UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Bed Bath & Beyond Inc.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Time: | 9:00 A.M. on Thursday, | |
Place: | The Madison Hotel One Convent Road Morristown, New Jersey 07960 |
Items of Business:
(1) | To elect |
(2) | To ratify the appointment of KPMG LLP as independent auditors for the |
(3) | To consider the approval, bynon-binding vote, of the |
(4) |
To transact such other business as may properly be brought before the Annual Meeting or any adjournment or adjournments. |
Record Date:You can vote if you were a shareholder of record on May 5, 2017.
29, 2019.
Proxy Voting: It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote online, via telephone or to fill out the enclosed proxy card and return it to us in the envelope provided. No postage is required.
May 31, 2017
Important Notice Regarding the Availability of Proxy Material for the Annual Meeting of Shareholders to be held on June 29, 2017:July 25, 2019:this Notice of the 20172019 Annual Meeting of Shareholders, Proxy Statement and the Company’s 20162018 Annual Report are available at www.bedbathandbeyond.com/annualmeeting2017
TABLE OF CONTENTS
annualmeeting2019
TABLE OF CONTENTSi
Dear Fellow Shareholders,
PROXY STATEMENT SUMMARY
You have received these proxy materials becauseOver the Board of Directors oflast few years, the retail sector has experienced massive changes. We at Bed Bath & Beyond Inc. (the “Company”, “we”, or “us”),have not been immune. While Bed Bath & Beyond continues to maintain its great brands, strong customer affinity and hardworking associates, we acknowledge the need to improve our financial performance and enhance our competitive positioning — and this work has been, and continues to be, underway as part of our overarching business transformation.
Underlying these efforts are our nine newest directors who joined the Board this year, expanding our Board to 13 directors — 12 of whom are independent, seven of whom are women and all of whom have been selected for their complementary skill sets and shared commitment to improve the Company’s performance and drive value for all Bed Bath & Beyond stakeholders as the business continues to evolve. This transformed Board brings rich diversity of perspectives, backgrounds, ages, gender, race and ethnicity and reflects the diversity of the Company’s loyal customers and dedicated associates. Perhaps most importantly, this Board is well equipped to oversee and drive the intensive business transformation underway.
As agents of change, the newly refreshed Board has already made announcements that are worth your consideration:
We named Mary A. Winston, a New York Corporation,newly appointed director and a seasoned public company executive, Interim CEO. Ms. Winston has an extensive background in all aspects of financing and accounting, as well as experience in M&A, corporate strategy, cost restructuring programs, corporate governance/compliance and investor relations/communications.
We formed a CEO Search Committee that is solicitingactively searching for a permanent CEO to lead Bed Bath & Beyond and reposition our Company for future growth. We are placing an emphasis on identifying a leader who has a multi-faceted skill set including transformation and innovation experience in the retail sector, as well as ecommerce and marketing experience.
We created a Business Transformation and Strategy Review Committee to support the Board’s oversight and review of the Company’son-going business transformation, navigate the evolving retail environment and identify opportunities to accelerate the Company’s evolution. The committee is chaired by Andrea Weiss, a newly appointed independent Board member and long-time retail executive.
We reconstituted all Board committees and appointed new committee chairs.
We encourage you to read the pages that follow focusing on our operating position, our enhanced governance structure, our updated compensation program and our demonstrated willingness to build creatively and quickly on a48-year history to improve our financial performance and competitive position. Across our Company we — our Board, our leadership team and our associates — are focused on delighting our customers and delivering long-term value for our shareholders.
With these positive changes in mind, we ask for your proxyvoting support, which we believe we have worked hard to vote your sharesearn. Additionally, we provide FAQs at the 2017 Annual Meetingback of Shareholders. This summary highlights information contained elsewhere in this proxy statement. This summary does not contain allstatement to facilitate your voting, and include information throughout to inform your important decisions.
Sincerely,
Patrick R. Gaston,
Independent Chairman of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.Board of Directors
Summaryii
BED BATH & BEYOND AT A GLANCE
Who are We?
Bed Bath & Beyond is an omni-channel retailer of Voting Matters
The Board of Directors is not aware of any mattergoods and services that will be presented forhelp make a vote at the 2017 Annual Meeting of Shareholders other than those shown below.
Proposals | Board Vote Recommendation | Page Reference | |
1. | Election of 10 Directors | FOR each director nominee | 8 |
2. | Ratification of Appointment of Auditors | FOR | 16 |
3. | Advisory Vote on Executive Compensation | FOR | 46 |
4. | Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation | FOR ONE YEAR | 47 |
5. | Re-Approval of Performance Goals Under the 2012 Incentive Compensation Plan | FOR | 48 |
Board of Directors Nominees
You are being asked to vote on the following ten (10) nominees for director. Each director is elected annually byhouse a majority vote of shares cast. Further information about each director can be found under “Board Nomineeshome, and Qualifications.”
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* AC – Audit Committee; CC – Compensation Committee; NC – Nominating and Corporate Governance Committee
** Ms. Ruesterholz has been nominated for election as a director for a term commencing upon the conclusion of the 2017 Annual Meeting.
See Election of Directors on page 8.
PROXY STATEMENT SUMMARY
Corporate Governance Highlights
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Our Strategy
The state of retail today is filled with exciting opportunities to do more for andthrough our various service offerings, we connect with our customers. Led by advances in technology and growth in digital capabilities, our industry is experiencing a dramatic shift in the way consumers search for, engage with, and ultimately purchase product. This democratization of shopping has given consumers more choice, more transparency and more convenience than ever. It also presents enormous possibilities for retailers, like us, to strengthen our competitive position and develop deeper and more personalized relationships with our customers.
Over the past several years, it is in this environment that we have been transforming our Company and evolving toward providing greater inspiration and a personal omnichannel shopping experience. Using a systematic and logical approach, we are making great progress in improving our capabilities every day.
During fiscal 2016 we made significant investments to advance our mission to be trusted by our customers as the expert for the home and “heart-related” life events. These includethroughout certain life events that evoke strong emotional connections such as getting married, moving to a new home, having a baby, going to college and decorating a room. Our strategy is rootedWe provide jobs to approximately 62,000 people and invest in our customer-centric cultureassociates with training and commitmentbenefits to customer service,enhance their lives, our customers’ experiences and involves building and delivering a strong foundation of differentiated products, and services and solutions for our customers while driving operational excellence.shareholders’ returns.
What Challenges Have We delivered revenues of over $12 billion in fiscal 2016, with net earnings per diluted share of $4.58. This marksFaced?
We have felt the fifth consecutive year that we’ve been in a narrow earnings range since we entered a heavy investment phase several years ago. Despite the pressures on our operating profits during this time, we continue to produce some of the best returns in retail. This allows us to make the necessary investments to position Bed Bath & Beyond Inc. for future growth.effects of:
Shareholder Outreach—The upheaval in the traditional retail sector
Shifting supply chain dynamics
Rapidly changing opportunities created by technology
The expenses incurred to operate as an omni-channel retailer
What Makes Us Strong?
We Listened, Learned & Responded
Throughout each year, managementhave scale: we operate over 1,500 stores (comprising ~43.1M sq. ft.) in the US and members of our Board engage with a significant portion of our shareholders. In addition to our day-to-day interactions with investors, we have expanded our shareholder engagement over time to include an ongoing outreach focused on governance, executive compensation and other topics suggested by our shareholders. Shareholder feedback, including through direct discussions and prior shareholder votes,Canada, as well as engagement with proxy advisory firmsdigitally across the globe. Scale gives us visibility, experience and stability.
The success of the Company is dependent, in part, on its ability to establish and profitably maintain the appropriate mix of digital and physical presence in the markets we serve.
Comparable sales from the Company’s customer-facing digital channels have experienced strong growth.
We have almost a half century of experience. Although we’ve suffered setbacks, we believe it is the getting up, not the falling down, that representdemonstrates sustainability. We continue to focus on driving long-term success.
We have not mortgaged our future, as have some in the interestsretail sector. We have:
~940,000 sq. ft. within 23 leased and owned facilities for procurement and corporate office functions as of March 2, 2019
Modest leverage of 0.8x net debt/EBITDA as of the end of fiscal 2018
A strong cash position
~$1B of cash and investments and $0.6B of net debt as of the end of fiscal 2018
Opened a wide arraytotal of 17 new stores and closed 37 stores during fiscal 2018
Maintained the financial discipline to return cash to shareholders via share buyback and dividends
We are already paying forward our ability to pivot and grow:
We have invested in sophisticated omni-channel conduits
We have invested in a comprehensive energy management system which we expect to generate significant savings and enhance our products’ appeal to environmentally conscious customers
More than half of our 41 solar installations provide more than 50% of the facilities’ energy
We have invested in our associates’ training and wellbeing, which pays forward in terms of our ability to manage turnover and enhance customers’ experience and shareholders’ returns
We have the willingness and the technology to manage our supply chain and inventory management systems more cost effectively
We have a diverse and refreshed Board, including seven of our 13 directors that are female, reflecting our core customer base; and 12 of our 13 directors that are new in the past two years
Our Board includes leading representatives of shareholders, is communicated to the Board periodically throughout the year. The feedback received through theseas well as industry, technology, human capital and management experts
We have a strong governance foundation and active shareholder engagement efforts has, in part, contributed to the steady enhancements made to our executive compensation program and governance policies over the past several years.
In preparation for our fiscal 2017 compensation decisions, and in light of the decline in the prior two-year say-on-pay votes, we reached out to representatives from a variety of our shareholders, including index funds, hedge funds, public pension funds, and actively-managed funds, representing more than 75% of our total shares outstanding. Over the past 12 months, representatives of the Compensation Committee and the Nominating and Corporate Governance Committee, along with management, engaged in face-to-face meetings and/or phone calls with, or received responsive feedback from shareholders
PROXY STATEMENT SUMMARY
representing approximately 56% of our total shares outstanding. In these conversations, we reviewed the Company’s strategic priorities and recent enhancements to our fiscal 2016 executive compensation program. We also discussed and solicited feedback on our proposed and subsequently adopted responses to the two shareholder proposals that received majority support at the 2016 Annual Meeting and additional executive compensation changes planned for fiscal 2017.
Following this engagement, and in consideration of favorable feedback from shareholders regarding the incremental changes made to executive compensation in fiscal 2016, the Compensation Committee has taken the following actions to more aggressively emphasize long-term performance.
Fiscal 2017 Compensation Decisions
This reflects a reduction of approximately $1 million in 2017 equity compensation awards, as well as a discount applied to the CEO’s grant of 2017 Performance Stock Units (PSUs) by virtue of the newly required two-year post-vesting holding period described below.
Since fiscal 2015, the value of annual CEO target compensation has been reduced from $19.6 million to $14.55 million, or by an aggregate of approximately 26%.
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Qualifications
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PROXY STATEMENT SUMMARY
Fiscal 2016 Compensation Decisions
We believe that the steps outlined above – including the significant cuts in the value of total target compensation for our CEO; reductions of approximately 50% in salary and equity of our Co-Chairmen, who plan to remain involved with the business and affairs of our Company; a reduction of 10% in the compensation of our outside directors (excluding fees for committee meetings and serving as lead director); and no increases (with a single exception) in total compensation for all executive officers and other senior officers reporting to the CEO – show the responsiveness of our Board and Management to shareholder concerns expressed to us during our engagement discussions. We believe these decisions for fiscal 2016 and 2017 reflect the steady and continued enhancement of the alignment between our compensation programs and the long-term interests of our shareholders.
In addition to the compensation changes adopted in connection with shareholder engagement, we also had meaningful interactions with the sponsor of the proxy access proposal which garnered majority support at our 2016 Annual Meeting of Shareholders. The sponsor provided valuable insight to our Board of Directors, leading to the adoption of a proxy access bylaw which was acceptable to the sponsor as well as to our major shareholders with whom we discussed the bylaw.
Our Board of Directors also adopted a policy applying certain payout limits to future severance agreements for executive officers. This followed engagement with the sponsors of a 2017 shareholder proposal which mirrored a proposal that had also received majority support at our 2016 Annual Meeting. The Board was already working on such a policy in response to the 2016 shareholder vote when the 2017 proposal was received. The proposed policy was reviewed by the proponent, who subsequently withdrew their proposal, and the proposed policy was acceptable to our major shareholders with whom it was discussed.
Other Voting Matters
TABLE OF CONTENTS
FAQs ABOUT THE 2017 ANNUAL MEETING AND VOTINGOF SHAREHOLDERS
These proxy materialsProxies in the form enclosed with this Proxy Statement are delivered in connection with the solicitationsolicited by the Board of Directors of Bed Bath & Beyond Inc. (the “Company,” “we,” or “us”), a New York corporation, of proxies to be votedused at our 2017the Annual Meeting of Shareholders (the “Annual Meeting”) to be held at The Madison Hotel, One Convent Road, Morristown, New Jersey 07960 on Thursday, July 25, 2019 at 9:00 A.M., for the purposes set forth in the Notice of Meeting and this Proxy Statement. The Company’s principal executive offices are located at any adjournment or adjournments.
This Proxy Statement, the proxy card and our 2016 Annual Report are being mailed starting May 31, 2017.650 Liberty Avenue, Union, New Jersey 07083. The information regarding stock ownership and other matters inapproximate date on which this Proxy Statement and accompanying Form of Proxy will be mailed to shareholders is as of the record date, May 5, 2017, unless otherwise indicated.July 1, 2019.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
What may I vote on?FOR THE SHAREHOLDER MEETING TO BE HELD ON JULY 25, 2019
You may vote on the following proposals:
THE BOARD RECOMMENDS THAT YOU VOTE:
Who may vote?
Shareholders of record of the Company’s common stock at the close of business on May 5, 2017 are entitled to receive this notice and to vote their shares at the Annual Meeting. As of that date, there were 144,118,966 shares of common stock outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.
How do I vote?
The Company encourages you to use the electronic means available to you to vote your shares. How you vote will depend on how you hold your shares of Bed Bath & Beyond Inc. common stock.
Shareholder of Record
If your shares are registered directly in your name with Bed Bath & Beyond Inc.’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those shares, and these proxy materials are being sent directly to you. If you hold restricted stock under the Company’s 2012 Incentive Compensation Plan, you are also considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to vote by proxy through any of the below methods.
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Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person. However, for those who will not be voting at the Annual Meeting in person, your proxy must be received by no later than 11:59 p.m. Eastern Time on June 28, 2017.
