | | | 6/19/2019 | | | | PSU | | | | 314,285 | | | $ | 1,382,854 | | | | 6/19/22 | | | | | 6/19/2019 | | | | RSU | | | | 314,285 | | | $ | 1,382,854 | | | | 6/19/20, 6/19/21, 6/19/22 | | Barry Brover | | | 9/16/2016 | | | | RSU | | | | 12,887 | | | $ | 56,703 | | | | 9/16/19 | | | | | 7/13/2017 | | | | PSU | | | | 18,256 | | | $ | 80,325 | | | | 7/13/20 | | | | | 9/19/2017 | | | | RSU | | | | 42,590 | | | $ | 187,396 | | | | 9/19/19, 9/19/20 | | | | | 7/19/2018 | | | | PSU | | | | 27,124 | | | $ | 119,346 | | | | 7/19/21 | | | | | 9/26/2018 | | | | RSU | | | | 69,232 | | | $ | 304,621 | | | | 9/26/19, 9/26/20, 9/26/21 | | | | | 6/19/2019 | | | | PSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/22 | | | | | 6/19/2019 | | | | RSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/20, 6/19/21, 6/19/22 | | Thomas Donohue | | | 9/16/2016 | | | | RSU | | | | 9,021 | | | $ | 39,692 | | | | 9/16/19 | | | | | 7/13/2017 | | | | PSU | | | | 6,085 | | | $ | 26,774 | | | | 7/13/20 | | | | | 9/19/2017 | | | | RSU | | | | 14,197 | | | $ | 62,467 | | | | 9/19/19, 9/19/20 | | | | | 7/19/2018 | | | | PSU | | | | 11,302 | | | $ | 49,729 | | | | 7/19/21 | | | | | 9/26/2018 | | | | RSU | | | | 28,847 | | | $ | 126,927 | | | | 9/26/19, 9/26/20, 9/26/21 | | | | | 6/19/2019 | | | | PSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/22 | | | | | 6/19/2019 | | | | RSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/20, 6/19/21, 6/19/22 | | Kanuj Malhotra | | | 9/16/2016 | | | | RSU | | | | 10,954 | | | $ | 48,198 | | | | 9/16/19 | | | | | 7/13/2017 | | | | PSU | | | | 18,256 | | | $ | 80,325 | | | | 7/13/20 | | | | | 9/19/2017 | | | | RSU | | | | 42,590 | | | $ | 187,396 | | | | 9/19/19, 9/19/20 | | | | | 7/19/2018 | | | | PSU | | | | 31,646 | | | $ | 139,242 | | | | 7/19/21 | | | | | 9/26/2018 | | | | RSU | | | | 80,769 | | | $ | 355,384 | | | | 9/26/19, 9/26/20, 9/26/21 | | | | | 6/19/2019 | | | | PSU | | | | 61,904 | | | $ | 272,378 | | | | 6/19/22 | | | | | 6/19/2019 | | | | RSU | | | | 61,904 | | | $ | 272,378 | | | | 6/19/20, 6/19/21, 6/19/22 | | Michael Miller | | | 9/19/2017 | | | | RSU | | | | 39,751 | | | $ | 174,904 | | | | 9/19/19, 9/19/20 | | | | | 7/19/2018 | | | | PSU | | | | 22,603 | | | $ | 99,453 | | | | 7/19/21 | | | | | 9/26/2018 | | | | RSU | | | | 57,694 | | | $ | 253,854 | | | | 9/26/19, 9/26/20, 9/26/21 | | | | | 6/19/2019 | | | | PSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/22 | | | | | 6/19/2019 | | | | RSU | | | | 52,380 | | | $ | 230,472 | | | | 6/19/20, 6/19/21, 6/19/22 | |
2021.Michael P. Huseby | | | | | | | | | | | | | | | | | 9/26/18 | | | RSU | | | 51,282 | | | $405,641 | | | 9/26/21 | | 6/19/19 | | | PSU | | | 99,408 | | | $786,320 | | | 6/19/22 | | 6/19/19 | | | RSU | | | 104,762 | | | $828,667 | | | 6/19/22 | | 9/22/20 | | | PS | | | 670,732 | | | $5,305,490 | | | 9/22/21, 9/22/22, 9/22/23 | Thomas D. Donohue | | | | | | | | | | | | | | | | | 9/26/18 | | | RSU | | | 9,616 | | | $76,063 | | | 9/26/21 | | 6/19/19 | | | PSU | | | 16,568 | | | $131,051 | | | 6/19/22 | | 6/19/19 | | | RSU | | | 17,460 | | | $138,109 | | | 6/19/22 | | 9/22/20 | | | PS | | | 182,927 | | | $1,446,953 | | | 9/22/21, 9/22/22, 9/22/23 | David Henderson | | | | | | | | | | | | | | | | | 9/26/18 | | | RSU | | | 20,193 | | | $159,727 | | | 9/26/21 | | 6/19/19 | | | PSU | | | 16,568 | | | $131,051 | | | 6/19/22 | | 6/19/19 | | | RSU | | | 17,460 | | | $138,109 | | | 6/19/22 | | 9/22/20 | | | PS | | | 118,902 | | | $940,515 | | | 9/22/21, 9/22/22, 9/22/23 | Michael C. Miller | | | | | | | | | | | | | | | | | 9/26/18 | | | RSU | | | 19,232 | | | $152,125 | | | 9/26/21 | | 6/19/19 | | | PSU | | | 16,568 | | | $131,051 | | | 6/19/22 | | 6/19/19 | | | RSU | | | 17,460 | | | $138,109 | | | 6/19/22 | | 9/22/20 | | | PS | | | 182,927 | | | $1,466,953 | | | 9/22/21, 9/22/22, 9/22/23 | Jonathan Shar | | | | | | | | | | | | | | | | | 9/26/18 | | | RSU | | | 10,257 | | | $81,133 | | | 9/26/21 | | 6/19/19 | | | PSU | | | 10,543 | | | $83,397 | | | 6/19/22 | | 6/19/19 | | | RSU | | | 11,111 | | | $87,888 | | | 6/19/22 | | 9/22/20 | | | PS | | | 237,805 | | | $1,881,038 | | | 9/22/21, 9/22/22, 9/22/23 | Kanuj Malhotra(3)
| | | | | | | | | | | | | | | |
(1)
| This column represents outstanding grants of shares of restricted stock units (RSU), performance share units (PSU) and performance shares. phantom shares (PS). |
(2)
| Market values have been calculated using a stock price of $4.40$7.91 (closing price of our Common Stock on April 26, 2019,May 1, 2021, the last trading day of Fiscal 2019). 2021), and assuming target level performance is achieved. |
(3)
| Mr. Malhotra forfeited outstanding equity awards effective with his resignation on November 30, 2020. |
TABLE OF CONTENTS Michael P. Huseby | | | | | | | | | | | | | | — | | | 568,417 | | | $2.46 | | | 9/22/30 | | — | | | 568,417 | | | $5.00 | | | 9/22/30 | Thomas D. Donohue | | | | | | | | | | | | | | — | | | 155,023 | | | $2.46 | | | 9/22/30 | | — | | | 155,023 | | | $5.00 | | | 9/22/30 | Michael C. Miller | | | | | | | | | | | | | | — | | | 155,023 | | | $2.46 | | | 9/22/30 | | — | | | 155,023 | | | $5.00 | | | 9/22/30 | David Henderson | | | | | | | | | | | | | | — | | | 54,258 | | | $2.46 | | | 9/22/30 | | — | | | 54,258 | | | $5.00 | | | 9/22/30 | Jonathan Shar | | | | | | | | | | | | | | — | | | 108,516 | | | $2.46 | | | 9/22/30 | | — | | | 108,516 | | | $5.00 | | | 9/22/30 |
Option Exercises and Stock Vested The following table provides additional information about the value realized by our NEOs upon the vesting of stock or stock unit awards during Fiscal 2019.2021. The Company has not issued any stock options. | | | | | | | | | | | | | | | | | | Stock Awards | | Name | | Fiscal Year | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting (1) ($) | | | | | | Michael P. Huseby | | | 2019 | | | | 170,759 | | | $ | 962,476 | | | | | | Barry Brover | | | 2019 | | | | 43,878 | | | $ | 247,233 | | | | | | Thomas Donohue | | | 2019 | | | | 22,520 | | | $ | 126,775 | | | | | | Kanuj Malhotra | | | 2019 | | | | 41,983 | | | $ | 233,883 | | | | | | Patrick Maloney | | | 2019 | | | | 101,762 | | | $ | 573,180 | | | | | | Michael C. Miller | | | 2019 | | | | 19,874 | | | $ | 112,288 | |
options in Fiscal 2021; however, none of such options were vested at fiscal year-end and there were no exercises.Michael P. Huseby | | | 2021 | | | 331,817 | | | $715,457 | Thomas D. Donohue | | | 2021 | | | 40,260 | | | $81,237 | Michael C. Miller | | | 2021 | | | 56,567 | | | $120,519 | David Henderson | | | 2021 | | | 66,046 | | | $141,537 | Jonathan Shar | | | 2021 | | | 21,368 | | | $44,121 | Kanuj Malhotra | | | 2021 | | | 87,108 | | | $185,004 |
(1)
| The amounts in this column are calculated by multiplying the number of shares vested by the closing price of our Common Stock on the date of vesting. |
TABLE OF CONTENTS Potential Payments Upon Termination or Change of Control Table(1) | | | | | | | | | | | | | | | | | | | | | Event | | Michael P. Huseby | | | Barry Brover | | | Thomas Donohue | | | Kanuj Malhotra | | | Michael C. Miller | | Involuntary Termination or Voluntary Termination with Good Reason | | | | | | | | | | | | | | | | | | | | | Cash severance payment (2) | | $ | 4,940,363 | | | $ | 1,171,885 | | | $ | 746,383 | | | $ | 1,085,793 | | | $ | 842,724 | | Acceleratedequity-based awards (3) | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 4,940,363 | | | $ | 1,171,885 | | | $ | 746,383 | | | $ | 1,085,793 | | | $ | 842,724 | | Death | | | | | | | | | | | | | | | | | | | | | Cash severance payment (2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Acceleratedequity-based awards (3) | | | 5,594,075 | | | | 1,209,335 | | | | 766,533 | | | | 1,355,300 | | | | 989,155 | | Health benefits (4) | | | 6,692 | | | | 4,153 | | | | — | | | | 6,692 | | | | 6,692 | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 5,600,767 | | | $ | 1,213,488 | | | $ | 766,533 | | | $ | 1,361,992 | | | $ | 995,847 | | Disability | | | | | | | | | | | | | | | | | | | | | Cash severance payment (2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Accelerated equity-based awards (3) | | | 5,594,075 | | | | 1,209,335 | | | | 766,533 | | | | 1,355,300 | | | | 989,155 | | Health benefits (5) | | | 11,632 | | | | 7,734 | | | | — | | | | 11,632 | | | | 11,632 | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 5,605,707 | | | $ | 1,217,069 | | | $ | 766,533 | | | $ | 1,366,932 | | | $ | 1,000,787 | | Change of Control with Involuntary Termination (without Cause) or Termination with Good Reason | | | | | | | | | | | | | | | | | | | | | Cash severance payment (2) | | $ | 7,410,545 | | | $ | 2,343,771 | | | $ | 1,492,766 | | | $ | 2,171,587 | | | $ | 1,685,449 | | Accelerated equity-based awards (3) | | | 5,594,075 | | | | 1,209,335 | | | | 766,533 | | | | 1,355,300 | | | | 989,155 | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 13,004,620 | | | $ | 3,553,106 | | | $ | 2,259,299 | | | $ | 3,526,887 | | | $ | 2,674,604 | |
Involuntary Termination or Voluntary Termination with Good Reason
| | | | | | | | | | | | | | | | Cash severance payment(2) | | | $4,575,145 | | | $984,355 | | | $1,010,896 | | | $931,363 | | | $929,329 | Accelerated equity-based awards(3) | | | — | | | — | | | — | | | — | | | — | Total | | | $4,575,145 | | | $984,355 | | | $1,010,896 | | | $931,363 | | | $929,329 | Death
| | | | | | | | | | | | | | | | Cash severance payment(2) | | | $— | | | $— | | | $— | | | $— | | | $— | Accelerated equity-based awards(3) | | | 16,318,475 | | | 4,244,639 | | | 4,320,701 | | | 2,227,763 | | | 3,850,178 | Health benefits(4) | | | 6,866 | | | 6,866 | | | 7,377 | | | 6,866 | | | | Total | | | $16.325,341 | | | $4,244,639 | | | $4,327,567 | | | $2,235,140 | | | $3,857,044 | Disability
| | | | | | | | | | | | | | | | Cash severance payment(2) | | | $— | | | $— | | | $— | | | $— | | | $— | Accelerated equity-based awards(3) | | | 16,318,475 | | | 4,244,639 | | | 4,320,701 | | | 2,227,763 | | | 3,850,178 | Health benefits(5) | | | 12,038 | | | — | | | 12,038 | | | 11,789 | | | 12,038 | Total | | | $16,330,513 | | | $4,244,639 | | | $4,332,739 | | | $2,239,552 | | | $3,862,216 | Change of Control with Involuntary Termination (without Cause) or Termination with Good Reason
| | | | | | | | | | | | | | | | Cash severance payment(2) | | | $6,862,717 | | | $1,968,710 | | | $2,021,793 | | | $1,862,726 | | | $1,858,659 | Accelerated equity-based awards(3) | | | 16,318,475 | | | 4,244,639 | | | 4,320,701 | | | 2,227,763 | | | 3,850,178 | Total | | | $23,181,192 | | | $6,213,349 | | | $6,342,494 | | | $4,090,489 | | | $5,708,837 |
(1)
| The values in this table reflect estimated payments associated with various termination scenarios, assume a stock price of $4.40$7.91 (closing price of our Common Stock on April 26, 2019,May 1, 2021, the last trading day of Fiscal 2019)2021) and include all outstanding grants through the assumed termination date of April 27, 2019.May 1, 2021. Actual value will vary based on changes in the Company’s Common Stock price. As previously disclosed, Patrick Maloney,Kanuj Malhotra, pursuant to the terms of his retirementresignation letter agreement, received a severancecash payment in the aggregate amount of $2,500,000. $1,141,500. |
