Peer Group and Competitive Assessment of Compensation
Compensation at a defined group of companies is one reference point considered by the HR Committee and management in setting NEO compensation levels, although we do not attempt to link any single element of compensation to specific peer company percentiles or ratios. Pay practices at this group of companies are also reviewed by the HR Committee. The composition of the peer group is reviewed periodically and is determined by the HR Committee, considering input from its independent compensation consultant.
No changesIn May 2021, following a regular review of the existing peer group by the HR Committee's consultant, CAP, the HR Committee approved revisions to the peer group,
were made duringfiscal year 2017. The last review of the composition of
adding Levi Strauss & Co. and Abercrombie & Fitch Co. and removing Tiffany & Co., which increased the peer group took place duringto 15 companies for fiscal year 2016.2021. As a secondary reference point, the HR Committee informally considers publicly available data from the following foreign-listed and private companies that are direct competitors of Coach, such aswith whom Tapestry competes for certain executive talent: Burberry Group plc, Hermes International, J. Crew Group, Inc., Kering S.A., and LVMH, and Richemont.as well as industry compensation surveys. The peer group used during fiscal year 20172021 is shown below. It includes 15 companies whose aggregate profile was comparable to CoachTapestry in terms of size, industry, operating characteristics and/or competition for executive talent:talent.
Company Name | Sub-Industry (as defined by GICS codes) | Revenue(1) | Market Valuation as of 7/1/2017 |
The Gap, Inc. | Apparel Retail | | $15,516 | | | $8,703 | |
L Brands, Inc. | Apparel Retail | | 12,574 | | | 15,458 | |
V.F. Corporation | Apparel, Accessories & Luxury Goods | | 12,019 | | | 23,066 | |
The Estée Lauder Companies Inc. | Personal Products | | 11,262 | | | 35,304 | |
PVH Corp. | Apparel, Accessories & Luxury Goods | | 8,203 | | | 8,913 | |
Ralph Lauren Corporation | Apparel, Accessories & Luxury Goods | | 6,653 | | | 5,997 | |
Williams-Sonoma, Inc. | Home Furnishing Retail | | 5,084 | | | 4,202 | |
Michael Kors Holdings Limited | Apparel, Accessories & Luxury Goods | | 4,494 | | | 5,649 | |
Tiffany & Co. | Specialty Stores | | 4,002 | | | 11,701 | |
American Eagle Outfitters, Inc. | Apparel Retail | | 3,610 | | | 2,133 | |
Urban Outfitters, Inc. | Apparel Retail | | 3,546 | | | 2,147 | |
Abercrombie & Fitch Co. | Apparel Retail | | 3,327 | | | 846 | |
Fossil Group, Inc. | Apparel, Accessories & Luxury Goods | | 3,042 | | | 502 | |
lululemon athletica inc. | Apparel, Accessories & Luxury Goods | | 2,344 | | | 8,157 | |
Kate Spade(2) | Apparel, Accessories & Luxury Goods | | 1,381 | | | 2,378 | |
Coach, Inc. | Apparel, Accessories & Luxury Goods | | 4,488 | | | 13,309 | |
Coach, Inc. Percentile Rank | | | 50th | | | 82nd | |
| (1) | As reported in the Form 10-K for the most recent fiscal year (in millions). |
| (2) | The Company acquired Kate Spade on July 11, 2017. Pursuant to the acquisition, Kate Spade & Company became a fully owned subsidiary of Coach, Inc. and ceased to be publicly traded. |
| Compagnie Financière Richemont SA(2) | | | Apparel, Accessories and Luxury Goods | | | $15,427 | | | $69,175 | |
| The Estée Lauder Companies Inc. | | | Personal Products | | | $14,294 | | | $115,308 | |
| The Gap, Inc. | | | Apparel Retail | | | $13,800 | | | $12,706 | |
| L Brands(3) | | | Specialty Stores | | | $11,847 | | | $19,948 | |
| V.F. Corporation | | | Apparel, Accessories and Luxury Goods | | | $9,239 | | | $32,189 | |
| PVH Corp. | | | Apparel, Accessories and Luxury Goods | | | $7,133 | | | $7,678 | |
| Williams-Sonoma, Inc. | | | Homefurnishing Retail | | | $6,783 | | | $11,993 | |
| Coty Inc. | | | Personal Products | | | $4,630 | | | $7,155 | |
| Levi Strauss & Co. | | | Apparel, Accessories and Luxury Goods | | | $4,453 | | | $11,098 | |
| Lululemon Athletica Inc. | | | Apparel, Accessories and Luxury Goods | | | $4,402 | | | $47,503 | |
| Ralph Lauren Corporation | | | Apparel, Accessories and Luxury Goods | | | $4,401 | | | $8,658 | |
| Capri Holdings Limited | | | Apparel, Accessories and Luxury Goods | | | $4,060 | | | $8,655 | |
| American Eagle Outfitters, Inc. | | | Apparel Retail | | | $3,759 | | | $6,294 | |
| Urban Outfitters, Inc. | | | Apparel Retail | | | $3,450 | | | $4,054 | |
| Abercrombie & Fitch Co. | | | Apparel Retail | | | $3,125 | | | $2,857 | |
| | | | | | | | | | | |
| Tapestry, Inc. | | | Apparel, Accessories and Luxury Goods | | | $5,746 | | | $12,153 | |
| Tapestry, Inc. Percentile Rank | | | | | | 54th | | | 59th | |
(1) As reported in the Form 10-K for the most recent fiscal year (in millions).
(2) Revenue was converted to U.S. dollars (US$) based on the exchange rate at the end of the fiscal year end (3/31/2021). Market Valuation converted to US$ and as reported by S&P Capital IQ.
(3) L Brands spun off Victoria’s Secret as a stand-alone publicly traded company in August 2021, and then changed its name to Bath & Body Works, Inc.
201752 | 2021 PROXY STATEMENT | 49 | | |
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and Analysis
Additional Information
Clawback Policy: Adjustment or Recovery of Awards
Coach
Tapestry has a clawback policy that applies to any performance-based annual or
long-term incentivesLTIs awarded to our NEOs as well as other key executives.
Under the policy, in the event of a material restatement of
Coach’sTapestry's financial results, the HR Committee will review the circumstances that caused the restatement and consider accountability to determine whether a covered employee was negligent or engaged in misconduct. If so, and if the amount paid in an annual incentive award or the shares vesting in a performance-based
long-term incentiveLTI award would have been less had the financial statements been correct, the HR
Committee will
Committee will
recover compensation from the covered employee as it deems appropriate. This policy is in addition to any requirements which might be imposed pursuant to Section 304 under the Sarbanes-Oxley Act of 2002, and will be modified to the extent required by the Dodd-Frank Act of 2010 and the related final rules of the SEC.
In addition, all of our long-term incentiveLTI award agreements include a repayment provision in the event an award holder is terminated for cause (as defined in those agreements) or violates various non-compete or non-solicitation provisions, or other restrictive covenants included in those agreements.
Stock Ownership and Anti-Hedging Trading Policies
We believe that our NEOs should have a meaningful ownership stake in Coach,Tapestry in order to further align the interests of management and stockholders. Under our Stock Ownership Policy, each executiveNEO is required to hold Company stock with a value at least equal to the multiple of his or her base salary set forth below.
| Chief Executive Officer | | | 5 | |
| Tapestry Chief Financial Officer, Chief Operations Officer, Coach Brand President | | | 3 | |
| Kate Spade Brand President | | | 2 | |
| Chief Communication Officer and Former Interim Financial Officer | | | 1 | |
Until the required ownership level is met, NEOs are required to retain 50% of net shares vested and options exercised until they reach such level, which is expected to
accumulate the lesser of a fixed number of Coach shares (ranging from 50,000 to 250,000) and Coach shares valued at three to five times his or her annual salary, with ownership targets increasing with the level of responsibility. The expected ownership is:for our CEO, Mr. Luis: the lesser of 250,000 shares or five times base salary; and
for Messrs. Bickley, Cohen and Kahn, the lesser of 100,000 shares or three times base salary.
for Mr. Wills and Ms. Resnick, the lesser of 50,000 shares or two times base salary
We expect the required level of ownership to be reachedhappen within five years of the date a NEO is appointed to his or her position. Other Executive Officers are required to hold Company stock with values equal to one to two times their annual salaries, depending on position.
Ownership includes
the equivalent of after-tax shares owned and shares equivalent
to the after-tax gain onof vested, unexercised, in-the-money stock
options.options and unvested RSUs. PRSUs with incomplete performance periods do not count towards ownership. The HR Committee evaluates compliance with this policy annually, as of December 31. If an executive fails to comply with the policy within the required timeframe, he or she may only sell 50% of the after-tax shares received from stock option exercises or the vesting of RSUs and PRSUs until the required ownership level is reached.
As of the last measurement date (December 31, 2016)2020):
Mr. BickleyKahn and Ms. Resnick owned the required number of shares; and
the remaining NEOs, includingMses. Crevoiserat and Fraser and Mr. Luis,Glaser were making appropriate progress towards achieving the five-yeartheir ownership guideline (since allrequirement (all had been in their role for less than five years)two years with the Company at the time of measurement).
CoachUnder Tapestry's Insider Trading Policy, Tapestry employees and directors are prohibited from trading in CoachTapestry shares during certain prescribed blackout periods, typically beginning two weeks prior to the end of each fiscal quarter and ending two days after the public release of our quarterly earnings announcement. CoachTapestry employees and directors are prohibited from engaging in short sales, buying or selling derivative securities and other similar hedging activities related to CoachTapestry stock at all times.
Executive Employment Contracts
| | | | | | 2021 PROXY STATEMENT | 53 |
In February 2013, the BoardTABLE OF CONTENTS
Compensation Discussion and
the HR Committee entered into a letter agreement with Mr. Luis. None of Misses Nielsen and Resnick or Messrs. Wills, Kahn, Bickley and Cohen are subject to employment agreements. The terms of their offerAnalysis
letters (as amended from time to time) and Mr. Luis’ letter agreement are described in more detail under the section Executive Compensation—Employment Agreements and Compensatory Arrangements.
Impact of Accounting and Tax Treatment
In designing our compensation and benefits programs, the HR Committee reviews and considers the accounting implications of its decisions, including the accounting treatment of amounts awarded or paid to our executives.
Section 162(m) of the Code limits the tax deductibility of certain compensation paid to our CEO and each of the other NEOs, other than the CFO. This provision disallows the deductibility of certain compensation to our NEOs in excess
50 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS
of $1 million per year unless it is considered performance-based compensation under the Code. We generally endeavor to pay compensation to our NEOs that is tax deductible to Coach under Section 162(m) of the Code; however, we reserve the right to pay compensation that is not deductible pursuant to Section 162(m) of the Code if we deem it appropriate and in the best interest of Coach and its stockholders. Stock options, PRSUs and annual bonuses under our Annual Incentive Plan granted to our NEOs are generally intended to qualify as performance-based compensation under Section 162(m) of the Code; service-based RSUs and non-performance-based bonuses granted to them are not intended to so qualify.
Other provisions of the Internal Revenue Code (the “IRC”) limits the income tax deduction by Tapestry for compensation paid to certain executive officers to $1 million per year. As a result of amendments to Section 162(m) as part of the Tax Cuts and Jobs Acts of 2017, Tapestry is generally no longer able to take a deduction for any compensation paid to its current or former NEOs in excess of $1 million, with the exception of compensation pursuant to a binding written agreement in place on November 2, 2017, which can be exempt from the deduction limit if applicable requirements are met.
Other provisions of the IRC can also affect compensation decisions. Section 409A of the Internal Revenue Code,IRC, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% penaltyadditional tax and an interest penalty on the recipient of deferred compensation that does not comply with Section 409A. The HR Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to our executives and strivesintends to structure any nonqualifiednon-qualified deferred compensation plans or arrangements to be exempt from or to comply with the requirements of Section 409A.
201754 | 2021 PROXY STATEMENT | 51 | | |
TABLE OF CONTENTS
| | | Human Resources Committee Report |
HUMAN RESOURCES COMMITTEE REPORT
The Human Resources Committee of the Board of Directors of
Coach,Tapestry, Inc. (the “Human Resources Committee”), which performs the functions of a compensation committee, reviewed and discussed the
Compensation Discussion and Analysis set forth above with management. Based on our reviews and discussion with management, the Human Resources Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the proxy statement for the
20172021 Annual Meeting of Stockholders and incorporated by reference into our Annual Report on Form 10-K.
| | | | Human Resources Committee | |
| | | | | |
| | | | David Denton, Chair
Darrell Cavens
Susan Kropf
Pamela Lifford*
Ivan Menezes | |
*Ms. Lifford joined the Human Resources Committee
Susan Kropf, Chair
William Nuti
Stephanie Tilenius
Jide Zeitlin
effective December 9, 2020.
52 | 2017 | | | | | 2021 PROXY STATEMENT | 55 |
TABLE OF CONTENTS
| | | Compensation Risk Assessment |
COMPENSATION RISK ASSESSMENT
Management periodically reviews and shares with the HR Committee our compensation policies and practices and evaluates the degree to which they may motivate any employee, including our NEOs, to take on inappropriate or excessive risk. We believe that our various compensation programs are aligned to our strategy and objectives, and that they encourage prudent risk-taking to drive performance. As a result of its review and evaluation of our fiscal year 20172021 compensation programs, the HR Committee, together with its independent compensation consultant, CAP, determined that our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Coach.
Tapestry.
Factors evaluated by management and the HR Committee include the overall mix of pay between base salary, annual and long-term incentives, the performance metrics used in each program, the range of performance required to earn a payout under each program, and incentive plan components such as maximum payouts, vesting, stock ownership requirements and clawbacks.
Some of the key factors supporting the HR Committee’s conclusion that our programs do not drive inappropriate or excessive risk include capped payouts on all of our incentive plans, use of multiple, counter-balancing financial performance criteria in our Annual Incentive Plan and Long-Term Incentive Plan, executive and
OutsideIndependent Director stock ownership and anti-hedging policies, a market competitive weight on each component of pay, multiple year vesting for long-term incentives, a variety of performance metrics for PRSUs, and an incentive compensation clawback policy.
When the HR Committee and management are developing new or modified compensation programs and selecting performance measures for annual and long-term incentives, risk taking is considered and affects decisions accordingly.
201756 | 2021 PROXY STATEMENT | 53 | | |
TABLE OF CONTENTS
EXECUTIVE COMPENSATIONSummary Compensation Table
Name & Principal Position | Fiscal Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(4) ($) | Non-Equity Incentive Plan Compensation(5) ($) | All Other Compensation(7) ($) | Total ($) |
Victor Luis Chief Executive Officer | | 2017 | | | 1,289,744 | | | 0 | | | 3,599,982 | | | 5,395,394 | | | 2,498,193 | | | 76,541 | | | 12,859,854 | |
| 2016 | | | 1,300,000 | | | 0 | | | 3,599,999 | | | 2,419,149 | | | 2,477,640 | | | 85,264 | | | 9,882,052 | |
| 2015 | | | 1,291,667 | | | 0 | | | 3,000,005 | | | 2,011,998 | | | 2,127,600 | | | 102,206 | | | 8,533,476 | |
Kevin Wills Chief Financial Officer* | | 2017 | | | 242,308 | | | 750,000 | | | 3,500,007 | | | 0 | | | 257,816 | | | 7,193 | | | 4,757,324 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Andre Cohen Former President, Coach North America and Global Marketing(6)* | | 2017 | | | 913,462 | | | 0 | | | 3,251,387 | | | 970,606 | | | 926,826 | | | 42,441 | | | 6,104,722 | |
| 2016 | | | 866,667 | | | 0 | | | 699,985 | | | 352,790 | | | 961,989 | | | 79,767 | | | 2,961,198 | |
| 2015 | | | 594,353 | | | 600,000 | | | 1,699,962 | | | 352,100 | | | 534,246 | | | 405,427 | | | 4,186,088 | |
Ian Bickley President, Global Business Development and Strategic Alliances | | 2017 | | | 793,077 | | | 0 | | | 1,019,994 | | | 679,054 | | | 941,062 | | | 21,302 | | | 3,454,489 | |
| 2016 | | | 800,000 | | | 0 | | | 699,985 | | | 352,790 | | | 1,019,256 | | | 18,801 | | | 2,890,832 | |
| 2015 | | | 771,603 | | | 0 | | | 699,984 | | | 352,100 | | | 773,990 | | | 95,652 | | | 2,693,329 | |
Todd Kahn President, Chief Administrative Officer and Secretary | | 2017 | | | 721,154 | | | 0 | | | 899,986 | | | 599,168 | | | 863,403 | | | 26,103 | | | 3,109,814 | |
| 2016 | | | 708,333 | | | 0 | | | 1,533,297 | | | 268,791 | | | 624,334 | | | 29,034 | | | 3,163,789 | |
| 2015 | | | 695,833 | | | 96,000 | | | 649,985 | | | 301,801 | | | 604,116 | | | 86,789 | | | 2,434,524 | |
Andrea Resnick Global Head of Investor Relations and Corporate Communications* | | 2017 | | | 452,564 | | | 300,000 | | | 833,324 | | | 166,438 | | | 339,340 | | | 30,150 | | | 2,121,816 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Jane Nielsen Former Chief Financial Officer* | | 2017 | | | 96,026 | | | 0 | | | 0 | | | 0 | | | 0 | | | 10,584 | | | 106,610 | |
| 2016 | | | 658,333 | | | 0 | | | 666,637 | | | 335,992 | | | 0 | | | 17,722 | | | 1,678,684 | |
| 2015 | | | 637,500 | | | 86,675 | | | 666,652 | | | 335,336 | | | 537,215 | | | 89,473 | | | 2,352,851 | |
| Joanne Crevoiserat
Chief Executive Officer | | | 2021 | | | 1,225,923 | | | — | | | 4,799,995 | | | 2,200,133 | | | 4,265,068 | | | 57,472 | | | 12,548,591 | |
| 2020 | | | 785,769 | | | 700,000 | | | 2,800,002 | | | 831,901 | | | — | | | 142,265 | | | 5,259,937 | |
| Scott Roe
Chief Financial Officer and Head of Strategy | | | 2021 | | | 67,596 | | | 250,000 | | | 549,983 | | | 1,100,040 | | | | | | — | | | 1,967,619 | |
| Todd Kahn
Chief Executive Officer and Brand President, Coach | | | 2021 | | | 870,423 | | | — | | | 2,299,988 | | | 799,998 | | | 2,348,878 | | | 36,259 | | | 6,355,546 | |
| 2020 | | | 750,000 | | | — | | | 960,007 | | | 665,522 | | | — | | | 22,662 | | | 2,398,191 | |
| 2019 | | | 750,000 | | | — | | | 959,984 | | | 637,501 | | | 573,000 | | | 58,409 | | | 2,978,894 | |
| Thomas Glaser
Chief Operations Officer | | | 2021 | | | 775,385 | | | — | | | 1,199,993 | | | 600,001 | | | 1,600,000 | | | 12,688 | | | 4,188,067 | |
| 2020 | | | 738,462 | | | 200,000 | | | 2,399,982 | | | 623,926 | | | — | | | 89,986 | | | 4,052,356 | |
| Liz Fraser
Chief Executive Officer and Brand President, Kate Spade | | | 2021 | | | 775,385 | | | 250,000 | | | 566,667 | | | — | | | 1,548,000 | | | 25,084 | | | 3,165,136 | |
| | | | | | | | | | | | | | | | | | | — | | | | |
| Andrea Shaw Resnick
Chief Communications Officer and Former Interim Chief Financial Officer | | | 2021 | | | 671,636 | | | — | | | 1,099,979 | | | — | | | 1,104,600 | | | 14,178 | | | 2,890,393 | |
| 2020 | | | 486,880 | | | 104,000 | | | 500,009 | | | — | | | — | | | 37,202 | | | 1,128,091 | |
| 2019 | | | 485,052 | | | 208,000 | | | 500,030 | | | — | | | 222,532 | | | 24,337 | | | 1,439,951 | |
| Jide Zeitlin
Former Chief Executive Officer | | | 2021 | | | 90,000 | | | — | | | — | | | — | | | — | | | 78 | | | 90,078 | |
| 2020 | | | 1,015,000 | | | — | | | 2,099,995 | | | 1,400,242 | | | — | | | 111,623 | | | 4,626,860 | |
* Mr. Zeitlin left the Company on July 20, 2020 and Ms. Crevoiserat was appointed Interim CEO on July 21, 2020 and later CEO on October 27, 2020. Mr. Roe joined the Company on June 1, 2021.
(1) Salary amounts reflect the actual base salary payments made in fiscal years 2021, 2020 and 2019, including the impact of temporary salary reductions in 2021.
(2) For Mr. Roe and Ms. Fraser, the fiscal year 2021 amount reflects a cash sign-on bonus pursuant to the terms of each of their offer letters. The amounts for fiscal years 2020 and 2019 are described in the similar section of our fiscal year 2020 and 2019 proxy statement.
(3) Reflects the aggregate grant date fair value of all RSU awards and the aggregate grant date fair value of all PRSU awards assuming target level achievement, granted in the years shown. The aggregate grant date fair value is the amount that the Company expects to expense for accounting purposes over the award’s vesting schedule as of the grant date and does not correspond to the actual value that the NEOs will realize from the award. The amounts for fiscal years 2020 and 2019 are described in the similar sections of our fiscal year 2020 and 2019 proxy statements. The grant date fair values for awards granted during fiscal year 2021 were as follows:
| * | Mr. Wills joined the company on February 21, 2017; Mr. Cohen left the Company after the end of fiscal year 2017; Ms. Resnick was considered an executive officer during her tenure as Interim Chief Financial Officer from August 20, 2016 through Mr. Wills’ hire date; Ms. Nielsen left the Company after the end of fiscal year 2016, on August 20, 2016. |
| (1) | Salary amounts reflect the actual base salary payments made in fiscal years 2017, 2016 and 2015. In fiscal year 2017, base earnings for bonus calculation purposes were adjusted upwards by two weeks due to a payroll timing change that affected all US payrolled employees including NEOs active in October 2016. The amounts shown in the above table do not include this adjustment. |
| (2)•
| For Mr. Wills, the fiscal year 2017 amount was a one-time cash sign-on bonus pursuant to the terms of his offer letter; Ms. Resnick’s fiscal year 2017 amount represents a cash bonus paid to compensate her for the additional responsibility she took on during her tenure as Interim Chief Financial Officer while continuing to perform duties as Global Head of Investor RelationsCrevoiserat, annual and Corporate Communications. |
| (3) | Reflects the aggregate grant date fair value of all RSU awards and the aggregate grant date fair value of all PRSU awards assuming target level achievement, granted in the years shown. The aggregate grant date fair value is the amount that the company expects to expense for accounting purposes over the award’s vesting schedule and does not correspond to the actual value that the NEOs will realize from the award. The amounts for fiscal years 2016 and 2015 are described in the similar sections of our 2016 and 2015 proxy statements. |
| | For Mr. Luis, the amount for fiscal year 2017 is the grant date fair value of the PRSUs awarded in fiscal year 2017 assuming target performance. At the maximum achievement level, the total grant date fair value of this award would be $7,199,964. |
| | For Mr. Wills, the amount for fiscal year 2017 is the grant date fair value of his new hire RSU grant. |
| | For Mr. Cohen, the amount for fiscal year 2017 includes the grant date fair value of the annualspecial RSUs and Acceleration and annual PRSUs granted in fiscal year 2017 (assuming target performance for the PRSUs). The Acceleration and the modified value of Mr. Cohen’s RSUs andannual PRSUs granted in fiscal year 2014 described further in footnote 6. The fiscal year 2017 annual PRSU hashave a grant date fair value of $799,992;$2,600,004; at the maximum achievement level, the total grant date fair value would be $1,599,983.$5,200,009. |
| •
| For Mr. Bickley, the amount for fiscal year 2017 includes the grant date fair value of theRoe, annual RSUs granted upon hire on June 1, 2021. |
•
| For Mr. Kahn, annual and special RSUs and Acceleration PRSUs granted in fiscal year 2017 (assuming target performance for the PRSUs). The fiscal year 2017 annualAcceleration PRSU has a grant date fair value of $679,983;$299,994; at the maximum achievement level, the total grant date fair value would be $1,359,966.$599,989. |
| •
| For Mr. Kahn, the amount for fiscal year 2017 includes the grant date fair value of theGlaser, annual RSUs and Acceleration PRSUs granted in fiscal year 2017 (assuming target performance for the PRSUs). The fiscal year 2017 annualAcceleration PRSU has a grant date fair value of $600,004;$299,994; at the maximum achievement level, the total grant date fair value would be $1,200,007.$599,989. |
| •
| For Ms. Resnick, the amount for fiscal year 2017 includes the grant date fair value of theFraser, annual RSUs and Acceleration PRSUs granted in fiscal year 2017 (assuming target performance for the PRSUs). The fiscal year 2017 annualAcceleration PRSU has a grant date fair value of $166,657;$299,994; at the maximum achievement level, the total grant date fair value would be $333,313.$599,989. |
| | Ms. Nielsen did not receive a grant for fiscal year 2017. | | | | 2021 PROXY STATEMENT | 57 |
54 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
EXECUTIVE COMPENSATION
Executive Compensation•
| (4) | ReflectsFor Ms. Resnick, annual and special RSUs and Acceleration PRSUs (assuming target performance for the aggregatePRSUs). The Acceleration PRSU has a grant date fair value of both$199,996; at the annual and performance stock options granted in fiscal year 2017. The weighted-average assumptions used in calculatingmaximum achievement level, the total grant date fair value of option awards are shown in the table below.would be $399,992. |
(4) Reflects the aggregate grant date fair value of all stock options granted in fiscal year 2021. The weighted-average assumptions used in calculating the grant date fair value of option awards are shown in the table below. The applicable weighted average assumptions for fiscal years 2020 and 2019 are described in Note 9, “Share-Based Compensation” of Tapestry’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021.
| Expected Term (years) | | | 5.1 | |
| Expected Volatility | | | 48.8% | |
| Risk-free Interest Rate | | | 0.3% | |
| Dividend Yield | | | —% | |
| AWARD TYPE |
| Annual Stock Option | Performance Stock Option |
Expected Term (years) | | 4.4 | | | 5.2 | |
Expected Volatility | | 30.5% | | | 31.8% | |
Risk-free Interest Rate | | 1.1% | | | 1.2% | |
Dividend Yield | | 3.4% | | | 3.4% | |
| (5) | Amounts in this column reflect compensation earned under the Annual Incentive Plan(5) Amounts in this column reflect compensation earned under the AIP for the years shown. The amounts for fiscal year 2021 are described in detail in the section titled Compensation Discussion and Analysis—Fiscal Year 2019 Compensation—Annual Incentive Plan. The AIP and the amounts for fiscal years 2020 and 2019 are described in the applicable sections of our 2020 and 2019 proxy statements. Mr. Zeitlin left the company in July 2020, and did not receive an AIP payment for fiscal years 2020 or 2021. Mr. Roe joined the company in June 2021, and was not eligible to receive an AIP payment for fiscal year 2021.(6) “All Other Compensation” includes the following amounts for the years shown. | Joanne Crevoiserat
Chief Executive Officer | | | 2021 | | | 11,800 | | | — | | | 396 | | | 45,276 | | | 2020 | | | 11,200 | | | — | | | 363 | | | 130,702 | | | Scott Roe
Chief Financial Officer and Head of Strategy | | | 2021 | | | — | | | — | | | — | | | — | | | Todd Kahn
Chief Executive Officer and Brand President, Coach | | | 2021 | | | 11,800 | | | 11,439 | | | 396 | | | 12,624 | | | 2020 | | | 11,200 | | | — | | | 396 | | | 11,066 | | | 2019 | | | 12,240 | | | 32,696 | | | 396 | | | 13,077 | | | Thomas Glaser
Chief Operations Officer | | | 2021 | | | 11,800 | | | — | | | 363 | | | 525 | | | 2020 | | | 11,200 | | | — | | | 363 | | | 78,423 | | | Liz Fraser
Chief Executive Officer and Brand President, Kate Spade | | | 2021 | | | 16,846 | | | — | | | 363 | | | 7,875 | | | Andrea Shaw Resnick
Chief Communications Officer and Former Interim Chief Financial Officer | | | 2021 | | | 13,263 | | | — | | | 390 | | | 525 | | | 2020 | | | 9,738 | | | 22,242 | | | 386 | | | 4,836 | | | 2019 | | | 13,380 | | | 9,635 | | | 386 | | | 936 | | | Jide Zeitlin
Former Chief Executive Officer | | | 2021 | | | — | | | — | | | 33 | | | 45 | | | 2020 | | | — | | | — | | | 297 | | | 111,326 | |
(a) Fiscal year 2021 amounts shown include: •
| Long-term disability insurance premiums of $525 for Ms. Crevoiserat, $525 for Mr. Kahn, $525 for Mr. Glaser, $525 for Ms. Fraser, $525 for Ms. Resnick, and $45 for Mr. Zeitlin. |
•
| Company matching charitable contributions under the Company’s Matching Gift program of $12,099 for Mr. Kahn and $7,350 for Ms. Fraser. |
•
| Relocation expenses, pursuant to the Company's Relocation Policy for Vice Presidents and above for Ms. Crevoiserat: reimbursement of $22,174 plus $22,577 of associated income taxes paid by the Company. |
58 | 2021 PROXY STATEMENT | (6) | Mr. Cohen left the company after the end of fiscal year 2017. | |
| | The HR Committee allowed his fiscal year 2015 RSUs, PRSUs and stock options to pro-rata vest through his last day of employment. Mr. Cohen will have until November 12, 2017 to exercise the stock options. The RSU awards distributed on August 14, 2017. The PRSU awards distributed on August 14, 2017, according to the Company’s performance against the predetermined criteria. The modification to the vesting conditions of these awards required revaluation of the accounting cost of the awards under ASC Topic 718. |
| • | On the date of grant, the RSU awards were valued at $683,318, which is included as a Stock Award in fiscal year 2015. The re-valued expense of $832,559 is included as a Stock Award in fiscal year 2017. |
| • | On the date of grant, the stock option award was valued at $352,100, which is included as a Option Award in fiscal year 2015. The re-valued expense of the third tranche in the amount of $171,717 is included as an Option Award in fiscal year 2017. |
| • | On the date of grant, the PRSU awards were valued at $1,016,644, which is included as a Stock Award in fiscal year 2015. The re-valued expense of $1,218,820 at target is included as a Stock Award in fiscal year 2017. |
| (7) | “All Other Compensation” includes the following values for the years shown. |
Name & Principal Position | Fiscal Year | Transportation Benefit(a) ($) | Company Contributions to Qualified Defined Contribution Plans ($) | Company Contributions to Non-Qualified Defined Contribution Plans ($) | Life Insurance Premiums ($) | Other(b) ($) | Victor Luis Chief Executive Officer | | 2017 | | | 0 | | | 19,200 | | | 0 | | | 2,925 | | | 54,416 | | | 2016 | | | 0 | | | 19,200 | | | 0 | | | 5,370 | | | 60,694 | | | 2015 | | | 0 | | | 7,800 | | | 49,274 | | | 5,010 | | | 40,122 | | Kevin Wills Chief Financial Officer | | 2017 | | | 0 | | | 5,769 | | | 0 | | | 0 | | | 1,424 | | | | | | | | | | | | | | | | | | | | Andre Cohen Former President, Coach North America and Global Marketing | | 2017 | | | 0 | | | 0 | | | 0 | | | 0 | | | 42,441 | | | 2016 | | | 0 | | | 0 | | | 0 | | | 0 | | | 79,767 | | | 2015 | | | 0 | | | 0 | | | 0 | | | 0 | | | 405,427 | | Ian Bickley President, Global Business Development and Strategic Alliances | | 2017 | | | 0 | | | 10,600 | | | 0 | | | 3,390 | | | 7,312 | | | 2016 | | | 0 | | | 9,600 | | | 0 | | | 5,518 | | | 3,683 | | | 2015 | | | 28,000 | | | 7,200 | | | 34,250 | | | 5,024 | | | 21,178 | | Todd Kahn President, Chief Administrative Officer and Secretary | | 2017 | | | 0 | | | 13,714 | | | 0 | | | 3,154 | | | 9,235 | | | 2016 | | | 0 | | | 13,714 | | | 0 | | | 5,040 | | | 10,280 | | | 2015 | | | 48,000 | | | 7,800 | | | 18,338 | | | 4,635 | | | 8,016 | | Andrea Resnick Global Head of Investor Relations and Corporate Communications | | 2017 | | | 0 | | | 19,167 | | | 0 | | | 2,516 | | | 8,467 | | | | | | | | | | | | | | | | | | | | Jane Nielsen Former Chief Financial Officer | | 2017 | | | 0 | | | 5,800 | | | 0 | | | 1,494 | | | 3,290 | | | 2016 | | | 0 | | | 4,800 | | | 0 | | | 4,758 | | | 8,164 | | | 2015 | | | 43,338 | | | 3,600 | | | 20,009 | | | 4,003 | | | 18,523 | |
| (a) | For years prior to fiscal year 2016, reflects a cash transportation allowance for certain executives, the taxes on which were paid by the executive. |
| (b) | Fiscal year 2017 amounts shown includes: |
Long-term disability insurance premiums of $4,541 for Mr. Luis, $1,424 for Mr. Wills, $1,688 for Mr. Cohen, $3,764 for Mr. Bickley, $4,385 for Mr. Kahn, $4,217 for Ms. Resnick and $1,113 for Ms. Nielsen.
