UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement | |
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Definitive Proxy Statement | |
Definitive Additional Materials | |
Soliciting Material under 240.14a-12 |
Chico’s FAS, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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| 2019 PROXY STATEMENT |
And Notice of Annual Meeting of Shareholders To be held June 27, 2019 |
On behalf of the employees and Directors of Chico’s FAS, Inc., we thank you for your continued support and confidence in our Company. | ||
David Walker |
May 8, 2017
10, 2019
To our Shareholders:
It is ourmy pleasure to invite you to attend our 20172019 Annual Meeting of Shareholders at 10:9:00 A.M., local time, on Thursday, June 22, 201727, 2019 at our National Store Support Center located at 11215 Metro Parkway, Fort Myers, Florida. The meeting will begin with a discussion and voting on the matters described in the attached Proxy Statement and Notice of Annual Meeting of Shareholders and Proxy Statement, followed by a report on Chico’s FAS, Inc.’s (the “Company”) financial performance.
This booklet includes the Notice of Annual Meeting of Shareholders and the Proxy Statement. The Proxy Statement is a critical element of the corporate governance process. Its purpose is to provide you with information about the Company’s Board of Directors (the “Board of Directors” or the “Board”) and executive officers and the proposals that require your vote. Please read these materials so you will understand what business will be transacted and voted upon at the meeting.
We are pleased to take advantage of Securities and Exchange Commission (“SEC”) rules that allow companies
to furnish their proxy materials over the internet.Internet. As a result, we are mailing to most of our shareholders a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) instead of a paperprinted copy of our proxy materials (i.e., thisthe Notice of Annual Meeting, the Proxy Statement, our 20162018 Annual Report, and a form proxy card or voting instruction form). The Notice of Internet Availability contains instructions on how to access those documents over the Internet and how to submit your proxy via the Internet. The Notice of Internet Availability also contains instructions on how to request a paperprinted copy of our proxy materials. All shareholders who do not receive a Notice of Internet Availability will receive a paperprinted copy of the proxy materials by mail. This process allows us to provide our shareholders with the information they need in a timelier manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.
On behalf of the employees and Directorsdirectors of Chico’s FAS, Inc., weI thank you for your continued support and confidence in our Company.
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DAVID F. WALKER | |
Chair of the Board |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
TO BE HELD JUNE 27, 2019
Thursday, June 22, 2017
10:9:00 A.M., Local Timelocal time, on Thursday, June 27, 2019
Gralnick Auditorium Chico’s FAS, Inc. National Store Support Center
11215 Metro Parkway, Fort Myers, Florida 33966
To the shareholders of Chico’s FAS, Inc.:
■ITEMS OF BUSINESS
1. | To elect |
2. | To approve an advisory resolution approving the compensation of our named executive officers; |
3. | To ratify the appointment of Ernst & Young LLP as the Company’s independent certified public accountants for the fiscal year ending February | |
To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. | |
■RECORD DATE
You can vote if you were a shareholder of record as of the close of business on April 24, 2017.29, 2019.
■ANNUAL REPORT
Our 20162018 Annual Report, which is not a part of the proxy soliciting material, is enclosed or available online or enclosed, as further discussed.discussed below.
■PROXY VOTING
It is important that your shares be represented and voted at the Annual Meeting.Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. You are urged to date, sign and promptly return the proxy card in the envelope provided to you, if you receive a printed copy of the proxy materials, or to use the telephone or Internet method of voting described on your proxy card, or voting instruction form,or Notice of Internet Availability even if you plan to attend the Annual Meeting, so that if you are unable to attend the Annual Meeting, your shares can be voted. Voting now will not limit your right to change your vote or to attend the Annual Meeting. If you should be present atattend the meeting and desire to vote in person, you may withdraw your proxy. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record in order to vote your shares.
The proxy materials are first being mailed or made available to shareholders on or about May 10, 2019.
By Order of the Board of Directors,
L. Susan Faw
Corporate Secretary
By Order of the Board of Directors, | |
Gregory S. Baker | |
Corporate Secretary |
TABLE OF CONTENTSTable of Contents
TABLE OF CONTENTS
Page | ||||
Annual Meeting of Shareholders to be Held June 22, 2017
May 8, 2017
To the Shareholders ofOur Chico’s FAS, Inc.:
These proxy materials are delivered in connection with the solicitation of proxies by the (the “Company,” “we,” or “us”) Board of Directors (the “Board of Directors” or the “Board”) of Chico’s FAS, Inc. (the “Company,” “we,” or “us”), a Florida corporation, to be voted at our 2017 Annual Meeting of Shareholders (the “Annual Meeting”) and at any adjournments or postponements thereof.
You are invited to attend our Annual Meeting of Shareholders on June 22, 2017, beginning at 10:00 A.M., local time. The Annual Meeting will be held at our National Store Support Center located at 11215 Metro Parkway, Fort Myers, Florida. Shareholders will be admitted beginning at approximately 9:30 A.M. The operation of cameras (including cellular phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting.
It is important that proxies be returned promptly to avoid unnecessary expense to the Company. Therefore, regardless of whether you plan to attend the Annual Meeting or the number of shares of stock you own, please take the time to vote as soon as possible so that your shares are represented at the meeting.
If you are a registered shareholder, you can simplify your voting by using the Internet or calling the toll-free telephone number. Internet and telephone voting information is provided on the proxy card. If you vote via the Internet or by telephone, there is no need to return a signed proxy card. However, you may still vote by proxy by using the proxy card. If you beneficially hold your shares in “street name” through a bank, broker or other nominee, you will be able to vote using the voting instruction form provided to you by such nominee, and Internet and telephone voting may also be available per the instructions provided on such voting instruction forms.
Proxies will be voted at the Annual Meeting in accordance with the specifications you make on the proxy. If you sign the proxy card or submit a proxy by telephone or over the Internet and do not specify how your shares are to be voted, your shares will be voted in accordance with the recommendations of the Board (see “About the Annual Meeting”).
What is the purpose of the meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the accompanying notice of meeting, which consists of the electioncomprised of directors ratificationwith exceptional leadership and governance expertise. This includes merchandising, e-commerce and social media, retail and store operations, marketing, supply chain/sourcing, technology/cybersecurity, real estate, executive compensation/human capital, finance, and mergers and acquisitions. We are fortunate to have the leadership skills, broad-based knowledge and experience of previously seated CEOs and CFOs. Our Board has overseen many important governance changes, most recently, the appointmentunwinding of the Company’s independent certified public accountants, adoptionour classified board structure. Our Board further employs a very hands-on review of our major corporate initiatives, operations and strategy on an advisory resolution to approve executive compensation,ongoing basis.
Our Board has been steadily refreshed and has what we believe is an advisory vote on the frequencyoptimal range of future advisory votes on executive compensation, and approvaltenures. The average director tenure is approximately six years; one-half have six or more years of the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan (the “Amended and Restated 2012 Omnibus Plan”)service and the material termsremaining half have less than six years of service. Our more tenured directors provide important historical insights into our Company’s operations, in addition to their strong governance experience. Notably, the performance goals under the plan. In addition, the Company’s management will report on the performance of the Companyfour new directors added since 2016 provide significant retail, operations, supply chain, fashion merchandise and respond to questions from shareholders.
When are these materials being sent?
Under rules adopted by the U.S. Securities and Exchange Commission (“SEC”) we have elected to provide accesstechnology expertise to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, to our shareholders of record. All shareholders will have the ability to access the proxy materials on the website referred to in the notice or to request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the notice. You will not receive a printed copy of the proxy materials unless you request one in the manner set forth in the notice. This permits us to conserve natural resources and reduces our printing costs, while giving shareholders a convenient and efficient way to access our proxy materials and vote their shares.
We intend to distribute this Proxy Statement, the accompanying proxy card and the 2016 Annual Report to our shareholders beginning on or about May 8, 2017. The 2016 Annual Report distributed with the Proxy Statement is not part of the proxy-soliciting material.
Why did I receive these proxy materials?
You have received these proxy materials because you are a shareholder of the Company, and our Board is soliciting authority, or proxy, to vote your shares at the Annual Meeting. The proxy materials include our Notice of Annual Meeting of Shareholders, Proxy Statement and 2016 Annual Report. These materials also include the proxy card or voting instruction form for the Annual Meeting. Proxy cards are being solicited on behalf of our Board.
The proxy materials include detailed information about the matters that will be discussed and voted on at the Annual Meeting and provide updated information about our Company that you should consider in order to make an informed decision when voting your shares. The proxy materials are first being furnished to shareholders on or about May 8, 2017.
Can I access the Company’s proxy materials online?
Yes. The Company’s 2017 Proxy Statement for the Annual Meeting (the “Proxy Statement”) and 2016 Annual Report may be accessed at https://materials.proxyvote.com/168615. This site does not have “cookies” that identify visitors to the site.
What is a proxy?
It is your legal designation of another person to vote on matters transacted at the Annual Meeting based upon the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. The form of proxy card included with this Proxy Statement designates each of Shelley G. Broader, Todd E. Vogensen and Susan S. Lanigan as proxies for the Annual Meeting.
What is a proxy statement?
It is a disclosure document that SEC regulations require us to give you so that you can make an informed voting decision when we ask you to sign the proxy card designating individuals as proxies to vote on your behalf.
What is the difference between a shareholder of record and a shareholder who holds stock in street name?
If your shares are registered in your name, you are a shareholder of record. When you properly vote in accordance with the instructions provided in the voting instruction form, you are instructing the named proxies to vote your shares in the manner you indicate on your proxy.
If your shares are held in the name of your broker or other institution, which is usually the case if you hold your shares in a brokerage or similar account, your shares are held in “street name.” Your broker or other institution or its respective nominee is the shareholder of record for your shares. As the holder of record, only your broker, other institution or nominee is authorized to vote or grant a proxy for your shares. Accordingly, if you wish to vote your shares in person, you must contact your broker or other institution to obtain the authority to do so. When you properly vote in accordance with the instructions provided in the voting instruction form, you are giving your broker, other institution or nominee instructions on how to vote the shares they hold for you.
Applicable SEC and New York Stock Exchange (“NSYE”) regulations severely limit the matters your broker may vote on without having been instructed to do so by you, especially as they relate to the election of directors and compensation matters. As a result, if you do not instruct your broker on how to vote your shares regarding the election of the directors, the advisory vote on the resolution to approve executive compensation, the advisory vote on the frequency of future advisory votes on executive compensation, or the approval of the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan and the material terms of the performance goals under the plan, then your shares will not be voted on these matters. We urge you to instruct your broker about how you wish your shares to be voted.
What is the record date and what does it mean?
The record date for the Annual Meeting is April 24, 2017. The record date is established by the Board of Directors as required by law and the Company’s Amended and Restated Articles of Incorporation and Bylaws. Owners of record of common stock at the close of business on the “record date” are entitled to:
No shareholders becoming owners of record after the record date will be entitled to vote at the Annual Meeting or any adjournment or postponement thereof.
What constitutes a “quorum” for the meeting?
A certain minimum number of shares must be present or represented by proxy at a meeting before any shareholder vote at the meeting can be effective. A quorum of shares must be present to conduct business at the meeting. For the Annual Meeting, the quorum requirement will be satisfied if a majority of the outstanding shares of common stock entitled to be cast on the matters submitted is present in person and/or represented by proxy. You are part of the quorum if you have voted by proxy. Abstentions and broker non-votes count as “shares present” at the meeting for purposes of determining a quorum.
Who is entitled to vote and how many votes do I have?
If you are a common shareholder of record at the close of business on the record date, you can vote. Each common share is entitled to one vote on each matter properly brought before the Annual Meeting. Shares of common stock, par value $0.01 per share, are the only outstanding voting securities of the Company. If you are a holder in street name at the close of business on the record date, you generally will have the right to instruct your broker or other holder of record how to vote your shares, although specific procedures depend on the terms of your account arrangement. As of the record date, there were 129,488,741 common shares outstanding.
How do I vote my shares?
If you are a shareholder of record, you may vote by proxy in three convenient ways: by telephone, via the Internet or by completing, signing and returning the enclosed proxy card in the pre-paid envelope provided. Simply follow the instructions provided on the enclosed proxy card.
If you are not the shareholder of record, please refer to the voting instructions provided by your bank, broker or other nominee to direct it how to vote your shares. Your vote is important. Follow the instructions from your nominee included with our proxy materials, or contact your nominee to request a proxy form. To vote in person at the meeting, you must obtain a legal proxy from your nominee. Whether or not you plan to attend the meeting, we urge you to vote using your voting instruction card to ensure that your vote is counted.
If you are a participant in the Chico’s Managed Share Plan and/or the Chico’s Employee Stock Purchase Plan (each a “Plan”; together the “Plans”), please refer to the instructions provided by the Administrator of each such Plan in order to direct it how to vote your shares. Please note that you must return your vote instructions with respect to any Plan shares no later than 11:59 p.m. ET on June 14, 2017. Please note that you may not vote any Plan shares in person at the meeting, as such shares may only be voted through the Plan Administrator. Since your vote is important, we urge you to vote promptly to ensure that your Plan shares are represented.
Can I change my vote or revoke my proxy?
You may revoke your proxy or change your voting instructions before the time of voting at the meeting in several ways.
A shareholder who has given a proxy may revoke it at any time before it is exercised at the meeting by:
Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to revoke a proxy, you may need to contact that firm to revoke any prior voting instructions.
Your vote must be received before the polls close at the Annual Meeting. You can also change your vote by voting in person at the Annual Meeting. However, attendance at the meeting will not, by itself, revoke a proxy. If you hold your shares in street name, please check with that firm for instructions on how to change your vote.
If I submit a proxy, how will my shares be voted?
By giving us your proxy, you authorize the individuals named as the proxies on the proxy card to vote your shares in accordance with the instructions you provide. You may vote for or against any or all of the director candidates and any or all of the other proposals. You may also abstain from voting. If you vote online or by telephone, you must indicate how you wish to vote on each item.
If you sign and return a proxy card without indicating your instructions, your shares will be voted
The individuals named as the proxies on the proxy card to vote your shares also have the discretionary authority to vote your shares, to the extent permitted by Rule 14(a)-4(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on any other matter that is properly brought before the Annual Meeting. As of the date of the Notice of Annual Meeting of Shareholders, we knew of no other matters to be presented at the Annual Meeting.
If you are a beneficial owner of shares and do not specify how you want to vote, your shares may not be voted by the record holder and will not be considered as present and entitled to vote on any matter to be considered at the Annual Meeting. If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in these important matters.
Your vote is important. Whether or not you plan to attend the meeting, we encourage you to vote by proxy as soon as possible.
What are the Board’s recommendations?
The Board’s recommendations regarding the proposals to be considered at the Annual Meeting are set forth together with the descriptions of the proposals in this Proxy Statement. In summary, the Board recommends a vote:
With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion. As of the date of the Notice of Annual Meeting of Shareholders, we knew of no other matters to be presented at the Annual Meeting.
My shares are held in street name. How are my shares voted if I do not return voting instructions?
If your shares are held in the name of a brokerage firm, financial institution or other nominee under NYSE rules, your shares may be voted on certain “routine” items by the brokerage firm, financial institution or other nominee, even if you do not provide voting instructions. When a proposal is not a “routine” matter under NYSE rules, the brokerage firm, financial institution or other nominee cannot vote the shares on that proposal unless they have received prior voting instructions from the beneficial owner of the shares with respect to that proposal. This inability to vote the shares in such an instance is referred to as a “broker non-vote.”
Proposal 2, the ratification of the appointment of Ernst & Young, LLP as the Company’s independent registered public accounting firm for fiscal 2017, is considered a routine matter for which the brokerage firm, financial institution or other nominee who holds your shares can vote your shares even if it has not received instructions from you. All other proposals in this Proxy Statement are non-
routine matters and accordingly the brokerage firm, financial institution or other nominee cannot vote your shares on those proposals without your instructions.
Although broker non-votes are not voted on non-routine matters, they will be counted in determining whether a quorum is present.
In any event, if your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in these matters.
What vote is required to approve each item?
Election of Directors.Our Board of Directors has instituted a majority vote standard in uncontested elections where a majority of the shares voted on the election of a director must be in favor of his or her election. This means that a director nominee will be elected if the number of votes cast“FOR” that nominee by holders entitled to vote exceeds the number of votes cast“AGAINST”that nominee.
If you return a signed proxy card or otherwise complete your voting by proxy online or by telephone but abstain from voting on any of the nominees, your shares will not be voted with respect to those nominees. Your shares will be counted for purposes of determining whether there is a quorum, but will have no effect on the election of those nominees. Broker non-votes will be counted as present, but are not entitled to vote on the proposal.
Ratification of Appointment of Accountants. The appointment of Ernst & Young, LLP as the Company’s independent certified public accountants for fiscal 2017 will be ratified if the number of votes cast“FOR” ratification of the appointment by holders entitled to vote exceeds the number of votes cast opposing the ratification of the appointment. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal.
Advisory Resolution to Approve Executive Compensation. The advisory resolution to approve executive compensation (the say-on-pay vote) will be approved if the number of votes cast“FOR” approval of such advisory resolution by holders entitled to vote exceeds the number of votes cast opposing the approval of the advisory resolution. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. As discussed above, if your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instruction. While the Board of Directors and its Human Resources, Compensation and Benefits Committee (the “Compensation Committee”) will consider the shareholder vote, the final vote is advisory in nature and will not be binding on the Board or the Company.
Advisory Resolution on Frequency of Future Advisory Votes on Executive Compensation. A plurality of votes cast means that the frequency option that receives the most votes of all the votes cast on the resolution is the frequency that will be deemed recommended by shareholders. While the Board of Directors and its Compensation Committee will carefully consider the shareholder vote, the final vote is advisory in nature and will not be binding on the Board or the Company.
Approval of the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan and the Material Terms of the Performance Goals under the Plan. The Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan and the material terms of the performance goals under the plan (“Amended and Restated 2012 Omnibus Plan”) will be approved if the number of votes cast“FOR” approval of the Plan by holders entitled to vote exceeds the number of votes cast opposing the approval of the Plan. If you abstain from voting on this proposal, your abstention will have the effect of a vote against the proposal because abstentions are treated as votes cast under the applicable NYSE requirements.
Other Items. If any other item requiring a shareholder vote should come before the meeting, the vote required will be determined in accordance with applicable law, the NYSE rules, and our Amended and Restated Certificate of Incorporation and Bylaws, as applicable.
What are abstentions and broker non-votes?
An abstention occurs when a shareholder of record (which may be a broker or other nominee of a street name holder) is present at a meeting (or deemed present) but fails to vote on a proposal or indicates that the shareholder abstains from voting on the election of directors or any other proposal. A broker non-vote occurs when a broker or other nominee who holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the street name owner of the shares.
How are abstentions and broker non-votes counted when tabulating the vote?
Except as described below with respect to the Amended and Restated 2012 Omnibus Plan, abstentions, that is, a properly executed proxy marked“ABSTAIN”and broker non-votes with respect to a particular matter do not count in any vote totals for or against any matter presented for a shareholder vote at this Annual Meeting, even though the shares associated with such abstentions and broker non-votes are counted for purposes of determining whether there is a quorum present at the Annual Meeting. Accordingly, for purposes of such votes, abstentions and broker non-votes will have the same effect as does a share that is not present or otherwise not voted, except as described below.
Election of Directors.Abstentions and broker non-votes will have no effect on the outcome of the election of candidates for director as they do not count as either“FOR” or“AGAINST” votes.
Ratification of Appointment of Accountants. Abstentions and broker non-votes will have no effect on the outcome of the ratification of the appointment of the accountants as they do not count as either“FOR” or“AGAINST” votes.
Advisory Resolution on Executive Compensation. Abstentions and broker non-votes will have no effect on the outcome of the advisory resolution on executive compensation as they do not count as either“FOR” or“AGAINST” votes.
Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation. Abstentions and broker non-votes will have no effect on the outcome of the advisory vote on frequency of future advisory votes on executive compensation as they do not count as either“1 YEAR” or“2 YEARS” or“3 YEARS” votes.
Approval of the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan and the Material Terms of the Performance Goals under the Plan. An abstention will have the effect of an“AGAINST” vote on the approval of the Amended and Restated 2012 Omnibus Plan and the material terms of the performance-based compensation under the Plan because abstentions are treated as votes cast under the applicable NYSE requirements. Broker non-votes will have no effect on the outcome of the proposal as they do not count as either“FOR” or“AGAINST” votes.
Are votes confidential? Who counts the votes?
The votes of all shareholders are held in confidence from directors, officers and employees, except:
All proxies, ballots and vote tabulations that identify shareholders are confidential. An independent tabulator will inspect and tabulate your proxy whether you vote by mail, online or by telephone. Your vote will not be disclosed to anyone other than the independent tabulator without your consent, except as described above.
Where can I find the voting results of the Annual Meeting?
We will report the voting results on a Current Report on Form 8-K filed with the SEC within four business days of the Annual Meeting.
Who is paying for the preparation and mailing of the proxy materials and how will solicitations be made?
We will pay the expenses of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or by telephone, mail, or electronic transmission. The Company will request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material on our behalf to shareholders and the Company will reimburse such institutions for their out-of-pocket expenses incurred. The Company has not engaged any outside service provider to assist in the solicitation of proxies.
What does it mean if I receive more than one package of proxy materials?
This means that you have multiple accounts holding Chico’s FAS, Inc. shares. These may include: accounts with our transfer agent, American Stock Transfer and Trust Company, shares held by the Administrator of our Employee Stock Purchase Plan, and accounts with a broker, bank or other holder or record. In order to vote all of the shares held by you in multiple accounts, you will need to vote the shares held in each account separately. Please follow the voting instructions provided on the proxy card or voting instruction forms that you receive to ensure that all of your shares are voted.
How do I contact the Board of Directors?
You can send written communications to one or more members of the Board, addressed to:
Chair, Board of DirectorsChico’s FAS, Inc.c/o Corporate Secretary11215 Metro ParkwayFort Myers, Florida 33966
All such communications will be forwarded to the relevant director(s), except for solicitations or other matters unrelated to the Company.
How do I submit a shareholder proposal or nominate directors for the 2018 Annual Meeting?
The Company’s 2018 Annual Meeting is currently expected to be held on June 28, 2018. To be eligible under the SEC shareholder proposal rule (Rule 14a-8 promulgated under the Exchange Act) for inclusion in next year’s proxy statement, and form of proxy, a shareholder must submit the proposal in writing so that we receive it by January 8, 2018. Proposals should be addressed to the Company’s Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966. Even if a shareholder proposal is not eligible for inclusion in our proxy statement pursuant to Rule 14a-8, the proposal may still be offered for consideration at an Annual Meeting according to the procedures set forth in the Company’s Amended and Restated Articles of Incorporation. The Company’s Amended and Restated Articles of Incorporation contain certain advance notice requirements with respect to any shareholder proposal and of any nominations by shareholders of persons to stand for election as directors at a shareholders’ meeting. That notice must be given at least 60 days before the date of the Company’s 2018 Annual Meeting and must provide certain other information as described in the Company’s Amended and Restated Articles of Incorporation.
What is the deadline to propose matters for inclusion in the proxy materials for the 2018 Annual Meeting of Shareholders?
A shareholder proposal must be received on or prior to January 8, 2018. All proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
What is the deadline to propose matters for consideration at the 2018 Annual Meeting of Shareholders, but not for inclusion in the proxy materials?
The proposal must be received no later than the close of business on April 29, 2018. The proposal must be submitted by a shareholder of record and must set forth the information required by the Company’s Amended and Restated Articles of Incorporation.
If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
What is the deadline to nominate individuals for election as directors at the 2018 Annual Meeting of Shareholders using proxy access?
A shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years shares of the Company’s common shares representing an aggregate of at least 3% of our outstanding shares, may nominate and include in our proxy materials director nominees constituting up to 20% of the Company’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements set forth in the Company’s bylaws. Notice of proxy access director nominees must be received not earlier than the close of business on December 9, 2017 and not later than the close of business on January 8, 2018.
What is the deadline to nominate individuals for election as directors at the 2018 Annual Meeting of Shareholders, but not included in the proxy materials?
Director nominations that a shareholder intends to present at the 2018 Annual Meeting of Shareholders, but does not intend to have included in the Company’s proxy materials, must be received no later than the close of business on April 23, 2018. Notice of director nominations must be submitted by a shareholder of record and must set forth the information required by the Company’s Amended and Restated Articles of Incorporation. If you are a beneficial owner of shares held in street name, you may contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record.
Where do I send proposals and director nominations for the 2018 Annual Meeting of Shareholders?
Proposals and director nominations must be sent by mail to Chico’s FAS, Inc., 11215 Metro Parkway, Fort Myers, Florida 33966. Attn: Corporate Secretary.
Our Board currently consists of nineeight directors, threeall of whose terms of office will expire at the Annual Meeting. Each of these three, David F. Walker, John J. Mahoney and Stephen E. Watson, is standing for re-election as a director of the Company to hold office until the 20182019 Annual Meeting of Shareholders (the “Annual Meeting”). Each of these eight, David F. Walker, Bonnie R. Brooks, Janice L. Fields, Deborah L. Kerr, John J. Mahoney, Kim Roy, William S. Simon and until his successor has been duly elected and qualified. In addition, RossStephen E. Roeder, a Class I director whose term also expires at our Annual Meeting of Shareholders in 2018, has announced his retirement and resignation from the Board, effective at the Annual Meeting. The Board of Directors,Watson, based on the recommendation of our Corporate Governance and Nominating Committee (the “Governance Committee”), has been nominated Deborah L. Kerrby the Board and has agreed to stand for electionre-election as a Class I director of the Company to fillhold office until the remainder2020 Annual Meeting of Mr. Roeder’s term.
Shareholders and until his or her successor has been duly elected and qualified.
Prior to the 2016 Annual Meeting of Shareholders, held last year, our Board was divided into three classes with terms expiring in 2017 (Class III), 2018 (Class I), and 2019 (Class II). At last year’s annual meeting,the 2016 Annual Meeting of Shareholders, shareholders approved an amendment to our Articles of Incorporation eliminating the classified board structure and providing for the annual election of directors beginning at this Annual Meeting. As summarized in the table below, underUnder our amendedAmended and Restated Articles of Incorporation (the “Articles”), the unexpired three-year terms of directors elected prior to 2017 were not changed and the
transition to a declassified board is beingwas phased in gradually as each class comescame up for election. Accordingly, at the 2017 Annual Meeting of Shareholders, the Class III directors whose terms are expiring at this Annual Meeting will bewere elected for terms that will expire annually. The termsAt the 2018 Annual Meeting of Shareholders, the Class I directors willwere elected for terms that also expire in 2018 and theannually. The terms of the Class II directors will expire in 2019.at this Annual Meeting, and these directors will be elected for terms that also expire annually. As a result, all of our directors will be elected on an annual basis commencing at the 2019this Annual Meeting of Shareholders.
Meeting.
Our BylawsArticles provide that a director nominee will be elected only if he or she receives a majority of the votes cast with respect to his or her election in an uncontested election (in other words, the votes cast “For” the election of such director nominee must exceed the votes cast “Against” his or her election as a director). Although you may abstain or votefrom voting with respect to withhold a vote for a particular nominee, that voteabstention will not be considered a vote cast “For” or “Against” that nominee and, as a result, will not have impact on the election result. Under our Corporate Governance Guidelines (the “Governance Guidelines”), if an incumbent director does not receive the required number of votes in an uncontested election, that director is required to submit in writing his or her irrevocable offer to resign from the Board.
In that situation, our Governance Committee would consider the resignation, evaluate the circumstances, and make a recommendation to the Board about whether to accept or reject the resignation or whether to take other action. The Board would act promptly on the Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it. The Board only will approve as nominees those director candidates who agree to tender such resignation promptly following the certification of the shareholder vote.
Nominees for Election
At the Annual Meeting, shareholders will be asked to elect fourthe aforementioned eight directors to our Board for the ensuing year. The terms of our Class III directors, consisting of David F. Walker, John J. Mahoney, and Stephen E. Watson, expire at the Annual Meeting. The Board of Directors, based on the recommendation of our Governance Committee, has nominated each of these directors to stand for reelection as unclassified directors to serve until our Annual Meeting of Shareholders in 2018.
In addition, Ross E. Roeder, a Class I director whose term also expires at our Annual Meeting of Shareholders in 2018, has announced his retirement and resignation from the Board, effective at the Annual Meeting. The Board of Directors, based on the recommendation of our Governance Committee, has nominated Deborah L. Kerr for election as a Class I director to fill the remainder of Mr. Roeder’s term.
Our remaining Class I directors, Andrea M. Weiss and William S. Simon, will serve until our Annual Meeting of Shareholders in 2018 and our Class II directors, consisting of Shelley G. Broader, Bonnie R. Brooks, and Janice L. Fields, will serve until our Annual Meeting of Shareholders in 2019.
The following information is provided for each person our Board of Directors has nominated and recommended for election at the Annual Meeting. It includes the experience, qualifications, attributes, and skills that led our Governance Committee and the Board believe are most important to our sustainable success and led them to conclude that the person should be nominated to serve as one of our directors.
■ | PROPOSAL 1 Election of Directors |
Nominees for Election | |
David F. Walker, 65 | ||
Board Chair Since: 2015
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Skills and Qualifications: • Former Partner Global Accounting Firm
Certified Public Accountant Certified Fraud Examiner
• Chico’s FAS, Inc. , Board Chair, Audit • CoreLogic, Inc.,Audit Committee Chair | Former Directorships: • Paradyne Networks
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David F. Walker serves as Chair of the Board and Chair of our Audit Committee.has been a director since 2005. He also serves on the Boardboards of Directors and chairs the audit committeesdirectors of CommVault Systems, Inc., a data management software company, and CoreLogic, Inc., a real estate intelligence and analytics company. In addition, he was the Director of the Accountancy Program at the University of South Florida from 2002 through 2009 and led the school’s Program for Social Responsibility and Corporate Reporting. Mr. Walker was a partner at Arthur Andersen LLP from 1986 until 2002 and was in charge ofled the firm’s assurance and business advisory services practice in the Florida/CarribeanCaribbean region. HeMr. Walker is an NACD Board Leadership Fellow, certified public accountant, certified fraud examiner, and has been deemed by the Board to be an Audit Committee Financial Expert.
Mr. Walker’s experience on other public company boards, his distinguished role in academia, his governance expertise, and his former service at a global accounting firm, provide the Board with significant leadership, financial and public company oversight experience and qualify him to sitserve on our Board.
Bonnie R. Brooks, 65 | |||
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Skills and Qualifications: • Interim President and CEO of Chico’s FAS, Inc. • Former President and CEO of Hudson’s Bay • Former President of Lane Crawford Joyce Group • Former Global Merchandise Manager of Dickson Concepts (International) Limited • Former EVP and General Merchandise Manager of Holt Renfrew & Company • Global Retail Experience Current Directorships: • Chico’s FAS, Inc., Executive Committee • Rogers Communications Inc., Human Resources, Pension and Corporate Governance Committees • RioCan Real Estate Investment Trust, Trustee, Investor and Governance Committees | Former Directorships: • Abercrombie & Fitch Co., Compensation Committee • Empire Company Limited, Human Resources Committee • Royal Ontario Museum, Chair • Alignvest Acquisition Corporatation • Indigo Books & Music, Inc. • Liquor Control Board of Ontario, Chair |
Bonnie R. Brooks has been a director since 2016. She was appointed Interim President and CEO (“Interim CEO”) of the Company effective April 24, 2019, following Shelley Broader’s resignation as President and CEO. She has more than 30 years of global retail executive leadership experience and most recently (January 2014 to December 2016) served as the Vice Chair of Hudson’s Bay
2 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Nominees for Election | |
Company, a fashion retail group operating through multiple banners, including Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Saks Off Fifth and Kaufhof. Ms. Brooks joined Hudson’s Bay in 2008 as Chief Executive Officer and President. From 2012 to 2014, Ms. Brooks served as President of Hudson’s Bay Company, responsible for both Hudson’s Bay and Lord & Taylor department stores USA. From 1997 to 2008, Ms. Brooks was based in Hong Kong serving as an executive officer, including as President of the Lane Crawford Joyce Group, a women’s fashion retailer with over 500 stores in Asia, and as Global Merchandise Manager for Dickson Concepts (International) Limited, a luxury retail group and owner of Harvey Nichols, UK. Prior to that, Ms. Brooks spent over a decade at Holt Renfrew & Company, a Canada-based fashion department store, in roles that included Executive Vice President and General Merchandise Manager. Ms. Brooks also served on the board of directors of Abercrombie & Fitch Co., a teen apparel retailer. Ms. Brooks currently serves on the board of directors of Rogers Communications Inc., a Canadian diversified communications and media company, and is a trustee of RioCan Real Estate Investment Trust, a North American real estate owner and developer. Ms. Brooks was formerly a director of Empire Company Limited, one of Canada’s largest food retailers. She is a member of the Order of Canada.
Ms. Brooks’ significant experience in the retail industry, including her experience as a Chief Executive Officer and President, has provided her with operational expertise and extensive public company board experience that qualify her to serve on our Board.
Janice L. Fields, 63 | ||
Skills and Qualifications: • Former President, EVP and COO of McDonald’s USA, LLC • Marketing, Strategic, Risk Management, Financial and Operational Experience Current Directorships: • Chico’s FAS, Inc., Corporate Governance and Nominating Committee Chair and Executive Committee • Welbilt, Inc., Compensation Committee and Corporate Governance Committee • Taubman Centers, Inc., Compensation Committee | Former Directorships: • Buffalo Wild Wings, Inc., Chair • Monsanto Company, Compensation Committee |
Janice L. Fields has been a director since 2013. She served as President of McDonald’s USA, LLC, a subsidiary of McDonald’s Corporation (“McDonalds”), a fast food chain operator and franchiser with $38 billion in sales per year, from January 2010 until her retirement in November 2012. Ms. Fields held numerous other roles at McDonald’s, having started her career as a crew member. Prior to serving as President, she held several executive positions within McDonald’s USA, including U.S. Division President for the Central Division from 2003 through 2006 and Executive Vice President and Chief Operating Officer from 2006 through January 2010.
From 2008 to 2018, Ms. Fields served on the board of directors of Monsanto Company, a leading global provider of agricultural products, and played a key role in navigating Bayer’s acquisition of the company in 2018. From 2017 until 2018, Ms. Fields also served on the board of directors of Buffalo Wild Wings, Inc. where she was appointed chairperson in August of 2017. As chairperson, Ms. Fields played a pivotal role in the acquisition of the company by Arby’s Restaurant Group in 2018.
In 2018, Ms. Fields was appointed to the board of directors of Welbilt, Inc., a leading global provider of commercial foodservice equipment. Ms. Fields also serves on the board of directors of Taubman Centers, Inc.
In addition to her public company service, Ms. Fields serves on the Global board of directors of Ronald McDonald House Charities, a global nonprofit organization focused on families and children. Previously, Ms. Fields also served on the boards of directors of The Field Museum, a natural history museum, from 2010 through 2012, and United Cerebral Palsy, an international nonprofit service provider for individuals with disabilities, from 2005 through 2013.
Through her numerous executive roles at a Fortune 500 company and board service, Ms. Fields has gained broad financial and operational experience and has demonstrated significant leadership and management skills through her successful implementation of various strategic initiatives. She has developed expertise related to marketing, strategic planning, risk management, production, human resources and mergers and acquisitions, which provides her with valuable insights on operational and strategic matters reviewed by our Board. Ms. Fields’ extensive operational, financial, and strategic planning experience qualifies her to serve on our Board.
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■ | PROPOSAL 1 Election of Directors |
Nominees for Election | |
Deborah L. Kerr, 47 | ||
Skills and Qualifications: • Managing Director, Warburg Pincus • Former Executive Vice President, Chief Product & Technology Officer for Sabre Corporation and FICO • Former Chief Technology Officer for Hewlett-Packard Company • Former Manager, Mission Operations at NASA Jet Propulsion Laboratory Current Directorships: • Chico’s FAS, Inc., Corporate Governance and Nominating Committee and Human Resources, Compensation and Benefits Committee • ExlService Holdings, Inc., Compensation Committee and Nominating and Governance Committee • International Consolidated Airlines Group, S.A., Audit Committee • NetApp, Inc., Audit Committee | Former Directorships: • D+H Corporation |
Deborah L. Kerr has been a Director since June 2017. Ms. Kerr also serves on the boards of directors of NetApp, Inc., ExlService Holdings, Inc. and International Consolidated Airlines Group, S.A. Ms. Kerr serves as a Managing Director of Warburg Pincus, an American private equity firm with offices in the United States, Europe, Brazil, China and India. She formerly served on the board of directors of D+H Corporation, a Canadian company that provides global payments and lending technology.
From 2013 to April of 2017, Ms. Kerr was the Executive Vice President, Chief Product & Technology Officer for Sabre Corporation in Dallas, Texas, a software and services technology provider to the travel and transportation industry.
From 2009 to 2012, Ms. Kerr served as Executive Vice President and Chief Product & Technology Officer at Fair Isaac Corporation (now FICO) in San Diego, California. From 1998 to 2009, she served in various leadership roles at Hewlett-Packard Company. Prior to Ms. Kerr’s experience at Hewlett-Packard Company, she was Manager, Mission Operations at NASA Jet Propulsion Laboratory in Pasadena, California.
Ms. Kerr is a global operating executive, recognized for executing successful transformations, accelerating growth and innovation, and managing risk and change in complex environments. She is also an experienced private and public company director. Her extensive skill set, particularly her product and technology experience, qualifies her to serve on our Board.