FAQs ABOUT THE 2017 ANNUAL MEETING AND VOTING
Beneficial Owner
Most shareholders of Bed Bath & Beyond Inc. hold their shares through a stockbroker, bank or other nominee, rather than directly in their own name. If you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker on how to vote. Your broker or nominee has enclosed a voting instruction form for you to use in directing the broker or nominee on how to vote your shares. If you hold your shares through a New York Stock Exchange member brokerage firm, such member brokerage firm has the discretion to vote shares held on your behalf with respect to the appointment of the Company’s auditors, but not with respect to any other proposal, as more fully described under “What is a broker ‘non-vote’?”.
Can I change my vote?
Yes. If you are the shareholder of record, you may revoke your proxy before it is exercised by doing any of the following:
Beneficial owners should contact their broker or nominee for instructions on changing their vote.
How many votes must be present to hold the Annual Meeting?
A “quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the shareholders entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum, but are not counted for purposes of determining any of the proposals to be voted on.
How many votes are needed to approve the proposals?
At the 2017 Annual Meeting of Shareholders, a “FOR” vote by a majorityincluding the Proxy Statement and the Company’s 2018 Annual Report are available at www.bedbathandbeyond.com/annualmeeting2019
PROPOSAL 1—ELECTION OF DIRECTORS
The Board of votes cast is requiredDirectors, upon recommendation of its Nominating and Corporate Governance Committee, has nominated the 13 people named below for election as directors, with all 13 individuals being nominated to (i) elect each nomineeserve for aone-year term expiring at the 2020 Annual Meeting. All of the nominees for director (Proposal 1), (ii) ratifycurrently serve as directors. Of the selection of KPMG LLP as13 directors, four (Stephanie Bell-Rose, Patrick R. Gaston, JB Osborne and Virginia P. Ruesterholz) were elected by the Company’s independent auditors for fiscal 2017 (Proposal 2), (iii) approve, by non-binding vote,shareholders at the say-on-pay proposal (Proposal 3),2018 Annual Meeting, five (Harriet Edelman, Harsha Ramalingam, Andrea Weiss, Mary A. Winston and (iv) re-approve the performance goals under the Company’s 2012 Incentive Compensation Plan (Proposal 5).
A “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of votes “AGAINST.” Abstentions and broker non-votes shall not constitute votes “FOR” or votes “AGAINST.”
With respect to Proposal 1, the election of directors, if a nominee who is an incumbent director fails to receive a “FOR” vote by a majority of votes cast, then such nominee must immediately tender his or her resignation, and the Board will decide, through a process managedAnn Yerger) were recommended by the Nominating and Corporate Governance Committee (excluding from the process such nominee), whether to accept the resignation. In the event of such a situation,and appointed by the Board intends to complete this process promptly afterserve as directors effective May 1, 2019, and four (John E. Fleming, Sue E. Gove, Jeffrey A. Kirwan and Joshua E. Schechter) were recommended by the Annual Meeting but no later than 90 days fromNominating and Corporate Governance Committee and appointed by the dateBoard to serve as directors effective May 29, 2019 pursuant to the Cooperation and Support Agreement (as defined below).
Information concerning our nominees as of the certificationrecord date, and the key experience, qualifications and skills they bring to our Board is provided below. The below charts show the diversity, tenure, age and independence of the election results.our Board. The Company will file a Form 8-K to disclose its decision and an explanationBoard of such decision.
With respect to Proposal 4, the frequency of say-on-pay proposal, the alternative (every one year, two years or three years) that receives a majority of votes cast will be the frequencyDirectors recommends that shareholders approve. If no alternative receives a majority of votes cast, then the alternative receiving the greatest number of votes will be deemed the frequency that shareholders approve. With respect to Proposal 4, abstentions and broker non-votes shall not constitute votes cast.
What is an abstention?
An abstention is a properly signed proxy card which is marked “abstain.”
What is a broker “non-vote”?
A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under current applicable rules, Proposal 2 is a “discretionary” item upon which brokers that hold shares as nominee may vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the tenth day before the Annual Meeting.
FAQs ABOUT THE 2017 ANNUAL MEETING AND VOTING
However, brokers that hold shares as nominee may not vote on behalf of the beneficial owners on the following proposals unless you provide voting instructions: Proposal 1,FOR the election of directors, Proposal 3, the say-on-pay proposal, Proposal 4, the frequency of say-on-pay proposal, and Proposal 5, the re-approval of the performance goals under the Company’s 2012 Incentive Compensation Plan. Therefore, if your shares are held by such nominee, please instruct your broker regarding how to vote your shares on each of these proposals. This will ensure that your shares are counted with respect to each of these proposals.13 director nominees.
Will any other matters be acted on at the Annual Meeting?
If any other matters are properly presented at the Annual Meeting or any adjournment, the persons named in the proxy will have discretion to vote on those matters. As of April 3, 2017, which is the date by which any proposal for consideration at the Annual Meeting submitted by a shareholder must have been received by the Company to be presented at the Annual Meeting, and as of the date of this Proxy Statement, the Company did not know of any other matters to be presented at the Annual Meeting.
Who pays for this proxy solicitation?
The Company will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person or by telephone or other means by directors or associates of the Company. The Company has engaged D.F. King & Co., Inc., for a fee of approximately $20,000 plus expenses, to assist in the solicitation of proxies. The Company will also reimburse brokerage firms and other nominees, custodians and fiduciaries for costs incurred by them in mailing proxy materials to the beneficial owners of shares held of record by such persons.
Whom should I call with other questions?
If you have additional questions about this Proxy Statement or the Annual Meeting or would like additional copies of this document or our 2016 Annual Report on Form 10-K, please contact: Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, NJ 07083, Attention: Investor Relations Dept., Telephone: (908) 613-5820.
PROPOSAL 1—ELECTION OF DIRECTORS
Board Structure, CompositionNominees and MeetingsQualifications
Patrick R. CEO, Gaston Consulting LLC Age: 61 Independent Chairman since 2019 Independent Director since 2007 Public and Select Private Board Membership NAACP Foundation America’s Charities KidSpirit, Inc. Eden Reforestation Projects | Qualifications • Brand Marketing / Product Merchandising • Corporate Finance / Capital Markets / Financial Acumen • Diversity • Human Resources and Organizational Development • Industry Experience • International Experience • Operations Management Experience • Public Affairs and Public Policy • Senior Leadership & Strategic Planning Experience • Chief Executive Officer, Gaston Consulting LLC (2016 – present) • Adjunct Professor of Business Management, Community College of Denver (2017 – 2018) • President, Western Union Foundation (2013 – 2016) • Executive in Residence and Senior Advisor, Clinton Bush Haiti Fund (2011) • President, Verizon Foundation (2003 – 2011) • Various management positions at Verizon Communications, Inc. (1984 – 2011) Education • BS, Management, University of Massachusetts • International Certificate in Business, Ecole Superieure De Commerce, Reims, France • MBA, Northeastern University Also Patrick is a lover of impressionist art and lived in France in the 80s. He is also passionate about working on issues that support youth development and education and has worked diligently on workforce education and economic development. |
PROPOSAL 1—ELECTION OF DIRECTORS
Mary A. Interim CEO, Bed Bath & Beyond Age: 57 Director since 2019 Public and Select Private Board Membership Acuity Brands, Inc. Domtar Corporation Dover Corporation | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Diversity • Industry Experience • International Experience • Public Company Board Service / Corporate Governance • Senior Leadership & Strategic Planning Experience • Interim Chief Executive Officer, Bed Bath & Beyond Inc. (May 2019 – present) • President and Founder, WinsCo Enterprises Inc. (2016 – present) • Executive Vice President and Chief Financial Officer, Family Dollar Stores Inc. (2012 – 2015) • Senior Vice President and Chief Financial Officer, Giant Eagle, Inc. (2008 – 2012) • Executive Vice President and Chief Financial Officer, Scholastic Corporation (2004 – 2007) • Various positions, including Vice President and Controller, Visteon Corporation (2002 – 2004), and Vice President, Global Financial Operations, Pfizer Inc. Pharmaceuticals Group (1995 – 2002) • Started her career as a CPA and auditor at Arthur Andersen & Co. Education • BBA, Accounting, University of Wisconsin, Milwaukee • MBA, Finance, Marketing and International Business, Northwestern University’s Kellogg Graduate School • CPA Also Mary is passionate about travel, exercise and spending time with family. |
PROPOSAL 1—ELECTION OF DIRECTORS
Stephanie Senior Managing Director, Corporate Strategy, TIAA and Head of TIAA Thought Leadership Governing Board and Head of TIAA Institute Age: 61 Independent Director since 2018 Public and Select Private Board Membership The John S. and James L. Knight Foundation, Trustee Council on Foundations, Trustee Public Welfare Foundation, Trustee Barnes Foundation, Trustee Emerita American Museum of Natural History, Honorary Trustee | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Diversity • International Experience • Operations Management Experience • Senior Leadership & Strategic Planning Experience • Senior Managing Director, Corporate Strategy, TIAA and Head of TIAA Thought Leadership Governing Board and Head of TIAA Institute (2010 - present) • Managing Director and President of its foundation, The Goldman Sachs Group, Inc. (1999 –2009) • Counsel and Program Officer, The Andrew W. Mellon Foundation (1988 – 1999) Education • AB, Harvard University • JD, Harvard University • MPA, Harvard University Also Stephanie is interested in history and family genealogy. |
PROPOSAL 1—ELECTION OF DIRECTORS
Harriet Vice Chairman, Age: 63 Independent Director since 2019 Public and Select Private Board Membership Assurant, Inc. Brinker International, Inc. Bucknell University Board of Trustees, Vice Chairman, member of the Executive, Finance and Nominating & Governance Committees | Qualifications • Brand Marketing / Product Merchandising • Corporate Finance / Capital Markets / Financial Acumen • Diversity • Industry Experience • International Experience • Operations Management and Supply Chain • Public Company Board Service / Corporate Governance (15+ years) • Regulatory and Government Relations • Senior Leadership & Strategic Planning • Technology / Data Security Experience • Vice Chairman, Emigrant Bank (2010 – present) • Special Advisor to the Chairman, Emigrant Bank (2008 – 2010) • Various positions including Senior Vice President and Chief Information Officer, Business Transformation and Senior Vice President, Global Supply Chain, Avon Products, Inc. (1979 – 2008) Education • Bachelor of Music, Bucknell University • MBA, Fordham Gabelli School of Business Also Harriet is a loyal Bed Bath & Beyond customer who loves family, music, exercise and the outdoors. |
PROPOSAL 1—ELECTION OF DIRECTORS
John E. Former Chief Executive Officer of Global eCommerce, Uniqlo Co. Ltd. Age: 60 Independent Director since 2019 Public and Select Private Board Membership UNTUCKit LLC r21Holdings, Inc. The Visual Comfort Group USA Hockey Foundation | Qualifications • Brand Marketing / Product Merchandising • Industry Experience • International Experience • Operations Management Experience • Public Company Board Service / Corporate Governance • Real Estate • Senior Leadership & Strategic Planning • Technology / Data Security Experience • Chief Executive Officer of Global eCommerce, Uniqlo Co. Ltd. (2013 – 2016) • Executive Vice President, Chief Merchandising Officer, Walmart, Inc. (2007 – 2010) • Executive Vice President, Chief Marketing Officer, Walmart, Inc. (2005 – 2006) • Chief Executive Officer, Walmart.com (2001 – 2005) • Chief Merchandising Officer, Walmart.com (2000 – 2001) • Various positions including Senior Vice President of Merchandising, Dayton Hudson (1981 – 2000) Education • BA, Colorado College Also John is from a four generation hockey family and enjoys travel, cooking, hiking and being near water. |
PROPOSAL 1—ELECTION OF DIRECTORS
Sue E. President, Excelsior Advisors, LLC Age: 60 Independent Director since 2019 Public and Select Private Board Membership Tailored Brands, Inc. IAA, Inc. | Qualifications • Brand Marketing / Product Merchandising • Corporate Finance/ Capital Markets / Financial Acumen • Diversity • Industry Experience • International Experience • Operations Management Expertise • Public Company Board Service / Corporate Governance (15+ years) • Real Estate • Senior Leadership & Strategic Planning Experience • Senior Advisor, Alvarez & Marsal (2017 – 2019) • President, Excelsior Advisors, LLC (2014 – present) • President and Chief Executive Officer, Golfsmith International Holdings, Inc. (2012 – 2014) • President, Golfsmith International Holdings, Inc. (2012 – 2014) • Chief Financial Officer, Golfsmith International Holdings, Inc. (2009 – 2012) • Chief Operating Officer, Golfsmith International Holdings, Inc. (2008 – 2012) • Executive Vice President, Golfsmith International Holdings, Inc. (2008 – 2012) • Chief Financial Officer, Zale Corporation (1997 – 2003) • Various senior financial, operating and strategic roles, culminating in the EVP and Chief Operating Officer role, Zale Corporation (1980 – 2006) Education • BBA, Accounting, University of Texas at Austin Also Sue enjoys golf, tennis and entertaining. |
PROPOSAL 1—ELECTION OF DIRECTORS
Jeffrey A. Former Global President and Chief Executive Officer, Gap division of The Gap, Inc. Age: 52 Independent Director since 2019 | Qualifications • Brand Marketing / Product Merchandising • Industry Experience • International Experience • Operations Management Experience • Real Estate • Senior Leadership & Strategic Planning • Technology / Data Security Experience • Global President and Chief Executive Officer, Gap division of The Gap, Inc. (2014 – 2018) • Executive Vice President and President, Gap China (2013 – 2014) • Senior Vice President, Managing Director and Chief Operating Officer, Gap China (2011 – 2013) • Senior Vice President, Stores and Operations, Old Navy (2008 – 2011) • Senior Vice President and General Manager, Old Navy Canada (2008 – 2008) • Vice President and General Manager, Old Navy Canada (2007 – 2008) Education • BS, Rhode Island College • MBA, the University of Maryland University College Also Jeff is an avid surfer, passionate about travel, enjoys learning about other cultures, spending time with family and continues to practice speaking Mandarin. |
Johnathan B. CEO, Red Antler Age: 38 Independent Director since 2018 | Qualifications • Advertising • Brand Marketing / Product Merchandising • Corporate Finance / Capital Markets / Financial Acumen • Industry Experience • International Experience • Operations Management Expertise • Product Innovation • Senior Leadership & Strategic Planning • Technology Experience • CEO &Co-Founder, Red Antler (2007 – present) • US Director and opened the New York office, Consortium (2006 – 2007) • Account Supervisor, Saatchi & Saatchi (2003 – 2006) Education • BS, Applied Economics and Management, Magna Cum Laude, Cornell University Also JB originally moved to New York with aspirations of playing in a rock band, but happily found entrepreneurship and now lives in Brooklyn with his wife Arielle, their incredibly cute son August, dog Brodie and a lot of plants. |
PROPOSAL 1—ELECTION OF DIRECTORS