(2)
| Cash severance is equal to the sum of (i) the NEO’s annual base salary, (ii) with respect to Mr. Huseby, the average of annual incentive compensation actually paid to the NEO with respect to the three completed years preceding the date of termination, and with respect to Messrs. Brover, Donohue, Malhotra and Miller, the target annual incentive compensation for the fiscal year in which termination takes place and (iii) the aggregate annual cost of benefits, times the named executive officer’s severance multiple as follows: one time (or, in the case of Mr. Huseby, two times) fornon-change of control and two times (or, in the case of Mr. Huseby, three times) for change of control. |
(3)
| This row represents the value of restricted stock unit awards and performance shares and performance share units at expected vested amounts that would automatically vest upon a termination due to death or disability and the value restricted stock unit awards upon a termination following a change of control. Except as provided below, in the event of a change of control, unless otherwise provided by the applicable award agreement, if the successor company assumes or substitutes for an outstanding equity award such award will continue in accordance with its applicable terms and not be accelerated. Absent a change of control, in the event of involuntary termination, termination for “cause” or resignation for any reason, each restricted stock unit award will be forfeited. In the event of an involuntary termination other than for “cause” within 24 months following a change of control, each restricted stock unit award will immediately vest. |
(4)
| Following the termination of employment due to death, the Company provides the NEO’s spouse three months’ of premiums for medical and dental insurance in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). |
(5)
| Following the termination of employment due to disability, the Company provides the NEO a seven-month subsidy for premiums for medical and dental insurance in accordance with COBRA. |
For the table above, the amount of potential payments to our NEOs, other than Mr. Maloney,Malhotra, in the event of a termination of their employment in connection with a change of control was calculated assuming that a change of control occurred on the last business day of Fiscal 2019 (April 27, 2019)2021 (May 1, 2021), each NEO’s employment terminated on that date due to involuntary termination without “cause” or for “good reason” and the successor company did not assume the NEO’s equity awards. Mr. Maloney’sMalhotra’s employment was terminated effective April 27, 2019,November 30, 2020, and, in connection with that termination, he was paid the amounts described under “Severance Arrangement for“Resignation Letter Agreement with Mr. Maloney.”Malhotra”. For a summary of the provisions of the employment agreements with our NEOs that were effective as of April 27, 2019May 1, 2021 and the outstanding equity awards that were held by our NEOs as of April 27, 2019,May 1, 2021, and therefore affect the amounts set forth in the table above in the event of involuntary termination without “cause” or for “good reason” or a “change of control”, see the discussions in the “Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table-Employment Arrangements-General Provisions” and “Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table-Employment Arrangements-Severance and Change of Control Benefits” sections of this Proxy Statement. TABLE OF CONTENTS Each non-employee director receives an annual Board of Directors retainer fee of $65,000, paid in quarterly installments. The Lead Director of the Board of Directors receives an additional $25,000 annual retainer. Audit Committee members receive an additional $15,000 annual retainer, and the Chair of the Audit Committee receives an additional $30,000 annual retainer. Compensation Committee members receive an additional $10,000 annual retainer, and the Chair of the Compensation Committee receives an additional $20,000 annual retainer. Corporate Governance and Nominating Committee members receive an additional $10,000 annual retainer, and the Chair of the Corporate Governance and Nominating Committee receives an additional $17,500 annual retainer. All retainer fees are paid quarterly in cash. Directors who are our employees will not receive additional compensation for serving on our Board of Directors or its committees. All directors are also reimbursed for travel, lodging and related expenses incurred in attending Board of Directors meetings. The Company has not increased the compensation paid to directors since the Spin-Off in 2015.
Eachnon-employee director is eligible for equity award grants under the Company’s Equity Incentive Plan. In Fiscal 2019,2021, these awards were in the form of restricted stock units with a grant date value of $120,000approximately $117,000 for eachnon-employee director. Such awards are granted the day following the Annual Meeting at which each individual director is elected by a majority of stockholders voting and vest after one year. Directors have the option to defer receipt of such awards under the Company’s director’s deferral plan. Director Stock Ownership and Retention Guidelines In 2016, the Board of Directors adopted Director Stock Ownership and Retention Guidelines, which require each non-employee director to maintain a minimum stock ownership amount equal to four times the annual cash retainer of $65,000, which currently equals $260,000. Directors have a three-year period following their appointment or election to the Board to achieve the minimum ownership level. Shares beneficially owned by a director and vested shares or units are deemed to be owned for purposes of the ownership guidelines. A director is deemed to have complied with these guidelines once they hold a number of shares sufficient to satisfy the minimum ownership level, regardless of subsequent fluctuations in the market price of the Company’s common stock. Directors are required to retain 100% of net-after-tax shares earned from the annual equity grants until the then-current minimum ownership level is met and may not sell or otherwise transfer common stock unless he or she has satisfied the then-current minimum ownership level. All of the Company’s directors are in compliance with the current Director Stock Ownership and Retention Guidelines.Guidelines, other than Mr. Robinson (who joined the Board in July 2020). Director Compensation Table | | | | | | | | | | | | | | | | | Name | | Paid in Cash | | | Number of Restricted Stock Units (Number of Shares) | | | Value | | | Total Compensation | | | | | | | Emily C. Chiu (1) | | $ | 68,833 | | | | 21,506 | | | $ | 120,003 | | | $ | 188,836 | | | | | | | Daniel A. DeMatteo | | $ | 90,000 | | | | 21,506 | | | $ | 120,003 | | | $ | 210,003 | | | | | | | David G. Golden | | $ | 100,000 | | | | 21,506 | | | $ | 120,003 | | | $ | 220,003 | | | | | | | John R. Ryan | | $ | 117,500 | | | | 21,506 | | | $ | 120,003 | | | $ | 237,503 | | | | | | | Jerry Sue Thornton | | $ | 85,000 | | | | 21,506 | | | $ | 120,003 | | | $ | 205,003 | | | | | | | David A. Wilson | | $ | 105,000 | | | | 21,506 | | | $ | 120,003 | | | $ | 225,003 | |
Emily C. Chiu | | | $90,000 | | | 48,781 | | | $117,075 | | | $207,075 | Daniel A. DeMatteo | | | $90,000 | | | 48,781 | | | $117,075 | | | $207,075 | David G. Golden | | | $100,000 | | | 48,781 | | | $117,075 | | | $217,075 | John R. Ryan | | | $117,500 | | | 48,781 | | | $117,075 | | | $234,575 | Jerry Sue Thornton | | | $85,000 | | | 48,781 | | | $117,075 | | | $202,075 | David A. Wilson | | | $105,000 | | | 48,781 | | | $117,075 | | | $222,075 | Lowell W. Robinson | | | $101,936 | | | 48,781 | | | $117,075 | | | $219,011 | Zachary D. Levenick | | | $47,500 | | | 48,781 | | | $117,075 | | | $164,575 |
(1)
| Ms.Each of the Directors hold the following unvested restricted units or shares; Chiu was appointed to the Board of Directors in June 2018, and received Committee assignments in September 2018. – 108,383 RSU; DeMatteo – 140,458 RSU; Golden – 48,781 RS; Ryan – 140,458 RSU; Thornton – 140,458 RSU; Wilson – 140,458 RSU; Robinson – 48,781 RS; Levenick – 48,781 RS. |
TABLE OF CONTENTS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policy and Procedures Governing Related Person Transactions Our Audit Committee of the Board of Directors of Directors utilizes procedures in evaluating the terms and provisions of proposed related party transactions or agreements in accordance with the fiduciary duties of directors under Delaware law. Our related party transaction procedures contemplate Audit Committee review and approval of all new agreements, transactions or courses of dealing with related parties, including any modifications, waivers or amendments to existing related party transactions. We conduct tests to ensure that the terms of related party transactions are at least as favorable to us as could have been obtained from unrelated parties at the time of the transaction. The Audit Committee considers, at a minimum, the nature of the relationship between us and the related party, the history of the transaction (in the case of modifications, waivers or amendments), the terms of the proposed transaction, our rationale for entering into the transaction and the terms of comparable transactions with unrelated third parties. In addition, management and internal audit annually analyze all existing related party agreements and transactions and review them with the Audit Committee.
Related Party Transactions We believe that the transactions and agreements discussed below between us and related third parties are at least as favorable to us as could have been obtained from unrelated parties at the time they were entered into.
MBS Lease.MBS Textbook Exchange, LLC (“MBS”), which was majority owned by Leonard Riggio (“Mr. Riggio”), a principal owner holding substantial shares of our common stock, was acquired in February 2017, and is now a wholly-owned subsidiary of the Company. MBS leases its main warehouse and distribution facility located in Columbia, Missouri from MBS Realty Partners, L.P., which is majority-owned by Mr. Riggio, with the remaining ownership by other sellers of MBS. The lease was originally entered into in 1991 and included a renewal option whichthat extended the lease term through September 1, 2023. Based upon a valuation performed as of the acquisition date, the lease was determined to be favorable from a lessee perspective with below market rent. Rental payments to MBS Realty Partners L.P. were approximately $1.4 million in both Fiscal 20192021 and Fiscal 2018.2020.
Independent Registered Public Accountants The Audit Committee has retained Ernst & Young LLP (“E&Y”) as the Company’s independent auditor for Fiscal 2020.2022. E&Y served as our independent auditors for Fiscal 20192021 and has served as the independent auditor for the Company since 2015. E&Y, as the independent registered public accountants, examine annual financial statements and provide tax-related services for the Company.