Company matching charitable contributions under the Company’s Matching Gift program of $11,000 for Mr. Luis, $25,000 for Mr. Cohen, $4,850 for Mr. Kahn, $4,250 for Ms. Resnick and $2,177 for Ms. Nielsen.
For Mr. Luis, includes the value of transportation paid for by Coach that is considered taxable under the Code. During fiscal year 2017, the amount was $19,775; Mr. Luis paid all taxes on this benefit.
2017 PROXY STATEMENT | 55 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation
Grants of Plan-based Awards For Messrs. Luis and Cohen, includes payments made by Coach on their behalf related to their international expatriate assignments in Japan and Hong Kong respectively. For
| Joanne Crevoiserat
Chief Executive Officer | | | Annual incentive | | | | | | 639,760 | | | 2,132,534 | | | 4,265,068 | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | | | | 121,166 | | | 15.83 | | | 15.83 | | | 799,998 | | | Appointment stock option grant | | | 11/2/2020 | | | | | | | | | | | | | | | | | | | | | | | | 141,535 | | | 23.63 | | | 23.63 | | | 1,400,135 | | | Annual RSU grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 25,268 | | | | | | | | | 15.83 | | | 399,992 | | | Annual RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 50,537 | | | | | | | | | 15.83 | | | 800,001 | | | Special RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 63,171 | | | | | | | | | 15.83 | | | 999,997 | | | Acceleration Performance RSU grant | | | 8/17/2020 | | | | | | | | | | | | 9,476 | | | 31,586 | | | 63,172 | | | | | | | | | | | | 15.83 | | | 500,006 | | | Appointment Performance RSU grant | | | 11/2/2020 | | | | | | | | | | | | 26,661 | | | 88,870 | | | 177,740 | | | | | | | | | | | | 23.63 | | | 2,099,998 | | | Scott Roe
Chief Financial Officer and Head of Strategy | | | Annual stock option grant | | | 6/1/2020 | | | | | | | | | | | | | | | | | | | | | | | | 57,541 | | | 44.97 | | | 44.97 | | | 1,100,040 | | | Annual RSU Grant | | | 6/1/2020 | | | | | | | | | | | | | | | | | | | | | 12,230 | | | | | | | | | 44.97 | | | 549,983 | | | Todd Kahn
Chief Executive Officer and Brand President, Coach | | | Annual incentive | | | | | | 352,332 | | | 1,174,439 | | | 2,348,878 | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | | | | 121,166 | | | 15.83 | | | 15.83 | | | 799,998 | | | Annual RSU grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 25,268 | | | | | | | | | 15.83 | | | 399,992 | | | Annual RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 50,537 | | | | | | | | | 15.83 | | | 800,001 | | | Special RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 50,537 | | | | | | | | | 15.83 | | | 800,001 | | | Acceleration Performance RSU grant | | | 8/17/2020 | | | | | | | | | | | | 5,685 | | | 18,951 | | | 37,902 | | | | | | | | | | | | 15.83 | | | 299,994 | | | Thomas Glaser
Chief Operations Officer | | | Annual incentive | | | | | | 240,000 | | | 800,000 | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | | | | 90,875 | | | 15.83 | | | 15.83 | | | 600,001 | | | Annual RSU grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 18,951 | | | | | | | | | 15.83 | | | 299,994 | | | Annual RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 37,903 | | | | | | | | | 15.83 | | | 600,004 | | | Acceleration Performance RSU grant | | | 8/17/2020 | | | | | | | | | | | | 5,685 | | | 18,951 | | | 37,902 | | | | | | | | | | | | 15.83 | | | 299,994 | | | Liz Fraser
Chief Executive Officer and Brand President, Kate Spade | | | Annual incentive | | | | | | 240,000 | | | 800,000 | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 16,846 | | | | | | | | | 15.83 | | | 266,672 | | | Acceleration Performance RSU grant | | | 8/17/2020 | | | | | | | | | | | | 5,685 | | | 18,951 | | | 37,902 | | | | | | | | | | | | 15.83 | | | 299,994 | | | Andrea Shaw Resnick
Chief Communications Officer and Former Interim Chief Financial Officer | | | Annual incentive | | | | | | 165,690 | | | 552,300 | | | 1,104,600 | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual RSU grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 21,162 | | | | | | | | | 15.83 | | | 334,994 | | | Annual RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 10,423 | | | | | | | | | 15.83 | | | 164,996 | | | Special RSU cliff grant | | | 8/17/2020 | | | | | | | | | | | | | | | | | | | | | 25,268 | | | | | | | | | 15.83 | | | 399,992 | | | Acceleration Performance RSU grant | | | 8/17/2020 | | | | | | | | | | | | 3,790 | | | 12,634 | | | 25,268 | | | | | | | | | | | | 15.83 | | | 199,996 | |
(1) These columns represent the range of possible cash payouts for fiscal year 2017, includes $19,100 in tax preparation fees for Mr. Luis and $15,753 in tax preparation fees for Mr. Cohen. Such tax payments2021 associated with established levels of performance under the AIP. If performance falls below the pre-established thresholds, the payout is $0. Amounts actually earned are part of Coach’s international expatriate policy for all similarly situated employees. Coach grosses up such benefits for all covered employees, including the NEOs. We do not expect any of our NEOs to participate in these services after fiscal year 2017. 56 | 2017 | | | | | 2021 PROXY STATEMENT | 59 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationGrants(2) These columns represent the range of Plan-based Awardspossible share payouts associated with pre-established levels of performance for PRSUs granted in fiscal year 2021. If performance falls below the pre-established thresholds, no shares will be earned or distributed. These awards are described in the section titled Compensation Discussion and Analysis—Fiscal Year 2017 2021 Compensation—Long Term Incentive Plan. (3) The exercise price for stock option grants is the closing stock price on the date of grant. (4) The amounts reported represent the grant date fair value of all stock and option awards granted to NEOs in fiscal year 2021. For RSU grants, the grant date fair value is calculated using the closing price of Tapestry common stock on the grant date, for stock options, the grant date fair value is calculated using the Black-Scholes value as of the grant date, and for the PRSU grants, the grant date fair value is determined using the closing price of Tapestry common stock on the date of grant. The weighted average assumptions used in calculating the grant date fair value of these awards are described in a footnote 4 to the Summary Compensation Table. Annual stock options and annual RSUs (including the awards granted to Mr. Roe upon hire) vest 25% per year over four years; annual PRSUs earned after completion of the two-year performance period will cliff vest on the third anniversary of the grant date; special PRSUs earned after completion of the two-year performance period will cliff vest on the second anniversary of the grant date.
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share)(3) | Closing Market Price on Grant Date ($/share) | Grant Date Fair Value of Stock and Option Awards(4) ($) | Name & Principal Position | Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Victor Luis Chief Executive Officer | Annual incentive | | | | | 704,375 | | | 2,347,917 | | | 4,695,834 | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 334,420 | | | 39.87 | | | 39.87 | | | 2,396,676 | | Annual Performance stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 368,846 | | | 39.87 | | | 39.87 | | | 2,998,718 | | Annual Performance RSU grant | | 8/11/2016 | | | | | | | | | | | | 27,088 | | | 90,293 | | | 180,586 | | | | | | | | | | | | 39.87 | | | 3,599,982 | | Kevin Wills Chief Financial Officer | Annual incentive | | | | | 72,692 | | | 242,308 | | | 484,616 | | | | | | | | | | | | | | | | | | | | | | | | | | New Hire RSU grant | | 3/6/2017 | | | | | | | | | | | | | | | | | | | | | 92,057 | | | | | | | | | 38.02 | | | 3,500,007 | | Andre Cohen Former President, North America and Global Marketing | Annual incentive | | | | | 285,000 | | | 950,000 | | | 1,900,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 111,473 | | | 39.87 | | | 39.87 | | | 798,889 | | Annual RSU Grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | 10,033 | | | | | | | | | 39.87 | | | 400,016 | | Annual Performance RSU grant | | 8/11/2016 | | | | | | | | | | | | 6,020 | | | 20,065 | | | 40,130 | | | | | | | | | | | | 39.87 | | | 799,992 | | Annual stock option grant(5) | | 8/14/2014 | | | | | | | | | | | | | | | | | | | | | | | | 17,594 | | | 36.31 | | | 36.31 | | | 171,717 | | Annual & Special RSU grants(5) | | 8/14/2014 | | | | | | | | | | | | | | | | | | | | | 18,072 | | | | | | | | | 36.31 | | | 832,559 | | Annual & Special Performance RSU grants(5) | | 8/14/2014 | | | | | | | | | | | | 7,937 | | | 26,456 | | | 44,975 | | | | | | | | | | | | 36.31 | | | 1,218,820 | | Ian Bickley President, Global Business Development and Strategic Alliances | Annual incentive | | | | | 247,500 | | | 825,000 | | | 1,650,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 94,752 | | | 39.87 | | | 39.87 | | | 679,054 | | Annual RSU grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | 8,528 | | | | | | | | | 39.87 | | | 340,011 | | Annual Performance RSU grant | | 8/11/2016 | | | | | | | | | | | | 5,117 | | | 17,055 | | | 34,110 | | | | | | | | | | | | 39.87 | | | 679,983 | | Todd Kahn President, Chief Administrative Officer and Secretary | Annual incentive | | | | | 225,000 | | | 750,000 | | | 1,500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 83,605 | | | 39.87 | | | 39.87 | | | 599,168 | | Annual RSU grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | 7,524 | | | | | | | | | 39.87 | | | 299,982 | | Annual Performance RSU grant | | 8/11/2016 | | | | | | | | | | | | 4,515 | | | 15,049 | | | 30,098 | | | | | | | | | | | | 39.87 | | | 600,004 | | Andrea Resnick Global Head of Investor Relations and Corporate Communications | Annual incentive | | | | | 84,750 | | | 282,500 | | | 565,000 | | | | | | | | | | | | | | | | | | | | | | | | | | Annual stock option grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | | | | 23,224 | | | 39.87 | | | 39.87 | | | 166,438 | | Annual RSU grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | 4,180 | | | | | | | | | 39.87 | | | 166,657 | | Special RSU grant | | 8/11/2016 | | | | | | | | | | | | | | | | | | | | | 12,541 | | | | | | | | | 39.87 | | | 500,010 | | Annual Performance RSU grant | | 8/11/2016 | | | | | | | | | | | | 1,254 | | | 4,180 | | | 8,360 | | | | | | | | | | | | 39.87 | | | 166,657 | | Jane Nielsen Former Chief Financial Officer(6) | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (3) | The exercise price for stock option grants is the closing stock price on the date of grant. |
| (4) | The amounts reported represent the grant date fair value of all stock and option awards granted to NEOs in fiscal year 2017. For RSU awards, the grant date fair value is calculated using the closing price of Coach common stock on the grant date, for stock options, the grant date fair value is calculated using the Black-Scholes value as of the grant date, and for the PRSU awards, the grant date fair value is determined using the closing price of Coach common stock on the date of grant. The weighted average assumptions used in calculating the grant date fair value of these awards are described in a footnote to the Summary Compensation Table. |
2017 PROXY STATEMENT | 57 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation | (5) | Mr. Cohen left the company after the end of fiscal year 2017. |
| | The HR Committee allowed his fiscal year 2015 RSUs, PRSUs and stock options to pro-rata vest through his last day of employment. Mr. Cohen will have until November 12, 2017 to exercise the stock options. The RSU awards distributed on August 14, 2017. The PRSU awards distributed on August 14, 2017, according to the Company’s performance against the predetermined criteria. The modification to the vesting conditions of these awards required revaluation of the accounting cost of the awards under ASC Topic 718. |
| • | On the date of grant, the RSU awards were valued at $683,318, which is included as a Stock Award in fiscal year 2015. The re-valued expense of $832,559 is included as a Stock Award in fiscal year 2017. |
| • | On the date of grant, the stock option award was valued at $352,100, which is included as a Option Award in fiscal year 2015. The re-valued expense of the third tranche in the amount of $171,717 is included as an Option Award in fiscal year 2017. |
| • | On the date of grant, the PRSU awards were valued at $1,016,644, which is included as a Stock Award in fiscal year 2015. The re-valued expense of $1,218,820 at target is included as a Stock Award in fiscal year 2017. |
| (6) | Ms. Nielsen left the Company in August 2016 and did not receive a fiscal year 2017 award. |
58 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
Outstanding Equity Awards at Fiscal Year-end 2017 2021Name & Principal Position | Option Awards | Stock Awards | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Grant Date | Option Exercise Price ($/share) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Restricted Stock Unit Grant Date | Market Value of Shares or Units of Stock that Have Not Vested(a) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested(b) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested(a) ($) | Victor Luis Chief Executive Officer | | 5,218(1 | ) | | 0 | | | 8/4/2010 | | | 38.41 | | | 8/4/2020 | | | | | | | | | | | | | | | | | | 92,441(2 | ) | | 0 | | | 8/5/2010 | | | 38.75 | | | 8/5/2020 | | | | | | | | | | | | | | | | | | 102,030(1 | ) | | 0 | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | | | | 192,578(1 | ) | | 0 | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | | | | 209,475(1 | ) | | 104,736(1 | ) | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | | | | | | | 143,912(1 | ) | | 287,822(1 | ) | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | | | | | | | 0 | | | 334,420(1 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | 0 | | | 368,846(3 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/4/2013 | | | | | | 146,268(f | ) | | 6,924,327 | | | | | | | | | | | | | | | | | | 64,869(g | ) | | 8/14/2014 | | | 3,070,898 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 122,255(i | ) | | 5,787,552 | | | | | | | | | | | | | | | | | | | | | 8/11/2016 | | | | | | 92,756(i | ) | | 4,391,069 | | Kevin Wills Chief Financial Officer | | | | | | | | | | | | | | | | | 92,816(c | ) | | 3/6/2017 | | | 4,393,909 | | | | | | | | Andre Cohen Former President, Coach North America and Global Marketing(4) | | 6,071(1 | ) | | 0 | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | | | | 15,228(1 | ) | | 0 | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | | | | 36,659(1 | ) | | 18,328(1 | ) | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | | | | | | | 20,988(1 | ) | | 41,973(1 | ) | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | | | | | | | 0 | | | 111,473(1 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,674(d | ) | | 8/14/2014 | | | 505,307 | | | | | | | | | | | | | | | | | | | | | | | | 10,166(e | ) | | 8/14/2014 | | | 481,258 | | | | | | | | | | | | | | | | | | | | | | | | 11,886(d | ) | | 8/13/2015 | | | 562,683 | | | | | | | | | | | | �� | | | | | | | | | | | | 10,307(d | ) | | 8/11/2016 | | | 487,933 | | | | | | | | | | | | | | | | | | | | | | | | 7,568(g | ) | | 8/14/2014 | | | 358,269 | | | | | | | | | | | | | | | | | | | | | | | | 14,415(h | ) | | 8/14/2014 | | | 682,406 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 11,886(i | ) | | 562,683 | | | | | | | | | | | | | | | | | | | | | 8/11/2016 | | | | | | 20,612(i | ) | | 975,772 | | Ian Bickley President, Global Business Development and Strategic Alliances | | 12,748(1 | ) | | 0 | | | 8/5/2009 | | | 29.37 | | | 8/5/2019 | | | | | | | | | | | | | | | | | | 32,745(1 | ) | | 0 | | | 8/4/2010 | | | 38.41 | | | 8/4/2020 | | | | | | | | | | | | | | | 92,441(2 | ) | | 0 | | | 8/5/2010 | | | 38.75 | | | 8/5/2020 | | | | | | | | | | | | | | | 22,221(1 | ) | | 0 | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | 27,868(1 | ) | | 0 | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | 36,710(1 | ) | | 0 | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | 36,659(1 | ) | | 18,328(1 | ) | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | 20,988(1 | ) | | 41,973(1 | ) | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | 0 | | | 94,752(1 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,674(d | ) | | 8/14/2014 | | | 505,307 | | | | | | | | | | | | | | | | | | | | | | | | 11,886(d | ) | | 8/13/2015 | | | 562,683 | | | | | | | | | | | | | | | | | | | | | | | | 8,761(d | ) | | 8/11/2016 | | | 414,746 | | | | | | | | | | | | | | | | | | | | | | | | 7,568(g | ) | | 8/14/2014 | | | 358,269 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 11,886(i | ) | | 562,683 | | | | | | | | | | | | | | | | | | | | | 8/11/2016 | | | | | | 17,520(i | ) | | 829,397 | | Todd Kahn President, Chief Administrative Officer and Secretary | | 14,165(1 | ) | | 0 | | | 8/4/2010 | | | 38.41 | | | 8/4/2020 | | | | | | | | | | | | | | | | | | 28,839(1 | ) | | 0 | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | | | | 36,167(1 | ) | | 0 | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | | | | 47,643(1 | ) | | 0 | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | | | | 15,711(1 | ) | | 15,710(1 | ) | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | | | | | | | 15,991(1 | ) | | 31,979(1 | ) | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | | | | | | | 0 | | | 83,605(1 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,149(d | ) | | 8/14/2014 | | | 433,114 | | | | | | | |
| Joanne Crevoiserat
Chief Executive Officer | | | 56,021(1) | | | 168,060(1) | | | 8/19/2019 | | | 20.97 | | | 8/19/2029 | | | | | | | | | | | | | | | | | | — | | | 121,166(1) | | | 8/17/2020 | | | 15.83 | | | 8/17/2030 | | | | | | | | | | | | | | | | | | — | | | 141,535(1) | | | 11/2/2020 | | | 23.63 | | | 11/2/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 45,320(c) | | | 8/5/2019 | | | 1,933,351 | | | | | | | | | | | | | | | | | | | | | | | | 15,042(d) | | | 8/19/2019 | | | 641,692 | | | | | | | | | | | | | | | | | | | | | | | | 63,171(e) | | | 8/17/2020 | | | 2,694,875 | | | | | | | | | | | | | | | | | | | | | | | | 50,537(f) | | | 8/17/2020 | | | 2,155,908 | | | | | | | | | | | | | | | | | | | | | | | | 25,268(d) | | | 8/17/2020 | | | 1,077,933 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/19/2019 | | | | | | 5,696(g) | | | 242,987 | | | | | | | | | | | | | | | | | | | | | 8/17/2020 | | | | | | 63,172(h) | | | 2,694,918 | | | | | | | | | | | | | | | | | | | | | 11/2/2020 | | | | | | 177,740(i) | | | 7,582,388 | | | Scott Roe
Chief Financial Officer and Head of Strategy | | | — | | | 57,541(1) | | | 6/1/2021 | | | 44.97 | | | 6/1/2031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,230(c) | | | 6/1/2021 | | | 521,732 | | | | | | | | | Todd Kahn
Chief Executive Officer and Brand President, Coach | | | 28,839(2) | | | — | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | | | | 36,167(2) | | | — | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | | | | 47,643(2) | | | — | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | | | | 47,970(2) | | | — | | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | | | | | | | 83,605(2) | | | — | | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | 58,851(1) | | | 19,616(1) | | | 8/17/2017 | | | 41.00 | | | 8/17/2027 | | | | | | | | | | | | | | | | | | 27,712(1) | | | 27,711(1) | | | 8/16/2018 | | | 51.38 | | | 8/16/2028 | | | | | | | | | | | | | | | | | | 44,817(1) | | | 134,448(1) | | | 8/19/2019 | | | 20.97 | | | 8/19/2029 | | | | | | | | | | | | | | | | | | — | | | 121,166(1) | | | 8/17/2020 | | | 15.83 | | | 8/17/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,057(d) | | | 8/17/2017 | | | 87,752 | | | | | | | | | | | | | | | | | | | | | | | | 3,399(d) | | | 8/16/2018 | | | 145,001 | | | | | | | | | | | | | | | | | | | | | | | | 12,034(d) | | | 8/19/2019 | | | 513,370 | | | | | | | | | | | | | | | | | | | | | | | | 50,537(e) | | | 8/17/2020 | | | 2,155,908 | | | | | | | | | | | | | | | | | | | | | | | | 50,537(f) | | | 8/17/2020 | | | 2,155,908 | | | | | | | | | | | | | | | | | | | | | | | | 25,268(d) | | | 8/17/2020 | | | 1,077,933 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/19/2019 | | | | | | 4,557(g) | | | 194,386 | | | | | | | | | | | | | | | | | | | | | 8/17/2020 | | | | | | 37,902(h) | | | 1,616,899 | | | Thomas Glaser
Chief Operations Officer | | | 42,016(1) | | | 126,045(1) | | | 8/19/2019 | | | 20.97 | | | 8/19/2029 | | | | | | | | | | | | | | | | | | — | | | 90,875(1) | | | 8/17/2020 | | | 15.83 | | | 8/17/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 56,649(c) | | | 8/5/2019 | | | 2,416,646 | | | | | | | | | | | | | | | | | | | | | | | | 11,282(d) | | | 8/19/2019 | | | 481,290 | | | | | | | | | | | | | | | | | | | | | | | | 37,903(f) | | | 8/17/2020 | | | 1,616,942 | | | | | | | | | | | | | | | | | | | | | | | | 18,951(d) | | | 8/17/2020 | | | 808,450 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/19/2019 | | | | | | 4,272(g) | | | 182,234 | | | | | | | | | | | | | | | | | | | | | 8/17/2020 | | | | | | 37,902(h) | | | 1,616,899 | | | Liz Fraser
Chief Executive Officer and Brand President, Kate Spade | | | 16,338(2) | | | 49,012(2) | | | 3/2/2020 | | | 23.69 | | | 3/2/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,653(c) | | | 3/2/2020 | | | 369,137 | | | | | | | | | | | | | | | | | | | | | | | | 16,846(f) | | | 8/17/2020 | | | 718,650 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/17/2020 | | | | | | 37,902(h) | | | 1,616,899 | |
| | | | | | 2021 PROXY STATEMENT | 59 | 61 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationName & Principal Position | Option Awards | Stock Awards | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Grant Date | Option Exercise Price ($/share) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Restricted Stock Unit Grant Date | Market Value of Shares or Units of Stock that Have Not Vested(a) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested(b) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested(a) ($) | | | | | | | | | | | | | | | | | | 9,056(d | ) | | 8/13/2015 | | | 428,711 | | | | | | | | | | | | | | | | | | | | | | | | | 16,980(e | ) | | 8/13/2015 | | | 803,833 | | | | | | | | | | | | | | | | | | | | | | | | | 7,729(d | ) | | 8/11/2016 | | | 365,891 | | | | | | | | | | | | | | | | | | | | | | | | | 6,487(g | ) | | 8/14/2014 | | | 307,095 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 9,056(i | ) | | 428,711 | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 16,980(j | ) | | 803,833 | | | | | | | | | | | | | | | | | | | | | | 8/11/2016 | | | | | | 15,459(i | ) | | 731,829 | | Andrea Resnick Global Head of Investor Relations and Corporate Communications | | 17,398(1 | ) | | 0 | | | 8/5/2009 | | | 29.37 | | | 8/5/2019 | | | | | | | | | | | | | | | 14,896(1 | ) | | 0 | | | 8/4/2010 | | | 38.41 | | | 8/4/2020 | | | | | | | | | | | | | | | 10,625(1 | ) | | 0 | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | 13,896(1 | ) | | 0 | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | 18,806(1 | ) | | 0 | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | 13,965(1 | ) | | 6,982(1 | ) | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | 8,196(1 | ) | | 16,389(1 | ) | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | 0 | | | 23,224(1 | ) | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,355(k | ) | | 8/14/2014 | | | 64,146 | | | | | | | | | | | | | | | | | | | | | | | | 3,094(k | ) | | 8/13/2015 | | | 146,470 | | | | | | | | | | | | | | | | | | | | | | | | 4,294(k | ) | | 8/11/2016 | | | 203,278 | | | | | | | | | | | | | | | | | | | | | | | | 12,883(e | ) | | 8/11/2016 | | | 609,881 | | | | | | | | | | | | | | | | | | | | | | | | 2,883(g | ) | | 8/14/2014 | | | 136,481 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/13/2015 | | | | | | 4,641(i | ) | | 219,705 | | | | | | | | | | | | | | | | | | | | | 8/11/2016 | | | | | | 4,294(i | ) | | 203,278 | | Jane Nielsen Former Chief Financial Officer(5) | | N/A | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Andrea Shaw Resnick
Chief Communications Officer and Former Interim Chief Financial Officer | | | 10,625(2) | | | — | | | 8/3/2011 | | | 61.92 | | | 8/3/2021 | | | | | | | | | | | | | | | | | | 13,896(2) | | | — | | | 8/15/2012 | | | 55.65 | | | 8/15/2022 | | | | | | | | | | | | | | | | | | 18,806(2) | | | — | | | 8/14/2013 | | | 53.23 | | | 8/14/2023 | | | | | | | | | | | | | | | | | | 20,947(2) | | | — | | | 8/14/2014 | | | 36.31 | | | 8/14/2024 | | | | | | | | | | | | | | | | | | 14,585(2) | | | — | | | 8/13/2015 | | | 31.46 | | | 8/13/2025 | | | | | | | | | | | | | | | | | | 23,224(2) | | | — | | | 8/11/2016 | | | 39.87 | | | 8/11/2026 | | | | | | | | | | | | | | | | | | 16,347(1) | | | 5,449(1) | | | 8/17/2017 | | | 41.00 | | | 8/17/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,143(d) | | | 8/17/2017 | | | 48,760 | | | | | | | | | | | | | | | | | | | | | | | | 3,541(d) | | | 8/16/2018 | | | 151,059 | | | | | | | | | | | | | | | | | | | | | | | | 12,535(d) | | | 8/19/2019 | | | 534,743 | | | | | | | | | | | | | | | | | | | | | | | | 25,268(e) | | | 8/17/2020 | | | 1,077,933 | | | | | | | | | | | | | | | | | | | | | | | | 10,423(f) | | | 8/17/2020 | | | 444,645 | | | | | | | | | | | | | | | | | | | | | | | | 21,162(d) | | | 8/17/2020 | | | 902,771 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/19/2019 | | | | | | 1,187(g) | | | 50,624 | | | | | | | | | | | | | | | | | | | | | 8/17/2020 | | | | | | 25,268(h) | | | 1,077,933 | | | Jide Zeitlin
Former Chief Executive Officer | | | 3,255(3) | | | — | | | 11/3/2011 | | | 65.64 | | | 11/3/2021 | | | | | | | | | | | | | | | | | | 4,419(3) | | | — | | | 11/7/2012 | | | 56.95 | | | 11/7/2022 | | | | | | | | | | | | | | | | | | 6,750(3) | | | — | | | 11/7/2013 | | | 51.68 | | | 11/7/2023 | | | | | | | | | | | | | | | | | | 11,321(3) | | | — | | | 11/6/2014 | | | 33.46 | | | 11/6/2024 | | | | | | | | | | | | | | | | | | 11,734(3) | | | — | | | 11/4/2015 | | | 32.28 | | | 11/4/2025 | | | | | | | | | | | | | | | | | | 11,284(3) | | | — | | | 11/10/2016 | | | 36.72 | | | 11/10/2026 | | | | | | | | | | | | | | | | | | 9,338(3) | | | — | | | 11/9/2017 | | | 40.16 | | | 11/9/2027 | | | | | | | | | | | | | | | | | | 7,712(3) | | �� | — | | | 11/8/2018 | | | 43.03 | | | 11/8/2028 | | | | | | | | | | | | | | | | | | 56,672(2) | | | 170,015(2) | | | 9/30/2019 | | | 26.05 | | | 9/30/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,617(d) | | | 9/30/2019 | | | 794,201 | | | | | | | | | | | | | | | | | | | | | | | | | | | 9/30/2019 | | | | | | 7,050(g) | | | 300,736 | |
(1) Annual Stock Option Grant: vests 25% each year beginning one year from date of grant. (2) Annual Stock Option Grant: vested 33.3% each year beginning one year from date of grant. (3) Stock Option grant made while serving on the Board of Directors: vested one year from date of grant. (a) The market value of stock awards is the number of shares shown in the table multiplied by $42.66, the closing price per share of our common stock on July 3, 2021. (c) New Hire RSU grants: For Ms. Crevoiserat vests 25% each year beginning one year from date of grant. For Mr. Roe, represents an annual RSU grant awarded upon hire and vests 25% each year beginning one year from date of grant. For Mr. Glaser, represents a special new hire RSU grant and vests 100% two years from date of grant (d) Annual RSU grant: vests 25% each year beginning one year from date of grant. (e) Special RSU grant in connection with Interim Officer appointments: vests 100% two years from date of grant. (f) Annual RSU grant in lieu of Annual PRSU grant: vests 100% three years from date of grant. (g) Annual PRSU grant: subject to performance, may vest 100% three years from date of grant. As of July 3, 2021, performance period was complete and 14.2% of target shares are expected to vest on August 19, 2022. (h) Acceleration PRSU grant: subject to performance, may vest 100% two years from date of grant. As of July 3, 2021, performance period was incomplete. Shares and market values shown assume maximum performance. (i) Annual PRSU grant: subject to performance, may vest 100% two years from date of grant. As of July 3, 2021, performance period was incomplete. Shares and market values shown assume maximum performance. 62 | 2021 PROXY STATEMENT | (2) | Special Stock Option Grant: vested 33.3% on July 29, 2013, 33.3% on June 28, 2014 and 33.3% on June 27, 2015 | |
| (3) | Annual Performance Stock Option Grant: may be earned and vest in full three years from date of grant subject to the achievement of a performance condition. |
| (4) | Mr. Cohen’s awards are all reflected as outstanding in the above table. All awards granted in fiscal year 2016 and forward were subsequently forfeited following his departure from the company after the end of fiscal year 2017. |
| (5) | Ms. Nielsen left the company during fiscal year 2017. As of July 3, 2017, none of her awards remain outstanding. |
| (a) | The market value of stock awards is based on the closing price per share of Coach, Inc.’s stock on June 30, 2017 ($47.34). |
| (c) | New hire RSU grant: vests 25% each year beginning one year from date of grant. |
| (d) | Annual RSU grant: vests 100% three years from date of grant. |
| (e) | Special RSU grant: vests 100% three years from date of grant. |
| (f) | Appointment PRSU grant: subject to performance, may vest up to 100% on March 4, 2018. As of July 1, 2017, performance period was incomplete. |
| (g) | Annual PRSU grant: subject to performance, may vest 100% three years from date of grant.