Harsha President and Owner, Ramalingam Consulting Age: 60 Independent Director since 2019 Public and Select Private Board Membership SAL Holdco Corp. | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Diversity • Industry Experience • International Experience • Operations Management Experience • Public Company Board Service / Corporate Governance • Senior Leadership & Strategic Planning • Technology / Data Security Experience • Senior Advisor, The Boston Consulting Group (2019 – present) • President and Owner, Ramalingam Consulting (2015 – present) • Global Vice President,e-commerce Platform, Chief Information Officer and CISO Functions, Amazon.com, Inc. (2008 – 2015) • Entrepreneur in Residence at North Bridge Venture Partners and Founder of ClouT Systems (2008) • Various positions including Vice President, Products and Operations, EMC SaaS, EMC Corporation (2002 – 2008) • Chief Technology Officer / Head of Research and Development and Technical Operations, FreeBorders, Inc. (2000 – 2002) • Global Development Manager, Storage Area Network Software Development and IBM Storage Systems Division, SAN Strategy Leadership, International Business Machines Corporation (1998 – 2000) Education • Bachelor of Technology, Indian Institute of Technology, Kharagpur • MBA, General Management, Indian Institute of Management, Bangalore • Executive Education, Stanford University Graduate School of Business Also Harsha is a volunteer with the United Nations World Food Program and serves on their Tech Advisory Board. |
PROPOSAL 1—ELECTION OF DIRECTORS
Virginia P. Former Executive Vice President, Strategic Initiatives, Verizon Communications, Inc. Age: 58 Independent Director since 2017 Public and Select Private Board Membership The Hartford Financial Services Group, Inc. Stevens Institute of Technology | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Diversity • International Experience • Operations Management Expertise • Public Company Board Service / Corporate Governance • Real Estate • Senior Leadership & Strategic Planning • Sourcing / Supply Chain / Logistics • Technology / Data Security Experience • Executive Vice President—Strategic Initiatives, Verizon Communications, Inc. (Jan 2012 – July 2012) • President, Verizon Services Operations (2009 – 2011) – led the Global Business Unit that included the global IP Network, a $40B sourcing spend, supply chain and real estate operations. • President, Verizon Telecom (2006 – 2009) – led the $30B business unit for Verizon’s consumer, general business and wholesale customers Education • BS, Chemical Engineering, Stevens Institute of Technology • MS, Telecommunications Management, Brooklyn Polytechnic • Honorary Doctorate of Engineering, Stevens Institute of Technology Also Virginia is a Trustee of Stevens Institute of Technology and served as its first and only female chair of the Board in its149-year history. |
Joshua E. Private investor and public Age: 46 Independent Director since 2019 Public and Select Private Board Membership SunWorks, Inc. Genesco Inc. (until June 26, 2019) Support.com Viad Corp | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Public Company Board Service / Corporate Governance • M&A Experience Experience • Co-President, Steel Partners Japan Asset Management, LP (2008 – 2013) • Managing Director, Steel Partners Ltd (2001 – 2013) Education • BBA, University of Texas at Austin • MPA, Professional Accounting, University of Texas at Austin Also Josh enjoys coaching his children’s youth sports teams. He also enjoys reading. |
PROPOSAL 1—ELECTION OF DIRECTORS
Andrea Founding Partner, The O Alliance, LLC Chief Executive Officer and Founder, Retail Consulting Inc. Age: 64 Independent Director since 2019 Public and Select Private Board Membership Cracker Barrel Old Country Store, Inc. O’Reilly Automotive, Inc. RPT Realty | Qualifications • Brand Marketing / Product Merchandising • Diversity • Industry Experience • International Experience • Operations Management Expertise • Public Company Board Service / Corporate Governance • Real Estate • Senior Leadership & Strategic Planning • Sourcing / Product Development • Technology / Data Security / Ecommerce Experience • Founding Partner, The O Alliance, LLC (2014 – present) • Chairman, Grupo Cortefiel (2006 – 2007) • Chief Executive Officer and Founder, Retail Consulting Inc. (2002 – present) • President, dELiA*s, Inc. (2001 – 2002) • Executive Vice President and Chief Stores Officer, The Limited, Inc.(1998 – 2001) • President, Retail Operations, Guess?, Inc. (1996 – 1998) • Senior Vice President and Director, Stores, Ann Taylor Stores, Inc. (1992 – 1996) Education • BFA, Virginia Commonwealth University • Masters of Administrative Science, The Johns Hopkins University • Post-Graduate Studies at Harvard Business School and The Kellogg School of Management at Northwestern University Also Andrea resides in Florida with her husband of 38 years where they breed thoroughbred horses. |
PROPOSAL 1—ELECTION OF DIRECTORS
Ann Advisor, Spencer Stuart North Age: 57 Independent Director since 2019 Public and Select Private Board Membership Hershey Entertainment and Resorts | Qualifications • Corporate Finance / Capital Markets / Financial Acumen • Diversity • Public Company Board Service / Corporate Governance • Senior Leadership & Strategic Planning Experience • Member, Grant Thornton Audit Quality Advisory Council (2019 – present) • Advisor, Spencer Stuart North America Board Practice (2017 – present) • Executive Director, Center for Board Matters, Ernst & Young LLP (2015 – 2017) • Various positions including Executive Director, Council of Institutional Investors (1996 – 2015) Education • BA, Economics, Duke University • MBA, Tulane University • CFA charterholder Also Ann loves spending time with her family and two dogs, and she enjoys visiting and hiking the U.S. national parks. |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE ELECTION OF THE 13 NOMINEES AS DIRECTORS.
The Board of Bed Bath & Beyond Inc. consists of 10 directors.
PROPOSAL 1—ELECTION OF DIRECTORS
HOW WE ARE SELECTED AND EVALUATED
Directors are elected annually at each annual meeting to serve until the next annual meeting or until their successors are duly elected and qualified, subject to their earlier death, resignation or removal. Biographical information and qualifications of the nominees for director are included below under “Board Nominees and Qualifications.”
The Board has adopted a policy regarding specific, minimum qualifications for potential directors. These factors, and others asqualifications are considered useful by the Board and the Nominating and Corporate Governance Committee, are reviewedtogether with other qualifications deemed useful in the context of an assessment of the perceivedcurrent needs of the Board. These qualifications reflect the desirability of selecting directors who:
are of high character and integrity;
are accomplished in their respective fields, with superior credentials and recognition;
have relevant expertise and experience upon which to be able to offer advice and guidance to management;
have sufficient time available to devote to the affairs of the Company;
are able to work with the other members of the Board and contribute to the success of the Company;
can represent the long-term interests of the Company’s shareholders as a whole; and
are selected such that the Board represents a range of backgrounds and experience.
The Nominating and Corporate Governance Committee also considers applicable legal and regulatory requirements that govern the composition of the Board. Accordingly, (i) a majority of the Board must be comprised of independent directors (as defined by Nasdaq), (ii) at a particular point in time. The Company’s policies regarding director qualifications and skills are includedleast three members of the Board must have the requisite financial literacy to serve on the Company’s websiteAudit Committee, (iii) at www.bedbathandbeyond.com underleast one member of the Investor Relations section.
Board must satisfy Nasdaq’s “financial sophistication” requirement (and should also be an “audit committee financial expert” (as defined by the SEC)), and (iv) there must be a sufficient number of independent directors to ensure that the Nominating and Corporate Governance Committee, the Audit Committee and the Compensation Committee are all comprised entirely of independent directors.
Qualified candidates for membership on the Board will be considered without regard to race, color, creed, religion, national origin, age, gender, sexual orientation or disability. The Nominating and Corporate Governance Committee reviews and evaluates each candidate’s character, judgment, skills (including financial literacy), background, experience and other qualifications (without regard to whether a nominee has been recommended by the Company’s shareholders), as well as the overall composition of the Board, and recommends to the Board for its approval the slate of directors to be nominated for election at the Company’s Annual Meeting of Shareholders. WhileIn addition, the Nominating andCompany’s Corporate Governance Committee does not have a formal policy with respect to diversity,Guidelines limit the number of outside board memberships of our directors. The Committee believes that it is desirable that Board members represent a diversity of backgrounds, including gender and race, as well as diversity of viewpoints and experience.
The Board holds regular meetings each quarter and special meetings when necessary. The Board held 10 meetings during the fiscal year ended February 25, 2017 (“fiscal 2016”). Directors are expected to attend the Board meetings and meetings of committees of the Board on which they serve. The Company encourages, but does not require, the directors to attend the Company’s Annual Meeting of Shareholders. During fiscal 2016, all incumbent directors attended more than 75% of the total number of meetings of the Board of Directors and committees on which he or she served. All of the Company’s directors attended the 2016 Annual Meeting of Shareholders.
The Board of Directors believes it is structured to provide oversight, direction and guidance to management. In doing so, the members of the Board bring to their service valuable expertise in a wide range of subject matter areassubjects relevant to the Company in the execution of its strategy. These areas include:
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The Board, as part of its annual self-assessment and on an ongoing basis as appropriate, considers the skills and experience of its members in relation to the needs of the Company.
Following engagement with our shareholders, and in consideration of their constructive feedback, a detailed Board self-assessment, supplementing the Board’s annual assessment process, has been ongoing, with the goal of refreshing Board membership. This effort is intended to help ensure that directors possess an appropriate mix of skills and experience, including a balance between new and experienced directors and a further alignment of the attributes of the directors with the Company’s strategic needs.
In furtherance of this initiative, upon the recommendation of the Nominating and Corporate Governance Committee, the Board has taken the following actions:
In May 2019, the following directors joined our Board of Directors and will stand for election at the Company’s 2019 Annual Meeting of Shareholders:
Harriet Edelman who brings three decades of global operating experience in consumer goods and financial services. Ms. Edelman, an independent director, currently serves as Chair of the Audit Committee and as a member of the Compensation Committee.
PROPOSAL 1—ELECTION OF DIRECTORS
Board NomineesJohn E. Fleming who brings four decades of ecommerce architecture, strategy and Qualificationsbig box marketing and merchandising experience. Mr. Fleming, an independent director, currently serves on the Compensation and the Business Transformation and Strategy Review Committees.
The Board of Directors, upon recommendation of itsSue E. Gove who brings significant retail operations and turnaround expertise. Ms. Gove, an independent director, currently serves on the Nominating and Corporate Governance Committee, has nominated for reelectionCommittee.
Jeffrey A. Kirwan who brings extensive retail operations and global supply chain experience. Mr. Kirwan, an independent director, currently serves on the Business Transformation and Strategy Review Committee.
Harsha Ramalingam who brings over 30 years of operational leadership experience and global expertise in areas including information technology and internet software. Mr. Ramalingam, an independent director, currently serves on the Nominating and Corporate Governance and the Business Transformation and Strategy Review Committees.
Joshua E. Schechter who brings extensive M&A, corporate governance, investments and turnaround expertise. Mr. Schechter, an independent director, currently serves on the Audit Committee.
Andrea Weiss who brings significant entrepreneurial leadership experience in the retail industry, and who was an early innovator in multi-channel commerce. Ms. Weiss, an independent director, currently serves as directors nineChair of the current membersBusiness Transformation and Strategy Review Committee and as a member of the Board,Audit Committee.
Mary A. Winston who brings significant governance expertise across a broad range of industries, having served on large public company boards and has nominated Virginia P. Ruesterholz to serveaudit committees for many years. Effective May 12, 2019, Ms. Winston was appointed Interim CEO of Bed Bath & Beyond.
Ann Yerger who brings extensive leadership experience as a nationally recognized governance specialist. Ms. Yerger, an independent director, currently serves on the Nominating and Corporate Governance and Compensation Committees.
In April 2019, Lead Independent Director Patrick R. Gaston, a transformational leader and seasoned executive, was appointed as Independent Chairman of the Board. He currently serves as Chair of the Compensation Committee and as a member of the Nominating and Corporate Governance and Business Transformation and Strategy Review Committees.
In May 2018, Stephanie Bell-Rose, an independent director with all 10 individuals being nominated to serve for a one-year term expiring atsenior-leadership experience in organizational effectiveness and business transformation, joined our Board. She currently serves on the Nominating and Corporate Governance Committee.
In April 2018, Annual Meeting. On April 5,Johnathan (“JB”) Osborne, an independent director with extensive consumer branding and marketing experience, within ecommerce and other retail models, joined our Board. He currently serves on the Audit and Business Transformation and Strategy Review Committees.
In June 2017, Geraldine T. Elliott notifiedVirginia P. Ruesterholz, an independent director with particular experience in the areas of finance, technology, real estate and supply chain services, joined our Board of Directors of the Company offollowing her decision not to stand for reelection as a director nomineeelection at the Company’s 2017 Annual Meeting of Shareholders. She will continue to serve oncurrently serves as Chair of the Nominating and Corporate Governance Committee and a member of the Audit Committee.
This Board refreshment initiative remains ongoing, and the Board throughexpects it to result in further changes to the endBoard’s composition over the next several years.
Our Board continues to be committed to sound and effective corporate governance principles and practices, including board diversity, and recruitment of her term, which will occur atnew directors to complement the endexisting skills and experience of our Board.
The Board holds regular meetings each quarter and special meetings when necessary. The Board held 11 meetings during the fiscal year ended March 2, 2019 (“fiscal 2018”). Directors are expected to attend the Board meetings and meetings of committees of the 2017Board on which they serve. The Company encourages the directors to attend the Company’s Annual Meeting.
Information concerning our nominees asMeeting of Shareholders. During fiscal 2018, all of the record date, andCompany’s incumbent directors attended more than 75% of the key experience, qualifications and skills they bring to our Board is provided below. Thetotal number of meetings of the Board of Directors recommends that the shareholders votefor the electionand committees on which he or she served. All of the 10 nominees as directors.Company’s then current directors attended the 2018 Annual Meeting of Shareholders.
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PROPOSAL 1—ELECTION OF DIRECTORS
The following table provides a summary view of the key qualifications and attributes of our director nominees that the Nominating and Corporate Governance Committee believes are relevant and important in light of Bed Bath & Beyond’s current business needs and structure. A particular director may possess additional experience, qualifications, attributes, or skills, even if not expressly indicated below.