Audit Fees. For Fiscal 20192021 and Fiscal 2018,2020, the Company was billed $2,029,763$1,998,449 and $2,003,570,$2,033,094, respectively, by E&Y for audit services, including (a) the annual audit (including quarterly reviews) and other procedures required to be performed by the independent auditor to be able to form an opinion on the Company’s consolidated financial statements, (b) the audit of the effectiveness of the Company’s internal control over financial reporting, (c) consultation with management as to the accounting or disclosure treatment of transactions or events, (d) international statutory audits, and (e) services that only the independent auditor reasonably can provide, such as services associated with SEC registration statements, periodic reports and other documents filed with the SEC and review of draft responses to SEC comment letters.
Audit-Related Fees . For each of Fiscal 20192021 and Fiscal 2018,2020, the Company was billed $41,700 and $44,400, respectively,$33,300 by E&Y for sales audits.
Tax Fees. For Fiscal 20192021 and Fiscal 2018,2020, the Company was billed $20,700$23,247 and $6,250,$1,500, respectively, by E&Y for services related to consultation on tax matters.
The Audit Committee assists the Board of Directors with its oversight responsibilities regarding the Company’s financial reporting process. The Company’s management is responsible for the preparation, presentation and integrity of the Company’s financial statements and the reporting process, including the Company’s accounting policies, internal audit function, internal control over financial reporting and disclosure controls and procedures. Ernst & Young LLP, the Company’s independent registered public accounting firm, is responsible for performing an audit of the Company’s financial statements. With regard to the fiscal year ended April 27, 2019,May 1, 2021, the Audit Committee (i)(a) reviewed and discussed with management our audited consolidated financial statements as of April 27, 2019,May 1, 2021, and for the year then ended; (ii)(b) discussed with Ernst & Young LLP, the independent auditors, the matters required by Public Company Accounting Oversight Board of Directors (“PCAOB”) AU Section 380, Communications with Audit Committees; (iii)(c) received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the Audit Committee regarding independence; and (iv)(d) discussed with Ernst & Young LLP their independence. Based on the review and discussions described above, the Audit Committee recommended to our Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended April 27, 2019,May 1, 2021, for filing with the Securities and Exchange Commission. | | | Audit Committee | Audit Committee | | | | | | | Emily C. Chiu |
Daniel A. DeMatteo |
David G. Golden
Zachary D. Levenick
Lowell W. Robinson |
TABLE OF CONTENTS PROPOSAL TWO: APPROVAL OF THE COMPANY’S AMENDED AND RESTATED EQUITY INCENTIVE PLANThe Company’s Equity Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and restricted stock units and performance awards to our non-employee directors, employees, consultants and/or advisors of the Company. We believe the Equity Incentive Plan assists the Company and its affiliates in attracting and retaining selected individuals who are expected to contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company. The purpose of this Proposal Two is to amend and restate the Equity Incentive Plan to increase the number of shares of Common Stock available for issuance under the Plan by 3,000,000. The Board of Directors is seeking stockholder approval of the Plan so that the shares reserved for issuance under the Plan may be listed on the New York Stock Exchange. Stockholder approval is also being sought so that the Company may grant options that qualify as incentive stock options under the Code. Outstanding awards under the Equity Incentive Plan will continue in effect in accordance with their terms. If our stockholders do not approve this Proposal Two, the Equity Incentive Plan will continue in its current form. Key Features of the Equity Incentive Plan Fixed Reserve of Shares. The number of shares of common stock available for grant under the Equity Incentive Plan is fixed and will not automatically increase because of an “evergreen” feature; stockholder approval is required to issue any additional shares, allowing our stockholders to have direct input on our equity compensation program. No Repricing. The Equity Incentive Plan prohibits the repricing of awards without stockholder approval. Award Limitations. The Equity Incentive Plan places limitations on the number of shares of Common Stock underlying Awards that can be granted to participants and the amount of cash and equity compensation that may be paid to non-employee directors. Minimum Vesting Period. Awards generally cannot vest earlier than one year from the date of grant. No Discounted Stock Options or Stock Appreciation Rights. All stock options and stock appreciation rights must have an exercise price or base price equal to or greater than the fair market value of the underlying shares on the date of grant. No Liberal Definition of “Change in Control”. The change in control definition is not a “liberal” definition that would be triggered on mere stockholder approval of a transaction. Limitation on Term of Stock Options and Stock Appreciation Rights. The maximum term of a stock option or stock appreciation right is 10 years. No Dividends or Dividend Equivalents on Unvested or Unearned Awards. Current payment of dividends or dividend equivalent rights on unvested or unearned awards is prohibited. Double-Trigger Vesting. The vesting of awards that are assumed or substituted in connection with a change in control only accelerates as a result of the change in control if a participant experiences a qualifying termination of employment. Clawback. Awards granted under the Equity Incentive Plan are subject to our clawback and/or recoupment policies. Hedging and Pledging. Directors and executive officers are prohibited from hedging, and may not pledge our stock without the approval of the Audit Committee. Performance Awards. The Compensation Committee may grant performance-based awards that vest based on the achievement of performance goals established by the Compensation Committee. Independent Compensation Committee. Our Compensation Committee, which will administer the Equity Incentive Plan, consists entirely of independent directors. No Tax Gross-Ups. The Equity Incentive Plan does not provide for any tax gross-ups.
TABLE OF CONTENTS Increase in Number of Shares of Common Stock Available for Issuance under the Equity Incentive Plan and other Amendments The Company’s Board of Directors has approved, subject to stockholder approval, the Amended and Restated Equity Incentive Plan to increase by 3,000,000 the number of shares of common stock available for issuance under the Equity Incentive Plan, for an aggregate total of 13,409,345 shares. The Equity Incentive Plan currently provides that the total number of shares of common stock reserved and available for issuance pursuant to awards under the plan is 10,409,345, of which 1,204,673 may be used for awards of incentive stock options. As of the date of this proxy, there were a total of 4,228,576 shares subject to outstanding awards under the Equity Incentive Plan and 742,862 remaining shares reserved for issuance. The Company’s Board of Directors believes that it is essential to have a sufficient number of reserved shares available for issuance under the Equity Incentive Plan to compensate and incentivize the Company’s employees, directors, and officers, and the Board of Directors and Compensation Committee believe that the proposed increase will provide a sufficient number of available shares of common stock for future granting needs to help the Company achieve the purposes of the Equity Incentive Plan. In any fiscal year (subject to certain adjustments described herein): No participant may be granted awards with respect to more than 1.5 million shares in the aggregate. Canceled awards, and awards settled in cash, will continue to be counted towards this limitation. The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all awards granted to any non-employee director during any single fiscal year, together with any amounts paid to such Directors for annual and committee retainer fees, during any 12-month period shall not exceed $700,000. Background for Requested Share Authorization The Board of Directors is asking stockholders to approve the Amended and Restated Equity Incentive Plan to authorize an additional 3 million shares, thereby increasing the total number of shares available for issuance under the Equity Incentive Plan to 13,409,345, of which 3,742,862 would be available for granting new awards, allowing for equity-based grants to employees for approximately the next two (2) years through Fiscal 2023. In determining the proposed number of additional shares to request, the Compensation Committee considered a number of factors, which are discussed in further detail below, including: Remaining shares available under the Equity Incentive Plan after the September 2020 equity award grant, Projected equity granting practices, and Current and total potential dilution of outstanding awards, remaining available shares, and newly requested shares. The increase to the number of shares available to grant under the Equity Incentive Plan will enable us to better deliver market competitive compensation packages to our employees and continue to attract and retain top talent that is key to the successful execution of our business strategy. If we do not increase the number of shares remaining under our Equity Incentive Plan, we will not have sufficient shares for future employee grants, thereby significantly impairing our ability to attract and retain top talent. Reasons for the Amended and Restated Equity Incentive Plan The Amended and Restated Equity Incentive Plan is intended to ensure that a sufficient reserve of shares of our Common Stock remains available to allow the Company to continue to use equity incentives to attract and retain the services of qualified employees, directors, and officers of the Company and its subsidiaries who are essential to the Company’s long-term growth and success. The Company relies on equity incentives in the form of grants of performance awards, restricted stock, stock appreciation rights, stock options, bonus awards, deferred stock, or any combination of the foregoing, in order to attract and retain employees, directors, and officers of the Company and its subsidiaries, and the Company believes that such equity incentives are necessary for the Company to remain competitive in the marketplace for talented employees, directors, and officers. Currently only 742,862 shares reserved for issuance under the Equity Incentive Plan remain. An aggregate of 2,891,284 shares were granted under the Equity Incentive Plan in Fiscal 2021. Thus, for grants expected to be made TABLE OF CONTENTS by the Company in the future, additional authorized shares are necessary under the Equity Incentive Plan for the Company to meet the Compensation Committee’s compensation objectives in future years. As a result, the Company is seeking stockholder approval of the proposal to adopt the Amended and Restated Equity Incentive Plan to increase the number of shares authorized for issuance thereunder. If the foregoing Amended and Restated Equity Incentive Plan is approved by the Company’s stockholders, it will be effective upon September 23, 2021, the date of such approval and will terminate ten years from such date unless sooner terminated by the Board of Directors. If the Amended and Restated Equity Incentive Plan is not approved by our stockholders, then the Equity Incentive Plan will continue in existence in its current state, and will remain in effect until terminated by the Company or until all shares available for awards under the plan have been granted. The following summarizes the terms of the Amended and Restated Equity Incentive Award Plan. The following summary is qualified in its entirety by reference to the full text of the Amended and Restated Equity Incentive Plan, as proposed, which is attached hereto as Appendix A. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE COMPANY’S AMENDED AND RESTATED EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED TO BE ISSUED UNDER THE PLAN. Unless you instruct otherwise on your proxy card or by telephone or Internet voting instructions, your proxy will be voted in accordance with the Board of Directors’ recommendation. TABLE OF CONTENTS DESCRIPTION OF THE EQUITY INCENTIVE PLAN Purpose of the Equity Incentive Plan The purpose of the Equity Incentive Plan is to assist the Company and its affiliates in attracting and retaining selected individuals to serve as non-employee directors, employees, consultants and/or advisors of the Company who are expected to contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company through the additional incentives inherent in the awards granted under the Equity Incentive Plan. The Equity Incentive Plan originally became effective on the date of the approval of the Spin-Off on July 13, 2015. If approved by the stockholders, the effective date of the Amended and Restated Equity Incentive Plan will be September 23, 2021, the date of such approval, and will terminate ten years from such date, unless sooner terminated by the Board of Directors. The maximum number of shares of the Company’s common stock available for grant under the Equity Incentive Plan when initially adopted was 2,409,345 shares of the Company’s common stock. The plan was amended to increase the shares by 4,000,000 to 6,409,345 in 2016, and further amended to increase the number of shares by 4,000,000 to 10,409,345. Of the 10,409,345 currently reserved shares, only 742,862 remain to be granted. If the Amended and Restated Equity Incentive Plan is approved, the maximum number of shares that will be available for grant will be 3,742,862. Any common stock that is the subject of an award under the Equity Incentive Plan shall be counted against the limit as one share for every share issued. In general, common stock is counted against the limit only to the extent that it is actually issued. Thus, stock subject to any award under the Equity Incentive Plan which terminates by expiration, forfeiture, cancellation or otherwise is settled in cash in lieu of stock, or exchanged for awards not involving stock, shall again be available for grant. Awards that are required to be settled in cash will not reduce the number of shares of the Company’s common stock available for grant. Substitute awards shall not reduce the shares authorized for issuance under the Equity Incentive Plan or authorized for grant to a participant in any calendar year. If shares issued upon vesting or settlement of an award, or shares owned by a participant, are surrendered or tendered to the Company in payment of any taxes required to be withheld in respect of such award, such surrendered or tendered shares shall again become available to be delivered pursuant to awards under the Equity Incentive Plan provided, however, that shares surrendered or tendered to the Company in payment of the exercise price of an option or any taxes required to be withheld in respect of an option or stock appreciation right shall not become available again to be delivered pursuant to Awards granted under the Plan. Additionally, the Equity Incentive Plan imposes certain per-participant award limits. In any fiscal year of the Company (subject to certain adjustments resulting from corporate transactions as discussed in the following paragraph), no participant may be granted awards with respect to more than 1.5 million shares. Canceled awards, and awards settled in cash, will continue to be counted towards this limitation. The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all awards granted to any non-employee director during any single fiscal year, together with any amounts paid to such Directors for annual and committee retainer fees, during any 12-month period shall not exceed $700,000. The number, class and kind of securities that may be issued, the number, class and kind of securities subject to outstanding awards, the option price or base price applicable to outstanding awards, the per-participant award limits, and other value determinations are subject to adjustment by the Compensation Committee to reflect stock dividends, stock splits, reverse stock splits and other corporate events or transactions. The Compensation Committee may also make adjustments to reflect unusual or nonrecurring events such as mergers, recapitalizations, consolidations, spin-offs and other corporate reorganizations. However, the Compensation Committee cannot make any