As of July 1, 2017, performance period was complete and 70.9% of shares are expected to vest including dividend equivalent shares accumulated through July 1, 2017. |
| (h) | Special PRSU grant: subject to performance, may vest 100% three years from date of grant.
As of July 1, 2017, performance period was complete and 70.9% of shares are expected to vest including dividend equivalent shares accumulated through July 1, 2017. |
| (i) | Annual PRSU grant: subject to performance, may vest 100% three years from date of grant. As of July 1, 2017, performance period was incomplete |
| (j) | Special PRSU grant: subject to performance, may vest 100% three years from date of grant. As of July 1, 2017, performance period was incomplete. |
| (k) | Annual RSU grant: vests 33.3% each year beginning one year from date of grant. |
60 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation20172021 Option Exercises and Stock VestedName & Principal Position | Option Awards | Stock Awards | Number of Shares Acquired on Exercise(1) (#) | Value Realized on Exercise(2) ($) | Number of Shares Acquired on Vesting(3) (#) | Value Realized on Vesting(4) ($) | Victor Luis Chief Executive Officer | | 0 | | | 0 | | | 22,129 | | | 878,948 | | Kevin Wills Chief Financial Officer | | 0 | | | 0 | | | 0 | | | 0 | | Andre Cohen Former President, Coach North America and Global Marketing | | 0 | | | 0 | | | 0 | | | 0 | | Ian Bickley President, Global Business Development and Strategic Alliances | | 0 | | | 0 | | | 13,659 | | | 537,208 | | Todd Kahn President, Chief Administrative Officer and Secretary | | 29,877 | | | 244,627 | | | 13,201 | | | 519,195 | | Andrea Resnick Global Head of Investor Relations and Corporate Communications | | 17,100 | | | 28,063 | | | 8,298 | | | 326,360 | | Jane Nielsen Former Chief Financial Officer | | 0 | | | 0 | | | 0 | | | 0 | |
| Joanne Crevoiserat
Chief Executive Officer | | | — | | | — | | | 20,120 | | | 283,168 | | | Scott Roe
Chief Financial Officer and Head of Strategy | | | — | | | — | | | — | | | — | | | Todd Kahn
Chief Executive Officer and Brand President, Coach | | | — | | | — | | | 23,726 | | | 372,744 | | | Thomas Glaser
Chief Operations Officer | | | — | | | — | | | 3,760 | | | 56,701 | | | Liz Fraser
Chief Executive Officer and Brand President, Kate Spade | | | — | | | — | | | 2,885 | | | 122,093 | | | Andrea Shaw Resnick
Chief Communications Officer and Former Interim Chief Financial Officer | | | — | | | — | | | 11,523 | | | 179,453 | | | Jide Zeitlin(3)
Former Chief Executive Officer | | | — | | | — | | | 6,205 | | | 96,984 | |
(1) 7,691 shares were withheld to cover the taxes related to the vesting of Ms. Crevoiserat's RSUs; 8,062 shares were withheld to cover the taxes related to the vesting of Mr. Kahn's RSUs and PRSUs; 1,278 shares were withheld to cover the taxes related to the vesting of Mr. Glaser's RSUs; 1,115 shares were withheld to cover the taxes related to the vesting of Ms. Fraser’s RSUs; 4,406 shares were withheld to cover the taxes related to the vesting of Ms. Resnick's RSUs and PRSUs; 2,372 shares were withheld to cover the taxes related to the vesting of Mr. Zeitlin's RSUs. (2) Represents the product of the number of shares vested and the market value of Tapestry, Inc.’s common stock on the vesting date. (3) Shares represent vesting of Mr. Zeitlin's awards received as Chief Executive Officer which were entitled to pro-rata retirement treatment upon his resignation in July 2020. | (1) | 28,077 shares were sold to cover the exercise cost, taxes and fees of Mr. Kahn’s stock option exercises; 16,817 shares were sold to cover the exercise cost, taxes and fees of Ms. Resnick’s stock option exercises. | | | | 2021 PROXY STATEMENT | 63 |
| (2) | Amounts shown reflect the difference between the exercise price of the stock option and the market price of Coach, Inc. common stock at time of exercise. |
| (3) | 8,215 shares were withheld to cover the taxes related to the vesting of Mr. Luis’ PRSUs; 5,051 shares were withheld to cover the taxes related to the vesting of Mr. Bickley’s RSUs; 5,442 shares were withheld to cover the taxes related to the vesting of Mr. Kahn’s RSUs; 3,423 shares were withheld to cover the taxes related to the vesting of Ms. Resnick’s RSUs. |
| (4) | Represents the product of the number of shares vested and the market value of Coach, Inc.’s common stock on the vesting date. |
2017 Non-Qualified Deferred Compensation
Name & Principal Position | Non-Qualified Plan | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(4) ($) | Victor Luis | | EDCP | | | 1,307,436 | | | 39,990 | | | 10,659 | | | 0 | | | 1,385,303 | | Chief Executive Officer | | SRP | | | 0 | | | 0 | | | 8,038 | | | 0 | | | 460,742 | | Kevin Wills | | EDCP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Chief Financial Officer | | SRP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Andre Cohen | | EDCP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Former President, North America and Global Marketing | | SRP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Ian Bickley | | EDCP | | | 512,451 | | | 41,702 | | | 6,289 | | | 0 | | | 572,836 | | President, Global Business Development and Strategic Alliances | | SRP | | | 0 | | | 0 | | | 14,800 | | | 0 | | | 826,045 | | Todd Kahn | | EDCP | | | 66,267 | | | 28,069 | | | 6,674 | | | 0 | | | 112,140 | | President, Chief Administrative Officer and Secretary | | SRP | | | 0 | | | 0 | | | 3,792 | | | 0 | | | 211,655 | | Andrea Resnick | | EDCP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Global Head of Investor Relations and Corporate Communications | | SRP | | | 0 | | | 0 | | | 3,865 | | | 0 | | | 215,725 | | Jane Nielsen | | EDCP | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Former Chief Financial Officer | | SRP | | | 0 | | | 0 | | | 1,703 | | | 0 | | | 0 | |
| (1) | Amounts shown represent elective salary and Annual Incentive Plan deferrals made by NEOs into the Coach, Inc. Executive Deferred Compensation Plan (“EDCP”) in fiscal year 2017. All contributions shown are also reported as compensation for fiscal year 2017 in the Summary Compensation Table. |
| (2) | Coach made matching contributions to the accounts of participants (including our NEOs) who participate in the EDCP. The matching formula is 100% of up to 3% of total earnings deferred less the maximum match available in the 401(k) Savings Plan, as described in the Other Compensation and Benefits Elements section. All contributions shown are also reported as compensation for fiscal year 2017 in the Summary Compensation Table. |
2017 PROXY STATEMENT | 61 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation
2021 Non-Qualified Deferred Compensation | (3) | Amounts shown represent total earnings under the Supplemental Retirement Plan (“SRP”) and the EDCP. Both plans are funded non-tax qualified plans in which participants select investment options based on substantially similar mutual funds available to participants in the 401(k) Savings Plan. The value of each mutual fund varies daily based on stock market conditions. |
| Joanne Crevoiserat | | | EDCP | | | 491,507 | | | — | | | 3,213 | | | — | | | 494,720 | | | Chief Executive Officer | | | SRP | | | — | | | — | | | — | | | — | | | — | | | Scott Roe | | | EDCP | | | — | | | — | | | — | | | — | | | — | | | Chief Financial Officer and Head of Strategy | | | SRP | | | — | | | — | | | — | | | — | | | — | | | Todd Kahn | | | EDCP | | | 143,557 | | | 11,439 | | | 117,422 | | | — | | | 553,771 | | | Chief Executive Officer and Brand President, Coach | | | SRP | | | — | | | — | | | 44 | | | — | | | 110,749 | | | Thomas Glaser | | | EDCP | | | — | | | — | | | — | | | — | | | — | | | Chief Operations Officer | | | SRP | | | — | | | — | | | — | | | — | | | — | | | Liz Fraser | | | EDCP | | | 40,000 | | | — | | | 1,558 | | | — | | | 41,558 | | | Chief Executive Officer and Brand President, Kate Spade | | | SRP | | | — | | | — | | | — | | | — | | | — | | | Andrea Shaw Resnick | | | EDCP | | | 145,460 | | | — | | | 40,689 | | | — | | | 376,197 | | | Chief Communications Officer and Former Interim Chief Financial Officer | | | SRP | | | — | | | — | | | 91 | | | — | | | 226,070 | | | Jide Zeitlin | | | EDCP | | | — | | | — | | | — | | | — | | | — | | | Former Chief Executive Officer | | | SRP | | | — | | | — | | | — | | | — | | | — | | | | | | DDC(5) | | | | | | | | | | | | 2,708,481 | | | | |
| (4) | Includes Executive Contributions, Registrant Contributions and Aggregate Earnings earned in the last fiscal year for both of Coach’s non-tax qualified deferred compensation plans. Vested account balances are paid out six months after a participant’s termination. Under the EDCP, the deferred amounts and company match(1) Amounts shown represent elective salary and AIP deferrals made by NEOs into the Tapestry, Inc. Executive Deferred Compensation Plan (“EDCP”) in fiscal year 2021. All contributions shown are also reported as compensation in the Summary Compensation Table were: |
(2) In fiscal year 2021, Tapestry made matching contributions to the accounts of employees who participated in the EDCP (including our NEOs) during the 2020 plan year. The matching formula is 100% of up to 3% of up to $2 million in salary and $1,347,426AIP deferred in the previous plan year, less the maximum match available in the qualified 401(k) Savings Plan, as described in the Other Compensation and Benefits Elements section. All contributions shown are also reported as compensation for fiscal year 2017 ($39,990 represented company match,2021 in the Summary Compensation Table. (3) Amounts shown represent total investment earnings (losses) under the EDCP and the Supplemental Retirement Plan (“SRP”). Both plans are funded non-tax qualified plans in which was first madeparticipants select investment options based on substantially similar mutual funds available to participants in the 401(k) Savings Plan. The value of each mutual fund varies daily based on stock market conditions. The SRP is frozen and there have been no contributions to the plan since December 31, 2015. (4) Includes Executive Contributions, Registrant Contributions and Aggregate Earnings earned in the last fiscal year 2017). For Mr. Bickley, $86,329 for fiscal year 2016 and $554,153 for fiscal year 2017 ($41,702 represented company match, which was first made in fiscal year 2017).
For Mr. Kahn, $39,610 for fiscal year 2016 and $94,336 for fiscal year 2017 ($28,069 represented company match, which was first made in fiscal year 2017).
Messrs. Cohen and Wills and Misses. Resnick and Nielsen did not participate ineach plan as applicable. Vested account balances are distributed six months after a participant’s termination. Under the EDCP, in fiscal year 2017.
| | Under the SRP, which was closed to future contributions during fiscal year 2015, the deferred amounts and company match reported as compensation in the Summary Compensation Table were:•
| For Ms. Crevoiserat, $491,507 for fiscal year 2015 were:2021 ($0 of which represented company match) |
•
| For Mr. Kahn, $39,619 for fiscal year 2019 ($32,696 of which represented company match), $11,250 for fiscal year 2020 ($0 of which represented company match) and $154,996 for fiscal year 2021 ($11,439 of which represented company match). |
•
| For Ms. Fraser, $40,000 for fiscal year 2021 ($0 of which represent company match). |
•
| For Ms. Resnick, $108,298 for fiscal year 2019 ($9,635 of which represented company match), $46,586 for fiscal year 2020 ($22,242 of which represented company match) and $145,460 for fiscal year 2021 ($0 of which represented company match). |
•
| Messrs. Roe, Glaser, and Zeitlin have not participated in the EDCP. |
(5) Mr. Zeitlin held deferred stock units under the Company's 2000 Non-Qualified Deferred Compensation Plan for Independent Directors and the Company's stock incentive plans, from his service as an Independent Director, prior to his appointment as Chief Executive Officer of the Company. The value of the units distributed to him on January 21, 2021, approximately six months following his departure from the Company, is shown using the closing price of our common stock on January 21, 2021 of $33.75. For Mr. Luis $49,274.
For Mr. Bickley $34,250.
For Mr. Kahn $23,937.
For Ms. Nielsen, $20,009. Ms. Nielsen’s balance was paid out 6 months after leaving the company.
Mr. Cohen did not participate in the SRP.
62 | 201764 | 2021 PROXY STATEMENT | | | |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationEmployment Agreements and Compensatory ArrangementsLuis Letter Agreements
Mr. Luis was appointed Chief Executive Officer on January 1, 2014 pursuant to the terms of a letter agreement between Mr. Luis and the Company, dated February 13, 2013, which outlined the terms of his employment as Chief Commercial Officer from February 14, 2013 to January 1, 2014 and as Chief Executive Officer thereafter. Mr. Luis entered into addendums to his letter agreement on June 22, 2015 and August 22, 2016 (collectively with his original letter agreement, the “Luis Letter Agreements”). The compensation elements of the Luis Letter Agreements were designed to incentivize successful execution of the Company’s strategy and drive annual performance while strongly aligning Mr. Luis’ long-term compensation with value creation for Coach’s stockholders over a multi-year period. The Luis Letter Agreements provide for minimum annual base salary and target annual cash incentive awards, subject to achievement of performance goals established by the HR Committee. The Luis Letter Agreements also provide for a one-time Appointment Grant PRSU and minimum annual equity awards described above under Fiscal Year 2017 Compensation and participation in Coach’s various health and welfare plans for similarly situated executives described in the section titled Other Compensation and Benefit Elements — Benefits and Executive Perquisites above. The Luis Letter Agreements also provide that Coach is required to provide Mr. Luis with executive life insurance benefits as described in Other Compensation and Benefit Elements — Benefits and Executive Perquisites and shown in the “All Other Compensation” column of the Summary Compensation Table and in the related footnote.
Mr. Luis is free, at any time, for any reason, to end his employment with Coach and Coach may do the same, subject to a mutual six-month notice requirement agreed to by Mr. Luis and the Company (other than in connection with a termination by Coach for “Cause”). Mr. Luis’ failure to comply with this six-month notice provision will result in the Company being entitled to claw back any bonus paid within 180 days of Mr. Luis’ last day of employment, the forfeiture of any unpaid bonus or unvested RSU or stock option or vested stock option as of his last day of employment and the Company being entitled to claw back any Financial Gain (as defined in Mr. Luis’ equity award grant agreements) realized from the vesting of any equity award within the 12 months preceding his last day of employment with Coach. Mr. Luis’ equity awards, excluding his Appointment Grant PRSU, will continue to vest during the six-month notice period. If Mr. Luis provides the required notice and Coach elects to shorten the notice period, pursuant to the terms of the Luis Letter Agreements, Coach is required to pay Mr. Luis his salary and bonus amount through the remainder of the notice period and his equity awards (excluding his appointment
PRSU) will continue to vest. If Coach terminates the employment of Mr. Luis without “Cause” or if he resigns for “Good Reason”, Coach will pay Mr. Luis a severance amount equal to the sum of his (i) pro-rated bonus for the fiscal year in which the termination occurs, (ii) 21 months of his then current salary, paid in monthly installments during the 21-month period following the later of the date of Mr. Luis’ termination or the expiration of the six-month notice period pursuant to the agreement, and (iii) 21 months of his annual cash incentive, calculated based on the average of the actual percentage of the maximum annual cash incentive amounts earned with respect to Coach financial performance for the three prior fiscal years and applied to the maximum annual bonus amount for the year of termination. Mr. Luis’ equity awards will be treated as follows: (i) all of his unvested annual equity awards will continue to vest during the severance period, (ii) a pro-rata portion of any unvested annual PRSU awards subject to cliff-vesting shall be eligible to vest as of the original vesting date based on actual Company performance, and (iii) all unvested appointment grant PRSUs will be forfeited. During the notice period and the severance period, Mr. Luis is subject to non-competition and non-solicitation covenants. As described above, Coach is required to continue to pay Mr. Luis even if it elects to shorten the required notice period.
If Mr. Luis resigns his employment with Coach other than for “Good Reason,” Mr. Luis is subject to a 12-month post-employment non-solicitation covenant and Coach may, in its sole discretion, elect to subject him to a 12-month post-employment non-competition covenant as well, so long as Coach provides him with the severance payments and benefits described above for the 12-month period following his termination.
“Cause” under the Luis Letter Agreements is defined as and includes (but is not limited to) termination for (i) willful failure to substantially perform his duties (other than any such failure resulting from permanent Disability), which is not remedied within 30 days after notice of such failure; (ii) failure to carry out reasonable directive of the Chairman of the Board, which is not remedied within 30 days after receipt of such failure; (iii) commission at any time of any act or omission that results in a conviction, plea of no contest, or imposition of unadjudicated probation for any felony or crime involving fraud, embezzlement, material misconduct, misappropriation or moral turpitude; (iv) willful taking of or failure to take any action that is materially injurious to the Company, whether monetarily or otherwise; (v) unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing his duties and responsibilities; or (vi) willful commission at any
2017 PROXY STATEMENT | 63 |
TABLE OF CONTENTS
time of any act of fraud, embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company.
“Good Reason” is defined under the Luis Letter Agreements and includes (but is not limited to) (i) the failure to continue as CEO; (ii) a material diminution in the nature or scope of his responsibilities; (iii) failure to make material payments or provide material benefits under his offer letter; (iv) the relocation of the Company’s executive offices more than 50 miles outside of New York City; (v) the Company’s material breach of the terms of his offer letter, subject to certain notice and cure periods described in the offer letter.
All performance-based compensation paid to Mr. Luis is subject to Coach’s incentive repayment (“clawback”) policy applicable in the event of a material restatement of the Company’s financial results. Mr. Luis will be subject to the non-competition and non-solicitation covenants set forth in the agreement, both during his employment with the Company as well as during specified periods following termination (provided that the non-competition covenants only apply following a termination of employment other than for Cause to the extent that Mr. Luis receives severance payments during the restricted period).
Messrs. Wills, Cohen, BickleyGlaser, Kahn and Kahn, Misses.Roe and Mses. Crevoiserat, Fraser and Resnick and Nielsen Messrs. Wills, Cohen, BickleyGlaser, Kahn and Kahn, Misses.Roe and Mses. Crevoiserat, Fraser and Resnick and Nielsen are not subject to fixed term employment agreements. Eachcontracts. However, each agreed to employment offer letters with the Company upon the commencement of their employment and/or appointments as executive officers and various supplemental letter agreements entered into, in fiscal years 2016 and 2017.as applicable. Each of Messrs. Wills, Cohen, BickleyGlaser, Kahn and KahnRoe and Mses. Crevoiserat, Resnick and Fraser is required to provide the Company with six-months’ advance written notice of his intent to terminate employment with Coach. Ms. Resnick is required to provide the Company with three-months’ advance written notice ofor her intent to terminate employment with Coach.Tapestry. Under the terms of each letter agreement, failure of the executive to comply with this notice provision results in the Company being entitled to an immediate injunction prohibiting him or her as applicable, from commencing employment elsewhere for the length of the required notice and being entitled to claw back any cash incentive paid within 180 days of his or her last day of employment, the forfeiture of any unpaid cash incentive or unvested RSU or stock option or vested stock option as of his or her last day of employment and the ability to claw back any Financial Gain (as defined in each equity award grant agreements)agreement) realized from the vesting of any equity award within the 12 months preceding his or her last day of employment with Coach.Tapestry. Mr. Glaser's letter agreement also provides that upon his voluntary resignation from the Company after attaining age 64 with not less than five (5) completed years of service with the Company he will receive retirement treatment under his equity award agreements. Ms. Crevoiserat and Mr. Roe's letter agreements each provide that upon their voluntary resignation from the Company after attaining age 62 with not less than five (5) completed years of service with the Company they will receive retirement treatment under their equity award agreements. All other executives are subject to the standard retirement requirements discussed below under Treatment of Long-Term Incentives Upon Termination or Change in Control. Mr. Kahn and Ms. Resnick are currently eligible for retirement treatment. See Treatment of Long-Term Incentives Upon Termination or Change in Control for a summary of such treatment. Each of the executivesexecutive's letter agreements, providedother than Ms. Crevoiserat’s agreement, provides for 12-months of base-salarybase salary and health benefits continuation under the Coach, Inc. Severance Pay Plan for Vice Presidents and Above (the “Severance Pay Plan”) in the event he or she is terminated without “Cause.” Mr. Bickley’s letter agreements provide that if he is terminated by Coach without “Cause” or, for Ms. Fraser and Messrs. Glaser and Roe, if he resignsthey resign for “Good Reason,Reason.” he will be eligible to receive a pro-rated amount of his annual cash incentiveMs. Crevoiserat’s agreement provides for the fiscal year that the termination occurred, 18-months 24-months of base salary and 18-months of annual cash incentive (calculatedbenefits continuation, as 1.5 timeswell as pro-rated AIP payment based on actual performance in the average of the actual cash incentive amounts paid to himevent she is terminated without “Cause” or resigns for the three fiscal years most recently completed prior to the termination date).“Good Reason.” Under Mr. Kahn’sMs. Resnick's letter agreement, “Cause” includes (but shall not be limited to) termination for any willful or grossly negligent breach of duties as an employee of Coach and termination for fraud, embezzlement or any other similar dishonest conduct or for violation of Coach’s rules of conduct. Under each of Mr. Wills and Ms. Resnick’s letter agreement,agreements, “Cause” is defined as (i) violation of Coach’sTapestry's employee guide or written policies and procedures, (ii) indictment, conviction of, or plea of guilty or no contest to a felony or crime of moral turpitude, (iii) willful or grossly negligent breach of duties, (iv) any act of fraud, embezzlement or other similar dishonest conduct, (v) any act or omission that CoachTapestry determines could have a material adverse effect on Coach,Tapestry, (vi) failure to follow the lawful directives of the chief executive officer or other officer of CoachTapestry to whom he or she reports, or (vii) breach of her letter agreement or other written agreement between with CoachTapestry or any of its affiliates. affiliates, or (viii) for breach of the representations set forth in her letter agreement stating that she has not been the subject of any allegation or complaint of sexual harassment, discrimination, retaliation, or sexual or other misconduct in connection with prior employment or otherwise and has not been a party to any settlement agreement or nondisclosure agreement relating to such matters (the “Representations”). Under each ofMses. Crevoiserat and Fraser's and Messrs. CohenKahn, Roe and Bickley’sGlaser's letter agreements, “Cause” is defined as (i) violation of Tapestry's employee guide or written policies and includes (but is not limited to) termination for (i) willful failure to substantially perform eachprocedures, (ii) violation of their duties (other than any such failure resulting from permanent Disability), which is not remedied within 30 days after notice of such failure; (ii) failure to carry out reasonable directive of the chief executive officer, which is not remedied within 30 days after receiptCompany's policies regarding sexual harassment and misconduct, (iii) indictment, conviction of, such failure; (iii) commission ator plea of guilty or no contest to a felony or crime of moral turpitude, (iv) willful or grossly negligent breach of duties, (v) any timeact of fraud, embezzlement or other similar dishonest conduct, (vi) any act or omission that results inTapestry determines could have a conviction, pleamaterial adverse effect on Tapestry, (vii) failure to follow the lawful directives of no contest,his or imposition of unadjudicated probation for any felony or crime involving fraud, embezzlement, material misconduct, misappropriation or moral turpitude; (v) unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing his duties and responsibilities; or (vi) willful commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, orher supervisor, (viii) breach of fiduciary duty againsthis or her letter agreement or other written agreement between with Tapestry or any of its affiliates; or (ix) for breach of the Company. Willful taking of or failure to take any action that is materially injurious to the Company, whether monetarily or otherwise also constitutes “Cause” underRepresentations. Under Mses. Crevoiserat and Fraser's and Mr. Cohen’sGlaser's letter agreement. 64 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
“Goodagreements, “Good Reason” is defined under Mr. Wills’ employment offer letter as (i) failurematerial diminution of the Company to continue him in therespective position of Chief Financial Officerand title, or comparable role; or (ii) relocation of the Company’s executive officers more than 50 miles outside of New York City, subject to certain notice and cure periods described in the offer letter.
“Good Reason” is defined under Mr. Bickley’s employment offer letter and includes (but is not limited to) (i) the failure of the Company to continue Mr. Bickley in his position of President, International Group or a more senior position; (ii) a material diminution of his responsibilities; (iii) failure to make material payments or provide material benefits under his offer letter; (iv) the relocation of the Company’sTapestry's executive offices more than 50 miles outside of New York City; or, (v)for Ms. Crevoiserat, (iii) a reduction in her base salary of more than 20%, other than a reduction that is also applied to members of the Company’sCompany's Executive Committee or equivalent body or (iv) the Company's material breach of the terms of her letter agreement, subject to certain notice and cure periods described in each letter agreement. Under Mr. Roe’s letter agreement, “Good Reason”
| | | | | | 2021 PROXY STATEMENT | 65 |
TABLE OF CONTENTS is defined as Mr. Roe ceasing to be the Company’s Chief Financial Officer (principal financial officer) without his offer letter,consent, subject to certain notice and cure periods described in the offer letter. Upon his appointment to his new position,letter agreement. During fiscal year 2020, the Company waived Mr. Bickley’s obligationadopted the Tapestry, Inc. Special Severance Plan (the “Special Severance Plan”), which is intended to provide benefits to designated employees of the Company who are members of a select group of management or highly compensated employees (as determined in accordance with noticeSections 201(2), 301(a)(3) and 401(a)(1) of intent to resignERISA) in the event their employment is terminated by the Company without cause or by the participant for good reason, no later than 60 dayseach as set forth in the plan upon or within 24 months following a Change in Control (a “Qualifying Termination”). In the effectivenessevent of his new position, effective solelya Qualifying Termination, the Company shall provide the participants under the Special Severance Plan with respectseverance payment amounts equal to the period from July 1, 2018 through July 10, 2018.sum of such participant’s Base Salary plus Bonus (each as defined in the Special Severance Plan) multiplied by a certain severance multiple applicable to each participant depending on position, pro-rated bonus based on actual performance, in addition to COBRA and accelerated vesting of unvested awards granted on or after the adoption of the plan. At the end of fiscal year 2021, Ms. Crevoiserat was entitled to a multiple of 2.5 times; all other NEOs other than Mr. Zeitlin were entitled to severance multiples of 1.5 times. Mr. Zeitlin agreed to heran employment offer letter both Ms. Nielsen and Coach were required to provideupon the other party three-months advance written noticecommencement of their intention to end herhis employment with Coach. Ms. Nielsen submitted her resignation to the Company on June 3, 2016as Chief Executive Officer in September 2019, and separated from the Companywas not subject to a fixed term employment contract. Prior to his appointment as Chief Executive Officer, Mr. Zeitlin had served on August 20, 2016. The Company waived the enforcement of the required three-month notice period in Ms. Nielsen’s employment offer letter. Ms. Nielsen and the Company also agreed that she would not receive any Annual Incentive Plan payment for fiscal year 2016 and that no portion of any of her unvested stock option, RSU or PRSU awards would become vested. Ms. Nielsen did not receive any Annual Incentive Plan payment or stock option, RSU or PRSU grant for fiscal year 2017. Ms. Nielsen also forfeited her outstanding vested stock options as of the date of her separation from the Company and agreed not to solicit the Company’s employees for a period of two yearsBoard since 2006; he continued his Board service after the date of her separation from the Company. The actual amounts that Ms. Nielsen received due to her separation are displayed below.
his appointment, but was no longer considered independent. Under his offer letter, Mr. Cohen Pursuant to his employment letter agreement, Mr. CohenZeitlin was required to provide the Company with six-monthssix-months’ advance written notice of his intent to terminate his employment. Mr. Cohen notified the Company on April 3, 2017 that he would be resigning. As his successor joined in June, the Company elected to shorten his notice period and his last day with the Company was July 1, 2017. The HR Committee determined that Mr. Cohen would receive his earned bonus for fiscal year 2017, based on the actual achievement of the performance criteria established by the HR Committee, on the date that the Company paid bonuses for fiscal year 2017 to other employees of the Company. In addition, the HR Committee has determined that the equity awards granted to Mr. Cohen on August 14, 2014 would remain outstanding following Mr. Cohen’s last day withZeitlin voluntarily resigned from the Company and becomethe Board effective July 20, 2020 and, as permitted under the terms of his offer letter, the Company waived his notice period.