Bed Bath & Beyond Director Skills Matrix
Brand Marketing / | Corporate Finance / Capital Markets / Financial Acumen | Industry Experience | International Experience | Operations Management Experience | Public Company Board Service / Corporate Governance | Real Estate | Senior Leadership & Strategic Planning | Technology / Data Security | ||||||||||
Patrick R. Gaston
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Mary A. Winston
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Harriet Edelman
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John E. Fleming |
Sue E. Gove | ||||||||||||||||||
Jeffrey A. Kirwan | ||||||||||||||||||
JB Osborne | ||||||||||||||||||
Harsha Ramalingam | ||||||||||||||||||
Virginia P. Ruesterholz | ||||||||||||||||||
Joshua E. Schechter | ||||||||||||||||||
Andrea Weiss | ||||||||||||||||||
Ann Yerger | ||||||||||||||||||
Total | 7 / 13 | 10 / 13 | 9 / 13 | 11 / 13 | 10 / 13 | 9 / 13 | 5 / 13 | 12 / 13 | 7 / 13 |
PROPOSAL 1—ELECTION OF DIRECTORS
HOW WE ARE GOVERNED AND GOVERN
network known as Fios®. She joined New York Telephone (a predecessor
On April 21, 2019, Lead Independent Director Patrick R. Gaston was named Independent Chairman. Effective May 1, 2019, five new directors were appointed to Verizon Communications) as a manager in 1984 and served in positions of increasing responsibility during her career there and in its successor companies, up to her retirement. She serves on the Board of Directors, four of Frontier Communications Corporationwhom are independent and The Hartford Financial Services Group, Inc. Sheone of whom is also Chaircurrently serving as Interim CEO; and effective May 29, 2019, four new directors were appointed to the Board of Directors, all of whom are independent. As Independent Chairman, Mr. Gaston presides at all meetings of the shareholders and of the Board of Trustees at Stevens InstituteDirectors, and shall have such powers and perform such other duties required by statute or the Company’s Amended and RestatedBy-Laws or as the Board may from time to time determine. The Board believes this structure represents good governance, particularly in addressing the coordination and oversight of Technology.the considerable committee work that lies immediately ahead.
Among other things, Ms. Ruesterholz brings to the Board extensive senior leadership experience at a global organization, as well as broad experience with the type of strategic, operational and financial matters a public company encounters while executing a transformational business plan. Ms. Ruesterholz was identified as a possible nominee by the Company’s Chief Executive Officer, and recommended to the Nominating and Corporate Governance Committee and the full Board by him and non-management directors who know the nominee professionally.
Board Leadership
Messrs. Eisenberg, Feinstein and Temares function together as the senior leaders of the Company. Since Messrs. Eisenberg, Feinstein and Temares are not ‘‘independent directors’’ within the meaning of NASDAQ Listing Rule 5605(a)(2), the Board of Directors appointed an independent director to serve as the outside Lead Director. Mr. Eppler has served as the outside Lead Director since 2002. The general authority and responsibilities of the outside Lead Director are established by the Board of Directors. In that capacity, Mr. Eppler presides at all executive sessions of the independent directors, has the authority to call meetings of the independent directors, acts as a liaison between the members of the Board and management, functions as Secretary of the Board (including with respect to the proposal and maintenance of Board agendas and schedules for meetings), arranges for Board committee functions and acts as Secretary of Board committees and receives communications from the Company’s shareholders.
Board Independence
The Board, of Directors, upon the advice of the Nominating and Corporate Governance Committee, has determined that Ms. MorrisonMmes. Bell-Rose, Edelman, Gove, Ruesterholz, Weiss and Yerger, and Messrs. Adler, Barshay, Eppler,Fleming, Gaston, Kirwan, Osborne, Schechter and HellerRamalingam each are ‘‘independent directors’’“independent directors” under the independence standards set forth in NASDAQNasdaq Listing Rule 5605(a)(2). Director Geraldine T. Elliott, whose term expires at the conclusion of the 2017 Annual Meeting of Shareholders and who is not standing for reelection, was also determined to be independent. Ms. Ruesterholz, nominated for election to the Board at this meeting, has also been determined to meet the above standards of independence. These determinations were based on the fact that each of these individuals is not an executive officer or employee of the Company or has any other relationship which, in the opinion of the Board, of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
In addition, the Board, upon the advice of the Nominating and Corporate Governance Committee, determined that our former directors Dean S. Adler, Stanley F. Barshay, Klaus Eppler, Jordan Heller and Victoria A. Morrison were each “independent directors” under the independence standards set forth in Nasdaq Listing Rule 5605(a)(2). Each of these former directors resigned as members of the Board of Directors effective May 1, 2019.
The Board of Directors’Board’s independence determination is analyzed annually in both fact and appearance to promote arms-length oversight. In making its independence determination this year, the Board of Directors considered relationships and transactions since the beginning of its 20162018 fiscal year. The Board of Directors’Board’s independence determinations included reviewing the following relationships,relationship, and a determination that the relationshipsrelationship and the amountsamount involved, in each case werewas immaterial.
PROPOSAL 1—ELECTION OF DIRECTORS
RPT Realty.
As the Board determined in each case, that the relationshipsrelationship and the amountsamount involved were immaterial, the Board does not believe that the relationshipsrelationship or transactionsthe amount involved might reasonably impair the ability of the directorsMs. Weiss to act in the shareholders’ best interests.
Committees of the Board of Directors
The Board has established standing committees to assist with the performance of its responsibilities. These include: Audit, Compensation, andAudit; Compensation; Nominating and Corporate Governance Committees.Committees; and the newly formed Business Transformation and Strategy Review Committee. The Board has adopted written charters for each of these committees.the Audit, Compensation, Nominating and Corporate Governance and Business Transformation and Strategy Review Committees. The charters are available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com. All members of the Audit, Compensation, and Nominating and Corporate Governance and Business Transformation and Strategy Review Committees are considered independent pursuant to applicable SecuritiesSEC and Exchange Commission (SEC) and NASDAQNasdaq rules, and all members of the Compensation Committee meet the “outside directors” requirements for purposes of applicable tax law.
AUDIT
The Audit Committee assists the Board in fulfilling its oversight responsibilities by (i) overseeing the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements, and (ii) reviewing the financial reports and other financial information provided by the Company to the public. In addition, the functions of this Committee have included, among other things, recommending to the Board the engagement or discharge of independent auditors, discussing with the auditors their review of the Company’s quarterly results and the results of their annual audit and reviewing the Company’s internal accounting controls. The Audit Committee, then consisting of Dean S. Adler, Stanley F. Barshay and JB Osborne, held eightfive meetings during fiscal 2016. The current members of2018. Mr. Adler served as the Committee are Messrs. Barshay, Gaston and Heller. The Board of Directors has determined that Mr. Heller is an “audit committee financial expert” during fiscal 2018, as defined in Item 407(d)(5)(ii) of RegulationS-K. As indicated above, Messrs. Adler and Barshay resigned as members of the Board effective May 1, 2019.
PROPOSAL 1—ELECTION OF DIRECTORS
The Audit Committee was reconstituted in May 2019, and the current members are independent directors Harriet Edelman, Chair, JB Osborne, Virginia P. Ruesterholz, Joshua E. Schechter and Andrea Weiss. The Board has determined that Andrea Weiss and Joshua E. Schechter qualify as “audit committee financial experts.”
COMPENSATION
The Compensation Committee assists the Board by (i) considering and determining all matters relating to the compensation of the Company’s Co-Chairmen, Chief Executive Officer (CEO)of the Company (“CEO”) and other executive officers (as defined in Rule3b-7 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and such other key executives as the Committee shall determine; (ii) administering and functioning as the Committee that is authorized to make grants and awards of equity compensation to executive officers and such other key executives as the Committee shall determine under the Company’s equity compensation plans; and (iii) reviewing and reporting to the Board on such other matters as may be appropriately delegated by the Board for the Committee’s consideration. The Committee has the authority to engage consultants and other advisors. The Compensation Committee held 10 meetings during the fiscal 2016. The currentyear 2018. Victoria Morrison, Dean S. Adler and Stanley F. Barshay were members of the Compensation Committee arethat set and approved 2018 compensation. Patrick R. Gaston and Jordan Heller joined the Compensation Committee after the 2018 compensation had been set. Mr. Adler and Mr. Barshay rotated off the Compensation Committee effective May 15, 2018, and Ms. Morrison resigned from the Compensation Committee effective September 26, 2018. Patrick R. Gaston and Jordan Heller joined the Compensation Committee on May 15, 2018, and neither participated in the deliberations or approval of the 2018 compensation. As indicated above, Messrs. Adler, and Barshay and Heller and Ms. Morrison.Morrison resigned as members of the Board effective May 1, 2019.
The Compensation Committee was reconstituted in May 2019, and the current members are independent directors Patrick R. Gaston, Chair, Harriet Edelman, John E. Fleming and Ann Yerger.
NOMINATING AND CORPORATE GOVERNANCE
The Nominating and Corporate Governance Committee assists the Board by (i) reviewing and recommending changes in certain policies regarding the nomination of directors to the Board for its approval; (ii) identifying individuals qualified to become directors; (iii) evaluating and recommending for the Board’s selection nominees to fill positions on the Board; and (iv) recommending changes in the Company’s corporate governance policies to the Board for its approval. The Committee also oversees Board and management succession planning. The Committee’s policy is to identify potential nominees based on properly submitted suggestions from any source, including the Company’s shareholders, and has established procedures to do so. Shareholders may recommend nominees to the Committee by submitting the names and supporting information in writing to the Secretary of the Company at 650 Liberty Avenue, Union, New Jersey 07083. In addition, the Board may determine that it requires a director with a particular expertise or qualification and will actively recruit such a candidate. The Nominating and Corporate Governance Committee also has the authority to retain third party search firms to evaluate or assist in identifying or evaluating potential nominees. The Nominating and Corporate Governance Committee, then consisting of Klaus Eppler, Victoria A. Morrison and Virginia P. Ruesterholz, held one meetingthree meetings during fiscal 2016. The current2018. As indicated above, Mr. Eppler and Ms. Morrison resigned as members of the Board of Directors effective May 1, 2019.
The Nominating and Corporate Governance Committee was reconstituted in May 2019, and the current members are Messrs. Adlerindependent directors Virginia P. Ruesterholz, Chair, Stephanie Bell-Rose, Patrick R. Gaston, Sue E. Gove, Harsha Ramalingam and EpplerAnn Yerger.
BUSINESS TRANSFORMATION AND STRATEGY REVIEW
On May 1, 2019, the Board formed a new Business Transformation and Ms. Morrison.Strategy Review Committee to review all aspects of the Company’s business transformation, strategy and structure. The Business Transformation and Strategy Review Committee is responsible for ensuring that all aspects of the Company’s ongoing business transformation are addressed and will work to identify opportunities for rapid performance improvement of both short- and long-term results. This Committee is comprised of independent directors Andrea Weiss, Chair, John E. Fleming, Patrick R. Gaston, Jeffrey A. Kirwan, JB Osborne and Harsha Ramalingam.
PROPOSAL 1—ELECTION OF DIRECTORS
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee was (i) during fiscal 2016,2018, an officer or employee of the Company or any of its subsidiaries or (ii) formerly an officer of the Company or any of its subsidiaries.
None of our executive officers currently serves,serve, or in fiscal 20162018 has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
PROPOSAL 1—ELECTION OF DIRECTORS
Governance Guidelines and Policies; Additional Information
The Board has adopted, and posts on the investor relations section of its website:
Corporate Governance Guidelines that are available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com, where you may also find Guidelines;
the Company’s policies on director attendanceDirector Nominations and Director Attendance at the Annual Meeting and Meeting;
how shareholders can communicate with the Board of Directors. In addition, Directors; and
the Board has adopted a PolicyCompany’s policy of Ethical Standards for Business Conduct that applies to all directorsassociates (including all officers) and employees. This Policy also can be found in the Investor Relations sectionmembers of the Company’s website noted above. The Company intends to post on this website any amendments to, or waivers from, the CodeBoard of Ethics that applies to the principal executive officer, financial officer and accounting officer.Directors.
The Company maintains directors and officers indemnification insurance coverage. This insurance covers directors and officers individually where exposures exist other than those for which the Company is able to provide indemnification.indemnification and covers the Company for its indemnity obligation to the directors and officers. This coverage is from June 1, 2016September 15, 2018 through July 1, 2017,September 15, 2019, at a total cost of approximately $307,000.$360,000. The primary current carrier is ArchZurich American Insurance Company. The excess carriers are American International Group, Inc., XL SpecialtyNational Union Fire Insurance Company of Pittsburgh, PA, Travelers Casualty & Surety Company of America, and Old Republic International Corporation.Endurance American Insurance Company. Although no assurances can be provided, the Company intends to maintain directors and officers coverage from July 1, 2017September 15, 2019 through July 1, 2018.September 15, 2020.
Compensation of Directors
The Director Compensation Table provides compensation information for each member of our Board of Directors during fiscal 2016, other than Steven H. Temares, whose compensation is reflected in the Summary Compensation Table. Messrs. Temares, Eisenberg and Feinstein did not receive any director fees for fiscal 2016, since they received compensation in their capacity as executives of the Company. The compensation as executives of Messrs. Eisenberg and Feinstein is included in the Director Compensation Table since their compensation is not reflected in the Summary Compensation Table.
Annual director fees for fiscal 2016 were $100,000. In addition, directors serving on standing committees of the Board of Directors were paid as follows: an additional $10,000 for Audit Committee members, an additional $7,500 for Compensation Committee members, and (other than for the Lead Director) an additional $5,000 for Nominating and Corporate Governance Committee members. The Lead Director received $15,000 for acting in that capacity. Director fees are paid on a quarterly basis. Directors have the right to elect to receive all or 50% of their fees in stock. In addition to the fees above, each director, other than Messrs. Temares, Eisenberg and Feinstein, received a grant of restricted stock under the Company’s 2012 Incentive Compensation Plan with a fair market value equal to $90,000 on the date of the Company’s 2016 Annual Meeting of Shareholders (calculated based on the average of the high and low trading prices on such date). Such restricted stock vested on the last day of fiscal 2016.
For fiscal 2017, the Company reduced compensation of non-employee directors, excluding fees for committee service and service as lead director, by approximately 10%.
PROPOSAL 1—ELECTION OF DIRECTORS
As described above and more fully below, the following table summarizes the annual compensation for the directors, other than Mr. Temares, during fiscal 2016. Additionally, the employment agreements for Messrs. Eisenberg and Feinstein are discussed below.