adjustments that would cause an award not otherwise “deferred compensation” within the meaning of Section 409A of the Code to become or create “deferred compensation” under Section 409A of the Code. Stock available under the Equity Incentive Plan may be used by the Company as a form of payment of performance-based compensation under other Company compensation plans, whether or not existing on the date TABLE OF CONTENTS hereof. To the extent any stock is used by the Company under its other compensation plans, this stock will reduce the then number of shares available under the Equity Incentive Plan for future awards, but will not be subject to the fiscal year stock or dollar limitations referred to above. The Compensation Committee is responsible for administering the Equity Incentive Plan and has the discretionary power to interpret the terms and intent of the Equity Incentive Plan and any Equity Incentive Plan- related documentation. The Board may remove from, add members to, or fill vacancies on, the Compensation Committee. The Compensation Committee is also responsible for determining the eligibility for awards, the types, terms and conditions of awards (including when and under what circumstances awards will vest, become exercisable or be paid or settled, subject to limitations regarding the minimum period for vesting and the attainment of certain performance criteria), whether and how an award may be settled, deferred or canceled, subject to certain limitations applicable to awards subject to performance-based vesting, whether an award will have the right to accumulate dividends, whether to accelerate the vesting or exercisability and whether to amend an outstanding award or grant a replacement award. The Compensation Committee may establish rules and regulations pertaining to the Equity Incentive Plan and may make any determination and take any other action it deems necessary or desirable for administration of the Equity Incentive Plan. Determinations of the Compensation Committee made under the Equity Incentive Plan are final and binding. The Compensation Committee may delegate administrative duties and powers to a committee of one or more non-employee directors and, to the extent permitted by law, to one or more officers or a committee of officers the right to grant awards to employees who are not directors or officers of the Company and to cancel or suspend awards to employees who are not directors or officers of the Company, subject to the requirements of Rule 16b-3 of the Exchange Act and the rules of the NYSE. The full Board may at any time grant awards to non-employee directors or administer the Equity Incentive Plan with respect to those awards. Individuals eligible to receive awards under the Equity Incentive Plan are employees and non-employee directors (including prospective employees and directors) of the Company or of any of its affiliates, and consultants and advisors (including prospective consultants and advisors) who provide services to the Company and any of its affiliates, as selected by the Compensation Committee. Approximately 150 people are currently eligible to participate in the Equity Incentive Plan. The award agreement for each award shall provide that no portion of any award may vest earlier than 12 months after the applicable grant date, except for awards subject to vesting in whole or part based on performance criteria, awards granted to non-employee directors, or, solely in the case of awards granted prior to the first annual meeting of the stockholders after the Spin-Off, such period as determined by the Compensation Committee in its sole discretion, subject to any accelerated vesting and/or exercisability, as applicable, in such award agreement, the Equity Incentive Plan or any other applicable arrangement to apply upon the occurrence of a specified event. Notwithstanding the foregoing minimum vesting and nonforfeitability requirements, the Committee may authorize the grant of Awards that are subject to periods of vesting and forfeiture less than 12 months, provided the amount of such Awards, when taken together with any other Awards that are similarly not subject to the minimum vesting or forfeiture time limits, in the aggregate do not exceed five percent of the maximum number of Shares that may be issued or delivered under the Equity Incentive Plan. The Compensation Committee may grant options under the Equity Incentive Plan either alone or in addition to other awards granted under the Equity Incentive Plan. The exercise price for options cannot be less than the fair market value of the Company’s common stock on the date of grant, which shall be the closing price of the stock as reported on the NYSE on the date of grant. The Compensation Committee may provide that an option will be automatically exercised, without further action by the holder, on the last day of such option’s exercise period if, on such day, the fair market value of the Company’s common stock to be acquired exceeds the aggregate exercise price. The Equity Incentive Plan expressly prohibits repricing of options/canceling an option with an exercise price that exceeds the fair market value of the stock underlying such option in exchange for another award or cash (other than in connection with a change of control). The latest expiration date of an option cannot be later than the tenth TABLE OF CONTENTS anniversary of the date of grant. The exercise price may be paid with cash or its equivalent, with previously acquired stock, or by certain other means with the consent of the Compensation Committee. With respect to options intended to qualify as “incentive stock options” as defined in Code Section 422, the maximum number of shares with respect to which such options may be granted under the Equity Incentive Plan is 1,204,673 shares. Stock Appreciation Rights The Compensation Committee may grant stock appreciation rights (“SARs”) under the Equity Incentive Plan either alone or in addition to other awards granted under the Equity Incentive Plan. Upon the exercise of an SAR, the holder will have the right to receive the excess of (a) the fair market value of one share on the date of exercise over (b) the base price of the SAR on the date of grant, which will not be less than the fair market value of one share of the Company’s common stock on the date of grant. The Compensation Committee may provide that an SAR will be automatically exercised, without further action by the holder, on the last day of such SAR’s exercise period, if on such day, the fair market value of the stock to which such SAR relates exceeds the aggregate base price. The latest expiration date of an SAR cannot be later than the tenth (10th) anniversary of the date of grant. Upon the exercise of an SAR, the Compensation Committee will determine, in its sole discretion, whether payment will be made in cash, stock or other property, or any combination thereof. The Equity Incentive Plan expressly prohibits repricing of SARs/canceling an SAR with a base price that exceeds the fair market value of the stock underlying such SAR in exchange for another award or cash (other than in connection with a change of control). The Compensation Committee may award restricted stock either alone or in addition to other awards under the Equity Incentive Plan. Restricted stock awards consist of stock that is granted to a participant subject to restrictions that may result in forfeiture if specified conditions are not satisfied. A holder of restricted stock is generally treated as a stockholder of the Company (subject to certain restrictions) and has the right to vote such stock and the right to receive distributions made with respect to such stock; however, any dividends otherwise payable with respect to a restricted stock award will not be paid currently but will be accumulated until the applicable restricted stock award has vested. In the case of restricted stock awards that are subject to vesting based on the achievement of performance goals, a participant will not be entitled to receive payment for any dividends with respect to such restricted stock awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied. Other awards of stock and other awards that are valued in whole or in part by reference to, or are otherwise based on, stock or other property, may be granted to participants, either alone or in addition to other awards granted under the Equity Incentive Plan. Unlike restricted stock awards, other stock unit awards result in the transfer of stock to the participant only after specified conditions and the holder of such an award is treated as a stockholder with respect to the award when the stock is delivered in the future. Other stock unit awards may be paid in cash, stock, other property, or any combination thereof, in the sole discretion of the Compensation Committee at the time of payment. Dividends otherwise payable with respect to any other stock unit award will not be paid currently but will be accumulated until the applicable other stock unit award has vested. In the case of other stock unit awards that are subject to vesting based on the achievement of performance goals, a participant will not be entitled to receive payment for any dividends with respect to such other stock unit awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied. Performance awards may be granted under the Equity Incentive Plan, either alone or in addition to other awards granted under the Equity Incentive Plan. Performance awards will be earned only if the participant meets certain performance goals established by the Compensation Committee over a designated performance period. Performance awards may be paid in cash, stock, other property, or any combination thereof, in the sole discretion of the Compensation Committee at the time of payment. The performance goals to be achieved for each performance period will be determined by the Compensation Committee and may be based upon the criteria described below the heading “Performance Criteria.” Performance periods will be established by the Compensation Committee for each performance award and are not less than 12 months. No participant will be entitled to receive payment for any dividends with respect to any performance awards unless, until and except to the extent that the performance goals applicable to such awards are achieved or are otherwise deemed to be satisfied. TABLE OF CONTENTS Covered Awards will be subject to the achievement of one or more performance goals established by the Compensation Committee, which will be based on the attainment of specified levels of one or any combination of the following: sales (including same store or comparable sales); net sales; return on sales; cash flow (including operating cash flow and free cash flow); cash flow per share (before or after dividends); cash flow return on investment; cash flow return on capital; pretax income before allocation of corporate overhead and bonus; earnings per share; net income; division, group or corporate financial goals or ratios including those measuring liquidity, activity, profitability or leverage; return on stockholders’ equity; total stockholder return; return on assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of the shares or any other publicly-traded securities of the Company; market share; customer satisfaction; customer growth; user time spent online; unique users; registered users; user frequency; user retention; web page views; employee satisfaction; employee turnover; productivity or productivity ratios; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company’s products (including with group purchasing organizations, distributors and other vendors); supply chain achievements (including establishing relationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products); co-development, co-marketing, profit sharing, joint venture or other similar arrangements; gross profits; gross or net profit margin; operating margin; gross profit growth; year-end cash; cash margin; revenue; net revenue; product revenue or system-wide revenue (including growth of such revenue measures); operating earnings; operating income; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic value-added models; comparisons with various stock market indices; regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company’s third-party manufacturer) and validation of manufacturing processes (whether the Company’s or the Company’s third-party manufacturer’s)); improvement in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; general and administrative expense savings; inventory control; operating efficiencies; average inventory; inventory turnover; inventory shrinkage; cost of capital or assets under management; financing and other capital raising transactions (including sales of the Company’s equity or debt securities; debt level year-end cash position; book value; factoring transactions; competitive market metrics; timely completion of new product roll- outs; timely launch of new facilities (such as new store openings, gross or net); sales or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or globally; or through partnering transactions); royalty income; implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; factoring transactions; and recruiting and maintaining personnel; debt reduction; reductions in costs, and/or return on invested capital of the Company or any affiliate, division or business unit of the Company for or within which the participant is primarily employed. Any performance criteria that are financial metrics may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”), or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP. Additionally, the Compensation Committee may also exclude the impact of an event or occurrence that the Compensation Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges or infrequently occurring items; (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; (c) a change in accounting standards required by generally accepted accounting principles; (d) asset write-downs; (e) litigation or claim judgments or settlements; (f) acquisitions or divestitures; (g) foreign exchange gains and losses; (h) a change in the fiscal year of the Company; (i) tax law changes; (j) costs associated with refinancing or repurchase of bank loans or debt securities, unbudgeted capital expenditures; or (k) a business interruption event. To prevent the dilution or enlargement of benefits or potential benefits intended to be made available under the Equity Incentive Plan, the aggregate number, class and kind of securities that may be delivered under the Equity Incentive Plan, including certain limitations under the Equity Incentive Plan, the number, class and kind and option or base price of securities subject to outstanding awards, the per-participant award limits, and other value TABLE OF CONTENTS determinations are subject to adjustment by the Compensation Committee to reflect stock dividends, stock splits, reverse stock splits and other corporate events or transactions, including a Change of Control (defined below). The Compensation Committee may also make adjustments to reflect unusual or nonrecurring events such as mergers, recapitalizations, consolidations, spin-offs and other corporate reorganizations. Termination of Employment The Compensation Committee will determine how each award will be treated following termination of the holder’s employment with, or service for, the Company, including the extent to which unvested portions of the award will be forfeited and the extent to which options, SARs or other awards requiring exercise will remain exercisable. Treatment of Awards upon a Change of Control One or more awards may be subject to the terms and conditions set forth in a written or electronic agreement between the Company and a participant providing for different terms or provisions with respect to such awards upon a “Change of Control” (as defined in the Equity Incentive Plan) of the Company. Unless otherwise provided in the applicable award agreement, in the event of a Change of Control, if the successor company assumes or substitutes for an outstanding award, then such award will be continued in accordance with its applicable terms and vesting will not be accelerated. If an award is not assumed or substituted for, generally it will vest and become free of all restrictions and limitations, and if the award is a performance award then the Compensation Committee will determine the portion and level of the award considered to be earned and payable. For purposes of the Equity Incentive Plan, “Change of Control” will generally have the meaning set forth in the applicable award agreement (subject to the limitations described below). If there is no definition set forth in the applicable award agreement, “Change of Control” will mean: i.