Mr. Zeitlin's letter agreement provided that, due to his 14 years of service on the Board, he was eligible to receive retirement treatment on his LTIs upon his departure from the Company, other than for cause. Prior to completion of one-year of service as the Company's Chief Executive Officer, retirement treatment entitled him to pro-rata vest throughvesting of his last dayLTIs. After completion of employment,one-year of service as the Company's Chief Executive Officer, retirement treatment entitled him to full continued vesting of his LTIs. Mr. Zeitlin voluntarily resigned from the Company prior to completion of one year of service during fiscal 2021 and was entitled to receive pro-rata vesting of his LTIs. Mr. Zeitlin waived participation in accordance with the termsCompany's Severance Pay Plan and conditions of the award agreements, includingSpecial Severance Plan upon his appointment as Chief Executive Officer. Mr. Zeitlin did not receive any severance payments upon his resignation from the achievement of any performance conditions for performance restricted stock units. Mr. Cohen will have 90 days following the vesting date to exercise any outstanding options from these awards.Company in July 2020. The actual amounts that Mr. CohenZeitlin received or is eligible to receive following his resignation are displayed below, and reflect payment for his deferred compensation units earned from his prior service as a director and the pro-rata vesting of his equity awards pursuant to the retirement treatment under his offer letter. The actual amounts that Mr. Zeitlin received or is eligible to receive following his resignation are displayed below. | Cash Severance Payments | | | $— | | | Annual Incentive Plan Payout for fiscal year 2021 | | | $— | | | Qualified Retirement Plan Distribution | | | $— | | | Deferred Stock Unit distribution (for prior service as independent director)(1) | | | $2,708,481 | | | Intrinsic value of unvested long-term incentive awards that continued vesting upon termination | | | | | | Stock Options: intrinsic value of the pro-rata portion of awards that continued vesting upon termination | | | $2,823,949 | | | RSUs: intrinsic value of the pro-rata portion of awards that continued vesting upon termination | | | $891,185 | | | PRSUs: intrinsic value of earned, unvested awards | | | $300,736 | | | Total | | | $6,724,351 | |
(1) Mr. Zeitlin held deferred stock units under the Company's 2000 Non-Qualified Deferred Compensation Plan for Independent Directors and the Company's stock incentive plans, from his service as an Independent Director, prior to his separation are displayed below.appointment as Chief Executive Officer of the Company. The value of the units distributed to him on January 21, 2021, approximately six months following his departure from the Company, is shown using the closing price of our common stock on January 21, 2021 of $33.75. Compensation and Benefits due to Termination Event | Andre Cohen | Jane Nielsen | Annual Incentive | $ | 926,826 | | $ | N/A | | Surrender Value of Life Insurance | | NA | | | 305 | | Qualified Retirement Plan Distribution | | NA | | | 142,664 | | Non-Qualified Retirement Plan Balance | | 12,035 | | | 88,953 | | Intrinsic value of unvested long-term incentive awards that continued vesting upon termination(1) | | | | | | | Stock Options: intrinsic value of the pro-rata portion of awards that vested | | 194,062 | | | N/A | | RSUs: intrinsic value of the pro-rata portion of awards that vested | | 954,185 | | | N/A | | PRSUs: intrinsic value of the pro-rata portion of awards that were earned and vested on the original vesting date, upon the satisfaction of performance conditions | | 1,006,543 | | | N/A | | Total | | 3,093,651 | | | 231,922 | |
66 | 2021 PROXY STATEMENT | (1) | Values are based on the closing price of our common stock on June 30, 2017 of $47.34 and reflect actual performance of 70.9% for the PRSU awards. | |
2017 PROXY STATEMENT | 65 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation(2) The intrinsic value of Options and RSUs is the number of shares expected to vest multiplied by $42.66, the closing price per share of our common stock on July 2, 2021, the last trading day of fiscal year 2021, plus the actual value of the options and RSUs vested on September 30, 2020, and reflects actual performance for the PRSUs earned but not vested. Treatment of Long-Term Incentives Upon Termination or Change in Control In general, the annual stock option, PRSU and RSU grants made to our NEOs and outstanding as of the end of fiscal year 20172021 are treated as indicated below in the event of termination or change-in-control. Footnotes indicate where such treatment differs pursuant to an employment agreement or as agreed by the HR Committee. In addition, theThe HR Committee retains discretion to modify the terms of any agreement in certain situations. | | | | Unvested awards forfeitforfeit.
Vested stock options remain exercisable for 90 daysdays. | Unvested awards forfeit | | Retirement (departure from the Company, other than for cause, if employee has attained age 65 and five years of service or age 55 and ten years of service with the Company) | | | Unvested awards remain outstanding and become vested onaccording to their original schedule; additionally, performance options will vestschedule, subject to satisfactioncompliance with the restrictive covenants through the last vesting date. The number of the performance conditionsPRSUs that vest is based on actual company performance.
Exercisability of vested Vested options continuescontinue to be exercisable for the remainder of the ten-year termterm. | Unvested RSUs and PRSUs remain outstanding and become vested on original schedule
PRSUs will vest based on actual company performance | | | | | UnvestedFor grants made on and after August 16, 2018: unvested awards remain outstanding andvest pro-rata as of the employee's termination date.
For grants made prior to August 16, 2018: unvested awards continue to vest for the duration of the salary continuation period; additionally,period.
In either case, the number of PRSUs that ultimately vest will be based on actual performance options will vest subjectrelative to satisfaction of the performance conditionspre-established targets.
Exercisability of vested stock options continues for the 90 days following termination date for grants made on or after August 16, 2018 or the end of the salary continuation period for grants made prior to this date. | Unvested awards remain outstanding and continue to vest for the duration of the salary continuation period:
- RSUs with vesting dates within the salary continuation period will vest; and
- PRSUs may pro-rata vest subject to satisfaction of the performance conditions | | Death or Long-Term Disability | | | Vesting of unvested awards and target PRSUs is accelerated; performance condition for performance options is waivedaccelerated.
The estate (or the executive) may exercise stock options for a period of five yearsyears. | Vesting of unvested RSUs and target PRSUs is accelerated | | Termination upon a Change-in-Control | | | Vesting of unvested awards is accelerated;accelerated (at target performance condition for PRSUs if prior to completion of performance options is waivedperiod). | Vesting of unvested RSUs and target PRSUs is accelerated | | | | | Vested and unvested stock options and unvested RSUs and PRSUs forfeit, and financial gains realized in the twelve months prior to termination must be repaidrepaid. | Unvested awards forfeit and financial gains realized in the twelve months prior to termination must be repaid | | Change-in-Control without termination | | | Outstanding awards shall continue vesting as scheduled assuming continued employment, or an equivalent award shall be substituted by the successor corporation | Outstanding awards continue vesting as scheduled assuming continued employment, or an equivalent awardcorporation. PRSUs shall be substituted by the successor corporationdeemed earned at target performance if Change-in-Control is prior to end of performance period.
| |
| | | | | | 2021 PROXY STATEMENT | 67 |
| (1) | For special cliff vest RSUs, (a) awards granted prior to August 2016 are forfeited in the case of a Severance Event or Retirement and, (b) awards granted August 2016 and later have different termination rules based on event: Retirement - awards are forfeited; Severance and Death and Long-Term Disability - awards pro-rata vest. |
| (2) | For Special cliff vest PRSUs, awards are forfeited in the case of Severance Event and Retirement and pro-rata vest for completed performance periods in a termination due to Death or Long-Term Disability. |
66 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationPotential Payments Upon Termination or Change in Control The tables below reflect the amount of compensation that would have been owed to each of our NEOs in the event of employment termination, orincluding due to a change in control, on July 1 2017.3, 2021. The tables include amounts earned through July 1, 2017,3, 2021, as well as estimates of the amounts which would have been paid to such NEOs following that date. The actual amounts to be paid out can only be determined at the time of a NEO’s termination. Regardless of the reason for a NEO’s termination of employment, he or shea NEO may be entitled to receive amounts earned during the term of employment. Such amounts include: any vested balance in our qualified and non-qualified retirement plans; the ability to convert his/her individual life insurance and/ or individual long-term disability insurance at his or herthe NEO's own expense; and the ability to exercise vested stock options for a defined period of time. In the event a NEO dies or is terminated due to disability, such NEO or beneficiary would receive benefits under our broad-based life insurance or long-term disability plan, as appropriate. The amounts of compensation due upon various termination situations reflect the specific employment terms and conditions for each executive as described above under Employment Agreements and Compensatory Arrangements, and were calculated using the following assumptions: Long-term incentiveLTI amounts reflect the intrinsic value of unvested stock options, RSUs and PRSUs whose vesting would be pro-rated, accelerated or continued due to the termination, assuming a closing price of our common stock on June 30, 2017July 2, 2021 of $47.34,$42.66 the last trading day before the assumed termination date.
For termination reasons in which the value of PRSUs earned depends on satisfaction of the performance criteria, FY19-21 PRSUs reflect no shares earned, FY20-22 PRSUs reflect actual performance of 14.2% of target, as certified by the HR Committee in August 2021, and Acceleration PRSUs assume maximum performance. The HR Committee does not exercise its discretion to pro-rata vest, increase or decrease any unvested RSUs or PRSUs. equity awards. The values shown for continuation of benefits and perquisites reflect our cost for each program as of July 1, 2017.3, 2021. These costs may change annually. The “Total” row represents the sum of all estimated payments in the column, excluding “Disability Benefits,” which are reflected as a monthly payment made by the insurance company that provides the benefit.column. Please see the Employment Agreements and Compensatory Arrangements section for details about the compensation paid to Ms. Nielsen and Mr. Cohen upon their separation from the Company.
68 | 2021 PROXY STATEMENT | | | 2017 PROXY STATEMENT | 67 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive Compensation
JOANNE CREVOISERAT | TOTAL | | | 586,316 | | | 586,316 | | | 18,079,140 | | | 18,079,140 | | | 37,322,569 | | | 29,794,491 | | | — | | | Salary Continuation | | | — | | | — | | | 2,600,000 | | | 2,600,000 | | | 3,250,000 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | 47,014 | | | 47,014 | | | 58,768 | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | 4,265,068 | | | 4,265,068 | | | 9,952,568 | | | 4,265,068 | | | — | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | 2,220,386 | | | 2,220,386 | | | 9,589,516 | | | 9,589,516 | | | — | | | Unvested Restricted Stock Units | | | — | | | — | | | 1,639,923 | | | 1,639,923 | | | 5,808,884 | | | 5,808,884 | | | — | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 1,413,646 | | | 1,413,646 | | | 4,034,181 | | | 5,502,372 | | | — | | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | | — | | | — | | | 2,694,875 | | | 2,694,875 | | | 2,694,875 | | | 2,694,875 | | | — | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 2,611,912 | | | 2,611,912 | | | 1,347,459 | | | 1,347,459 | | | — | | | Retirement Plan Distribution | | | 586,316 | | | 586,316 | | | 586,316 | | | 586,316 | | | 586,316 | | | 586,316 | | | — | |
(1) In the event of Ms. Crevoiserat's termination for cause or resignation without good reason she would be required to repay to the Company the full amount of her $700,000 sign-on bonus within one month of her termination date if she provides notice of resignation within 24 months of her start date. (2) Pursuant to Ms. Crevoiserat's employment offer letter with the Company, Ms. Crevoiserat may receive, based on the sole discretion of the Company, total compensation of up to $2,600,000, equal to 24 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 24-month period following her separation from the Company. VICTOR LUIS
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason(1) ($) | Termination by the Board without Cause(2) ($) | Resignation by the Executive with Good Reason(2) ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(3) ($) | TOTAL | | 2,337,139 | | | 2,337,139 | | | 33,828,822 | | | 33,828,822 | | | 43,204,038 | | | 39,312,963 | | | 0 | | Salary Continuation | | 0 | | | 0 | | | 2,362,500 | | | 2,362,500 | | | 2,362,500 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 26,841 | | | 26,841 | | | 26,841 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 6,996,919 | | | 6,996,919 | | | 6,996,919 | | | 2,498,193 | | | 0 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 8,855,917 | | | 8,855,917 | | | 10,979,248 | | | 10,979,248 | | | 0 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 13,249,506 | | | 13,249,506 | | | 14,509,919 | | | 14,509,919 | | | 0 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Appointment PRSUs | | 0 | | | 0 | | | 0 | | | 0 | | | 5,991,472 | | | 5,991,472 | | | 0 | | Retirement Plan Distribution | | 2,334,131 | | | 2,334,131 | | | 2,334,131 | | | 2,334,131 | | | 2,334,131 | | | 2,334,131 | | | 0 | | Life Insurance Benefits(4) | | 3,008 | | | 3,008 | | | 3,008 | | | 3,008 | | | 3,008 | | | 3,000,000 | | | 0 | | Disability Benefits(5) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 25,000 | | | 0 | |
(3) Ms. Crevoiserat was not eligible to retire as of July 3, 2021.SCOTT ROE | TOTAL | | | — | | | — | | | 951,187 | | | 951,187 | | | 3,665,747 | | | 521,732 | | | — | | | Salary Continuation | | | — | | | — | | | 925,000 | | | 925,000 | | | 1,387,500 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | 14,760 | | | 14,760 | | | 22,140 | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | — | | | — | | | 1,734,375 | | | — | | | — | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Unvested Restricted Stock Units | | | — | | | — | | | 11,427 | | | 11,427 | | | 521,732 | | | 521,732 | | | — | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Retirement Plan Distribution | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
(1) In the event of Mr. Roe’s termination for cause or resignation without good reason he would be required to repay to the Company the full amount of his $500,000 sign-on bonus within one month of his termination date if he provides notice of resignation within 24 months of his start date. (2) Pursuant to Mr. Roe’s employment offer letter with the Company, Mr. Roe may receive, based on the sole discretion of the Company, total compensation of up to $925,000, equal to 12 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 12-month period following his separation from the Company. (3) Mr. Roe was not eligible to retire as of July 3, 2021. | (1) | Pursuant to the Luis Letter Agreements, Mr. Luis may receive, based on the sole discretion of the HR Committee, total compensation upon separation in the amount of $27,212,559 in exchange for accepting the non-competition provisions of the agreement for the 12-month period following his termination. | | | | 2021 PROXY STATEMENT | 69 |
| (2) | Pursuant to the Luis Letter Agreements, Mr. Luis may receive, based on the sole discretion of the HR Committee, pay in lieu of notice representing three months of salary and benefit continuation, and a pro-rata annual incentive. The incremental total compensation severance pay would equal $984,009. |
| (3) | Mr. Luis was not eligible to retire as of July 1, 2017. |
| (4) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (5) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
KEVIN WILLS
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason ($) | Termination by the Board without Cause ($) | Resignation by the Executive with Good Reason ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(1) ($) | TOTAL | | 0 | | | 0 | | | 1,863,812 | | | 1,863,812 | | | 5,159,234 | | | 4,636,204 | | | 0 | | Salary Continuation | | 0 | | | 0 | | | 750,000 | | | 750,000 | | | 750,000 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 15,338 | | | 15,338 | | | 15,338 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 242,308 | | | 0 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 1,098,474 | | | 1,098,474 | | | 4,393,896 | | | 4,393,896 | | | 0 | �� | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Retirement Plan Distribution | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Life Insurance Benefits(2) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Disability Benefits(3) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 25,000 | | | 0 | |
| (1) | Mr. Wills was not eligible to retire as of July 1, 2017. |
| (2) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (3) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
68 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationANDRE COHEN
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason(1) ($) | Termination by the Board without Cause ($) | Resignation by the Executive with Good Reason(1) ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(2) ($) | TOTAL | | 12,035 | | | 12,035 | | | 4,178,337 | | | 0 | | | 7,708,187 | | | 7,407,504 | | | 0 | | Salary Continuation | | 0 | | | 0 | | | 950,000 | | | 0 | | | 950,000 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 1,278 | | | 0 | | | 1,278 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 950,000 | | | 0 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 813,002 | | | 0 | | | 1,701,392 | | | 1,701,392 | | | 0 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 505,308 | | | 0 | | | 1,555,986 | | | 1,555,986 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 1,896,714 | | | 0 | | | 2,043,759 | | | 2,043,759 | | | 0 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 481,246 | | | 461,926 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 962,491 | | | 682,406 | | | 0 | | Retirement Plan Distribution | | 12,035 | | | 12,035 | | | 12,035 | | | 0 | | | 12,035 | | | 12,035 | | | 0 | | Life Insurance Benefits(3) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Disability Benefits(4) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 17,500 | | | 0 | |
TODD KAHN | TOTAL | | | 1,287,825 | | | 1,287,825 | | | 16,394,216 | | | — | | | 20,046,492 | | | 18,149,566 | | | 15,664,511 | | | Salary Continuation | | | — | | | — | | | 950,000 | | | — | | | 1,425,000 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | 9,609 | | | — | | | 14,413 | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | — | | | — | | | 3,980,921 | | | 2,348,878 | | | 2,348,878 | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | 6,199,623 | | | — | | | 6,199,623 | | | 6,199,623 | | | 6,199,623 | | | Unvested Restricted Stock Units | | | — | | | — | | | 3,979,965 | | | — | | | 3,979,965 | | | 3,979,965 | | | 3,979,965 | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 194,386 | | | — | | | 194,386 | | | 1,368,917 | | | 194,386 | | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | | — | | | — | | | 2,155,908 | | | — | | | 2,155,908 | | | 2,155,908 | | | 945,056 | | | Unvested Performance Restricted Stock Units(4) | | | — | | | — | | | 1,616,899 | | | — | | | 808,450 | | | 808,450 | | | 708,778 | | | Retirement Plan Distribution | | | 1,287,825 | | | 1,287,825 | | | 1,287,825 | | | — | | | 1,287,825 | | | 1,287,825 | | | 1,287,825 | |
(1) Pursuant to Mr. Kahn’s employment offer letter with the Company, Mr. Kahn may receive, based on the sole discretion of the Company, total compensation of up to $950,000, equal to 12 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 12-month period following his separation from the Company. (2) Mr. Kahn is not able to resign for Good Reason under the terms of his offer letter. (3) Mr. Kahn was eligible to retire as of July 3, 2021. (4) Although Mr. Kahn is eligible for retirement treatment, special treatment rules for his Special RSUs and Acceleration PRSUs call for a proration of the award based on termination date. THOMAS GLASER | TOTAL | | | 84,127 | | | 84,127 | | | 7,752,435 | | | 7,752,435 | | | 15,599,213 | | | 12,448,727 | | | — | | | Salary Continuation | | | — | | | — | | | 800,000 | | | 800,000 | | | 1,200,000 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | 19,321 | | | 19,321 | | | 28,982 | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | 1,600,000 | | | 1,600,000 | | | 2,800,000 | | | 1,600,000 | | | — | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | 1,329,304 | | | 1,329,304 | | | 5,172,092 | | | 3,349,482 | | | — | | | Unvested Restricted Stock Units | | | — | | | — | | | 3,097,175 | | | 3,097,175 | | | 5,323,328 | | | 5,323,328 | | | — | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 113,730 | | | 113,730 | | | 182,234 | | | 1,283,341 | | | — | | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 708,778 | | | 708,778 | | | 808,450 | | | 808,450 | | | — | | | Retirement Plan Distribution | | | 84,127 | | | 84,127 | | | 84,127 | | | 84,127 | | | 84,127 | | | 84,127 | | | — | |
(1) In the event of Mr. Glaser's termination for cause or resignation without good reason, he would be required to repay to the Company the full amount of his $200,000 sign-on bonus within one month of his termination date if he provides notice of resignation within 24 months of his start date. (2) Pursuant to Mr. Glaser's employment offer letter with the Company, Mr. Glaser may receive, based on the sole discretion of the Company, total compensation of up to $800,000, equal to 12 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 12-month period following his separation from the Company. (3) Mr. Glaser was not eligible to retire as of July 3, 2021. 70 | 2021 PROXY STATEMENT | (1) | Mr. Cohen is not able to resign for “Good Reason” under the terms of his offer letter. | |
| (2) | Mr. Cohen was not eligible to retire as of July 1, 2017. |
| (3) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (4) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
IAN BICKLEY
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason ($) | Termination by the Board without Cause ($) | Resignation by the Executive with Good Reason ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(1) ($) | TOTAL | | 3,108,106 | | | 3,108,106 | | | 10,883,717 | | | 10,883,717 | | | 11,681,413 | | | 11,159,306 | | | 0 | | Salary Continuation | | 0 | | | 0 | | | 1,245,000 | | | 1,245,000 | | | 1,245,000 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 21,083 | | | 21,083 | | | 21,083 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 2,350,657 | | | 2,350,657 | | | 2,350,657 | | | 941,062 | | | 0 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 1,340,562 | | | 1,340,562 | | | 1,576,487 | | | 1,576,487 | | | 0 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 1,067,975 | | | 1,067,975 | | | 1,482,701 | | | 1,482,701 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 1,750,334 | | | 1,750,334 | | | 1,897,379 | | | 1,897,379 | | | 0 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Retirement Plan Distribution | | 2,981,677 | | | 2,981,677 | | | 2,981,677 | | | 2,981,677 | | | 2,981,677 | | | 2,981,677 | | | 0 | | Life Insurance Benefits(2) | | 126,429 | | | 126,429 | | | 126,429 | | | 126,429 | | | 126,429 | | | 2,280,000 | | | 0 | | Disability Benefits(3) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 25,000 | | | 0 | |
| (1) | Mr. Bickley was not eligible to retire as of July 1, 2017. |
| (2) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (3) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
2017 PROXY STATEMENT | 69 |
TABLE OF CONTENTS EXECUTIVE COMPENSATION
Executive CompensationTODD KAHN
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason(1) ($) | Termination by the Board without Cause ($) | Resignation by the Executive with Good Reason(1) ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(2) ($) | TOTAL | | 775,499 | | | 775,499 | | | 4,075,681 | | | 0 | | | 7,274,196 | | | 8,257,093 | | | 0 | | Salary Continuation | | 0 | | | 0 | | | 750,000 | | | 0 | | | 750,000 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 14,055 | | | 0 | | | 14,055 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 750,000 | | | 0 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 635,384 | | | 0 | | | 1,305,637 | | | 1,305,637 | | | 0 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 433,121 | | | 0 | | | 1,227,711 | | | 1,227,711 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 1,467,622 | | | 0 | | | 1,593,660 | | | 1,593,660 | | | 0 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 803,817 | | | 504,586 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 803,817 | | | 0 | | | 0 | | Retirement Plan Distribution | | 775,499 | | | 775,499 | | | 775,499 | | | 0 | | | 775,499 | | | 775,499 | | | 0 | | Life Insurance Benefits(3) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 2,100,000 | | | 0 | | Disability Benefits(4) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 25,000 | | | 0 | |
LIZ FRASER | TOTAL | | | 123,978 | | | 123,978 | | | 3,536,252 | | | 3,536,252 | | | 6,897,972 | | | 4,497,972 | | | — | | | Salary Continuation | | | — | | | — | | | 800,000 | | | 800,000 | | | 1,200,000 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | 1,548,000 | | | 1,548,000 | | | 2,748,000 | | | 1,548,000 | | | — | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | 104,146 | | | 104,146 | | | 929,758 | | | 929,758 | | | — | | | Unvested Restricted Stock Units | | | — | | | — | | | 251,350 | | | 251,350 | | | 1,087,787 | | | 1,087,787 | | | — | | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 708,778 | | | 708,778 | | | 808,450 | | | 808,450 | | | — | | | Retirement Plan Distribution | | | 123,978 | | | 123,978 | | | 123,978 | | | 123,978 | | | 123,978 | | | 123,978 | | | — | |
(1) In the event of Ms. Fraser's termination for cause or resignation without good reason, she would be required to repay to the Company the full amount of her $500,000 sign-on bonus within one month of her termination date if she provides notice of resignation within 24 months of her start date. (2) Pursuant to Ms. Fraser’s employment offer letter with the Company, Ms. Fraser may receive, based on the sole discretion of the Company, total compensation of up to $800,000, equal to 12 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 12-month period following her separation from the Company. (3) Ms. Fraser was not eligible to retire as of July 3, 2021. ANDREA SHAW RESNICK | TOTAL | | | 2,801,454 | | | 2,801,454 | | | 7,816,412 | | | — | | | 9,580,768 | | | 7,970,487 | | | 6,992,740 | | | Salary Continuation | | | — | | | — | | | 700,000 | | | — | | | 1,050,000 | | | — | | | — | | | Benefit and Perquisite Continuation | | | — | | | — | | | 17,444 | | | — | | | 26,166 | | | — | | | — | | | Short Term Incentive | | | — | | | — | | | — | | | — | | | 1,944,600 | | | 1,104,600 | | | 1,104,600 | | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | | — | | | — | | | 9,045 | | | — | | | 9,045 | | | 9,045 | | | 9,045 | | | Unvested Restricted Stock Units | | | — | | | — | | | 2,081,979 | | | — | | | 2,081,979 | | | 2,081,979 | | | 2,081,979 | | | Unvested Performance Restricted Stock Units | | | — | | | — | | | 50,624 | | | — | | | 50,624 | | | 356,510 | | | 50,624 | | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | | — | | | — | | | 1,077,933 | | | — | | | 1,077,933 | | | 1,077,933 | | | 472,519 | | | Unvested Performance Restricted Stock Units(4) | | | — | | | — | | | 1,077,933 | | | — | | | 538,966 | | | 538,966 | | | 472,519 | | | Retirement Plan Distribution | | | 2,801,454 | | | 2,801,454 | | | 2,801,454 | | | — | | | 2,801,454 | | | 2,801,454 | | | 2,801,454 | |
(1) Pursuant to Ms. Resnick’s employment offer letter with the Company, Ms. Resnick may receive, based on the sole discretion of the Company, total compensation of up to $700,000, equal to 12 months’ salary, in exchange for enforcement of the non-competition provisions of such offer letter for up to the 12-month period following her separation from the Company. (2) Ms. Resnick is not able to resign for “Good Reason” under the terms of her offer letter. (3) Ms. Resnick was eligible to retire as of July 3, 2021. (4) Although Ms. Resnick is eligible for retirement treatment, special treatment rules for her Special RSUs and Acceleration PRSUs call for a proration of the award based on termination date. | (1) | Mr. Kahn is not able to resign for “Good Reason” under the terms of his offer letter. | | | | 2021 PROXY STATEMENT | 71 |
| (2) | Mr. Kahn was not eligible to retire as of July 1, 2017. |
| (3) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (4) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
ANDREA RESNICK
Incremental Benefits Due to Termination Event | Termination by Board with Cause ($) | Resignation by the Executive without Good Reason(1) ($) | Termination by the Board without Cause ($) | Resignation by the Executive with Good Reason(1) ($) | Termination due to Change-in- Control ($) | Termination due to Executive’s Death or Disability ($) | Termination due to Executive’s Retirement(2) ($) | TOTAL | | 1,447,636 | | | 1,447,636 | | | 3,147,995 | | | 0 | | | 4,087,959 | | | 4,784,497 | | | 3,214,221 | | Salary Continuation | | 0 | | | 0 | | | 475,000 | | | 0 | | | 475,000 | | | 0 | | | 0 | | Benefit and Perquisite Continuation | | 0 | | | 0 | | | 15,338 | | | 0 | | | 15,338 | | | 0 | | | 0 | | Short Term Incentive | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 282,500 | | | 282,500 | | Annual Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Stock Options | | 0 | | | 0 | | | 264,981 | | | 0 | | | 510,752 | | | 510,752 | | | 510,752 | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 205,116 | | | 0 | | | 413,868 | | | 413,868 | | | 413,868 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 559,465 | | | 0 | | | 615,482 | | | 615,482 | | | 559,465 | | Special Long Term Incentives: | | | | | | | | | | | | | | | | | | | | | | Unvested Restricted Stock Units | | 0 | | | 0 | | | 180,459 | | | 0 | | | 609,883 | | | 180,459 | | | 0 | | Unvested Performance Restricted Stock Units | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Retirement Plan Distribution | | 1,431,436 | | | 1,431,436 | | | 1,431,436 | | | 0 | | | 1,431,436 | | | 1,431,436 | | | 1,431,436 | | Life Insurance Benefits(3) | | 16,200 | | | 16,200 | | | 16,200 | | | 0 | | | 16,200 | | | 1,350,000 | | | 16,200 | | Disability Benefits(4) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 25,000 | | | 0 | |
| (1) | Ms. Resnick is not able to resign for “Good Reason” under the terms of her offer letter. |
| (2) | Ms. Resnick is eligible to retire as of July 1, 2017. |
| (3) | In cases other than the executive’s death, reflects the cash surrender value of the individual life insurance policy as of July 1, 2017. In the case of the executive’s death, the death benefit payable to the executive’s estate is shown. |
| (4) | In the event of termination due to the executive’s long-term disability, reflects the monthly disability benefit payable to the executive under the insurance policy as of July 1, 2017; amount not included in total. |
70 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), the following information explains the relationship of the annual total compensation of our median employee to the annualized total compensation of Ms. Crevoiserat, our CEO at the end of fiscal year 2021. For fiscal year 2021, as required under the applicable rules, we identified a new median employee. We determined the following in compliance with the requirements set forth in Item 402(u) of SEC Regulation S-K: The total compensation of our median employee was $27,571; The total annualized compensation of Ms. Crevoiserat was $12,622,668; and The ratio of the median employee’s pay to that of Ms. Crevoiserat was 1 to 458. To determine Ms. Crevoiserat's compensation for purposes of calculating the ratio, we annualized her base salary as reported in the Summary Compensation Table, since Ms. Crevoiserat did not serve as Chief Executive Officer for all of fiscal year 2021. The remaining components of her compensation used to calculate the ratio were as reported in the Summary Compensation Table. Our median employee is a full time sales associate working in a retail store in Asia. To identify the median employee and determine his or her annual total compensation, we used the following methodology, consistent with SEC regulations: We selected May 3, 2021 as the determination date, two months before the end of our fiscal year 2021. At that time, we prepared a file of our consolidated global payroll records. As of the determination date, our analysis included approximately 17,300 employees working in 27 countries. This figure represented all our employees globally with the exception of 286 employees working in Australia and New Zealand. This group was fewer than 5% of our total population and therefore was excluded from our analysis using the de minimus exemption. We utilized actual base salary paid in fiscal year 2021 from our payroll records as our consistently applied compensation measure to identify the median employee. We converted compensation for employees paid in currencies other than the U.S. dollar into U.S. dollars based on exchange rates as of the end of fiscal year 2021. We examined a small group of employees for whom actual base salary was clustered within a few dollars around the median. From this group we selected an individual we determined to be reasonably representative of our median employee. For purposes of the pay ratio, both the CEO's and median employee’s annual total compensation were calculated in accordance with the requirements of Item 402(c)(2)(x) of SEC Regulation S-K. 72 | 2021 PROXY STATEMENT | | | |
TABLE OF CONTENTSSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | | | Securities Authorized for Issuance
Under Equity Compensation Plans |
The following table summarizes information as of July 1, 2017,3, 2021, with respect to the shares of CoachTapestry common stock that may be issued under our equity compensation plans: Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants or rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | Equity compensation plans approved by security holders | | 20,768,990(1) | | $ | 41.12(2) | | | 18,827,158(3) | | Equity compensation plans not approved by security holders(4) | | 57,716 | | $ | 42.56 | | | 0 | | Total | | 20,826,706 | | | | | | 18,827,158 | |
| Equity compensation plans approved by security holders | | | 24,010,673(1) | | | 36(2) | | | 23,203,709(3) | | | Equity compensation plans not approved by security holders(4) | | | 8,870 | | | N/A(2) | | | — | | | Total | | | 24,019,543 | | | | | | 23,203,709 | |
(1) Includes 8,046,044 RSUs and 2,626,533 PRSUs which do not have an exercise price. PRSUs with incomplete performance periods assume maximum performance conditions will be satisfied. (2) Includes weighted average exercise price for stock options only. (3) Includes securities remaining available for future issuance for each of the following plans: •
| (1)2018 Stock Incentive Plan: 22,452,153 |
•
| Includes 3,487,186 RSUs and 2,282,076 PRSUs which do not have an exercise price. PRSUs with incomplete performance periods assume maximum performance conditions will be satisfied.Employee Stock Purchase Plan: 751,556 |
| (2) | Includes weighted average exercise price for stock options only. |
| (3) | Includes securities remaining available for future issuance for each of the following plans: |
Amended(4) Includes outstanding deferred stock units held by the 2000 Non-Qualified Deferred Compensation Plan for Independent Directors, under which certain of Tapestry’s Independent Directors previously deferred certain elements of their compensation. Since November 2018, director compensation and Restated Coach, Inc. 2010deferrals have been administered under the stockholder-approved 2018 Stock Incentive Plan: 17,422,692Plan. The Board froze this program to new deferrals effective in February 2020. Amounts previously deferred under these plans are represented by deferred stock units, which represent the right to receive shares of Tapestry common stock, on a one-for-one basis, on the distribution date elected by the participant. Deferred stock units were valued as if each deferral were invested in Tapestry common stock as of the deferral date. Deferred stock units do not have voting rights, but are credited with dividend equivalents.