4 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Nominees for Election | |
John J. Mahoney, 67 | ||
Skills and Qualifications: •Former Partner Global Accounting Firm
Certified Fraud Examiner • Chico’s FAS, Inc. , Human Resources,
Director and Compensation Committee Chair | Former Directorships: • Advo, Inc.
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John J. Mahoney currently serves on the Audit Committee and as Chair of the Human Resources, Compensation and Benefits Committee.has been a director since 2007. He retired as Vice Chairman of Staples, Inc. (“Staples”), an office supply retail chain, where he served from 2006 through 2012. Additionally, he served as Chief Financial Officer for Staples Inc., from 1996 through 2012. Prior to 1996, Mr. Mahoney was a partner at the accounting firm Ernst & Young LLP. He currently serves on the Boardboards of Directorsdirectors of Bloomin’ Brands, Inc., a company that owns dining restaurant chains, The Michaels Companies, Inc., an arts and crafts retail chain, and Burlington Stores, Inc., a national discount apparel retail chain. Mr. Mahoney served on the Boardboard of Directorsdirectors of Advo, Inc., a leading direct mail marketing services company, from 2001 to 2007, Zipcar, Inc., one of the world’s leading car-sharing services, from 2010 to 2012, and has been deemed by the Board to be an Audit Committee Financial Expert.
Mr. Mahoney’s extensive experience in a number ofseveral important areas, including finance and strategic planning, public company governance and executive compensation, as well as his deep knowledge of the various issues that retail companies currently face, qualify him to sitserve on our Board.
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Skills and Qualifications: • Former Ralph Lauren Ralph Lauren, • Chico’s FAS, Inc. , Audit Committee | Former Directorships: •
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Stephen E. Watson,Kim Roy has been a director since November 2010. Mr. Watson wasFebruary 2019. She has more than 30 years of experience in the Chairretail industry leading and Chief Executive Officer of Dayton Hudson Department Stores Co., a company owning several major retaildeveloping iconic American brands, from 1985 to 1992, andparticularly in women’s apparel.
Ms. Roy is currently President of Dayton Hudson Corporation from 1992Kim Roy Consulting LLC, a consulting advisory firm established by Ms. Roy to 1995. Mr. Watson retired in 2002provide professional consulting services to businesses. Previously, she spent 13 years at Ralph Lauren Corporation. From 2014 to 2016 Ms. Roy was Group President, North America Wholesale, leading Polo, Lauren and Chaps apparel brands for men, women and children, as well as home categories. From 2008 to 2014, Ms. Roy was Group President and Chief Executive Officer of Gander Mountain Company, a privately held retailerLauren Brands, responsible for outdoor sports and recreation activities. Mr. Watson also serves on the Board of Directors of Regis Corporation, a leading hair salon chain, and as Lead Director for Kohl’s Corporation, a department store retail chain. From 1997 through 2005, Mr. Watson was a director of Shopko Stores, Inc., a general retail chain,Company’s women’s brands, and from 2004 through 2007, Mr. Watson was a director of Smart & Final, Inc., a chain of warehouse-style food supply stores. He also served on the Boards of Target Corporation, a national retail chain, from 19912003 to 1996 and Eddie Bauer Holdings, Inc., a holding company that operates retail store chains, from 2005 to 2010.
Mr. Watson’s extensive experience as a senior executive officer of several complex and specialty retail businesses and his experience as a director of other public retail companies, along with his broad knowledge of areas such as retail operations, corporate finance, accounting, marketing and merchandise procurement qualify him to sit on our Board.
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Deborah Kerr is our nominee to fill the term of our retiring director Ross Roeder. From 2013 to April of 2017, Ms. Kerr was the Executive Vice President, Chief Product & Technology Officer for Sabre Corporation in Dallas, Texas, a software and services technology provider to the travel and transportation industry. At Sabre,2008, she led the global product and technology organization.
Prior to her role at Sabre Corporation, from 2009-2012, Ms. Kerr served as Executive Vice President and Chief Product & Technology Officer at Fair Issac Corporation in San Diego, California. From 1998 to 2009, she served in various technology leadership roles at Hewlett-Packard Company, also in San Diego, and from 1988 to 1998, she was Manager, Mission Operations, at NASA Jet Propulsion Laboratory in Pasadena, California.
Ms. Kerr serves on the Board of DH Corporation, a Canadian company that provides global payments and lending technology, where she sits on the Risk and Governance and Nominating committees. She also sits on the board of ExlService Holdings, Inc., a provider of operations management analytics and technology platforms, sitting on the Audit and Compensation committees.
Ms. Kerr is a global product and technology executive, recognized for executing successful transformations, accelerating growth and innovation, and managing risk and change in complex environments. She is also an experienced public company director. Her extensive skill set, particularly her product and technology experience, qualify her to sit on our Board.
If elected, Mr. Walker, Mr. Mahoney and Mr. Watson will continue their service on the Board, and Ms. Kerr will initiate her service on the Board beginning after the Annual Meeting, and all will serve on the Board until the Annual Meeting in 2018, until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Unless otherwise directed, the persons named in the enclosed form proxy intend to vote such proxy“FOR” the election of Mr. Walker, Mr. Mahoney and Mr. Watson as Directors of the Company and Ms. Kerr as a Class I Director of the Company.
None of the nominees are related to any of our directors, other nominees for director, or any executive officer of the Company by blood, marriage or adoption. There are no arrangements or understandings between any director or director nominee and any other person pursuant to which such director or director nominee was or is to be selected as a director.
Each of the proposed nominees for election as director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, any of the nominees becomes unable or unwilling to serve as a director, it is intended that shares represented by the proxies voted for such nominee will be voted for such other person as our Board of Directors shall designate to replace such nominee. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.
Recommendation
The Board of Directors recommends a vote“FOR”the election of all four nominees.
Directors Continuing in Office
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Shelley G. Broader has been a director since December 2015 at which time she was also appointed Chief Executive Officer and President. Ms. Broader joined the Company after having served as President and Chief Executive Officerof Lauren.
From 2001 to 2003, Ms. Roy was President of the Walmart EMEA, a multinational retail corporation in the Europe, Middle EastAnn Taylor division for Ann Taylor Inc. From 1995 to 2001, Ms. Roy served as Group President Liz Claiborne, Inc. Prior to this, Ms. Roy held various senior merchandising positions at Associated Merchandising Corporation and Sub-Saharan Africa regions since 2014. SheAbraham & Straus.
- 2019 Proxy Statement | 5 |
■ | PROPOSAL 1 Election of Directors |
Nominees for Election | |
Ms. Roy previously served Walmart Canada in various roles, including President and Chief Executive Officer 2011 to 2014 and Chief Merchandising Officer from 2010 to 2011. Ms Broader also served as Senior Vice President for Sam’s Club in 2010. Prior to joining Walmart, Ms. Broader was President and Chief Operating Officer of The Michaels Companies, Inc., an arts and crafts retail chain, from 2008 to 2009. Previously, Ms. Broader enjoyed a 17-year career with Delhaize Group, a food supermarket retailer, where, under the Hannaford banner, she held a range of leadership roles across the Company’s operations, merchandising, distribution, strategy and marketing divisions. Ms. Broader is also a member of the board of directors of Raymond James Financial, Inc,Weight Watchers International, Inc. She serves on the board of trustees of Skidmore College as well as serving as marketing and communications committee chair, compensation committee vice chair and advancement committee member. Ms. Roy also serves as a financial services company.director and development committee member of Catholic Guardian Services.
Ms. Roy has extensive experience in retail brands with deep insight into driving profitability and promoting growth, including several prior senior executive roles. Ms. Roy’s expertise in the retail industry, particularly in women’s apparel and merchandising, and leadership skills qualify her to serve on our Board.
William S. Simon, 59 | |||
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Skills and Qualifications: •
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Bonnie R. Brooks has more than 30 years of global retail executive leadership experience, retiring in December 2016 from her role as the Vice Chair of Hudson’s Bay Co., a department store group operating through multiple banners internationally including Saks Fifth Avenue. Ms. Brooks joined Hudson’s Bay in 2008 as Chief Executive Officer and President. From 1997 to 2008, Ms. Brooks was based in Hong Kong serving as an executive officer, including as President of the Lane Crawford Joyce Group, which operates fashion department stores and designer brand franchise operations in Asia, and as Global Merchandise Manager for Dickson Concepts (International) Limited, a luxury retail group. Prior to that, Ms. Brooks spent over a decade at Holt Renfrew & Company, a Canada-based fashion department store, in roles that included Executive Vice President and General Merchandise Manager. Ms. Brooks also serves on the Board of Directors of Abercrombie & Fitch Co., a teen apparel retailer, Rogers Communications Inc., a Canadian diversified communications and media company, and is a trustee of RioCan Real Estate Investment Trust, a North American real estate developer and operator. Ms. Brooks was formerly a director of Empire Company Limited, one of Canada’s largest food retailers.
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Janice L. Fields has been a director since May of 2013 and served as President of McDonald’s USA, LLC, a subsidiary of McDonald’s Corporation, a fast food chain operator and franchiser, from January 2010 until her retirement in November 2012. Prior to serving as President, she held several executive positions within McDonald’s USA, including U.S. Division President for the Central Division from 2003 through 2006 and Executive Vice President and Chief Operating Officer from 2006 through January 2010. Ms. Fields currently serves on the Board of Directors of Monsanto Company, a leading global provider of agricultural products.
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Former President and CEO of Walmart U.S. and EVP of
Former President of WSS Consulting
Former Secretary of the Florida Department of Management Services
Formerly held senior positions at Brinker International, Inc., Diageo North America, Inc., Cadbury Schweppes plc, PepsiCo, Inc. and RJR Nabisco, Inc. |
• Chico’s FAS, Inc.
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Human Resources, Compensation and Benefits Committee • Darden Restaurants, Inc., Audit Committee andNominating and Governance Committee Chair • Anixter International, Inc. | Former Directorships: • Agrium, Inc. |
William S. Simon has been a director since 2016. He retired in 2014 from his position as President and CEO of Walmart U.S. and Executive Vice President of Wal-martWalmart Stores, Inc. (“Walmart”) and remained a consultant through 2015. Prior to that, he served in various executive roles at Walmart from 2006 forward. Mr. Simon has also served as President of WSS Consulting, a consulting advisory firm established by Mr. Simon to provide professional consulting services to businesses. MrMr. Simon held several senior positions at Brinker International, Inc., a casual dining restaurant company, Diageo North America, Inc., a leading premium drink company, Cadbury Schweppes plc, a multinational confectionery company, PepsiCo, a multinational food, snack and beverage corporation, and RJR Nabisco, a tobacco and food products company. Mr. Simon served as Secretary of the Florida Department of Management Services and served 25 years in the U.S. Navy and Naval Reserves. Mr. Simon also servesserved on the Boardboard of Directorsdirectors of Darden Restaurants, Inc., a restaurant operator, and Agrium, Inc., a retail supplier of agricultural products and services,services. Mr. Simon also serves on the boards of directors of Darden Restaurants, Inc., a restaurant operator, Anixter International, Inc., a global distributor of network and security solutions, and is a senior advisor to KKR, an investment firm. Since 2015, Mr. Simon has served as a faculty member and Executive in Residence at Baylor University.
Mr. Simon’s extensive retail experience, particularly in management, in multi-unit supply chain and in global sourcing, along with his strong public company board experience, qualify him to serve on our Board.
6 |
| - 2019 Proxy Statement | |
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PROPOSAL 1 Election of Directors | ■ |
Nominees for Election | |
Stephen E. Watson, 74 | |||
Skills and Qualifications: • Dayton Gander Mountain Company |
, Corporate Governance
Kohl’s Corporation, Audit Committee and | Former Directorships: •
Shopko, Inc. |
Andrea M. WeissStephen E. Watson has been a director since February 2009. Ms. Weiss isNovember 2010. Mr. Watson brings to the founderBoard nearly 40 years of executive and currentdirector experience in the retail industry, holding various executive officer positions with Dayton Hudson Corporation, a company owning several major retail brands, including Chairman and Chief Executive Officer of Dayton Hudson Department Stores Co. and President of Dayton Hudson Corporation. Mr. Watson retired in 2002 as President and Chief Executive Officer of Retail Consulting, Inc.,Gander Mountain Company, a boutique consulting practice which formed in 2002. In 2014, Ms. Weiss co-founded The O Alliance, LLC.,privately held retailer for outdoor sports and recreation activities.
Mr. Watson serves on the board of directors of Kohl’s Corporation, a consulting network focuseddepartment store retail chain. From 2007 to 2017, he served on omni-channel solutions. She has extensive specialty retail experience having served in several senior executive positions with dELiA*sthe board of directors of Regis Corporation, a leading hair salon chain. From 1997 through 2005, Mr. Watson was a director of Shopko Stores, Inc., a retail companystore chain. From 2004 through 2007, Mr. Watson was a director of young women’s clothing, The Limited, Inc., a women’s fashion retailer, Intimate Brands, Inc., a women’s fashion retailer, Guess, Inc., a clothing retailer, and Ann Taylor Stores, Inc., a women’s retail chain. Ms. Weiss currently serves on the Board of Directors of Cracker Barrel Old Country Store,Smart & Final, Inc., a chain of restaurant and gift stores, and Nutrisystem,food supply stores. He also served on the boards of directors of Norwest Bank from 1990 to 1996, Target Corporation, a multinational retail chain, from 1991 to 1996, Retek, Inc., a provider of weight loss productsan end-to-end retail management enterprise resource planning software, from 1999 to 2004 and services.Eddie Bauer Holdings, Inc., a holding company that operates retail store chains, from 2005 to 2010.
Mr. Watson’s experience as a leading senior executive officer of several complex and specialty retail businesses, his experience as a director of other public retail companies and his broad knowledge of areas such as retail operations, corporate finance, accounting, marketing and merchandise procurement qualify him to serve on our Board.
If elected, Mr. Walker, Ms. Weiss servedBrooks, Ms. Fields, Ms. Kerr, Mr. Mahoney, Ms. Roy, Mr. Simon and Mr. Watson will continue their service on the Board beginning after the Annual Meeting, and all will serve on the Board until the Annual Meeting in 2020, until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Unless otherwise directed, the persons named as proxies intend to vote such proxy “FOR” the election of DirectorsMr. Walker, Ms. Brooks, Ms. Fields, Ms. Kerr, Mr. Mahoney, Ms. Roy, Mr. Simon and Mr. Watson as directors of the Company.
None of the nominees are related to any of our directors, other nominees for director, or any executive officer of the Company by
blood, marriage or adoption. There are no arrangements or understandings between any director or director nominee and any other person pursuant to which such director or director nominee was or is to be selected as a director.
Each of the proposed nominees for election as director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, any of the nominees becomes unable or unwilling to serve as a director, it is intended that shares represented by the proxies voted for such nominee will be voted for such other person as our Board shall designate to replace such nominee. The Pep Boys – Manny, Moe & Jack, an automotive products chain from 2013Board has no reason to 2016.believe that any of the nominees will be unable or unwilling to serve.
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■ | PROPOSAL 1 Election of Directors |
Director Nominations and Qualifications | |
Director Nominations and Qualifications
Responsibility for Selection of Director Candidates |
Responsibility for Selection of Director Candidates
The Board is responsible for selecting director candidates. The Board has delegated the screening process to the Governance Committee, with the expectation that other members of the Board and executives will be asked to take part in the process as appropriate. The Governance Committee identifies individuals qualified to become Board members and recommends such individuals to the Board for its consideration.
Director Criteria |
Director Criteria
The Governance Committee is responsible for initial review and assessment of the skills, experience and background required of each of the Company’s directors in the overall context of the business and current composition of the entire Board. When evaluating potential nominees, including incumbent directors, the Governance Committee and the Board take into account theour requirement that a substantial majority of Board members be independent; the diversity of experiences and backgrounds represented on the Board; the need for financial, business,
academic, public company and other expertise on the Board and its committees;Committees; and the need to have directors who will work diligently and collegially to represent the best interests of the Company and its shareholders, communitiesemployees, customers and employees.communities. While the focus and priorities may change from time to time, this assessment includes an evaluation of thea potential nominee’s experience in areas relevant to our business and our strategy. Below is a summary of areas of experience our Board has determined are currently most relevant to our business:
SUMMARY OF DIRECTOR EXPERTISE/SKILL
Expertise/Skill | Board Representation | |
CEO / CFO Experience | ✔ | |
Corporate Governance | ✔ | |
E-Commerce / Social Media | ✔ | |
Executive Compensation / Human | ✔ | |
Financial Expert | ✔ | |
Franchising | ✔ | |
IT/ Cybersecurity | ✔ | |
Marketing | ✔ | |
Product Development / Fashion Merchandising | ✔ | |
Real Estate | ✔ | |
Retail | ✔ | |
Store Operations | ✔ | |
Supply Chain / Sourcing | ✔ | |
Strategy / Business Development / Mergers & Acquisitions | ✔ |
We seek diversity on ourOur Board as a means to provideis exceptionally diverse, which provides us a broad spectrum of experience and expertise to the Company that will promote the presentation and consideration of differing points of view. By “diversity,” the Governance Committee and Board intend to includewe mean differences of viewpoint, professional experience, individual characteristics, personal background, qualities, skills, qualifications, gender, ethnicity and race, so as to generate naturally varying perspectives. The Board and the Governance Committee believe that those varying perspectives are important to the effectiveness of the Board’s oversight of the Company. The Governance Committee does not assign specific weight to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees and continuing directors.
Directors should be able to provide insights and practical wisdom based on their experience and expertise. Directors are expected to prepare for, attend and participate in Board and Board Committee meetings, to ask direct questions and require straightstraight-forward answers, and to meet as frequently and for as long as necessary to properly discharge their responsibilities and
duties as directors. Each Board member is expected to ensure that other commitments do not materially interfere with the member’s service as a director. In accordance with our Governance Guidelines, service on other boards and other commitments are considered by the Governance Committee when reviewing candidates for election and reelection.
The Company does not have term limits for its directors nor does it have a mandatory retirement age for Board members.directors. However, under the Company’s Governance Guidelines, a non-management director who will attain the age of 75 prior to the next Annual Meeting of Shareholders is required to submit a letter of resignation to the Board effective, if accepted, as of the next Annual Meeting of Shareholders. The Governance Committee and the Board will consider the resignation in the context of whether such director’s continued service contributes to the right mix of tenured and newer directors in light of requirements of the Board
at that time. If the Board determines not to accept the director’s resignation, the Governance Committee and the Board will reconsider the issue the following year, if necessary.
8 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Director Nominations and Qualifications | |
The Board and its Governance Committee believe the skills, qualities, attributes, and experience of our current directors including our new director nominee, provide the Company with the business acumen and diverse range of
perspectives needed to engage each other and management, to address effectively the Company’s evolving needs, and to represent the best interests of the Company’s shareholders.
Identifying and Evaluating Nominees |
Identifying and Evaluating Nominees
The Governance Committee annually determines whether the current members of the Board continue to provide the appropriate mix of knowledge, skills, judgment, experience, diversity, differing viewpoints and other qualities necessary for the Board to direct the Company based on the list of relevant skills and experienceexpertise discussed above. Furthermore, the Governance Committee regularly engages in Board succession planning by assessing the need for additional Board members to fill vacancies or to expand the size or expertise of the Board and the likelihood that the prospective nominee can satisfy the applicable criteria for directors. The Governance Committee identifies potential Board nominees utilizing search firms and Board members’ contacts within the business community. When the Governance Committee seeks a new candidate for directorship, it seeks an individual whose skills and experience will complement the attributes and perspectives of the other members of the Board. The Governance Committee takes into consideration whether particular individuals satisfy the independence criteria established by the Company, which standards meet or exceed those set forth in the NYSENew York Stock Exchange (“NYSE”) listing standards, together with any special criteria applicable to serve on various committees of the Board. The information learned through the Board’s self-assessmentevaluation process, including any identified gaps or weaknesses on the Board, is also used by the Governance Committee when considering the need for new directors and individual director nominees.
Once the Governance Committee has identified a potential nominee, it will make an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the
Governance Committee with the recommendation of the prospective candidate, as well as the Governance Committee’s own knowledge of the candidate, which may be supplemented by inquiries to the person making the recommendation or others.
If the Governance Committee determines, in consultation with the Chair of the Board and other Board members, as appropriate, that additional consideration is warranted, it may ask Board members or engage third parties to gather additional information about the prospective nominee’s background and experience and to report the findings to the Governance Committee. The Governance Committee then evaluates the prospective nominee against the criteria set out in the Company’s Governance Guidelines.
In connection with this evaluation, the Governance Committee determines whether to interview the prospective nominee. If warranted, the Chair of the Governance Committee, one or more of the independent directors, as well as the Chief Executive Officer and President (“CEO”) and others as appropriate, interview the prospective nominee. Thereafter, the Governance Committee deliberates and makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Governance Committee.
In the case of Ms. Kerr,Roy, she was identified as a potential candidate by a non-management director and then vetted by a professional search firm retained by the Board, identified her as a potential candidate, and the process described above was followed, resulting in her nomination for election.election by the Board in February 2019.
Shareholder Nominees |
Shareholder Nominees
The policy of the Governance Committee is to consider written recommendations from shareholders for positions on the Board of Directors.Board. A shareholder who wishes to recommend a prospective nominee for the Board should notify the Corporate Secretary of the Company or any member of the Governance Committee in writing with whatever supporting material the shareholder considers appropriate, including the nominee’s name and qualifications for Board membership. In evaluating the nominations, the Governance Committee uses the same criteria as for other candidates recommended by the committee, other Board members, or other persons. In addition, shareholders may nominate persons for election as directors at an annual shareholders’ meeting if such nominations are made in accordance with the procedures set forth in the Company’s Amended and Restated Articles of Incorporation.Articles.
In addition, in 2016, the Board adopted amendments to our Bylaws to implement proxy access. Aa shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of the Company’s stock representing an aggregate of at least 3% of our outstanding shares, may nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the shareholder(s) and nominee(s) satisfy the requirements in the Company’s Bylaws.Amended and Restated Bylaws (the “Bylaws”). The Board believes that the provisions adopted in our Bylaws appropriately balance the benefits shareholders gain under proxy access against the potential disruption that could be created by regular proxy contests, the corresponding turnover of a number of Board seats, and the challenges of on-boarding and integrating these new directors.
- | 9 |
■ | PROPOSAL 1 Election of Directors |
Committees of the Board | |
Compensation of Directors
General
Under our Governance Guidelines, only our non-management directors are entitled to receive compensation for serving on the Board. Compensation of such directors is determined by the Board based on the recommendation of the Compensation Committee. The Compensation Committee is responsible for reviewing and recommending director compensation to the Board. Last year it engaged the services of Frederic W. Cook & Co., Inc. (“FW Cook”), an outside independent consultant, to assist the Compensation Committee in its analysis and recommendations. As part of its consulting services, FW Cook provides the Compensation Committee with a review and analysis of the prevailing outside director compensation structures, utilizing data from the Company’s peer group companies. The Compensation Committee shares that review and analysis with the full Board. Such reviews are conducted at least annually. When making its recommendation, the Compensation Committee may take into account the potential appearance that the independence of our directors may be adversely affected if compensation and benefits exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the Company enters into consulting contracts with, or provides other indirect forms of compensation, to a director, an immediate family member or an organization with which the director is affiliated. These reviews and analyses were used in connection with implementing the compensation arrangements described below. FW Cook’s competitive review conducted in 2016 indicated that the Company’s annual director compensation approximated the median of the peer group, as reported in proxy statements filed in 2015, and before any anticipated or undisclosed increases as of the date the analysis was conducted.
Indemnification
We indemnify our directors and certain officers to the fullest extent permitted by law so that they will serve free from undue concern. This indemnification is authorized under our Bylaws, and accordingly we have signed agreements with all Board members obligating us to provide this indemnification to them.
Base Compensation and Non-Equity Benefits
During fiscal 2016, each non-employee director received an annual retainer of $75,000. The non-employee director serving as ChairCommittees of the Board received an additional annual cash retainer of $75,000. In addition, each non-employee director who served as a committee Chair for the Audit Committee, Compensation Committee, Governance Committee, or Executive Committee received additional annual retainers of $20,000, $20,000, $12,500, and $10,000, respectively.
All directors are entitled to reimbursement of their reasonable out-of-pocket expenses for attendance at Board and committee meetings and until recent changes described below, non-employee directors have also been entitled to elect to participate in the Company’s health insurance program with coverage provided for the director and his or her dependents, with the cost thereof paid by the Company. During the last fiscal year, Ms. Gibson (retired), Mr. Walker, Mr. Mahoney, Ms. Fields, Ms. Weiss, Ms. Brooks, Mr. Simon and Mr. Dyer (retired) participated in this health insurance program. In February 2017, the Board voted to discontinue offering participation in the Company’s health insurance program to new Board members and to current non-participating Board members. Those Board members currently participating in the program have been grandfathered so that their participation may continue. In addition, Board members are eligible to participate in the same merchandise discount program as all of our associates.
Restricted Stock
The Board has the discretion to make equity awards to non-employee directors. It is anticipated that each year around the time of the Annual Meeting of Shareholders, at the discretion of the Board, each continuing non-employee director will be awarded a determined grant value of restricted stock or restricted stock units that would vest one year following the grant date. Restricted stock awards are considered participating securities and recipients have the right to receive dividends on the awards during the vesting period. On July 21, 2016, for their respective service as directors, Mr. Walker, Mr. Mahoney, Mr. Watson, Mr. Roeder, Ms. Weiss, Mr. Simon, Ms. Fields and Ms. Brooks each received grants of 11,170 shares of restricted equity under the Company’s 2012 Omnibus Stock and Incentive Plan (the “2012 Omnibus Plan”), which was equivalent to approximately $130,000 in grant value, with certain rights to take such award in the form of restricted stock or restricted stock units and certain rights to defer vesting. Each such restricted stock grant vests the earlier of the 2017 Annual Meeting or July 21, 2017.
Non-Employee Director Compensation Table
The following table provides information on the compensation for non-employee directors for the fiscal year ended January 28, 2017 (referred to as “fiscal 2016”).
Fees Earned | Stock | All Other | ||||||||||
or Paid in Cash | (1) | Awards | (2) | Compensation | (3) | Total | ||||||
Name | ($) | ($) | ($) | ($) | ||||||||
David F. Walker | 180,000 | 130,019 | 12,757 | 322,776 | ||||||||
Bonnie R. Brooks | 39,561 | 130,019 | 2,880 | 172,460 | ||||||||
Janice L. Fields | 87,500 | 130,019 | 12,846 | 230,365 | ||||||||
John J. Mahoney | 95,000 | 130,019 | 16,513 | 241,532 | ||||||||
Ross E. Roeder | 75,000 | 130,019 | 417 | 205,436 | ||||||||
William S. Simon | 39,561 | 130,019 | 8,765 | 178,345 | ||||||||
Stephen E. Watson | 75,000 | 130,019 | — | 205,019 | ||||||||
Andrea M. Weiss | 78,564 | 130,019 | 12,398 | 220,981 | ||||||||
Verna K. Gibson* | 42,775 | — | 6,477 | 49,252 | ||||||||
David F. Dyer* | 39,210 | — | 154,396 | 193,606 |
* Ms. Gibson and Mr. Dyer retired from the Board effective at the 2016 Annual Meeting of Shareholders.
Name | Annual Retainer Fees ($) | Board Chair and Committee Chair Fees* ($) | Total Fees Earned or Paid in Cash ($) | ||||||||||
David F. Walker | 75,000 | 105,000 | 180,000 | ||||||||||
Bonnie R. Brooks | 39,561 | — | 39,561 | ||||||||||
Janice L. Fields | 75,000 | 12,500 | 87,500 | ||||||||||
John J. Mahoney | 75,000 | 20,000 | 95,000 | ||||||||||
Ross E. Roeder | 75,000 | — | 75,000 | ||||||||||
William S. Simon | 39,561 | — | 39,561 | ||||||||||
Stephen E. Watson | 75,000 | — | 75,000 | ||||||||||
Andrea M. Weiss | 75,000 | 3,564 | 78,564 | ||||||||||
Verna K. Gibson | 35,646 | 7,129 | 42,775 | ||||||||||
David F. Dyer | 35,646 | 3,564 | 39,210 |
The Company believes that effective corporate governance should include regular discussions with our shareholders in an effort to identify those areas where improvements might be made. Based on such discussions, as well as our monitoring of corporate governance practices of other public companies, we have recently adopted or enhanced the following corporate policies or practices:
standing committees: (a) Corporate Governance Guidelines
The Companyand Nominating Committee, (b) Audit Committee, (c) Human Resources, Compensation and Benefits Committee, and (d) Executive Committee. Each of these Committees has adopted Corporate Governance Guidelines to address the structure of the Board and its committees and to outline the Board’s current practices, policies, and processes for performing its oversight function. The Corporate Governance Guidelines, together with thea charter under which it operates. These charters of the Board’s committees, provide the framework for the governance of the Company which is designed to promote the Board’s independence from management where appropriate, to establish an environment where the Board is able to adequately perform its function as the overseer of management, and to align the interests of the Board and management with the interests of the Company’s shareholders. The Corporate Governance Guidelines are reviewed at least annually and have been updated from time to time since their initial adoption. The Corporate Governance Guidelines, including all revisions, as adopted by the Board, meet the applicable listing standards of the NYSE.
The Corporate Governance Guidelines are available at the Company’s website ((www.chicosfas.com)www.chicosfas.com) by clicking on “About Us” and then “Governance Documents & Charters”. The Company’s shareholders may obtain printed copies of the following documents by writing to Chico’s FAS, Inc., Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966. In addition to the Company’s Corporate Governance Guidelines, other information relating to corporate governance at the Company is available on the Corporate Governance section of the Company’s investor relations website, including:
Charters.” The members of the Board of Directors on the date of this proxy statement,Proxy Statement, and the committeesCommittees of the Board on which they currently serve, are identified below:
Director | Corporate Governance and Nominating Committee | Audit Committee | Human | Compensation and Benefits Committee | Executive Committee | |||
David F. Walker | ||||||||
Bonnie R. Brooks | ✔ | |||||||
Janice L. Fields | ✔ | |||||||
Deborah L. Kerr | ✔ | ✔ | ||||||
John J. Mahoney | ✔ | ✔ | ||||||
William S. Simon | ✔ | |||||||
Kim Roy | ✔ | |||||||
Stephen E. Watson | ✔ |
Chair | ||||||||
✔ |
Board Responsibilities |
Governance Structure
Corporate governance is typically defined as the system that allocates duties and authority among a company’s shareholders, board of directors, and management. The shareholders elect the Board and vote on non-routine matters. The Board has the ultimate decision-making authority for the Company, except with respect to those matters specifically reserved to the shareholders. The Board has responsibility for the Company’s long-term strategic plans, for establishing broad corporate policies, for hiring, overseeing and evaluating executive management, particularly the Chief Executive Officer, and for our overall performance and direction, but is not directly involved in our day-to-day operations. The day-to-day operations of the Company are conducted by its management, under the direction of the Chief Executive Officer. Board members keep informed about our business by participating in meetings of the Board and its committees, by reviewing analyses, reports and other materials provided by Company management and through discussions with our Chief Executive Officer and other employees. The Board conducts its business through meetings and through actions taken by written consent in lieu of meetings. Our Board of Directors currently consists of nine directors, including eight independent directors and our current Chief Executive Officer and President, who is not independent. If all of the nominees for election are elected, this year the Board will continue to be comprised of eight independent directors and one non-independent director.
Board Responsibilities
The primary responsibility of the Board of Directors is to provide oversight, counseling, and direction to the Company’s senior executive management with regard to the long-term interests of the Company and its shareholders. To the extent appropriate under Florida law, the Board, in carrying out its duties, also may consider other factors it deems relevant, including the social, economic, legal or other effects of the Company’s business and operations, and its constituents, which include employees, suppliers, customers and the communities in which we do business. The Board’s detailed responsibilities include: (a) selecting, establishing performance goals for, regularly evaluating the performance of, and approving the compensation of the Chief Executive OfficerCEO and other executives;executive officers; (b) reviewing, monitoring, and, where appropriate, approving the Company’s major financial objectives, operating and capital plans, and other significant actions or operations; (c) overseeing the Company’s strategic, operational, legal, regulatory, and reputational risk, including management’s identification and assessment of major risks facing the Company, and assisting in developing mitigation strategies; (d) planning for succession with respect to the Board and the Chief Executive Officer,CEO, and monitoring management’s succession planning for other executives; executive officers;
(e) overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed for long-term value and whether proper internal controls are in place and effective; (e)(f) overseeing the processes for maintaining the Company’s integrity and ethical obligations with regard to its financial statements and other public disclosures, and its compliance with law and ethics; (f)ethical requirements, and its environmental, social and governance practices; (g) monitoring, through the Audit Committee, possible conflicts of interest and related party transactions; and (g)(h) planning for the succession of the Board’s own members, including leadership roles.
The Board of Directors has delegated to the Chief Executive Officer,CEO, working with the Company’s other executive officers, the authority and responsibility for managing the Company’s business in a manner consistent with the Company’s standards and practices, and in accordance with any specific plans, instructions or directions of the Board. The Chief Executive OfficerCEO and management are responsible for seeking the advice and, in appropriate situations, the approval of the Board and/or its various committeesCommittees with respect to significant actions to be undertaken by the Company.
Corporate Governance and Nominating Committee |
The Governance Committee held six meetings during fiscal 2018. This Committee is responsible for developing, assessing, maintaining, recommending and implementing policies and practices relating to corporate governance, including reviewing and monitoring compliance with the Company’s Governance Guidelines. In addition, as a nominating committee, its principal responsibilities also include interviewing, evaluating, nominating, and recommending individuals for membership on, and to serve
as Chair of, the Company’s Board and each of its Committees. This Committee also prepares and supervises the Board’s annual review of director independence and oversees the Board’s evaluation process. All of the members of this Committee are, and all of the members of this Committee during fiscal 2018 were, independent within the meaning of the NYSE listing standards and the Company’s Governance Guidelines.
10 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Committees of the Board | |
Audit Committee |
The Audit Committee held six meetings during fiscal 2018. The Audit Committee’s principal responsibilities are to assist the Board in its general oversight of our accounting, financial reporting, financial risk assessment, internal controls, and audit function. This committee is directly responsible for: (a) the appointment, engagement, compensation, and oversight of the work of the Company’s independent certified public accountants; (b) reviewing the annual financial results and the annual audit of the Company’s financial statements; and (c) recommending whether the audited financial statements should be included in the Company’s Form 10-K and preparing the Audit Committee Report required under applicable securities laws. The Audit Committee also reviews the Company’s quarterly financial results and each Form 10-Q, and meets with the independent accountants and the Vice President-Internal Audit from time to time in order to review the Company’s internal controls and financial management practices. The Audit Committee also is responsible for reviewing and discussing with its independent accountants and management any related party transactions. During each fiscal year, at least one (and usually more) of the meetings between this Committee and the independent accountants is held separately without management present. The Audit Committee also meets with the head of the management disclosure committee periodically to discuss related party transactions. This Committee has established policies and procedures for the engagement of the independent accountants to provide permissible non-audit services, which includes pre-approval of all permissible non-audit services to be provided by the independent accountants.
All members of the Audit Committee are, and all of the members of this Committee during fiscal 2018 were, independent within the meaning of the listing standards of the NYSE, the Company’s
Governance Guidelines, and Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). SEC regulations also require the Board to determine if a member of its Audit Committee is an “Audit Committee Financial Expert.” According to these regulations, an audit committee member can be designated an Audit Committee Financial Expert only when the audit committee member satisfies specified qualification requirements, including experience in (or “experience actively supervising” others engaged in) preparing, auditing, analyzing, or evaluating financial statements presenting a level of accounting complexity comparable to what is encountered in connection with the Company’s financial statements. The regulations further require such qualifications to have been acquired through specified means of experience or education. The Board has determined that Mr. Walker, the Chair of this Committee, and Mr. Mahoney each qualify as an Audit Committee Financial Expert within the meaning of the regulations of the SEC and that each of them has accounting and related financial management expertise within the meaning of the listing standards of the NYSE. Although the Board has determined that Mr. Walker and Mr. Mahoney each has the requisite attributes defined under the rules of the SEC, their respective responsibilities are generally the same as those of the other Audit Committee members. The Audit Committee members are not auditors or accountants for the Company, do not perform “field work” and are not full-time employees of any audit firm. The SEC has determined that an audit committee member who is designated as an Audit Committee Financial Expert will not be deemed to be an “expert” for any purpose as a result of being identified as an Audit Committee Financial Expert. (See the Audit Committee Report on page 46 for further information.)
Human Resources, Compensation and Benefits Committee |
The Human Resources, Compensation and Benefits Committee (also referred to as the “Compensation Committee”) held five meetings during fiscal 2018. The principal responsibilities of this Committee are to: (a) review and make recommendations to the Board concerning the Company’s compensation philosophy and compensation plans to ensure alignment with the Company’s corporate goals and objectives; (b) evaluate the CEO’s performance against corporate goals and objectives established for the CEO and to approve the compensation of the CEO in light of her or his performance; (c) review and, when appropriate, approve the compensation of the executive officers of the Company; (d) provide input and make recommendations to the Board on individuals elected to be executive officers of the Company; (e) oversee and evaluate management’s assessment of the risks related to the Company’s compensation programs at least annually; (f) review and make recommendations with respect to, and administer, the Company’s existing and proposed compensation and bonus plans; and (g) review and discuss with management the Compensation Discussion and Analysis to be included in the Company’s annual proxy statement, recommend to the Board whether it should be included in such filing, and prepare the Compensation Committee
report required to be included in the Company’s annual proxy statement. The Compensation Committee also participates in management succession planning processes with the Board and the CEO.