| during any period of 24 consecutive months, a change in the composition of a majority of the Board, as constituted on the first day of such period, that was not supported by a majority of the incumbent directors; |
ii.
| the consummation of certain mergers or consolidations of the Company with any other corporation, or the sale of all or substantially all the assets of the Company, following which the Company’s then current stockholders cease to own more than 50% of the combined voting power of the surviving entity; or |
iii.
| the acquisition by a third party (other than Mr. Leonard Riggio and his affiliates) of 40% or more of the combined voting power of the then outstanding voting securities of the Company. An award agreement may provide for a different definition of Change of Control than is provided for in the Equity Incentive Plan, any definition of Change of Control set forth in any award agreement will provide that a Change of Control would not occur until consummation or effectiveness of a Change of Control of the Company, rather than upon the announcement, commencement, stockholder approval or other potential occurrence of any event or transaction that, if completed, would result in a change of control of the Company. |
The Board may at any time alter, amend, suspend or terminate the Equity Incentive Plan, except that no amendment of the Equity Incentive Plan will be made without stockholder approval if stockholder approval is required by applicable law or regulation. Stockholder approval is also generally required for any amendment that would: (a) increase the number of shares that may be the subject of awards; (b) expand the types of awards available; (c) materially expand the class of persons eligible to participate; (d) permit options or SARs to be issued or repriced at option or base prices less than 100% of fair market value; (e) increase the maximum permissible term for options or SARs; (f) modify the limitations on the number of shares or maximum dollar amounts that may be awarded to participants; or (g) permit awards to be transferred to third parties in exchange for value. No amendment to an award previously granted may materially impair the rights of any participant to whom such award was granted without such participant’s consent, provided, however, that the Board may amend, modify or terminate the Equity Incentive Plan without the consent of such participant if it deems it necessary to comply with applicable law, tax rules, stock exchange rules or accounting rules, provided that all participants similarly situated are similarly affected. Except to the participant’s spouse, domestic partner and/or children (and/or trusts and/or partnerships established for the benefit of the participant’s spouse, domestic partner or children or in which the participant is a beneficiary TABLE OF CONTENTS or partner) as approved by the Compensation Committee, awards are not transferable other than by will or the laws of descent and distribution. No award is transferable to a third party in exchange for value unless the transfer is specifically approved by the Company’s stockholders. The Compensation Committee may provide that an award shall be cancelled if the participant, without the consent of the Company, while employed by or providing services to the Company or any affiliate of the Company or after termination of such employment or service, (a) violates a non-competition, non-solicitation or non-disclosure covenant or agreement; (b) otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any of its affiliates, including fraud, or conduct contributing to any financial restatements or irregularities, as determined by the Compensation Committee in its sole discretion; or (c) otherwise violates any policy adopted by the Company or any of its affiliates relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to any participant by the Company or any of its affiliates as such policy is in effect on the date of grant of the applicable award or, to the extent necessary to address the requirements of applicable law (including Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as codified in Section 10D of the Exchange Act, Section 304 of the Sarbanes- Oxley Act of 2002 or any other applicable law), as may be amended from time to time. Additionally, the Compensation Committee may also provide that (a) a participant will forfeit any gain realized on the vesting or exercise of such award if the participant engages in such activities referred to in the preceding sentence; or (b) a participant must repay the gain to the Company realized under a previously paid performance award if a financial restatement reduces the amount that would have been earned under such performance award. Federal Income Tax Consequences to Participants The Company believes generally that awards under the Equity Incentive Plan will have the following consequences under current U.S. Federal income tax laws: Incentive Stock Options. A participant will not recognize any taxable income on grant or exercise of an incentive stock option. The exercise of an incentive stock option may, however, result in the imposition of the alternative minimum tax. The Company is not entitled to a deduction on grant or exercise of an incentive stock option unless the participant disposes of the shares within 12 months after exercise. Other Awards. A participant will not recognize any taxable income on grant of non-statutory stock options, stock appreciation rights, restricted stock units or performance awards. On exercise of non-statutory stock options or stock appreciation rights, on expiration of a restriction period for restricted shares or restricted share units, or on expiration of a performance period for performance awards, the participant will recognize compensation income and the Company may be entitled to a deduction equal to the value of the Common Stock or cash the participant receives (minus, in the case of a non-statutory stock option, the option exercise price paid by the participant). Federal Income Tax Consequences to the Company At the time and to the extent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the Code. TABLE OF CONTENTS Equity Compensation Plan Information The following table sets forth information as of May 1, 2021 regarding the Company’s equity compensation plan. The only plan pursuant to which the Company may currently make additional equity grants is the Equity Incentive Plan. Equity compensation plans approved by stockholders | | | 4,132,417 | | | $2.20 | | | 702,461 | Equity compensation plans not approved by stockholders | | | N/A | | | N/A | | | N/A | Total | | | 4,132,417 | | | $2.20 | | | 702,461 |
(1)
| Represents shares of Common Stock to be issued upon vesting of outstanding restricted stock units, which shares are issued for no additional consideration. |
TABLE OF CONTENTS PROPOSAL THREE: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables the Company’s stockholders to vote to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with SEC rules. The Company’s executive compensation program is designed to advance the philosophy of the Compensation Committee of the Board of Directors of paying for performance, paying competitively and aligning pay to business objectives and the Company’s long-term strategy. To align executive pay with both the Company’s financial performance and long-term strategy, a significant portion of the NEOs’ compensation is based on the performance of the Company, and the compensation program is designed to reward both annual and long-term performance. Annual performance is rewarded through base salary and annual incentive compensation. Annual performance is measured principally by the Company’s EBITDA (in each case, as defined in this Proxy Statement) and individual performance goals. Long-term performance is rewarded through equity-based awards, the value of which is based upon the performance of the Company’s Common Stock price. The Compensation Committee and the Board of Directors believe that the Company’s Fiscal 20192021 executive compensation program aligned well with the Compensation Committee’s philosophy and sufficiently linked to the Company’s performance. For additional information on the Company’s executive compensation program and how it reflects the Compensation Committee’s philosophy and is linked to the Company’s performance, see the “Compensation Discussion and Analysis” herein. We are asking for stockholder approval, on an advisory basis, of the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules, which disclosures include the disclosures under the Compensation Discussion and Analysis above, the compensation tables and the narrative discussion following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and practices described in this Proxy Statement. This vote is advisory and therefore not binding on the Company, the Board of Directors or the Compensation Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOLLOWING RESOLUTION: RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed in this Proxy Statement pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis above, the compensation tables and narrative discussion be, and hereby is, approved. Unless you instruct otherwise on your proxy card or by telephone or Internet voting instructions, your proxy will be voted in accordance with the Board of Directors’ recommendation. PROPOSAL THREE:FOUR: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS The Audit Committee has appointed the firm of Ernst & Young LLP, which firm was engaged as independent registered public accountants for Fiscal 2019,2021, to audit the financial statements of the Company for the Company’s 20202022 fiscal year ending May 2, 2020.April 30, 2022. A proposal to ratify this appointment is being presented to the stockholders at the Annual Meeting. A representative of Ernst & Young LLP will be present at the Annual Meeting and will have the opportunity to make a statement and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS CONSIDERS ERNST & YOUNG LLP TO BE WELL QUALIFIED AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTEFOR RATIFICATION.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCETABLE OF CONTENTS Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who own more than10-percent of the Common Stock, to file initial statements of beneficial ownership of Common Stock (Form 3) and statements of changes in beneficial ownership of Common Stock (Forms 4 and 5) with the SEC. Executive officers, directors and greater than10-percent stockholders are required to furnish the Company with copies of all such forms they file.
Based solely on a review of these reports and written representations from the executive officers and directors, the Company believes that there was compliance with all such filing requirements for the fiscal year ended April 27, 2019.
Other Matters Brought Before the Annual Meeting As of the date of this Proxy Statement, the Company does not intend to present any business for action at the Annual Meeting other than as described in this Proxy Statement, and the Company has not been notified of any stockholder proposals intended to be raised at the Annual Meeting.
Proxies are being solicited through the mail, in person, by telephone, email, the Internet or other electronic means. The Company will pay all solicitation expenses in connection with this Proxy Statement and related proxy soliciting material of the Board of Directors, including the expense of preparing, printing, assembling and mailing this Proxy Statement and any other material used in the Board of Directors’ solicitation of proxies. In addition, the Company has retained Innisfree M&A Incorporated to assist with the solicitation of proxies for a fee not to exceed $17,500, plus reimbursement for out-of-pocket expenses. The Company will request banks, brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held of record by such persons and obtain their voting instructions. The Company will reimburse such persons for their expenses in connection with the foregoing activities.
Financial and Other Information The Company’s Annual Report for Fiscal 2019,2021, including financial statements, is being sent to stockholders together with this Proxy Statement.
Under the SEC proxy rules, proposals of stockholders intended to be included in the Company’s proxy materials for the annual meeting of stockholders to be held in 20202022 must be received by the Company’s Corporate Secretary, at Barnes & Noble Education, Inc., 120 Mountain View Blvd., Basking Ridge, New Jersey 07920, no later than April 17, 2020.15, 2022. In addition, the Company’s bylaws require that any eligible stockholder wishing to make a nomination for director, or wishing to introduce any business, at our 20202022 annual meeting of stockholders must give the Company advance notice in accordance with the Company’s bylaws. To be timely, the Company must receive such notice for its 20202022 annual meeting of stockholders at its offices mentioned above no earlier than May 28, 202026, 2022 and no later than June 27, 2020.25, 2022. Notices by eligible stockholders wishing to make a nomination for director, or wishing to introduce any business, at our 20202022 annual meeting of stockholders must comply with the Company’s bylaws. These requirements are separate from and in addition to the SEC requirements that a stockholder must meet in order to have a stockholder proposal included in our Proxy Statement. The delivery of this Proxy Statement after the date of this Proxy Statement shall, under no circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Proxy Statement. Other than the Company and the Company’s proxy solicitor, no person has been authorized by the Board of Directors to give you any information or to make any representations in connection with the solicitation of proxies by the Board of Directors, and if any such information is given or any such representations are made, they must not be relied upon as having been authorized by the Board of Directors.
TABLE OF CONTENTS Your vote is very important no matter how many shares you own.own. You are urged to read this Proxy Statement carefully and, whether or not you plan to attend the Annual Meeting, to promptly submit a proxy: (a) by telephone or the Internet following the instructions on the enclosed proxy cardcard; or (b) by signing, dating and returning the enclosed proxy card in the postage-paid return envelope provided. A prompt response will be greatly appreciated. If you have any questions or require any assistance with voting your shares, please contact the Company’s proxy solicitor: Innisfree M&A Incorporated
501 Madison Avenue, 20 th Floor
Stockholders may call toll-free: (888)750-5834(877) 750-8269
Banks and Brokers may call collect: (212) 750-5833* * *
| | | By Order of the Board of Directors
| | | | | | | | | | | | Michael P. Huseby, Chairman of the Board of Directors and Chief Executive Officer | | | | August 15, 201913, 2021 |
TABLE OF CONTENTS
000004 ENDORSEMENT_LINE SACKPACK MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X
BARNES & NOBLE EDUCATION, INC. AMENDED AND RESTATED
EQUITY INCENTIVE PLAN [as shown in this example. Please do not write outside the designated areas.