Amended and Restated Coach, Inc. 2001 Employee Stock Purchase Plan: 1,404,466
| (4) | Includes outstanding deferred stock units held by the 2000 Non-Qualified Deferred Compensation Plan for Outside Directors, under which certain of Coach’s Outside Directors previously deferred certain elements of their compensation. Since November 2013, director compensation and deferrals are administered under the stockholder-approved Amended and Restated Coach, Inc. 2010 Stock Incentive Plan. Amounts deferred under these plans may, at the participants’ election, be either represented by deferred stock units, which represent the right to receive shares of Coach common stock, on a one-for-one basis, on the distribution date elected by the participant, or placed in an interest-bearing account to be paid on such distribution date. Deferred stock units are valued as if each deferral were invested in Coach common stock as of the deferral date. Deferred stock units do not have voting rights, but are credited with dividend equivalents. | | | | 2021 PROXY STATEMENT | 73 |
2017 PROXY STATEMENT | 71 |
TABLE OF CONTENTS PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN (AMENDED AND RESTATED AS OF SEPTEMBER 20, 2017)Our Board of Directors is submitting for stockholder approval the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan (Amended and Restated as of September 20, 2017) (the “Amended Stock Incentive Plan”). The Amended Stock Incentive Plan is an amendment and restatement of the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan, which was first adopted by our Board of Directors on September 17, 2010, and approved by our stockholders on November 3, 2010, and which was most recently amended and restated in its entirety by our Board of Directors on September 23, 2016, which amendment and restatement was approved by our stockholders on November 10, 2016 (the “Plan”).
The Amended Stock Incentive Plan was approved by our Board of Directors on September 20, 2017, the effective date, subject to stockholder approval. Accordingly, Coach’s stockholders are being asked to approve the Amended Stock Incentive Plan at the 2017 Annual Meeting of Stockholders.
The Board of Directors believes that the Amended Stock Incentive Plan is a critical part of our pay-for-performance compensation program. We grant long term stock incentives annually to over 1,400 of our associates around the world, including our executive officers and many of our store managers. Aligning these key employees to the same outcomes achieved by our stockholders has been a hallmark of our approach, and supports our objective to attract and retain the best talent in the luxury retail industry. We believe that it is in the best interests of the Company and our stockholders to approve the Amended Stock Incentive Plan. Based on the amount of awards granted in the past, as discussed in more detail below, the shares remaining available for awards under the Plan will likely be insufficient to satisfy our equity compensation needs after the end of fiscal year 2018 and we believe therefore that the Plan should be amended to authorize up to an additional 7,500,000 shares of our common stock for awards. If our stockholders do not approve the Amended Stock Incentive Plan, we may experience a shortfall of shares available for issuance for stock-based compensation awards, which we believe will adversely affect our ability to attract, retain and reward the many employees who contribute to our long-term success.
Approval of this Proposal 5 will constitute approval of the Amended Stock Incentive Plan. The key differences between the Plan and the Amended Stock Incentive Plan are:
7,500,000 additional shares of our common stock are authorized for issuance under the Amended Stock Incentive Plan, increasing the number of shares of our common stock available for awards from 54,900,000 to 62,400,000, subject to adjustment as described below.
Added language confirming our current practice that no dividends or dividend equivalents will be payable with respect to any shares underlying an award until the award (or the applicable part of the award) has vested.
In its determination to approve the Amended Stock Incentive Plan, the Board reviewed an analysis prepared by management and reviewed by CAP, its independent compensation consultant, which included an analysis of certain burn rates, dilution and overhang metrics, peer group market practices and trends, and the costs of the Amended Stock Incentive Plan, including the estimated stockholder value transfer cost. Specifically, the Board considered that:
Our three-year average burn rate is 2.3% of common shares outstanding:
Fiscal Year(1) | Total shares granted | Common Shares Outstanding | Burn Rate | 2015 | | 6,331,000 | | | 276,606,164 | | | 2.3% | | 2016 | | 7,094,793 | | | 278,537,258 | | | 2.5% | | 2017 | | 5,981,138 | | | 281,938,089 | | | 2.1% | | 3-yr average | | | | | | | | 2.3% | |
| (1) | As reported in the Company’s Form 10-K filing at the end of each fiscal year. | Certain Relationships and
Related Transactions |
If we do not increase the shares of our common stock available for issuance under our the Amended Stock Incentive Plan, then, based on historical grant practices and our practice of granting performance-based full-value awards to approximately 40 executives including our NEOs, we may exhaust the current reserve under the Plan before making our annual August 2018 long-term incentive grants, losing an important compensation tool that we consider to be aligned with stockholder interests and critical to our ability to attract, motivate and retain highly qualified talent.
We do not intend to grant any further awards under the Fifth & Pacific Companies, Inc. 2013 Stock Incentive Plan (the “Kate Spade Plan”), which we acquired in connection with the acquisition of Kate Spade & Company. All
72 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
outstanding awards under the Kate Spade Plan were converted to Coach stock after the closing of the Company's acquisition of Kate Spade and are included in the shares outstanding figures below.
If approved, the issuance of the additional shares of our common stock to be reserved under the Amended Stock Incentive Plan would dilute the holdings of stockholders by 2.6% of our common shares outstanding, bringing our overhang to approximately 14.4% (including the shares
that will be reserved for issuance under the Amended Stock Incentive Plan). According to our analysis, this overhang level is slightly above the 75th percentile of the companies in our peer group (please see Peer Group and Competitive Assessment of Compensation section above). We expect our overhang level to decrease in subsequent years as we issue shares from the Amended Stock Incentive Plan; for example, by the end of August 2018, approximately 646,080 stock options will expire or be exercised.
| Stock Options | | | | | Fiscal Year(1) | Number Outstanding | Weighted average exercise Price | Weighted average remaining term (yrs) | Total Full-Value Awards Outstanding(2) | Shares Available(3) | Common Shares Outstanding | Total equity dilution | 2015 | | 13,459,822 | | $ | 42.72 | | | 6.0 | | | 4,694,649 | | | 15,504,449 | | | 276,606,164 | | | 12.2% | | 2016 | | 14,990,465 | | $ | 40.51 | | | 6.6 | | | 5,656,534 | | | 19,207,954 | | | 278,537,258 | | | 14.3% | | 2017 | | 14,999,728 | | $ | 41.12 | | | 6.1 | | | 5,769,262 | | | 17,422,692 | | | 281,938,089 | | | 13.5% | | Current(4) | | 16,591,597 | | $ | 41.31 | | | 6.9 | | | 6,153,326 | | | 10,543,662 | | | 284,133,227 | | | 11.7% | | New Shares | | | | | | | | | | | | | | 7,500,000 | | | | | | 2.6% | | Total equity dilution including new shares | | 14.4% | |
| (1) | As reported in the Company’s proxy statement at the end of each fiscal year. |
| (2) | For PRSUs, assumes awards are earned at maximum performance level. |
| (3) | Excludes the Amended and Restated Coach, Inc. 2001 Employee Stock Purchase Plan. |
| (4) | Total number of outstanding options, weighted average exercise price of total outstanding options,weighted average remaining term of total outstanding options, total number of outstanding full value awards, and total number of shares available from all active equity plans are as of September 8, 2017; common shares outstanding are as of September 11, 2017 record date. |
In light of the factors described above, and the fact that we believe that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain employees in the competitive labor markets in which we compete, the Board has determined that the size of the share reserve under the Amended Stock Incentive Plan is reasonable and appropriate at this time.
In addition, we believe that the Amended Stock Incentive Plan continues to properly balance its compensatory design with stockholder interests by having the following characteristics:
Grants of options or stock appreciation rights (“SARs”) with an exercise price that is less than fair market value on the grant date are prohibited (except in the case of certain awards granted in connection with a merger or similar corporate transaction upon the assumption of or in substitution for outstanding equity awards previously granted by another entity);
Repricing of options or SARs to reduce price per share is prohibited without prior stockholder approval;
Acceleration of vesting in connection with a change in control only occurs in the context of a qualifying termination of employment occurring within 12 months following a change in control (commonly known as a “double trigger”) or under other limited circumstances as provided by the administrator;
The term of the Amended Stock Incentive Plan has not been extended in connection with this amendment and restatement and, accordingly, no awards may be granted under the Amended Stock Incentive Plan following September 17, 2020 (the ten-year anniversary of the date our Board of Directors adopted the Plan);
Dividends or dividend equivalents on unvested awards are only earned to the extent the underlying award is earned and vests; and
Shares used to satisfy the exercise price on stock options and SARs or used to satisfy tax withholding on any awards are not recycled back into the Amended Stock Incentive Plan, and the Amended Stock Incentive Plan does not have other practices commonly known as “liberal share counting” practices.
We have designed the Amended Stock Incentive Plan in a manner that is intended to permit us to grant awards of qualified performance-based compensation under Section 162(m) of the Code and to allow us to receive a tax deduction for incentive-based compensation without limitation under such Section 162(m). One of the requirements of Section 162(m) necessitates that we obtain stockholder approval of the Amended Stock Incentive Plan, including the performance criteria set forth in the Amended Stock Incentive Plan. Accordingly, approval of the Amended Stock Incentive Plan by our stockholders will also constitute approval of the performance criteria set forth in the Amended Stock Incentive Plan.
2017 PROXY STATEMENT | 73 |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
We are also seeking stockholder approval of the Amended Stock Incentive Plan to comply with a listing requirement of the NYSE which requires that material changes to any equity compensation plan of a NYSE-listed company be approved by the company’s stockholders.
If our stockholders approve the Amended Stock Incentive Plan, the Amended Stock Incentive Plan will be effective as of September 20, 2017. If our stockholders do not approve the Amended Stock Incentive Plan, the Plan, in its current form, will remain in effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN (AMENDED AND RESTATED AS OF SEPTEMBER 20, 2017).
The approval of the Amended Stock Incentive Plan requires the affirmative vote of a majority of the votes cast at the meeting (either in person or by proxy) on this Proposal 5.
Description of the Amended Stock Incentive Plan
The following is only a summary of the Amended Stock Incentive Plan and is qualified in its entirety by reference to its full text, a copy of which is attached hereto as Appendix B.
General. The Company has used equity compensation as a significant component of executive and broad-based compensation since our initial public offering in October 2000. As described in the Compensation Discussion and Analysis above, we have found equity compensation to be especially effective at motivating both sustained high performance and retention. At this time, the Company wishes to amend and restate its Plan to ensure that the Company has sufficient shares available to continue its approach to pay for performance through equity compensation, and to incorporate terms for future grants that reflect current best practices in executive compensation. The Board is seeking our stockholders’ approval of the Amended Stock Incentive Plan, because it believes it is the best way to motivate employees and outside directors to further the growth, development and financial success of Coach, and to enable us to obtain and retain the services of employees and outside directors considered essential to our long-term success by offering them an opportunity to own, and benefit from the ownership of, Coach stock. The Amended Stock Incentive Plan will:
Allow us to issue an additional 7,500,000 shares, which may be in the form of options to purchase shares of our common stock, restricted stock, RSUs, performance awards, including PRSUs, dividend equivalents, deferred stock, deferred stock units, SARs and other stock awards.
Allow us to continue providing, where appropriate, incentive compensation that is intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code of 1986 (the “Code”).
Number of Shares. A total of 62,400,000 shares of Coach common stock have been reserved for issuance pursuant to the Amended Stock Incentive Plan. No more than 1,000,000 shares may be granted to any participant within any fiscal year, and, as described below, no more than 5% of the available shares may be issued as awards without specified vesting schedules of at least one year. The number of shares of common stock available under the Amended Stock Incentive Plan will be proportionately adjusted in the event of any stock dividend, stock split, combination or exchange of securities, merger, consolidation, recapitalization, spin-off or other distribution (other than normal cash dividends).
Share Counting. Each share that is delivered under the Amended Stock Incentive Plan in settlement of a full-value award (such as a grant of RSUs or PRSUs) that was granted prior to September 19, 2014, will count as 2.0 shares for purposes of determining shares remaining available for grant and each share that is delivered in settlement of a full-value award that was granted on or following September 19, 2014, will count as 2.45 shares for purposes of determining shares remaining available for grant. Any awards under the Amended Stock Incentive Plan that are made in connection with an acquisition will not reduce the number of shares available for issuance under the Amended Stock Incentive Plan. Awards under either the Amended Stock Incentive Plan or under the Coach, Inc. 2004 Stock Incentive Plan (Amended and Restated Effective May 8, 2008) and the Coach, Inc. 2000 Stock Incentive Plan (Amended and Restated as of August 9, 2001) (the “Prior Plans”) that are not issued due to forfeiture or expiration will be returned to the Amended Stock Incentive Plan for reuse. Shares of common stock withheld upon
74 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
issuance to pay all or a portion of the exercise price of a stock option or SAR or tax withholding obligations on any award will not be returned to the Amended Stock Incentive Plan for reuse.
Shares Available. As of September 8, 2017, 10,543,662 shares remained available for grant under the Plan. There were 16,591,597 stock options outstanding with a weighted average exercise price of $41.31 and weighted average remaining term of 6.9 years, and 6,153,326 full value awards outstanding under all stock plans (including the Prior Plans, the Kate Spade Plan and the 2000 Non-Employee Director Stock Plan); of which 3,907,612 were service-based awards and 2,245,714 were unearned performance-based awards. To the extent actual performance is below the maximum attainable level, fewer than 2,245,714 performance-based awards shares will be issued. Also as of September 8, 2017, there were 59,479 deferred stock units outstanding under Coach’s Non-Qualified Deferred Compensation Plan for Outside Directors. There are no shares available for grant under the Prior Plans or the Non-Qualified Deferred Compensation Plan for Outside Directors. Approval of the Amended Stock Incentive Plan will have no impact on these plans.
Administration. The HR Committee administers the Amended Stock Incentive Plan. Awards under the Amended Stock Incentive Plan may be intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code. The HR Committee consists solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The HR Committee has the power to determine the terms of the awards granted, including the exercise price of stock options and SARs, the number of shares subject to each award, the exercisability of the options and SARs and the form of consideration payable upon exercise.
Eligibility. The HR Committee, in its sole discretion, may from time to time grant awards under the Amended Stock Incentive Plan to any number of employees of Coach or any subsidiary or to Coach’s outside directors. The HR Committee determines at the time of each grant the number of shares subject to such awards. All of our employees that are not covered by a collective bargaining agreement are eligible to participate in the Amended Stock Incentive Plan under the terms of the plan.
Stock Options and SARs. The exercise price of all options and SARs granted under the Amended Stock Incentive Plan must be at least equal to the fair market value (as defined in the Amended Stock Incentive Plan) of Coach common stock on the grant date. Each option and SAR will have a maximum term of ten years. No dividends or dividend equivalents will be paid on outstanding options or SARs. The HR Committee determines all other terms of these awards. After termination of employment, an optionee may exercise a vested option or SAR for the period of time stated in the option agreement,
which varies depending on the circumstances of the termination. In most cases, a vested option will generally remain exercisable for 90 days; however, an option or SAR may never be exercised later than the expiration of its term. All SARs granted under the Amended Stock Incentive Plan generally represent a right to receive payment, in cash, stock, or a combination of cash and stock, equal to the excess of the fair market value of a specified number of shares of common stock on the exercise date over the fair market value of such shares on the grant date. The Company does not currently grant SARs but may choose to do so in the future.
No Repricing. Repricing of stock options or SARs is prohibited without stockholder approval.
Full Value Stock Awards. A full value stock award granted under the Amended Stock Incentive Plan represents an award made in or valued in whole or in part by reference to shares of common stock and may be payable in whole or in part in stock. Full value awards do not include stock options or SARs but do include RSUs and PRSUs. The HR Committee determines the conditions and restrictions of all stock awards granted under the Amended Stock Incentive Plan. No more than 5% of these awards may be issued without specified vesting schedules of at least one year for full value awards requiring satisfaction of performance criteria, and at least three years for full value awards without performance criteria.
Dividend Equivalents. Under the Amended Stock Incentive Plan, the HR Committee has the discretion to grant dividend equivalents on unvested full value awards, but not on stock options or SARs. Dividends and dividend equivalents will not be paid prior to the vesting of the underlying award. If the underlying award is forfeited, the related dividends and dividend equivalents will be forfeited.
Payment Deferrals. The HR Committee may require or permit an award holder to defer the receipt of shares or cash or other property upon settlement of awards. The HR Committee may also allow the payment or crediting of earnings on deferred amounts.
Transferability of Awards. The Amended Stock Incentive Plan generally does not allow for the transfer of awards other than by will or the laws of descent and distribution pursuant to approved beneficiary designation procedures. Only the employee may exercise his or her options or benefit from his or her other awards during his or her lifetime.
Clawback. The Amended Stock Incentive Plan allows the Board to recover performance-based compensation from covered employees in the case of a material restatement of the Company’s financial results, as described above under Compensation Discussion and Analysis, and pursuant to any claw-back policy implemented by the Company, including any claw-back policy intended to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.
2017 PROXY STATEMENT | 75 |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
Adjustments in Connection with a Change in Control. If an employee is terminated involuntarily within the twelve months following a Change in Control (as defined in the Amended Stock Incentive Plan), or in the event outstanding awards are not assumed or substituted by the successor corporation, all unvested awards will vest automatically. The Board of Directors may not, without stockholder approval: reduce the price of an outstanding option or SAR, cancel any option or SAR in exchange for cash or another award with a lower fair market value per share, increase the number of shares available under the Amended Stock Incentive Plan (other than permitted adjustments due to a recapitalization of the Company’s stock), increase the individual annual award limit under the Amended Stock Incentive Plan, or extend the exercise period of an option or SAR beyond ten years from the date of grant.
Amendment of the Amended Stock Incentive Plan. Coach’s Board of Directors has the authority to amend, suspend or terminate the Amended Stock Incentive Plan, provided it does not adversely affect any award previously granted under the Amended Stock Incentive Plan, without the affected award holder’s consent.
Plan Benefits. Pursuant to the Luis Letter Agreements, Mr. Luis will annually receive equity awards with a fair market value on the grant date of not less than $4,800,000, with 60% of the award as PRSUs and 40% as stock options. However, because we make awards using a value-based approach, we cannot ascertain the number of stock option or PRSUs that will be granted to Mr. Luis. Pursuant to Mr. Bickley’s employment offer letter, the grant value of annual equity awards made to Mr. Bickley each year will be no less than $300,000. However, because we make awards using a value-based approach, we cannot ascertain the number of stock options, PRSUs or other awards that will be granted to Mr. Bickley. For other participants, no determination has been made as to the types or amounts of awards that will be granted to specific individuals under the Amended Stock Incentive Plan. While not necessarily indicative of future awards, information on awards granted under the Plan to each of our NEOs and Directors is provided above under the headings Summary Compensation Table, Grants of Plan-Based Awards, and2017 Director Compensation, as well as in the Compensation Discussion and Analysis.
Performance Criteria Under the Amended Stock Incentive Plan
The Amended Stock Incentive Plan provides that the HR Committee may grant performance awards in its discretion. A performance award is an award that is subject to the attainment of one or more performance targets during a specified period. At the discretion of the HR Committee, performance awards granted under the Amended Stock Incentive Plan may be designed to qualify as performance-based compensation under Section 162(m). In order for a performance award to qualify under Section 162(m), the HR Committee may select only from the following performance criteria enumerated in the Amended Stock Incentive Plan (any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group): net earnings or losses (either before or after one or more of the following: interest, taxes, depreciation and amortization); economic value added (as determined by the HR Committee); gross or net sales or revenue; net income (either before or after taxes); adjusted net income; operating earnings, income or profit (either before or after taxes); cash flow (including, but not limited to, operating cash flow and free cash flow); funds from operations or funds available for distributions; return on assets or net assets; return on capital (or invested capital) and cost of capital; return on investment; return on stockholders’ equity; total stockholder return; return on sales; gross or net profit or operating margin; costs, reduction in costs, and cost control measures or savings; productivity; expenses; operating efficiency; average daily transaction value (including, without limitation, average dollars per transaction); working capital; earnings or diluted earnings
per share; adjusted earnings or loss per Share; price per Share or dividends per Share (or appreciation in and/or maintenance of such price or dividends); revenue growth or product revenue growth; sales or market share, market penetration or other performance measures with respect to specific designated products or product groups and/or specific geographic areas or business units; economic value added models or similar metrics; regulatory achievements or compliance (including, without limitation, regulatory body approval for commercialization of a product); implementation or completion of critical projects or processes; licensing revenue; brand recognition/acceptance; inventory turns or cycle time and supply chain achievements (including, without limitation, establishing relationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products); strategic initiatives (including, without limitation, with respect to market penetration, geographic business expansion, manufacturing, commercialization, production and productivity, customer satisfaction and growth, employee satisfaction, recruitment and retention of personnel, human resources management, supervision of litigation and other legal matters, information technology, strategic partnerships and transactions (including acquisitions, dispositions, joint ventures, in-licensing and out-licensing of intellectual property, and establishment of relationships with commercial entities with respect to the marketing, distribution and sale of Company products, and factoring transactions, research and development and related activity, and financial or other capital raising transactions)); new or existing store results and
76 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
operations, new store openings, store remodelings and/or comparable store sales growth; and financial ratios (including, without limitation, those measuring liquidity, activity, profitability or leverage).
The HR Committee, in its discretion, may, within the time prescribed by Section 162(m), adjust or modify the calculation of these performance criteria for any performance period in order to prevent the dilution or enlargement of the rights of participants (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or
development or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles or business conditions.
Nothing in these terms precludes the HR Committee from making any payments or granting any awards whether or not such payments or awards qualify for tax deductibility under Section 162(m).
Federal Income Tax Consequences
The following discussion summarizes U.S. federal tax treatment of awards granted under the Amended Stock Incentive Plan under federal tax laws currently in effect. The rules governing the tax treatment of awards are quite technical and the following discussion is necessarily general in nature and does not purport to be complete. The statutory provisions and interpretations described below are, of course, subject to change, and their application may vary in individual circumstances. Award holders are encouraged to seek professional tax advice when exercising awards under the Amended Stock Incentive Plan.
Non-Qualified Stock Options. If an optionee is granted options under the Amended Stock Incentive Plan that constitute non-qualified stock options, the optionee will not have taxable income on the grant of the option, nor will Coach be entitled to any deduction. Generally, on exercise of non-qualified stock options, an optionee will recognize ordinary income, and Coach will be entitled to a deduction, in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. The holder’s basis for the common stock for purposes of determining gain or loss on subsequent disposition of such shares generally will be the fair market value of the common stock on the date the optionee exercises the stock option. Any subsequent gain or loss will be generally taxable as capital gains or losses.
Incentive Stock Options. There is no taxable income to an optionee when he is granted an option under the Amended Stock Incentive Plan that constitutes an incentive stock option or when that option is exercised. However, the amount by which the fair market value of the common stock at the time of exercise exceeds the exercise price will be an “item of tax preference” for the optionee. Generally, gain realized by the optionee on the sale of an incentive stock option is taxable at capital gains rates, and no tax deduction is available to Coach, unless the optionee disposes of the common stock (A) within two years after the date of grant of the incentive stock option or (B) within one year of the date of exercise. If the shares of common stock are sold or otherwise disposed of before the end of the one-year and two-year periods specified above, the
difference between the exercise price and the fair market value of the common stock on the date of the option’s exercise will be taxed at ordinary income rates, and Coach will be entitled to a deduction to the extent the optionee must recognize ordinary income. An incentive stock option exercised more than three months after an optionee retires, other than by reason of death or disability, will be taxed as a non-qualified stock option, and the optionee will have been deemed to have received income on the exercise taxable at ordinary income rates. Coach will be entitled to a tax deduction equal to the ordinary income, if any, realized by the optionee.
Restricted Stock. An award holder will generally not have income upon the grant of restricted stock unless an election under Section 83(b) of the Code is made within 30 days of the date of grant. If a timely 83(b) election is made, then a holder will have compensation income upon the date of grant equal to the value of the stock less the purchase price and, when the stock is sold, the holder will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant. If the holder does not make an 83(b) election, then when the stock vests the holder will have compensation income equal to the value of the stock on the vesting date less the purchase price. When the stock is sold, the holder will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Generally, any capital gain or loss will be long-term if the holder held the stock for more than one year and otherwise will be short-term. The holding period for purposes of capital gain or loss generally will commence on the date of vesting (or, if an 83(b) election is made, the date of grant).
Restricted Stock Units. An award holder will not have income upon the grant of an RSU award. A holder is not permitted to make a Section 83(b) election with respect to an RSU award. When the Restricted Stock Unit vests, the holder will have compensation income on the vesting date in an amount equal to the fair market value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the holder will have capital gain or loss equal to the sales proceeds less
2017 PROXY STATEMENT | 77 |
TABLE OF CONTENTS
PROPOSAL 5: APPROVAL OF THE AMENDED AND RESTATED COACH, INC. 2010 STOCK INCENTIVE PLAN
the value of the stock on the vesting date. Generally, any capital gain or loss will be long-term if the holder held the stock for more than one year and otherwise will be short-term.
Performance Awards. An award holder will generally recognize taxable ordinary income on the amount of cash paid or value of stock received under a performance award (including a performance stock unit award) and Coach will generally be entitled to a corresponding deduction.
Dividend Equivalents. An award holder will generally recognize taxable ordinary income on dividend equivalents as they are paid and Coach will generally be entitled to a corresponding deduction.
Stock Payments. An award holder will generally recognize taxable ordinary income on the fair market value of the stock delivered as payment of bonuses or other compensation under the Amended Stock Incentive Plan and Coach will generally be entitled to a corresponding deduction.
Deferred Stock. An award holder will generally recognize taxable ordinary income on the fair market value of the shares of stock on the date such shares are delivered under a deferred stock award and Coach will generally be entitled to a corresponding deduction.
Deferred Stock Units. An award holder will generally recognize taxable ordinary income on the fair market value of the shares of stock on the date such shares are delivered under a deferred stock unit award and Coach will generally be entitled to a corresponding deduction.
Stock Appreciation Rights. No taxable income is realized on the receipt of a stock appreciation right, but on exercise of the stock appreciation right the fair market value of the common stock (or cash in lieu of common stock) received must be treated as compensation taxable as ordinary income to the award holder in the year of the exercise. Coach will be entitled to a deduction for compensation paid in the same amount which the award holder realized as ordinary income.
Section 162(m) of the Code. In general, under Section 162(m) of the Code, income tax deductions of publicly-held corporations may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified benefits) for certain executive officers exceeds $1.0 million (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any taxable year of the corporation. However, under Section 162(m), the deduction limit does not apply to certain “performance-based” compensation. Stock options and SARs will satisfy the “performance-based” exception if (A) the awards are made by a qualifying compensation committee, (B) the Amended Stock Incentive Plan sets the maximum number of shares of common stock that can be granted to any person within a specified period and (C) the compensation is based solely on an increase in the common stock price after the grant date. The Amended Stock Incentive Plan has been designed to permit the HR Committee to grant stock options which will qualify as “performance-based compensation.” PRSUs are also intended to qualify as “performance-based” to the extent the performance requirements and other terms satisfy the requirements described above. As noted above, however, while the HR Committee considers the potential impact of Section 162(m) on our executive compensation decisions, the HR Committee may approve compensation under the Amended Stock Incentive Plan that does not meet the deductibility requirements of Section 162(m) in order to maintain competitive executive compensation packages and to continue to attract talented leaders. In addition, because of the fact-based nature of the performance-based compensation exception and the limited amount of applicable binding guidance, we cannot guarantee that compensation granted under the Amended Stock Incentive Plan that is intended to comply with the performance-based compensation exception under Section 162(m) will in fact so qualify.
The foregoing is only a summary of the effect of federal income taxation upon the participant and Coach with respect to the awards granted under the Amended Stock Incentive Plan. It does not purport to be complete and does not discuss the tax consequences arising in the context of a participant’s death or the income tax laws of any municipality, state or foreign country in which the participant’s income or gain may be taxable.
Incorporation by Reference
The foregoing is only a summary of the Amended Stock Incentive Plan and is qualified in its entirety by reference to its full text, a copy of which is attached hereto as Appendix B.
78 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 6: STOCKHOLDER PROPOSAL ENTITLED “NET-ZERO GREENHOUSE GAS EMISSIONS”
Coach has been advised that Jantz Management LLC, P.O. Box 301090, Boston, MA 02130, which has indicated it is a beneficial owner of at least $2,000 in market value of Coach's common stock, intends to submit the following proposal at the Annual Meeting:
Stockholder Proposal
Whereas:
In 2015, 196 parties at the U.N. Climate Change Conference agreed to limit climate change to an average global warming of 2 degrees Celsius above pre-industrial temperatures, with a goal of limiting it to 1.5 degrees Celsius. Alarmingly, recent data suggest that “if current emissions trends continue (RCP8.5) we could cross the 1.5°C threshold in 10 to 15 years, somewhere between the years 2025-2030.” Experts have concluded that the temperature increase goals mean that to fend off catastrophic climate change the entire world will need to achieve net zero GHG emissions;
Shareholders commend the Company’s efforts in reducing emissions and in calculating its carbon footprint, described as:
| • | Scope 1: Direct GHG Emissions - … occur from sources that are owned or controlled by the company… |
| • | Scope 2: Electricity Indirect GHG Emissions - … GHG emissions from the generation of purchased electricity consumed by the company |
| • | Scope 3: Other indirect GHG Emissions -… are a consequence of the activities of the company but occur from sources not owned or controlled by the company [e.g. transport-related activities; employee business travel/commuting; product end-of-life disposal] |
We believe that achieving the goal of net-zero greenhouse gas emissions is important for companies generally, and Coach specifically, to achieve sustainable long-term shareholder value.