In addition, the Compensation Committee is responsible for evaluating and recommending compensation to be paid to our directors, including retainers, fees, benefits and perquisites. Because of the inherent conflict associated with directors setting their own compensation levels, under its charter, the recommendations of the Compensation Committee relating to director compensation must be reviewed by third parties, which may include outside consultants. Furthermore, the 2012 Omnibus Plan includes an annual per director limit on cash and equity compensation paid to our directors. The Compensation Committee also reviews, makes recommendations with respect to, and monitors compliance with the Company’s Stock Ownership Guidelines.
All of the members of this Committee are, and all of the members of this Committee during fiscal 2018 were, independent within the meaning of the listing standards of the NYSE and the Company’s Governance Guidelines. (See the Human Resources, Compensation and Benefits Committee Report on page 35 for further information.)
- 2019 Proxy Statement | 11 |
■ | PROPOSAL 1 Election of Directors |
Governance of the Company | |
Executive Committee |
The Executive Committee held one meeting during fiscal 2018. The Executive Committee serves primarily as a means for taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on matters other than those specifically
reserved by Florida law solely to the Board. In practice, the Executive Committee’s actions have generally been limited to matters that the full Board specifically delegates to the Executive Committee, such as occasional action relating to the Company’s stock repurchase program.
Board and Committee Evaluation |
Strengthening our Board’s effectiveness is a high priority and we conduct robust annual evaluations to assess our directors’ strengths and identify areas for improvement. Each year, the Board conducts a three-part evaluation process coordinated by the Governance Committee Chair and delivered by the Chair of the Board and other Committee Chairs: full Board evaluation, Committee evaluation and self-assessment. In advance of the meeting in which the evaluation occurs, the Board and Committees collect materials and information to assist in their evaluation discussions. They review the qualifications and experience we have identified as important for Board effectiveness and how our membership stacks up against those criteria. They also review the number of Board and Committee meetings for the prior fiscal year and attendance records for individual directors. They look at the various responsibilities of the Board or the particular Committee set out in our governing documents, and they examine whether those responsibilities were met. They review a summary of their accomplishments, actions and areas of focus over the year, including any open
items. Members of the Board and each Committee also complete a comprehensive questionnaire relating to the Board’s performance, each Committee’s performance and their individual performance. The data collected from the questionnaires is tabulated, compared to the prior year and shared with the relevant chairs (of the Board and each Committee) to use in the in-person evaluation discussions.
The Board or Committee, in private session, then engages in focused, candid and thoughtful discussion about their performance. Directors who may not feel comfortable raising an issue in open session are encouraged to speak privately with the relevant Chair (of the Board or Committee), the CEO or General Counsel. Following the evaluation, the Chair of the Board or the Committee reports to the Board Chair, the CEO and/or the General Counsel (as appropriate) regarding the assessment generally and any desired management or Board action, change in procedure, or required follow-up resulting from the discussion.
Chair of the Board/Chief Executive Officer |
The Board annually elects a Chair after taking into account the recommendation of the Governance Committee made following its annual review of the Company’s Board leadership structure. The Company does not require the separation of its Chair and CEO positions, but they are currently separate. If the CEO is elected as the Chair of the Board, the independent directors shall elect a lead independent director (“Lead Independent Director”) to serve as the focal point for communicating with the CEO, facilitating information flow and communications among
non-management directors, and coordinating feedback to the CEO on behalf of the non-management directors regarding business issues and Board management. Currently, David F. Walker, an independent member of the Board, serves as Chair, while Bonnie R. Brooks serves as Interim CEO. The Company believes that, generally, separating the Chair and CEO roles is a strong governance practice and contributes to the Board’s independence from management.
Governance of the Company
Our Board operates within a strong set of governance principles and practices, which reflect discussions with our shareholders and monitoring of suggestions by recognized governance experts and the governance practices of other public companies. Our governance policies generally align with the corporate governance principles for U.S. companies developed by the Investor Stewardship Group (“ISG”), a collective of some of the largest institutional investors and global asset managers, including some of our own investors, that seeks to promote best practices in corporate governance. Some of our key governance principles and practices include:
Board Accountability to Shareholders
■ | Majority Voting and Director Resignation Policy. Incumbent directors up for re-election to our Board who fail to receive a majority of the votes cast in an uncontested election must tender their resignation; |
■ | Declassified Board. As of this Annual Meeting, our Board is fully declassified, meaning the full Board is elected annually; |
■ | Proxy Access. Our Bylaws include a proxy access provision to make it easier for shareholders to nominate director candidates; |
12 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Governance of the Company | |
■ | Right to Call Special Meetings. Our Articles and Bylaws include a mechanism for shareholders to call special meetings of shareholders; |
■ | Public Governance Documents. The Company discloses its corporate governance documents and its Code of Ethics on the Company’s website; |
■ | Shareholder Communication Mechanism. The Company provides a mechanism for shareholders to communicate with the Board; and |
■ | No Poison Pill. The Company has not adopted a “poison pill” or other similar shareholder rights provisions in its governance documents. |
Shareholders’ Voting Rights
■ | One- Share One-Vote. Each common share is entitled to one vote on each matter properly brought before the Annual Meeting; |
■ | One Class of Stock. Shares of common stock are the only outstanding voting securities of the Company; and |
■ | Amendments to Articles and Bylaws. Amendments to our Articles do not require a super majority vote, except for changes to the provisions regarding the election and removal of directors and the vote required for amending the Articles. Our Bylaws may be amended by a vote of the shareholders and shareholders may prescribe in any bylaw approved by them that such bylaw may not be amended by the Board. |
Independent Leadership Structure
■ | Seven of Eight Directors are Independent. All but one member of our Board is independent; |
■ | Independent Board and Committee Chairs. The Board and every committee have an independent chair; |
■ | Annual Leadership Structure Review. The Board’s leadership structure is reviewed annually by our Governance Committee; |
■ | Separate Board Chair and CEO. The CEO and Chair of the Board are currently separate; |
■ | Independent Directors Executive Sessions. Independent directors regularly meet in executive session at regularly scheduled Board meetings and the Chair of the Board communicates any concerns to the CEO or management; and |
■ | Audit Executive Sessions. The Audit Committee regularly conducts executive sessions with: independent auditors, internal audit, General Counsel, CFO and Chief Accounting Officer. |
Structures and Practices that Enhance Board Effectiveness
■ | Experience Mix. As described above, our Board is comprised of directors with a diverse and appropriate mix of experience and skills relevant to the Company’s business and strategy and to its status as a public company; |
■ | Diversity. The Board reflects, and seeks in its searches for new directors, diversity of experience and of personal and professional backgrounds; |
■ | Risk Oversight. The Board oversees the Company’s Enterprise Risk Management program, which is reviewed at |
least annually, and has allocated its various risk management and oversight responsibilities among itself and its Audit, Governance and Compensation Committees to ensure adequate time and resources to effectively monitor Company risk;
■ | Retirement Policy. Individual directors are required to offer their resignation on certain triggers, including changes in professional circumstances or the attainment of the age of 75; |
■ | Annual Evaluations. The Board and its Committees engage in a robust annual evaluation process, described above; |
■ | Over-Boarding and Other Significant Activities. The Company’s Governance Guidelines contain provisions limiting its directors’ service on other boards of directors and their committees as well as undertaking business activities that result in significant time commitments or may create legal or independence issues; |
■ | Majority Voting for Mergers. Mergers require the affirmative vote of a majority of the outstanding shares of the Company; |
■ | Board Size and Director Vacancies. The size of the Board can be fixed from time to time and vacancies on the Board can be filled by a majority vote of the Board; |
■ | Directors Removable Only for Cause. Our Articles provide that directors may be removed only for cause by shareholders; and |
■ | Annual Review of Governance Guidelines. Many of the governance policies of the Company are contained in our Governance Guidelines which are reviewed annually and provided on our website (see discussion of the Governance Guidelines below). |
Compensation and Incentive Structure Alignment with Company Goals and Strategy
■ | Stock Ownership Guidelines. The Company has strong stock ownership guidelines in place for our officers and directors; |
■ | Anti-hedging and Anti-pledging Policies. The Company’s Insider Trading Policy prohibits officers and directors from engaging in certain speculative transactions, such as short-term trading, short sales, trading on margin and certain stock pledges; |
■ | Clawback Policy. The Company has an incentive compensation clawback policy in place for our executive officers; |
■ | Third Party Compensation Review. The Compensation Committee engages an independent third party to evaluate the level of compensation provided to our named executive officers; |
■ | Incentive Compensation Practices Align with Long-Term Goals. As described more fully in our compensation discussions below, the Company has enhanced its incentive compensation practices to ensure alignment with its long-term goals; and |
■ | Equity Compensation Practices Align with Long-Term Goals. The 2012 Omnibus Plan and the related agreements governing equity grants require a minimum of one-year vesting on grants, prohibit the “recycling” of shares related to stock option exercises, and limit the annual amount of cash and equity compensation that can be granted to non-employee |
- 2019 Proxy Statement | 13 |
■ | PROPOSAL 1 Election of Directors |
Governance of the Company | |
directors. In addition, beginning in 2018, our long-term performance equity grants have a 3-year performance period based on Company performance against specific return on net assets (“RONA”) goals.
Corporate Governance Guidelines and Other Materials |
As noted above, the Company has adopted Corporate Governance Guidelines. The Governance Guidelines, together with the charters of the Board’s Committees and other governance documents, provide the framework for the governance of the Company which is designed to promote the Board’s independence from management where appropriate, to establish an environment where the Board is able to adequately perform its function as the overseer of management, and to align the interests of the Board and management with the interests of the Company’s shareholders.
The Governance Guidelines are available at the Company’s website (www.chicosfas.com) by clicking on “About Us” and then “Governance Documents & Charters.” In addition to the Company’s Governance Guidelines, other information relating to corporate governance at the Company is available on the Corporate Governance section of the Company’s website, including:
■ | Audit Committee Charter |
■ | Human Resources, Compensation and Benefits Committee Charter |
■ | Corporate Governance and Nominating Committee Charter |
■ | Executive Committee Charter |
■ | Articles of Incorporation |
■ | Bylaws |
■ | Code of Ethics |
■ | Policy on Granting Equity Awards |
■ | Stock Ownership Guidelines |
■ | Complaint Procedures for Accounting Matters |
■ | Insider Trading Policy |
The Company’s shareholders may also obtain printed copies of these documents by writing to Chico’s FAS, Inc., c/o Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966.
In addition, we are working to minimize the Company’s environmental footprint in all the communities where we operate by integrating social and environmental sustainability into business practices to support long-term growth. By creating sustainable global operations, we can create opportunities that positively impact the communities that make our products and the communities in which our products are sold. Information about some of these efforts is available in the following documents found on the Company’s website (www.chicosfas.com) by clicking on “Responsibility”:
■ | Social Responsibility |
■ | Philanthropy |
14 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Governance of the Company | |
Corporate Governance Structure |
A corporate governance structure is typically defined as the system that allocates duties and authority among a company’s shareholders, board of directors, and management. The shareholders elect the Board and vote on certain governance matters. The Board has the ultimate decision-making authority for the Company, except with respect to those matters specifically reserved for the shareholders. The Board has responsibility for the Company’s long-term strategic plans, for establishing broad corporate policies, for hiring, overseeing and evaluating executive management, particularly the CEO, and for our overall performance and direction, but is not directly involved in our day-to-day operations. The day-to-day operations of the Company are conducted by its management, under the direction
of the CEO. Board members keep informed about our business by participating in meetings of the Board and its Committees, by reviewing analyses, reports and other materials provided by Company management during and between Board meetings and through discussions with our CEO and other employees. The Board conducts its business through meetings and through actions taken by written consent in lieu of meetings. Our Board currently consists of eight directors, including seven independent directors and our current Interim CEO, who is not independent. If all of the nominees for election are elected, this year the Board will continue to be comprised of seven independent directors and one non-independent director.
Code of Ethics |
The Company and the Board believe that the long-term success of the Company is dependent upon maintaining an ethical business environment and complying with all legal and regulatory requirements. As part of its oversight in that regard, the Company maintains a Code of Ethics that applies to all employees and directors of the Company, including the CEO, the principal financial officer and the principal accounting officer. The Code of Ethics is available at the Company’s investor relations website
(www.chicosfas.com) by clicking on “About Us” and then “Governance Documents & Charters.” The Company intends to post amendments to or waivers from its Code of Ethics (to the extent applicable to the Company’s CEO, principal financial officer, principal accounting officer or its directors) at this location on its website. No waivers have been granted under the Code of Ethics.
Affirmative Determination Regarding Director Independence |
Under our Governance Guidelines, a substantial majority of the directors serving on our Board is required to be comprised of independent directors. In general, our Board determines independence on the basis of criteria established by the Company and set forth in its Governance Guidelines, which standards meet or exceed those set forth in the NYSE listing standards, and other facts and circumstances it considers relevant. It is the responsibility of the Governance Committee to evaluate whether each director and each director candidate satisfies these independence standards and to make its findings and recommendations to the Board. In making the independence determination, the Governance Committee and the Board consider all relevant facts, circumstances, and material relationships with the Company, including its affiliates (either directly or indirectly or with an organization of which the director is an officer, shareholder, member or a partner) that may interfere with the exercise of such director’s independence from management. A director is considered independent only if the Board affirmatively determines that the director has no material relationship with the Company, either directly or indirectly. In addition, under the Governance Guidelines and the NYSE listing standards a director is not independent if:
■ | The director is or has been within the last three years an employee of the Company. |
■ | An immediate family member of the director is or has been within the last three years an executive officer of the Company. |
■ | The director has received more than $120,000 in direct compensation from the Company during any twelve-month |
period within the last three years. This excludes Board and Committee fees or other forms of deferred compensation for prior service.
■ | An immediate family member of the director has received more than $120,000 in direct compensation from the Company (excluding for purposes of this computation any direct compensation received as a non-executive employee of the Company) during any twelve-month period within the last three years. |
■ | The director or an immediate family member of the director is a current partner of the Company’s internal or external auditor. |
■ | The director is a current employee of the Company’s internal or external auditor. |
■ | An immediate family member of the director is a current employee of the Company’s internal or external auditor and works in the auditor’s audit, assurance, or tax compliance practice. |
■ | Within the last three years, the director or immediate family member of the director was a partner or employee of the Company’s internal or external auditor and personally worked on the Company’s audit. |
■ | The director or immediate family member of the director is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on the other company’s compensation committee. |
- 2019 Proxy Statement | 15 |
■ | PROPOSAL 1 Election of Directors |
Board’s Role in the Risk Management Process | |
■ | The director is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payment to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or 2% of the other company’s consolidated gross revenues. |
Directors who are designated as independent directors are expected to promptly inform the Company of any anticipated changes in their circumstances or relationships that may impact their designation as an independent director or their qualifications to serve on any Board Committee to which they have been appointed.
The Board, based on the evaluation, findings and recommendations of the Governance Committee, has concluded that all of the director
nominees, other than Bonnie R. Brooks, our Interim CEO, are, and all directors serving during fiscal 2018, other than Ms. Broader, were, independent of the Company and its management under the independence standards set forth in the Governance Guidelines, under the NYSE independence standards, and under the independence standards set forth in Rule 10A-3 under the Exchange Act. The Board also has affirmatively determined that the members of the Audit, Compensation, and Governance Committees are all, and the members who served on these Committees during fiscal 2018, were all independent directors. Members of the Compensation Committee also meet the additional standards applicable to “outside directors” under Internal Revenue Code Section 162(m) and qualify as “non-employee directors” as defined in Rule 16b-3 under the Exchange Act.
Board’s Role in the Risk Management Process
Our Board and its Committees serve an important role in overseeing management’s identification, assessment, and mitigation of risks that are material to us. The Board discharges many of its responsibilities and oversight functions with respect to risk through its Audit, Compensation, and Governance Committees. The Board generally oversees our Enterprise Risk Management program and the evaluation of enterprise risk issues, particularly those risk issues not overseen by other Committees, such as data and cyber-security, information systems, litigation and strategic planning.
In particular, the Audit Committee assists the Board in fulfilling its oversight responsibility relating to the performance of our system of internal controls, certain legal and regulatory compliance, and our audit, accounting and financial reporting processes. The Audit Committee also periodically reviews with our General Counsel legal and regulatory matters, if any, that may have a material adverse impact on our financial statements.
The Compensation Committee is responsible for overseeing the management of risks relating to our compensation programs. In April 2018 and in April 2019, the Compensation Committee asked management to review our compensation policies and practices for all employees to identify general areas of risk and to communicate with the Compensation Committee’s independent compensation consultant concerning the design and structure of our executive compensation program. Management performed its review and discussed areas of potential risk. Management
concluded that our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company because they include multiple incentives, balancing sales, earnings, margin, expense control and return on net assets (or RONA), and including certain compensation awards that are designed to encourage a longer-term focus. In addition, the design and structure of our compensation programs are generally the same across all business units such that the compensation policies and practices throughout the organization do not vary significantly from the overall risk and reward structure of the Company as a whole. The Compensation Committee reviewed management’s assessments and conclusions and discussed them with management.
The Governance Committee oversees risks associated with corporate governance, business conduct and ethics, and board membership, leadership and structure.
As part of the oversight process, each Committee receives reports from members of management concerning the areas of material risk to the Company that are within the purview of that Committee to enable it to understand our risk identification, risk management and risk mitigation strategies. While each Committee is responsible for assisting the Board in evaluating and overseeing certain risks, the entire Board is kept apprised of such risks through regular Committee reports. This enables the Board and its Committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
The Board and its committeesCommittees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. It is the Company’s policy that directors should attend each meeting of the Board of Directors and each meeting of the committeesCommittees on which they serve. The Board of Directors held ten meetings (including four specially called meetings)five regularly scheduled and one special meeting during fiscal 20162018 and each incumbent director attended at least 75% of the aggregate of the total number of Board meetings and meetings of committeesCommittees on which he or she served.
During fiscal 2016,2018, the non-management directors of the Board met without the Chief Executive OfficerCEO or other members of management present at fourall five of the sixits regularly scheduled Board meetings.
Chair of the Board/Chief Executive Officer
The Board annually elects a Chair after taking into account the recommendation of the Governance Committee made following its annual review of the Company’s Board leadership structure. The Company does not require the separation of its Chair and Chief Executive Officer positions, but they are currently separate. If the CEO is elected as the Chair of the Board, the independent directors shall elect a lead Independent Director (“Lead Independent Director”) to serve as the focal point for communicating with the CEO, facilitating information flow and communications among non-management directors, and coordinating feedback to the CEO on behalf of the non-management directors regarding business issues and Board management. Currently, David F. Walker, an independent member of the Board, serves as Chair, while Shelley G. Broader serves as CEO and President. The Company believes that, generally, separating the Chair and CEO roles is a strong governance practice and contributes to the Board’s independence from management.
Affirmative Determination Regarding Director Independence
Under our Corporate Governance Guidelines, a substantial majority of the directors serving on our Board of Directors is required to be comprised of independent directors. In general, our Board of Directors determines independence on the basis of criteria established by the Company and set forth in its Corporate Governance Guidelines, which standards meet or exceed those set forth in the NYSE listing standards, and other facts and circumstances it considers relevant. It is the responsibility of the Governance Committee to evaluate whether each director and each director candidate satisfies these independence standards and to make its findings and recommendations to the Board. In making the independence determination, the Governance Committee and the Board consider all relevant facts, circumstances, and material relationships with the Company, including its affiliates (either directly or indirectly or with an organization of which the director is an officer, shareholder, member or a partner) that may interfere with the exercise of such director’s independence from management. A director is considered independent only if the Board affirmatively determines that the director has no material relationship with the Company, either directly or indirectly. In addition, under the Corporate Governance Guidelines and the NYSE listing standards a director is not independent if:
Directors who are designated as independent directors are expected to promptly inform the Company of any anticipated changes in their circumstances or relationships that may impact their designation as an independent director or their qualifications to serve on any Board committee to which they have been appointed.
The Board, based on the evaluation, findings and recommendations of the Governance Committee, has concluded that all of the director nominees and the continuing directors, other than Shelley G. Broader, our CEO and President, are independent of the Company and its management under the independence standards set forth in the Corporate Governance Guidelines, under the NYSE independence standards, and under the independence standards set forth in Rule 10A-3 under the Securities Exchange Act of 1934. The Board also has affirmatively determined that the Audit, Compensation, and Governance Committees are all comprised entirely of independent directors. Members of the Compensation Committee also meet the additional standards applicable to “outside directors” under Internal Revenue Code Section 162(m) and qualify as “non-employee directors” as defined in Rule 16b-3 under the Securities Exchange Act of 1934.
Board’s Role in the Risk Management Process
Our Board and its committees play an important role in overseeing management’s identification, assessment, and mitigation of risks that are material to us. The Board discharges many of its responsibilities and oversight functions with respect to risk through its Audit Committee, Compensation Committee, and Governance Committee. The Board generally oversees our evaluation of enterprise risk issues, particularly those risk issues not overseen by other committees.
In particular, the Audit Committee assists the Board in fulfilling its oversight responsibility relating to the performance of our system of internal controls, legal and regulatory compliance, and our audit, accounting and financial reporting processes. The Audit Committee also periodically reviews with our General Counsel legal and regulatory matters, if any, that may have a material adverse impact on our financial statements.
The Compensation Committee is responsible for overseeing the management of risks relating to our compensation programs. In April 2016 and in April 2017, the Compensation Committee asked management to review our compensation policies and practices for all employees to identify general areas of risk and to communicate with the Compensation Committee’s independent compensation consultant concerning the design and structure of our executive compensation program. Management performed its review and discussed areas of potential risk. Management
concluded that our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company because they include multiple incentives, balancing sales, earnings, margin, expense control and return on net assets, and including certain compensation awards that are designed to encourage a longer term focus. In addition, the design and structure of our compensation programs are generally the same across all business units such that the compensation policies and practices throughout the organization do not vary significantly from the overall risk and reward structure of the Company as a whole. The Compensation Committee reviewed management’s assessments and conclusions and discussed them with management.
The Governance Committee oversees risks associated with corporate governance, business conduct and ethics.
As part of the oversight process, each committee receives reports from members of management concerning the areas of material risk to the Company that are within the purview of that committee to enable it to understand our risk identification, risk management and risk mitigation strategies. While each committee is responsible for assisting the Board in evaluating and overseeing certain risks, the entire Board is apprised of such risks through regular committee reports. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Board and Committee Self-Assessment
Based on recommendation from the Governance Committee, the Board recently adopted a new self-assessment process. In advance of the meeting in which the self-assessment is to occur, the Board and committees collect materials and information to assist in their evaluation discussions. They review the qualifications and experience we have identified as important for Board effectiveness and how our membership stacks up against those criteria. They also review the number of Board and committee meetings for the prior fiscal year and attendance records for individual directors. They look at the various responsibilities of the Board or the particular committee set out in our governing documents, and they examine whether those responsibilities were met. They consider other accomplishments, actions and areas of focus over the year, including any open items. The Board or committee, in private session, then engages in focused, candid and thoughtful discussion about performance. Directors who may not feel comfortable raising an issue in open session are encouraged to speak privately with the Chair, the CEO or the General Counsel. Following the assessment, the Chair of the Board or the committee reports to the Board Chair, the CEO and/or the General Counsel (as appropriate) regarding the assessment generally and any desired management or Board action, change in procedure, or required follow-up resulting from the discussion.
The Company and its Board believes that the long-term success of the Company is dependent upon maintaining an ethical business environment and complying with all legal and regulatory requirements. As part of its oversight in that regard, the Company maintains a Code of Ethics that applies to all employees and directors of the Company, including the chief executive officer, the principal financial officer and the principal accounting officer. The Code of Ethics is available at the Company’s investor relations website(www.chicosfas.com)by clicking on “About Us” and then “Governance Documents & Charters”. The Company intends to post amendments to or waivers from its Code of Ethics (to the extent applicable to the Company’s chief executive officer, principal financial officer, principal accounting officer or its directors) at this location on its website. No waivers have been granted under the Code of Ethics.
Communications to Non-Management Directors
The Board of Directors has established a process for shareholders and other interested parties to communicate with any independent director or with non-management directors as a group. Shareholders and other parties interested in communicating with the Chair or with the other non-management directors as a group may do so by writing to: Chair, Board of Directors, Chico’s FAS, Inc., c/o Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966. Letters addressed to the Chair or any of the other non-management directors will be routed to the Corporate Secretary who will review all such correspondence, will keep a file with copies of such correspondence (including a log thereof), will regularly forward such correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or committees thereof or that he or she otherwise determines requires their attention and may also provide each of the directors with summaries of all such correspondence. Directors may at any time review the file of such correspondence or the log of such correspondence and may request copies of any such correspondence.
A separate process has been established for dealing with concerns relating to accounting, internal controls or auditing matters. Shareholders, employees, and other parties interested in communicating about any of these particular matters may alternatively submit such communications by calling a third party hotline that has been established by the Company (1-888-361-5813) and such reports will immediately be brought directly to the attention of the Chair of the Company’s Audit Committee and separately to the General Counsel and to the Vice President-Internal Audit. If a
communication relating to accounting, internal controls or auditing matters is received in writing by the Company, the Corporate Secretary will promptly forward such written correspondence to the Chair of the Audit Committee and separately to the General Counsel and Vice President-Internal Audit. These particular reports, whether received through the hotline or in writing, will be handled in accordance with procedures established by the Audit Committee (see Complaint Procedures for Accounting Matters).
Director Attendance at Annual Meeting
The Company expects all of its directors to attend the Annual Meeting of Shareholders. With the exception of those directors not standing for reelection and one director who had an unavoidable scheduling conflict, allAll of our directors then holding office attended our Annual Meeting of Shareholders in 2016 as did the two new director nominees.2018.
16 | - 2019 Proxy Statement |
PROPOSAL 1 Election of Directors | ■ |
Compensation of Directors | |
Our Board highly values shareholder input and has engaged in telephonic and in-person meetings with shareholders this year. Our Board is also available to talk with shareholders at our annual shareholder meeting, which we host at our corporate headquarters in Fort Myers, Florida. Further, our Board has established a process for shareholders and other interested parties to communicate with any independent director or with non-management directors as a group. Shareholders and other parties interested in communicating with the Chair or with the other non-management directors as a group may do so by writing to: Chair, Board of Directors, Chico’s FAS, Inc., c/o Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966. Letters addressed to the Chair or any of the other non-management directors will be routed to the Corporate Secretary who will review all such correspondence, will keep a file with copies of such correspondence (including a log thereof), will regularly forward such correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or Committees thereof or that he or she otherwise determines requires their attention and may also provide each of the directors with summaries of all such correspondence. Solicitations or other matters unrelated to the Company will not be forwarded to the relevant director(s). Directors may at any time review the file of such correspondence or the log of such correspondence and may request copies of any such correspondence. Our
shareholder communication process is also available on our corporate website, under our Governance Guidelines at http://chicosfas.com/about-us/governance-documents-and-charters.
The Board of DirectorsA separate process has the following standing committees: (a) Corporate Governancebeen established for dealing with concerns relating to accounting, internal controls or auditing matters. Shareholders, employees, and Nominating Committee, (b) Audit Committee, (c) Human Resources, Compensation and Benefits Committee, and (d) Executive Committee. Eachother parties interested in communicating about any of these committeesparticular matters may alternatively submit such communications by calling a third-party hotline that has a charter under which it operates.
Corporate Governancebeen established by the Company (1-888-361-5813) and Nominating Committee
The Governance Committee held seven meetings during fiscal 2016. This committee is responsible for developing, assessing, maintaining, recommending and implementing policies and practices relatingsuch reports will immediately be brought directly to corporate governance, including reviewing and monitoring compliance with the Company’s Corporate Governance Guidelines. In addition, as a nominating committee, its principal responsibilities also include interviewing, evaluating, nominating, and recommending individuals for membership on, and to serve asattention of the Chair of the Company’s Board and each of its committees. This Committee also prepares and supervises the Board’s annual review of director independence and oversees the Board’s self-assessment process. All of the members of this committee are independent within the meaning of the NYSE listing standards and the Company’s Corporate Governance Guidelines.
Audit Committee
The Audit Committee held six meetings during fiscal 2016. The Audit Committee’s principal responsibilities areand separately to assist the Board in its general oversight of our accounting, financial reporting, financial risk assessment, internal controls,General Counsel and audit function. This committee is directly responsible for: (a) the appointment, engagement, compensation, and oversight of the work of the Company’s independent certified public accountants; (b) reviewing the annual financial results and the annual audit of the Company’s financial statements; and (c) recommending whether the audited financial statements should be included in the Company’s Form 10-K and preparing the audit committee report required under applicable securities laws. The Audit Committee also reviews the Company’s quarterly financial results and each Form 10-Q, and meets with the independent accountants andto the Vice President-Internal Audit. If a communication relating to accounting, internal controls or auditing matters is received in writing by the Company, the Corporate Secretary will promptly forward such written correspondence to the Chair of the Audit from timeCommittee and separately to timethe General Counsel and Vice President-Internal Audit. These reports, whether received through the hotline or in order to reviewwriting, will be handled in accordance with procedures established by the Audit Committee (see Complaint Procedures for Accounting Matters available on the Company’s internal controlswebsite (www.chicosfas.com) by clicking on “About Us” and financial management practices.then “Governance Documents & Charters”).
Compensation of Directors
Our Company is fortunate to have directors whose commitment to board service is substantial as reflected in their active engagement with management. Various members of the Board have participated in evaluations across certain company functional areas, offering hands on expertise and guidance. This is particularly true in merchandising, technology and sourcing and supply chain as we strive to be a more efficient, agile and flexible organization, which is essential in the rapidly evolving retail environment. Their commitment is further reflected in their continued retention of all shares that have been awarded as part of their director compensation.
General |
Under our Governance Guidelines, only our non-management directors are entitled to receive compensation for serving on the Board. The AuditCompensation Committee also is responsible for reviewing and discussing with its independent accountant and management any related party transactions. During each fiscal year,recommending director compensation to the Board, which it does at least one (and usually more)annually. For each of the meetingspast several years, the Compensation Committee engaged the services of Frederic W. Cook & Co., Inc. (“FW Cook”), an outside independent consultant, to assist in its analysis and recommendations. As part of its consulting services, FW Cook provided the Compensation Committee with a review and analysis of the prevailing outside director compensation structures, utilizing data from the Company’s peer group companies. FW Cook’s review indicated that the Company’s annual director compensation was positioned between thisthe median and 75th percentile of the peer group, as reported in proxy statements filed in 2017, and before any anticipated or undisclosed increases as of the date the analysis was conducted and recommended changes to base compensation and
non-equity benefits. The Compensation Committee shared that review and analysis with the independent accountants is held separately without management present. The Auditfull Board as part of its recommendation.
When making its recommendation to the Board, the Compensation Committee also meetsconsiders the potential appearance that the independence of our directors may be adversely affected if compensation and benefits exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a director is affiliated, or if the headCompany enters into consulting contracts with, or provides other indirect forms of compensation, to a director, an immediate family member of a director or an organization with which the director is affiliated.
The reviews and analyses discussed above were used in connection with implementing the compensation arrangements described below.
- 2019 Proxy Statement | 17 |
■ | PROPOSAL 1 Election of Directors |
Compensation of Directors | |
Indemnification |
We indemnify our directors and certain officers to the fullest extent permitted by law so that they will serve free from undue concern. This indemnification is authorized under our Bylaws, and accordingly we have signed agreements with all Board members obligating us to provide this indemnification to them.
Base Compensation and Non-Equity Benefits |
During fiscal 2018, each non-employee director received an annual retainer of $90,000. The non-employee director serving as Chair of the Disclosure Committee periodically to discuss related party transactions. This committee has established policies and proceduresBoard received an additional annual retainer of $75,000. In addition, each non-employee director who served as the Chair for the engagement of the independent accountants to provide permissible non-audit services, which includes pre-approval of all permissible non-audit services to be provided by the independent accountants.
All members of the Audit Committee, Compensation Committee and Governance Committee received additional annual retainers of $20,000, $20,000 and $15,000, respectively.
All directors are independent withinentitled to reimbursement of their reasonable out-of-pocket expenses for attendance at Board and Committee meetings and until the meaningchanges described below, non-employee directors were also entitled to elect to participate in the Company’s health insurance program with coverage provided for
the director and his or her dependents, with the cost thereof paid by the Company. In February 2017, the Board voted to discontinue offering participation in the Company’s health insurance program to new Board members and to current non-participating Board members. Those Board members participating in the program as of that date were grandfathered so that their participation could continue. During the last fiscal year, Mr. Walker, Ms. Brooks, Ms. Fields, Mr. Mahoney, Mr. Simon and Andrea Weiss (who resigned from the Board in November 2018) participated in this health insurance program. In addition, Board members are eligible to participate in the same merchandise discount program as all of our employees.
Restricted Stock |
The Board has the discretion to make equity awards to non-employee directors. It is anticipated that each year around the time of the listing standardsAnnual Meeting of Shareholders, at the discretion of the NYSE,Board, each continuing non-employee director will be awarded a determined number of shares of restricted stock or restricted stock units that would vest one year following the grant date. Restricted stock awards are considered participating securities and recipients have the right to receive dividends on the awards during the vesting period. On June 21, 2018, for their respective service as directors, Mr. Walker, Ms. Brooks,
Ms. Fields, Ms. Kerr, Mr. Mahoney, Mr. Simon, Mr. Watson and Ms. Weiss each received a grant of 16,580 shares of restricted equity under the Company’s Corporate Governance Guidelines,2012 Amended and Rule 10A-3 promulgated underRestated Omnibus Stock and Incentive Plan (the “2012 Omnibus Plan”), which was equivalent to approximately $145,000 in grant value, with the Securities Exchange Actright to receive such award in the form of 1934. SEC regulations also require the Board to determine if a member of its Audit Committee is an “Audit Committee Financial Expert.” According to these regulations, an audit committee member can be designated an Audit Committee Financial Expert only when the audit committee member satisfies specified qualification requirements, including experiencerestricted stock or restricted stock units with deferred delivery. Each such restricted stock or restricted stock unit grant vests on June 21, 2019, except for Ms. Weiss’s restricted stock, which vested in (or “experience actively supervising” others engaged in) preparing, auditing, analyzing, or evaluating financial statements presenting a level of accounting complexity comparable to what is encounteredfull in connection with the Company’s financial statements. The regulations further require such qualifications to have been acquired through specified means of experience or education. The Board has determined that Mr. Walker, the Chair of this Committee, and Mr. Mahoney are each qualifiedher resignation on November 2, 2018.
Other |
During her service as an Audit Committee Financial Expert within the meaning of the regulations of the SEC and that each of them has accounting and related financial management expertise within the meaning of the listing standards of the NYSE. Although the Board of DirectorsInterim CEO, Ms. Brooks will not receive any compensation for her continuing service as a non-employee director.
18 | - |
PROPOSAL 1 Election of Directors | ■ |
Compensation of Directors | |
has determined that Mr. Walker and Mr. Mahoney each has the requisite attributes defined under the rules of the SEC, their respective responsibilities are generally the same as those of the other Audit Committee members. The Audit Committee members are not auditors or accountants for the Company, do not perform “field work” and are not full-time employees of any audit firm.
The SEC has determined that an audit committee member who is designated as an Audit Committee Financial Expert will not be deemed to be an “expert” for any purpose as a result of being identified as an Audit Committee Financial Expert. (See the Audit Committee Report on page 44 for further information.)
Human Resources, Compensation and Benefits Committee
The Compensation Committee held five meetings during fiscal 2016. The principal responsibilities of this committee are to: (a) review and make recommendations to the Board concerning the Company’s compensation philosophy and compensation plans to ensure alignment with the Company’s corporate goals and objectives; (b) evaluate the CEO’s performance against corporate goals and objectives established for the CEO and to approve the compensation of the CEO in light of her or his performance; (c) review and, when appropriate, approve the compensation of executives of the Company; (d) provide input and make recommendations to the Board on individuals elected to be executive officers of the Company; (e) oversee and assess management’s assessment of the risks related to the Company’s compensation programs; (f) review and make recommendations with respect to, and administer, the Company’s existing and proposed compensation and bonus plans; and (g) review and discuss with management the Compensation Discussion and Analysis to be included in the Company’s Form 10-K, recommend to the Board whether it should be included in such filing, and prepare the Compensation Committee report required to be included in the Company’s Form 10-K. The Compensation Committee also participates in management succession planning processes with the Board and the CEO.
In addition, the Compensation Committee is responsible for evaluating and recommending compensation to be paid to our directors, including retainers, fees, benefits and perquisites. Because of the inherent conflict associated with directors setting their own compensation levels, under its charter, the recommendations of the Compensation Committee relating to director compensation must be reviewed by third parties, which may include outside consultants. The Compensation Committee also reviews, makes recommendations with respect to, and monitors compliance with the Company’s Stock Ownership Guidelines.
All of the members of this Committee are independent within the meaning of the listing standards of the NYSE and the Company’s Corporate Governance Guidelines. (See the Human Resources, Compensation and Benefits Committee Report on page 47 for further information.)
Executive Committee
The Executive Committee held one meeting during fiscal 2016. The Executive Committee serves primarily as a means for taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on matters other than those specifically reserved by Florida law solely to the Board. In practice, the Executive Committee’s actions are generally limited to matters that the full Board specifically delegates to the Executive Committee such as oversight of the Company’s stock repurchase program.