Fees Earned or Paid in Cash($) | Stock Awards ($)(2)(3) | Option Awards ($)(2)(4) | All Other Compensation ($) | Total ($) | ||||||||||||||||
Warren Eisenberg | — | 1,500,003 | 500,010 | 1,246,243 | (5) | 3,246,256 | ||||||||||||||
Leonard Feinstein | — | 1,500,003 | 500,010 | 1,264,863 | (6) | 3,264,876 | ||||||||||||||
Dean S. Adler | 112,500 | (1) | 90,000 | — | — | 202,500 | ||||||||||||||
Stanley F. Barshay | 117,500 | 90,000 | — | — | 207,500 | |||||||||||||||
Geraldine T. Elliott | 100,000 | 90,000 | — | — | 190,000 | |||||||||||||||
Klaus Eppler | 115,000 | 90,000 | — | — | 205,000 | |||||||||||||||
Patrick R. Gaston | 110,000 | (7) | 90,000 | — | — | 200,000 | ||||||||||||||
Jordan Heller | 110,000 | 90,000 | — | — | 200,000 | |||||||||||||||
Victoria A. Morrison | 112,500 | 90,000 | — | — | 202,500 |
Compensation Arrangements for Messrs. Eisenberg and Feinstein
Messrs. Eisenberg’s and Feinstein’s compensation for fiscal 2016 was based on their employment agreements with the Company. These agreements provided for salaries at the rate of $800,000 per year which may be increased from time to time by the Company. The annual salary for each of Messrs. Eisenberg and Feinstein in fiscal 2016 was $1,100,000,
PROPOSAL 1—ELECTION OF DIRECTORS
unchanged since 2004. Under these agreements, each of Messrs. Eisenberg and Feinstein could at any time elect senior status (i.e., to be continued to be employed to provide non-line executive consultative services) at an annual salary of the greater of $400,000 (increased for cost of living adjustments) or 50% of his average salary over the three-year period prior to such election for a period (the “Senior Status Period”) of up to ten years from the date of such election. Following the Senior Status Period, Messrs. Eisenberg and Feinstein are each entitled to supplemental pension payments of $200,000 per year (as adjusted for a cost of living increase) until the death of the survivor of him and his current spouse. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their Senior Status Period and during the period of supplemental pension payments.
On May 11, 2017, Messrs. Eisenberg and Feinstein notified the Company that they elected to commence their Senior Status Period, effective May 21, 2017. Consequently, their annual salary will be reduced to $550,000 each, which represents 50% of their average salary over the three-year period prior to the election, and in consultation with these executives, the Compensation Committee has reduced the aggregate value of their equity compensation for 2017 by 50% through the elimination of stock options and the reduction in the value of their PSU grants by approximately one-third.
In substitution for a split-dollar insurance benefit previously provided to such executives, in fiscal 2003, the Company entered into deferred compensation agreements with Messrs. Eisenberg and Feinstein under which the Company is obligated to pay Messrs. Eisenberg and Feinstein $2,125,000 and $2,080,000, respectively, in each case payable only on the last day of the first full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result in the loss of a deduction for such payment pursuant to applicable federal income tax law.
Risk Oversight
As part of its oversight responsibility, the Board receives at least annually a report on the material risks facing the Company, which risks are identified through the Company’s Enterprise Risk Management (“ERM”) process. This report is presented to the Board by a committee of key executives representing legal, compliance, finance and internal audit, and results from a formal process where members of the committee meet with executives of each principal business function to identify and assess the significant risks in each such business function’s areas of responsibility. The committee then analyzes with those executives what risk mitigation efforts are or should be in place to eliminate or reduce such risks to acceptable levels, where possible, and then engages on these matters with the full Board of Directors.Board. In the annual ERM report, areas of risk and mitigation efforts reviewed with the full Board in furtherance of its oversight responsibilities generally include: general business risks, such as economic forces, competition and weather; employment-related risks, such as recruitment and retention, succession, labor costs and associate relations; data security risks with respect to Company, associate and customer data; compliance risks associated with the range of legal, accounting, tax and financial reporting systems under which the Company operates; supply chain risks, including disruption arising from political instability or labor disturbances, supplier financial stability and legal compliance; and compliance with a variety of product, labor, social and environmental standards. The Board is updated on certain risks more frequently than annually, upon request or as developments warrant.
The ERM process and report to the Company’s Board of Directors also informs the more detailed Risk Factor disclosure in the Company’s annual report on Form10-K, filed with the SecuritiesSEC.
The Director Compensation Table provides compensation information for each member of our Board of Directors during fiscal 2018, other than Warren Eisenberg and Leonard Feinstein, our former Co-Chairmen, and Steven H. Temares, our former CEO, whose compensation is reflected in the Summary Compensation Table. Messrs. Eisenberg, Feinstein and Temares did not receive any director fees for fiscal 2018, since they received compensation in their capacity as executives of the Company. Messrs. Eisenberg and Feinstein resigned as members of the Board effective May 1, 2019, and Mr. Temares resigned as a member of the Board on May 13, 2019.
Annual director fees for fiscal 2018 were $90,000. In addition, directors serving on standing committees of the Board were paid as follows: an additional $10,000 for Audit Committee members; an additional $7,500 for Compensation Committee members; and (other than for the Lead Director) an additional $5,000 for Nominating and Corporate Governance Committee members. The Lead Director received $15,000 for acting in that capacity. Director fees are paid on a quarterly basis. Directors have the right to elect to receive all or 50% of their fees in stock. In addition to the fees above, each director, other than Messrs. Eisenberg, Feinstein and Temares, received a grant of restricted stock under the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”) with a fair market value equal to $81,000 on the date of the Company’s 2018 Annual Meeting of Shareholders (calculated based on the average of the high and low trading prices on such date). Such restricted stock vested on the last day of fiscal 2018. All of the independent directors are in compliance with the Company’s stock ownership guidelines.
PROPOSAL 1—ELECTION OF DIRECTORS
As described above and more fully below, the following table summarizes the annual compensation for the directors, other than Messrs. Eisenberg, Feinstein and Temares, during fiscal 2018.
Fees Earned or Paid in Cash($) | Stock Awards ($)(1)(2) | Total ($) | |||||||||||||
Dean S. Adler | 100,495 | 81,000 | 181,495 | ||||||||||||
Stanley F. Barshay | 101,484 | 81,000 | 182,484 | ||||||||||||
Stephanie Bell-Rose | 71,456 | (3) | 81,000 | 152,456 | |||||||||||
Klaus Eppler | 105,000 | 81,000 | 186,000 | ||||||||||||
Patrick R. Gaston | 97,995 | (4) | 81,000 | 178,995 | |||||||||||
Jordan Heller | 97,995 | 81,000 | 178,995 | ||||||||||||
Victoria A. Morrison | 102,500 | 81,000 | 183,500 | ||||||||||||
JB Osborne | 90,605 | (5) | 81,000 | 171,604 | |||||||||||
Virginia P. Ruesterholz | 94,011 | 81,000 | 175,011 | ||||||||||||
(1) | The value of stock awards represents their respective total fair value on the date of grant calculated in accordance with Accounting Standards Codification Topic No. 718, “Compensation—Stock Compensation” (“ASC 718”), without regard to the estimated forfeiture related to service-based vesting conditions. All assumptions made in the valuations are contained and described in Note 14 to the Company’s financial statements in the Company’s Form10-K for fiscal 2018. Stock awards and option awards are rounded up to the nearest whole share when converted from dollars to shares. The amounts shown in the table reflect the total fair value on the date of grant and do not necessarily reflect the actual value, if any, that may be realized by the directors. |
(2) | Represents the value of 4,086 restricted shares of common stock of the Company granted under the 2012 Plan at fair market value on the date of the Company’s 2018 Annual Meeting of Shareholders ($19.83 per share, the average of the high and low trading prices on June 29, 2018), such restricted stock to vest on the last day of the fiscal year of grant provided that the director remains in office until the last day of the fiscal year. No stock awards were outstanding for eachnon-employee director as of March 2, 2019. |
(3) | This director fee waspro-rated due to the election of the Director on May 18, 2018. |
(4) | Fifty percent of Mr. Gaston’s fee was paid in shares of common stock of the Company pursuant to the Bed Bath & Beyond Plan to Pay Directors Fees in Stock and the number of shares was determined (in accordance with the terms of such plan) based on the fair market value per share on the second business day following the announcement of the Company’s financial results for its fiscal third quarter, which was $14.81 per share, the average of the high and low trading prices on January 11, 2019. |
(5) | This director fee waspro-rated due to the election of the Director on April 3, 2018. |
Changes for Fiscal 2019
For fiscal 2019, the Board approved, upon the recommendation of the Compensation Committee and based on the peer group data the Compensation Committee received from Arthur J. Gallagher & Exchange Commission.Co. Human Resources & Compensation Consulting Practice (“Gallagher”) regarding director compensation, the following changes to ournon-employee director compensation program in order to bring ournon-employee directors’ compensation in line with market practices, with all of the changes being effective as of May 1, 2019, except as expressly noted below:
effective as of April 21, 2019, the date that Patrick R. Gaston was appointed to the role of Independent Chairman of the Board, the Board approved an annual retainer in the amount of $200,000 for the Company’s Independent Chairman of the Board (in addition to the standard annual director fees received by the Independent Chairman), which equals the median retainer paid to anon-executive chairperson of the peer group, with 75% of such amount payable in cash and 25% of such amount payable in restricted stock under the 2012 Plan, which will vest at the end of the Company’s fiscal 2019 year, subject to Mr. Gaston’s continued service with the Company through such vesting date;
directors serving as chairs of the standing committees of the Board will be paid the following additional annual retainers, which, in each case other than for the Business Transformation and Strategy Review Committee, equal the median retainers paid to a chairperson of the applicable committee of the peer group: $25,000 for Audit Committee chair; $25,000 for Compensation Committee chair; $16,500 for Nominating and Corporate Governance Committee chair; and $20,000 for Business Transformation and Strategy Review Committee chair;
the Lead Director, if any, will receive $30,000 for acting in that capacity, which equals the median retainer paid to a lead director of the peer group;
the members of our newly created Business Transformation and Strategy Review Board Committee will receive an additional annual retainer of $10,000; and
PROPOSAL 1—ELECTION OF DIRECTORS
the chair of the Chief Executive Officer Search Committee of the Board of Directors (the “CEO Search Committee”) will receive aone-time special committee retainer equal to $10,000, and each of the other members of the CEO Search Committee will receive aone-time special committee retainer of $6,000.
The retainers described above for the Independent Chairman of the Board, the committee chairs, the Lead Independent Director (if any) and the members of the Business Transformation and Strategy Review and CEO Search Committees will be in addition to the standard annual director fees each director serving in such role will receive, which have not changed. See the section below entitled “Methodology for Determining Executive Compensation” for further discussion regarding the peer group used by Gallagher and the Compensation Committee in connection with the evaluation of certain elements of the Company’s director compensation.
HOW TO COMMUNICATE WITH US AND HOW WE LISTEN
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE ELECTION OF THE 10 NOMINEES AS DIRECTORS.Shareholder Outreach—We Listened, Learned & Responded
The Board’s recent changes and ongoing actions include:
Appointing nine new independent directors to the Board with relevant skill sets for accelerating the business transformation underway and promoting robust Board oversight. In addition, the Company’s longest-tenured directors have stepped down from the Board;
Appointing Lead Independent Director Patrick R. Gaston, a transformational leader and seasoned executive, as Independent Chair of the Board;
Appointing Mary A. Winston, a newly appointed director and a seasoned public company executive, as Interim CEO;
Actively searching for a permanent CEO who will bring transformation and innovation experience in the retail sector to the Company. The search process is being led by a dedicated CEO Search Committee (which includes three of the directors who recently joined the Board), chaired by independent director Virginia P. Ruesterholz, the recently appointed chair of the Nominating and Governance Committee, and is supported by a leading executive search firm; and
Creating a Business Transformation and Strategy Review Committee (which includes four of the directors who recently joined the Board), chaired by Andrea Weiss, a newly appointed independent Board member and a long-time retail executive.
Throughout each year, management and members of our Board actively engage with our shareholders. Over time, in addition to ourday-to-day interactions with investors, we have expanded our shareholder engagement efforts to include a greater focus on areas such as executive compensation, governance and other topics suggested by our shareholders.
Shareholder feedback, including through direct discussions and prior shareholder votes, as well as engagement with proxy advisory firms that represent the interests of a wide array of shareholders, is discussed at the Board level periodically throughout the year.
In preparation for our fiscal 2019 compensation decisions, and in light of the decline in the most recentsay-on-pay vote, we reached out to representatives from a variety of our shareholders, including index funds, hedge funds, public pension funds and actively managed funds, representing approximately 85% of our total shares outstanding, excluding shares held by directors and executive officers. In addition, over the past 12 months, Board representatives, along with management, engaged inface-to-face meetings and/or phone calls with, or received responsive feedback from shareholders representing approximately 66% of our total shares outstanding, excluding shares held by directors and executive officers.
During the course of this engagement, we discussed with shareholders the progress being made in executing our strategic objectives, which are based on the foundational changes made over the past 18 months to transform the business and operating structure of our Company. These include providing our customers with unique, convenient omnichannel experiences; making significant investments in technology, analytics and value optimization to enable data-driven decision making; continuing enhancements of thein-store and digital customer experience; evolving our assortment to include a higher proportion of meaningfully differentiated/private label products; and extensively focusing on profitability. The multi-year investments being made have impacted our financial performance during this transformational period.
We also discussed certain governance-related topics important to our shareholders during these conversations, such as board diversity and refreshment.
PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 20172019
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed KPMG LLP to serve as our independent auditors for fiscal 2017,2019, subject to ratification by our shareholders. The Company’s auditors have been KPMG LLP for every year that it has been a public company. The Audit Committee and the Board of Directors believe that the continued retention of KPMG LLP as our independent registered public accounting firm is in the best interest of the Company and our shareholders.
Representatives of KPMG LLP will be present at the Annual Meeting to answer questions. They will also have the opportunity to make a statement if they desire to do so. If the proposal to ratify their appointment is not approved, other certified public accountants will be considered by the Audit Committee. Even if the proposal is approved, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year if it believes that such a change would be in the best interest of the Company and its shareholders.
Fees Paid to KPMG LLP for Services and Products
The Audit Committee is responsible for the approval of the audit fee associated with the Company’s retention of KPMG LLP. The fees incurred by the Company for professional services rendered by and products purchased from KPMG LLP for fiscal 20162018 and the fiscal year ended February 27, 2016March 3, 2018 (“fiscal 2015”2017”) were as follows:
2016 | 2015 | |||||||
Audit Fees | $ | 1,404,000 | $ | 1,214,000 | ||||
Tax Fees | 18,000 | 61,000 | ||||||
All Other Fees | 3,000 | 3,000 | ||||||
$ | 1,425,000 | $ | 1,278,000 |
2018 | 2017 | |||||||
Audit Fees | $ | 1,644,000 |
| $ | 1,369,000 |
| ||
Audit-Related Fees |
| 10,000 |
|
| — |
| ||
Tax Fees |
| 75,000 |
|
| 81,000 |
| ||
All Other Fees |
| 3,000 |
|
| 3,000 |
| ||
|
|
|
| |||||
$ | 1,732,000 |
| $ | 1,453,000 |
|
In fiscal 20162018 and fiscal 2015,2017, in accordance with the SEC’s definitions and rules, “Audit Fees” included fees associated with the annual audit of the Company’s financial statements, the assessment of the Company’s internal control over financial reporting as integrated with the annual audit of the Company’s financial statements and the quarterly reviews of the financial statements included in its Form10-Q filings. In fiscal 2016,2018, “Audit Fees” also include fees for additional procedures due to the acquisitionsadoption of One Kings Lane, Inc.Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers, PersonalizationMall.com, LLC,” upgrades to information technology systems during fiscal 2018 and certain assets of Chef Central.additional procedures related to the goodwill and other impairments. In fiscal 20162017, “Audit Fees” also include fees for additional procedures due to the adoption of ASC Topic 606, upgrades to information technology systems during fiscal 2017 and the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). In fiscal 2015,2018, “Audit-Related Fees” include fees for procedures required due to a FormS-8 registration statement. In fiscal 2018 and 2017, “Tax Fees” included fees associated with tax planning, tax compliance (including review of tax returns) and tax advice (including tax audit assistance). The Audit Committee has concluded that the provision of the foregoing services is compatible with maintaining KPMG LLP’s independence. In addition to fees for audit andnon-audit services, in fiscal 20162018 and 2015,2017, the Company paid a subscription fee for a KPMG sponsored research product, reflected above in “All Other Fees.” The Audit Committee has concluded that the provision of the foregoing services and products is compatible with maintaining KPMG LLP’s independence.