Resolved: The shareholders request the Board of Directors of Coach (the “Company”) to prepare a report to shareholders by June 1, 2018 that evaluates the potential for the Company to voluntarily address its role in climate change by achieving “net-zero” emissions of greenhouse gases. The report should be prepared at reasonable expense and may exclude confidential information.
Supporting Statement: Achieving “net-zero greenhouse gas emissions status” would involve reducing GHG emissions from company operations and then offsetting the remaining GHG emissions by negative emissions strategies established by the company or purchased as offsets, such as from tree-planting and technological solutions that draw carbon from the air.
While the scope of the report would be in the management’s discretion, the proponent suggests that the report could:
• Consider the potential for net zero GHG from manufacturing and distribution, executive and administrative offices, data centers, product development offices, customer service offices, and employee transportation.
• Include fixed dates for fulfilling net zero GHG, such as 2030, 2040 or 2050.
ATTENTION FUND FIDUCIARIES: Mutual funds and institutions hold over 93% of Coach common stock. Leading investors include FMR, Dodge & Cox, Fidelity, T. Rowe Price, Vanguard, and Invesco. Your YES vote will promote Coach’s reputation and sales, and encourage Coach to establish a long-term sustainable business model.
2017 PROXY STATEMENT | 79 |
TABLE OF CONTENTS
PROPOSAL 6: STOCKHOLDER PROPOSAL ENTITLED “NET-ZERO GREENHOUSE GAS EMISSIONS”
BOARD OF DIRECTORS STATEMENT IN OPPOSITION OF THE PROPOSAL
The Board of Directors recommends a vote AGAINSTthis proposal 6.
The Board has given careful consideration to this proposal and has concluded that the adoption of this resolution is not necessary or in the best interest of Coach, Inc. (“Coach” or the “Company”). The proponent, Jantz Management, submitted a substantially similar proposal that was included in the Company's 2016 Proxy Statement, which received approximately 8.5% stockholder support. The Company continues to believe that this proposal is not beneficial to the Company’s stockholders.
The Board and management take Coach’s commitment to sustainable practices and environmental conservation seriously and are dedicated to transparency and public disclosure of Coach’s strategies and progress. Coach publishes an annual report (the “Corporate Responsibility Report”), which outlines the Company’s sustainability program and publicly discloses environmental conservation initiatives and goals. The Corporate Responsibility Report for fiscal year 2016, which is available at http://www.coach.com/sustainability-report.html, disclosed progress on Coach’s publicly announced sustainability targets for fiscal years 2016 - 2020, including Coach’s existing commitment to reduce its Greenhouse Gas (GHG)emissions.
In addition to the public disclosures contained in the Corporate Responsibility Report, Coach has voluntarily reported to the Carbon Disclosure Project (CDP) survey on climate change since 2015. Coach’s previously published CDP submissions can be found at https://www.cdp.net/en/reports/archive. The information included in the Company’s Corporate Responsibility Report and CDP Survey is not incorporated by reference into this Proxy Statement.
In support of its environmental conservation strategy, Coach has undertaken several key initiatives to successfully reduce the environmental impact of its operations and supply chain. These initiatives include:
| • | Establishing a public GHG emissions reduction target: In its annual sustainability report for fiscal year 2015, Coach announced public sustainability targets for fiscal years 2016 through 2020, including a commitment to reduce its absolute GHGemissions by 15% over a 2014 baseline. As of the end of fiscal year 2016, Coach had achieved a reduction of approximately 18.2% over its 2014 baseline. |
| • | Continuous improvement of processes to increase efficiencies and reduce environmental impact. Coach has enacted a more regionalized approach to sourcing materials closer to service providers and streamlined its distribution strategy through the use of in-region international warehouses, rather than relying substantially on Coach’s primary warehouse in the U.S. The Company also works to optimize shipping efficiencies and utilizes ocean freight shipping over other more carbon intensive methods of transportation when possible. In addition to a positive economic impact, these strategies have reduced the environmental emissions of sourcing and shipping products. |
| • | Designing and remodeling retail locations to be more energy efficient. In connection with Coach’s strategy to renovate its stores to reflect its modern luxury brand transformation, Coach has implemented energy efficient design and construction elements, including lower energy LED lighting, low volatile organic compound paints and environmentally friendly packing materials (shopping bags for full price stores are made from 40% post-consumer waste gift boxes are made from 100% recyclable materials). In fiscal year 2016 Coach began removing compact fluorescent lamps and fixtures from retail operations and replacing them with LED lighting, which will contribute towards the Company’s carbon reduction goals. |
| • | Zero-Waste Goal. Coach has set a target to achieve a 100% waste-to-landfill diversion rate by the end of fiscal year 2020 in its corporate locations. Coach’s New York corporate locations have improved their recycling capabilities year-over-year, improving from a 77% diversion rate in fiscal 2010 to 85.6% in fiscal year 2016. |
Sustainability is one platform of a comprehensive corporate-wide strategic plan for Coach. The Board notes that the Company has put considerable effort into developing actionable sustainability goals that are appropriate for its business planning horizon, operations and global footprint. By aligning Coach’s sustainability program with its business strategy, the Company believes it can make the biggest impact on sustainability initiatives while supporting the Company’s long-term financial success and stockholder value.
80 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 6: STOCKHOLDER PROPOSAL ENTITLED “NET-ZERO GREENHOUSE GAS EMISSIONS”
The Board believes that the Company’s resources in this area are best utilized through its continued effort in implementing its existing program and developing new goals and long-term strategies for emissions reductions and environmental conservation activities. As described above, the Company has already provided detailed information about its GHG emissions and strategies for reduction in its annual Corporate Responsibility Report and other sources and intends to continue to do so. The Board believes that these public disclosures reflect the Company’s firm commitment to reducing its GHG emissions and the preparation and publication of an additional public report is not necessary or advisable at this
time. Accordingly, the Board believes that adoption of this resolution is not in the best interest of the Company or its stockholders and, therefore, recommends a vote AGAINST this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL ENTITED “NET-ZERO GREENHOUSE GAS EMISSONS”
2017 PROXY STATEMENT | 81 |
TABLE OF CONTENTS
PROPOSAL 7: STOCKHOLDER PROPOSAL REGARDING RISK DISCLOSURE ON THE COMPANY'S USE OF FUR
Coach has been advised that The Humane Society of the United States, 1255 23rd Street NW, Suite 450, Washington, DC 20037, which has indicated it is a beneficial owner of at least $2,000 in market value of Coach's common stock, intends to submit the following proposal at the Annual Meeting:
Stockholder Proposal
RESOLVED, that shareholders request that Coach disclose to shareholders what risks it may face from its continued sale of products made from real animal fur. This disclosure should be made within six months after the 2017 annual meeting at reasonable cost and omit proprietary information.
ANALYSIS: Consumers' concerns about animals can cause tangible impacts on companies' value and performance.
In the two years following the release of a film alleging the mistreatment of captive animals at SeaWorld's theme parks, the company's share price plummeted nearly 60 percent - impacting SeaWorld and its investors.
In 2017, Ringling Bros. Circus closed entirely after nearly 150 years in operation, in large part due to ongoing animal welfare issues related to is business.
The food industry is also being impacted: as the Food Marketing Institute reports, “Shoppers prioritize animal welfare second only to employment practices” and, “Animal welfare must now therefore be considered as a shopper value that retailers need to manage towards.”
Coach may be putting its company and investors at increased risk through its use of real animal fur. Unlike Coach, other major brands have announced policies to eliminate their use of fur, thereby mitigating such risks. Those brands include: Armani, HUGO BOSS, Ralph Lauren, Tommy Hilfiger, Calvin Klein and Coach's recent acquisition, Kate Spade.
These companies' decisions to mitigate risks associated with animal abuse issues by eliminating fur from their products make good economic sense. Please consider the following opinions from the finance industry:
Citigroup concludes that “headline risks” endangering companies include “concerns over animal cruelty.”
“In the case of animal welfare,” reports the World Bank's International Finance Corporation, “failure to keep pace...could put companies and their investors at a competitive disadvantage.”
Glass Lewis reports: a company “should consider its exposure to regulatory, legal and reputational risk due to its animal welfare policies and practices.”
Northern Trust reports that at companies in which it invests, it “generally votes for proposals requesting increased disclosure or reporting regarding animal treatment issues that may impact a company's operations and products.”
ING refers to animal abuse as an important matter, and has issued a policy requiring companies it invests in to meet certain animal welfare criteria.
In light of the impact that this issue could have on Coach's performance, it's reasonable that the company should more thoroughly disclose to shareholders what risks it faces through its decision to continue using real fur.
CONCLUSION: Coach has no disclosure of the type requested by this proposal. Increased disclosure around the risks outlined in this proposal will benefit shareholders, and shareholders are encouraged to vote FOR this proposal.
82 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
PROPOSAL 7: STOCKHOLDER PROPOSAL REGARDING RISK DISCLOSURE ON THE COMPANY'S USE OF FUR
BOARD OF DIRECTORS STATEMENT IN OPPOSITION OF THE PROPOSAL
The Board of Directors recommends a vote AGAINSTthis proposal 7.
The Board has given careful consideration to this proposal and has concluded that the adoption of this resolution is not in the best interest of Coach, Inc. (“Coach” or the “Company”) or its stockholders. As described below, the Company has extensive disclosures regarding the materials used in its products, its policies and practices regarding animal welfare and risks facing the Company. Devoting resources towards preparing additional disclosure is unnecessary and would be an inefficient use of Company resources.
Coach is a leading New York-based house of modern luxury accessories and lifestyle brands. Coach’s product offerings include handbags, women’s and men’s accessories, footwear, jewelry, wearables, sunwear, watches and fragrance and use a broad range of high quality leathers, fabrics and materials. Materials of animal origin used in Company products are primarily byproducts of the meat industry; however, the Company does use animals that are not considered animal byproducts in a small portion of its products.
Each of the Company's brands is led by a design team that is responsible for conceptualizing and directing the design of all products. The Company's designers are supported by strong merchandising teams that analyze sales, market trends and consumer preferences to help create a globally relevant product assortment that meets customer expectations. The selection of the materials to be used in products is an integral part of the Company's business and a fundamental aesthetic choice of the design teams. Management’s ability to continue to make decisions regarding material selection is necessary to the operations of the Company's day-to-day business and the success of its products.
Coach is committed to high standards of animal welfare and has adopted principles and practices that require animals in its supply chain to be treated with care and respect. As disclosed in its latest Annual Report on Form 10-K and its Corporate Responsibility Report for fiscal year 2016, Coach requires its raw material suppliers, independent manufacturers and licensing partners to achieve and maintain high quality standards, which are reviewed through regular internal and external third party compliance audits.
Coach has also adopted a Supplier Code of Conduct and Animal Welfare Policy, both of which are publicly available at http://www.coach.com/governance-document.html. These policies set forth requirements and expectations for the ethical treatment of all animals in Coach’s supply chain. Coach also works to source materials from countries that have well-established and enforced legislation covering animal welfare. The information included in the Company’s Corporate Responsibility Report, Annual Report on Form 10-K, Supplier Code of Conduct and Animal Welfare Policy is not incorporated by reference into this Proxy Statement.
The Company’s management team, who are involved in the day-to-day operations of designing, sourcing and selling Company products, have made careful and informed decisions regarding the risks facing the Company. These risks are assessed on a regular basis and disclosed to stockholders in accordance with Securities and Exchange Commission (“SEC”) rules and guidance. The Company adheres to the SEC requirements of Regulation S-K, Item 503(c) and discloses the most significant risks facing the company to stockholders in a concise and logically organized manner that reflect the specific risks of the Company. Coach’s Annual Report on Form 10-K contains fulsome disclosure on risks with respect to its use of various materials in the Company’s products, including risks regarding demand for products, availability of raw materials, change in consumer preferences and ensuring the continued high standards of Coach’s third party partners.
The Board has carefully considered the stockholder proposal and, for the reasons described above, believes that additional disclosure requested by the stockholder proposal would be largely duplicative and not enhance the Company’s existing disclosures or policies and practices regarding animal welfare. Devoting resources for additional disclosure would be inefficient and not in the best interest of the Company or the Company’s stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL REGARDING RISK DISCLOSURE ON THE COMPANY'S USE OF FUR
2017 PROXY STATEMENT | 83 |
TABLE OF CONTENTS
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Transactions with Related Persons CoachThe Company has not identified any direct or indirect material interests of its directors or executive officers in any
transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. S-K for fiscal year 2021.Policies and Procedures for Related Person Transactions Coach
Tapestry has instituted written policies and procedures for the review, approval and ratification of “related person” transactions as defined in Item 404 of SEC Regulation S-K under the rules and regulations of the Exchange Act between the Company and its directors, director nominees, executive officers, greater than 5% beneficial owners, and each of their immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 and the partywhich any “related person” had, has or will have a direct“direct or indirect interest.material interest,” and which is potentially required to be disclosed pursuant to the Exchange Act. The policy provides that the GN Committee is responsible for the review and approval or disapproval of related party transactions proposed to be entered into or the ratification of any such transaction previously commenced or completed.which continues on a year after year basis. Under the policy, no GN Committee member may participate in any review, consideration or approval of a transaction involving such member or their immediate family or any entity with which such GN Committee member is affiliated. In reviewing transactions subject to the policy, the GN Committee considers any factors it deems relevant, including (i) whether the transaction is in the ordinary course of business of the Company, (ii) whether the transaction is on terms no less favorable than terms available to an unaffiliated third party, (iii) the related party’sperson’s interest in the transaction, (iv) the approximate dollar value of the transaction and the related party’sperson’s interest, (v) the purpose of the transaction, (vi) the disclosure obligations of the Company, (vii) the conflict of interest provisions of the Code and (viii) any other information that may be considered material.
The GN Committee has considered and adopted the following standing pre-approvals under the policy: (i) employment and compensation as an executive officer, other than to an individual who is an immediate family member of a related party, if the compensation would be required to be reported in the proxy statement and has been approved by the Board or HR Committee, (ii) director compensation, other than to an individual who is an immediate family member of a related party, if the compensation is required to be reported in the Company’s proxy statement, (iii) certain transactions in the ordinary course of business, and (iv) transactions where the interest of the related party arise solely from the ownership of Company equity securities and all owners of such securities receive the same pro rata benefit.
84 | 201774 | 2021 PROXY STATEMENT | | | |
TABLE OF CONTENTS OTHER INFORMATIONSection 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Coach’s executive officers, Directors and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish Coach with copies of all Section 16(a) forms filed by such
persons. Based solely on Coach’s review of such forms furnished to Coach and written representations from certain reporting persons, Coach believes that all filing requirements applicable to its executive officers, Directors and more than 10% stockholders were complied with on a timely basis during fiscal year 2017.
Communicating with the Board Coach
Tapestry has adopted a policy which permits stockholders and interested parties to contact the Board, of Directors.with the option to do so anonymously. To report complaints or concerns about Coach’sTapestry’s accounting, internal accounting controls, auditing or legal matters directly to Coach’sTapestry’s Board of Directors and/or Audit Committee, stockholders may submit a report on CoachTapestry Ethics and Compliance Reporting System (https://www.coachinc.ethicspoint.com/www.tapestry.ethicspoint.com/) or call 1-800-396-1807, which is manned by an independent service taking confidential messages on behalf of Coach.Tapestry. Complaints or concerns relating to Coach’sTapestry’s accounting, internal accounting controls or auditing matters will be referred to Coach’sTapestry’s independent Chair and the Audit Committee.Committee Chair. Other relevant legal or ethical concerns will be referred to the independent ChairmanChair of Coach’sTapestry’s Board, who is also currently the Chair of the GN Committee. The status of all outstanding concerns addressed to the independent ChairmanChair or the Audit Committee Chair will be reported to the DirectorsBoard on at least a quarterly basis. Further information on this policy is available to security holders on Coach’sTapestry’s web site through the Corporate Governance page. Stockholder Proposals for the 20182022 Annual Meeting Coach’s
Tapestry’s Bylaws currently provide that in order for a stockholder or eligible group of stockholders to nominate a candidate for election as a Director at an Annual Meeting of Stockholders or for a stockholder to propose business for consideration at such meeting, written notice complying with the requirements set forth in our Bylaws generally must be delivered to the Secretary of Coach,Tapestry, at Coach’sTapestry’s principal executive office, not later than 5:00 p.m., Eastern time, on the 120th120th day, and not earlier than the 150th150th day, prior to the first anniversary of the date of the proxy statement for the preceding year’s Annual Meeting. Accordingly, a stockholder nomination or proposal intended to be considered at the 20182022 Annual Meeting must be received by the Secretary after May 2, 2018,April 27, 2022, and no later than 5:00 p.m. Eastern time on June 1, 2018.May 27, 2022. Nominations or proposals should be mailed to Coach,Tapestry, Inc., to the attention of Coach’sTapestry’s Secretary, Todd Kahn,David Howard, 10 Hudson Yards, New York, New York 10001. In addition, if you wish to have your proposal considered for inclusion in Coach’s 2018Tapestry’s 2022 proxy statement, pursuant to Rule 14a-8 of the Exchange Act, we must receive it no later than June 1, 2018. May 27, 2022. Except as required by applicable law, CoachTapestry will consider only proposals meeting the requirements of the applicable federal securities laws, the Commission rules promulgated thereunder and Coach’sTapestry’s Bylaws. Tapestry’s Bylaws currently permit a stockholder (or a group of up to 20 stockholders) owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials candidates for election as directors constituting up to the greater of two individuals or 20% of the Board, if the nominating stockholder(s) and the nominee(s) satisfy the requirements specified in Tapestry’s Bylaws. For the 2022 Annual Meeting, notice of a proxy access nomination must be delivered to our Secretary not before April 27, 2022, and no later than 5:00 p.m. Eastern time on May 27, 2022. A copy of the Bylaws may be obtained from Todd Kahn, Coach’sDavid Howard, Tapestry’s Secretary, by written request to the same address. 2017 PROXY STATEMENT | 85 |
Coach’s
Tapestry’s Board of Directors does not presently intend to bring any other business before the Annual Meeting and, so far as is known to the Board, no matters are to be brought before the Annual Meeting except as specified in the Notice of the Annual Meeting. As to any business other than as specified in the Notice of the Annual Meeting that may properly come before the Annual Meeting, however, it is intended that proxies will be voted in respect thereof in accordance with the discretion of the persons exercising such proxies. | | | | | | 2021 PROXY STATEMENT | 75 |
TABLE OF CONTENTSCoach’s Tapestry’s Form 10-K and Other Matters A copy of Coach’sTapestry’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017,3, 2021, as filed with the SEC, will be sent to any stockholder, without charge, by regular mail or by e-mail upon written request addressed to Coach,Tapestry, to the attention of the Investor Relations Department, 10 Hudson Yards, New York, New York 10001. You also may obtain our Annual Report on Form 10-K over the Internet at the Securities and Exchange Commission’sSEC’s website, www.sec.gov, or on the investor relations section of our website. To the extent that this proxy statement is incorporated by reference into any of our other filings under the Securities ActorAct or the Exchange Act, the sections of this proxy statement titled Human Resources Committee Report, and Audit Committee Report (to the extent permitted by the rules of the SEC) will not be deemed incorporated, unless specifically provided otherwise in such filing. No information contained on our website, www.coach.com,www.tapestry.com, is intended to be included as part of, or incorporated by reference into, this proxy statement. This solicitation is being made by mail, but may also be made by email, telephone or in person by Coach’sTapestry’s officers and employees (without additional compensation). CoachTapestry will pay the cost of soliciting proxies for the Annual Meeting, including the cost of mailing. CoachTapestry will reimburse brokerage firms, nominees, custodians and fiduciaries for their out-of-pocketout-of-pocket expenses for forwarding proxy materials to
beneficial owners and seeking instruction with respect thereto. The Company has engaged Alliance Advisors LLC to assist in the solicitation of proxies for the Annual Meeting for a fee of $11,000$12,500 plus reasonable out-of-pocket expenses. 86 | 2017 PROXY STATEMENT |
Pursuant to rules of the SEC, the Company is delivering to multiple stockholders sharing the same address one copy of the Notice of Internet Availability (or, for those who request it, one hard copy of our annual report, proxy statement and proxy card) in a single envelope unless the Company has received prior instructions to the contrary. This procedure is referred to as householding. Upon written or oral request, we will promptly mail a separate copy of our Notice of Internet Availability in separate envelopes (or our annual report, proxy statement and proxy card) to any stockholder at a shared address to which a single copy of our Notice of Internet Availability (or our annual report, proxy statement and proxy card) was delivered in a single envelope. Conversely, upon written or oral request, we will cease delivering separate copies of our Notice of Internet Availability (or our annual report, proxy statement and proxy card) in separate envelopes to any shareholder at a shared address to which multiple copies of either document were delivered in the past. Please contact Broadridge Householding Department with your request, by calling their toll free number, 1-866-540-7095 or by writing to: Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. We will mail the materials that you request at no cost to you. Shareholders who hold their shares in “Street Name,” that is, through a broker, bank, financial institution or other nominee or intermediary as holder of record, and who wish to change their householding instructions or obtain copies of these documents, should follow the instructions on their voting instruction card or contact the holders of record. 76 | 2021 PROXY STATEMENT | | | |
TABLE OF CONTENTS APPENDIX A
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURESMEASURES
The Company’s reported results are presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The reported gross profit,net sales, operating income, net income and diluted earnings per share in fiscal years 20172021 and 20162020 reflect certain items which affect the comparability of our results. In addition, the reported net sales, operating income, net income, inventory turn and diluted earnings per share in fiscal years 20172021 and 20162020 were adjusted, when applicable, for annual and/or long-term incentive plan evaluation purposes. The following tables reconcile the “as reported” results to “adjusted” results excluding these items. Numbers shown in millions have been rounded to one decimal and diluted earnings per share has been rounded to two decimals. ADJUSTMENTS FOR ANNUAL INCENTIVE PLAN EVALUATION | Fiscal Year 2017 | | Net
Sales (in millions) | Operating Income (in millions) | Diluted Earnings Per Share | As Reported: (GAAP Basis) | $ | 4,488.3 | | $ | 787.4 | | $ | 2.09 | | Excluding items affecting comparability | | N/A | | | 25.2 | | | 0.06 | | Adjusted: (Non-GAAP Basis as reported in Form 10-K)(1) | | 4,488.3 | | | 812.6 | | | 2.15 | | Adjustment for annual incentive award measurement | | (0.1) | | | 2.9 | | | 0.01 | | Adjusted: (Non-GAAP Basis for award measurement) | | 4,488.2 | | | 815.5 | | | 2.16 | |
ADJUSTMENTS FOR ANNUAL INCENTIVE PLAN EVALUATION | Fiscal Year 2016 | | Net Sales (in millions) | Operating Income (in millions) | Diluted Earnings Per Share | As Reported: (GAAP Basis) | $ | 4,491.8 | | $ | 653.5 | | $ | 1.65 | | Excluding items affecting comparability | | N/A | | | 123.1 | | | 0.33 | | Adjusted: (Non-GAAP Basis as reported in Form 10-K)(1) | | 4,491.8 | | | 776.6 | | | 1.98 | | Excluding impact of 53rd week | | (84.4) | | | (27.7) | | | (0.07) | | Adjusted: (Non-GAAP Basis excluding 53rd week) | | 4,407.4 | | | 748.9 | | | 1.90 | |
| As Reported: (GAAP Basis) | | | $5,746.3 | | | $968.0 | | | 2.30x | | | $2.95 | | | $4,253.1 | | | $1,312.1 | | | 2.32x | | | $1,210.0 | | | $108.5 | | | 2.49x | | | Impairment | | | N/A | | | 37.7 | | | 0.01x | | | 0.10 | | | N/A | | | 12.3 | | | 0.02x | | | N/A | | | 19.3 | | | N/A | | | Acceleration Program | | | N/A | | | 89.6 | | | N/A | | | 0.23 | | | N/A | | | 21.9 | | | N/A | | | N/A | | | 4.4 | | | N/A | | | CARES Act Tax Impact | | | N/A | | | N/A | | | N/A | | | (0.31) | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | Adjusted: (Non-GAAP basis as reported in Form 10-K)(1) | | | $5,746.3 | | | $1,095.3 | | | 2.31x | | | $2.97 | | | $4,253.1 | | | $1,346.3 | | | 2.34x | | | $1,210.0 | | | $132.2 | | | 2.49x | | | Foreign Currency Adjustments | | | (85.9) | | | (11.9) | | | N/A | | | N/A | | | (71.0) | | | (22.7) | | | N/A | | | (8.0) | | | 1.8 | | | N/A | | | Exclude COVID Store Closures & Wholesale Order Cancellations | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | 34.9 | | | N/A | | | N/A | | | Exclude AIP from Operating Income Adjustment | | | N/A | | | 148.5 | | | N/A | | | N/A | | | N/A | | | 54.1 | | | N/A | | | N/A | | | 21.3 | | | N/A | | | Adjusted: (Non-GAAP Basis for AIP results measurement) | | | $5,660.4 | | | $1,231.8 | | | 2.31x | | | N/A | | | $4,182.1 | | | $1,377.6 | | | 2.34x | | | $1,236.9 | | | $155.3 | | | 2.49x | |
| As Reported: (GAAP Basis) | | | $4,961.4 | | | $(550.8) | | | $(2.34) | | | $3,525.7 | | | $589.4 | | | $1,149.5 | | | $(99.3) | | | ERP Implementation | | | N/A | | | 28.5 | | | 0.08 | | | N/A | | | N/A | | | N/A | | | N/A | | | Organization-related & Integration Costs | | | N/A | | | 33.4 | | | 0.13 | | | N/A | | | 0.6 | | | N/A | | | 1.3 | | | Impairment | | | N/A | | | 840.3 | | | 2.82 | | | N/A | | | 178.6 | | | N/A | | | 125.2 | | | Acceleration Program | | | N/A | | | 87.0 | | | 0.28 | | | N/A | | | 18.5 | | | N/A | | | 13.6 | | | Adjusted: (Non-GAAP basis as reported in Form 10-K)(1) | | | $4,961.4 | | | $438.4 | | | $0.97 | | | $3,525.7 | | | $787.1 | | | $1,149.5 | | | $40.8 | | | Foreign Currency Adjustments | | | 12.1 | | | 0.2 | | | 0.04 | | | 8.8 | | | 0.6 | | | (1.1) | | | (0.6) | | | Adjusted: (Non-GAAP Basis for AIP results measurement) | | | $4,973.5 | | | $438.6 | | | $1.01 | | | $3,534.5 | | | $787.7 | | | $1,148.4 | | | $40.2 | |
ADJUSTMENTS FOR LONG-TERM INCENTIVE PLAN EVALUATION | FY15-17 PRSU Third Tranche | | FY17 International Sales (in millions) | FY16 International Sales (in millions) | As Reported: (GAAP Basis) | $ | 1,715.2 | | $ | 1,704.0 | | Adjustment for long-term incentive award measurement | | 150.5 | | | 127.0 | | Adjusted Measure | | 1,865.7 | | | 1,831.0 | |
| | | | | | 2021 PROXY STATEMENT | 77 |
TABLE OF CONTENTS | As Reported: (GAAP Basis) | | | $(652.1) | | | $834.2 | | | $182.1 | | | ERP Implementation | | | 22.5 | | | N/A | | | 22.5 | | | Organization-related & Integration Costs | | | 37.2 | | | N/A | | | 37.2 | | | CARES Act Tax Impact | | | N/A | | | (95.0) | | | (95.0) | | | Impairment | | | 785.0 | | | 29.9 | | | 814.9 | | | Acceleration Program | | | 78.6 | | | 72.0 | | | 150.6 | | | Adjusted: (Non-GAAP basis as reported in Form 10-K)(1) | | | $271.2 | | | $841.1 | | | $1,112.3 | | | Adjustments related to 53rd Week (target conformity) | | | N/A | | | (25.0) | | | (25.0) | | | Adjusted: (Non-GAAP Basis for PRSU results measurement) | | | $271.2 | | | $816.1 | | | $1,087.3 | |
| As Reported: (GAAP Basis) | | | $(550.8) | | | $968.0 | | | ERP Implementation | | | 28.5 | | | N/A | | | Organization-related & Integration Costs | | | 33.4 | | | N/A | | | Impairment | | | 840.3 | | | 37.7 | | | Acceleration Program | | | 87.0 | | | 89.6 | | | Adjusted: (non-GAAP basis as reported in Form 10-K)(1) | | | $438.4 | | | $1,095.3 | |
| As Reported: (GAAP Basis) | | | $829.2 | | | $220.5 | | | Integration and Acquisition Charges | | | 0.4 | | | N/A | | | Impairment Charges | | | 580.5 | | | N/A | | | Acceleration Charges | | | N/A | | | 1.8 | | | Adjusted: (non-GAAP basis as reported in Form 10-K)(1) | | | $248.3 | | | $218.7 | |
| As Reported: (GAAP Basis) | | | $775.1 | | | $516.9 | | | Presentation Conformity Due to Acquisitions/Acct. Changes | | | (238.3) | | | (54.6) | | | Adjusted: (non-GAAP Basis for PRSU results measurement) | | | $536.8 | | | $462.3 | |
(1)
| See pages 33-34, 39-40 and 44 of the Company's Form 10-K for fiscal year 20172021 for a detailed description of certain items excluded from the non-GAAP financial measures presented in the 10-K for fiscal years 20172021 and 2016.2020. |
78 | 2021 PROXY STATEMENT | | | |
TABLE OF CONTENTS These non-GAAP performance measures were used by management to conduct and evaluate its business during its regular review of operating results for the periods affected. Management and the Company’s Board utilized these non-GAAP measures to make decisions about the uses of Company resources, analyze performance between periods, develop internal projections and measure management performance. The Company’s primary internal financial reporting excluded these items affecting comparability. In addition, the HR Committee of the Company’s Board used these non-GAAP measures when setting and assessing achievement of incentive compensation goals. We believe these non-GAAP measures are useful to investors in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company’s historical performance. In addition, Additionally, we believe presenting certain measuresincreases and decreases in constant currency provides a framework for assessing the performance of the Company's business outside the United States and helps investors and analysts understand the effect of significant year-over-year currency fluctuations. We believe non-GAAP measures assist investors in developing expectations of future performance. By providing the non-GAAP measure,measures, as a supplement to GAAP information, we believe we are enhancing investors’ understanding of our business and our results of operations. The non-GAAP financial measures are limited in their 2017 PROXY STATEMENT | 87 |
TABLE OF CONTENTS
usefulness and should be considered in addition to, and not in lieu of, U.S. GAAP financial measures. Further, these non-GAAP measures may be unique to the Company, as they may be different from non-GAAP measures used by other companies. Adjustments
Due to the ongoing Covid-19 pandemic, when setting the targets for Award MeasurementFor Annual Incentive Plan purposes, The Company made the following adjustments to non-GAAP results to excludefiscal year 2021 AIP in August 2020, the HR Committee approved the exclusion of the sales impact of foreign currency fluctuation: ($0.1) million for net sales, $2.9 million for operating incomeunplanned store closures and $0.01 for diluted earnings per share.cancelled wholesale orders, primarily as a direct result of regional government-mandated shutdowns of the retail sector within our fiscal year FY21. The Company calculates constant currencyexclusion was applied to the Kate Spade brand, as corporate and Coach brand results by translating current period results in local currency using the prior year period's monthly average currency conversion rate. The Company believes that planning incentive
targets and evaluating resultswere over maximum performance even before excluding the impact of foreign currency volatility produces a better evaluation of Company performance for incentive awards. The Company also excluded the impact of the 53rd week in fiscal year 2016 when planning incentive targets for fiscal year 2017 in order to set targets based on comparable periods.