Appointment Proposed for Ratification
Based on the recommendation of the Audit Committee, the Company has selected Ernst & Young, LLP (“EY”) as its independent certified public accountants for the current fiscal year ending February 3, 2018 (fiscal 2017), subject to ratification of such appointment by the shareholders. Ratification of the Company’s independent certified public accountants is not required by the Company’s Bylaws or otherwise, but the Board has decided to seek such ratification as a matter of good corporate practice. In
the event of a negative vote, the Audit Committee will reconsider its selection. EY has audited the accounts of the Company since first being engaged by the Company effective July 1, 2002. Representatives of EY are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions by shareholders.
We have been advised by EY that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in the Company or its subsidiaries.
Recommendation
The Board of Directors recommends a vote “FOR” the ratification of appointment of Ernst & Young, LLP as our independent certified public accountants for the period specified.
Fees to Independent Accountants
The following table presents feesprovides information on the compensation for professional services rendered by EYnon-employee directors for the audit of the Company’s annual financial statements for fiscal 2016 (ended January 28, 2017) and fiscal 2015 (ended January 30, 2016) and fees billed for audit-related services, tax services and all other services rendered by EY for fiscal 2016 and fiscal 2015.
Fiscal 2016 | Fiscal 2015 | |||||||
Audit Fees | $ | 1,350,000 | $ | 1,315,000 | ||||
Audit-Related Fees | 1,995 | 1,995 | ||||||
Tax Fees | 251,748 | 375,708 | ||||||
All Other Fees | — | — | ||||||
TOTAL | $ | 1,603,743 | $ | 1,692,703 |
Audit Fees
Fees for audit services include aggregate fees billed for professional services rendered for the annual audits of the Company’s financial statements included in Form 10-K filings, the reviews of the Company’s quarterly reports on Form 10-Q, other SEC filings and audit consultations and the Sarbanes-Oxley Section 404 attestation.
Audit-Related Fees
Fees for audit-related services in fiscal 2016 and 2015 included the Company’s use of EY’s online research tools.
Tax Fees
Fees for tax services in fiscal 2016 and 2015 were principally relatedyear ended February 2, 2019 (referred to special tax and international tax projects.as “fiscal 2018”).
All audit-related services, tax services and other services in fiscal 2016 were pre-approved by the Audit Committee, which concluded that the provision of such services by EY was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee provides for pre-approval of audit, audit-related and tax services specifically described by the Audit Committee on an annual basis and, in addition, individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority with respect to permitted services.
Name(a) | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||||||
David F. Walker | $ | 185,000 | $ | 145,075 | $ | 14,239 | $ | 344,314 | ||||
Bonnie R. Brooks | 90,000 | 145,075 | 6,726 | 241,801 | ||||||||
Janice L. Fields | 105,000 | 145,075 | 14,239 | 264,314 | ||||||||
Deborah L. Kerr | 90,000 | 145,075 | — | 235,075 | ||||||||
John J. Mahoney | 110,000 | 145,075 | 14,239 | 269,314 | ||||||||
William S. Simon | 90,000 | 145,075 | 19,974 | 255,049 | ||||||||
Stephen E. Watson | 90,000 | 145,075 | — | 235,075 | ||||||||
Andrea M. Weiss(b) | 67,500 | 145,075 | 80,539 | 293,114 |
(a) | Ms. Roy is not included in this table because she joined the Board during fiscal 2019. |
(b) | Ms. Weiss resigned from the Board effective November 2, 2018. |
(1) | The following table shows the breakdown of the Fees Earned or Paid in Cash between the Annual Retainer and the Committee Chair Fees. These fees are paid quarterly, in arrears. |
Name | Annual Retainer Fees ($) | Board Chair and Committee Chair Fees ($) | Total Fees Earned or Paid in Cash ($) | ||||||
David F. Walker | 90,000 | 95,000 | 185,000 | ||||||
Bonnie R. Brooks | 90,000 | — | 90,000 | ||||||
Janice L. Fields | 90,000 | 15,000 | 105,000 | ||||||
Deborah L. Kerr | 90,000 | — | 90,000 | ||||||
John J. Mahoney | 90,000 | 20,000 | 110,000 | ||||||
William S. Simon | 90,000 | — | 90,000 | ||||||
Stephen E. Watson | 90,000 | — | 90,000 | ||||||
Andrea M. Weiss | 67,500 | — | 67,500 |
(2) | The amounts included in the “Stock Awards” column represent the grant date fair value of restricted equity awards granted to directors in fiscal 2018, computed in accordance with FASB ASC 718. The grant date fair value for shares/units granted to each non-employee director on June 21, 2018 was $8.75 per share. The amounts in this column represent the value of 16,580 shares of restricted stock or restricted stock units, the aggregate number of restricted stock (or restricted stock units in the case of Ms. Fields) held by each non-employee director as of February 2, 2019. In connection with her resignation, the Board fully vested Ms. Weiss’s restricted stock award on November 2, 2018. |
(3) | The amounts in this column represent Company-paid premiums for health insurance coverage. For Ms. Weiss, the amount in this column also represents, in connection with her resignation from the Board, lump sum payments of $60,000 equal to the director fees she would have earned for the period from the date of her resignation through the end of her term, and $9,888 equal to the estimated COBRA costs for her health insurance for the period from the date of her resignation through the end of her term. |
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PROPOSAL | 2 Advisory Resolution to Approve Executive Compensation of our Named Executive Officers | |
Compensation of Directors | ||
■ | PROPOSAL 2 ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS |
Summary of the Advisory Resolution |
The Company is asking you for approval ofto approve the compensation of our named executive officers (“NEOs”) as described in this proxy statementProxy Statement (the say-on-pay“say-on-pay” vote). The Company’s named executive officers (“NEOs”)NEOs are identified in the Summary Compensation Table on page 5836 in the Executive Compensation section and the accompanying tables contained in this proxy statementProxy Statement on pages 48-57.24-35. While the Board and its Compensation Committee will carefully consider the shareholder vote, the final vote is advisory in nature and will not be binding on the Board or the Company.
The Company has long demonstrated its commitment to sound executive compensation practices and corporate governance principles, working to ensure that its practices protect and further the interests of shareholders. We believe that our executive compensation programs,program, as described more fully in the “Executive Compensation”Executive Compensation section of this proxy statement, areProxy Statement, is structured (i) to promote a performance-based culture which links the interests of management and shareholders; (ii) to support our business objectives; and (iii) to align our programs with recognized corporate governance best practices because:
■ | Our compensation programs strongly support our key business objectives and our focus on increasing shareholder value. |
■ | A significant portion of NEO compensation is “at risk” so that if the value we deliver to our shareholders declines, so does the compensation we deliver to our NEOs. |
■ | We set our performance goals for the cash incentive bonus at the beginning of the fiscal year so that the determination as to whether the goals have been achieved is based on objective criteria and so that, at the time the goals are set, there remains sufficient uncertainty as to whether they will be achieved so as to more effectively motivate performance. |
■ | We monitor and compare the compensation programs and pay levels of executives at peer companies so that our compensation programs are competitive and within the range of market practices of our peers. |
■ | We conduct an annual risk assessment of our compensation |
■ | We require executives and non-employee directors to maintain meaningful Company stock ownership levels. |
■ | Officers and directors are not permitted to hedge their economic exposures to Company stock and are also prohibited from trading our stock on margin. |
■ | We have a formal compensation clawback policy for adjustment, cancellation or recovery of incentive-based awards or payments to our Section 16 officers in the event of a material financial restatement. |
■ | We do not provide significant perquisites or personal benefits to NEOs. |
■ | As part of our emphasis on performance-based compensation plans, we do not provide supplemental executive retirement plans or other non-performance-based retirement benefits to the NEOs, other than the tax-qualified 401(k) defined contribution plan available to all employees and the deferred compensation plan, which is available to highly-compensated employees. |
■ | Our severance policies are in line with competitive practice, and we do not provide tax gross-ups. |
As noted above,below, our compensation philosophy emphasizes pay for performance and places a significant percentage of NEO compensation “at risk.” For example, between 58%63% - 88% of our executive compensation opportunity for fiscal 20162018 was at risk, subject to at-risk performance.
In addition, the Company has in the past sought and received shareholder approval for the incentive plans that we use to motivate, retain, and reward our executives. Those incentive plans include the Cash Bonus Incentive Plan (“the Bonus Plan”), which the shareholders approved in 2015, and the 2012 Omnibus Plan, which the shareholders originally approved in 2012, and for which we are askingreceived shareholder approval of an amendment and restatement this year.in 2017. Compensation provided pursuant to these shareholder-approved plans makes up a majority of the pay that the Company provided to its NEOs.
At our 20162018 Annual Meeting of Shareholders, we received 78%96% approval of our executive compensation for fiscal 2015.2017. While we applied similar philosophy and practices in determining fiscal 20162018 compensation for our NEOs, we conducted extensive shareholder outreach and took those commentsthat feedback into consideration in the design of our future programs.
Our long-term equity plan provides a direct link between compensation and the creation of long-term shareholder value. For fiscal year 2018, the Company increased the performance measurement period of the Company’s performance-based stock awards from one to three years. This change allows for a more focused approach on longer term strategic goal setting for the business and supports retention efforts for employees participating in the 2012 Omnibus Plan.
Accordingly, the Board recommends that the shareholders approve the following advisory resolution:
RESOLVED, that the shareholders approve, on an advisory basis, the compensation paid to the Company’s named executive officersNEOs as disclosed in the Company’s Proxy Statement for the 20172019 Annual Meeting of Shareholders pursuant to compensation disclosure rules of the
20 | - 2019 Proxy Statement |
PROPOSAL 2 Advisory Resolution to Approve Executive Compensation of our Named Executive Officers | ■ |
Compensation of Directors | |
Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and the related narrative discussion.
The Board of Directors encourages shareholders to endorse the executive compensation program by voting in favor of this resolution. Although the say-on-pay vote is non-binding, the Board and its Compensation Committee, which is comprised entirely of independent directors, will consider the voting results, as well as other communications from shareholders relating to our
compensation practices, and take them into account in future determinations concerning our executive compensation program.
THE BOARD RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
The Board of Directors recommends a vote “FOR” this proposal.
Summary of the Advisory Vote
The Company also seeks your input about the frequency of future shareholder advisory votes on our executive compensation program. In particular, we are asking for a non-binding advisory vote on whether the advisory say-on-pay vote should occur every year, every two years, or every three years. The Company asks that you support a frequency period of every year for future non-binding shareholder votes on compensation of our NEOs.
After careful consideration, the Company has determined that an annual advisory vote on executive compensation is the most appropriate choice because it gives shareholders a formal mechanism for providing their direct input on our compensation philosophy, policy and practices as disclosed in our proxy statement every year. An annual advisory vote is also consistent with our desire to constructively engage with our shareholders on important issues such as executive compensation.
Recommendation
The Board of Directors recommends a vote for“1 YEAR”on the proposal.
Overview
The Company is asking you to APPROVE the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan (also referred to in this proxy statement as the “Amended and Restated 2012 Omnibus Plan”), which amends and restates the Chico’s FAS, Inc. 2012 Omnibus Stock and Incentive Plan (the “2012 Omnibus Plan”). For the Company to continue to have the flexibility
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■ |
to use certain tax-effective incentives under Section 162(m) of the Internal Revenue Code (“Code Section 162(m)”) to align the interests of our executives and our shareholders, shareholders must approve the material terms of the performance goals under the plan every five years. In addition, certain amendments to the 2012 Omnibus Plan require shareholder approval to be effective. Approval of the Amended and Restated 2012 Omnibus Plan will constitute shareholder approval of the material terms of the performance goals, thus satisfying one of the Code Section 162(m) requirements, and will permit the Company to continue to offer a competitive compensation program in accordance with our compensation philosophy.
The 2012 Omnibus Plan was approved by our shareholders on June 21, 2012. The 2012 Omnibus Plan was amended effective February 1, 2017 to permit shares of common stock to be withheld from awards in an amount up to the maximum statutory tax withholding rate and further amended effective April 6, 2017 to add a clawback provision. Neither of these administrative changes required shareholder approval. On April 6, 2017, upon recommendation of the Compensation Committee, the Board approved and adopted the Amended and Restated 2012 Omnibus Plan described in this proposal, subject to shareholder approval. If approved by our shareholders, the Amended and Restated 2012 Omnibus Plan will become effective as of June 22, 2017.
The 2012 Omnibus Plan is the only equity incentive compensation plan under which the Company currently grants equity incentive awards to employees and non-employee directors. If the Amended and Restated 2012 Omnibus Plan is approved by our shareholders, awards made on or after June 22, 2017 will be granted in accordance with the terms of the Amended and Restated 2012 Omnibus Plan.
Summary of Amendments
The Amended and Restated 2012 Omnibus Plan includes the following amendments to the 2012 Omnibus Plan, which amendments have been approved by the Board, subject to approval of shareholders at the Annual Meeting:
Why You Should Vote For the Amended and Restated 2012 Omnibus Plan and Approval Under Section 162(m) of the Code
The Board believes that the Amended and Restated 2012 Omnibus Plan is important to the long-term success of the Company. The purpose of the Amended and Restated 2012 Omnibus Plan is to attract, retain and motivate highly qualified employees and non-employee directors, provide appropriate and competitive incentives to achieve long-range goals, and align the interests of employees and non-employee directors with the Company’s other shareholders. As an integral part of our pay-for-performance philosophy, awards under the Amended and Restated 2012 Omnibus Plan are intended to promote the long-term financial interest of the Company and our shareholders.
As of April 1, 2017, approximately 4,200,000 shares of common stock authorized under the 2012 Omnibus Plan were available to be granted in connection with awards under the plan. Under the proposed amendment and restatement, 5,000,000 shares of common stock would be added to the plan if our shareholders approve the Amended and Restated 2012 Omnibus Plan. The Company believes that increasing the number of shares reserved for issuance is necessary for the Company to continue to offer a competitive compensation program in accordance with our compensation philosophy that emphasizes pay-for-performance and places a significant percentage of executive compensation “at risk.”
Equity awards, designed to align executives’ focus with shareholder value and with the long-term, future performance of the Company, are a fundamental component of the Company’s executive compensation program, as discussed further in the Compensation Discussion and Analysis found on pages 48-57 of this Proxy Statement. The Compensation Committee anticipates that the shares of common stock that will be available for new awards under the Amended and Restated 2012 Omnibus Plan if shareholders approve this proposal will provide the Company with flexibility to continue to grant equity awards under the Amended and Restated 2012 Omnibus Plan for approximately five (5) years following the 2017 Annual Meeting. This is only an estimate, however, based on current circumstances. The total number of shares awarded in any one year or from year to year may change based on any number of variables, such as the value of the Company’s common stock (since higher stock prices generally require fewer shares to be issued to produce awards of the same grant date fair value), changes in the Company’s equity grant practices, changes in the number of employees, whether and to what extent vesting conditions applicable to equity-based awards are satisfied, the number of shares that become available for new awards pursuant to the terms of the plan (for example, as a result of forfeitures), and changes in how the Company chooses to balance the elements of our compensation program.
If shareholders approve the Amended and Restated 2012 Omnibus Plan, the Company may grant awards under the Amended and Restated 2012 Omnibus Plan until June 21, 2027. If shareholders do not approve the Amended and Restated 2012 Omnibus Plan, the Company may continue to grant awards under the existing 2012 Omnibus Plan until June 20, 2022, although the shares remaining available under the 2012 Omnibus Plan may not be sufficient for the Company’s anticipated future needs and the Company will not be able to use certain tax-effective incentives under Code Section 162(m) to align the interests of our executives and our shareholders.
Code Section 162(m) prohibits publicly held companies from deducting certain compensation to any person who serves as the chief executive officer or who is one of the three other most highly compensated executive officers (other than the chief financial officer) in excess of $1,000,000 during the tax year. However, Code Section 162(m) provides that, to the extent that compensation is based on the attainment of performance goals set by the Compensation Committee pursuant to plans approved by our shareholders, the compensation is exempt from the deductibility limitations.
The Amended and Restated 2012 Omnibus Plan is designed to provide the Company with the authority to grant awards that qualify as performance-based compensation that meets the requirements of Code Section 162(m), as well as awards that do not so qualify. The Company is permitted and reserves the right to pay amounts that are not tax deductible to meet the design goals of our executive compensation program. In any event, because of the uncertainties associated with the application and interpretation of Code Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Code Section 162(m) will in fact be deductible.
For the Company to continue to have the flexibility to pay performance-based compensation that meets the requirements of the performance-based exception under Code Section 162(m), the Company is also seeking re-approval of the material terms of the performance goals under which performance-based compensation is to be paid under the Amended and Restated 2012 Omnibus Plan. The material terms of the performance goals are (i) employees eligible for awards, (ii) individual grant limits on awards and (iii) the business criteria that can be used as performance measures for awards. Approval of the Amended and Restated 2012 Omnibus Plan will constitute shareholder approval of the material terms of the performance goals, thus satisfying one of the Code Section 162(m) requirements.
Amended and Restated 2012 Omnibus Plan Highlights
The Amended and Restated 2012 Omnibus Plan generally will be administered by the Compensation Committee, but awards made to non-employee directors will be approved by the entire Board. The Amended and Restated 2012 Omnibus Plan provides the Company flexibility to design compensatory awards that are responsive to the Company’s needs.
The Company believes the design of the Amended and Restated 2012 Omnibus Plan illustrates the Company’s commitment to best practices in equity compensation, prudent use of these limited resources and the promotion of a strong alignment with shareholder interest. Examples of best practice provisions and key features of the Amended and Restated 2012 Omnibus Plan that enable the Company to maintain sound governance practices in granting equity awards include:
Key Data
Overhang
The following table provides certain additional information regarding total awards outstanding as of January 28, 2017 (fiscal year-end) and April 1, 2017.
As of January 28, 2017 | As of April 1, 2017 | |||||||
Number of outstanding Options | 577,246 | 532,579 | ||||||
Weighted average exercise price of outstanding Options | 13.58 | 13.48 | ||||||
Weighted average remaining term of outstanding Options | 2.97 | 2.90 | ||||||
Number of outstanding, unvested restricted shares | 2,463,186 | 2,796,845 | ||||||
Number of outstanding, unvested performance shares | 652,248 | 928,851 | ||||||
Shares available for grant under 2012 Plan | 5,764,356 | 4,161,138 |
As of April 24, 2017, there were 129,488,741 total common shares outstanding, and the per-share closing price of our common stock as reported on the New York Stock Exchange was $13.85.
Burn Rate
The following table sets forth information to calculate the Company’s burn rate under the 2012 Omnibus Plan for the last three fiscal years:
Fiscal 2016 | Fiscal 2015 | Fiscal 2014 | ||||||||||
Number of Options granted | — | — | — | |||||||||
Number of Restricted Shares granted | 1,817,830 | 1,611,625 | 1,674,790 | |||||||||
Number of Performance Sharesearned(1) | 228,105 | 213,453 | 243,369 | |||||||||
Total Share Usage | 2,045,935 | 1,825,078 | 1,918,159 | |||||||||
Weighted-average common shares outstanding | 128,994,743 | 138,365,729 | 148,621,595 | |||||||||
Burn Rate (Options, restricted shares, andearned performance shares) | 1.6 | % | 1.3 | % | 1.3 | % |
(1) | Fiscal 2016 | Fiscal 2015 | Fiscal 2014 | |||||||
Number of Performance Shares Granted (target) | 733,360 | 526,810 | 657,000 | |||||||
Number of Performance Sharesearned | 228,105 | 213,453 | 243,369 |
Potential dilution is equal to the number of shares associated with outstanding grants plus the number of shares available for future grant under a plan divided by the sum of (a) the total number of shares of common stock outstanding and (b) the total outstanding and available shares under the plan. As of April 1, 2017, the Company’s potential dilution under the 2012 Omnibus Plan was approximately 6.1%. If the Amended and Restated 2012 Omnibus Plan is approved by shareholders, the potential dilution from awards authorized for issuance under the Amended and Restated 2012 Omnibus Plan will increase to approximately 9.6%. While the Company is aware of the potential dilutive effect of equity awards, it also recognizes the significant motivational and performance benefits that may be achieved in connection with making such awards.
Summary Description of the Amended and Restated 2012 Omnibus Plan
A summary of the provisions of the Amended and Restated 2012 Omnibus Plan is set forth in question and answer format below. The full text of the Amended and Restated 2012 Omnibus Plan appears as Annex A to this Proxy Statement. The following summary is qualified in its entirety by reference to the complete text of the Amended and Restated 2012 Omnibus Plan.
Who may participate?
Employees of the Company and its subsidiaries and members of the Board of the Company or the boards of directors of its subsidiaries may be selected by the Compensation Committee or Board, as applicable, to receive awards under the Amended and Restated 2012 Omnibus Plan. If shareholders approve this proposal, approximately 200 employees and 8 non-employee directors, as of April 1, 2017, would be eligible to receive awards under the Amended and Restated 2012 Omnibus Plan. Based on its historic compensation practices, the Company expects that a range of 200 to 250 persons annually will receive awards under the Amended and Restated 2012 Omnibus Plan.
What shares are authorized for awards under the Amended and Restated 2012 Omnibus Plan?
Subject to approval by our shareholders, the aggregate number of shares authorized and reserved for issuance under the Amended and Restated 2012 Omnibus Plan (since inception on June 21, 2012) is the sum of (i) 12,000,000 shares of common stock; (ii) 3,500,000 shares of common stock that were available for future awards under any prior option plan of the Company (the “Prior Plans”) as of June 21, 2012 (including without limitation the 1992 Stock Option Plan, the 1993 Stock Option Plan, the 2002 Omnibus Stock and Incentive Plan and the Non-Employee Directors’ Stock Option Plan); and (iii) any shares of common stock that are represented by awards granted under any Prior Plans that are forfeited, expire or are canceled without delivery of shares of common stock to participants. As of April 1, 2017, approximately 4,200,000 shares of common stock authorized under the 2012 Omnibus Plan were available to be granted in connection with awards under the plan. Under the proposed amendment and restatement, 5,000,000 shares of common stock would be added to the plan if our shareholders approve the Amended and Restated 2012 Omnibus Plan. If shareholders do not approve the Amended and Restated 2012 Omnibus Plan, the share limit under the 2012 Omnibus Plan will remain in effect as approved by shareholders in 2012.
In general, if any award granted under the Amended and Restated 2012 Omnibus Plan is forfeited or canceled or is settled in cash (in each case without delivery of shares to the participant), the shares associated with such award will be available for future awards under the plan. In addition, if any shares associated with a restricted stock award, restricted stock unit award or performance award are not delivered to a participant because they are used to satisfy the minimum amount required to satisfy statutory tax withholding requirements, such shares will be available for future awards under the plan.
In contrast, if any shares associated with a restricted stock award, restricted stock unit award or performance award are not delivered to a participant because they are used to satisfy tax withholding obligations in excess of the minimum amount required to satisfy
statutory tax withholding requirements, such shares will be counted against the aggregate plan limit and will not be available for future awards under the plan. In addition, if any shares associated with a stock option award or a stock appreciation right award are not delivered to a participant because they are used to satisfy the applicable tax withholding obligation, such shares will be counted against the aggregate plan limit and will not be available for future awards under the plan. Further, the full number of shares associated with a stock option exercise or stock appreciation right exercise, and not just the net shares issued upon exercise, will be counted against the aggregate plan limit and will not be available for future awards under the plan. Any shares of common stock purchased on the open market with cash proceeds from a stock option exercise will not be added to the aggregate plan limit.
Who administers the Amended and Restated 2012 Omnibus Plan?
The Amended and Restated 2012 Omnibus Plan generally will be administered by the Compensation Committee, except that awards made to non-employee directors will be approved by the entire Board. The Compensation Committee has the authority to interpret the Amended and Restated 2012 Omnibus Plan and awards granted under the plan, to prescribe, amend and rescind rules and regulations relating to the plan and awards granted under the plan, to determine the terms and conditions of awards granted under the plan and the related award agreements, to amend any outstanding award agreement, to construe and interpret the plan and the award agreements, and to make all other determinations for the administration of the plan and the awards.
With respect to non-employee directors, the authority described above rests with the Board and not the Compensation Committee.
The Board or the Compensation Committee, in its discretion, may delegate to any of the Chief Executive Officer, Chief Financial Officer and Chief Human Resources Officer of the Company all or part of the Committee’s authority and duties with respect to awards to employees who are not executive officers.
Are there limits on awards to individual participants or other award limits?
Yes. The number of shares of common stock issued under the Amended and Restated 2012 Omnibus Plan upon the exercise of incentive stock options will not exceed 7,000,000 shares of common stock. No participant may receive an aggregate of stock option awards and stock appreciation right awards during any one calendar year representing more than 750,000 shares of common stock. In addition, no participant may receive grants of restricted stock awards, restricted stock unit awards or other stock-based performance awards intended to qualify as performance-based compensation under Code Section 162(m) during any one calendar year representing more than 750,000 shares of common stock. Further, with respect to cash-based performance awards intended to qualify as performance-based compensation under Code Section 162(m), the maximum dollar value that may be granted to any one participant during any one calendar year is $10 million.
Finally, and in addition to the above, the aggregate value of cash compensation and the grant date fair value of awards under the Amended and Restated 2012 Omnibus Plan to any one non-employee director (other than the non-executive Chair of the Board) during any fiscal year of the Company shall not exceed $750,000.
These limits are subject to adjustments for stock splits, stock dividends, recapitalizations and other similar transactions or events.
What types of awards may be granted?
Awards under the Amended and Restated 2012 Omnibus Plan may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards. Performance awards include both cash-based and stock-based awards.
Upon what terms may options be awarded?
Stock options entitle the optionee to purchase shares of common stock at a price equal to or greater than the fair market value of the underlying common stock on the date of grant. Options may be either incentive stock options or nonqualified stock options, but only employees may be granted incentive stock options. At the time of grant, the Compensation Committee will fix the exercise price of a stock option granted to an employee and the Board will fix the exercise price of a stock option granted to a non-employee director. Other than in connection with substitute awards, the option price must not be less than the fair market value of the common stock on the date of grant. The option may specify that the option price is payable (i) in cash, (ii) by the delivery to the Company of unrestricted shares of common stock already owned by the optionee, (iii) by withholding shares of common stock otherwise issuable in connection with the exercise of the option, (iv) with any other legal consideration the Compensation Committee may deem appropriate or (v) any combination of the foregoing. To the extent permitted by applicable law and regulations, the Compensation Committee or the Board, as the case may be, may also permit a participant to pay the option price through a broker-assisted cashless exercise. No stock option may be exercised more than ten years from the date of grant. Each grant may specify a period of continuous employment or service with the Company or any subsidiary that is necessary before the stock option or any portion thereof will become exercisable, provided that a participant will become fully vested with regard to a stock option award in the event the participant dies or becomes totally and permanently disabled (as determined in the sole discretion of the Compensation Committee or its delegee) while still employed by or in service to the Company.
In addition, the exercise price of an incentive stock option cannot be less than 100% of the fair market value of the of the underlying common stock on the date of grant (or 110% of the fair market value in the case of an incentive stock option granted to a person at a time when such person owns, within the meaning of Section 424(d) of the Code, more than 10% of the total combined voting power of all classes of stock of the employer corporation (or a parent or subsidiary of such corporation within the meaning of Section 424 of the Code), and such option must be exercised within five years of the date of grant). The value in incentive stock options, based on the underlying shares’ fair market value on the date of grant, that can be exercisable for the first time by any participant in any calendar year under the plan and under all other incentive stock option plans of the Company and any parent and subsidiary corporations of the Company (as those terms are defined in Section 424 of the Code) shall not exceed $100,000.
Upon what terms may stock appreciation rights be granted?
Stock appreciation rights represent the right to receive an amount equal to the difference between the base “SAR price” established for such rights and the fair market value of the common stock on the date the rights are exercised. Payment of the amount may be made in shares of common stock, in cash, or in a combination thereof as specified in the stock appreciation right agreement. At the time of grant, the Compensation Committee or the Board, as applicable, will fix the SAR price. Other than in connection with substitute awards, the SAR price must not be less than the fair market value of the common stock on the date of grant. The participant does not pay anything upon exercise of the stock appreciation right (except for required tax withholding). No stock appreciation right may be exercised more than ten years from the date of grant. Each grant may specify a period of continuous employment or service with the Company or any subsidiary that is necessary before the stock appreciation right or any portion thereof will become exercisable, provided that a participant will become fully vested with regard to a stock appreciation right award in the event the participant dies or becomes totally and permanently disabled (as determined in the sole discretion of the Compensation Committee or its delegee) while still employed by or in service to the Company.
Upon what terms may restricted stock be awarded?
An award of restricted stock involves the immediate transfer by the Company to a participant of ownership of a specific number of shares of common stock in return for the performance of services. Restricted stock is subject to forfeiture and generally may not be transferred by a participant until the restrictions established by the Compensation Committee or the Board, as the case may be, lapse. The restrictions may take the form of a period of continuous employment or service with the Company or any subsidiary (i.e., time-based vesting) or the achievement of stock price goals and performance or other goals (i.e., performance-based vesting). Upon grant, holders of restricted stock will have voting, dividend and other ownership rights in such shares during the restriction period. The grant may be made without payment of additional consideration by the participant other than the performance of future services.
Restricted stock must be subject to a “substantial risk of forfeiture” within the meaning of Code Section 83 for a period to be determined by the Compensation Committee on the grant date. A restricted stock award may be designated as performance-based compensation under Code Section 162(m).
Upon what terms may restricted stock units be granted?
An award of restricted stock units granted under the Amended and Restated 2012 Omnibus Plan represents the right to receive a specific number of shares of common stock or a cash equivalent at the end of a specified restriction period. The restrictions may take the form of a period of continuous employment or service with the Company or any subsidiary (i.e., time-based vesting) or the achievement of stock price goals and performance or other goals (i.e., performance-based vesting), as established by the Compensation Committee or the Board, as the case may be. During the restriction period, the participant has no right to vote the shares of common stock represented by the units. The Compensation Committee or the Board, as the case may be, may provide for payment of dividend equivalents in connection with restricted stock units, but dividend equivalents shall be paid only in accordance with Section 409A of the Internal Revenue Code (“Code Section 409A”) and only if the restricted stock unit award is earned. The grant of restricted stock units will be made without any consideration from the participant other than the performance of future services. A restricted stock unit award may be designated as performance-based compensation under Code Section 162(m).
Upon what terms may performance awards be granted?
A performance award may be denominated in shares of common stock or in cash, and each grant will specify one or more performance objectives, established by the Compensation Committee or the Board, as the case may be, to be met within a specified period (the “performance period”), to receive the common stock or cash. If by the end of the performance period the participant has achieved the specified performance objectives, the participant will be deemed to have fully earned the performance award. To the extent earned, the performance award will be paid to the participant at the time and in the manner determined by the Compensation Committee of the Board, as the case may be, in cash, shares of common stock or any combination thereof. The Compensation Committee or the Board, as the case may be, may provide for payment of dividend equivalents in connection with performance awards, but dividend equivalents shall be paid only in accordance with Code Section 409A and only if the performance award is earned. A performance award may be designated as performance-based compensation under Code Section 162(m) and any such award shall require at least a one-year performance period.
What is the Code Section 162(m) exemption?
Code Section 162(m) prevents a publicly held corporation from claiming income tax deductions for compensation in excess of $1,000,000 paid to certain senior executives. Compensation is exempt from this limitation if it is “qualified performance-based compensation.” Because the 2012 Omnibus Plan was previously approved by shareholders, stock options and stock appreciation rights granted under the 2012 Omnibus Plan or Amended and Restated 2012 Omnibus Plan qualify as performance-based compensation. If the Amended and Restated 2012 Omnibus Plan is approved by shareholders, restricted stock awards, restricted stock unit awards and performance awards may be granted under the Amended and Restated 2012 Omnibus Plan as qualified performance-based compensation under Code Section 162(m) or may be granted as awards that are not intended to qualify as performance-based compensation under Code Section 162(m). Each award may qualify as performance-based compensation, so long as certain requirements are met, including the prior approval by shareholders of the performance measures.
What are the performance measures for restricted stock awards, restricted stock unit awards and performance awards?
The Amended and Restated 2012 Omnibus Plan provides that grants of restricted stock, restricted stock units and performance awards may be made based upon performance objectives/ measures (the “Performance Measures”). Any such performance award, restricted stock award or restricted stock unit award intended to qualify as performance-based compensation under Code Section 162(m) shall be conditioned on the achievement of one or more Performance Measures, to the extent required by Code Section 162(m). The Performance Measures that may be used by the Compensation Committee for such awards shall be based on any one or more of the following, as selected by the Committee: net sales; comparable sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes); pre- or after-tax income (before or after allocation of corporate overhead and bonus); net earnings; earnings per share; net income (before or after taxes); return on equity; total shareholder return; return on assets or net assets; appreciation in and/or maintenance of share price; gross profits; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization); economic value-added models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); free cash flow; return on capital (including return on total capital or return on invested capital); cash flow return on investment; improvement in or attainment of expense levels or working capital levels; operating margins, gross margins or cash margins; year-end cash; debt reductions; shareholder equity; market share; regulatory achievements; implementation, completion, or attainment of measurable objectives with respect to research, development, products or projects and recruiting and maintaining personnel. The Performance Measures may be expressed in terms of absolute growth, cumulative growth, percentage growth, a designated absolute amount, percentage of sales, and per share value of common stock outstanding. In addition, the Performance Measures may be based solely by reference to the Company’s performance or the performance of a subsidiary, division, business segment or business unit of the Company, or based upon the Company’s performance relative to the performance of one or more companies or an index covering multiple companies. The Committee may also exclude, if provided in the award agreement, charges related to an event or occurrence which the Committee determines should appropriately be excluded, including but not limited to (a) restructurings, discontinued operations, and other unusual or non-recurring charges, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (c) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles. For performance awards, restricted stock or restricted stock units intended to qualify as performance-based compensation under Code Section 162(m), the grant of the performance award, restricted stock or restricted stock units, the establishment of the Performance Measures and the certification as to whether such Performance Measures have been satisfied shall be made in a manner and during the period required under Code Section 162(m). The Committee retains the discretion to adjust the compensation or economic benefit due upon attainment of any Performance Measure and to adjust the Performance Measures themselves, but any such adjustment shall be made only in conformity with the requirements of Code Section 162(m) for awards intending to qualify as performance-based compensation.
What is the maximum amount payable upon attainment of the specified performance-based objectives?
No participant may receive restricted stock awards, restricted stock unit awards or other stock-based performance awards intended to qualify as performance-based compensation under Code Section 162(m) during any one calendar year representing more than 750,000 shares of common stock. In addition, with respect to cash-based performance awards intended to qualify as performance-based compensation under Code Section 162(m), the maximum dollar value granted to any one participant during any one calendar year is $10 million.
Are there minimum vesting requirements for awards under the Amended and Restated 2012 Omnibus Plan?
Yes. Except with respect to a maximum of 5% of the shares of common stock authorized under the Amended and Restated 2012 Omnibus Plan, no portion of an award shall vest prior to the first anniversary of the date of grant, subject to applicable provisions regarding accelerated vesting in the event of a participant’s death, disability or termination of employment (including retirement) or a change in control.
How are awards under the Amended and Restated 2012 Omnibus Plan treated in the event of a termination of employment or service?
A participant will become fully vested with regard to a stock option award or a stock appreciation right award in the event the participant dies or becomes totally and permanently disabled (as determined in the sole discretion of the Compensation Committee or its delegee) while still employed by or in service to the Company. With respect to other types of awards and other termination events, the Compensation Committee or the Board, as the case may be, may provide for partial or full vesting in connection with the termination of a participant’s employment or service on such basis as it deems appropriate.
How are awards under the Amended and Restated 2012 Omnibus Plan treated in the event of a change in control of the Company?
In the event of a “change in control” (as defined in the Amended and Restated 2012 Omnibus Plan), the Compensation Committee or the Board, as applicable, may, subject to compliance with Code Section 409A, take such action as it deems appropriate in its sole discretion and without the consent of any participant. These actions may include, without limitation, the following: (i) provide for the purchase, settlement or cancellation of any award by the Company for an amount of cash equal to the amount which could have been obtained upon the exercise of such award or realization of
a participant’s rights had the award been currently exercisable or payable, (ii) adjust outstanding awards as the Committee or Board deems appropriate to reflect the change in control and retain the economic value of the award, or (iii) cause any outstanding award to be assumed, or new rights substituted therefor, by the successor company in such change in control.
In connection with a change in control, the Compensation Committee or the Board, as applicable, may provide for acceleration of the vesting, delivery and exercisability of, and the lapse of time-based and/or performance-based vesting restrictions with respect to, an outstanding award, and for the replacement of a stock-settled award with a cash-settled award.
In the event of a change in control of the Company, any award subject only to time-based vesting will accelerate and become fully vested if either (i) the successor company does not assume, convert, continue, or otherwise replace the outstanding award on proportionate and equitable terms, or (ii) the successor company assumes, converts, continues, or otherwise replaces the outstanding award on proportionate and equitable terms and the participant is terminated without cause within 24 months following the change in control.
In the event of a change in control of the Company, unless the award agreement or the Compensation Committee or Board provide otherwise, any award subject to performance-based vesting will accelerate and become fully vested if either (i) the successor company does not assume, convert, continue, or otherwise replaces the outstanding award on proportionate and equitable terms, or (ii) the successor company assumes, converts, continues, or otherwise replaces the outstanding award on proportionate and equitable terms and the participant is terminated without cause within 24 months following the change in control.