Pre-Approval Policies and Procedures
In accordance with the Audit Committee charter, the Audit Committee mustpre-approve all audit andnon-audit services provided to the Company by its outside auditor. To the extent permitted by applicable laws, regulations and NASDAQNasdaq rules, the Committee may delegatepre-approval of audit andnon-audit services to one or more members of the Committee. Such member(s) must then report to the full Committee at its next scheduled meeting if such member(s)pre-approved any audit ornon-audit services.
In fiscal 20162018 and fiscal 2015,2017, all (100%) audit andnon-audit services werepre-approved in accordance with the Audit Committee charter.
PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF AUDITORS FOR FISCAL 20172019
Audit Committee Report for the Fiscal Year Ended February 25, 2017
The Board of Directors has determined that the members of the Audit Committee meet the SEC and NASDAQ independence and experience requirements. The Board of Directors has also determined that Mr. Heller qualifies as an “audit committee financial expert.”March 2, 2019
The Audit Committee discussed the auditors’ review of quarterly financial information with the auditors prior to the release of that information and the filing of the Company’s quarterly reports with the SEC; the Audit Committee also met and held discussions with management and the independent auditors with respect to the auditedyear-end financial statements.
Further, the Audit Committee discussed with the independent auditors the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 1301, ‘‘Communications with Audit Committees,’’ received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’ independence. The Committee also discussed with the auditors and the Company’s financial management matters related to the Company’s internal control over financial reporting. Based on these discussions and the written disclosures received from the independent auditors, the Committee recommended that the Board of Directors include the audited financial statements in the Company’s Annual Report on Form10-K for the year ended February 25, 2017,March 2, 2019, filed with the SEC on April 25, 2017.
30, 2019.
This audit committee report is not deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934 and is not incorporated by reference into any filings that the Company may make with the SEC.
At such time that the Audit Committee recommended that the Board of Directors include the audited financial statements in the Company’s Annual Report on Form10-K for the year ended March 2, 2019, filed with the SEC on April 30, 2019, the Audit Committee was comprised of Dean S. Adler, Stanley F. Barshay and JB Osborne. Messrs. Adler and Barshay resigned from the Board of Directors effective as of May 1, 2019, and the current members of the Audit Committee are Harriet Edelman, Chair, JB Osborne, Virginia P. Ruesterholz, Joshua E. Schechter and Andrea Weiss.
AUDIT COMMITTEE
Harriet Edelman
Stanley F. BarshayJB Osborne
Patrick R. GastonVirginia P. Ruesterholz
Jordan HellerJoshua E. Schechter
Andrea Weiss
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS INDEPENDENT AUDITORS FOR FISCAL 2017.2019.
The directors named below, who constitute the current Compensation Committee of the Company’s Board of Directors has(the “New Compensation Committee”), have submitted the following report for inclusion in this Proxy Statement.
The New Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on the Compensation Committee’sits review of and the discussions with management with respect to the Compensation Discussion and Analysis, the New Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC and incorporated by reference in the Company’s Annual Report on Form10-K for fiscal 2016 for filing with the SEC.
The foregoing report is provided by the following directors, who constitute the fiscal 2016 Compensation Committee:
2018.
COMPENSATION COMMITTEE
Patrick R. Gaston
Dean S. AdlerHarriet Edelman
Stanley F. BarshayJohn E. Fleming
Victoria A. MorrisonAnn Yerger
The current members of the New Compensation Committee did not participate in the deliberations or approval of 2018 compensation. The Compensation Committee that approved the 2018 compensation of the Company’s CEO and other executive officers set forth in this Proxy Statement was comprised entirely of directors who are no longer members of the Board of Directors (the “2018 Compensation Committee”).
Compensation Discussion and Analysis (CD&A)
As discussed in further detail in this Proxy Statement, we have recently experienced significant refreshment at the Board and management level.
On April 21, 2019, Messrs. Eisenberg and Feinstein, formerlyCo-Chairmen of the Company, ceased to be officers of the Company.
Introduction
In this section, we describe our executive compensation philosophy and program. We also discuss significant changes madeEffective May 1, 2019, five new independent directors were appointed to our Board and seven existing directors resigned.
On May 12, 2019, Mary A. Winston, one of the newly appointed independent Board members, was appointed Interim CEO, replacing Steven H. Temares, who ceased to be the CEO effective as of that date.
On May 13, 2019, Mr. Temares resigned from the Board of Directors.
Effective May 29, 2019, four new independent directors were appointed to our Board.
On May 1, 2019, Harriet Edelman and Ann Yerger became members of the New Compensation Committee, joining Patrick R. Gaston. On May 29, 2019, John E. Fleming also became a member of the New Compensation Committee. All members of the New Compensation Committee became members after approval of the 2018 compensation for the CEO and executive officers reported in this Proxy Statement, and they did not participate in any deliberations regarding 2018 compensation.
The New Compensation Committee is fully aware that shareholders have raised significant concerns regarding certain aspects of our historical pay practices, as evidenced by consecutive years of majority vote opposition to the Company’ssay-on-pay proposal.
The New Compensation Committee is determined to regain the trust of our shareholders and committed to establishing apay-for-performance executive compensation program for 2017 after consideration of input from our shareholders, including:
This reflects a reduction of approximately $1 million in 2017 equity compensation awards, as well as a discount applied to the CEO’s grant of 2017 PSUs by virtue of the newly required two-year post-vesting holding period.
Since fiscal 2015, the value of annual CEO target compensation has been reduced from $19.6 million to $14.55 million, or by an aggregate of approximately 26%.
EXECUTIVE COMPENSATION
As the New Compensation Committee was refreshed only a short time ago and the Board is currently seeking a new permanent CEO, the specific composition of the CEO pay package is yet to be determined. However, the New Compensation Committee is committed to a transformedpay-for-performance compensation plan and philosophy that is receptive and responsive to shareholder views and reflects best practices, with the ultimate objective of aligning executive compensation with long-term shareholder value. In that regard, we will focus on the following pillars:
This CD&A is organized as follows:Compensation Design Pillars
• | Establish fixed, short-term, long-term and total target pay levels that are rigorously and appropriately benchmarked against our peer companies. |
• | Establish a single, updated and relevant peer group that will be used consistently for all performance metrics and also for reviewing and setting appropriate compensation levels, and review the peer group annually to ensure all companies remain appropriate for comparison in terms of both size and industry. |
• | Utilize a reasonable blend of fixed, annual and long-term compensation,with fixed compensation comprising a market-appropriate percentage of total target pay and the majority of target total compensation linked to long-term performance and total shareholder returns. |
• | Set annual compensation (base salary and annual incentive target) and long-term incentive targets generally at the median range for the peer group. |
• | Establish a short-term incentive program with metrics based on key operational and other objectives that support the Company’s long-term strategic goals. |
• | Set metrics for long-term incentives that are closely aligned with total shareholder returns. |
• | Develop payout curves for annual and long-term incentives to provide strong incentives for superior performance and meaningful downside risk for underperformance, including the risk of forfeiture. |
• | Require the achievement of rigorous performance goals for target incentive payout. |
• | Ensure meaningful stock ownership guidelines to promote significant alignment between directors, executives and shareholders. |
• | Continue to engage with shareholders and vigorously solicit their feedback. |
• | Consider and appropriately address shareholder concerns. |
We commit to a robust annual review of the compensation philosophy and objectives, an overview of our strategy, and some highlights of our fiscal 2016 operational and financial performance.
As noted above, the Company is conducting a search for a permanent CEO. The New Compensation (page 26) explains our Committee is committed to applying this transformed compensation philosophy to the hiring of a new CEO and the compensation design processfor the full executive team, subject to adjustments depending on extraordinary circumstances, opportunities and other relevant considerations. Once compensation for the elements of ournew permanent CEO has been determined, the New Compensation Committee will closely review other Named Executive Officer (NEO)(“NEO”) compensation which are heavily weighted toward performance-based compensation; provides a reviewand make appropriate modifications where needed to reflect the principles outlined above.
Members of the senior executive compensation for fiscal 2016, including other benefits2018 Board and considerations; and presents the required Summary Compensation Table,Committee, as well as alternative analysesrepresentatives from management engaged with shareholders in the past year.
Members of CEO compensation.
Executive Summary/Executive Compensation Philosophy and Objectives
Our compensation programs are determined by the2018 Compensation Committee of the Board of Directors, with the assistance of an independent compensation consultant and independent counsel. The primary objectives of the Company’s executive officer compensation program are to:
The Company believes that its compensation policies, plans and programs have no material adverse effect on the Company’s enterprise risk.
The Company believes that a key factor in its success to date has been the stability of its executive team. The average tenure of our executive officers is approximately 34 years, which has created a very cohesive executive team, led by our CEO Steven Temares, which has deep knowledge of the Company as well as the depth and breadth of experience to navigate the ever-evolving and dramatically changing retail landscape. The assembly and retention of this executive team and its team-based approach have also contributed to the Company’s strong corporate culture to think long-term and do whatever it takes to satisfy a customer. To that end, the Company’s policy is to seek, whenever possible, at all levels, to promote from within and to make compensation program changes gradually in order to compensate executives in a manner designed to promote the long-term success of the organization as well as to maintain a level of stability. Compensation heavily weighted toward equity awards also support such stability, including PSUs that vest upon the achievement of performance goals and generally vest over three years and stock options that generally vest over five years.
The Company’s compensation programs do not include annual cash bonuses and allocate the majority of each executive’s compensation to long-term equity awards and performance-based compensation. The Compensation Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success. The Compensation Committee believes that paying a fair base salary and putting all other compensation in the form of long-term equity awards and performance-based compensation creates alignment with the Company’s and shareholders’ goal of incenting management to continue to enhance shareholder value over the long term. As discussed in detail below, this compensation structure is performing as designed, such as a comparison of our CEO’s Granted Pay Opportunity to Realizable Pay over the most recent three-year period, shows the value of Realizable Pay to be 39% less than the Granted Pay Opportunity, resulting from the decline in the Company’s stock price over a similar period. (For further detail, see the graph and explanatory notes in the Supplemental Compensation Analysis below.) We believe the significant changes to our executive compensation program implemented for fiscal 2017 more aggressively emphasize long-term performance.
EXECUTIVE COMPENSATION
It continues to be a transitional time for retail. New advances in technology are creating opportunities for our customers to shop in a more seamless environment, and for us to do more for and with our customers and connect with them in a more personalized manner. Within this environment, we have been working continuously to evolve our Company and expand the breadth of the differentiated products, services and solutions we offer our customers. By providing real answers to our customers’ needs at the right time and at the right value, we can further strengthen our position as the customer’s first choice for the home and heart-related life events and continue to achieve long-term success.
The Compensation Committee recognizes the significant transformation occurring within the Company and the level of fortitude and expertise required to create the right balance between achieving positive results in the near-term, and investing for long-term success. We have great confidence in our executive team and their ability to further strengthen and position Bed Bath & Beyond Inc. as a world-class omnichannel retailer.
Our Strategy
The state of retail today is filled with exciting opportunities to do more for and with our customers. Led by advances in technology and growth in digital capabilities, our industry is experiencing a dramatic shift in the way consumers search for, engage with, and ultimately purchase product. This democratization of shopping has given consumers more choice, more transparency and more convenience than ever. It also presents enormous possibilities for retailers, like us, to strengthen our competitive position and develop deeper and more personalized relationships with our customers.
Over the past several years, it is in this environment that we have been transforming our Company and evolving toward providing greater inspiration and a personal omnichannel shopping experience. Using a systematic and logical approach, we are making great progress in improving our capabilities every day.
Our Performance
During fiscal 2016 we made significant investments to advance our mission to be trusted by our customers as the expert for the home and “heart-related” life events. These include certain life events that evoke strong emotional connections such as getting married, moving to a new home, having a baby, going to college, and decorating a room. Our strategy is rooted in our customer-centric culture and commitment to customer service, and involves building and delivering a strong foundation of differentiated products, and services and solutions for our customers while driving operational excellence. We delivered revenues of over $12 billion in fiscal 2016, with net earnings per diluted share of $4.58. This marks the fifth consecutive year that we’ve been in a narrow earnings range since we entered a heavy investment phase several years ago. Despite the pressures on our operating profits during this time, we continue to produce some of the best returns in retail. This allows us to make the necessary investments to position Bed Bath & Beyond Inc. for future growth.
In support of our strategy, some of our initiatives during fiscal 2016 and today include:
EXECUTIVE COMPENSATION
Select financial highlights for Fiscal 2016:
For more information regarding our fiscal 2016 financial performance, see our Annual Report on Form 10-K for fiscal 2016 filed with the SEC on April 25, 2017.
Shareholder Outreach & Response
Throughout each year, management and members of our Board engage with a significant portion of our shareholders. In addition to our day-to-day interactions with investors, we have expanded our shareholder engagement over time to include an ongoing outreach focused on governance, executive compensation and other topics suggested by our shareholders. Shareholder feedback, including through direct discussions and prior shareholder votes, as well as engagement with proxy advisory firms that represent the interests of a wide array of shareholders, is communicated to the Board periodically throughout the year. The feedback received through these engagement efforts has, in part, contributed to the steady enhancements made to our executive compensation program and governance policies over the past several years.