MMMMMMMMMMMM MMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Your vote matters – here’s howproposed to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 11:59 p.m. EDT on September 24, 2019. Online Go to www.envisionreports.com/BNED or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territoriesamended and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/BNED 1234 5678 9012 345 2019 Annual Meeting Proxy Card 1234 5678 9012 345 qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain 01 - Emily C. Chiu 02 - Daniel A. DeMatteo 03 - David G. Golden 04 - Michael P. Huseby 05 - John R. Ryan 06 - Jerry Sue Thornton 07 - David A. Wilson For Against Abstain For Against Abstain 2. Approval, on an advisory basis, of the compensation of the 3. The ratification of the appointment of Ernst & Young LLP as the Company’s named executive officers as disclosed in the independent registered public accountants for the Company’s Proxy Statement. fiscal year ending May 2, 2020. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMM 72BM 427164 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 033XEF
2019 Annual Meeting Admission Ticket 2019 Annual Meeting of Barnes & Noble Education Stockholders September 25, 2019, 9:00 am EDT Embassy Suites by Hilton 250 Connell Drive, Berkeley Heights, NJ 07922 Upon arrival, please present this admission ticket and photo identificationrestated at the registration desk. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/BNED Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/BNED qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Barnes & Noble Education, Inc. + Notice of 20192021 Annual Meeting of Stockholders Proxy Solicitedto increase authorized shares by Board3,000,000]
BARNES & NOBLE EDUCATION, INC., a corporation existing under the laws of Directorsthe State of Delaware, together with any successor thereto (the “Company”), hereby establishes and adopts the following Equity Incentive Plan (the “Plan”). Certain capitalized terms used in the Plan are defined in Article 2. RECITALS WHEREAS, the Company desires to encourage high levels of performance by those individuals who are key to the success of the Company, to attract new individuals who are highly motivated and who are expected to contribute to the success of the Company and to encourage such individuals to remain as non-employee directors, employees, consultants and/or advisors of the Company and its Affiliates by increasing their proprietary interest in the Company’s growth and success; and WHEREAS, to attain these ends, the Company has formulated the Plan embodied herein to authorize the granting of Awards to Participants whose judgment, initiative and efforts are or have been or are expected to be responsible for Annual Meeting — September 25, 2019 Mr. Michael P. Huseby, Mr. Thomas D. Donohue,the success of the Company. NOW, THEREFORE, the Company hereby constitutes, establishes and Mr. Michael C. Miller,adopts the following Plan and agrees to the following provisions: ARTICLE 1
PURPOSE OF THE PLAN 1.1. Purpose. The purpose of the Plan is to assist the Company and its Affiliates in attracting and retaining selected individuals to serve as non-employee directors, employees, consultants and/or advisors of the Company and its Affiliates who are expected to contribute to the Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company through the additional incentives inherent in the Awards hereunder. ARTICLE 2
DEFINITIONS 2.1. “Affiliate” shall mean (i) any person or entity that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company (including any Subsidiary) or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee. 2.2. “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Other Stock Unit Award or any of them, each withother right, interest or option relating to Shares or other property (including cash) granted pursuant to the power of substitution, are hereby authorized to represent and vote the sharesprovisions of the undersigned, withPlan. 2.3. “Award Agreement” shall mean any written or electronic agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder. 2.4. “Board” shall mean the board of directors of the Company. 2.5. “Change of Control” shall (a) have the meaning set forth in an Award Agreement; provided, however, that any definition of Change of Control set forth in an Award Agreement shall provide that a Change of Control shall not occur until consummation or effectiveness of a change of control of the Company, rather than upon the announcement, commencement, stockholder approval or other potential occurrence of any event or transaction that, if completed, would result in a change of control of the Company, or (b) if there is no definition set forth in an Award Agreement, mean the occurrence of any of the following events: (i) during any period of 24 consecutive months, individuals who were Directors of the Company on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board; TABLE OF CONTENTS provided, however, that any individual becoming a Director of the Company subsequent to the first day of such period whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director; (ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company or (y) any of its Subsidiaries, but in the case of this clause (y) only if Company Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the powers whichassets of the undersigned would possessCompany to an entity that is not an Affiliate (a “Sale”), in each case, if personally present, atsuch Reorganization or Sale requires the Annual Meetingapproval of Stockholdersthe Company’s stockholders under the law of Barnes & Noble Education to be held on September 25, 2019the Company’s jurisdiction of organization (whether such approval is required for such Reorganization or at any postponementSale or adjournment thereof. Shares represented by this proxy will be voted byfor the stockholder. If noissuance of securities of the Company in such directions are indicated,Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the Proxies will have authorityindividuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote FORfor the election of the Board (“Company Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including a corporation that, as a result of such transaction, owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Company Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than the Company), (2) no “person” (as such term is used in Section 13(d) of the Exchange Act) (each, a “Person”) (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation or (y) the Riggio Stockholders) beneficially owns, directly or indirectly, 40% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale; or (iii) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate, (C) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the voting power of the Company Voting Securities or (D) the Riggio Stockholders) becomes the beneficial owner, directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company Voting Securities; provided, however, that for purposes of this subparagraph (iii), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (y) any acquisition by an underwriter temporarily holding such Company Voting Securities pursuant to an offering of such securities or any acquisition by a pledgee of Company Voting Securities holding such securities as collateral or temporarily holding such securities upon foreclosure of the underlying obligation or (z) any acquisition pursuant to a Reorganization or Sale that does not constitute a Change of Control for purposes of subparagraph (ii) above. The determination as to the occurrence of a Change of Control shall be based on objective facts and, FOR items 2to the extent applicable, in accordance with the requirements of Code Section 409A and 3. In their discretion, the Proxies are authorizedregulations promulgated thereunder. 2.6. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to vote upontime, and any successor thereto. 2.7. “Committee” shall mean the Compensation Committee of the Board (or such other business as may properly come beforecommittee designated by the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. +
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2019 Annual Meeting Proxy Card qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. 1. Election of Directors: + For Against Abstain For Against Abstain For Against Abstain 01 - Emily C. Chiu 02 - Daniel A. DeMatteo 03 - David G. Golden 04 - Michael P. Huseby 05 - John R. Ryan 06 - Jerry Sue Thornton 07 - David A. Wilson For Against Abstain For Against Abstain 2. Approval, on an advisory basis,Compensation Committee of the compensationBoard).
2.8. “Company” has the meaning set forth in introductory paragraph of the 3. The ratificationPlan. TABLE OF CONTENTS 2.9. “Director” shall mean a non-employee member (including any prospective non-employee member) of the appointmentBoard or a non-employee member (including any prospective non-employee member) of Ernstthe board of directors of a Subsidiary. 2.10. “Director Award Limitations” shall have the meaning set forth in Section 4.3. 2.11. “Distribution” shall mean the distribution by Barnes & Young LLPNoble, Inc., a Delaware corporation, to its stockholders of all Shares. 2.12. “ “Employee” shall mean any employee (including any prospective employee) of the Company or any Affiliate. Solely for purposes of the Plan, an Employee shall also mean any consultant or advisor (or prospective consultant or advisor) who provides services to the Company or any Affiliate, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s named executive officers as disclosedsecurities in the independent registered public accountantsa capital-raising transaction and (ii) does not directly or indirectly promote or maintain a market for the Company’s Proxy Statement.securities. 2.13. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 2.14. “Fair Market Value” shall mean, with respect to any property other than Shares, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. The Fair Market Value of Shares as of any date shall be the per Share closing price of the Shares as reported on the New York Stock Exchange on that date (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported) or, if the Company is not then listed on the New York Stock Exchange, the per Share closing price of the Shares as reported on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)) on which the Shares are traded. If the Company is not listed on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)), the Fair Market Value of Shares shall be determined by the Committee in its sole discretion using appropriate criteria. Notwithstanding the foregoing, the Fair Market Value of Shares shall, in all events, be determined in accordance with Code Section 409A. 2.15. “ISO Limitation” shall have the meaning set forth in Section 5.7. 2.16. “Limitations” shall mean, collectively, (i) the Plan Share Limitation, (ii) the Director Award Limitations, (iii) the Participant Award Limitations, and (iv) the ISO Limitation. 2.17. “Option” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine. 2.18. “Other Stock Unit Award” shall have the meaning set forth in Section 8.1. 2.19. “Participant” shall mean an Employee or Director who is selected by the Committee to receive an Award under the Plan. 2.20. “Participant Award Limitations” shall have the meaning set forth in Section 4.3. 2.21. “Payee” shall have the meaning set forth in Section 12.1. 2.22. “Performance Award” shall mean any Award of Performance Shares or Performance Units granted pursuant to Article 9. 2.23. “Performance Period” shall mean one or more periods of time not less than one fiscal year, ending May 2, 2020. B Authorized Signatures — This section mustas the Committee may select, over which the attainment of one or more performance goals will be completedmeasured for your votethe purpose of determining a Participant’s right to count. Please date and sign below. Please sign exactlythe payment of a Performance Award, in each case, established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured. 2.24. “Performance Share” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 72BM 427164 + 033XFE
qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Barnes & Noble Education, Inc. Notice of 2019 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — September 25, 2019 Mr. Michael P. Huseby, Mr. Thomas D. Donohue, and Mr. Michael C. Miller,Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of them, eachsuch performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
TABLE OF CONTENTS 2.25. “Performance Unit” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter. 2.26. “Permitted Assignee” shall have the meaning set forth in Section 11.3. 2.27. “Plan Share Limitation” shall have the meaning set forth in Section 3.1. 2.28. “Restricted Stock” shall mean any Share issued with the powerrestriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate. 2.29. “Restricted Period” shall have the meaning set forth in Section 7.1. 2.30. “Restricted Stock Award” shall have the meaning set forth in Section 7.1. 2.31. “Riggio Stockholders” shall mean Leonard Riggio, his spouse, his lineal descendants, trusts for the exclusive benefit of substitution, are hereby authorized to representany such individuals, the executor or administrator of the estate or the legal representative of any of such individuals and voteany entity controlled by any of the foregoing Persons. 2.32. “Shares” shall mean the shares of common stock of the undersigned, with allCompany, par value $0.01 per share. 2.33. “Stock Appreciation Right” shall mean the powersright granted to a Participant pursuant to Article 6. 2.34. “Subsidiary” shall mean any entity in which the undersigned would possess if personally present, atCompany, directly or indirectly, possesses fifty percent (50%) or more of the Annual Meetingtotal combined voting power of Stockholdersall classes of Barnes & Noble Educationits stock or similar equity interests. 2.35. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines. 2.36. “Treasury Regulations” shall mean the federal income tax regulations promulgated under the Code. ARTICLE 3
SHARES SUBJECT TO THE PLAN 3.1. Number of Shares. (a) Subject to adjustment as provided in Section 11.2, a total of 13,409,345 Shares shall be authorized for grant under the Plan (the “Plan Share Limitation”). (b) If any Shares subject to an Award are forfeited, expire or otherwise terminate without issuance of such Shares, or any Award is settled for cash or otherwise does not result in the issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for Awards under the Plan. Awards that are required to be held on September 25, 2019settled in cash will not reduce the Plan Share Limitation. (c) If Shares issued upon vesting or atsettlement of an Award other than an Option or Stock Appreciation Right, or Shares owned by a Participant, are surrendered or tendered to the Company in payment of any postponementtaxes required to be withheld in respect of such Award, in each case, in accordance with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or adjournment thereof.tendered Shares represented by this proxy willshall again become available to be voteddelivered pursuant to Awards under the Plan; provided, however, that in no event shall such Shares increase the ISO Limitation and, for the avoidance of doubt, no Shares that are surrendered or tendered to the Company in payment of the exercise price of an Option or any taxes required to withheld in respect of an Option or Stock Appreciation Right shall again become available to be delivered pursuant to Awards granted under the Plan. (d) Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the stockholder. If noCompany or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such directions are indicated,acquisition or combination, the Proxies willshares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or TABLE OF CONTENTS formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors or employees, other service providers or non-employee directors of any Affiliate prior to such acquisition or combination. 3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise. ARTICLE 4