FY15-17 PRSUs Third Tranche
Reported International Net Sales was adjusted primarily to exclude the impact of any foreign currency. The Company calculates constant currency revenue results for this purpose by translating the total fiscal year’s revenue by country in local currency using the fiscal 2014 total weighted average currency conversion rate. these closures.88 | 2017 | | | | | 2021 PROXY STATEMENT | 79 |
TABLE OF CONTENTS APPENDIX B
AMENDED AND RESTATED
QUESTIONS YOU MAY HAVE REGARDING THIS PROXY STATEMENT
COACH, INC.
2010 STOCK INCENTIVE PLAN
(Amended and Restated 1. What is the purpose of these materials? The accompanying proxy is solicited on behalf of our Board. We provide these proxy materials to you in connection with our Annual Meeting. Our Annual Meeting will be held virtually via live webcast on Wednesday, November 3, 2021, at 9:00 a.m. Eastern Time at www.virtualshareholdermeeting.com/TPR2021. As a holder of our common stock as of September 20, 2017)Article 1.
PURPOSE AND HISTORY
The purposethe close of this Amended and Restated Coach, Inc. 2010 Stock Incentive Plan (Amended and Restated as of September 20, 2017) (as it may be further amended from time to time, the “Plan”) is to promote the success and enhance the value of Coach, Inc. (the “Company”) by linking the individual interests of Employees, Consultants and Directors to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Employees, Consultants and Directors upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.
This Plan constitutes a complete amendment, restatement and continuation of the Coach, Inc. 2010 Stock Incentive Plan (formerly known as the Coach, Inc. 2010 Incentive Award Plan), as amended, which was originally adopted by the Boardbusiness on September 17, 2010,7, 2021 (the record date), you are invited to join the Annual Meeting and approved byare entitled and requested to vote on the Company’s stockholders on November 3, 2010, and which was subsequently amended and restatedproposals described in its entirety as the
Amended and Restated Coach, Inc. 2010 Stock Incentive Plan, which amendment and restatement was adopted by the Board on September 19, 2014 (the “2014 Restatement Effective Date”), and approved by the Company’s stockholders on November 6, 2014, and further amended and restated in its entirety as the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan (Amended and Restated as of September 18, 2015), which amendment and restatement was adopted by the Board on September 18, 2015, and approved by the Company’s stockholders on November 4, 2015, and further amended and restated in its entirety as the Amended and Restated Coach, Inc. 2010 Stock Incentive Plan (Amended and Restated as of September 23, 2016). Which amendment and restatement was adopted by the Board on September 23, 2016, and approved by the Company’s stockholders on November 10, 2016. In the event that the Company’s stockholders do not approve this Plan, the Plan will continue in full force and effect on its terms and conditions as in effect immediately prior to the date that the Plan (as amended and restated herein) is approved by the Board. proxy statement.Article 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
| 2.1 | “Administrator” shall mean the entity that conducts the general administration of the Plan as provided in Article 13. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 13.6, or as to which the Board has assumed, the term “Administrator” |
shall refer
2. What information is contained in these materials? The information included in this proxy statement relates to such person(s) unless the Committeeproposals to be considered and voted on at the Annual Meeting, the voting process, the compensation of the Directors and our NEOs, and other required information. Our Form 10-K for fiscal year 2021 is available to review with this proxy statement. We are delivering the Notice of 2021 Annual Meeting of Stockholders and instructions on how to access the proxy statement (or, for those who request it, a hard copy of this proxy statement and the enclosed proxy card) to our stockholders on or about September 24, 2021. 3. What proposals will be voted on at the meeting? At the Annual Meeting, our stockholders will be asked: 4.
| To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting. |
Our Board is not aware of any other matter that will be presented at the Annual Meeting. If any other matter is properly presented at the Annual Meeting, the persons named on your proxy will vote in accordance with their discretion on the matter. 4. Does the Board has revoked such delegationof Directors recommend voting in favor of the proposals? Yes, our Board unanimously recommends that you vote your shares “FOR” each of the Director nominees in proposal 1 and “FOR” proposals 2 and 3. 5. What shares can I vote? You may vote all of the shares of our common stock that you owned at the close of business on September 7, 2021, the record date. 6. What classes of shares are entitled to be voted? Holders of our common stock are entitled to one vote for each share of stock held by them as of the close of business on the September 7, 2021 record date. On the record date, the Company had 278,320,419 shares of common stock outstanding and entitled to be voted at the Annual Meeting, and no other stock of any series issued or the Board has terminated the assumption of such duties. | 2.2 | “Affiliate” shall mean (a) Subsidiary; and (b) any domestic eligible entity that is disregarded, under Treasury Regulation Section 301.7701-3, as an entity separate from either (i) the Company or (ii) any Subsidiary. |
| 2.3 | “Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or |
outstanding. 201780 | 2021 PROXY STATEMENT | 89 | | |
TABLE OF CONTENTS 7. What do I need to do now? such other accounting principles
Please carefully consider the information contained in this proxy statement and respond as soon as possible so that your shares will be represented at the Annual Meeting. You can respond by following the instructions for granting a proxy to vote presented in the Notice of Annual Meeting and Internet Availability of Proxy Materials you received; if you received paper copies of the Company's proxy materials, you can respond by completing, signing and dating your proxy card and returning it in the enclosed envelope. Alternatively, you may attend the Annual Meeting virtually via live webcast and vote your shares at the meeting. If you grant a proxy to vote online, by telephone, or standards asmail in a proxy card, you may applystill participate in the online meeting, should you choose do to so, you may revoke the Company’s financial statements under United States federal securities laws from time to time. | 2.4 | “Applicable Law” shall mean any applicable law, including, without limitation” (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. |
proxy by voting your shares when joining our Annual Meeting. | 2.5 | “Automatic Exercise Date” shall mean, with respect to an Option or a Stock Appreciation Right, the last business day of the applicable Option Term or Stock Appreciation Right Term that was initially established by the Administrator for such Option or Stock Appreciation Right (e.g., the last business day prior to the tenth anniversary of the date of grant of such Option or Stock Appreciation Right if the Option or Stock Appreciation Right initially had a ten-year Option Term or Stock Appreciation Right Term, as applicable). |
| 2.6 | “Award” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Deferred Stock Unit award, a Stock Payment award or a Stock Appreciation Right, which may be awarded or granted under the Plan (collectively, “Awards”). |
| 2.7 | “Award Agreement” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan. |
| 2.8 | “Award Limit” shall mean with respect to Awards that shall be payable in Shares or in cash, as the case may be, the respective limit set forth in Section 3.3. |
| 2.9 | “Board” shall mean the Board of Directors of the Company. |
| 2.10 | “Change in Control” shall mean and includes each of the following: |
| (a) | A “Person” (which term, for purposes of this Section 2.10, shall have the meaning it has when it is used in Section 13(d) of the Exchange Act, but shall not include the Company, any underwriter temporarily holding securities pursuant to an offering of such securities, any trustee or other fiduciary holding securities under an employee |
benefit plan
8. Do I need to attend the Annual Meeting? No. You may authorize a proxy to vote your shares by following the instructions presented in the notice of the Company,Annual Meeting and Internet Availability of Proxy Materials or if you received or, if you requested a paper proxy card, by completing, signing and dating your proxy card and returning it in the envelope provided to you. 9. If I wish to attend the Annual Meeting, what's different this year? Due to the continued uncertainties around the Covid-19 pandemic, we believe that it is in the best interest of our stockholders, the Board and our employees, that Tapestry's 2021 Annual Meeting be conducted via a live webcast, simultaneously allowing for greater participation and the opportunity to participate in the live, online meeting from any corporation owned, directly or indirectly, by thelocation convenient for you. We are committed to ensuring that our stockholders of the Company inhave substantially the same proportionsopportunities to participate in the virtual Annual Meeting as they would at an in-person meeting. Stockholders may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/TPR2021. Questions may also be submitted prior to the Annual Meeting at www.proxyvote.com. Stockholders will be able to review the rules of conduct and other meeting materials on www.virtualshareholdermeeting.com/TPR2021. We will answer questions that comply with the meeting rules of conduct during the Annual Meeting, subject to time constraints. If we receive substantially similar questions, we will group such questions together. The webcast replay of the Annual Meeting, including the question and answer portion, will be available soon after the Annual Meeting on our Investor Relations website for at least 30 days. Please note that stockholders will need their ownershipcontrol number which appears on their Notice of Voting StockInternet Availability of Proxy Materials, the proxy card (printed in the box and marked by the arrow), and the instructions that accompanied the proxy materials in order to access these sites and vote shares or ask questions prior to or at the Annual Meeting. If you hold your shares as a beneficial owner in street name and do not have a control number, please contact your bank or brokerage firm for voting instructions. If you access the Annual Meeting but do not enter your control number you will be able to listen to the proceedings, but you will not be able to otherwise participate. We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting. If you encounter any technical difficulties during check-in or during the Annual Meeting, please call the technical support number that will be posted on www.virtualshareholdermeeting.com/ TPR2021. 10. What constitutes a quorum, and why is a quorum required? A quorum is required for the Tapestry stockholders to conduct business at the Annual Meeting. The presence at the Annual Meeting, in person via the webcast or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting on any matter will constitute a quorum, permitting us to conduct the business of the Company) is or becomesAnnual Meeting. Proxies received but marked as abstentions, if any, and broker non-votes described below, will be included in the Beneficial Owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of Voting Stock representing thirty percent (30%) or morecalculation of the combined voting powernumber of shares considered to be present at the Company’s then outstanding securities; or | (b) | The Company consummates a reorganization, merger or consolidation of the Company or the Company sells, or otherwise disposes of, all or substantially all of the Company’s property and assets, or the stockholders of the Company approve a liquidation or dissolution of the Company (other than a reorganization, merger, consolidation or sale which would result in all or substantially all of the beneficial owners of the Voting Stock of the Company outstanding immediately prior thereto continuing to beneficially own, directly or indirectly (either by remaining outstanding or by being converted into voting securities of the resulting entity), more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such entity resulting from the transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s property or assets, directly or indirectly) outstanding immediately after such transaction in substantially the same proportions relative to each other as their ownership immediately prior to such transaction); or |
| (c) | During any period of 12 consecutive months, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 2.10(a) or Section 2.10(b)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the Directors then still in office who either were Directors at the beginning of the 12-month period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof. |
| 2.11 | “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder. |
Annual Meeting for purposes of obtaining a quorum. 90 | 2017 | | | | | 2021 PROXY STATEMENT | 81 |
TABLE OF CONTENTS 11. What is the voting requirement to approval the proposals? With respect to election of Directors (Proposal No. 1), our Bylaws provide that Directors will be elected by a majority of the total votes cast “FOR” and “AGAINST” each nominee in the election of directors at the Annual Meeting, either in person or by properly completed or authorized proxy. This means that the number of shares voted “FOR” a nominee must exceed the number of shares voted “AGAINST” that nominee. There are no cumulative voting rights. Abstentions and broker non-votes will not have any effect on the election of Directors. See “What happens if a Director nominee does not receive a majority of the votes cast?” below for information concerning our director resignation policy. Approval of Proposals No. 2 through 3 requires, in each case, “FOR” votes from a majority of the votes cast on the matter at the Annual Meeting, either in person or by properly completed or authorized proxy. Abstentions and broker non-votes will not have any effect on Proposals No. 2 and No. 3. Additionally, as discussed below, there will not be broker non-votes with regard to Proposal No. 2 as it is a routine matter. 12. What if I don't vote? What if I abstain? How are broker non-votes counted? If you hold your shares in street name, based on current NYSE rules, your broker will NOT be able to vote your shares with respect to the election of Directors or the non-binding advisory approval of executive compensation. If you have not provided directions to your broker, we strongly encourage you to do so and exercise your right to vote as a stockholder. However, the NYSE considers Proposal No. 2, regarding the ratification of the appointment of D&T, a routine matter. Thus, your broker or nominee may vote on your behalf with regard to Proposal No. 2, whether or not you provide voting instructions. When a proposal is not a routine matter and a brokerage firm has not received voting instructions from a beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a broker non-vote. Abstentions and broker non-votes are generally not considered votes cast and will have no effect on the proposals. 13. What happens if a Director nominee does not receive a majority of the votes cast? Under our Corporate Governance Principles, a Director nominee, running uncontested, who does not receive a majority of the votes cast, is required to tender his or her resignation for consideration by the GN Committee. The GN Committee will recommend to the Board whether to accept or reject the resignation. The Board will act on the tendered resignation and publicly disclose its decision within 90 days following certification of the election results. Unless all Directors have tendered their resignation, any Director who tenders his or her resignation will not participate in the Board’s decision with respect to his or her resignation. 14. Can I change my vote after I have delivered my proxy? Yes. You may change your vote at any time before your proxy is exercised at the meeting. You can do this in one of three ways. First, you can revoke your proxy by sending written notice to the Secretary of Tapestry before the Annual Meeting. Second, you can authorize online or send the Secretary of Tapestry a later-dated, signed proxy before the meeting. Third, if you are a holder of record, you can attend the meeting through our live online webcast and submit your vote electronically. If your shares are held in an account at a brokerage firm or bank and you do not have your control number, you must contact your brokerage firm or bank for instructions on how to change your vote. 15. If my shares are held in “street name” by my broker, will my broker vote my shares for me? Your broker will vote your shares only if the proposal is a matter on which your broker has discretion to vote (which is limited to the ratification of the appointment of the Company’s independent registered public accounting firm) or if you provide directions on how to vote by following the instructions provided to you by your broker. 16. Who will count the votes? All votes will be tabulated by Broadridge Financial Solutions, the inspector of elections appointed for the meeting. 82 | 2021 PROXY STATEMENT | 2.12 | “Committee” shall mean the Human Resources Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 13.1. | |
| 2.13 | “Common Stock” shall mean the common stock of the Company, par value $0.01 per share. |
| 2.14 | “Company” shall mean Coach, Inc., a Maryland corporation. |
| 2.15 | “Consultant” shall mean any consultant or advisor engaged to provide services to the Company or any Affiliate who qualifies as a consultant under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form S-8 Registration Statement. |
| 2.16 | “Covered Employee” shall mean any Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code. |
| 2.17 | “Deferred Stock” shall mean a right to receive Shares awarded under Section 10.4. |
| 2.18 | “Deferred Stock Unit” shall mean a right to receive Shares awarded under Section 10.5. |
| 2.19 | “Director” shall mean a member of the Board, as constituted from time to time. |
| 2.20 | “Director Limit” shall have the meaning set forth in Section 4.6. |
| 2.21 | “Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 10.2. |
| 2.22 | “DRO” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder. |
| 2.23 | “Effective Date” shall mean the date the Plan (as amended and restated herein) is approved by the Board, subject to approval of the Plan by the Company’s stockholders. |
| 2.24 | “Eligible Individual” shall mean any Employee, Consultant or Director designated by the Administrator as eligible to receive an Award or Awards under the Plan, including any officer or key Employee of the Company and all other Employees of the Company. |
| 2.25 | “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any Affiliate, but shall not include any person whose services with the Company are performed pursuant to a contract or arrangement that purports to treat the individual as an independent |
contractor even if such individual is later determined (by judicial action or otherwise) to have been a common law employee of the Company rather than an independent contractor.
| 2.26 | “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of shares of Common Stock (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per-share value of the Common Stock underlying outstanding Awards. |
| 2.27 | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time. |
| 2.28 | “Expiration Date” shall have the meaning given to such term in Section 14.1. |
| 2.29 | “Fair Market Value” shall mean, as of any given date, the closing sales price for a share of Common Stock as quoted on the New York Stock Exchange (or on any national securities exchange on which the Common Stock is then listed) for such date or, if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable. |
| 2.30 | “Full Value Award” shall mean any Award other than an Option or a Stock Appreciation Right, and that is settled by the issuance of Shares. |
| 2.31 | “Greater Than 10% Stockholder” shall mean an individual then owning (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 Company or any Affiliate corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code). |
| 2.32 | “Holder” shall mean a person who has been granted an Award. |
| 2.33 | “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code. |
| 2.34 | “Non-Employee Director” shall mean a Director of the Company who is not an Employee. |
| 2.35 | “Non-Employee Director Equity Compensation Policy” shall have the meaning set forth in Section 4.6. |
2017 PROXY STATEMENT | 91 |
TABLE OF CONTENTS 17. Where can I find voting results of the Annual Meeting? We will announce preliminary voting results at the meeting and publish final results in a Form 8-K filed with the SEC within four business days after the end of the Annual Meeting. 18. Who will bear the costs of soliciting votes for the meeting? The expenses of soliciting proxies to be voted at the meeting will be paid by the Company. Following the original mailing of soliciting materials, we may also solicit proxies by mail, telephone, fax or email. Following the original mailing of soliciting materials, we will request that brokers, custodians, nominees and other record holders of common stock forward copies of the proxy statement and other soliciting materials to persons for whom they hold shares of common stock and request authority for the exercise of proxies. In such cases, the Company, upon the request of the record holders, will reimburse these holders for their reasonable expenses. The Company has engaged Alliance Advisors LLC to solicit proxies for a fee of $12,500 plus reasonable out-of-pocket expenses. 19. Whom should I call with other questions? If you have additional questions about this proxy statement or the meeting or would like additional copies of this document, please contact: Tapestry, 10 Hudson Yards, New York, New York 10001, Attention: Investor Relations Department, Telephone: (212) 629-2618. | 2.36 | “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option. | | | | 2021 PROXY STATEMENT | 83 |
| 2.37 | “Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Consultants and Non-Employee Directors shall only be Non-Qualified Stock Options. |
| 2.38 | “Option Term” shall have the meaning set forth in Section 6.4. |
| 2.39 | “Performance Award” shall mean a cash bonus award, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 10.1. |
| 2.40 | “Performance-Based Compensation” shall mean any compensation that is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code. |
| 2.41 | “Performance Criteria” shall mean the criteria (and adjustments) that the Committee selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period, determined as follows: |
| (a) | The Performance Criteria that shall be used to establish Performance Goals are limited to the following: net earnings or losses (either before or after one or more of the following: interest, taxes, depreciation and amortization); economic value added (as determined by the Committee); gross or net sales or revenue; net income (either before or after taxes); adjusted net income; operating earnings, income or profit (either before or after taxes); cash flow (including, but not limited to, operating cash flow and free cash flow); funds from operations or funds available for distributions; return on assets or net assets; return on capital (or invested capital) and cost of capital; return on investment; return on stockholders’ equity; total stockholder return; return on sales; gross or net profit or operating margin; costs, reduction in costs, and cost control measures or savings; productivity; expenses; operating efficiency; average daily transaction value (including, without limitation, average dollars per transaction); working capital; earnings or diluted earnings per share; adjusted earnings or loss per Share; price per Share or dividends per Share (or appreciation in and/or maintenance of such price or dividends); revenue growth or product revenue growth; sales or market share, market penetration or other performance measures with respect to specific designated products or product groups and/or specific geographic areas or business units; economic value |
added models or similar metrics; regulatory achievements or compliance (including, without limitation, regulatory body approval for commercialization of a product); implementation or completion of critical projects or processes; licensing revenue; brand recognition/acceptance; inventory turns or cycle time and supply chain achievements (including, without limitation, establishing relationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products); strategic initiatives (including, without limitation, with respect to market penetration, geographic business expansion, manufacturing, commercialization, production and productivity, customer satisfaction and growth, employee satisfaction, recruitment and retention of personnel, human resources management, supervision of litigation and other legal matters, information technology, strategic partnerships and transactions (including acquisitions, dispositions, joint ventures, in-licensing and out-licensing of intellectual property, and establishment of relationships with commercial entities with respect to the marketing, distribution and sale of Company products, and factoring transactions, research and development and related activity, and financial or other capital raising transactions)); new or existing store results and operations, new store openings, store remodelings and/or comparable store sales growth; and financial ratios (including, without limitation, those measuring liquidity, activity, profitability or leverage), any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices.
| (b) | The Administrator may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include one or more of the following: items related to a change in accounting principle; items relating to financing activities; expenses for restructuring or productivity initiatives; other non-operating items; items related to acquisitions; items attributable to the business operations of any entity acquired by the Company during the Performance Period; items related to the disposal of a business or segment of a business; items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; any other items of significant |
92 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS APPENDIX B
![](https://capedge.com/proxy/DEF 14A/0001140361-21-032470/ny20000403x1_bcv.jpg) income or expense which are determined to be appropriate adjustments; items relating to unusual or extraordinary corporate transactions, events or developments; items related to amortization of acquired intangible assets; items that are outside the scope of the Company’s core, on-going business activities; items related to acquired in-process research and development; items relating to changes in tax laws; items relating to major licensing or partnership arrangements; items relating to asset impairment charges; items relating to gains or losses for litigation, arbitration and contractual settlements; items attributable to expenses incurred in connection with a reduction in force or early retirement initiative; or items relating to any other unusual or nonrecurring events or changes in Applicable Law, accounting principles or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.
| 2.42 | “Performance Goals” shall mean, for a Performance Period, one or more goals established in writing by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a Subsidiary, division, business unit, or an individual. The achievement of each Performance Goal shall be determined, to the extent applicable, with reference to Applicable Accounting Standards. |
| 2.43 | “Performance Period” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, and the payment of, an Award. |
| 2.44 | “Performance Stock Unit” shall mean a Performance Award awarded under Section 10.1 which is denominated in units of value including dollar value of shares of Common Stock. |
| 2.45 | “Permitted Transferee” shall mean, with respect to a Holder, any “family member” of the Holder, as defined in the instructions to Form S-8 Registration Statement under the Securities Act, after taking into account Applicable Law. |
| 2.46 | “Plan” has the meaning set forth in Article 1. |
| 2.47 | “Prior Plans” shall mean the Coach, Inc. 2004 Stock Incentive Plan (Amended and Restated Effective May 8, |
2008) and the Coach, Inc. 2000 Stock Incentive Plan (Amended and Restated as of August 9, 2001), as such plans may be amended from time to time.
| 2.48 | “Program” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan. |
| 2.49 | “Restricted Stock” shall mean Common Stock awarded under Article 8 that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase. |
| 2.50 | “Restricted Stock Units” shall mean the right to receive Shares awarded under Article 9. |
| 2.51 | “Securities Act” shall mean the Securities Act of 1933, as amended. |
| 2.52 | “Share” shall mean a share of Common Stock. |
| 2.53 | “Share Limit” shall mean the aggregate number of Shares set forth in Section 3.1(a), as adjusted pursuant to Sections 3.1(b) and (c). |
| 2.54 | “Stock Appreciation Right” shall mean a stock appreciation right granted under Article 11. |
| 2.55 | “Stock Appreciation Right Term” shall have the meaning set forth in Section 11.4. |
| 2.56 | “Stock Payment” shall mean (a) a payment in the form of Shares, or (b) an option or other right to purchase Shares, as part of a bonus, deferred compensation or other arrangement, awarded under Section 10.3. |
| 2.57 | “Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain. |
| 2.58 | “Substitute Award” shall mean an Award granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right. |
2017 PROXY STATEMENT | 93 |
TABLE OF CONTENTS
APPENDIX B
![](https://capedge.com/proxy/DEF 14A/0001140361-21-032470/ny20000403x1-pc02.jpg) | 2.59 | “Termination of Service” shall mean: |
| (a) | As to a Consultant, the time when the engagement of a Holder as a Consultant to the Company or any Affiliate is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any Affiliate. |
| (b) | As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate. |
| (c) | As to an Employee, the time when the employee-employer relationship between a Holder and the Company or any Affiliate is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate. |
The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of the Program, the Award Agreement or otherwise, or as otherwise required by Applicable Law, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then-applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).
Article 3.
SHARES SUBJECT TO THE PLAN
| (a) | Subject to Section 14.2 and Section 3.1(b), the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan shall be 62,400,000 Shares; provided, however, that such aggregate number of Shares available for issuance under the Plan shall be reduced by (x) two (2) Shares for each Share delivered in settlement of any Full Value Award granted under the Plan prior to the 2014 Restatement Effective Date and settled by the issuance of Shares prior to, on or following the 2014 Restatement Effective Date and (y) 2.45 Shares for each Share delivered in settlement of any Full Value Award granted under the Plan on or following the 2014 Restatement Effective Date. |
| (b) | If any Shares subject to an Award that is not a Full-Value Award are forfeited or expire or such Award is settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again |
be available for future grants of Awards under the Plan. To the extent that a Full-Value Award is forfeited or expires or such Full-Value Award is settled for cash (in whole or in part), the Shares available under the Plan shall be increased by (x) two (2) Shares for each Share subject to any such Full-Value Award granted under the Plan prior to the 2014 Restatement Effective Date that is forfeited, expired or settled in cash prior to, on or following the 2014 Restatement Effective Date and (y) 2.45 Shares for each Share subject to any such Full-Value Award granted under the Plan on or following the 2014 Restatement Effective Date that is forfeited, expired or settled in cash. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 3.1(a) and will not be available for future grants of Awards under the Plan: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the
94 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options. Any Shares repurchased by the Company under Section 8.4 at the same price paid by the Holder so that such Shares are returned to the Company will again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.
| (c) | If any Shares subject to an award under any Prior Plan are forfeited or expire or such award is settled for cash (in whole or in part), the Shares subject to such award under such Prior Plan shall, to the extent of such forfeiture, expiration or cash settlement, be available for future grants of Awards under the Plan; provided, however, that the following Shares subject to Prior Plan awards shall not be added to the Shares authorized for grant under Section 3.1(a) and will not be available for future grants of Awards under the Plan: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of a stock option award granted under a Prior Plan; (ii) Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an award granted under a Prior Plan; (iii) Shares subject to a stock appreciation right granted under a Prior Plan that are not issued in connection with the stock settlement of the stock appreciation right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of stock option awards granted under a Prior Plan. Any Shares repurchased by the Company with respect to a restricted stock award under any Prior Plan at the same price paid by the Holder so that such Shares are returned to the Company will be available for Awards under the Plan. |
| (d) | Substitute Awards shall not reduce the Shares authorized for grant under the Plan. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by |
stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Subsidiaries immediately prior to such acquisition or combination.
| 3.2 | Stock Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market. |
| 3.3 | Limitation on Number of Shares Subject to Awards. Notwithstanding any provision in the Plan to the contrary, and subject to Section 14.2, the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any fiscal year shall be 1,000,000 and the maximum aggregate amount of cash that may be paid in cash during any fiscal year with respect to one or more Awards payable in cash shall be $6,000,000. To the extent required by Section 162(m) of the Code, Shares subject to Awards which are canceled shall continue to be counted against the Award Limit. |
| 3.4 | Award Vesting Limitations. Notwithstanding any other provision of the Plan to the contrary, but subject to Section 14.2 of the Plan, Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted; provided, however, that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the shares of Common Stock available pursuant to Section 3.1(a) may be granted to any one or more Eligible Individuals without respect to such minimum vesting provisions. Nothing in this Section 3.4 shall preclude the Administrator from taking action, in its sole discretion, to accelerate the vesting of any Award in connection with or following a Holder’s death, disability, Termination of Service or the consummation of a Change in Control. |
2017 PROXY STATEMENT | 95 |
TABLE OF CONTENTS
Article 4.
GRANTING OF AWARDS
| 4.1 | Participation. The Administrator may, from time to time, select from among all Eligible Individuals those to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. Except as provided in Section 4.6 regarding the grant of Awards pursuant to the Non-Employee Director Equity Compensation Policy, no Eligible Individual shall have any right to be granted an Award pursuant to the Plan. |
| 4.2 | Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award, which may include the term of the Award, the provisions applicable in the event of the Holder’s Termination of Service, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award. Award Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. |
| 4.3 | Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. |
| 4.4 | At-Will Employment; Voluntary Participation. Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of, or as a Consultant or Director for, the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change |
all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan shall be construed as mandating that any Eligible Individual shall participate in the Plan.
| 4.5 | Foreign Holders. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Subsidiaries operate or have Employees, Consultants or Non-Employee Directors, or in order to comply with the requirements of any foreign securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws or listing requirements of any such foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the Share Limit, the Award Limit or the Director Limit; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law. For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof. |
| 4.6 | Non-Employee Director Awards. The Administrator may, in its sole discretion, provide that Awards granted to Non-Employee Directors shall be granted pursuant to a written non-discretionary formula established by the Administrator (the “Non-Employee Director Equity Compensation Policy”), subject to the limitations of the Plan. The Non-Employee Director Equity Compensation Policy shall set forth the type of Award(s) |
96 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
to be granted to Non-Employee Directors, the number of Shares to be subject to Non-Employee Director Awards, the conditions on which such Awards shall be granted, become exercisable and/or payable and expire, and such other terms and conditions as the Administrator shall determine in its sole discretion. The Non-Employee Director Equity Compensation Policy may be modified by the Administrator from time to time in its sole discretion. Notwithstanding any provision to the contrary in the Plan or in the Non-Employee Director Equity Compensation Policy, the maximum aggregate grant date fair value of Awards granted to a Non-
Employee Director during any calendar year shall be $500,000 (the “Director Limit”).
| 4.7 | Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards. |
Article 5.
PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS
PERFORMANCE-BASED COMPENSATION.
| 5.1 | Purpose. The Committee, in its sole discretion, may determine at the time an Award is granted or at any time thereafter whether such Award is intended to qualify as Performance-Based Compensation. If the Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is intended to qualify as Performance-Based Compensation (other than an Option or Stock Appreciation Right), then the provisions of this Article 5 shall control over any contrary provision contained in the Plan. The Administrator may in its sole discretion grant Awards to other Eligible Individuals that are based on Performance Criteria or Performance Goals or any such other criteria and goals as the Administrator may establish, but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation. Unless otherwise specified by the Committee at the time of grant, the Performance Criteria with respect to an Award intended to be Performance-Based Compensation payable to a Covered Employee shall be determined on the basis of Applicable Accounting Standards. |
| 5.2 | Applicability. The grant of an Award to an Eligible Individual for a particular Performance Period shall not require the grant of an Award to such Eligible Individual in any subsequent Performance Period and the grant of an Award to any one Eligible Individual shall not require the grant of an Award to any other Eligible Individual in such period or in any other period. |
| 5.3 | Types of Awards. Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to an Eligible Individual intended to qualify as Performance-Based Compensation, including, without limitation, Restricted Stock the restrictions with respect |
to which lapse upon the attainment of specified Performance Goals, Restricted Stock Units that vest and become payable upon the attainment of specified Performance Goals and any Performance Awards described in Article 10 that vest or become exercisable or payable upon the attainment of one or more specified Performance Goals.
| 5.4 | Procedures with Respect to Performance-Based Awards. To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or more Eligible Individuals which is intended to qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period or any designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned under such Awards, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to |
2017 PROXY STATEMENT | 97 |
TABLE OF CONTENTS
take into account additional factors that the Committee may deem relevant, including the assessment of individual or corporate performance for the Performance Period.
| 5.5 | Payment of Performance-Based Awards. Unless otherwise provided in the applicable Program or Award Agreement and only to the extent otherwise permitted by Section 162(m) of the Code, as to an Award that is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or an Affiliate throughout the Performance Period. Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and to the extent the Performance Goals for such period are achieved. |
| 5.6 | Additional Limitations. Notwithstanding any other provision of the Plan and except as otherwise determined by the Administrator, any Award which is granted to an Eligible Individual and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code or any regulations or rulings issued thereunder that are requirements for qualification as Performance-Based Compensation, and the Plan and the applicable Program and the Award Agreement shall be deemed amended to the extent necessary to conform to such requirements. |
Article 6.