The provision that awards that are assumed by the successor company (or otherwise converted, continued or replaced in connection with a change in control) will experience accelerated vesting only if the participant experiences a qualifying termination is commonly referred to as a “double-trigger” acceleration provision. The Company believes a mandatory double-trigger provision for time-based awards and a flexible default double-trigger provision for performance based-awards that are assumed by the successor company (or otherwise converted, continued or replaced in connection with a change in control) is a good governance practice. While the Company recognizes the benefits of double-trigger acceleration in certain change in control circumstances and has included the provisions described above for this reason, the Board also believes it is appropriate to retain flexibility in the case of performance-based awards granted under the Amended and Restated 2012 Omnibus Plan and to avoid restricting the range of available alternatives for structuring performance-based equity compensation opportunities for the Company’s executives, other employees and non-employee directors. As a result the double-trigger provision is mandatory for time-based awards but for performance-based awards is a default provision that can be modified by the award agreement or the Compensation Committee or the Board.
Are awards under the Amended and Restated 2012 Omnibus Plan transferable?
Except as provided below, no award under the Amended and Restated 2012 Omnibus Plan may be transferred by a participant other than by will or the laws of descent and distribution, and stock options and stock appreciation rights may be exercised during the participant’s lifetime only by the participant. The Compensation Committee or the Board, as the case may be, may expressly provide in an award agreement that the participant may transfer restricted stock to a trust that the Committee or the Board may approve.
How can awards under the Amended and Restated 2012 Omnibus Plan be amended?
As is customary in stock and incentive plans of this nature, in the event of any increase or decrease in the outstanding shares of the Company’s common stock resulting from a stock split or other division or consolidation of shares, the payment of a stock dividend on shares of common stock, or similar change in the number of outstanding shares of the Company’s common stock without any receipt of consideration by the Company, then the number of shares of common stock that remain available under the Amended and Restated 2012 Omnibus Plan, the number of shares covered by each outstanding stock option or stock appreciation right, the exercise price for each outstanding stock option or stock appreciation right, the purchase price per share and the number and any purchase price for any other outstanding awards involving common stock (or equivalents), in each case, shall be proportionately and appropriately adjusted by the Compensation Committee or the Board.
Similarly, subject to any required action by our shareholders, if any change occurs in the Company’s common stock by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Company’s common stock, then number of shares of common stock that remain available under the Amended and Restated 2012 Omnibus Plan, the number and type of shares of common stock then covered by each outstanding stock option or stock appreciation right, the exercise price for each outstanding stock option or stock appreciation right, and the purchase price per share and the number and any purchase price for any other outstanding awards involving common stock (or equivalents), in each case, shall be proportionately and appropriately adjusted by the Compensation Committee or the Board.
Other than as provided in the Amended and Restated 2012 Omnibus Plan in connection with any increase or decrease in the outstanding shares of the Company’s common stock or in connection with any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Company’s common stock, as described above, the Compensation Committee and the Board shall not without the approval of the shareholders of the Company (i) lower the exercise price of an outstanding stock option or stock appreciation right, (ii) cancel an outstanding stock option or stock
appreciation right when the exercise price exceeds the fair market value of the underlying shares of common stock in exchange for another award or cash (other than in connection with substitute awards), or (iii) take any other action with respect to an outstanding stock option or stock appreciation right that would be treated as a repricing under the rules and regulations of the principal stock exchange on which the common stock is traded.
How can the Amended and Restated 2012 Omnibus Plan be amended or terminated?
The Amended and Restated 2012 Omnibus Plan may be amended by the Board, but without further approval by the shareholders of the Company to the extent such shareholder approval is required by applicable law, regulation or listing standard, no such amendment may: (i) increase the total number of shares of common stock that may be issued pursuant to awards granted under the Amended and Restated 2012 Omnibus Plan, (ii) change the designation of the class of employees eligible to receive awards, (iii) decrease the minimum option or stock appreciation rights price set forth under the Amended and Restated 2012 Omnibus Plan, (iv) extend the period during which an option or stock appreciation right may be exercised beyond the maximum period specified in the Amended and Restated 2012 Omnibus Plan, (v) otherwise materially modify the requirements as to eligibility for participation in the Amended and Restated 2012 Omnibus Plan, (vi) otherwise materially increase the benefits under the Amended and Restated 2012 Omnibus Plan, or (vii) withdraw the authority to administer the Amended and Restated 2012 Omnibus Plan as to awards made to employees from the Committee. Notwithstanding the foregoing, the Board may amend the Plan to incorporate or conform to requirements imposed by and amendments made to the Internal Revenue Code or regulations promulgated thereunder which the Board deems to be necessary or desirable to preserve (A) incentive stock option status for outstanding incentive stock options and to preserve the ability to issue incentive stock options pursuant to the Amended and Restated 2012 Omnibus Plan, (B) the deductibility by the Company of amounts taxed to participants as ordinary compensation income, and (C) the status of any award as exempt from registration requirements under any securities law for which the award was intended to be exempt.
The Board may terminate or suspend the Amended and Restated 2012 Omnibus Plan or any portion thereof at any time, but no suspension or termination shall impair the rights of a participant under an outstanding award without the consent of the affected participant.
What is the duration of the Amended and Restated 2012 Omnibus Plan?
Unless terminated sooner by the Board as described above, the Amended and Restated 2012 Omnibus Plan shall be of unlimited duration to facilitate administration of awards issued under the plan, but no award will be granted under the Amended and Restated 2012 Omnibus Plan after June 21, 2027.
Are awards under the Amended and Restated 2012 Omnibus Plan subject to clawback?
Yes. The Company has a formal compensation clawback policy for adjustment, cancellation or recovery of excess incentive awards or payments to all executive officers in the event of a financial restatement, which applies to awards under the Amended and Restated 2012 Omnibus Plan that are subject in any way to performance-based vesting. In addition, the Amended and Restated 2012 Omnibus Plan includes a clawback provision that subjects all awards granted under the plan to any additional clawback that may be required pursuant to any applicable federal or other law or regulation, any applicable listing standard of any securities exchange on which the common stock is then listed or reported.
What are the tax consequences of the Amended and Restated 2012 Omnibus Plan?
The following is a brief summary of certain of the general U.S. federal income tax consequences of certain awards under the Amended and Restated 2012 Omnibus Plan. This summary is based on U.S. federal income tax laws and regulations in effect on the date of this Proxy Statement and is not a complete description of the U.S. federal income tax laws.
In general, an optionee will not recognize income at the time a nonqualified stock option is granted. At the time of exercise, the optionee will recognize ordinary income in an amount equal to the difference between the option price paid for the shares and the fair market value of the shares on the date of exercise. At the time of sale of shares acquired pursuant to the exercise of a nonqualified stock option, any appreciation (or depreciation) in the value of the shares after the date of exercise generally will be treated as capital gain (or loss).
An optionee generally will not recognize income upon the grant or exercise of an incentive stock option. If shares issued to an optionee upon the exercise of an incentive stock option are not disposed of in a disqualifying disposition within the later of two years after the date of grant or one year after the transfer of the shares to the optionee, then upon the sale of the shares any amount realized in excess of the option price generally will be taxed to the optionee as long-term capital gain and any loss sustained will be a long-term capital loss. If shares acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to any excess of the fair market value of the shares at the time of exercise (or, if less, the amount realized on the disposition of the shares) over the option price paid for the shares. Any further gain (or loss) realized by the optionee generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
Subject to certain exceptions for death or disability, if an optionee exercises an incentive stock option more than three months after termination of employment, the exercise of the option will be taxed as the exercise of a nonqualified stock option. In addition, if an optionee is subject to federal “alternative minimum tax,” the exercise of an incentive stock option will be treated essentially the same as a nonqualified stock option for purposes of the alternative minimum tax.
A recipient of restricted stock generally will be subject to tax at ordinary income rates on the fair market value of the restricted stock at such time as the shares are no longer subject to a risk of forfeiture or restrictions on transfer for purposes of Code Section 83. However, a recipient who so elects under Code Section 83(b) within thirty days of the date of grant of the restricted stock will recognize ordinary income on the date of grant of the shares equal to the excess of the fair market value of the restricted stock (determined without regard to the risk of forfeiture or restrictions on transfer) over any purchase price paid for the shares. Thereafter, if the shares are forfeited and the participant has made a Section 83(b) election, the participant will be entitled to a deduction, refund, or loss, for tax purposes only, in an amount equal to any purchase price of the forfeited shares. Dividends on restricted stock generally will be treated as compensation that is taxable as ordinary income to the participant and will be deductible by the Company when paid. If, however, the participant has made a Section 83(b) election, the dividends will be taxable as ordinary income to the participant but will not be deductible by the Company.
A participant generally will not recognize income upon the grant of restricted stock units. A recipient of restricted stock units generally will not recognize income until cash and/or shares of common stock are delivered to the recipient at the end of the restriction period and are no longer subject to a substantial risk of forfeiture or restrictions on transfer for purposes of Code Section 83. At that time, the participant generally will recognize as ordinary income an amount equal to the amount of any cash received and the fair market value of any unrestricted shares of common stock received. The Company will be entitled to a deduction at the time and in the amount that is included in the participant’s income by reason of the receipt. For each share of common stock received in respect of a restricted stock unit, the taxation of the post-settlement appreciation or depreciation upon a subsequent disposition is generally treated as short-term or long-term capital gain (or loss) depending on the holding period.
A participant generally will not recognize income upon the grant of performance awards. Upon payment of performance awards in cash and/or shares of common stock, the participant generally will recognize as ordinary income an amount equal to the amount of any cash received and the fair market value of any unrestricted shares of common stock received. The Company will be entitled to a deduction at the time and in the amount that is included in the participant’s income by reason of the receipt. For each share of common stock received in respect of a performance award, the taxation of the post-settlement appreciation or depreciation upon a subsequent disposition is generally treated as short-term or long-term capital gain (or loss) depending on the holding period.
To the extent that a participant recognizes ordinary income in the circumstances described above, the Company or subsidiary for which the participant performs services generally 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 Code Section 280G and is not disallowed by the $1,000,000 limitation on certain executive compensation under Code Section 162(m).
The Compensation Committee may grant awards that are either exempt from or subject to Code Section 409A. Code Section 409A imposes certain requirements on non-qualified deferred compensation arrangements, including requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Code Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Code Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, Code Section 409A requires that such individual’s distribution commence no earlier than six months after such officer’s separation from service.
Under current Internal Revenue Service guidance, certain awards under the Amended and Restated 2012 Omnibus Plan are excluded from non-qualified deferred compensation to which Code Section 409A applies. These excluded awards are stock options under which shares of common stock are issued, stock appreciation rights under which shares of common stock are issued, restricted stock, restricted stock units that are paid at or shortly after vesting, and performance awards that are paid at or shortly after vesting. Other awards under the Amended and Restated 2012 Omnibus Plan may be treated as non-qualified deferred compensation to which Code Section 409A applies, and in such case it is generally the Company’s intent that such awards be designed to comply with the election timing, payment timing, and other requirements of Code Section 409A.
If an award is subject to and fails to satisfy the requirements of Code Section 409A, the recipient of that award will recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Code Section 409A fails to comply with the provisions of Code Section 409A, Code Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as possible interest requirements with respect to such amounts, and will have certain withholding requirements.
The foregoing is only a summary of the effect of federal income taxation upon the Company and upon participants, is not complete and does not discuss the federal employment taxes, tax consequences of any participant’s death or the income tax laws of any municipality, state, or foreign country in which a participant may reside. The foregoing is not legal or tax advice.
Where can I get a copy of the Amended and Restated 2012 Omnibus Plan?
This summary is not a complete description of all provisions of the Amended and Restated 2012 Omnibus Plan. A copy of the Amended and Restated 2012 Omnibus Plan, as proposed to be adopted, is attached hereto as Annex A.
New Plan Benefits
Participation and the types of awards granted under the Amended and Restated 2012 Omnibus Plan are subject to the discretion of the Compensation Committee or the Board, as the case may be, and no determination has been made as to the awards, if any, that any individuals who would be eligible to participate in the plan will be granted in the future. Therefore, the benefits or amounts that will be received by any participant or groups of participants if the Amended and Restated 2012 Omnibus Plan is approved are not currently determinable.
Equity Compensation Plan Information
The following table shows information concerning our equity compensation plans as of the end of the fiscal year ended January 28, 2017:
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b)(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(2) | ||
Equity compensation plans approved bysecurity holders | 577,246 | $ 13.58 | 5,764,356 | ||
Equity compensation plans not approvedby security holders | — | — | — | ||
TOTAL | 577,246 | $ 13.58 | 5,764,356 |
Recommendation
The Board of Directors recommends a vote “FOR” the approval of the Chico’s FAS, Inc. Amended and Restated 2012 Omnibus Stock and Incentive Plan and the material terms of the performance-based compensation under the Plan for purposes of compensation deductibility under Internal Revenue Code Section 162(m).
The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference therein.
The Audit Committee consists of three directors and operates under a written charter adopted by the Board of Directors. The current members of this Committee are David F. Walker (Chair), John J. Mahoney and Andrea M. Weiss. Each member of the Committee is independent in the judgment of the Company’s Board of Directors, as required by NYSE listing standards and as set forth in the Company’s Corporate Governance Guidelines. This Committee is responsible for selecting, engaging, evaluating and negotiating fee arrangements with the Company’s independent certified public accountants (the “Independent Accountants”) with input from the Company’s Board and management. Management is responsible for the Company’s internal controls and the financial reporting process. The Independent Accountants are responsible for performing an audit of internal control over financial reporting that is integrated with an audit of the Company’s consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board in the United States (“PCAOB”), and for expressing opinions thereon. This Committee’s responsibility is to monitor and oversee these processes.
The members of this Committee do not serve as professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or the Independent Accountants, nor can this Committee certify that the Independent Accountants are “independent” under applicable rules. This Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management, internal auditors, and the Independent Accountants on the basis of several factors, including the information it receives, discussions with management, internal auditors, and the Independent Accountants, and the experience of this Committee’s members in business, and with financial and accounting matters.
As part of its oversight of the Company’s financial reporting process, this Committee reviews and discusses with both management and the Company’s Independent Accountants all annual and quarterly financial statements prior to their issuance, including receiving reports on the matters discussed in management’s Disclosure Committee meetings. This Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended January 28, 2017 (fiscal 2016), with management and the Company’s Independent Accountants. Management advised the Audit Committee that the Company’s fiscal 2016 consolidated financial statements had been prepared in accordance with accounting principles generally accepted in the United States, and presented significant accounting and disclosure matters to this Committee. Discussions with the Independent Accountants regarding the Company’s fiscal 2016 audited financial statements included the Independent Accountants’ judgments about the quality, not just the acceptability, of the Company’s accounting principles and underlying estimates used in the Company’s financial statements, as well as other matters, as required to be discussed under applicable auditing standards as adopted by the PCAOB and by the Audit Committee’s charter.
This Committee annually evaluates, with input from management and the internal auditor, the quality of services and sufficiency of resources provided by the Independent Accountants, communications and interactions with the Independent Accountants, and assesses the Independent Accountants’ independence, objectivity and professional skepticism. The Company’s Independent Accountants provided the Committee the written disclosures and the letter required by applicable requirements of the PCAOB for independent auditor communications with Audit Committees concerning its independence, and this Committee discussed the results of the evaluation process with the independent auditors, including their independence from the Company.
In addition, this Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure control structure. As part of this process, this Committee continued to monitor the scope and adequacy of the Company’s internal auditing program, reviewing staffing levels and steps taken to implement recommended improvements in internal procedures and control.
Based upon the Audit Committee’s discussion with management, the internal auditor, and the Independent Accountants, this Committee’s review of the representations of management, and the report of the Independent Accountants to this Committee, and subject to the limitations on the role and responsibilities of this Committee described above and in the Committee’s charter, this Committee recommended that the Board of Directors approve the inclusion of the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission as of and for the fiscal year ended January 28, 2017.
The following table sets forth certain information regarding the Company’s current executive officers.
Years | |||
with the | |||
Executive Officers | Age | Positions | Company |
Shelley G. Broader | 52 | Chief Executive Officer, President, and Director | 1 |
Todd E. Vogensen | 48 | Executive Vice President - Chief Financial Officer and Assistant Corporate Secretary | 7 |
Diane M. Ellis | 59 | Brand President - Chico’s | (a) |
Donna M. Colaco | 58 | Brand President - White House Black Market | 9 |
Laurie J. Van Brunt | 59 | Brand President - Soma | (b) |
Kristin L. Oliver | 45 | Executive Vice President - Chief Human Resources Officer | 1 |
Susan S. Lanigan | 54 | Executive Vice President - General Counsel | 1 |
Ann E. Joyce | 52 | Executive Vice President - Chief Information Officer | 1 |
John R. Lund | 57 | Senior Vice President of Supply Chain Operations | (a) |
David M. Oliver | 59 | Group Vice President - Finance, Controller and Chief Accounting Officer | 5 |
Cynthia S. Murray | 59 | Brand President - Chico’s | (c) |
Executive Officers | Age | Positions | Years with the Company |
Bonnie R. Brooks | 65 | Interim President, Chief Executive Officer and Director | (a) |
Todd E. Vogensen | 50 | Executive Vice President - Chief Financial Officer and Assistant Corporate Secretary | 9 |
Karen McKibbin | 59 | Brand President - Chico’s | (b) |
David Pastrana | 42 | Brand President - White House Black Market | 1 |
Mary van Praag | 54 | President of the Intimate Apparel Group | 1 |
Ann E. Joyce | 54 | Chief Customer Officer and Executive Vice President - Technology, Supply Chain and Field Operations | 3 |
Kristin M. Gwinner | 50 | Senior Vice President - Chief Human Resources Officer | 6 |
Gregory S. Baker | 48 | Senior Vice President - General Counsel and Corporate Secretary | 2 |
David M. Oliver | 61 | Senior Vice President - Finance, Controller and Chief Accounting Officer | 7 |
(a) | Director since 2016. Interim President and Chief Executive Officer as of April 24, 2019. |
(b) | Joined the Company in | |
Non-Director Executive Officers
Todd E. Vogensenis Executive Vice President - Chief Financial Officer and Assistant Corporate Secretary for the Company. Mr. VogensenSecretary. He joined the Company in October 2009 as Vice President - Financial Planning and Analysis, followed by the role of Vice President - Investor Relations, before his promotion to Senior Vice President - Finance andFinance. He was subsequently named Executive Vice President - Chief Financial Officer and Assistant Corporate Secretary. Prior to joining the Company, Mr. Vogensen served in executive finance roles at Michaels Stores, Inc., an arts and crafts retail chain, Gap, Inc., a clothing and accessories retailer, and Hewlett Packard Company, an information technology company, as well as Audit Manager and CPA at accounting firm PricewaterhouseCoopers LLP.
Diane M. EllisKaren McKibbinis Brand President - Chico’s havingChico’s. She joined the Company in November 2016. Prior to joining the Company,April 2019. Ms. EllisMcKibbin served as Chief Executive OfficerPresident of The Limited Stores, aNordstrom Rack, an off-price fashion retailer, since 2013.2017. From 20042012 until 2013,2017, Ms. EllisMcKibbin served as President of Nordstrom Canada, an international fashion retailer. Previously at Nordstrom, she served as Vice President and Chief Operating Officer of Brooks Brothers Group, Inc., an apparel retailer. Prior to Brooks Brothers,led four different regions for that company. Ms. Ellis was the founding partner of Lighthouse Retail Group, a retail-centric consulting firm, managing director for the Retail Strategy Practice at PricewaterhouseCoopers, and director of merchandise planning, allocation and inventory control at Filene’s department stores. Ms. EllisMcKibbin also served in merchandising planning, strategy and store management roles at Joseph Horne’s department stores and at Marshalls, where she launched the petite and swimwear businesses. She is a member of the board of directors of Stage Stores, Inc., which operates specialty department stores.
Nordstrom.
Donna M. ColacoDavid Pastranais Brand President - White House Black Market, havingMarket. He joined the Company in August 2007.January 2018. Mr. Pastrana served as President of Apparel at Sears Holding Corporation from March 2014 through July 2017. Prior to that, from April 2013 to March 2014, he served as President North America for Topshop Topman, where he managed the North American retail, wholesale and online businesses. Before that he was at Inditex (parent company to Zara) for almost eight years, where he served as CEO and Managing Director of the Canadian and then the U.S. markets. Prior to that he served Inditex in various corporate, regional and store operations roles.
Mary van Praag is President of the Intimate Apparel Group. She joined the Company in September 2017. Ms. Colacovan Praag has over 30 years of experience in women’s specialty apparel.global, multichannel beauty industry leadership
experience. She has a proven track record of developing brands and executing sales growth strategies. Prior to joining the Company, Ms. Colaco worked for Ann Taylor Corporation, a women’s retail chain, for more than 10 years in numerous capacitiesvan Praag was CEO of Perricone MD from May 2015 to August 2017. From March 2008 to May 2015, Ms. van Praag held several international and domestic executive leadership roles at Coty, Inc. (“Coty”), including serving as PresidentGeneral Manager of Ann Taylor LOFT.OPI Products, Inc. Prior to Ann Taylor,Coty, Ms. Colaco worked for the Lerner New York Division of Limited,van Praag held corporate and regional positions at Johnson & Johnson, Revlon, Inc., a women’s fashion retailer, and Petrie Stores Corporation, a women’s apparel retailer.
Laurie J. Van Brunt,who served as Brand President - Soma, left the Company in March 2017, having joined the Company in May 2010. Ms. Van Brunt has over 30 years of experience in retail. Prior to joining the Company, Ms. Van Brunt spent the previous five years with J.C. Penney Company, a department store retailer, serving as its Marketing Divisional Vice President, Director of Brand Managementother health, beauty, and most recently as Divisional Vice President-Intimate Apparel. Prior to J.C. Penney, Ms. Van Brunt served as Executive Vice President-General Merchandise Manager for the Lane Bryant Division of Limited Brands, a women’s fashion retailer, General Merchandise Manager for Chadwicks of Boston, a women’s fashion retailer, and Petite Sophisticates Division of Casual Corner/U.S. Shoe, a women’s fashion retailer, and as a merchant for May Company, a company with retail department stores.
Kristin L. Oliveris Executive Vice President - Chief Human Resources Officer, having joined the Company in May 2016. Previously, she spent 11 years at Wal-Mart Stores, Inc., a multinational retail corporation, serving as its Executive Vice President, Walmart U.S. People, Senior Vice President, Walmart International People, and Vice President and Division General Counsel, Employment. Before joining Walmart, Kristin was a partner in the Tulsa, Oklahoma law firm of Gable and Gotwals, where she practiced commercial litigation and employment law.
Susan S. Laniganis Executive Vice President - General Counsel, having been hired by the Company in May 2016. Ms. Lanigan currently serves as Chair of the Tennessee Education Lottery
Commission and is a director of the board of Kirkland’s, Inc., a specialty retailer of home decor and gifts. Ms. Lanigan joined Dollar General Corporation, the nation’s largest small box retailer of discount consumable basic merchandise, in 2002 as Vice President, General Counsel and Secretary, and in 2005, was promoted to Executive Vice President. She retired from Dollar General in 2013. Prior to joining Dollar General, Ms. Lanigan served as Senior Vice President, General Counsel and Secretary at Zale Corporation, a specialty retailer of fine jewelry. Prior to her time at Zale, Ms. Lanigan held legal positions with Turner Broadcasting, a media conglomerate and division of Time Warner, and the law firm of Troutman Sanders LLP.
personal care companies.
Ann E. Joyce is Chief Customer Officer and Executive Vice President - Chief Information Officer for the Company, havingTechnology, Supply Chain and Field Operations. She joined the Company in November 2015. Ms. Joyce has more than 30 years of information technology experience supporting the apparel industry, including retail, wholesale, licensing, manufacturing, and international environments. Prior to joining the Company, Ms. Joyce served as Senior Vice President and Chief Information Officer at Aeropostale, Inc. for 12 years. During her tenure, Aeropostale was recognized as a Top Innovator by Apparel Magazine and helped lead the industry into mobile payments. Prior to Aeropostale, Ms. Joyce held various positions including the position of Vice President of Global Applications at Polo Ralph Lauren from 1996 until 2002. Ms. Joyce has also held positions of increasing scope and responsibility at Leslie Faye, and Garan, Inc. since starting her career.
John R. LundKristin M. Gwinner is Senior Vice President Supply Chain Operations,- Chief Human Resources Officer, having joined the Company in November 2016. Most recently, he wasDecember 2012. Ms. Gwinner has served Chico’s FAS, Inc. in several roles over the founderlast 6 years, leading to her current position as Senior Vice President, Chief Human Resources Officer. Ms. Gwinner joined Chico’s FAS initially as Vice President, Human Resources, followed by the role of Vice President of Talent, Development, and principal at Lund Simon Consulting, specializingDiversity and Inclusion, before her promotion to Senior Vice President. Previously, Ms. Gwinner served as head of human resources in helping organizationsthe role of Vice President, Human Resources for Pacific Sunwear of California, LLC (“PacSun”), a specialty retailer
22 | - 2019 Proxy Statement |
EXECUTIVE OFFICERS | ■ |
Non-Director Executive Officers | |
that offers a cross-section of emerging brands and trending fashion based in Anaheim, California from 2010 to master the complexities of supply chain operations while driving profitable growth.2012. Prior to founding Lund Simon Consulting, Dr. Lund joining PacSun, Ms. Gwinner served as Sr. Director, Human Resources for T-Mobile US, Inc. a national provider of wireless voice, messaging, and data services. During her 12 years, she held numerous positions of increasing scope and worked through several mergers and acquisitions in the telecommunications industry. Ms. Gwinner holds a Masters in Human Resources Management from Troy State University, a Bachelor’s in Business Management from Florida State University and is SPHR certified. Ms. Gwinner currently serves on the Diversity and Inclusion Leadership Council of RILA, the Retail Industry Leaders Association.
Gregory S. Baker is Senior Vice President - General Counsel and Corporate Secretary of Chico’s FAS, Inc. He joined the Company in February 2017 and has over 20 years of experience in the retail industry. In his current role, Mr. Baker has the added responsibility of overseeing global compliance and risk management. He previously served as Senior Vice President - Chief Legal Officer and Corporate Secretary of Chico’s FAS and prior thereto as Vice President - Legal and Corporate Secretary. Previously, Mr. Baker served as General Counsel and Business Development of Limited Stores, LLC (“The Limited”) from January 2013 through December 2016 and served as its Senior Counsel from January 2011 through December 2012. Prior to joining The Limited, Mr. Baker practiced law as part of the Corporate Group of Schottenstein, Zox & Dunn. He joined the firm in 1998 and served as a partner from 2007 through 2010. In private practice and at
The Limited, Mr. Baker gained extensive experience overseeing major corporate transactions both domestically and globally. Mr. Baker is a Leadership Columbus graduate, a 40 Under 40 Honoree by Columbus Business First, an Ohio Super Lawyer Rising Star and has served in various leadership roles with increasing responsibilityfor non-profit agencies. He is an author and regularly speaks at regional and national law conferences on various retail topics. Mr. Baker received his undergraduate and law degrees from the University of Wisconsin-Madison and The Walt Disney Company, including SVP, Integrated Supply Chain Management from 2013 to 2016, and Senior Vice President Disney Parks Supply Chain Management from 2006 to 2013, after having joined Disneyland Paris in 1992 as Manager, Transportation, Telecommunication & General Services. Prior to his career at Disney, Dr. Lund worked at RAND, an internationally renowned nonprofit research center for public policy. During his career at RAND from 1984 to 1992, he advised the US government on national security strategy, political-economic affairs, and military planning. While at RAND, he authored or co-authored numerous books and reports. John holds a doctorate in policy analysis from Pardee RAND Graduate School, an MA in international affairs from ColumbiaOhio State University, and a BA in international relations and economics from St. Joseph’s University.
respectively.
David M. Oliveris GroupSenior Vice President - Finance, Controller and Chief Accounting Officer. Mr. OliverHe joined Chico’s FAS, Inc. in March 2012 as Vice President - Controller. Prior to joining Chico’s FAS, Inc., Mr. Oliver held various finance roles with SUPERVALU Inc., a retail and wholesale grocery chain, including Chief Financial Officer - Supply Chain Services, Vice President, Corporate Controller and Vice President, Investor Relations.Relations from 2004 to 2012. Mr. Oliver also served as an executive finance officer at the Arden Group, Inc. and The Vons Companies, Inc., both food supermarket retailers, as well as Audit Manager and CPA at the accounting firm Arthur Andersen.
Cynthia S. Murray,who served as Brand President - Chico’s, left the Company in September 2016, having joined the Company in February 2009. Ms. Murray has over 30 years of experience in retail. Prior to joining the Company, Ms. Murray spent the previous five years with Stage Stores, Inc., a company that operates retail department stores, most recently serving as its Executive Vice President and Chief Merchandising Officer. Prior to Stage Stores, Ms. Murray worked for Talbot’s, a women’s apparel retailer, and Saks Fifth Avenue / Saks Off 5th, a department store retailer, among other retailers.
None of the executive officers or directors who currently serve or who served in such capacities during fiscal 20162018 are related to one another. There are no arrangements or understandings pursuant to which any executive officer was elected to office. Executive officers are elected by and serve at the discretion of the Board of Directors.Board.
- | 23 |
The following report of the Human Resources, Compensation and Benefits Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference therein.
The Human Resources, Compensation and Benefits Committee evaluates and establishes compensation for executive officers and oversees the deferred compensation plan, the Company’s management equity compensation plans, and other management incentive, benefit and perquisite programs. Management has the primary responsibility for the disclosure of executive compensation in the Company’s financial statements and reporting process. With this in mind, the Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis found on pages 48-57 of this proxy statement. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the Compensation Committee with regard to executive compensation and recommended to the Board that the Compensation Discussion and Analysis be included in the proxy statement.
MEMBERS OF THE HUMAN RESOURCES, COMPENSATION AND BENEFITS COMMITTEE
John J. Mahoney, Chair
William S. Simon
Stephen E. Watson
COMPENSATION DISCUSSION AND ANALYSIS |
The Compensation Discussion and Analysis describes the material elements of the Company’s executive compensation program, how it is designed to support the achievement of our key strategic and financial objectives, and the compensation decisions the Compensation Committee made under the program for our Named Executive Officers (“NEOs”)NEOs as defined under SEC rules, who for fiscal 20162018 were:
Named Executive Officers | Title |
Shelley G. Broader(a) | Former Chief Executive Officer, President and Director |
Todd E. Vogensen | Executive Vice President - Chief Financial Officer and Assistant Corporate Secretary |
David Pastrana | Brand President - White House Black Market |
President | |
Ann E. Joyce | Chief Customer Officer and Executive Vice President - |
Former Brand President - Chico’s |
Left the Company in |
Left the Company in |
Strategic Highlights |
In fiscal 2016, we began our multi-year transformational journey by implementing cost reduction and operating efficiency initiatives, including realigning marketing and digital commerce, improving supply chain efficiency and reducing non-merchandise expenses. In fiscal 2017, we focused on our brand positioning and evolving the customer experience and leveraging actionable retail science to drive sales. In fiscal 2018, we launched multiple initiatives that utilize technology and new platforms to drive growth such as Endless Aisle (our shared inventory system) and STYLECONNECTSM (which enables store employees to personalize the customer experience). These initiatives were taken to develop an integrated, robust omnichannel platform with advanced capabilities to modernize, digitize and personalize the customer experience. The Company has also forged key relationships with ShopRunner®, Amazon® and QVC®. As a result, the Company now has the technology and tools in place to
capture and stay connected with its nearly eight million customers in new ways, whether in-store, online or virtually, and to fully activate its omnichannel strategy.
BusinessWe are committed to enhancing our effectiveness and efficiency to better meet customer expectations and drive profitable growth. In the fourth quarter of fiscal 2018, we announced a retail fleet optimization plan to rebalance the mix between our physical store presence and our digital network with the closure of at least 250 stores in the United States over the next three years. Building upon management’s strategic decision to right-size our retail fleet, we also commenced a comprehensive review of our operations to ensure the business is structured for agility, speed and innovation. These initiatives are part of the Company’s efforts to better capitalize on its omnichannel platform, reduce costs, improve profitability and return on invested capital.
Financial Highlights |
In fiscal 2018, we reported earnings per diluted share of $0.28 compared to $0.79 in fiscal 2017. Fiscal 2018 earnings per diluted share includes the unfavorable impact of impairment and accelerated depreciation related to our fleet optimization plan, partially offset by the favorable tax benefit related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). Fiscal 2017 earnings per diluted share includes the favorable impact of the Tax Act, the benefit of the 53rd week and the unfavorable impact of hurricanes Harvey, Irma and Maria. Inventories at the end of fiscal 2018 increased 0.6% which primarily reflects accelerated in-transits in fiscal 2018 due to the timing of the Chinese New Year, partially offset by a 7% decrease in on-hand inventory compared to the end of fiscal 2017. In fiscal 2018, we also returned $124 million to shareholders, consisting of $81 million in share repurchases and $43 million in dividends. Actual return on net assets (“RONA”) achieved in fiscal 2018 was 10.2%, excluding the unfavorable impact of impairment and accelerated depreciation related to our fleet optimization plan. RONA is defined as (a) net income divided by (b) the “five-point average” (based on balances at the
beginning of the first quarter plus the final balances for each quarter of the fiscal year) of net working capital less cash and marketable securities plus fixed assets. While fiscal 2018 results fell short of expectations, we are committed to best position our brands for profitable growth and enhance the value of our Company as an efficient, effective and agile organization with robust omnichannel capabilities.
Our executive compensation program aligns pay with the overall performance of the Company while attracting, motivating and retaining key executives. In fiscal 2018, challenges in the macro retail environment and other internal merchandise and execution issues caused lower than expected performance. Consequently, our incentive programs reflected this below target performance with payments at zero or below target for our executives. The alignment of below target performance with below target incentive payment indicates that the incentive programs are operating as they were designed.
24 | - 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
Executive Summary | |
Compensation Highlights
Compensation Highlights |
Compensation Elements
Our compensation program is designed to attract and retain talented leaders and reward them for achievement of our key financial and strategic objectives. Our compensation elements seek to balanceprogram balances all aspects of pay for an executive’s responsibilities: a base salary for day-to-day responsibilities,work, a cash incentive bonus for shorter-term returns linked to annual Company and Brand performance, and a long-term equity awardsprogram for aligning the
executives’ focus with shareholder value and the long-term future performance of the Company. The following table provides a summary of the direct compensation elements of our executive compensation program, their principal contribution to our compensation objectives, and the key actions and decisions made with respect to each element for fiscal 2016.2018.
Compensation Element | Objectives and Key Features | Highlights for Fiscal | |
FIXED | Base Salary | ■ Reflects position’s relative value in the |
|
AT RISK | Annual Cash Incentive | ■ Focuses executives on achieving ■ Uses performance measures we believe | ■ Strategic metrics, added for the first time in fiscal 2018, to |
Long-Term Equity Incentives | ■ Links compensation earned to the ■ Aligns interests of management with ■ Supports retention of key talent |
|
Target Pay Mix
There is no pre-established policy or target for the allocation between either cash and non-cash incentive compensation or short-term and long-term incentive compensation. The
Compensation Committee believes, however, that a substantial portion of the annual and long-term compensation for our NEOs should be “at-risk.” We define at-risk compensation to include target
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■ | COMPENSATION DISCUSSION AND ANALYSIS |
Executive Summary | |
bonus opportunities under our Cash Bonus Incentive Plan and the targeted grant-date fair value of annual equity awards. Our total direct compensation mix is designed to provide more upside potential and downside risk
for the NEOs because they have greatersubstantial influence on and more accountability for our performance as a whole.performance.
The following chart describes the percent of pay at-risk for our NEOs, based on annualized salary and target bonus opportunity, in fiscal 2016:
2018:
NEO | % | ||
Shelley G. Broader | 88% | ||
Todd E. Vogensen | 68% | ||
David Pastrana | 68% | ||
Mary van Praag | 67% | ||
Ann E. Joyce(a) | 63% | ||
Diane M. Ellis | 68% |
(a) | Includes Ms. |
Compensation Risk Mitigation and Governance Highlights
Compensation Risk Mitigation and Governance Highlights |
In addition to the items discussed in the table summarizing our direct compensation elements of executive compensation (page 49)36), we also maintain various compensation policies that align our program with recognized corporate governance best practices:
WHAT WE DO | WHAT WE DON’T DO | ||
✔ | Align Pay to Performance: Our compensation programfor NEOs emphasizes variable pay over fixed pay to | ✗ | Offer Significant Perquisites: We do not provide significantperquisites or personal benefits to NEOs. |
✔ | Retain Meaningful Stock Ownership Requirements:Werequire senior executives and non-employee directors | ✗ | Offer Supplemental Executive Retirement Plans: As part ofour emphasis on performance-based compensation plans, |
✔ | Provide Formal Clawback Policy: We have a compensationclawback policy for adjustment, cancellation or recovery | ✗ | Permit Hedging or Pledging: NEOs and directors are notpermitted to hedge their economic exposures to the Company stock and are also prohibited from trading our stock on |
✔ | Mitigate Undue Risk: We conduct an annual risk assessmentof all of our compensation policies and practices. | ✗ | Provide Excise Tax Gross-Ups: We do not provide excise taxgross-ups on change-in-control severance payments. |
26 | - 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
Executive Summary | |
Pay for Performance |
We have confidence that our pay for performance compensation program is functioning as we intended. The following graph shows the three-year (fiscal year 2016 through fiscal year 2018) aggregate pay for our CEO based on target and then based on what was realized. The difference of over $10,000,000, or 40% of target, appropriately reflects the gap between our goals and the company’s performance over that time period.