ELIGIBILITY AND ADMINISTRATION 4.1. Eligibility. Any Employee or Director shall be eligible to be selected as a Participant. 4.2. Administration. (a) The Plan shall be administered by the Committee. The Board may remove from, add members to, or fill vacancies on, the Committee. (b) The Committee shall have full power and authority, subject to vote FORthe provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees and Directors to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of Shares or dollar value to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder (including when and under what circumstances Awards shall vest, become exercisable or be paid or settled, subject to Section 4.4) and, if certain performance goals must be attained in order for an Award to vest or be settled or paid, establish such performance goals and determine in its sole discretion whether, and to what extent, such performance goals have been attained); (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the BoardParticipant; (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of Directorsthe Plan; (xi) subject to Sections 8.1 and FOR items 2 and 3. In their9.1, determine whether dividends on the shares of Common Stock underlying any Award will accumulate; (xii) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards, (xiii) amend an outstanding Award or grant a replacement Award for an Award previously granted under the Plan if, in its sole discretion, the ProxiesCommittee determines that (A) the tax consequences of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that have more favorable tax consequences than initially anticipated; and (xiv) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. (c) Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, any stockholder and any Employee or any Affiliate. A majority of the members of the Committee may determine its actions and fix the time and place of its meetings. Notwithstanding the foregoing or anything else to the contrary in the Plan, any action or determination by the Committee specifically affecting or relating to an Award to a member of the Committee shall require the prior approval of the Board if the Award is not comparable and consistent with Awards to Directors who are not members of the Committee. The full Board may, in its sole discretion, at any time and from time to time, grant Awards to any Director or administer the Plan with respect to such Awards. In any such case, the Board shall have all the power and authority granted to the Committee herein. TABLE OF CONTENTS (d) The Committee may delegate to a committee of one or more non-employee directors of the Company or, to the extent permitted by law, to one or more officers or a committee of officers the right to grant Awards to Employees who are not Directors or officers of the Company and to cancel or suspend Awards to Employees who are not Directors or officers of the Company. Such delegation shall be subject to the requirements of Rule 16b-3 of the Exchange Act and the rules of the New York Stock Exchange. 4.3. Award Limitations. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Director, together with any amounts paid to such Directors for annual and committee retainer fees, during any 12-month period shall not exceed $700,000 (the “Director Award Limitations”). Subject to adjustment as provided in Section 11.2, no Participant shall be granted during any 12 month period, Awards with respect to more than 1,500,000 shares of Common Stock in the aggregate (the “Participant Award Limitations”). 4.4. Minimum Vesting Requirements. Notwithstanding any other provision of the Plan to the contrary, equity-based Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted (excluding, for this purpose, any (A) Substitute Awards, (B) shares delivered in lieu of fully vested cash Awards and (C) Awards to non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders (provided that such vesting period may not be less than 50 weeks after grant)); provided, that, the Committee may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Section 3.1 (subject to adjustment under Section 11.2); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, death or a Change in Control (in accordance with Section 10), in the terms of the Award or otherwise. ARTICLE 5
OPTIONS 5.1. Grant of Options. Subject to the Limitations, Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Article 5 and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable. The provisions of Options need not be the same with respect to each recipient. 5.2. Award Agreements. All Options granted pursuant to this Article 5 shall be evidenced by a written or electronic Award Agreement in such form and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. Granting of an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Article 5 may hold more than one Option granted pursuant to the Plan at the same time. The Committee may provide in the Award Agreement relating to an Option that such Option will be automatically exercised, without further action required by the holder, on the last day of such Option’s exercise period if, on such day, the Fair Market Value of the Shares to be acquired pursuant to an exercise of such Option exceeds the aggregate option price payable to exercise such Option. 5.3. Option Price. Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted pursuant to this Article 5 shall not be less than 100% of the Fair Market Value of such Share on the date of grant of such Option. Other than pursuant to Section 12.2, the Committee shall not be permitted to (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option (at a time when the option price per Share exceeds the Fair Market Value of the underlying Shares) in exchange for another Award or cash (other than in connection with a “change of control” of the Company), and (c) take any other action with respect to an Option that may be treated as a repricing under the rules and regulations of the New York Stock Exchange. 5.4. Option Period. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of ten years from the date the Option is granted. 5.5. Exercise of Options. Vested Options granted under the Plan shall be exercised by the Participant or by a Permitted Assignee thereof (or by the Participant’s executors, administrators, guardian or legal representative, as may be provided in an Award Agreement) as to all or part of the Shares covered thereby, by the giving of written notice of exercise to the Company or its designated agent, specifying the number of Shares to be purchased, accompanied by payment of the full purchase price for the Shares being purchased. Unless otherwise provided in an Award TABLE OF CONTENTS Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (a) in cash or by certified check or bank check or wire transfer of immediately available funds, (b) by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value), (c) with the consent of the Committee, by delivery of other consideration having a Fair Market Value on the exercise date equal to the total purchase price, (d) with the consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise of the Option, (e) through any other method specified in an Award Agreement, or (f) any combination of any of the foregoing. In connection with a tender of previously acquired Shares pursuant to clause (b) above, the Committee, in its sole discretion, may permit the Participant to constructively exchange Shares already owned by the Participant in lieu of actually tendering such Shares to the Company, provided that adequate documentation concerning the ownership of the Shares to be constructively tendered is furnished in form satisfactory to the Committee. The notice of exercise, accompanied by such payment, shall be delivered to the Company at its principal business office or such other office as the Committee may from time to time direct, and shall be in such form, containing such further provisions consistent with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may any Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance. 5.6. Form of Settlement. In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant. 5.7. Incentive Stock Options. With respect to the Options that may be granted by the Committee under the Plan, the Committee may grant Options intended to qualify as “incentive stock options” as defined in Section 422 of the Code, to any employee of the Company or any Affiliate, subject to the requirements of Section 422 of the Code. Notwithstanding anything in Section 3.1 to the contrary and solely for the purposes of determining whether Shares are available for the grant of “incentive stock options” under the Plan, the maximum aggregate number of Shares with respect to which “incentive stock options” may be granted under the Plan shall be 1,204,673 Shares (the “ISO Limitation”). ARTICLE 6
STOCK APPRECIATION RIGHTS 6.1. Grant and Exercise. Subject to the Limitations, the Committee may provide Stock Appreciation Rights either alone or in addition to other Awards granted under the Plan. 6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following: (a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the base price of the right on the date of grant, as specified by the Committee in its sole discretion, which, except in the case of Substitute Awards or in connection with an adjustment provided in Section 11.2, shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be. The Committee may provide in the Award Agreement relating to a Stock Appreciation Right that such Stock Appreciation Right will be automatically exercised, without further action required by the holder, on the last day of such Stock Appreciation Right’s exercise period if, on such day, the Fair Market Value of the Shares to which such Stock Appreciation Right relates exceeds the aggregate base price of such rights on their date of grant. (b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its sole discretion whether payment shall be made in cash, in whole Shares or other property, or any combination thereof. (c) The provisions of Stock Appreciation Rights need not be the same with respect to each recipient. (d) The Committee may impose such other conditions or restrictions on the terms of exercise and the base price of any Stock Appreciation Right, as it shall deem appropriate. Notwithstanding the foregoing provisions of this Section 6.2(d), but subject to Section 11.2, a Stock Appreciation Right shall not have (i) a base price less than Fair Market Value on the date of grant, or (ii) a term of greater than ten years. In addition to the foregoing, other than pursuant to Section 11.2, the Committee shall not be permitted to TABLE OF CONTENTS (A) reduce the base price of any Stock Appreciation Right after it is granted, (B) cancel any Stock Appreciation Right (at a time when the base price per Share exceeds the Fair Market Value of the underlying Shares) in exchange for another Award or cash (other than in connection with a “change of control” of the Company), and (C) take any other action with respect to a Stock Appreciation Right that may be treated as a repricing under the rules and regulations of the New York Stock Exchange. (e) The Committee may impose such terms and conditions on Stock Appreciation Rights granted in conjunction with any Award (other than an Option) as the Committee shall determine in its sole discretion. ARTICLE 7
RESTRICTED STOCK AWARDS 7.1. Grants. Subject to the Limitations, Awards of Restricted Stock may be issued hereunder to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted Stock Award”). A Restricted Stock Award shall be subject to restrictions imposed by the Committee covering a period of time specified by the Committee (the “Restriction Period”). The provisions of Restricted Stock Awards need not be the same with respect to each recipient. The Committee has absolute discretion to determine whether any consideration (other than services) is to be received by the Company or any Affiliate as a condition precedent to the issuance of Restricted Stock. 7.2. Award Agreements. The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written or electronic Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. 7.3. Rights of Holders of Restricted Stock. Beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a stockholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the rights of a stockholder, including, except as set forth in this Section 7.3, the right to vote such Shares and the right to receive distributions made with respect to such Shares; however, subject to compliance with Code Section 409A, any dividends otherwise payable with respect to a Restricted Stock Award shall not be paid currently but shall be accumulated until the applicable Restricted Stock Award has vested. Furthermore, notwithstanding any provisions of the Plan to the contrary, in the case of Restricted Stock Awards that are subject to vesting based on the achievement of performance goals, a Participant shall not be entitled to receive payment for any dividends with respect to such Restricted Stock Awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied. In any event, any Shares or any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Stock. ARTICLE 8
OTHER STOCK UNIT AWARDS 8.1. Stock and Administration. Subject to the Limitations, other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property (“Other Stock Unit Awards”) may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan, and such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. Other Stock Unit Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees and Directors to whom and the time or times at which such Other Stock Unit Awards shall be made, the number of Shares to be granted pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock Unit Awards need not be the same with respect to each recipient. Subject to compliance with Code Section 409A, any dividends otherwise payable with respect to an Other Stock Unit Award shall not be paid currently but shall be accumulated until the applicable Other Stock Unit Award has vested. Furthermore, notwithstanding any provision of the Plan to the contrary, in the case of Other Stock Unit Awards that are subject to vesting based on the achievement of performance goals, a Participant shall not be entitled to receive payment for any dividends with respect to such Other Stock Unit Awards unless, until and except to the extent that the applicable performance goals are achieved or are otherwise deemed to be satisfied. 8.2. Terms and Conditions. Shares (including securities convertible into Shares) subject to Awards granted under this Article 8 may be issued for no consideration or for such minimum consideration as may be required by applicable law. Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Article 8 shall be purchased for such consideration as the Committee shall determine in its sole discretion. TABLE OF CONTENTS ARTICLE 9
PERFORMANCE AWARDS 9.1. Terms of Performance Awards. Subject to the Limitations, Performance Awards may be issued hereunder to Participants, for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award. The provision of Performance Awards need not be the same with respect to each Participant. Except as provided in Article 10 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 9.2 or such other criteria as the Committee deems appropriate. The amount of the Award to be distributed shall be conclusively determined by the Committee. 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. Notwithstanding any provision of the Plan to the contrary, a Participant shall not be entitled to receive payment for any dividends with respect to any Performance Awards unless, until and except to the extent that the performance goals applicable to such Performance Awards are achieved or are otherwise deemed to be satisfied. 