In preparation for our 2017 compensation decisions, and in light of the declines in the prior two-year say-on-pay votes, wedirectors reached out to representatives from a variety of our shareholders, including index funds, hedge funds, public pension funds and actively-managed funds, representing more than 75%approximately 85% of our total shares outstanding.outstanding, excluding shares held by directors and executive officers. Over the past 12 months, representatives of the Compensation Committee and Nominating and Corporate Governance Committee,Board, along with management, engaged inface-to-face meetings and/or phone calls with, or received responsive feedback from shareholders representing approximately 56%66% of our total shares outstanding. In these conversations, we reviewed the Company’s strategic prioritiesoutstanding, excluding shares held by directors and recent enhancements to our executive compensation program. We also discussed and solicited feedback on our proposed and subsequently adopted responses to the two shareholder proposals that received majority support at the 2016 Annual Meeting and additional executive compensation changes planned for fiscal 2017.officers.
EXECUTIVE COMPENSATION
KeyShareholders expressed their thoughts on executive compensation, with feedback includedgenerally coalescing into three key themes that the following:
EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
TheNew Compensation Committee took into account in revising the compensation philosophy and will continue to actively engage with shareholders to discuss variousconsider as it further evaluates and develops the executive compensation program:
Magnitude of CEO pay, fixed vs. variable/at risk portion of CEO compensation, and governance mattersperformance curves.
Pay-for-performance alignment.
Strong connection between Company strategy, results and will consider theircompensation structure.
The New Compensation Committee is committed to a transformed pay philosophy and to a robust review of pay practices for both the new permanent CEO and other NEOs to determine changes that are needed to align with the compensation pillars previously presented. The New Compensation Committee is committed to continuing extensive shareholder outreach and to obtaining shareholder feedback in any futureadvance of adopting changes to the Company’s executive compensation program.
Fiscal 2017 Executive Compensation Program Decisions
The Compensation Committee continues to believe that a combination of PSUs (including an EBIT margin performance metric requiring fiscal discipline in the short-term and long-term, and an ROIC performance metric that measures the return on investments made over the long term to address a rapidly changing industry with vesting that extends generally over a one to three year period), together with stock options (vesting over five years), appropriately aligns the compensation program with both the short- and long-term interestsdesign of the Company’s shareholders.
Subsequent to the recent shareholder engagement efforts and the Company’s most recent say-on-pay votes, and after discussions among all the directors, the Compensation Committee and Board of Directors made more aggressive changes to the Company’s executive compensation program for fiscal 2017, building on changes made during the prior three years. The Compensation Committee believes these changes further strengthen the direct link between pay and performance.
structure.
Summary of Executive Compensation and Relevant Governance Changes
The Compensation Committee has made significant changes to the Company’s executive officer compensation program over the past four years.
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EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
Below is a summary of our executive compensation and governance practices that we have implemented to drive performance, as well as practices we avoid because we do not believe they serve investors’ long-term interests.
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Methodology for Determining Executive Compensation
The Compensation Committee has engaged the services of an independent compensation consultant, retaining Arthur J. Gallagher & Co. Human Resources & Compensation Consulting Practice (Gallagher) or its predecessor to conduct a compensation review for the NEOs and certain other executives. Gallagher has not served the Company in any other capacity except as consultant to the Compensation Committee. The Compensation and the Nominating and Corporate Governance Committees also receive advice and assistance from the law firm of Chadbourne & Parke LLP (Chadbourne), which has acted as counsel only to the Company’s independent directors and its Board committees. The Compensation Committee has concluded that no conflict of interest exists that prevents Gallagher or Chadbourne from being independent advisors to the Compensation Committee.
The Compensation Committee charter, which describes the Compensation Committee’s function, responsibilities and duties, is available on the Company’s website at www.bedbathandbeyond.com under the Investor Relations section. The Compensation Committee consists of three independent members of our Board of Directors. The Compensation Committee meets on a regular basis and met 10 times in fiscal 2016.
Under the direction of the Compensation Committee, the compensation review included a peer group competitive market analysis of executive compensation and total compensation recommendations by Gallagher. The peer group developed by Gallagher, agreed upon by the Compensation Committee and upon which Gallagher based its recommendations for fiscal 2016 compensation, consisted of 18 retail companies of a size range based on revenue and net income relatively closely aligned with the Company’s revenue and net income. The peer group was modified from fiscal 2015 to fiscal 2016 with a net decrease of one company. The following companies were added: Dollar Tree, Inc., Office Depot, Inc. and Williams-Sonoma, Inc. The following companies were removed: Family Dollar Stores Inc., PetSmart Inc., The TJX Companies, Inc. and Starbucks Corporation.
EXECUTIVE COMPENSATION
The 18 company peer group consisted of the following companies at the time of the analysis:
Gallagher conducted a compensation review for all executive officers, including the NEOs, and for certain other key executives. Gallagher benchmarked the NEOs’ total compensation and separately their cash compensation against data from the 18 company peer group. Gallagher also assisted the Compensation Committee in determining the targets and other provisions, for the one-year and three-year performance goals. With respect to the grants of PSUs, the Compensation Committee, with assistance from Gallagher, adopted a wider peer group of 46 retail companies against which the performance goals will be measured. This larger peer group includes all of the 18 company benchmarking peer group described above and was created to establish a larger, more stable statistical base over the duration of the performance periods.
The compensation approved by the Compensation Committee for Mr. Temares for fiscal 2016 was determined by the Compensation Committee taking into account recommendations of and certain data received from Gallagher. The compensation approved by the Compensation Committee for the NEOs for fiscal 2016, other than Mr. Temares, was determined by the Compensation Committee, taking into account the recommendations of the Co-Chairmen, CEO and Gallagher, and data the Compensation Committee received from Gallagher. No executive was present during voting or deliberations with respect to matters relating to such executive’s compensation.
Based on the recommendations and data from Gallagher, and in light of the Company’s financial results for fiscal 2015, the strategic investments being made to position the Company for long-term growth, its relative performance in its industry, and the decline in the prior year say-on-pay vote, and other factors, the Compensation Committee determined that the NEOs of the Company should receive the total compensation packages for fiscal 2016, further described below. Subsequently, the Compensation Committee made more aggressive changes to the executive compensation program for fiscal 2017.
The Company seeks to provide total compensation packages to its associates, including its NEOs, which implement its compensation philosophy. As described above, the Company places greater emphasis in the compensation packages for NEOs on equity incentive compensation rather than cash compensation in order to align compensation more closely with long-term performance results and the creation of shareholder value. The Compensation Committee firmly believes that annual cash bonuses promote short-term thinking and are in direct contrast to the Bed Bath & Beyond culture which is rooted in a commitment to customer service and a desire to achieve long-term success.
The components of the Company’s 2018 compensation programs for its executive officers and certain other key executives arewere base salary, equity compensation (consisting of awards of PSUsperformance stock units (“PSUs”) and stock options), retirement and other benefits (consistingconsisting of health plans, a limited 401(k) plan match and a nonqualified deferred compensation plan)plan (terminated in late 2017) and very limited perquisites. Consistent with prior practice and the Company’s culture, the Company does not provide perquisites such as club memberships, company planes or retreats. For those perquisites provided, see the footnotes to the Summary Compensation Table (on page 35).Table.
Base Salary
The Company pays base salaries to provide its NEOs with current, regular compensation that is appropriate for their position, experience and responsibilities.compensation. Changes in base salary, if any, are generally effective in May of each fiscal year. The Company believes that total cash compensation levels for its NEOs are appropriate taking into consideration factors including that the Company does not pay annual cash bonuses.
EXECUTIVE COMPENSATION
Equity Compensation
The overall approach to equity compensation in fiscal 2018 for all executive officers, including the NEOs, and for certain other executives was to combine the performance-based PSU awards with stock options.
For fiscal 2018, the Company allocated at least 75% of the value of equity compensation granted to all executive officers on average, including the NEOs, to PSU awards and up to 25% of such value to stock option awards.
2018 PSUs
In fiscal 2014, the Company redesigned its equity incentive program for its NEOs and certain other key executives withFiscal 2018 PSUs were based 25% on a view toward creating an enhanced link between pay and performance, providing performance metrics fundamental to the business, and aligning with shareholder value creation. The redesigned program eliminated the prior performance test and created a new framework consisting of a one-year performance test based on EBIT margin relative to a peer group and a three-year performance test based on ROIC relative to such peer group. Payouts under the performance goals were contingent upon achievement of various levels of EBIT margin and ROIC as well as the continued performance of services by the executives. The fiscal 2014 and fiscal 2015 awards were in the form of PSUs, of which 75% were subject to the one-year EBIT margin goal and 25% were75% on a three-year relative ROIC (2/3 weighting) and EBIT margin (1/3 weighting) goals. In addition, awards are subject to the three-year ROIC goal. In fiscal 2016, the Compensation Committee shifted the weighting of the PSU awards to create more emphasis on the longer-term goal, such that 50% of the PSU awards were subject to the one-year EBIT margin goal and 50% were subject to the three-year ROIC (subsequently changed for fiscal 2017 to 25% for the one-year goal and 75% for the three-year goals further increasing the weighting of the three-year goal). In addition, the Compensation Committee applied a stricter minimum performance level to achieve target payout for PSUs subject to the three-year performance goal by increasing the achievement percentage from 80-164% to 100-144%, to earn 100% payment, and also applied a Total Shareholder Return (TSR)(“TSR”) “Regulator” to the achievement thresholds of each performance goal, capping PSU awards at 100% of the target if the Company’s TSR over the performance period is negative. The Compensation Committee believed it appropriate to set a target based upon EBIT margin when compared to a retail industry peer group, to incentivize continued operational and fiscal discipline as management executes against the Company’s strategic goals. The Compensation Committee also believed that, as a relative measure compared to a retail industry peer group, ROIC over a three-year period provides a suitable metric to measure how the Company’s investments are returning value to the enterprise. The Compensation Committee believes that these goals are an appropriate measure of performance for companies in the retail industry and, specifically, for companies in the Company’s sector.
The following table sets forth the achievement ranges for the fiscal 2016 2018one-year relative EBIT margin goal and the three-year relative ROIC goal,and EBIT margin goals, together with the associated payout percentages and vesting schedule. As shown in the table, the awards range from a floor of zero to a cap of 150% of target achievement. A TSR “Regulator” caps PSU awards at 100% of the target if the Company’s TSR over the performance period is negative.
PSUs Subject to One-Year EBIT Margin Goal for 2016 (50% Weighting) | PSUs Subject to Three-Year ROIC Margin Goal for 2016 (50% Weighting) | ||
Vesting: 50% year 1, 50% year 2 | Vesting: 50% year 3, 50% year 4 | ||
Achievement Percentage (% of Peer Group Average) | Payment Percentage of Common Stock Underlying PSUs | Achievement Percentage (% of Peer Group Average) | Payment Percentage of Common Stock Underlying PSUs |
200% or Greater | 150% | 180% or Greater | 150% |
185-199% | 110% | 145-179% | 110% |
125-184% | 100% | 100-144% | 100% |
100-124% | 90% | 70-99% | 90% |
80-99% | 75% | 60-69% | 75% |
70-79% | 50% | 50-59% | 50% |
60-69% | 25% | 40-49% | 25% |
<60% | 0% | <40% | 0% |
PSUs Subject to One-Year EBIT Margin for 2018 (25% Weighting) PSUs Subject to Three-Year ROIC (2/3) & EBIT Margin (1/3) Goals for 2018 (75% Weighting) Achievement Payment Percentage of Common Stock Achievement Payment Percentage of Common Stock 180% or Greater 150% 180% or Greater 150% 145-179% 110% 145-179% 110% 100-144% 100% 100-144% 100% 70-99% 90% 70-99% 90% 60-69% 75% 60-69% 75% 50-59% 50% 50-59% 50% 40-49% 25% 40-49% 25% <40% 0% <40% 0% Vesting: 100% in year 1 Vesting: 100% year 3
Percentage (% of Peer
Group Average)
Underlying PSUs
Percentage (% of Peer
Group Average)
Underlying PSUs
For fiscal 2017, the Compensation Committee adjusted the EBIT margin achievement threshold for the EBIT margin component of the PSUs for the one-year and three-year performance periods to align with the ROIC thresholds.
EXECUTIVE COMPENSATION
The metrics with respect to each peer group member necessary to measure the performance criteria are based on data reported in the S&P Capital IQ Database to the extent publicly available, and to the extent such data is not publicly available, are based on information otherwise publicly available.
The PSUs are not transferable, cannot be pledged, assigned or otherwise disposed of and are subject to the terms of the Company’s 2012 Incentive Compensation Plan.
The overall approach to equity compensation in fiscal 2016 for all executive officers, including the NEOs, and for certain other executives was to combine the performance-based PSU awards with stock options. In determining the allocation between these two forms of equity awards, the Company considered the retention component and the role of the executive in the
EXECUTIVE COMPENSATION
enhancement of shareholder value. For fiscal 2016, the Company allocated at least two-thirds of the value of equity compensation granted to all executive officers, including the NEOs, to PSU awards and no greater than one-third of such value to stock option awards. The vesting provisions relating to equity compensation have been and continue to be determined with a principal purpose of retaining the Company’s executives and key associates. The Company believes its equity compensation program promotes the long-term retention of its executives and key associates including its NEOs and in large measure directly aligns compensation of its NEOs with Company performance.
The Company believes that the performance-based tests, described above, meet the standard for performance-based compensation under Section 162(m) of the Code, so that the PSU awards are intended to be deductible compensation by the Company for certain executives if their annual compensation exceeds $1 million.
2018 Stock Options
Stock option awards are made in dollars (with the number of shares covered by the options determined by dividing the dollar amount of the grant by the Stock Option Fair Value, as described below). The Compensation Committee believes that making stock option awards in dollar amounts rather than share amounts is advisable because making stock option awards in dollar amounts allows the Compensation Committee to align stock option awards with the value of the option grants. Awarding stock options in a fixed dollar amount also enables the Compensation Committee to more readily evaluateallows evaluation of appropriate aggregate compensation amounts and percentage increases or decreases for executives, in comparison to making stock option awards in share amounts (the value of which varies depending on the trading price of the Company’s stock and other factors). In making the awards, the 2018 Compensation Committee considered the fair value of these options on the date of grant determined in accordance with Accounting Standards Codification Topic No.ASC 718 “Compensation—Stock Compensation” (the Stock Option Fair Value).
Consistent with the Company’s historic practice, the stock options vest over time, subject, in general, to the NEOs remaining in the Company’s service on specified vesting dates.
Time Vested Restricted Stock
All executives (other than NEOs) and other key executives whose compensation is determined by the Compensation Committee and associates awarded incentive compensation receive grants consisting solely of restricted stock. Vesting of restricted stock awarded to these associates is based solely on time vesting with no performance-based test.
All 2016 awards of equity compensation were made under the Company’s 2012 Incentive Compensation Plan approved by the Company’s shareholders, which is the only equity incentive plan under which the Company can currently make awards of equity compensation.