(a) | Target compensation includes annualized base salary, target bonus opportunity and the grant date fair value of equity awards, as illustrated on page 37 and the Fiscal Year Grant of Plan-Based Awards table in our 2017 and 2018 Proxy Statements. |
(b) | Realized compensation is derived from the Summary Compensation Table on page 36. Realized compensation is compensation received by the CEO, including salary and awards that vested during the three-year period noted above. Realized compensation includes annual incentive payouts for the year earned. It excludes the value of any unearned and unvested performance shares which will not actually be received, if earned, until a future date. |
At our 20162018 Annual Meeting of Shareholders, we conducted our annual say-on-pay vote where we asked our shareholders to vote to approve, on an advisory basis, the fiscal 20152017 compensation paid to our NEOs. Our shareholders approved our NEO compensation, with approximately 78%96% of votes cast in favor of our say-on-pay resolution. In 2016, we met with shareholders representing approximately 60% of our outstanding shares of common stock to gather feedback on our executive compensation program and areas for potential improvement. Those conversations confirmed the appropriateness of most aspects of our executive compensation programs and policies. However, we began to implement certain changes, as summarized below:
We are committed to an open dialog with shareholders and will continue to seek and consider shareholder feedback in the future.
Compensation Philosophy and Objectives
The goal of our executive compensation program is the same as our goal for the Company — to increase shareholder value over the long-term. To this end, we have designed and implemented a compensation program intended to attract, motivate, and retain highly skilled executive officers and reward them for results that increase shareholder value through sustained, profitable financial performance and outstanding leadership that reflects our values and unique culture.
The Company structures our executive compensation programs and decisions on the same basic objectives that guide us in establishing all of our compensation programs:
The decisions that the Compensation Committee makes on NEO compensation are performance-based and market driven.market-driven. In making compensation decisions, the Compensation Committee reviews all compensation components for the NEOs and compares each element of compensation against a peer group of publicly traded retailers. In setting the various elements of NEO compensation, the Compensation Committee believes that a substantial portion of an individual NEO’s compensation should be “at-risk,” which we define as the target bonus opportunity under our Cash
Bonus Incentive Plan and the targeted grant-date fair value of equity awards.awards, and “performance-based,” which we define as the bonus opportunity and the performance share unit value. Thus, the Compensation Committee, with the advice of its independent compensation consultant and with the desire to have a significant portion of the NEO compensation at risk, establishes an overall compensation opportunity for each NEO designed to deliver a specific, market-competitive value when our target goals are achieved.
Role of the Compensation Committee and the Executive Officers |
Role of the Compensation Committee and the Executive Officers
The Compensation Committee, in consultation with its independent compensation consultant, reviews, evaluates, and
determines the various components of compensation for the CEO, including establishing base salary, the terms under which
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■ | COMPENSATION DISCUSSION AND ANALYSIS |
Executive Summary | |
cash incentive bonuses may be earned, and the grant value of and terms under which her stock-based compensationlong-term equity incentive awards may be earned. The General Counsel and SVP - Chief Human Resources Officer (“CHRO”) may assist the Compensation Committee with gathering relevant data but doesdo not participate in recommending or setting the CEO’s compensation.
The Compensation Committee also determines the amount and terms of the cash-based and stock-based compensation awards
for the other NEOs, taking into account recommendations on individual compensation levels and performance evaluation input from the CEO and CHRO.SVP - Chief Human Resources Officer. No other NEO had an active role in the evaluation, design, or administration of the 20162018 executive officer compensation program. Each NEO, however, provides input on individual compensation levels for their respective direct reports.
Role of Independent Compensation Consultant |
Role of Independent Compensation Consultants
In 2016,2018, the Compensation Committee engaged FW Cook, a nationally recognized compensation consulting firm, as its independent compensation consultant. The Compensation Committee considered whether FW Cook was independent from management utilizing, among other things, the independence factors required by the Securities and Exchange Commission and incorporated into New York Stock Exchange Listing Standards. Based on this review, the Compensation Committee determined that FW Cook was independent from Company management and, further, that FW Cook’s work did not create any conflicts of interest under Rule 10C-1(b)(4)(i)-(vi) of the Exchange Act.
FW Cook’s work for the Compensation Committee included gathering and analyzing data, performing market assessments, providing information on executive compensation trends and
regulatory developments and preparing reports and recommendations. A representative from FW Cook attended Compensation Committee meetings, when requested by the Compensation Committee, and the Compensation Committee Chair interacted with the consultant between meetings to define the nature of work to be conducted, to review materials to be presented at Compensation Committee meetings, and to obtain the consultant’s opinion and perspective on proposals prepared by management.
The Compensation Committee considered the input from FW Cook in making NEO compensation decisions. The Compensation Committee also considered information and analyses received from management as well as its own judgment and experience.
Setting Executive Compensation — Comparative Data |
Setting Executive Compensation — Comparative Data
FW Cook provided the Compensation Committee with relevant market and comparative data and strategic alternatives to consider when making compensation decisions and recommendations for our NEOs. The Compensation Committee and FW Cook also utilized benchmark data from Korn Ferry|Hay Group,Ferry, another compensation consulting firm, to provide data for positions below the NEO level and to supplement the comparative data FW Cook provided to the Compensation Committee.
In making compensation decisions, the Compensation Committee reviewed all compensation components for the NEOs, taking into account tally sheets showing each individual component as well as overall compensation for each NEO. The Compensation Committee also compared each element of total
compensation against a peer group of publicly traded retailers (the “Compensation Peer Group”), which is reviewed and updated each fall. The Compensation Peer Group generally consists of U.S.-based, publicly traded retailers in the Apparel Retail and Apparel, Accessories and Luxury Goods GICS Industry Codes of generally similar size and scope to us and with which we generally compete for talent and shareholder investment.
In November 2015,September 2017, FW Cook conducted a review of the currentprior year’s Compensation Peer Group to ensure the companies were appropriate comparators. Based on this review, the following 20 companies were selected for inclusion in the Compensation Peer Group used to inform decisions about fiscal 20162018 compensation opportunities:
Abercrombie & Fitch Co. | Carter’s, Inc. | Finish Line, Inc. | Kate Spade & Company |
American Eagle Outfitters, Inc. | The | Foot Locker, Inc. | L Brands, Inc. |
Ascena Retail Group, Inc. | Coach, Inc. | The Gap, Inc. | Lululemon Athletica, Inc. |
The Buckle, Inc. | |||
DSW, Inc. | Genesco, Inc. | Michael Kors Holdings Ltd. | |
Caleres, Inc. | Express, Inc. | Guess, Inc. | Urban Outfitters, Inc. |
In November 2016,September 2018, FW Cook again conducted a review of the Compensation Peer Group to ensure the companies remained appropriate comparators to inform decisions about fiscal 20172019 pay opportunities. Some changes were made including: Ann, Inc.Kate Spade & Company was acquired by Ascena Retail GroupCoach, Inc. (now known as Tapestry, Inc.) in July 2017 and was therefore droppedremoved from the Compensation Peer Group. In addition, Aeropostale was droppedCarter’s, Inc. and Kate Spade
Footlocker, Inc. were removed and New York & Company, Lululemon Athetica, Inc.Oxford Industries, Tailored Brands and Michael Kors Holdings Ltd.Zumiez were added.added to maintain a Compensation Peer Group of companies with revenue size and business profits similar to ours.
In terms of size, our revenues and market capitalization were between the 25th percentile and median of the Compensation Peer Group.
28 | - 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
Components of Executive Compensation | |
Components of Executive Compensation
The principal components of our executive compensation program are: base salary, annual cash incentives, long-term incentive stock-based compensation,equity incentives, and employee benefit plans.
Base Salaries |
Base Salaries
Base salaries provide appropriate fixed cash compensation necessary to attract and retain executive talent. Base salaries are intended to be competitive, which we define as the median of the Compensation Peer Group or other relevant data source for the executive’s position. The Compensation Committee reviews the base salaries of our NEOs on an annual basis as well as at the time of any promotion or other material change in responsibilities. In addition to external market data on base salaries, our Compensation Committee also considers the following when setting base salaries: (a) the individual executive’s overall
performance and contribution to the Company’s performance, (b) overall Company-wide performance and (c) the individual’s base salary relative to other executive officers. For fiscal 2018, the amounts reported in the Summary Compensation Table represent 52 weeks of base salary. For fiscal 2017, the amounts reported in the Summary Compensation Table represent 53 weeks of base salary. In fiscal 2016, Mr. Vogensen2018, Ms. Joyce received ana salary increase in base salarybased on expansion of $75,000 in orderher responsibilities to more closely align his salary with chief financial officers among Compensation Peer Group companies.include Supply Chain and Field Operations. None of the other NEOs received a base salary increase.
2015 Salary(1) | 2016 Salary(2) | ||
Executive | ($) | ($) | % Increase |
Shelley G. Broader | 1,100,000 | 1,100,000 | —% |
Todd E. Vogensen | 475,000 | 550,000 | 15.8% |
Donna M. Colaco | 725,000 | 725,000 | —% |
Laurie J. Van Brunt | 525,000 | 525,000 | —% |
Kristin L. Oliver | n/a(3) | 500,000 | n/a |
Cynthia S. Murray | 725,000 | 725,000 | —% |
Executive | 2017 Base Salary(a) ($) | 2018 Base Salary(b) ($) | % Increase | ||||||
Shelley G. Broader | 1,100,000 | 1,100,000 | —% | ||||||
Todd E. Vogensen | 550,000 | 550,000 | —% | ||||||
David Pastrana | 700,000 | 700,000 | —% | ||||||
Mary van Praag | 550,000 | 550,000 | —% | ||||||
Ann E. Joyce | 500,000 | 550,000 | 10.0% | ||||||
Diane M. Ellis | 800,000 | 800,000 | —% |
(a) | Represents annualized salary |
Represents | ||
Annual Cash Incentives
Annual Cash Incentives |
The annual cash incentive or bonus component of total compensation is intended to provide incentives to achieve the Company’s annual financial and strategic goals and to encourage teamwork in meeting objectives and overcoming challenges. In fiscal 2016,2018, bonuses for NEOs were determined pursuant to our Cash Bonus Incentive Plan, (the “Bonus Plan”), which the shareholders approved at our 2010 Annual Meeting and then re-approved at our 2015 Annual Meeting.
We generally target total cash compensation (base salary plus cash incentive bonus), when target performance goals are achieved, at or near the market median. Variations to this target positioning may occur as dictated bya result of performance, the experience level of the individual, and by other market factors. This target competitive positioning takes into account our expectations and desires that, over the long-term, we will be able to generate shareholder returns at or above the median of our peer group.
Each executive has a target bonus expressed as a percentage of base salary. Actual bonuses earned for 20162018 could be zero or could range from 25% to 175%200% of this target, based on performance against the measures and goals determined by the Compensation Committee. For corporate NEOs, these measures were total company sales, operating income, adjusted Company EPS and EPS.a functionally defined strategic goal. Brand Presidents were also subject toused the total adjusted Company EPS measure and a brand specific strategic goal, in addition to brand-level sales and brand-level contribution. These metrics were chosen because the Compensation Committee believes that they are the most direct drivers of long-term shareholder value.
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■ | COMPENSATION DISCUSSION AND ANALYSIS |
Components of Executive Compensation | |
The following table outlines the weightings of each performance measure and payouts in fiscal 20162018 for each NEO:
Performance Measures, Weights, and Payout | |||||||
Total | Company | Target | Actual | ||||
Company | Operating | Company | Brand | Payout | Payout | ||
Executive | Sales | Income(2) | EPS(3) | Brand Sales | Contribution(4) | (% of Salary) | (% of Salary) |
Shelley G. Broader(1) | 30% | 30% | 40% | — | — | 150% | 134% |
Todd E. Vogensen | 30% | 40% | 30% | — | — | 70% | 55% |
Donna M. Colaco | — | — | 30% | 35% | 35% | 80% | 54% |
Laurie J. Van Brunt | — | — | 30% | 35% | 35% | 75% | 46% |
Kristin L. Oliver | 30% | 40% | 30% | — | — | 60% | 49% |
Cynthia S. Murray | — | — | 30% | 35% | 35% | 80% | 48% |
Executive | Performance Measures, Weights and Payout | |||||||||||||||||||||||
Total Company Sales | Company Operating Income(a) | Adjusted Company EPS(b) | Brand Sales | Brand Contribution(c) | Strategic Goal(d) | Target Payout (% of Salary) | Actual Payout (% of Salary) | |||||||||||||||||
Shelley G. Broader | 20% | 30% | 40% | — | — | 10% | 150% | —% | ||||||||||||||||
Todd E. Vogensen | 20% | 30% | 30% | — | — | 20% | 70% | —% | ||||||||||||||||
David Pastrana | — | — | 30% | 20% | 30% | 20% | 80% | —% | ||||||||||||||||
Mary van Praag | — | — | 30% | 25% | 25% | 20% | 75% | 65% | ||||||||||||||||
Ann E. Joyce | 20% | 30% | 30% | — | — | 20% | 70% | 14% | ||||||||||||||||
Diane M. Ellis | — | — | 30% | 20% | 30% | 20% | 80% | —% |
Operating Income means total sales revenue minus cost of goods sold minus all selling, general and administrative expenses. |
(b) | Adjusted Company EPS means earnings per share, as calculated on a |
(c) | Brand Contribution is defined as gross margin less direct and supervisory expenses directly attributable to the applicable |
(d) | Strategic goals were defined at the individual executive level and were either 0% or 100% achieved based on |
The fiscal 2018 bonus performance measures, targeted financialtargets, actual performance targetedand payout and actual payouts for fiscal 2016expressed as a percent of target are set forthpresented below.
Payout | ||||||
Performance Measure | Target | Actual | (% of Target) | Target | Actual(a) | Payout (% of Target) |
(dollars in millions except for EPS data) | (dollars in millions except for EPS data) | |||||
Total Company Sales | $2,604.9 | $2,476.0 | —% | $2,264.1 | $2,131.1 | —% |
Company Operating Income | $169.0 | $171.8 | 104.9% | $150.0 | $54.4 | —% |
Company EPS(1) | $0.76 | $0.81 | 120.0% | |||
Adjusted Company EPS | $0.85 | $0.35 | —% | |||
Brand Sales - Chico’s | $1,341.0 | $1,270.0 | —% | $1,169.9 | $1,080.2 | —% |
Brand Sales - WHBM | $874.1 | $834.6 | —% | $725.7 | $685.5 | —% |
Brand Sales - Soma | $365.3 | $343.6 | —% | $341.1 | $337.3 | 83.0% |
Brand Contribution - Chico’s | 0.9% increase | 3.0% decrease | 80.8% | 3.5% increase over last year | 30.7% decrease over last year | —% |
over last year | ||||||
Brand Contribution - WHBM | 8.5% increase | 4.9% increase | 88.6% | 26.3% increase over last year | 0.9% increase over last year | —% |
over last year | ||||||
Brand Contribution - Soma | 43.8% increase | 29.4% increase | 70.9% | 32.3% decrease over last year | 27.5% decrease over last year | 186.0% |
over last year |
(a) | Actual |
The Compensation Committee believed the approved target metrics to bewere challenging, but achievable, and dependent on the successful execution of the Company’s strategic business plans, assuming general business conditions that are reasonable. Numerous factors, however, could cause the Company’s actual results to vary from expected results. It is not possible for the Compensation Committee to reliably calculate the exact likelihood of any NEO achieving threshold, target, or maximum
bonus levels. Historically, NEOs have received bonus payouts ranging from no bonus to near target bonus to maximum bonus based on our actual performance. Therefore, the Company seeks to establish goals that will incent NEOs to achieve the Company’s objectives. Payouts in any year above the target level indicate significant accomplishment with performance above expectations.
Long-Term Equity Incentives |
Long-Term Incentive Stock-Based Compensation
We provide long-term equity incentives in the form of stock-based compensation, to align the interests of management with those of our shareholders, and to motivate and reward key employees for long-term performance and shareholder value creation. Multi-year vesting of equity compensation provides a strong retention mechanism for key talent, which is critical to our long-term success.
The Compensation Committee has established general guidelines for the value of the long-term incentive compensationequity incentives to be
granted to each NEO based upon relevant market and comparative data provided by FW Cook and the NEO’s position within the Company. In determining the size of the individual stock-based awards, the Compensation Committee also considers the amountnumber of stock-based awards outstanding and previously granted, the amountnumber of stock-based awards remaining available for grant under the 2012 Omnibus Plan, the aggregate amount of current awards, and the amount of awards believed necessary to attract and retain key talent.
30 | - |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
Retirement and Welfare Benefits | |
Our annual long-term equity incentives granted in fiscal 20162018 consisted of an approximately equal weighting of grant value in restricted stock and performance share units, each of which are described in more detail below:
Restricted Stock | Restricted stock and awards of restricted stock units encourage executives not only to create Approximately 50% of target long-term incentive grant value in fiscal |
Performance Share Units(“PSUs”) | PSUs tie equity compensation earned to the achievement of corporate performance objectives. Approximately 50% of target long-term incentive grant value in fiscal The RONA threshold for fiscal 2018 was 14.2% with a maximum of 28.3%. Actual RONA achieved in fiscal |
Granting of Equity Awards
The Company has adopted a Policy on Granting Equity Awards. The complete Policy is available under “Governance Documents & Charters” at www.chicosfas.com.www.chicosfas.com. This Policy is designed to provide some measure of assurance that equity grant awards are not being manipulated to result in a price that is unreasonably favorable to the recipients of the grants. Since fiscal 2007, the annual equity grant date for all officers has been on or shortly after the date on which the trading window period first opens following the public release of year-end earnings. This grant date is generally
in late February or early March and is established by usthe Company well in advance. Because the Compensation Committee does not generally meet on this date, the Compensation Committee authorizes the grant values at its meeting immediately preceding the grant date specifying an effective prospective grant date consistent with this policy. The exercise price for stock options is generally the closing price on the specified grant date, but in no event less than the closing price on the grant date. The Company has not granted any stock options since 2011.
The CompanyCompensation Committee may also make promotional, new hire, and out-of-cycle equity awards to executives, as deemed appropriate. The grant date for such awards is generally the first business day of the month following the date of promotion or hire.
401(k) Plan
As a means for all eligible employees at all levels of the Company to accumulate retirement savings, we maintain a 401(k) Plan, as amended and restated on January 1, 2015. Under the 401(k) feature of the plan, eligibleEligible employees can elect to defer up to 100%75% of their respective compensation,
subject to statutory limitations, and have it contributed to the plan. The Company has elected to match employee contributions at 50% on the first 6% of the employees’ compensation that is contributed (limited to 3.5% for NEOs) and in the future, may elect to make additional contributions at its discretion.
- | 31 |
■ | COMPENSATION DISCUSSION AND ANALYSIS |
Retirement and Welfare Benefits | |
Employee Stock Purchase Plan
We also maintain an employee stock purchase plan to provide eligible employees at all levels an opportunity to become shareholders of the Company. Eligible employees may purchase shares of our stock semi-annually during specified offering periods at a 15% discount to the value of the stock. Executive officers are eligible to participate in this stock purchase plan.
Health and Welfare Benefits
Our executive officers are also eligible to participate in the medical and dental coverage, life and disability insurance, paid time off, and other programs that are generally available to all of our full timefull-time employees.
Other Benefits |
Other Benefits
We do not provide significant perquisites or personal benefits to NEOs. We provide competitive relocation benefits to newly hired officers, in keeping with industry practices. We offer to pay for an annual physical examination and provide supplemental disability income insurance for all officers, including all NEOs. The costs of the annual physical and supplemental disability income insurance are immaterial. The annual physical helps to mitigate the risk of losing the services of a member of senior management due to otherwise undetected health issues. The Company believes that the financial security provided to executives through the supplemental disability income insurance is a good investment because it provides a useful tool in the retention of top talent. We value perquisites at their incremental cost to us in accordance with SEC regulations. These amounts, if applicable, are reflected in the Summary Compensation Table below under the column entitled “All Other Compensation” and the related footnotes.
Deferred Compensation Plan
The Company has adopted twoa nonqualified plansdeferred compensation plan that permitpermits participants, which includes certain executive officers and NEOs, to defer current compensation, on a tax-deferred basis, for long-term or retirement savings one of which relates(the “deferred compensation plan”). The deferred compensation plan applies to deferrals made through December 31, 2004 and related earnings and the other of which relates to deferrals since January 1, 2005 and related earnings. Pursuant to the deferred compensation plans,terms of the plan, participants are allowed to defer a portion of their eligible compensation. Under each plan, aA book account is then maintained for each such executive officerparticipant in which there is an accounting of the amount of compensation deferred and deemed earnings on those amounts based upon the participant’s selection of various available investment options. TheEffective January 1, 2019, the Company has not made any matching funds or other contributionintroduced a company match of 50% on employee base salary deferrals up to any participant’s account.
2.5% under the deferred compensation plan. In accordance with the terms of each of the plans,plan, a grantor trust has been
set up to hold assets sufficient to pay benefits under the deferral is placed in a “rabbi” trust. This trust arrangement offers a degree of assurance for ultimate payment of benefits without causing constructive receipt of the deferral or earnings thereon for income tax purposes.plan when they become due. The assets in the grantor trust remain subject to the claims of ourthe Company’s creditors and are not the property of the executive officerparticipant unless there is a retirement, termination of employment, or a previously elected in-service distribution.
Section 409A of the Internal Revenue Code (the “Code”(“Section 409A”) imposes restrictions on the funding of, distributions made under, and elections to participate in, nonqualified deferred compensation arrangements.arrangements unless the plan meets certain requirements for exemption. The deferred compensation plan is subject to Section 409A. Although we believe that we are operating the deferred compensation plan in compliance with the statutory provisions relating to Section 409A that are currently effective and have made appropriate modifications to the applicable plan, the statute and its regulations are complex and subject to further interpretation. Thus, it is possible that we will have to make additional adjustments to ourthe nonqualified deferred compensation arrangementsplan to comply with the applicable rules as further interpretations are issued.
Severance and Change in Control Benefits
The Company offers competitive severance benefits to all NEOs in order to attract and retain highly skilled management talent. Many other retailers offer comparable severance benefits. As a result, the Company has adopted an Officer Severance Plan, which provides severance benefits upon certain terminations of employment. The plan is on file with the SEC, as required, and the material terms are summarized on pages 63-64pages41-43 of this Proxy Statement.
None of these severance benefits provide for tax gross-ups.
32 | - 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
Compensation Governance Policies | |
Compensation Philosophy and Objectives
The goal of our executive compensation program is the same as our goal for the Company — to increase shareholder value over the long-term. To this end, we have designed and implemented a compensation program intended to attract, motivate, and retain highly skilled executive officers and reward them for results that increase shareholder value through sustained, profitable financial performance and outstanding leadership that reflects our values and unique culture.
The Company structures our executive compensation program and decisions on the same basic objectives that guide us in establishing all of our compensation programs:
■ |
■ | Pay for Performance. Compensation should reward performance that achieves our strategic and financial objectives and enhances shareholder value. |
○ | Our compensation programs are structured so that if performance exceeds target levels, a NEO’s total compensation may similarly exceed target levels. Likewise, where performance falls short of established goals, the programs will deliver lower levels of compensation. |
○ | Performance-based programs should enable employees to |
■ | Long-Term Focus and Alignment with Shareholders. Employees at higher levels should have an increasing portion of their compensation in the form of equity-based incentives, where the value is tied to long-term shareholder value creation. |
Compensation Governance Policies
Share Ownership Guidelines |
Share Ownership Guidelines
The Company has adopted stock ownership guidelines for all NEOs and directors. Compliance with the ownership guidelines is reviewed by the Compensation Committee annually, typically
each June. The guidelines were most recently revised, effective April 2016, to (a) increase the ownership requirement for the CEO and non-employee directors and (b) to increase the retention guideline for all covered officers and directors to 50% of net-after-tax shares until the ownership requirement is met. The following table summarizes our current ownership guidelines for executives and non-employee directors:
Position | Ownership Guidelines |
CEO | 5x Base Salary |
Brand Presidents | 2x Base Salary |
Executive Vice Presidents | 1.5x Base Salary |
Non-Employee Directors | 5x Annual Cash Retainer |
Until each officer or non-employee director achieves the applicable ownership level, he or she must retain and hold on a net-after-tax basis at least 50% of the shares obtained as a result of a stock option exercise or the vesting of restricted shares.shares and PSUs. Shares counted toward the ownership guidelines include shares owned outright, as well as shares otherwise beneficially owned by such officer or director (as beneficial ownership is defined by the SEC’s rules and regulations)., and the stock equivalent of the gain
on vested, unexercised options. Unvested restricted and performance shares and unvested options awarded under our stock incentive plan2012 Omnibus Plan are not counted.
While serving as Interim CEO, Ms. Brooks will continue to be subject to the ownership guidelines applicable to non-employee directors.
- 2019 Proxy Statement | 33 |
Hedging and Pledging Prohibition
■ | COMPENSATION DISCUSSION AND ANALYSIS |
CEO Pay Ratio | |
Hedging and Pledging Prohibition |
Officers and directors are not permitted to hedge their economic exposures to the Company stock that they own and are not permitted to trade our stock on margin. NEOs, Board members and other “insiders” are prohibited from pledging their shares of the Company’s stock.
Clawback Policy |
Clawback Policy
The Company has a “clawback” policy that applies to our Section 16 officers. Under this policy, in the event the Company is required to prepare an accounting restatement, after the adoption of the policy, due to material noncompliance of the Company with any then-applicable financial reporting requirement under the
securities laws, the Company may seek recovery of any overpayment of cash and equity incentive-based compensation that was granted after adoption of this policy, and that was based on the financial statements prepared during the three completed fiscal years prior to any such restatement.
Deductibility of Executive Compensation |
Deductibility of Executive Compensation
Previously, Section 162(m) of the Internal Revenue Code prohibits publicly held companies from deducting(“Section 162(m)”) limited the tax deductibility of certain compensation paid to any person who serves as theour CEO or who is one of theand our three other most highly compensated executive officers (otherNEOs, other than our Chief Financial Officer. That provision disallowed the CFO)deductibility of certain compensation in excess of $1,000,000 during$1 million per year unless it was considered performance-based compensation under the tax year. However,Internal Revenue Code. As a result, we historically adopted policies and practices that were intended to qualify our annual cash incentive payments and PSUs as performance-based compensation under Section 162(m) providesto ensure the maximum possible tax deduction.
However, on December 22, 2017, the U.S. federal government enacted the Tax Act, which substantially modifies the Internal Revenue Code and, among other things, eliminates the performance-based compensation exception under Section 162(m). As a result, we expect that, in 2018 and beyond, we will no longer be able to deduct any compensation amounts over $1 million paid to any of our current or former NEOs unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Chico’s FAS, Inc. is a specialty retail apparel company with a portfolio of three omni-channel brands serving the needs of fashion-savvy women. In addition to our online presence, we operated 1,418 stores in the U.S. and Canada as of February 2, 2019. As of November 1, 2018, our employee population totaled approximately 19,000 employees. Over 90% of our workforce is compensated on an hourly basis and over 70% of our workforce is part-time.
Our store employees are the primary ambassadors of our brands with our customers, and we offer market-based wages, a
sales-based bonus and competitive benefits to ensure we attract and retain people who will enable us to deliver our “Most Amazing Personal Service” to our customers.
Our CEO pay ratio for 2018, which was our last completed fiscal year, was estimated and calculated in compliance with the requirements of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K.
Methodology |
The median employee we identified for our 2017 CEO pay ratio terminated employment during fiscal 2018. Accordingly, we identified a new median employee for 2018. To do this, we utilized the following methodology:
■ | We determined that, as of November 1, 2018, our employee population consisted of approximately 19,000 full-time, part-time and temporary employees, including 162 Canadian employees. |
■ | We excluded, for administrative convenience, our Canadian employees, who fell far below the 5 percent de minimis threshold for exclusion based on our total employee population. |
34 | - 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | ■ |
CEO Pay Ratio | |
■ | We determined our median employee by analyzing the total gross wages paid (salary and bonus) between January 1, 2018 and November 1, 2018 to each employee, other than our CEO and Canadian employees, employed as of November 1, 2018. |
■ | Using the methodology described above, we estimated that for 2018, our median employee was a part-time retail sales associate working at a boutique in California. |
That median employee’s total compensation was calculated using the same methodology required for disclosure of compensation to the CEO, under the requirements established by the SEC in the Summary Compensation Table. Accordingly,
■ | Our median employee’s fiscal 2018 annual compensation was $6,242 |
■ | Our CEO’s fiscal 2018 annual compensation was $7,604,998 in compensation during the same period |
■ | The ratio of our CEO to Median Employee Compensation is 1,218:1 |
Our pay ratio is influenced by the fact that over 70% of our employees work on a part-time basis. If only full-time employees were used, then the ratio would change materially.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
■ | HUMAN RESOURCES, COMPENSATION AND BENEFITS COMMITTEE REPORT |
The following report of the Human Resources, Compensation and Benefits Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that compensation is based on the attainment of performance goals setCompany specifically incorporates this report by thereference therein.
The Compensation Committee pursuant toevaluates and establishes compensation for executive officers and oversees the deferred compensation plan, the Company’s management equity compensation plans, approved by our shareholders,and other management incentive, benefit and perquisite programs. Management has the compensation is exempt from the deductibility limitations. Our Compensation Committee administered the bonus awards under the Bonus Plan in an effort to have the payouts qualifyprimary responsibility for the “performance-based” exemption fromdisclosure of executive compensation in the $1,000,000 limit.
Compensation realized from stock options granted under the 2012 Omnibus Plan is believed to qualify for the performance-based exemption under Section 162(m),Company’s financial statements and is, therefore, treated as fully deductible. In addition,reporting process. With this in mind, the Compensation Committee has administeredreviewed and discussed with management the performance share awards in an effortCompensation Discussion and Analysis found on pages 24-35 of this Proxy Statement. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the Compensation Committee with regard to also qualify for the performance-based exemption; therefore,executive compensation realized from performance shares has been treated as fully deductible. Compensation realized from time-based vesting restricted stock grants, however, does not qualify for such an exemption. Thus,and recommended to the extent taxable compensation from restricted stock earningsBoard that the Compensation Discussion and Analysis be included in combination with salaries and certain other compensation elements for any NEO exceeds $1,000,000, such compensation will not be deductible.
The Company is permitted and reserves the right to pay other amounts that are not tax deductible to meet the design goals of our executive compensation program, including, for example, the sign-on-bonus, sign-on-grant, and guaranteed bonus for Ms. Broader discussed above. In any event, because of the uncertainties associated with the application and interpretation of Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Section 162(m) will in fact be deductible.
Proxy Statement.
MEMBERS OF THE HUMAN RESOURCES, COMPENSATION AND BENEFITS COMMITTEE | |
John J. Mahoney, Chair | |
Deborah L. Kerr | |
William S. Simon |
- 2019 Proxy Statement | 35 |
■ | EXECUTIVE COMPENSATION TABLES |
The following table includes information concerning compensation for fiscal years 2016, 20152018, 2017 and 20142016 in reference to the NEOs, which consists of each person who served as the Company’s principal executive officer, during fiscal 2016, the Company’s principal financial officer, and the three most highly compensated executive officers of the Company other than the principal executive officersofficer and the principal financial officer and one former executive officer. A description of the material terms of the employment agreements for each of the NEOs, including a description of potential post-employment payments, appears below under the headings “Employment Agreements for Named Executive Officers” and “Payments“Potential Payments Upon Termination or Change in Control for Named Executive Officers”.Officers.”