9.2. Performance Goals. The performance goals to be determined by the Compensation Committee in establishing the terms of Performance Awards shall relate to the attainment of a specified level of performance of one or more performance criteria established by the Committee, which may include, but are not limited any of the following: sales (including same store or comparable sales); net sales; return on sales; cash flow (including operating cash flow and free cash flow); cash flow per Share (before or after dividends); cash flow return on investment; cash flow return on capital; pretax income before allocation of corporate overhead and bonus; earnings per share; net income; division, group or corporate financial goals or ratios including those measuring liquidity, activity, profitability or leverage; return on stockholders’ equity; total stockholder return; return on assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; market share; customer satisfaction; customer growth; user time spent online; unique users; registered users; user frequency; user retention; web page views; employee satisfaction; employee turnover; productivity or productivity ratios; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property; establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company’s products (including with group purchasing organizations, distributors and other vendors); supply chain achievements (including establishing relationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products); co-development, co-marketing, profit sharing, joint venture or other similar arrangements); gross profits; gross or net profit margin; operating margin; gross profit growth; year-end cash; cash margin; revenue; net revenue; product revenue or system-wide revenue (including growth of such revenue measures); operating earnings; operating income; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic value-added models; comparisons with various stock market indices; regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company’s third-party manufacturer) and validation of manufacturing processes (whether the Company’s or the Company’s third-party manufacturer’s)); improvement in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; general and administrative expense savings; inventory control; operating efficiencies; average inventory; inventory turnover; inventory shrinkage; cost of capital or assets under management; financing and other capital raising transactions (including sales of the Company’s equity or debt securities; debt level year-end cash position; book value; factoring transactions; competitive market metrics; timely completion of new product roll-outs; timely launch of new facilities (such as new store openings, gross or net); sales or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or globally; or through partnering transactions); royalty income; implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; factoring transactions; and recruiting and maintaining personnel; debt reduction; reductions in costs, and/or return on invested capital of the Company or any Affiliate, division or business unit of the Company for or within which the Participant is primarily TABLE OF CONTENTS employed. Such performance goals also may be based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. When determining whether performance goals have been attained, the Committee will have the discretion to make adjustments to take into account extraordinary or nonrecurring items or events, or unusual nonrecurring gains or losses identified in the Company’s financial statements, and include or exclude the impact of an event or occurrence which the Committee determines should appropriately be excluded, including, but not limited to (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges or infrequently occurring items, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, (c) a change in accounting standards required by generally accepted accounting principles, (d) asset write-downs, (e) litigation or claim judgments or settlements, (f) acquisitions or divestitures, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) tax law changes, (j) costs associated with refinancing or repurchase of bank loans or debt securities, (k) unbudgeted capital expenditures or (l) a business interruption event. ARTICLE 10
CHANGE OF CONTROL PROVISIONS 10.1. Assumption Upon Change of Control. Unless otherwise provided in the Award Agreement evidencing the applicable Award, in the event of a Change of Control, if the successor company assumes or substitutes for an outstanding Award (or in which the Company is the ultimate parent corporation and continues the Award), then such Award shall be continued in accordance with its applicable terms and shall not be accelerated as described in Section 10.2. For the purposes of this Section 10.1, an Award shall be considered assumed or substituted for if, following the Change of Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change of Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Award, for each Share subject thereto, will be solely common stock of the successor company substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change of Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of a Participant’s employment in such successor company within a specified time period following such Change of Control, each Award held by such Participant at the time of the Change of Control shall be accelerated as described in Section 10.2. Notwithstanding the foregoing, no Award shall be assumed or substituted pursuant to this Section 10.1 if such action would cause an Award not otherwise “deferred compensation” within the meaning of Code Section 409A to become or create “deferred compensation” within the meaning of Code Section 409A. 10.2. Acceleration Upon Change of Control. Notwithstanding Section 10.1, and except as provided in the applicable Award Agreement, in the event of a Change of Control, unless provision is made in connection with the Change of Control for assumption or continuation of Awards previously granted or substitution of such Awards in accordance with Section 10.1, upon the Change of Control (a) Options and Stock Appreciation Rights outstanding as of the date of the Change of Control shall immediately vest and become fully exercisable, (b) restrictions on Restricted Stock shall lapse and the Restricted Stock shall become free of all restrictions and limitations and become fully vested, (c) all Performance Awards shall be considered to be earned and payable (either in full or pro-rata based on the portion of Performance Period completed as of the date of the Change of Control and at the level determined by the Committee), and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed, (d) the restrictions and other conditions applicable to any Other Stock Unit Awards or any other Awards shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested, and (e) such other additional benefits as the Committee deems appropriate shall apply, subject in each case to any terms and conditions contained in the Award Agreement evidencing such Award. Notwithstanding any provision of this Section 10.2, unless otherwise provided in the applicable Award Agreement, if any amount payable pursuant to an Award constitutes deferred compensation within the meaning of Code Section 409A, in the event of a Change of Control that does not qualify as an event described in Code Section 409A(a)(2)(A)(v), such Award (and any other Awards that constitute deferred TABLE OF CONTENTS compensation that vested prior to the date of such Change of Control but are outstanding as of such date) shall not be settled until the earliest permissible payment event under Code Section 409A following such Change of Control. Notwithstanding any other provision of the Plan, the Committee, in its discretion, may determine that, upon the occurrence of a Change of Control of the Company, (i) each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and such Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control over the option or base price, as applicable, per Share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine and (ii) each Option and Stock Appreciation Right outstanding at such time with an option or base price, as applicable, per Share that exceeds the Fair Market Value of such Share immediately prior to the occurrence of such Change of Control shall be canceled for no consideration. ARTICLE 11
GENERALLY APPLICABLE PROVISIONS 11.1. Amendment and Modification of the Plan. The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including the rules and regulations of the New York Stock Exchange or any rule or regulation of any stock exchange or quotation system on which Shares are listed or quoted; provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the Board may not, without the approval of the Company’s stockholders, amend the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to Section 11.2), (b) expand the types of awards available under the Plan, (c) materially expand the class of persons eligible to participate in the Plan, (d) amend any provision of Section 5.3 or Section 6.2(d), (e) increase the maximum permissible term of any Option or Freestanding Stock Appreciation Right specified by Section 5.4 or Section 6.2(d), as applicable, or (f) amend the penultimate sentence of Section 11.3. In addition, no amendments to, or termination of, the Plan shall materially impair the rights of a Participant under any Award previously granted without such Participant’s consent, provided, however, that the Board may amend, modify or terminate the Plan without the consent of such Participant if it deems such action necessary to comply with applicable law, tax rules, stock exchange rules or accounting rules, provided such action affects the rights of all similarly situated Participants. 11.2. Adjustments. To prevent the dilution or enlargement of benefits or potential benefits intended to be made available under the Plan, in the event of any corporate transaction (including any Change of Control) or event such as a merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee, in its sole discretion, deems equitable or appropriate, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, including each of the Plan Share Limitation and the ISO Limitation, and, in the aggregate or to any one Participant, in the number, class, kind and option or base price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number. Notwithstanding the foregoing, no Award shall be adjusted, substituted or otherwise modified pursuant to this Section 11.2 if such action would cause an Award not otherwise “deferred compensation” within the meaning of Code Section 409A to become or create “deferred compensation” within the meaning of Code Section 409A. 11.3. Transferability of Awards. Except as provided below, no Award and no Shares subject to Awards described in Article 8 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative. Notwithstanding the foregoing, a Participant may assign or transfer an Award with the consent of the Committee (each transferee thereof, a “Permitted Assignee”) to the Participant’s spouse, domestic partner and/or children (and/or trusts and/or partnerships established for the benefit of the Participant’s spouse, domestic partner and/or children or in which the Participant is a beneficiary or partner); provided that such Permitted Assignee(s) shall be bound by and subject to all of the terms and conditions of the Plan TABLE OF CONTENTS and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. Notwithstanding the foregoing, in no event shall any Award (or any rights and obligations thereunder) be transferred to a third party in exchange for value unless such transfer is specifically approved by the Company’s stockholders. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section 11.3. 11.4. Termination of Employment. The Committee shall determine and set forth in each Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, and the terms of such exercise, on and after the date that a Participant ceases to be employed by or to provide services to the Company or any Affiliate (including as a Director), whether by reason of death, disability, voluntary or involuntary termination of employment or services, or otherwise. The date of termination of a Participant’s employment or services will be determined by the Committee, which determination will be final. ARTICLE 12
MISCELLANEOUS 12.1. Tax Withholding. The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable Federal, State and local taxes required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any Affiliate shall have the right to withhold from wages or other amounts otherwise payable to such Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay such withholding taxes. If the Payee shall fail to make such tax payments as are required, the Company or its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Payee or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to vote uponestablish procedures for election by Participants to satisfy such obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that have been owned for a period of at least six months (or such other period to avoid accounting charges against the Company’s earnings), or by directing the Company to retain Shares (up to the employee’s minimum required tax withholding rate or such other rate that will not cause adverse accounting consequences and is permitted under applicable Internal Revenue Service withholding rules) otherwise deliverable in connection with the Award. 12.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an Award hereunder shall confer upon any Employee or Director the right to continue in the employment or service of the Company or any Affiliate or affect any right that the Company or any Affiliate may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee or Director at any time for any reason. Except as specifically provided by the Committee, the Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee or Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan. 12.3. Prospective Recipient. The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied with the then applicable terms and conditions. 12.4. Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12.5. Nature of Payments. All Awards made pursuant to the Plan are in consideration of services performed or to be performed for the Company or any Affiliate, division or business unit of the Company. Any income or gain TABLE OF CONTENTS realized pursuant to Awards under the Plan constitute a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any Affiliate except as may properly come beforebe determined by the meeting. (ItemsCommittee or by the Board or board of directors of the applicable Affiliate. 12.6. Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases. 12.7. Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan. 12.8. Construction. All references in the Plan to “Section”, “Sections”, or “Article” are intended to refer to the Section, Sections or Article, as the case may be, of the Plan. As used in the Plan, the words “include” and “including”, and variations thereof, shall not be deemed to be voted appearterms of limitation, but rather shall be deemed to be followed by the words “without limitation”, and the word “or” shall not be deemed to be exclusive. 12.9. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan. 12.10. Governing Law. The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed accordingly. 12.11. Effective Date of Plan; Termination of Plan. The Plan, as amended, is adopted by the Board as of July 20, 2021, and will be effective upon approval by the Company stockholders at the 2021 annual meeting or such other meeting held to approve the Plan (the “Effective Date”). Awards may be granted under the Plan at any time and from time to time on reverse side)or prior to the tenth anniversary of the effective date of the Plan, on which date the Plan will expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired. 12.12. Foreign Employees. Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country. 12.13. Captions. The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein. 12.14. Code Section 409A. All provisions of the Plan shall be interpreted in a manner consistent with Code Section 409A, and the regulations and other guidance promulgated thereunder. Notwithstanding the preceding, the Company makes no representations concerning the tax consequences of participation in the Plan under Code Section TABLE OF CONTENTS 409A or any other federal, state, or local tax law. Tax consequences will depend, in part, upon the application of relevant tax law, including Code Section 409A, to the relevant facts and circumstances. Participant should consult a competent and independent tax advisor regarding the tax consequences of the Plan. 12.15. Clawback. Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that an Award granted thereunder shall be cancelled if the Participant, without the consent of the Company, while employed by or providing services to the Company or any Affiliate or after termination of such employment or service, (a) violates a non-competition, non-solicitation or non-disclosure covenant or agreement, (b) otherwise engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Committee in its sole discretion or (c) to the extent applicable to the Participant, otherwise violates any policy adopted by the Company or any of its Affiliates relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to any Participant by the Company or any of its Affiliates as such policy is in effect on the date of grant of the applicable Award or, to the extent necessary to address the requirements of applicable law (including Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as codified in Section 10D of the Exchange Act, Section 304 of the Sarbanes-Oxley Act of 2002 or any other applicable law), as may be amended from time to time. The Committee may also provide in an Award Agreement that (i) a Participant will forfeit any gain realized on the vesting or exercise of such Award if the Participant engages in any activity referred to in the preceding sentence, or (ii) a Participant must repay the gain to the Company realized under a previously paid Performance Award if a financial restatement reduces the amount that would have been earned under such Performance Award.
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