GRANTING OF OPTIONS
| 6.1 | Granting of Options to Eligible Individuals. The Administrator is authorized to grant Options to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan. |
| 6.2 | Qualification of Incentive Stock Options. No Incentive Stock Option shall be granted to any person who is not an Employee of the Company or any “subsidiary corporation” of the Company (as defined in Section 424(f) of the Code). No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. Any Incentive Stock Option granted under the Plan may be modified by the Administrator, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code. To the extent that the aggregate Fair Market Value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any parent or subsidiary corporation thereof (each as defined in Section 424(e) and (f) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The rule set forth in the immediately preceding sentence shall be applied by taking Options and other “incentive stock options” |
into account in the order in which they were granted and the Fair Market Value of stock shall be determined as of the time the respective options were granted.
| 6.3 | Option Exercise Price. The exercise price per Share subject to each Option shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). |
| 6.4 | Option Term. The term of each Option (the “Option Term”) shall be set by the Administrator in its sole discretion; provided, however, that the Option Term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Options, which time period may not extend beyond the last day of the Option Term. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder or the first sentence of this Section 6.4, the Administrator may extend the Option |
98 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
Term of any outstanding Option, and may extend the time period during which vested Options may be exercised, in connection with any Termination of Service of the Holder, and may amend, subject to Section 14.1, any other term or condition of such Option relating to such a Termination of Service.
| (a) | The period during which the right to exercise, in whole or in part, an Option vests in the Holder shall be set by the Administrator and the Administrator may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Affiliate, any of the Performance Criteria, or any other criteria selected by the Administrator, and, except as limited by the Plan, at any time after the grant of an Option, the Administrator, in its sole discretion, and subject to whatever terms and conditions it selects, may accelerate the period during which an Option vests. |
| (b) | No portion of an Option which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the applicable Program, the Award Agreement evidencing the grant of an Option, or by action of the Administrator following the grant of the Option. Unless otherwise determined by the Administrator in the Award Agreement or by action of the Administrator following the grant of the Option, the portion of the Option that is |
unexercisable at a Holder’s Termination of Service shall automatically expire and be forfeited thirty (30) days following such Termination of Service.
| 6.6 | Substitute Awards. Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the Shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the Shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares. |
| 6.7 | Substitution of Stock Appreciation Rights. The Administrator may provide in the applicable Program or the Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable, and shall also have the same exercise price, vesting schedule and remaining term as the substituted Option. |
Article 7.
EXERCISE OF OPTIONS
| 7.1 | Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional Shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of Shares. |
| 7.2 | Expiration of Option Term: Automatic Exercise of In-The-Money Options. Unless otherwise provided by the Administrator (in an Award Agreement or otherwise) or as otherwise directed by an Option Holder in writing to the Company, each vested and exercisable Option outstanding on the Automatic Exercise Date with an exercise price per share that is less than the Fair Market Value per share of Common Stock as of such date shall automatically and without further |
action by the Option Holder or the Company be exercised on the Automatic Exercise Date. In the sole discretion of the Administrator, payment of the exercise price of any such Option shall be made pursuant to Section 12.1(b) or 12.1(c) and the Company or any Affiliate shall deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 12.2. Unless otherwise determined by the Administrator, this Section 7.2 shall not apply to an Option if the Holder of such Option incurs a Termination of Service on or before the Automatic Exercise Date. For the avoidance of doubt, no Option with an exercise price per share that is equal to or greater than the Fair Market Value per share of Common Stock on the Automatic Exercise Date shall be exercised pursuant to this Section 7.2.
2017 PROXY STATEMENT | 99 |
TABLE OF CONTENTS
| 7.3 | Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock plan administrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, as applicable: |
| (a) | A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option; |
| (b) | Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars; |
| (c) | In the event that the Option shall be exercised pursuant to Section 12.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and |
| (d) | Full payment of the exercise price and applicable withholding taxes to the stock plan administrator of the Company for the Shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Sections 12.1 and 12.2. |
| 7.4 | Notification Regarding Disposition. The Holder shall give the Company prompt written or electronic notice of any disposition of shares of Common Stock acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such Shares to such Holder. |
Article 8.
AWARD OF RESTRICTED STOCK
| 8.1 | Award of Restricted Stock. |
| (a) | The Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate. |
| (b) | The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law. In all cases, legal consideration shall be required for each issuance of Restricted Stock. |
| 8.2 | Rights as Stockholders. Subject to Section 8.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said Shares, subject to the restrictions in the applicable Program or in each individual Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares; provided, |
however, that, in the sole discretion of the Administrator, any extraordinary distributions with respect to the Shares shall be subject to the restrictions set forth in Section 8.3. Notwithstanding the foregoing, (i) dividends may accrue in connection with Restricted Stock, but shall not be paid to a Holder prior to the date on which the applicable Shares related to the dividends become fully vested, and (ii) to the extent such vesting does not occur with respect to any Restricted Stock, any related accrued dividends shall be forfeited.
| 8.3 | Restrictions. All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of the applicable Program or in each individual Award Agreement, be subject to such restrictions and vesting requirements as the Administrator shall provide. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Administrator, including, without limitation, criteria based on the Holder’s duration of employment, directorship or consultancy with the Company, the Performance Criteria, Company |
100 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
performance, individual performance or other criteria selected by the Administrator. By action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of the applicable Program or Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.
| 8.4 | Repurchase or Forfeiture of Restricted Stock. Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the applicable Program or Award Agreement. Notwithstanding the foregoing, except as otherwise provided by Section 3.4, the Administrator, in its sole discretion, may provide that upon certain events, including a Change in Control, the Holder’s |
death, retirement or disability or any other specified Termination of Service or any other event, the Holder’s rights in unvested Restricted Stock shall not lapse, such Restricted Stock shall vest and, if applicable, the Company shall not have a right of repurchase.
| 8.5 | Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine. Certificates or book entries evidencing shares of Restricted Stock shall include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. The Company, in its sole discretion, may (a) retain physical possession of any stock certificate evidencing shares of Restricted Stock until the restrictions thereon shall have lapsed and/or (b) require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Restricted Stock. |
| 8.6 | Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service. |
Article 9.
AWARD OF RESTRICTED STOCK UNITS
| 9.1 | Grant of Restricted Stock Units. The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator. |
| 9.2 | Term. Except as otherwise provided herein, the term of a Restricted Stock Unit award shall be set by the Administrator in its sole discretion. |
| 9.3 | Purchase Price. The Administrator shall specify the purchase price, if any, to be paid by the Holder to the Company with respect to any Restricted Stock Unit award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law. |
| 9.4 | Vesting of Restricted Stock Units. At the time of grant, the Administrator shall specify the date or dates on |
which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Affiliate, one or more Performance Criteria, Company performance, individual performance or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator, subject to Section 3.4.
| 9.5 | Maturity and Payment. At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that, except as otherwise determined by the |
2017 PROXY STATEMENT | 101 |
TABLE OF CONTENTS
Administrator, set forth in any applicable Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating to each Restricted Stock Unit occur following the later of (a) the 15th day of the third month following the end of calendar year in which the applicable portion of the Restricted Stock Unit award vests; or (b) the 15th day of the third month following the end of the Company’s fiscal year in which the applicable portion of the Restricted Stock Unit award vests. On the maturity date, the Company shall, subject to Section 12.4(e), transfer to the Holder one unrestricted, fully transferable share of Common Stock for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such Shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator.
| 9.6 | Payment upon Termination of Service. An Award of Restricted Stock Units shall only be payable while the Holder is an Employee, a Consultant or a Director, as |
applicable; provided, however, that the Administrator, in its sole and absolute discretion may provide (in an Award Agreement or otherwise) that a Restricted Stock Unit award may be paid subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service.
| 9.7 | No Rights as a Stockholder. Unless otherwise determined by the Administrator, a Holder of Restricted Stock Units shall possess no incidents of ownership with respect to the Shares represented by such Restricted Stock Units, unless and until such Shares are transferred to the Holder pursuant to the terms of this Plan and the applicable Award Agreement. |
| 9.8 | Dividend Equivalents. Subject to Section 10.2, the Administrator may, in its sole discretion, provide that Dividend Equivalents shall be earned by a Holder of Restricted Stock Units based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award of Restricted Stock Units is granted to a Holder and the maturity date of such Award. |
Article 10.
AWARD OF PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS, DEFERRED STOCK, DEFERRED STOCK UNITS
| (a) | The Administrator is authorized to grant Performance Awards, including awards of Performance Stock Units, to any Eligible Individual and to determine whether such Performance Awards shall be Performance-Based Compensation. The value of Performance Awards, including Performance Stock Units, may be linked to any one or more of the Performance Criteria or other specific criteria determined by the Administrator, in each case on a specified date or dates or over any period or periods and in such amounts as may be determined by the Administrator with respect to a particular Holder. In making such determinations, the Administrator may consider (among such other factors as it deems relevant) the contributions and responsibilities of the particular Holder. Performance Awards, including Performance Stock Unit awards, may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator. |
| (b) | Without limiting Section 10.1(a), the Administrator may grant Performance Awards to any Eligible |
Individual in the form of a cash bonus payable upon the attainment of objective Performance Goals, or such other criteria, whether or not objective, which are established by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator. Any such bonuses paid to a Holder which are intended to be Performance-Based Compensation shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Article 5.
| 10.2 | Dividend Equivalents. |
| (a) | Dividend Equivalents may be granted by the Administrator based on dividends declared on the Common Stock, to be credited as of dividend payment dates with respect to dividends with record dates that occur during the period between the date an Award is granted to a Holder and the date such Award vests, is exercised, is distributed or expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such |
102 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
restrictions and limitations as may be determined by the Administrator. Notwithstanding the foregoing, (i) Dividend Equivalents may accrue in connection with an Award, but shall not be paid to a Holder prior to the date on which the Award (or the applicable portion of the Award to which the Dividend Equivalents relate) becomes vested and (ii) to the extent such vesting does not occur with respect to an Award, any related accrued Dividend Equivalents shall be forfeited.
| (b) | Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights. |
| 10.3 | Stock Payments. The Administrator is authorized to make Stock Payments to any Eligible Individual. The number or value of Shares of any Stock Payment shall be determined by the Administrator and may be based upon one or more Performance Criteria or any other specific criteria, including service to the Company or any Affiliate, determined by the Administrator. Shares underlying a Stock Payment which is subject to a vesting schedule or other conditions or criteria set by the Administrator shall not be issued until those conditions have been satisfied. Unless otherwise provided by the Administrator, a Holder of a Stock Payment shall have no rights as a Company stockholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder. Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual. |
| 10.4 | Deferred Stock. The Administrator is authorized to grant Deferred Stock to any Eligible Individual. The number of shares of Deferred Stock shall be determined by the Administrator and may, but is not required to, be based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator. Shares underlying a Deferred Stock award which is subject to a vesting schedule or other conditions or criteria set by the Administrator shall be issued on the vesting date(s) or date(s) that those conditions and criteria have been satisfied, as applicable. Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder. |
| 10.5 | Deferred Stock Units. The Administrator is authorized to grant Deferred Stock Units to any Eligible Individual. The number of Deferred Stock Units shall be determined by the Administrator and may, but is not required to, be based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator. Each Deferred Stock Unit shall entitle the Holder thereof to receive one Share on the date the Deferred Stock Unit becomes vested or upon a specified settlement date thereafter (which settlement date may, but is not required to, be the date of the Holder’s Termination of Service). Shares underlying a Deferred Stock Unit award which is subject to a vesting schedule or other conditions or criteria set by the Administrator shall not be issued until on or following the date that those conditions and criteria have been satisfied. Unless otherwise provided by the Administrator, a Holder of Deferred Stock Units shall have no rights as a Company stockholder with respect to such Deferred Stock Units until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder. |
| 10.6 | Term. The term of a Performance Award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award shall be established by the Administrator in its sole discretion. |
| 10.7 | Purchase Price. The Administrator may establish the purchase price of a Performance Award, Shares distributed as a Stock Payment award, shares of Deferred Stock or Shares distributed pursuant to a Deferred Stock Unit award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law. |
| 10.8 | Termination of Service. A Performance Award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award is distributable only while the Holder is an Employee, Consultant or Director, as applicable. The Administrator, however, in its sole discretion may provide that the Performance Award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award may be distributed subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service. |
2017 PROXY STATEMENT | 103 |
TABLE OF CONTENTS
Article 11.
AWARD OF STOCK APPRECIATION RIGHTS
| 11.1 | Grant of Stock Appreciation Rights. |
| (a) | The Administrator is authorized to grant Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan. |
| (b) | A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose. Except as described in (c) below, the exercise price per Share subject to each Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation Right is granted. |
| (c) | Notwithstanding the foregoing provisions of Section 11.1(b) to the contrary, in the case of a Stock Appreciation Right that is a Substitute Award, the exercise price per share of the Shares subject to such Stock Appreciation Right may be less than 100% of the Fair Market Value per share on the date of grant; provided that the excess of: (i) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the Shares subject to the Substitute Award, over (ii) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares. |
| 11.2 | Stock Appreciation Right Vesting. |
| (a) | The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests |
in the Holder shall be set by the Administrator and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Affiliate, any Performance Criteria, or any other criteria selected by the Administrator. Except as limited by the Plan, at any time after grant of a Stock Appreciation Right, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which a Stock Appreciation Right vests.
| (b) | No portion of a Stock Appreciation Right which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator in the applicable Program or the Award Agreement evidencing the grant of the Stock Appreciation Right, or by action of the Administrator following the grant of the Stock Appreciation Right. |
| 11.3 | Manner of Exercise. All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock plan administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable: |
| (a) | A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right; |
| (b) | Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with Applicable Law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance, including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars; |
| (c) | In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 11.3 by any person or persons other than the Holder, |
104 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right, as determined in the sole discretion of the Administrator; and
| (d) | Full payment of the exercise price and applicable withholding taxes to the stock plan administrator of the Company for the Shares with respect to which the Stock Appreciation Right, or portion thereof, is exercised, in a manner permitted by Sections 12.1 and 12.2. |
| 11.4 | Stock Appreciation Right Term. The term of each Stock Appreciation Right (the “Stock Appreciation Right Term”) shall be set by the Administrator in its sole discretion; provided, however, that the Stock Appreciation Right Term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted. The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the last day of the Stock Appreciation Right Term applicable to such Stock Appreciation Right. Except as limited by the requirements of Section 409A of the Code and regulations and rulings thereunder or the first sentence of this Section 11.4, the Administrator may extend the Stock Appreciation Right Term of any outstanding Stock Appreciation Right, and may extend the time period during which vested Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder, and may amend, subject to Section 14.1, any other term or condition of such Stock Appreciation Right relating to such a Termination of Service. |
| 11.5 | Payment. Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 11 shall be in cash, Shares (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator. |
| 11.6 | Expiration of Stock Appreciation Right Term: Automatic Exercise of In-The-Money Stock Appreciation Rights. Unless otherwise provided by the Administrator (in an Award Agreement or otherwise) or as otherwise directed by a Stock Appreciation Right Holder in writing to the Company, each vested and exercisable Stock Appreciation Right outstanding on the Automatic Exercise Date with an exercise price per share that is less than the Fair Market Value per share of Common Stock as of such date shall automatically and without further action by the Stock Appreciation Right Holder or the Company be exercised on the Automatic Exercise Date. In the sole discretion of the Administrator, the Company or any Affiliate shall deduct or withhold an amount sufficient to satisfy all taxes associated with such exercise in accordance with Section 12.2. Unless otherwise determined by the Administrator, this Section 11.6 shall not apply to a Stock Appreciation Right if the Stock Appreciation Right Holder incurs a Termination of Service on or before the Automatic Exercise Date. For the avoidance of doubt, no Stock Appreciation Right with an exercise price per share that is equal to or greater than the Fair Market Value per share of Common Stock on the Automatic Exercise Date shall be exercised pursuant to this Section 11.6. |
Article 12.
ADDITIONAL TERMS OF AWARDS
| 12.1 | Payment. The Administrator shall determine the methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker acceptable to the Company with respect to Shares then |
issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration acceptable to the Administrator in its sole discretion. The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted
2017 PROXY STATEMENT | 105 |
TABLE OF CONTENTS
to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.
| 12.2 | Tax Withholding. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA, employment tax or other social security contribution obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan. The Administrator may, in its sole discretion and in satisfaction of the foregoing requirement, or in satisfaction of such additional withholding obligation as a Holder may have elected, allow a Holder to satisfy such obligations by any payment means described in Section 12.1 hereof, including, without limitation, by allowing such Holder to elect to have the Company or an Affiliate withhold, Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding or repurchase no greater than the aggregate amount of such liabilities based on the maximum statutory withholding rates in such Holder's applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income. The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code and other applicable law, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation with respect to any Award. |
| 12.3 | Transferability of Awards. |
| (a) | Except as otherwise provided in Sections 12.3(b) and 12.3(c): |
| (i) | No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed; |
| (ii) | No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by Section 12.3(a)(i); and |
| (iii) | During the lifetime of the Holder, only the Holder may exercise an Award (or any portion thereof) granted to such Holder under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by the Holder’s personal representative or by any person empowered to do so under the deceased Holder’s will or under the then-applicable laws of descent and distribution. |
| (b) | Notwithstanding Section 12.3(a), the Administrator, in its sole discretion, may determine to permit a Holder to transfer an Award other than an Incentive Stock Option to any one or more Permitted Transferees, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution or pursuant to a DRO; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to further transfer the Award); and (iii) the Holder and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under Applicable Law and (C) evidence the transfer. |
| (c) | Notwithstanding Section 12.3(a), a Holder may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with |
106 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
respect to any Award upon the Holder’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the Program and the Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married or a domestic partner in a domestic partnership qualified under Applicable Law and resides in a community property state, a designation of a person other than the Holder’s spouse or domestic partner, as applicable, as the Holder’s beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse or domestic partner. If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time; provided that the change or revocation is filed with the Administrator prior to the Holder’s death.
| 12.4 | Conditions to Issuance of Shares. |
| (a) | Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such Shares is in compliance with Applicable Law and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its sole discretion, deems advisable in order to comply with Applicable Law. |
| (b) | All Share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any Share certificate or book entry to reference restrictions applicable to the Shares. |
| (c) | The Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator. |
| (d) | Unless otherwise determined by the Administrator, fractional Shares may be issued pursuant to Awards granted under the Plan. |
| (e) | Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by Applicable Law, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). |
| 12.5 | Forfeiture and Claw-Back Provisions. Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Administrator shall have the right to provide, in an Award Agreement or otherwise, or to require a Holder to agree by separate written or electronic instrument, that: |
| (a) | (i) Any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, shall be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (x) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (z) the Holder incurs a Termination of Service for “cause” (as such term is defined in the sole discretion of the Administrator, or as set forth in the applicable Award Agreement); and |
| (b) | All Awards (including any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of Applicable |
2017 PROXY STATEMENT | 107 |
TABLE OF CONTENTS
Law, including without limitation the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement.
| 12.6 | Prohibition on Repricing. Subject to Section 14.2, the Administrator shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Subject to Section 14.2, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award to increase the price per share or to cancel and replace an |
Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award. Furthermore, for purposes of this Section 12.6, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the exercise price per share of the original Options or Stock Appreciation Rights without the approval of the stockholders of the Company.
Article 13.
ADMINISTRATION
| 13.1 | Administrator. The Committee (or another committee or a subcommittee of the Board or the Committee assuming the functions of the Committee under the Plan) shall administer the Plan (except as otherwise permitted herein). To the extent necessary to comply with Rule 16b-3 of the Exchange Act, and with respect to Awards that are intended to be Performance-Based Compensation, including Options and Stock Appreciation Rights, the Committee (or another committee or a subcommittee of the Board or the Committee assuming the functions of the Committee under the Plan) shall take all action with respect to such Awards and the individuals taking such action shall consist solely of two or more Non-Employee Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as both a “non-employee director” as defined by Rule 16b-3 of the Exchange Act or any successor rule and an “outside director” for purposes of Section 162(m) of the Code. Additionally, to the extent required by Applicable Law, each of the individuals constituting the Committee (or another committee or a subcommittee of the Board or the Committee assuming the functions of the Committee under the Plan) shall be an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. Notwithstanding the foregoing, any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for |
membership set forth in this Section 13.1 or otherwise provided in any charter of the Committee. Except as may otherwise be provided in any charter of the Committee, appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written or electronic notice to the Board. Vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (a) the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect to Awards granted to Non-Employee Directors and, with respect to such Awards, the terms “Administrator” and “Committee” as used in the Plan shall be deemed to refer to the Board and (b) the Board or Committee may delegate its authority hereunder to the extent permitted by Section 13.6.
| 13.2 | Duties and Powers of Committee. It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan, the Program and the Award Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement; provided that the rights or obligations of the Holder of the Award that is the subject of any such Program or Award Agreement are not affected adversely by such amendment, unless the consent of the Holder is |
108 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
obtained or such amendment is otherwise permitted under Section 12.5 or Section 14.10. Any such grant or award under the Plan need not be the same with respect to each Holder. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act or any successor rule, or Section 162(m) of the Code, or any regulations or rules issued thereunder, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee. Each member of the Committee shall be entitled to rely on any report, information, opinion or statement furnished to that member by any officer or other employee of the Company whom such member reasonably believes to be reliable and competent in the matter presented and any lawyer, certified public accountant or other person as to a matter which such member reasonably believes to be within the person’s professional or expert competence.
| 13.3 | Action by the Committee. Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. |
| 13.4 | Authority of Administrator. Subject to the Company’s Bylaws, the Committee’s Charter and any specific designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to: |
| (a) | Designate Eligible Individuals to receive Awards; |
| (b) | Determine the type or types of Awards to be granted to each Eligible Individual; |
| (c) | Determine the number of Awards to be granted and the number of Shares to which an Award will relate; |
| (d) | Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not |
limited to, the exercise price, grant price, or purchase price, any Performance Criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;
| (e) | Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered; |
| (f) | Prescribe the form of each Award Agreement, which need not be identical for each Holder; |
| (g) | Decide all other matters that must be determined in connection with an Award; |
| (h) | Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; |
| (i) | Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement; |
| (j) | Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan; and |
| (k) | Accelerate wholly or partially the vesting or lapse of restrictions of any Award or portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Sections 3.4 and 14.2(d). |
| 13.5 | Decisions Binding. The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties. |
| 13.6 | Delegation of Authority. To the extent permitted by Applicable Law, the Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to Article 13; provided, however, that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the following |
2017 PROXY STATEMENT | 109 |
TABLE OF CONTENTS
individuals: (a) individuals who are subject to Section 16 of the Exchange Act, (b) Covered Employees, or (c) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation of administrative authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code and other Applicable Law. Any delegation
hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 13.6 shall serve in such capacity at the pleasure of the Board and the Committee.
Article 14.
MISCELLANEOUS PROVISIONS
| 14.1 | Amendment, Suspension or Termination of the Plan. Except as otherwise provided in this Section 14.1, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee. However, without approval of the Company’s stockholders given within twelve (12) months before or after the action by the Administrator, no action of the Administrator may, except as provided in Section 14.2, (a) increase the Share Limit or the Award Limit, (b) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 12.6, or (c) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Except as provided in Section 14.10, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and, notwithstanding anything herein to the contrary, in no event may any Award be granted under the Plan after September 17, 2020 (the tenth (10th) anniversary of the date the Board originally approved the Plan) (the “Expiration Date”). Any Awards that are outstanding on the Expiration Date shall remain in force according to the terms of the Plan and the applicable Award Agreement. |
| 14.2 | Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events. |
| (a) | In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the |
shares of the Company’s stock or the share price of the Company’s stock other than an Equity Restructuring, the Administrator may make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the Share Limit and Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted); (ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards; (iii) the number and kind of shares of Common Stock (or other securities or property) for which automatic grants are subsequently to be made to new and continuing Non-Employee Directors pursuant to Section 4.6; (iv) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (v) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award intended as Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.
| (b) | In the event of any transaction or event described in Section 14.2(a) or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in Applicable Law or accounting principles, the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution |
110 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
| (i) | To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 14.2 the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested; |
| (ii) | To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; |
| (iii) | To make adjustments in the number and type of shares of the Company’s stock (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future; |
| (iv) | To provide that such Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and |
| (v) | To provide that the Award cannot vest, be exercised or become payable after such event. |
| (c) | In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 14.2(a) and 14.2(b): |
| (i) | The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or |
| (ii) | The Administrator shall make such equitable adjustments, if any, as the Administrator, in its sole discretion, may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the Share Limit and Award Limit and adjustments of the manner in which shares subject to Full Value Awards will be counted). The adjustments provided under this Section 14.2(c) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company. |
| (d) | Notwithstanding any other provision of the Plan, in the event of a Change in Control, with respect to each outstanding Award, unless the Administrator elects to (i) terminate such Award in exchange for cash, rights or property, or (ii) cause such Award to become fully exercisable and no longer subject to any forfeiture restrictions prior to the consummation of a Change in Control, pursuant to Section 14.2, (A) such outstanding Award (other than any portion subject to performance-based vesting) shall continue in effect, or be assumed or an equivalent Award substituted by the successor corporation or a parent or subsidiary of the successor corporation and (B) the portion of such Award subject to performance-based vesting shall be subject to the terms and conditions of the applicable Award Agreement or, in the absence of applicable terms and conditions, the Administrator’s discretion. In the event an Award continues in effect, or is assumed or an equivalent Award substituted, and the surviving or successor corporation terminates a Holder’s employment without “cause” (as such term is defined in the sole discretion of the Administrator, or as set forth in the Award Agreement relating to such Award) upon or within twelve (12) months following the Change in Control, then such Holder shall be fully vested in such continued, assumed or substituted Award. |
2017 PROXY STATEMENT | 111 |
TABLE OF CONTENTS
| (e) | In the event that the successor corporation in a Change in Control refuses to assume or substitute for an Award, the Administrator may cause any or all of such Awards to (i) terminate in exchange for cash, rights or other property, pursuant to Section 14.2(b)(i), or (ii) become fully exercisable immediately prior to the consummation of such transaction and all forfeiture restrictions on any or all of such Awards to lapse. If any such Award is exercisable, in lieu of assumption or substitution in the event of a Change in Control, the Administrator shall notify the Holder that such Award shall be fully exercisable for a period of fifteen (15) days from the date of such notice, contingent upon the occurrence of the Change in Control, and such Award shall terminate upon the expiration of such period. |
| (f) | For the purposes of this Section 14.2, an Award shall be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each share of Common Stock subject to an Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per-share consideration received by holders of Common Stock in the Change in Control. |
| (g) | The Administrator may, in its sole discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan. |
| (h) | With respect to Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation, no adjustment or action described in this Section 14.2 or in any other provision of the Plan shall be |
authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the Administrator determines that the Award should not so qualify. No adjustment or action described in this Section 14.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Administrator determines that the Award is not to comply with such exemptive conditions.
| (i) | The existence of the Plan, the Program, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. |
| (j) | No action shall be taken under this Section 14.2 which shall cause an Award to fail to be exempt from or comply with Section 409A of the Code or the Treasury Regulations thereunder. |
| (k) | In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the share price of the Common Stock including any Equity Restructuring, for reasons of administrative convenience, the Company, in its sole discretion, may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the consummation of any such transaction. |
| 14.3 | Approval of Plan by Stockholders. The Plan was originally approved by the Company’s stockholders on November 3, 2010. This amendment and restatement |
112 | 2017 PROXY STATEMENT |
TABLE OF CONTENTS
of the Plan will be submitted for the approval of the Company’s stockholders within twelve (12) months after the date of the Board’s adoption of this amendment and restatement of the Plan. Awards may be granted or awarded under the Plan after Board approval, but prior to such stockholder approval; provided that Awards granted after Board approval, but prior to such stockholder approval that provide for the grant of Shares in excess of the Share Limit (as in effect immediately prior to this amendment and restatement of the Plan) shall not be exercisable, shall not vest and the restrictions thereon shall not lapse and no Shares shall be issued pursuant thereto prior to the time when this amendment and restatement of the Plan is approved by the stockholders; and provided, further, that if such shareholder approval has not been obtained at the end of said twelve (12) month period, (a) the Plan (as amended and restated herein) will not become effective, (b) all Awards previously granted or awarded under the Plan after Board approval that provide for the grant of Shares in excess of the Share Limit (as in effect immediately prior to this amendment and restatement of the Plan) shall thereupon be canceled and become null and void, and (c) all Awards previously granted or awarded under the Plan after Board approval that provide for the grant of Shares at or below the Share Limit (as in effect immediately prior to this amendment and restatement of the Plan) shall be subject to the terms of the conditions of the Plan (as in effect immediately prior to this amendment and restatement).
| 14.4 | No Stockholders Rights. Except as otherwise provided herein, a Holder shall have none of the rights of a stockholder with respect to shares of Common Stock covered by any Award until the Holder becomes the record owner of such shares of Common Stock. |
| 14.5 | Paperless Administration. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system. |
| 14.6 | Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate. Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees, Consultants or Directors of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any |
proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.
| 14.7 | Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreign securities law and margin requirements), and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Law. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such Applicable Law. |
| 14.8 | Titles and Headings, References to Sections of the Code or Exchange Act. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto. |
| 14.9 | Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Maryland without regard to conflicts of laws thereof or of any other jurisdiction. |
| 14.10 | Section 409A. To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date |
2017 PROXY STATEMENT | 113 |
TABLE OF CONTENTS
the Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Administrator may adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.
| 14.11 | No Rights to Awards. No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly. |
| 14.12 | Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate. |
| 14.13 | Indemnification. To the extent allowable pursuant to Applicable Law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved |
by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
| 14.14 | Relationship to other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder. |
| 14.15 | Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries. |
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Coach, Inc. on September 20, 2017.
* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders of Coach, Inc. on [] [], 2017.
Executed on this [] day of [] 2017.
/s/ Todd Kahn
Corporate Secretary
114 | 2017 PROXY STATEMENT |
|
|
|