Name and Principal Position | Fiscal Year Ended | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3)(4)(5) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(6) ($) | Change in Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(7) ($) | Total ($) | |||||||||||||||||||||||||
Shelley G. Broader, | 1/28/2017 | 1,100,000 | 1,475,000 | 6,500,147 | — | — | — | 388,604 | 9,463,751 | |||||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||||
and President | 1/30/2016 | 190,385 | 275,000 | 3,000,115 | — | — | — | 13,605 | 3,479,105 | |||||||||||||||||||||||||
Todd E. Vogensen, | 1/28/2017 | 503,846 | — | 800,188 | — | 276,565 | — | 6,133 | 1,586,732 | |||||||||||||||||||||||||
Executive Vice President - | 1/30/2016 | 470,673 | — | 800,297 | — | 137,732 | — | 9,041 | 1,417,743 | |||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||
and Asst. Corporate | ||||||||||||||||||||||||||||||||||
Secretary | 1/31/2015 | 373,750 | — | 288,253 | — | — | — | 7,178 | 669,181 | |||||||||||||||||||||||||
Donna M. Colaco, | 1/28/2017 | 725,000 | — | 900,086 | — | 388,658 | — | 10,571 | 2,024,315 | |||||||||||||||||||||||||
Brand President - | 1/30/2016 | 725,000 | — | 1,800,030 | — | 107,313 | — | 10,582 | 2,642,925 | |||||||||||||||||||||||||
White House | ||||||||||||||||||||||||||||||||||
Black Market | 1/31/2015 | 725,000 | — | 1,360,094 | — | — | — | 17,042 | 2,102,136 | |||||||||||||||||||||||||
Laurie J. Van Brunt, | 1/28/2017 | 525,000 | — | 700,040 | — | 239,496 | — | 31,401 | 1,495,937 | |||||||||||||||||||||||||
Brand President - Soma | 1/30/2016 | 525,000 | — | 1,200,263 | — | 126,602 | — | 22,791 | 1,874,656 | |||||||||||||||||||||||||
1/31/2015 | 525,000 | — | 884,276 | — | — | — | 11,049 | 1,420,325 | ||||||||||||||||||||||||||
Kristin L. Oliver, | 1/28/2017 | 336,538 | — | 400,070 | — | 166,434 | — | 115,823 | 1,018,865 | |||||||||||||||||||||||||
Executive Vice | ||||||||||||||||||||||||||||||||||
President - Chief Human | ||||||||||||||||||||||||||||||||||
Resources Officer | ||||||||||||||||||||||||||||||||||
Cynthia S. Murray, | 1/28/2017 | 485,192 | — | 900,086 | — | 234,496 | — | 242,010 | 1,861,784 | |||||||||||||||||||||||||
Brand President - Chico’s | 1/30/2016 | 725,000 | — | 1,800,030 | — | 107,313 | — | 15,939 | 2,648,282 | |||||||||||||||||||||||||
1/31/2015 | 725,000 | — | 1,360,094 | — | — | — | 13,604 | 2,098,698 |
Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3)(4)(5) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(6) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(7) ($) | Total ($) | ||||||||||||||||||
Shelley G. Broader(8) Former Chief Executive Officer and President | 2018 | 1,100,000 | — | 6,500,185 | — | — | — | 4,813 | 7,604,998 | ||||||||||||||||||
2017 | 1,121,154 | — | 6,500,246 | — | 740,258 | — | 19,798 | 8,381,456 | |||||||||||||||||||
2016 | 1,100,000 | 1,475,000 | 6,500,147 | — | — | — | 388,604 | 9,463,751 | |||||||||||||||||||
Todd E. Vogensen Executive Vice President- Chief Financial Officer and Asst. Corporate Secretary | 2018 | 550,000 | — | 800,062 | — | — | — | 4,812 | 1,354,874 | ||||||||||||||||||
2017 | 560,577 | — | 1,200,168 | — | 165,609 | — | 12,878 | 1,939,232 | |||||||||||||||||||
2016 | 503,846 | — | 800,188 | — | 276,565 | — | 6,133 | 1,586,732 | |||||||||||||||||||
David Pastrana Brand President- WHBM | 2018 | 700,000 | — | 900,144 | — | — | — | 60,537 | 1,660,681 | ||||||||||||||||||
Mary van Praag President of the Intimate Apparel Group | 2018 | 550,000 | — | 700,178 | — | 359,886 | — | 16,628 | 1,626,692 | ||||||||||||||||||
Ann E. Joyce Chief Customer Officer and Executive Vice President - Technology, Supply Chain and Field Operations | 2018 | 529,808 | — | 550,086 | — | 74,173 | — | 4,900 | 1,158,967 | ||||||||||||||||||
2017 | 481,538 | — | 300,042 | — | 121,936 | — | 52,096 | 955,612 | |||||||||||||||||||
Diane M. Ellis(9) Former Brand President- Chico’s | 2018 | 659,341 | — | 900,144 | — | — | — | 153,826 | 1,713,311 | ||||||||||||||||||
2017 | 815,385 | 900,126 | 350,936 | 43,740 | 2,110,187 |
(1) |
(2) | The amounts in this column consist of Ms. Broader’s minimum guaranteed bonus for her first 12 months of service. A portion was received in fiscal 2015. The remainder of $1,375,000 was received in fiscal 2016. Ms. Broader also received an additional bonus of $100,000 for fiscal 2016 in recognition of her successful management of unanticipated strategic challenges in fiscal 2016. |
(3) | The amounts included in the “Stock Awards” column for fiscal years |
(4) | The amounts included in the “Stock Awards” column for fiscal years 2018, 2017 and 2016 |
(5) | The actual amounts that the NEOs will be able to realize from these equity awards will depend on a number of factors including the Company’s actual operating performance, stock price, the vesting terms of the award and the applicable NEO’s continued employment. The disclosure rules require inclusion of the target grant date fair value of |
(6) | The amounts in this column consist of annual incentive bonus payments earned by each of the NEOs based on |
(7) | The amounts in this column consist of the Company’s matching contributions to its 401(k) savings plan and deferred compensation plan on behalf of the NEOs, |
(8) | Ms. Broader left the Company in April 2019. |
(9) | Ms. Ellis left the Company in November 2018. |
36 | - |
EXECUTIVE COMPENSATION TABLES | ■ |
Fiscal Year 2018 Grants of Plan-Based Awards | |
Fiscal Year 2018 Grants of Plan BasedPlan-Based Awards
The following table sets forth certain information with respect to the equity and non-equity incentive awards granted during or for the fiscal year ended January 28, 2017February 2, 2019 (fiscal 2016)2018) to each of our NEOs.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock | Grant | |||||||||||||||||||||||||||||||||
Name | Grant Date | Compensation Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Awards: Number of Shares of Stock or Units(3) (#) | Date Fair Value of Stock Awards(4) ($) | ||||||||||||||||||||||||||
Shelley G. | N/A | N/A | 412,500 | 1,650,000 | 2,887,500 | |||||||||||||||||||||||||||||||
Broader | March 1, 2016 | February 22, 2016 | 129,485 | 258,970 | 388,455 | 3,250,074 | ||||||||||||||||||||||||||||||
March 1, 2016 | February 22, 2016 | 258,970 | 3,250,074 | |||||||||||||||||||||||||||||||||
Todd E. | N/A | N/A | 88,173 | 352,692 | 617,211 | |||||||||||||||||||||||||||||||
Vogensen | March 1, 2016 | February 22, 2016 | 15,940 | 31,880 | 47,820 | 400,094 | ||||||||||||||||||||||||||||||
March 1, 2016 | February 22, 2016 | 31,880 | 400,094 | |||||||||||||||||||||||||||||||||
Donna M. | N/A | N/A | 145,000 | 580,000 | 1,015,000 | |||||||||||||||||||||||||||||||
Colaco | March 1, 2016 | February 22, 2016 | 17,930 | 35,860 | 53,790 | 450,043 | ||||||||||||||||||||||||||||||
March 1, 2016 | February 22, 2016 | 35,860 | 450,043 | |||||||||||||||||||||||||||||||||
Laurie J. | N/A | N/A | 98,438 | 393,750 | 689,063 | |||||||||||||||||||||||||||||||
Van Brunt | March 1, 2016 | February 22, 2016 | 13,945 | 27,890 | 41,835 | 350,020 | ||||||||||||||||||||||||||||||
March 1, 2016 | February 22, 2016 | 27,890 | 350,020 | |||||||||||||||||||||||||||||||||
Kristin L. | N/A | N/A | 50,481 | 201,923 | 353,365 | |||||||||||||||||||||||||||||||
Oliver | June 1, 2016 | May 19, 2016 | 36,370 | 400,070 | ||||||||||||||||||||||||||||||||
Cynthia S. | N/A | N/A | 145,000 | 580,000 | 1,015,000 | |||||||||||||||||||||||||||||||
Murray | March 1, 2016 | February 22, 2016 | 17,930 | 35,860 | 53,790 | 450,043 | ||||||||||||||||||||||||||||||
March 1, 2016 | February 22, 2016 | 35,860 | 450,043 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock Awards(4) ($) | |||||||||||||||||||||||||||
Grant Date | Compensation Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||
Shelley G. Broader | N/A | N/A | 41,250 | 1,650,000 | 3,300,000 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 164,645 | 329,290 | 576,258 | 3,250,092 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 329,290 | 3,250,092 | |||||||||||||||||||||||||||
Todd E. Vogensen | N/A | N/A | 19,250 | 385,000 | 770,000 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 20,265 | 40,530 | 70,928 | 400,031 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 40,530 | 400,031 | |||||||||||||||||||||||||||
David Pastrana | N/A | N/A | 28,000 | 560,000 | 1,120,000 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 22,800 | 45,600 | 79,800 | 450,072 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 45,600 | 450,072 | |||||||||||||||||||||||||||
Mary van Praag | N/A | N/A | 20,625 | 412,500 | 825,000 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 17,735 | 35,470 | 62,073 | 350,089 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 35,470 | 350,089 | |||||||||||||||||||||||||||
Ann E. Joyce | N/A | N/A | 18,543 | 370,866 | 741,732 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 12,665 | 25,330 | 44,328 | 250,007 | |||||||||||||||||||||||||
3/1/18 | 2/19/18 | 25,330 | 250,007 | |||||||||||||||||||||||||||
7/2/18 | 6/20/18 | 6,040 | (5) | 50,072 | ||||||||||||||||||||||||||
Diane Ellis | N/A | N/A | 26,374 | 527,473 | 1,054,946 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 22,800 | 45,600 | 79,800 | 450,072 | |||||||||||||||||||||||||
3/1/2018 | 2/19/2018 | 45,600 | 450,072 |
(1) | These columns show the range of |
(2) | These columns |
(3) | This column |
(4) | The amounts in this column represent the aggregate grant date fair value of each equity award, computed in accordance with |
(5) | In addition to the annual equity awards, Ms. Joyce received a one-time restricted stock award based on expansion of her responsibilities. |
- | 37 |
■ | EXECUTIVE COMPENSATION TABLES |
Outstanding Equity Awards at 2018 Fiscal Year End | |
Outstanding Equity Awards at 2018 Fiscal Year End
The following table outlines outstanding long-term equity-based incentive compensation awards for our NEOs as of January 28, 2017February 2, 2019 (last day of fiscal 2016)2018). Each outstanding award is shown separately. The vesting schedule for each award is described in the footnotes to this table.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(2) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ||||||||||||||||||||||||||||||
Shelley G. Broader | — | — | 185,040 | 2,350,008 | 290,046 | 3,683,584 | ||||||||||||||||||||||||||
— | — | 258,970 | 3,288,919 | |||||||||||||||||||||||||||||
Todd E. Vogensen | 1,667 | — | 14.60 | 11/19/2019 | 1,900 | 24,130 | 11,268 | 143,104 | ||||||||||||||||||||||||
1,667 | — | 13.78 | 2/25/2020 | 1,947 | 24,727 | 35,707 | 453,479 | |||||||||||||||||||||||||
2,000 | — | 13.69 | 2/24/2021 | 14,634 | 185,852 | |||||||||||||||||||||||||||
31,880 | 404,876 | |||||||||||||||||||||||||||||||
Donna M. Colaco | 30,000 | — | 14.86 | 9/7/2017 | 80,000 | 1,016,000 | 25,344 | 321,869 | ||||||||||||||||||||||||
30,000 | — | 13.78 | 2/25/2020 | 13,730 | 174,371 | 40,163 | 510,070 | |||||||||||||||||||||||||
55,000 | — | 13.69 | 2/24/2021 | 32,914 | 418,008 | |||||||||||||||||||||||||||
35,860 | 455,422 | |||||||||||||||||||||||||||||||
Laurie J. Van Brunt | — | — | — | — | 60,000 | 762,000 | 16,900 | 214,630 | ||||||||||||||||||||||||
40,000 | 508,000 | 31,236 | 396,697 | |||||||||||||||||||||||||||||
8,927 | 113,373 | |||||||||||||||||||||||||||||||
21,947 | 278,727 | |||||||||||||||||||||||||||||||
27,890 | 354,203 | |||||||||||||||||||||||||||||||
Kristin L. Oliver | — | — | — | — | 36,370 | 461,899 | — | — | ||||||||||||||||||||||||
Cynthia S. Murray | — | — | — | — | — | — | 7,278 | 92,431 |
Option Awards | Stock Awards | ||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) ($) | ||||||||||||||||||||
Name | Grant Date | Exercisable | Unexercisable | ||||||||||||||||||||||||
Shelley G. Broader(5) | 3/1/2016 | — | — | — | — | 86,324 | (1) | 494,637 | — | — | |||||||||||||||||
3/1/2017 | — | — | — | — | 152,374 | (1) | 873,103 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | 329,290 | (1) | 1,886,832 | — | — | ||||||||||||||||||
3/1/2016 | — | — | — | — | 96,683 | (2) | 553,994 | — | — | ||||||||||||||||||
3/1/2017 | — | — | — | — | 175,763 | (2) | 1,007,122 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | — | — | 164,645 | (3) | 943,416 | ||||||||||||||||||
Todd E. Vogensen | 11/19/2009 | 1,667 | — | 14.60 | 11/19/2019 | — | — | — | — | ||||||||||||||||||
2/25/2010 | 1,667 | — | 13.78 | 2/25/2020 | — | — | — | — | |||||||||||||||||||
2/24/2011 | 2,000 | — | 13.69 | 2/24/2021 | — | — | — | — | |||||||||||||||||||
3/1/2016 | — | — | — | — | 10,627 | (1) | 60,893 | — | — | ||||||||||||||||||
3/1/2017 | — | 28,134 | (1) | 161,208 | — | — | |||||||||||||||||||||
3/1/2018 | — | — | — | — | 40,530 | (1) | 232,237 | — | — | ||||||||||||||||||
3/1/2016 | — | — | — | — | 11,902 | (2) | 68,198 | — | — | ||||||||||||||||||
3/1/2017 | — | — | — | — | 32,452 | (2) | 185,950 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | — | — | 20,265 | (3) | 116,118 | ||||||||||||||||||
David Pastrana | 2/1/2018 | — | — | — | — | 7,020 | (1) | 40,225 | — | — | |||||||||||||||||
3/1/2018 | — | — | — | — | 45,600 | (1) | 261,288 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | — | — | 22,800 | 130,644 | |||||||||||||||||||
Mary van Praag | 10/2/2017 | — | — | — | — | 14,954 | (1) | 85,686 | — | — | |||||||||||||||||
3/1/2018 | — | — | — | — | 35,470 | (1) | 203,243 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | — | — | 17,735 | (3) | 101,622 | ||||||||||||||||||
Ann E. Joyce | 3/1/2016 | — | — | — | — | 3,987 | (1) | 22,846 | — | — | |||||||||||||||||
3/1/2017 | — | — | — | — | 7,034 | (1) | 40,305 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | 25,330 | (1) | 145,141 | — | — | ||||||||||||||||||
7/2/2018 | — | — | — | — | 6,040 | (1) | 34,609 | — | — | ||||||||||||||||||
3/1/2017 | — | — | — | — | 4,466 | (2) | 25,590 | — | |||||||||||||||||||
3/1/2018 | — | — | — | — | 8,113 | (2) | 46,487 | — | — | ||||||||||||||||||
3/1/2018 | — | — | — | — | — | — | 12,665 | (3) | 72,570 | ||||||||||||||||||
Diane M. Ellis(5) | — | — | — | — | — | — | — | — |
(1) | ||
(2) | Awards |
Awards represent the number of PSUs that were unearned and not yet vested as of February 2, 2019. The 2018 PSUs cliff-vest on the third anniversary of the grant date, to the extent earned based on performance over a three-year performance period. The amounts reported are based on achieving the threshold (50%) level of performance. |
(4) | The amounts in this column represent the aggregate fair market value of the restricted stock and PSUs as of February 2, 2019, the last business day of fiscal 2018. The closing price of the Company’s stock was $5.73 on that date. |
(5) | In accordance with their terms, all of Ms. Broader’s and Ms. Ellis’s unvested restricted stock and unearned or unvested PSUs were forfeited when they left the Company on April 24, 2019 and November 30, 2018, respectively. |
38 | - 2019 Proxy Statement |
EXECUTIVE COMPENSATION TABLES | ■ |
Fiscal Year 2018 Options Exercised and Stock Vested | |
Fiscal Year 2018 Options Exercised and Stock Vested
The following table sets forth stock options exercised and restricted stock that vested during the fiscal year ended January 28, 2017February 2, 2019 (fiscal 2016)2018) with respect to our NEOs. None of our NEOs exercised stock options during fiscal 2018. The dollar figures in the table below reflect the value on the exercise date for Option Awards and the vesting date for Stock Awards.
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||
Shelley G. Broader | — | — | 382,551 | 3,224,359 | ||||||||
Todd E. Vogensen | — | — | 49,546 | 485,911 | ||||||||
David Pastrana | — | — | 3,510 | 20,112 | ||||||||
Mary van Praag | — | — | 7,476 | 60,257 | ||||||||
Ann E. Joyce | — | — | 18,822 | 155,136 | ||||||||
Diane M. Ellis | — | — | 19,270 | 171,273 |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Shelley G. Broader | — | — | 61,680 | 949,872 | ||||||||||||
Todd E. Vogensen | — | — | 17,604 | 222,151 | ||||||||||||
Donna M. Colaco | — | — | 75,634 | 963,645 | ||||||||||||
Laurie J. Van Brunt | — | — | 64,639 | 783,733 | ||||||||||||
Kristin L. Oliver | — | — | — | — | ||||||||||||
Cynthia S. Murray | 85,000 | 46,834 | 180,637 | 2,254,132 |
Fiscal Year 2018 Retirement Benefits
The Company does not maintain a defined benefit pension plan for any of its employees, including for any of the NEOs. Thus, there are no accumulated pension benefits for any of its NEOs. The only funded retirement benefits that are provided for the Company’s NEOs are those resulting from contributions made under the Company’s 401(k) plan.Plan.
Fiscal Year 2018 Nonqualified Deferred Compensation
The following table illustrates the nonqualified deferred compensation benefits under the Nonqualified Deferred Compensation Plans, reported collectively.deferred compensation plan.
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year(2) ($) | Aggregate Earnings (Losses) in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End(3) ($) | |||||||||||||||
Shelley G. Broader | — | — | — | — | — | |||||||||||||||
Todd E. Vogensen | — | — | — | — | — | |||||||||||||||
Donna M. Colaco | — | — | — | — | — | |||||||||||||||
Laurie J. Van Brunt | 39,096 | — | 97 | — | 293,543 | |||||||||||||||
Kristin L. Oliver | — | — | — | — | — | |||||||||||||||
Cynthia S. Murray | — | — | — | — | — |
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year(2) ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End(3) ($) | ||||||||||
Shelley G. Broader | — | — | — | — | — | ||||||||||
Todd E. Vogensen | — | — | — | — | — | ||||||||||
David Pastrana | — | — | — | — | — | ||||||||||
Mary van Praag | 26,442 | 529 | (1,072 | ) | — | 28,025 | |||||||||
Ann E. Joyce | — | — | — | — | — | ||||||||||
Diane M. Ellis | — | — | (3,638 | ) | — | 277,111 |
(1) | For Ms. |
(2) | Effective January 1, 2019, the Company introduced a company match of 50% on employee base salary deferrals up to 2.5% under the deferred compensation plan. The Company match is reflected as part of Ms. van Praag’s fiscal 2018 all other compensation reported in the Summary Compensation Table. The Company |
(3) | The aggregate balances shown |
- | 39 |
■ | EXECUTIVE COMPENSATION TABLES |
Fiscal Year 2018 Options Exercised and Stock Vested | |
Shelley G. Broader. Ms. Broader who currently servesserved as Chief Executive Officer and President isuntil April 24, 2019, and was subject to an at-will employment offer letter dated October 26, 2015. The offer letter contemplatescontemplated an annual base salary and certain other benefits. As of April 24, 2019, Ms. Broader’s current base salary is $1,100,000 and is subject to further increases as set from time to time by the Board of Directors.was $1,127,500. Ms. Broader iswas also eligible for an annual bonus under the Company’s Cash Bonus Incentive Plan. Ms. Broader’s aggregate annual cash bonus, to the extent earned, hashad a threshold bonus equal to 37.5% of her base salary, a target bonus equal to 150% of her base salary and a maximum bonus equal to 262.5%300% of her base salary. Ms. Broader was entitled to a minimum guaranteed bonus at target for her first 12 months of service. A portion was received in 2015, and the remaining $1,375,000 was received in fiscal 2016. In fiscal 2015, consistent with the terms of the offer letter, she received a guaranteed bonus of $275,000, certain relocation benefits and was awarded restricted stock of $3$3.0 million. Ms. Broader received a $1.03 million sign-on bonus, less applicable taxes, upon establishing residency for herself and family in the United States and relocating herself and her family’s residency to Florida. Ms. Broader iswas eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Todd E. Vogensen.Mr. Vogensen, who currently serves as Executive Vice President-ChiefPresident - Chief Financial Officer and Assistant Corporate Secretary, is subject to an at-will employment offer letter dated September 23, 2009, as subsequently amended on March 3, 2015. The offer letter contemplates an annual base salary and certain other benefits. Mr. Vogensen’s current base salary is $550,000 and is subject to further increases as set from time to time by the Board of Directors.Board. Mr. Vogensen is also eligible for an annual bonus under the Company’s Cash Bonus Incentive Plan. In particular, for fiscal 2016,2018, Mr. Vogensen’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 17.5% of his base salary, a target bonus equal to 70% of his base salary and a maximum bonus equal to 122.5%140% of his base salary. Mr. Vogensen is eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Donna M. Colaco.David Pastrana. Ms. Colaco,Mr. Pastrana, who currently serves as Brand President-White House | Black Market,President - WHBM, is subject to an at-will employment offer letter dated July 19, 2007.December 11, 2017. The offer letter contemplates an annual base salary and certain other benefits. Ms. Colaco’sMr. Pastrana’s current base salary is $725,000$700,000 and is subject to further increases as set from time to time by the Board of Directors. Ms. ColacoBoard. Mr. Pastrana is also eligible for an annual bonus under the Company’s Cash Bonus Incentive Plan. In particular, for fiscal 2016,2018, Mr. Pastrana’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 20% of his base salary, a target bonus equal to 80% of his base salary and a maximum bonus equal to 160% of his base salary. Mr. Pastrana is eligible to be considered for additional awards of
stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Mary van Praag. Ms. Colaco’svan Praag, who currently serves as President of the Intimate Apparel Group, is subject to an at-will employment offer letter dated August 1, 2017. The offer letter contemplates an annual base salary and certain other benefits. Ms. van Praag’s current base salary is $550,000 and is subject to further increases as set from time to time by the Board. Ms. van Praag is also eligible for an annual bonus under the Company’s Bonus Plan. In particular, for fiscal 2018, Ms. van Praag’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 18.75% of her base salary, a target bonus equal to 75% of her base salary and a maximum bonus equal to 150% of her base salary. Ms. van Praag is eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Ann E. Joyce. Ms. Joyce, who currently serves as Chief Customer Officer and Executive Vice President, Technology, Supply Chain and Field Operations, is subject to an at-will employment offer letter dated October 8, 2015. The offer letter contemplates an annual base salary and certain other benefits, as adjusted on June 21, 2018 in connection with the expansion of her responsibilities to include Supply Chain and Field Operations. Ms. Joyce’s current base salary is $550,000 and is subject to annual increases as determined from time to time by the Company’s Board. Ms. Joyce is also eligible for an annual bonus under the Company’s Bonus Plan. In particular, for fiscal 2018, Ms. Joyce’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 17.5% of her base salary, a target bonus equal to 70% of her base salary and a maximum bonus of 140% of her base salary. Ms. Joyce also is eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Diane M. Ellis. Ms. Ellis, served as Brand President - Chico’s until November 2018, and was subject to an at-will employment offer letter dated September 27, 2016. The offer letter contemplated an annual base salary and certain other benefits. At the time of termination, Ms. Ellis’s base salary was $800,000. Ms. Ellis was also eligible for an annual bonus under the Company’s Bonus Plan. In particular, for fiscal 2018, Ms. Ellis’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 20% of her base salary, a target bonus equal to 80% of her base salary and a maximum bonus equal to 140%of 160% of her base salary. Ms. Colaco isEllis was eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
40 | - 2019 Proxy Statement |
EXECUTIVE COMPENSATION TABLES | ■ |
Potential Payments Upon Termination or Change in Control for Named Executive Officers | |
Laurie J. Van Brunt.Officer Severance Plan Ms. Van Brunt, who served as Brand President-Soma, left the
The Company on March 31, 2017. At her retirement, Ms. Van Brunt’s base salary was $525,000. Ms. Van Brunt will be entitled to a pro-rata bonus payment based upon actual fiscal year 2017 performance results and the percentage of the plan year she was employed; and, pursuant to the terms of the company’s restricted stock and performance share unit agreements, an accelerated prorated portion of her non-vested restricted stock grants and subject to the achievement of the applicable performance goals, of the non-vested performance share unit grants.
Kristin L. Oliver. Ms. Oliver, who serves as Chief Human Resources Officer, is subject to an at-will employment offer letter dated April 27, 2016. The offer letter contemplates an annual base salary and certain other benefits. Ms. Oliver’s current base salary is $500,000 and is subject to annual increases as determined from time to time by the Company’s Board of Directors. Ms. Oliver is also eligible for an annual bonus under the Company’s Cash Bonus Incentive Plan. In particular, for fiscal 2016, Ms. Oliver’s aggregate annual cash bonus, to the extent earned, had a threshold bonus equal to 15% of her base salary, a target bonus equal to 60% of her base salary and a maximum bonus of 105% of her base salary. Ms. Oliver also is eligible to be considered for additional awards of stock options or other stock-based compensation of the Company consistent with the equity award practices applicable to other senior officers.
Cynthia S. Murray. Ms. Murray, who served as Brand President - Chico’s, left the Company in September 2016. Upon termination, Ms. Murray received $725,000 in salary continuation, $234,496 in pro-rata bonus, $1,290,487 in equity acceleration, and was eligible for outplacement assistance and other severance benefits in the ordinary course.
Payments Upon Termination or Change in Control for Named Executive Officers
A description of potential post-employment payments payable to the Company’s NEOs appears below under the heading “Potential Payments Upon Termination or Change in Control for Named Executive Officers.” The section below describes the payments that may be made to NEOs upon termination of their employment, pursuant to individual agreements or otherwise.
Effective September 1, 2016, the Company put into effecthas a formal severance plan for all officer employees, including the Company’s NEOs. The Company’s officer severance planOfficer Severance Plan currently covers the Chief Executive Officer,CEO, executive vice presidents, senior vice presidents group vice presidents and vice presidents.
The purpose of the Officer Severance Plan is to promote uniform treatment of senior executives who are involuntarily terminated other than for “cause”under certain circumstances or who terminate for good“good reason, all” as defined in the Plan. Furthermore,plan. Certain benefits under the officer severance plan provides benefits to senior executives who,Officer Severance Plan are enhanced if the involuntary termination or termination for good reason occurs within 24 months following a change in control as defined in the officer severance plan, have not been offered employment comparable to that whichplan.
The Officer Severance Plan provides payment of benefits for involuntary termination by the Company provided prior toin connection with the changeelimination of an officer’s position, certain changes in control.
an officer’s job responsibilities, certain unsatisfactory performance, or termination upon or immediately preceding certain reorganizations or sales affecting the Company, but only if the officer is not offered comparable employment after the reorganization or sale. The plan provides payment of benefits for termination by the officer with good reason for any of the following events:(i) anya material reductionchange in current titlesduties or positions,responsibilities or a material reduction in then current duties or responsibilities,authority, (ii) for officers serving in certain corporate locations (which includes all of the Company’s NEOs), a change of corporate location that is more than fifty (50)50 miles from current place of employment, or (iii) a reduction in total direct compensation at target of more than thirty percent (30%)30%. Pursuant to Ms. Broader’s employment offer letter, agreement dated October 26, 2015, the term “Good Reason” also includes:included: the Company’s fraudulent, criminal or other serious misconduct which would have a material adverse effect on the Company and which occurred prior to her becoming Chief Executive Officer and PresidentCEO of the Company, or a substantial diminution in duties or responsibilities (including a change in reporting relationships) resulting from a “Change in Control” as defined in the 2012 Omnibus Plan.
A good reason termination requires the officer to provide written notice to the Company, and the officer must timely terminate employment if the Company does not cure the good reason event within a cure period.
The executive severance planOfficer Severance Plan provides for the following severance benefits:
■ | Continued annual base salary, paid in accordance with the Company’s normal payroll practices, for 24 months |
■ | |
A cash payment equal to the officer’s prorated bonus, if earned, for the year in which the termination |
■ | |
For officers enrolled in healthcare coverage (medical and/or dental plans) offered by the Company, the officer will receive a cash lump sum payment equal to the aggregate COBRA healthcare plan premium costs over the severance period. |
■ | |
Reasonable outplacement assistance during the severance |
■ | |
Release from any obligation to otherwise repay any sign-on bonus or relocation benefits. |
In the event a terminated officer’s employment termination without cause occurs within 24 months following a change in control (other than termination for good cause in connection with a disqualifying event), the terminated officer shall receive theirthe respective salary per theand bonus severance benefits noted above (except forin a single lump sum payment as follows: CEO, payment of 24 months of annual base salary plus bonus at target; Executive Vice Presidents who will receivePresident, payment of 18 months of annual base salary plus bonus at target; and Senior Vice President and Vice Presidents who will receivePresident, payment of 12 months of annual base salary)salary plus their bonus at target, payable intarget. Payments under the Officer Severance Plan are subject to a single lump sum payment.
modified cutback provision, where payments to a terminated officer would be reduced if the reduction would produce a better after-tax result for the officer. There would be no reduction, however, if the terminated officer would have a better after-tax result without the reduction.
The provision of severance benefits under the officer severance planOfficer Severance Plan is conditioned upon the officer executing an agreement and release which includes, among other things, non-competition covenants of six-months for vice president, one-year for senior vice presidents and group vice presidents and two years24 months for the ChiefCEO, 12 months for Executive Officer,Vice Presidents and Senior Vice Presidents, and 6 months for Vice Presidents, non-solicitation covenants of 24 months, a non-disclosure covenant, a non-disparagement covenant and a release of claims against the Company. Payments under the Officer Severance Plan will cease if the terminated officer violates the covenants or other provisions set forth in the agreement and release.
Ms. Broader, Mr. Vogensen, Mr. Pastrana, Ms. Colaco,van Praag and Ms. OliverJoyce are and prior to her departure,their departures, Ms. Van Brunt wasBroader and Ms. Ellis were eligible to receive certain post-employment payments and other benefits as indicated below in accordance with the Company’s
above-described executive severance planOfficer Severance Plan (payment of which is conditioned upon entry into the above described letter agreement and release under the executive severance plan)Officer Severance Plan) and, in certain cases, under the 2012 Omnibus Plan.
- 2019 Proxy Statement | 41 |
■ | EXECUTIVE COMPENSATION TABLES |
Potential Payments Upon Termination or Change in Control for Named Executive Officers | |
The following table shows the potential payments upon termination or change in control for our NEOs(5)as if the respective termination or change in control events had occurred on January 28, 2017:February 2, 2019:
Name and Termination Scenarios | Cash Severance(1) ($) | Equity(2) ($) | Health Benefits(3) ($) | Other Benefits(4) ($) | Tax Gross Up ($) | Total ($) | ||||||||||||||||
Shelley G. Broader | ||||||||||||||||||||||
w/o Good Reason (Voluntary) | — | — | — | — | N/A | — | ||||||||||||||||
w/ Good Reason (Voluntary) | 2,200,000 | — | 33,582 | — | N/A | 2,233,582 | ||||||||||||||||
For Good Cause (Involuntary) | — | — | — | — | N/A | — | ||||||||||||||||
Death or Disability (Involuntary) | — | 9,322,516 | — | — | N/A | 9,322,516 | ||||||||||||||||
w/o Good Cause (Involuntary) | 2,200,000 | — | 33,582 | 21,000 | N/A | 2,254,582 | ||||||||||||||||
Change in Control | 2,200,000 | 9,322,516 | 33,582 | 21,000 | N/A | 11,577,098 | ||||||||||||||||
Todd E. Vogensen | ||||||||||||||||||||||
w/o Good Reason (Voluntary) | — | — | — | — | N/A | — | ||||||||||||||||
w/ Good Reason (Voluntary) | 826,565 | — | 17,193 | — | N/A | 843,758 | ||||||||||||||||
For Good Cause (Involuntary) | — | — | — | — | N/A | — | ||||||||||||||||
Death or Disability (Involuntary) | — | 1,236,164 | — | — | N/A | 1,236,164 | ||||||||||||||||
w/o Good Cause (Involuntary) | 826,565 | — | 17,193 | 21,000 | N/A | 864,758 | ||||||||||||||||
Change in Control | 1,210,000 | 1,236,164 | 17,193 | 21,000 | N/A | 2,484,357 |
Name and Termination Scenarios(1) | Cash Severance(3) $ | Equity(4) $ | Health Benefits(5) $ | Other Benefits(6) $ | Tax Gross Up $ | Total $ | ||||||||||||
Shelley G. Broader(2) | ||||||||||||||||||
w/o Good Reason (Voluntary)(a) | — | — | — | — | N/A | — | ||||||||||||
w/ Good Reason (Voluntary)(a) | 2,200,000 | — | 37,394 | — | N/A | 2,237,394 | ||||||||||||
For Good Cause (Involuntary)(a) | — | — | — | — | N/A | — | ||||||||||||
Death or Disability (Involuntary)(b) | — | 5,759,103 | — | — | N/A | 5,759,103 | ||||||||||||
w/o Good Cause (Involuntary)(a) | 2,200,000 | — | 37,394 | 21,000 | N/A | 2,258,394 | ||||||||||||
Change in Control(c) | 5,500,000 | 6,387,420 | 37,394 | 21,000 | N/A | 11,945,814 | ||||||||||||
Retirement(d) | — | 3,109,723 | — | — | N/A | 3,109,723 | ||||||||||||
Todd E. Vogensen | ||||||||||||||||||
w/o Good Reason (Voluntary)(a) | — | — | — | — | N/A | — | ||||||||||||
w/ Good Reason (Voluntary)(a) | 550,000 | — | 20,373 | — | N/A | 570,373 | ||||||||||||
For Good Cause (Involuntary)(a) | — | — | — | — | N/A | — | ||||||||||||
Death or Disability (Involuntary)(b) | — | 824,604 | — | — | N/A | 824,604 | ||||||||||||
w/o Good Cause (Involuntary)(a) | 550,000 | — | 20,373 | 21,000 | N/A | 591,373 | ||||||||||||
Change in Control(c) | 1,402,500 | 901,936 | 20,373 | 21,000 | N/A | 2,345,809 | ||||||||||||
Retirement(d) | — | 278,776 | — | — | N/A | 278,776 | ||||||||||||
David Pastrana | ||||||||||||||||||
w/o Good Reason (Voluntary)(a) | — | — | — | — | N/A | — | ||||||||||||
w/ Good Reason (Voluntary)(a) | 700,000 | — | 20,232 | — | N/A | 720,232 | ||||||||||||
For Good Cause (Involuntary)(a) | — | — | — | — | N/A | — | ||||||||||||
Death or Disability (Involuntary)(b) | — | 432,157 | — | — | N/A | 432,157 | ||||||||||||
w/o Good Cause (Involuntary)(a) | 700,000 | — | 20,232 | 21,000 | N/A | 741,232 | ||||||||||||
Change in Control(c) | 1,890,000 | 519,167 | 20,232 | 21,000 | N/A | 2,450,399 | ||||||||||||
Retirement(d) | — | 133,578 | — | — | N/A | 133,578 | ||||||||||||
Mary van Praag | ||||||||||||||||||
w/o Good Reason (Voluntary)(a) | — | — | — | — | N/A | — | ||||||||||||
w/ Good Reason (Voluntary)(a) | 909,886 | — | 14,524 | — | N/A | 924,410 | ||||||||||||
For Good Cause (Involuntary)(a) | — | — | — | — | N/A | — | ||||||||||||
Death or Disability (Involuntary)(b) | — | 390,551 | — | — | N/A | 390,551 | ||||||||||||
w/o Good Cause (Involuntary)(a) | 909,886 | — | 14,524 | 21,000 | N/A | 945,410 | ||||||||||||
Change in Control(c) | 1,443,750 | 458,234 | 14,524 | 21,000 | N/A | 1,937,508 | ||||||||||||
Retirement(d) | — | 132,472 | — | — | N/A | 132,472 | ||||||||||||
Ann E. Joyce | ||||||||||||||||||
w/o Good Reason (Voluntary)(a) | — | — | — | — | N/A | — | ||||||||||||
w/ Good Reason (Voluntary)(a) | 624,173 | — | 14,524 | — | N/A | 638,697 | ||||||||||||
For Good Cause (Involuntary)(a) | — | — | — | — | N/A | — | ||||||||||||
Death or Disability (Involuntary)(b) | — | 387,549 | — | — | N/A | 387,549 | ||||||||||||
w/o Good Cause (Involuntary)(a) | 624,173 | — | 14,524 | 21,000 | N/A | 659,697 | ||||||||||||
Change in Control(c) | 1,402,500 | 435,881 | 14,524 | 21,000 | N/A | 1,873,905 | ||||||||||||
Retirement(d) | — | 177,103 | — | — | N/A | 177,103 |
Name and Termination Scenarios | Cash Severance(1) ($) | Equity(2) ($) | Health Benefits(3) ($) | Other Benefits(4) ($) | Tax Gross Up ($) | Total ($) | ||||||||||||||||
Donna M. Colaco | ||||||||||||||||||||||
w/o Good Reason (Voluntary) | — | — | — | — | N/A | — | ||||||||||||||||
w/ Good Reason (Voluntary) | 1,113,658 | — | 11,944 | — | N/A | 1,125,602 | ||||||||||||||||
For Good Cause (Involuntary) | — | — | — | — | N/A | — | ||||||||||||||||
Death or Disability (Involuntary) | — | 2,895,742 | — | — | N/A | 2,895,742 | ||||||||||||||||
w/o Good Cause (Involuntary) | 1,113,658 | — | 11,944 | 21,000 | N/A | 1,146,602 | ||||||||||||||||
Change in Control | 1,667,500 | 2,895,742 | 11,944 | 21,000 | N/A | 4,596,186 | ||||||||||||||||
Laurie J. Van Brunt* | ||||||||||||||||||||||
w/o Good Reason (Voluntary) | — | — | — | — | N/A | — | ||||||||||||||||
w/ Good Reason (Voluntary) | 764,496 | — | 17,193 | — | N/A | 781,689 | ||||||||||||||||
For Good Cause (Involuntary) | — | — | — | — | N/A | — | ||||||||||||||||
Death or Disability (Involuntary) | — | 2,627,626 | — | — | N/A | 2,627,626 | ||||||||||||||||
w/o Good Cause (Involuntary) | 764,496 | — | 17,193 | 21,000 | N/A | 802,689 | ||||||||||||||||
Change in Control | 1,181,250 | 2,627,626 | 17,193 | 21,000 | N/A | 3,847,069 | ||||||||||||||||
Kristin L. Oliver | ||||||||||||||||||||||
w/o Good Reason (Voluntary) | — | — | — | — | N/A | — | ||||||||||||||||
w/ Good Reason (Voluntary) | 666,434 | — | 16,560 | — | N/A | 682,994 | ||||||||||||||||
For Good Cause (Involuntary) | — | — | — | — | N/A | — | ||||||||||||||||
Death or Disability (Involuntary) | — | 461,899 | — | — | N/A | 461,899 | ||||||||||||||||
w/o Good Cause (Involuntary) | 666,434 | — | 16,560 | 21,000 | N/A | 703,994 | ||||||||||||||||
Change in Control | 1,050,000 | 461,899 | 16,560 | 21,000 | N/A | 1,549,459 |
Ms. Broader, who served as President and CEO, left the Company in April 2019. Upon termination and execution of the agreement and release discussed above, Ms. Broader received severance benefits for involuntary termination under the Officer Severance Plan of $2,255,000 in salary continuation, a lump sum payment of $39,015 equal to the aggregate COBRA healthcare plan premium costs over the 24-month severance period and was eligible for outplacement assistance. Ms. Broader will receive a prorated bonus for fiscal 2019, to the extent earned, after the fiscal 2019 financial results have been audited. Ms. Broader’s unvested restricted stock and PSUs did not receive accelerated vesting and were forfeited. |
(3) | The cash severance associated with any covered termination under the Officer Severance Plan other than |
Equity value for accelerated vesting of restricted stock and PSUs assumes a value of |
42 | - 2019 Proxy Statement |
EXECUTIVE COMPENSATION TABLES | ■ |
Indemnification Agreements | |
$5.73 as of the end of the 2018 fiscal year. In accordance with the grant agreements pursuant to the Company’s 2012 Omnibus Plan: (a) in the event of voluntary termination with or without Good Reason, involuntary termination for Good Cause, or involuntary termination without Good Cause in the absence of Compensation Committee exercise of discretion to accelerate vesting, unvested restricted stock and unvested PSUs are forfeited; (b) in the event of death or disability, unvested restricted stock and unvested fiscal 2016 and 2017 PSUs become 100% vested and unvested fiscal 2018 PSUs become 100% vested with respect to time-based vesting, subject to continued performance-based vesting, shown at threshold level based on performance through February 2, 2019; (c) in the event of a change in control, unvested restricted stock becomes 100% vested if the buyer does not assume the awards or upon involuntary termination without Good Cause within 12 or 24 months following the change in control if buyer does assume the awards, unvested fiscal 2016 and 2017 PSUs become 100% vested upon a change in control, and unvested fiscal 2018 PSUs become 100% vested with respect to time-based vesting, with performance-based vesting based on actual performance for completed years within the performance period (shown at threshold level based on performance through February 2, 2019) and target level performance for incomplete years, if the buyer does not assume the awards or upon involuntary termination without Good Cause following the change in control if buyer does assume the awards; and (d) in the event of retirement at or after age 55, with combined age and years of service of 65 or more and approval of the Compensation Committee, unvested restricted stock grants and unvested PSUs become partially vested, based on the number of completed months of the vesting period, with the unvested fiscal 2018 PSUs subject to continued performance-based vesting, shown at threshold level based on performance through February 2, 2019.
For Ms. Broader, Mr. Vogensen, Mr. Pastrana, Ms. |
Represents an estimate of maximum outplacement | ||
We have entered into indemnification agreements with all of our directors and certain executive officers under which we have agreed to indemnify them against all direct and indirect costs of any type or nature whatsoever (including attorneys’ fees) incurred as a result of the fact that such person, in his or her capacity as a director or officer, is made or threatened to be made a party to any
suit or proceeding. These directors and officers are to be indemnified to the fullest extent now or hereafter permitted by the Florida Business Corporation Act. The indemnification agreements also provide for the advancement of expenses to these directors and officers in connection with any such suit or proceeding.
In connection with Ms. Brooks’ appointment as Interim CEO in April 2019, we entered into a letter agreement with Ms. Brooks, dated April 24, 2019, which provides for a base compensation of $100,000 per month and a one-time grant of shares of restricted stock with a value of $750,000 under the 2012 Omnibus Plan that vests in three equal installments on each of the first, second and third anniversaries of the grant date, subject to Ms. Brooks’ continued service as Interim CEO, or following the appointment of a new Chief Executive Officer and President of the Company, Ms. Brooks’ continued service as a member of the Board. Ms. Brooks will forfeit any unvested restricted shares from this grant in the event she voluntarily resigns her service as Interim
CEO prior to the appointment of a new Chief Executive Officer and President of the Company, or she voluntarily resigns from the Board, or refuses to stand for re-election as part of the Board-nominated slate of directors. These restricted shares will otherwise immediately fully vest upon Ms. Brooks’ cessation as a member of the Board for any other reason. Ms. Brooks will not be entitled to any severance compensation or other benefits upon the cessation of her service as Interim CEO and is not currently eligible for an annual bonus or to receive additional equity awards during her service as Interim CEO. During her service as Interim CEO, Ms. Brooks will not be entitled to any compensation for her service as a member of the Board.
■ | Certain Relationships and Related Party Transactions |
Certain RelationshipsThe Board and Related Party Transactions
On an annual basis, each director and executive officer is obligated to complete a Director and Officer Questionnaire which, among other things, requires disclosure of any transactions with the Company in whichare committed to maintaining the directorhighest legal and ethical conduct while fulfilling their responsibilities and recognize that related party transactions can present potential or executive officer, or any memberactual conflicts of his or her immediate family, have a direct or indirect material interest. As of February 17, 2017,interest and create the appearance that decisions are based on considerations other than compensation arrangements fully described elsewhere in this proxy, no such transactions have been disclosed. None of the directors or officersbest interests of the Company and no shareholder holding over 5%its shareholders. Nevertheless, the Company recognizes that there are situations where related party transactions may be in, or may not be inconsistent with, the best interests of the Company’s common stock,Company and no corporationsits shareholders. Therefore, the Board has adopted a written Related Party Transactions Policy for the review and approval or firms with which such personsratification of related party transactions. Subject to certain pre-approved exceptions, any transaction or entities are associated, currently maintainsrelationship that involves a director, director nominee, executive officer, greater than
5% shareholder or has maintained since the beginningany of the last fiscal year, any significant business or personal relationship with the Company other than such as arises by virtue of such position or ownership interesttheir immediate family members that constitutes a “related party transaction” requires, preferably in the Company. Transactions and relationships that involve directors, executive officers or other related parties and that constitute a conflict with the Company’s interests require, in advance, a full disclosure to and review by the Company’s Audit Committee of all facts and circumstances concerning the transactions and relationships.relationships, including, but not limited to, the related party’s interest in the transaction, the approximate dollar amount involved, and whether the transaction was undertaken in the ordinary course of business. The related party may not participate in the Audit Committee’s discussion or approval of the transaction. The Audit Committee will only approve or ratify a related party transaction if the Audit Committee determines in good faith that, under all of the circumstances, the transaction is fair to the Company. For this purpose, a “related party transaction” is any transaction,
- 2019 Proxy Statement | 43 |
■ | PROPOSAL 3 Proposal to Ratify the Appointment of Ernst & Young LLP as Independent Certified Public Accountants |
Appointment Proposed for Ratification | |
arrangement or relationship in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year; (2) the Company is a participant; and (3) a related party has or will have a direct or indirect interest. Other than compensation
arrangements fully described elsewhere in this Proxy Statement, there have been no related party transactions since February 3, 2018, and there are none proposed currently.
■ | Compensation Committee Interlocks and Insider Participation |
Compensation Committee Interlocks and Insider Participation
The current members of the Company’s Human Resources, Compensation and Benefits Committee are John J. Mahoney, Stephen E. WatsonDeborah L. Kerr and William S. Simon. None of the members of the Human Resources, Compensation and Benefits Committee have at any time been an officer or employee of the Company or any of its subsidiaries, nor did any of them have a relationship requiring disclosure under Item 404 of Regulation S-K
promulgated under the Exchange Act. In addition, during the last completed fiscal year, none of our executive officers has served as a member of the board of directors or compensation committee of any other entity that has or has had one or more of its executive officers serving as a member of our BoardBoard’s Human Resources, Compensation and Benefits Committee.
■ | PROPOSAL 3 PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS |
Appointment Proposed for Ratification
Based on the recommendation of the Audit Committee, the Company has selected Ernst & Young LLP (“EY”) as its independent certified public accountants for the current fiscal year ending February 1, 2020 (fiscal 2019). Ratification of the Company’s independent certified public accountants is not required by the Company’s Bylaws or otherwise, but the Board has decided to seek such ratification as a matter of good corporate practice. In the event of a negative vote, the Audit Committee will review its future selection of its independent certified public accountants in light of that result. Even in the event of a positive vote, the Audit Committee in its discretion may select a different independent certified public accounting firm at any time
during fiscal 2019 if it determines it to be in the best interests of the Company and our shareholders. EY has audited the accounts of the Company since first being engaged by the Company effective July 1, 2002. Representatives of EY are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions by shareholders.
We have been advised by EY that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in the Company or its subsidiaries.
Recommendation |
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE PERIOD SPECIFIED.
44 | - |
PROPOSAL 3 Proposal to Ratify the Appointment of Ernst & Young LLP as Independent Certified Public Accountants | ■ |
Fees to Independent Accountants
The following table presents fees for professional services rendered by EY for the audit of the Company’s annual financial statements for fiscal 2018 (ended February 2, 2019) and fiscal 2017 (ended February 3, 2018) and fees billed for audit-related services, tax services and all other services rendered by EY for fiscal 2018 and fiscal 2017.
Fiscal 2018 | Fiscal 2017 | |||||
Audit Fees | $ | 1,442,625 | $ | 1,340,000 | ||
Audit-Related Fees | 1,995 | 1,995 | ||||
Tax Fees | 142,511 | 270,095 | ||||
All Other Fees | — | 10,000 | ||||
Total | $ | 1,587,131 | $ | 1,622,090 |
Audit Fees |
Fees for audit services include aggregate fees billed for professional services rendered for the annual audits of the Company’s financial statements included in Form 10-K filings, the reviews of the Company’s quarterly reports on Form 10-Q, other SEC filings and audit consultations and the Sarbanes-Oxley Section 404 attestation. Fiscal 2017 includes additional audit fees related to a registration statement on Form S-8 (“Form S-8”) filing.
Audit-Related Fees |
Fees for audit-related services in fiscal 2018 and 2017 include the Company’s use of EY’s online research tools.
Tax Fees |
Fees for tax services in fiscal 2018 and 2017 were principally related to special tax and international tax projects.
All Other Fees |
Fees for other services in fiscal 2017 relate to the Company’s Form S-8 filing.
All audit-related services, tax services and other services in fiscal 2018 and 2017 were pre-approved by the Audit Committee, which concluded that the provision of such services by EY was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee
provides for pre-approval of audit, audit-related and tax services specifically described by the Audit Committee on an annual basis and, in addition, individual engagements anticipated to exceed pre-established thresholds must be separately approved. The Company’s pre-approval policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority with respect to permitted services.
- 2019 Proxy Statement | 45 |
Section 16(a)The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act requires all executive officers,of 1934, except to the extent the Company specifically incorporates this report by reference therein.
The Audit Committee consists of three directors and persons whooperates under a written charter adopted by the Board of Directors. The current members of this Committee are David F. Walker (Chair), John J. Mahoney and Kim Roy. Each member of the beneficial ownerCommittee is independent in the judgment of more than 10%the Company’s Board of our sharesDirectors, as required by NYSE listing standards and as set forth in the Company’s Governance Guidelines. This Committee is responsible for selecting, engaging, evaluating and negotiating fee arrangements with the Company’s independent certified public accountants (the “Independent Accountants”) with input from the Company’s Board and management. Management is responsible for the Company’s internal controls and the financial reporting process. The Independent Accountants are responsible for performing an audit of outstanding common stockinternal control over financial reporting that is integrated with an audit of the Company’s consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board in the United States (“PCAOB”), and for expressing opinions thereon. This Committee’s responsibility is to filemonitor and oversee these processes.
The members of this Committee do not serve as professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or the Independent Accountants, nor can this Committee certify that the Independent Accountants are “independent” under applicable rules. This Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management, internal auditors, and the Independent Accountants on the basis of several factors, including the information it receives, discussions with management, internal auditors, and the Independent Accountants, and the experience of this Committee’s members in business, and with financial and accounting matters.
As part of its oversight of the Company’s financial reporting process, this Committee reviews and discusses with both management and the Company’s Independent Accountants all annual and quarterly financial statements prior to their issuance, including receiving reports on the matters discussed in management’s Disclosure Committee meetings. This Committee reviewed and discussed the audited consolidated financial
statements of ownershipthe Company as of and for the year ended February 2, 2019 (fiscal 2018), with management and the Company’s Independent Accountants. Management advised the Audit Committee that the Company’s fiscal 2018 consolidated financial statements had been prepared in accordance with accounting principles generally accepted in the United States, and presented significant accounting and disclosure matters to this Committee. Discussions with the Independent Accountants regarding the Company’s fiscal 2018 audited financial statements included the Independent Accountants’ judgments about the quality, not just the acceptability, of the Company’s accounting principles and underlying estimates used in the Company’s financial statements, as well as other matters, as required to be discussed under applicable auditing standards adopted by the PCAOB and under the Audit Committee’s charter.
This Committee annually evaluates, with input from management and the internal auditor, the quality of services and sufficiency of resources provided by the Independent Accountants, communications and interactions with the Independent Accountants, and assesses the Independent Accountants’ independence, objectivity and professional skepticism. The Company’s Independent Accountants provided this Committee the written disclosures and the letter required by applicable requirements of the PCAOB for independent auditor communications with Audit Committees concerning its independence, and this Committee discussed the results of the evaluation process with the Independent Accountants, including their independence from the Company.
In addition, this Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the Company’s internal and disclosure control structure. As part of this process, this Committee continued to monitor the scope and adequacy of the Company’s internal auditing program, reviewing staffing levels and steps taken to implement recommended improvements in internal procedures and control.
Based upon this Committee’s discussion with management, the internal auditor, and the Independent Accountants, this Committee’s review of the representations of management, and the report of the Independent Accountants to this Committee, and subject to the limitations on the role and responsibilities of this Committee described above and in this Committee’s charter, this Committee recommended that the Board of Directors approve the inclusion of the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K filed with the SEC indicating their ownershipas of the Company’s equity securities and to report any changes in that ownership. Specific due dates for these reports have been established, and the Company is required to report in this Proxy Statement any failure to comply therewith during the fiscal year ended January 28, 2017. To the Company’s knowledge, based solely on a review of the forms, reports and certificates filed with the Company by the Company’s directors and officers and the holders of more than 10% of the Company’s common stock, we believe all Section 16(a) filing requirements were complied with by such persons during or with respect to the fiscal year ended January 28, 2017, except that due to administrative errors by the Company, Mr. Lund filed an untimely Form 4 relating to his December grant on December 1, 2016.February 2, 2019.
MEMBERS OF THE AUDIT COMMITTEE | |
David F. Walker, Chair | |
John J. Mahoney | |
Kim Roy |
46 | - |
The following tables set forth the number of shares of the Company’s common stock beneficially owned by (1) each of its directors and nominees to become a director, (2) each NEO, (3) all current directors and executive officers as a group and (4) each person known to the Company as having beneficial ownership of more than 5% of the Company’s common stock together with such owner’s address as of April 28, 2017.29, 2019.
Stock Ownership of Directors and Executive Officers
Directors/Executive Officers | Current Beneficial Holdings(1)(2) | Shares Subject to Options(3) | Total Beneficial Ownership(1) | Percent of Class(4) | Current Beneficial Holdings(1)(2) | Shares Subject to Options(3) | Total Beneficial Ownership(1) | Percent of Class(4) | ||||||||||||||||||
Shelley G. Broader | 921,650 | — | 921,650 | * | 710,162 | — | 710,162 | * | ||||||||||||||||||
Todd E. Vogensen | 147,295 | 5,334 | 152,629 | * | 229,081 | 5,334 | 234,415 | * | ||||||||||||||||||
David Pastrana | 111,452 | — | 111,452 | * | ||||||||||||||||||||||
Mary van Praag | 100,121 | — | 100,121 | * | ||||||||||||||||||||||
Ann E. Joyce | 107,584 | — | 107,584 | * | ||||||||||||||||||||||
Diane M. Ellis | 57,810 | — | 57,810 | * | — | — | — | * | ||||||||||||||||||
Donna M. Colaco | 317,938 | 115,000 | 432,938 | * | ||||||||||||||||||||||
Kristin L. Oliver | 53,960 | — | 53,960 | * | ||||||||||||||||||||||
David F. Walker | 89,853 | 10,000 | 99,853 | * | 122,993 | — | 122,993 | * | ||||||||||||||||||
Bonnie R. Brooks | 11,170 | — | 11,170 | * | 247,562 | — | 247,562 | * | ||||||||||||||||||
Janice L. Fields | 34,490 | — | 34,490 | * | 34,490 | — | 34,490 | * | ||||||||||||||||||
Deborah L. Kerr | — | — | — | * | 33,140 | — | 33,140 | * | ||||||||||||||||||
John J. Mahoney | 95,853 | 10,000 | 105,853 | * | 128,993 | — | 128,993 | * | ||||||||||||||||||
Ross E. Roeder | 124,327 | 10,000 | 134,327 | * | ||||||||||||||||||||||
Kim Roy | 7,238 | — | 7,238 | * | ||||||||||||||||||||||
William S. Simon | 11,170 | — | 11,170 | * | 44,310 | — | 44,310 | * | ||||||||||||||||||
Stephen E. Watson | 57,016 | — | 57,016 | * | 90,156 | — | 90,156 | * | ||||||||||||||||||
Andrea M. Weiss | 70,899 | — | 70,899 | * | ||||||||||||||||||||||
All Directors and Executive Officers as a Group (18 persons) | 2,155,438 | 150,334 | 2,305,772 | 1.8% | ||||||||||||||||||||||
All Directors and Executive Officers as a Group (16 persons) | 2,123,485 | 5,334 | 2,128,819 | 1.8% |
* Less than one percent
(1) | For purposes of this table, a person is deemed to be the beneficial owner of shares under applicable SEC rules, if she or he (a) has or shares voting power or |
(2) | The shares listed also include restricted stock which has not yet vested and which is subject to forfeiture as follows: |
(3) | Represents shares that may be acquired currently or within |
(4) | In calculating the percentage ownership for a given individual or group, the number of shares of common stock outstanding includes unissued shares subject to options, warrants, rights or conversion privileges exercisable within |
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Stock Ownership of Certain Beneficial Owners | |
Stock Ownership of Certain Beneficial Owners
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | (1) | Percent of Class | |||||
BlackRock, Inc. | ||||||||
55 East 52nd Street | ||||||||
New York, NY 10022 | 12,980,437 | (2) | 10.0 | % | ||||
T. Rowe Price Associates | ||||||||
100 E. Pratt Street | ||||||||
Baltimore, MD 21202 | 12,118,886 | (3) | 9.4 | % | ||||
The Vanguard Group. | ||||||||
100 Vanguard Blvd. | ||||||||
Malvern, PA 19355 | 9,951,444 | (4) | 7.7 | % | ||||
JP Morgan Chase & Co | ||||||||
270 Park Avenue | ||||||||
New York, NY 10017 | 6,786,190 | (5) | 5.2 | % | ||||
Wellington Management Group, LLP | ||||||||
280 Congress Street | ||||||||
Boston, MA 02210 | 6,364,083 | (6) | 4.9 | % |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class | ||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 18,563,076(2) | 15.8% | ||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 12,772,524(3) | 10.8% | ||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | 10,693,857(4) | 9.1% | ||
Renaissance Technologies Holdings Corporation 800 Third Avenue New York, NY 10022 | 6,625,500(5) | 5.6% |
(2) | The ownership information set forth herein is based in its entirety on the material contained in |
(3) | The ownership information set forth herein is based in its entirety on the material contained in Amendment No. 6 to Schedule | |
(4) | The ownership information set forth herein is based in its entirety on the material contained in Schedule |
(5) | The ownership information set forth herein is based in its entirety on the material contained in Amendment No. 1 to Schedule |
We permit our officers and directors to adopt trading plans under Rule 10b5-1 promulgated under the Securities Exchange Act, of 1934, which allows shareholders to establish prearranged written plans to buy or sell shares or exercise stock options in accordance with predetermined formulas. Rule 10b5-1 plans allow shareholders to buy or sell shares of the Company’s common stock according to their plan on a regular basis (for example, weekly or monthly or in accordance with another
predetermined formula), regardless of any subsequent nonpublic information they receive. As of May 5, 2017, Ms. Colaco had Rule 10b5-1 trading plans in place. No other10, 2019, no Company shareholders, officers or directors were known by the Company to have adopted and have in effect a Rule 10b5-1 trading plan. However, directors and officers have carried outadopted such plans in the past and may adopt such plans in the future.
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■ | INFORMATION ABOUT THE 2019 ANNUAL MEETING AND VOTING |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held June 27, 2019 |
The Notice of Annual Meeting of Shareholders, this Proxy Statement and our 2018 Annual Report are available on the Internet at https://materials.proxyvote.com/168615. This site does not have “cookies” that identify visitors to the site.
What is the purpose of the meeting? |
At the Annual Meeting, shareholders will act upon the matters outlined in the accompanying Notice of Annual Meeting of Shareholders, which consists of the election of directors, ratification of the appointment of the Company’s independent certified public accountants, adoption of an advisory resolution to approve the compensation of our named executive officers and to
transact such other business as may properly come before the meeting or any adjournments or postponements thereof. In addition, the Company’s management will report on the performance of the Company and respond to questions from shareholders.
When are these materials being sent? |
Under rules adopted by the SEC we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability to most of our shareholders of record. All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or to request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice.
You will not receive a printed copy of the proxy materials unless you request one in the manner set forth in the Notice. This permits us to conserve natural resources and reduces our printing costs, while giving shareholders a convenient and efficient way to access our proxy materials and vote their shares.
The proxy materials are first being mailed or made available to shareholders on or about May 10, 2019.
Why did I receive these proxy materials? |
You have received these proxy materials because you are a shareholder of the Company, and our Board is soliciting authority, or your proxy, to vote your shares at the Annual Meeting and at any adjournments or postponements thereof. The proxy materials include our Notice of Annual Meeting of Shareholders, Proxy Statement and 2018 Annual Report. These materials also include the proxy card or voting instruction form for the Annual Meeting.
Proxies are being solicited on behalf of our Board. The proxy materials include detailed information about the matters that will be discussed and voted on at the Annual Meeting and provide updated information about our Company that you should consider in order to make an informed decision when voting your shares.
Can I access the Company’s proxy materials online? |
Yes. The Proxy Statement and 2018 Annual Report may be accessed at https://materials.proxyvote.com/168615. This site does not have “cookies” that identify visitors to the site.
What is a proxy? |
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It is your legal designation of another person to vote on matters transacted at the Annual Meeting based upon the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. The proxy included with this Proxy Statement designates each of Bonnie R. Brooks, Todd E. Vogensen and Gregory S. Baker as proxies for the Annual Meeting.
What is a proxy statement? |
It is a disclosure document that SEC regulations require us to give you so that you can make an informed voting decision when we ask you to designate individuals as proxies to vote on your behalf.
What is the difference between a shareholder of record and a shareholder who holds stock in street name? |
If your shares are registered in your name, you are a shareholder of record. When you properly vote in accordance with the instructions provided on the proxy card or Notice of Internet Availability, you are instructing the named proxies to vote your shares in the manner you indicate on your proxy.
If your shares are held in the name of your broker or other institution, which is usually the case if you hold your shares in a brokerage or similar account, your shares are held in “street name.” Your broker or other institution or its respective nominee is the shareholder of record for your shares. As the holder of record, only your broker, other institution or nominee is authorized to vote or grant a proxy for your shares. Accordingly, if you wish to vote your shares in person, you must contact your broker or other
institution to obtain the authority to do so. When you properly vote in accordance with the instructions provided in the voting instruction form, you are giving your broker, other institution or nominee instructions on how to vote the shares they hold for you.
Applicable SEC and NYSE regulations limit the matters your broker may vote on without having been instructed to do so by you, especially as they relate to the election of directors and compensation matters. As a result, if you do not instruct your broker on how to vote your shares regarding the election of the directors or the advisory vote on the resolution to approve executive compensation, then your shares will not be voted on these matters. We urge you to instruct your broker about how you wish your shares to be voted.
What is the record date and what does it mean? |
The record date for the Annual Meeting is April 29, 2019. The record date is established by the Board of Directors as required by law and the Company’s Articles and Bylaws. Owners of record of common stock at the close of business on the “record date” are entitled to:
(a) | receive notice of the meeting; and |
(b) | vote at the meeting and any adjournments or postponements thereof. |
No shareholders who become owners of record after the record date will be entitled to vote at the Annual Meeting or any adjournment or postponement thereof.
What constitutes a “quorum” for the meeting? |
A certain minimum number of shares must be present or represented by proxy at a meeting before any shareholder vote at the meeting can be effective. A quorum of shares must be present to conduct business at the meeting. For the Annual Meeting, the quorum requirement will be satisfied if a majority of the
outstanding shares of common stock entitled to be cast on the matters submitted is present in person and/or represented by proxy. You are part of the quorum if you have voted by proxy. Abstentions and broker non-votes count as “shares present” at the meeting for purposes of determining a quorum.
Who is entitled to vote and how many votes do I have? |
If you are a common shareholder of record at the close of business on the record date, you can vote. Each common share is entitled to one vote on each matter properly brought before the
Annual Meeting. Shares of common stock, par value $0.01 per share, are the only outstanding voting securities of the Company. If you are a holder in street name at the close of business on the
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Stock Ownership of Certain Beneficial Owners | |
record date, you generally will have the right to instruct your bank, broker or other holder of record how to vote your shares, although specific procedures depend on the terms of your account
arrangement. As of the record date, there were 117,845,215 common shares outstanding.
How do I vote my shares? |
If you are a shareholder of record, you may vote by proxy in three convenient ways: by telephone, via the Internet or by completing, signing and returning the proxy card in the pre-paid envelope provided, if you receive a printed copy of the proxy materials. Simply follow the instructions provided on the Notice of Internet Availability or proxy card. Internet voting is provided on the Notice of Internet Availability and Internet and telephone voting information is provided on the proxy card. If you receive a printed copy of the proxy materials and vote via the Internet or by telephone, there is no need to return a signed proxy card. However, you may still vote by proxy by using the proxy card. If you beneficially hold your shares in “street name” through a bank, broker or other nominee, you will be able to vote using the voting instruction form provided to you by such nominee, and Internet and telephone voting may also be available per the instructions provided on such voting instruction form.
If you are not the shareholder of record, please refer to the voting instructions provided by your bank, broker or other nominee to
direct it how to vote your shares. Your vote is important. Follow the instructions from your nominee included with our proxy materials, or contact your nominee to request a voting instruction form. To vote in person at the meeting, you must obtain a legal proxy from your nominee. Whether or not you plan to attend the meeting, we urge you to vote using your voting instruction form to ensure that your vote is counted.
If you are a participant in the Chico’s Managed Share Plan and/or the Chico’s Employee Stock Purchase Plan (each a “Plan”; together the “Plans”), please refer to the instructions provided by the Administrator of each such Plan in order to direct it how to vote your shares. Please note that you must return your vote instructions with respect to any Plan shares no later than 11:59 P.M. ET on June 19, 2019. Please note that you may not vote any Plan shares in person at the meeting, as such shares may only be voted through the Administrator. Since your vote is important, we urge you to vote promptly to ensure that your Plan shares are represented.
Can I change my vote or revoke my proxy? |
You may revoke your proxy or change your voting instructions before the time of voting at the meeting in several ways.
A shareholder who has given a proxy may revoke it at any time before it is exercised at the meeting by:
■ |
■ | signing and delivering a proxy card bearing a later date; |
■ | voting again by telephone or through the Internet; or |
■ | attending and voting at the meeting. |
Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to revoke a proxy, you may need to contact that firm to change any prior voting instructions.
Your vote must be received before the polls close at the Annual Meeting. While you can change your vote by voting in person at the Annual Meeting, attendance at the meeting will not, by itself, revoke a proxy. If you hold your shares in street name, please check with that firm for instructions on how to change your vote.
If I submit a proxy, how will my shares be voted? |
By giving us your proxy, you authorize the individuals named as the proxies on the proxy card to vote your shares in accordance with the instructions you provide. You may vote for or against any or all of the director candidates and any or all of the other proposals. You may also abstain from voting. If you vote via the Internet or by telephone, you must indicate how you wish to vote on each item.
If you sign and return a proxy card without indicating your instructions, your shares will be voted:
FOR election of the eight directors, nominated herein; |
■ | FOR approval of the advisory resolution to approve the compensation of our named executive officers; and |
■ | FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent certified public accountants for the fiscal year ending February 1, 2020 (fiscal 2019). |
If you are a beneficial owner of shares and do not specify how you want to vote, your shares may not be voted by the record holder and may not be considered as present and entitled to vote on any
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Stock Ownership of Certain Beneficial Owners | |
matter to be considered at the Annual Meeting. If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in these important matters.
Your vote is important. Whether or not you plan to attend the meeting, we encourage you to vote by proxy as soon as possible.
What are the Board’s recommendations? |
The Board’s recommendations regarding the proposals to be considered at the Annual Meeting are set forth together with the descriptions of the proposals in this Proxy Statement. In summary, the Board recommends a vote:
■ | FOR election of the eight directors, nominated herein (see page 1); |
■ | FOR approval of the advisory resolution to approve the compensation of our named executive officers (see page 20); and |
■ | FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent certified public accountants for the fiscal year ending February 1, 2020 (fiscal 2019) (see page 44). |
With respect to any other matter that properly comes before the meeting, the proxies will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion. As of the date of the Notice of Annual Meeting of Shareholders, we knew of no other matters to be presented at the Annual Meeting.
My shares are held in street name. How are my shares voted if I do not return voting instructions? |
If your shares are held in the name of a bank, broker or other nominee under NYSE rules, your shares may be voted on certain “routine” items by the brokerage firm, financial institution or other nominee, even if you do not provide voting instructions. When a proposal is not a “routine” matter under NYSE rules, the brokerage firm, financial institution or other nominee cannot vote the shares on that proposal unless they have received prior voting instructions from the beneficial owner of the shares with respect to that proposal. This inability to vote the shares in such an instance is referred to as a “broker non-vote.”
Proposal 2, the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accountants for
fiscal 2019, is considered a routine matter for which the brokerage firm, financial institution or other nominee who holds your shares can vote your shares even if it has not received instructions from you. All other proposals in this Proxy Statement are non-routine matters and accordingly the bank, broker or other nominee cannot vote your shares on those proposals without your instructions.
Although broker non-votes are not voted on non-routine matters, they will be counted in determining whether a quorum is present. In any event, if your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in these matters.
What are abstentions and broker non-votes? |
An abstention occurs when a shareholder of record (which may be a broker or other nominee of a street name holder) is present at a meeting (or deemed present) but fails to vote on a proposal or indicates that the shareholder abstains from voting on the election of directors or any other proposal. As discussed above, a broker
non-vote occurs when a broker or other nominee who holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares.
What vote is required to approve each item? |
Election of Directors. Our Board of Directors has instituted a majority vote standard in uncontested elections where a majority of the shares voted on the election of a director must be in favor of his or her election. This means that a director nominee will be elected if the number of votes cast “FOR” that nominee by holders entitled to vote exceeds the number of votes cast “AGAINST” that nominee.
If you return a signed proxy card or otherwise complete your voting by proxy via the Internet or by telephone but abstain from voting on any of the nominees, your shares will not be voted with
respect to those nominees. Your shares will be counted for purposes of determining whether there is a quorum, but will have no effect on the election of those nominees. Broker non-votes will be counted as “shares present” for purposes of determining whether there is a quorum, but are not entitled to vote on the proposal.
Advisory Resolution to Approve Executive Compensation. The advisory resolution to approve the compensation of our named executive officers (the “say-on-pay” vote) will be approved if the number of votes cast “FOR” approval of such advisory resolution
52 | - 2019 Proxy Statement |
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Stock Ownership of Certain Beneficial Owners | |
by holders entitled to vote exceeds the number of votes cast “AGAINST” the approval of the advisory resolution. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. As discussed above, if your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instruction. While the Board of Directors and its Compensation Committee will consider the shareholder vote, the final vote is advisory in nature and will not be binding on the Board or the Company.
Ratification of Appointment of Accountants. The appointment of Ernst & Young LLP as the Company’s independent certified public
accountants for fiscal 2019 will be ratified if the number of votes cast “FOR” ratification of the appointment by holders entitled to vote exceeds the number of votes cast “AGAINST” the ratification of the appointment. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal.
Other Items. If any other item requiring a shareholder vote should come before the meeting, the vote required will be determined in accordance with applicable law, the NYSE rules, and our Articles and Bylaws, as applicable.
How are abstentions and broker non-votes counted when tabulating the vote? |
Abstentions, that is, a properly submitted proxy marked “ABSTAIN,” and broker non-votes with respect to a particular matter do not count in any vote totals for or against any matter presented for a shareholder vote at this Annual Meeting, even though the shares associated with such abstentions and broker non-votes are counted as “shares present” for purposes of determining whether there is a quorum present at the Annual Meeting. Accordingly, for purposes of such votes, abstentions and broker non-votes will have the same effect as a share that is not present or otherwise not voted.
Election of Directors. Abstentions and broker non-votes will have no effect on the outcome of the election of candidates for director as they do not count as either “FOR” or “AGAINST” votes.
Advisory Resolution on Executive Compensation. Abstentions and broker non-votes will have no effect on the outcome of the advisory resolution on executive compensation as they do not count as either “FOR” or “AGAINST” votes.
Ratification of Appointment of Accountants. Abstentions will have no effect on the outcome of the ratification of the appointment of the accountants as they do not count as either “FOR” or “AGAINST” votes.
Where can I find the voting results of the Annual Meeting? |
We will report the voting results on a Current Report on Form 8-K filed with the SEC within four business days of the Annual Meeting.
Who is paying for the preparation and mailing of the proxy materials and how will solicitations be made? |
We will pay the expenses of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees in person or by telephone, mail, or electronic transmission. The Company will request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material on our
behalf to shareholders and the Company will reimburse such institutions for their out-of-pocket expenses incurred. The Company has not engaged any outside service provider to assist in the solicitation of proxies.
What does it mean if I receive more than one package of proxy materials or Notice of Internet Availability? |
This means that you have multiple accounts holding Chico’s FAS, Inc. shares. These may include: accounts with our transfer agent, American Stock Transfer and Trust Company, shares held by the Administrators of our Plans, and accounts with a broker, bank or other holder or record. In order to vote all of the shares held by you
in multiple accounts, you will need to vote the shares held in each account separately. Please follow the voting instructions provided on every proxy card, voting instruction form or Notice of Internet Availability that you receive to ensure that all of your shares are voted.
Do I have to attend the 2019 Annual Meeting in order to vote my shares? |
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Stock Ownership of Certain Beneficial Owners | |
No. Whether or not you plan to attend this year’s meeting, you may vote your shares by proxy. It is important that all shareholders participate by voting, regardless of the number of shares owned.
It is important that you vote promptly to avoid unnecessary expense to the Company. Therefore, regardless of whether you
plan to attend the Annual Meeting or the number of shares of stock you own, please take the time to vote by proxy as soon as possible so that your shares are represented at the meeting.
How do I attend the 2019 Annual Meeting in person? |
You are invited to attend our Annual Meeting on June 27, 2019, beginning at 9:00 A.M., local time. The Annual Meeting will be held at our National Store Support Center located at 11215 Metro Parkway, Fort Myers, Florida. Shareholders will be admitted
beginning at approximately 8:30 A.M. The operation of cameras (including cellular phones with camera functions), recording devices and other electronic devices will not be permitted at the meeting.
How do I obtain directions to the Annual Meeting? |
Directions to attend the Annual Meeting, where you may vote in person, may be obtained by calling Investor Relations at (239) 277-6200.
54 | - 2019 Proxy Statement |
The Company’s 20182020 Annual Meeting is currently expected to be held on June 28, 2018.25, 2020. To be eligible under the SEC shareholder proposal rule (Rule 14a-8 promulgated under the Exchange Act), for inclusion in thenext year’s proxy statement, for our 2018 Annual Meeting of Shareholders and form of proxy, a shareholder must submit the proposal in writing so that we receive it by January 11, 2020 and must be received by management ofcomply with Rule 14a-8 under the Company at its executive offices on or before January 8, 2018
Exchange Act.
Even if a shareholder proposal is not eligible for inclusion in our proxy statement pursuant to Rule 14a-8, the proposal may still be offered for consideration at an annual meetingAnnual Meeting according to the procedures set forth in the Company’s Amended and Restated Articles of Incorporation.Articles. The Company’s Amended and Restated Articles of Incorporation contain certain advance notice requirements to the Company of any shareholder proposal and of any nominations by shareholders of persons to stand for election as directors at a shareholders’ meeting.
Notice of director nominations must be submitted by a shareholder of record and must set forth the information required by the Company’s Articles. If you are a beneficial owner of shares held in street name, you may contact the organization that holds your shares for information about how to register your shares directly in your name as a shareholder of record. Notice of shareholder proposals and of director nominations (other than proxy access director nominations) must be timely given in writing to the Corporate Secretary of the Company prior to the meeting at which the proposals are to be presented or the directors are to be elected. To be timely, notice must be received at the principal executive offices of the Company not less than 60 days prior to the meeting of shareholders; provided, however, that in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or made to the shareholders, notice by the shareholder, in order to be timely, must be so delivered or received not later than the close of business on the tenth10th day following the day on which such notice of the date of the annual meeting was given or public disclosure of the date of the annual meeting was made, whichever first occurs. For the 2020 Annual Meeting of Shareholders, this notice must be received no later than the close of business on April 26, 2020 and must provide certain other information as described in the Company’s Articles.
A shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years shares of the Company’s
common shares representing an aggregate of at least 3% of our outstanding shares, may nominate and include in our proxy materials director nominees constituting up to 20% of the Company’s Board, provided that the shareholder(s) and nominee(s) satisfy the requirements set forth in the Company’s Bylaws. Notice of proxy access director nominees must be received by our Corporate Secretary no earlier than the close of business on December 9, 201712, 2019 and no later than the close of business on January 8, 2018;11, 2020 to be included in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders and form of proxy; provided, however, that in the event the annual meeting is more than 30 days before or more than 60 days after the first anniversary of the previous year’s annual meeting, or if no annual meeting was held in the preceding year, in order to be timely, the notice of proxy access noticedirector nominees must be so delivered not earlier than the close of business on the 150thday prior to such annual meeting and not later than the close of business on the later of the 120thday prior to such annual meeting or the 10thday following the day on which public announcement of the date of such annual meeting is first made by the Company.
In each case, the notice must include the information specified in our Amended and Restated Articles of Incorporation andor Bylaws, including information concerning the nomineeproposal or proposal,nominee, as the case may be, and information about the shareholder’s ownership of and agreements related to our stock.
Our Amended and Restated Articles of Incorporation and Bylaws can be reviewed at the Company’s investor relations website (www. chicosfas.com)(www.chicosfas.com) by clicking on “About Us” and then “Governance Documents & Charters.”
We will not entertain any proposals or nominations at the Annual Meeting that do not meet the requirements set forth inof Rule 14a-8 or our Amended and Restated Articles of Incorporation and our Bylaws. We strongly encourage shareholders to seek advice from knowledgeable counsel before submitting a proposal or a nomination. A complete copyComplete copies of our Amended and Restated Articles of Incorporation and our Bylaws provisions governing these requirements are available to any shareholder without charge upon request from the Corporate Secretary of the Company.
All shareholder proposals and director nominations must be delivered or mailed to Chico’s FAS, Inc., c/o Corporate Secretary, 11215 Metro Parkway, Fort Myers, Florida 33966.
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At the time of the preparation of this Proxy Statement, the Board of Directors of the Company had not been informed of any matters proposed to be presented for action at the Annual meetingMeeting other than the proposals specifically set forth in the Notice of Annual Meeting and referred to herein. If any other matters are properly presented for action at the Annual meeting,Meeting, it is intended that the persons named in the accompanying proxy cardproxies will vote or refrain from voting in accordance with their best judgment on such matters after consultation with the Board of Directors.
The Company will provide without charge to any shareholder upon written request, a copy of the Company’s Annual Report on Form 10-K, including financial statements and schedules thereto, for the fiscal year ended January 28, 2017February 2, 2019 (fiscal 2016)2018), as filed with the Securities and Exchange CommissionSEC (without exhibits). All such requests should be delivered to L. Susan Faw,Gregory S. Baker, Corporate Secretary, Chico’s FAS, Inc. at the address set forth on the front pageNotice of this Proxy Statement.Annual Meeting of Shareholders. Copies of exhibits will be provided upon written request and payment of a reasonable fee to cover the costs of reproduction and mailing.
By Order of
- 2019 Proxy Statement
TABLE OF CONTENTS
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