2018 Senior Executive Compensation Decisions
The Compensation Committee reviews the compensation packages for the CEO, Co-Chairmen, other NEOs and the other senior executives believed to be the most important and influential in determining the continued success of the Company. Compensation decisions, including equity grants are generally made on May 10th of each year, or the next business day if that date falls on a weekend, in connection with annual reviews. Equity grants are made pursuant to procedures established by the Compensation Committee which are available for review in the governance documents found on the Company’s website in the investor relations section.
In the spring of 2016, when the Compensation Committee made its compensation decisions relating to executive compensation for the Company’s NEOs for fiscal 2016, the Compensation Committee took into account, among other things, the following:
EXECUTIVE COMPENSATION
In response to shareholder concerns regarding magnitude of CEO pay, theThe 2018 Compensation Committee approved a reduction in Mr. Temares’ fiscal 20162018 target compensation from $19.6$14.55 million to $16.9$11.83 million, or by approximately 14%19%.
This reflected a reduction of approximately $2.2 million in 2018 equity compensation awards, including a 23.1% discount applied to the CEO’s grant of 2018 PSUs by virtue of the requiredtwo-year post-vesting holding period which was adopted in May 2017.
Mr. Temares’ base salary did not increase in fiscal 2016, for the third consecutive year, and remained at2018. The CEO voluntarily waived $500,000 of his $3,967,500 as his2018 salary, effective May 13, 2018. The resulting base salary may not be reduced under his 1994 employment agreement with the Company. This base salary amount of $3,467,500 represented Mr. Temares’ entire cash compensation since the Company does not pay cash bonuses. Cash compensation for fiscal 20162018 represented 23%30% of Mr. Temares’ total target compensation.
Equity awards to Mr. Temares for fiscal 20162018 were reduced and consisted of $10,446,121$7,530,747 of PSUs (representing 229,459581,543 PSUs) and $2,486,425$836,415 of stock options (representing 209,542194,199 options). This reflected a reduction of approximately $2.22 million in 2018 equity compensation awards, including a discount applied to the CEO’s grant of 2018 PSUs by virtue of the requiredtwo-year post-vesting holding period which was adopted in May 2017. Mr. Temares hasdid not soldsell anypost-tax restricted shares during his tenure with the Company, and as calculated in accordance with the Company’s stock ownership guidelines for the Company’s CEO, the value of the shares or share equivalents that Mr. Temares owns,owned, as of May 5, 2017, is29, 2019, was approximately $30$14 million, well in excess ofcompared to the Company’s minimum $6,000,000$6 million holding requirement. Additionally, since becoming President/Chief Operating Officer in 1999, Mr. Temares has always heldrequirement that was applicable to him during his options at least until within one year (or less) of the option expiration date. These actions further support Mr. Temares’ alignmenttenure with the long-term success of the Company.
For fiscal 2017, Mr. Temares’ base salary will not increase, for the fourth consecutive year, and the value of his target compensation will be further reduced by approximately 14%, from $16.9 million to $14.55 million. The reduction in the value of Mr. Temares’ target compensation reflects an approximate $1 million reduction in the 2017 equity compensation awards, as well as a discount applied to the CEO’s grant of 2017 PSUs by virtue of a newly-required two-year post-vesting holding period of shares acquired on vesting of 2017 PSUs, net of withholding taxes, resulting in a reduction in the value of CEO target compensation of approximately $1.35 million.
For fiscal 2016, the base salaries for the Co-Chairmen did not increase and remained at $1,100,000 each, the same as they were for the previous 10 years. Equity awards in 2016 for the Co-Chairmen did not increase and have remained in the same amount as they were for the previous five years (rounded to the next full share). The base salaries and equity awards of the other NEOs increased based upon several factors including increased responsibilities and individual performance.
On May 11, 2017, the Company’s Co-Chairmen elected to commence “senior status.” Under their employment agreements, and as a result of reductions in their equity compensation by the Compensation Committee in consultation with the Co-Chairmen, their combined salary and equity has been reduced by approximately 50%, or approximately $3.1 million.
The stock options granted to the CEO and the other NEOs in 2018 and prior years vest in five equal annual installments, while the stock options awarded to the formerCo-Chairmen in 2016 andyears prior yearsto 2017 vest in three equal annual installments. In each case, vesting commences on the first anniversary of the grant date and is also based on continued service to the Company.
In The PSUs granted to the view of the Compensation Committee, the fiscal 2016 compensation packages for the Chief Executive OfficerCEO and for the Co-Chairmen, as well as the other NEOs based onin 2018 are described above under the Company’s annual performance, including the strategic investments being made to enhance its omnichannel capabilities and strengthen its position as the customer’s first choice for the home and “heart-related” life events, and based on the results and recommendationsheading “2018 PSUs” under “Elements of Gallagher’s compensation review, were appropriate for a company with the revenues and earnings of the Company.
Compensation”, “Equity Compensation.”
For further discussion related to equity grants to the NEOs in fiscal 2016,2018, see Potential Payments Upon Termination or Change in Control Table.
Supplemental Compensation Analysis
Reported Compensation vs Realizable Pay
Amounts reportedPrior to her promotion to the position of Chief Financial Officer, Treasurer, and Principal Financial and Accounting Officer, during fiscal 2018 the Company granted Robyn M. D’Elia a deferred cash award under the Company’s Cash Incentive Plan in the Summary Compensation Table (SCT) are the total compensationaggregate amount of a NEO in a given year as calculated in accordance with SEC rules. While the amounts shown$75,000. The deferred cash award to Ms. D’Elia was made pursuant to an award agreement in the SCT reflectform used by the Company to make deferred cash awards to selected employees other than the NEOs. Ms. D’Elia’s deferred cash award will vest ratably on each of the first through seventh anniversaries of the grant date, fair value of equity awards (Granted Pay Opportunity)subject to a NEO inMs. D’Elia’s continued employment with the year ofCompany through the grant, those awards have not vestedapplicable vesting date, and the amounts shownaward will be paid no later than 75 days following vesting. Ms. D’Elia’s employment agreement provides for accelerated vesting of this deferred cash award in certain cases of termination of her employment. For further discussion regarding accelerated vesting of Ms. D’Elia’s deferred cash award, see Potential Payments Upon Termination or Change in Control Table and the SCT do not reflect the impact of performance-based metrics or stock price performance on realizable pay, which may be considerably more or less based on (i) the actual number of options that vest during the performance period, (ii) the number of PSUs which are earned based on actual performance achieved, and (iii) the impact of actual stock price performance on the value of PSUs and options that vested or were earned during the period.accompanying discussion.
For purposes of helping our shareholders see the strong alignment of pay and performance in the Company’s executive compensation program, below is a comparison of Mr. Temares’ granted pay opportunity to realizable pay for an aggregate period of three years from 2014 to 2016. This table should not be viewed as a replacement or substitute for the SCT or other compensation tables provided on pages 35-42.
EXECUTIVE COMPENSATION
CEO Realizable Pay is ~39% Lower Than
Granted Pay Opportunity OverOn April 21, 2019, Messrs. Eisenberg and Feinstein transitioned to the Period
Resulting from Stock Price Decline Over Similar Period
Valuerole of CEO Total Target Compensation Has Decreased Approximately $5.1 Million Since 2015
Base Salary | Bonus/ Non-equity Incentive Paid | PSUs | RSAs | Stock Options | Total Direct Target Compensation | |||||||||||||||||||
2015 | $ | 3,967,500 | $ | — | $ | 10,446,137 | $ | — | $ | 5,224,624 | $ | 19,638,261 | ||||||||||||
2016 | $ | 3,967,500 | $ | — | $ | 10,446,121 | $ | — | $ | 2,486,425 | $ | 16,900,046 | ||||||||||||
2017 | $ | 3,967,500 | $ | — | $ | 8,947,298 | * | $ | — | $ | 1,636,415 | $ | 14,551,213 |
*This reflectsCo-Founders andCo-Chairmen Emeriti of the Board. In their new roles asCo-Chairmen Emeriti, they may attend Board meetings if invited by the Board, but are not entitled to notice of any such meeting or to vote or be counted for quorum purposes at any such meetings. As a reductionresult of $1 millionthis transition, Messrs. Eisenberg and Feinstein ceased to be officers of the Company effective as of April 21, 2019, and became entitled to the payments and benefits provided under their employment agreements that apply in the grant valuecase of a termination without cause, which generally include continued senior status payments (as described elsewhere in this proxy statement) until May 2027 and continued participation for them (and their spouses, if applicable) at the Company’s expense, in medical, dental, hospitalization and life insurance and in all other employee plans and programs in which they (or their family) were participating as of the CEO’s equity awards,date of termination and a discount applied toother or additional benefits in accordance with the CEO’s grantapplicable plans and programs until the earlier of 2017 PSUs by virtuedeath of the newly-required two-year post-vesting holding period described above.
EXECUTIVE COMPENSATION
Substantial Majoritysurvivor of CEO Target Compensation “At Risk”
To promotetheCo-Founder and his spouse or the date(s) he receives equivalent coverage and benefits from a performance-based culture that alignssubsequent employer. In addition, Messrs. Eisenberg and Feinstein are entitled to supplemental pension payments specified in their employment agreements until the interestsdeath of managementthe survivor of theCo-Founder and shareholders, our executive compensation program focuses extensively on performance-based and equity-based compensation. As illustratedhis spouse, reduced by the continued senior status payments referenced in the chartsforegoing sentence. See the section below the substantial majority (77%) of our CEO’s target compensationentitled “Employment Agreements and Potential Payments Upon Termination or Change in fiscal 2016 was in the form of at risk compensation (short-term and long-term), while the target compensation of the CEOs in our peer group was on average 72% “at risk.Control.” At risk consists of performance-based equity awards and stock options (time-based equity awards). The Compensation Committee continues to believe that a high percentage of our CEO’s compensation should remain at risk and based on Company financial performance.
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Performance Goals and Equity Awards
The table below shows how we performed under our equity incentive program for the fiscal 2014 three-year performance goal based on ROIC relative to a peer group, and for the fiscal 2016 one-year performance goal based on EBIT margin relative to a peer group.
Mean (average) Peer Group | Bed Bath & Beyond | Achievement Percentage | Payment Percentage | |||||||||||||
Fiscal 2014 PSU Award | ||||||||||||||||
Three-year performance goal (ROIC) | 13.45 | % | 20.95 | % | 155.75 | % | 100.00 | % | ||||||||
Fiscal 2016 PSU Award | ||||||||||||||||
One-year performance goal (EBIT margin) | 6.76 | % | 9.29 | % | 137.55 | % | 100.00 | %* |
*The TSR “Regulator” was not applied since the payment percentage did not exceed 100%.
The Company provides the NEOs with the same benefits offered to all other associates. The cost of these benefits constitutes a small percentage of each NEO’s total compensation. Key benefits include paid vacation, premiums paid for long-term disability insurance, a matching contribution to the NEO’s 401(k) plan account and the payment of a portion of the NEO’s premiums for healthcare and basic life insurance.
The Company haspreviously maintained a nonqualified deferred compensation plan for the benefit of certain highly compensated associates, including the NEOs. The plan providesprovided that a certain percentage of an associate’s contributions may be matched by the Company, subject to certain limitations. This matching contribution will vestvested over a specified period of time. On December 27, 2017, the Company terminated the Bed Bath & Beyond Inc. Nonqualified Deferred Compensation Plan 2016 Restatement, effective January 1, 2016, and its predecessor plan, the Bed Bath & Beyond Inc. Nonqualified Deferred Compensation Plan, adopted December 18, 2008 and frozen effective January 1, 2016 and all similar arrangements (together, the “Nonqualified Deferred Compensation Plans”). After December 27, 2017, no participant deferrals were accepted and all balances were liquidated in late December 2018 and early January 2019. Until the final payment date in January 2019, the Nonqualified Deferred Compensation Plans were operated in the ordinary course, except that no new participant deferrals were credited to participant accounts under the Nonqualified Deferred Compensation Plans after the termination date. See the Nonqualified Deferred Compensation Table.
The Company provides the NEOs with certain perquisites including a car allowance, in the case of all NEOs, other than Ms. Lattmann.Mses. Lattmann and D’Elia. The Compensation Committee believes all such perquisites are reasonable and consistent with its overall objective of attracting and retaining our NEOs.
EXECUTIVE COMPENSATION
See the “All Other Compensation” column in the Summary Compensation Table for further information regarding these benefits and perquisites, and Potential Payments Upon Termination or Change in Control table for information regarding termination and change in control payments and benefits.
Methodology for Determining Executive Compensation
The Compensation Committee has engaged the services of an independent compensation consultant, retaining Gallagher or its predecessor to conduct a compensation review for the NEOs and certain other executives. Gallagher has not served the Company in any other capacity except as consultant to the Compensation Committee. The Compensation and the Nominating and Corporate Governance Committees also receive advice and assistance from the law firm of Winston & Strawn LLP (Winston), which has acted as counsel only to the Company’s independent directors and its Board committees. The Compensation Committee has concluded that no conflict of interest exists that prevents Gallagher or Winston from being independent advisors to the Compensation Committee.
The Compensation Committee charter, which describes the Compensation Committee’s function, responsibilities and duties, is available on the Company’s website at www.bedbathandbeyond.com under the Investor Relations section. The New Compensation Committee consists of four independent members of our Board of Directors. The Compensation Committee meets on a regular basis and met 10 times in fiscal 2018. The New Compensation Committee will undertake a review of the Compensation Committee charter and recommend to the Board of Directors for approval any appropriate changes to facilitate rigorous oversight by the independent Committee and transparency regarding CEO and executive compensation.
EXECUTIVE COMPENSATION
The compensation approved by the 2018 Compensation Committee for Mr. Temares for fiscal 2018 was determined by the 2018 Compensation Committee taking into account recommendations of and certain data received from Gallagher. The compensation approved by the 2018 Compensation Committee for the NEOs for fiscal 2018, other than Mr. Temares, was determined by the 2018 Compensation Committee, taking into account the recommendations of the formerCo-Chairmen, former CEO and Gallagher, and data the Compensation Committee received from Gallagher.
None of the current members of the New Compensation Committee were members of the 2018 Compensation Committee when the 2018 compensation for the CEO and executive officers reported in this Proxy Statement was approved by the 2018 Compensation Committee in May 2018.
Peer Groups
The Compensation Committee adopted the use of the following two separate peer groups several years ago: (i) a “Compensation Peer Group” for compensation benchmarking purposes; and (ii) a wider “Performance Peer Group” to evaluate performance under relative performance measures contained in PSU award agreements.
2018 Compensation Peer Group
Under the direction of the 2018 Compensation Committee, the 2018 compensation review included competitive market analysis of executive compensation and total compensation recommendations by Gallagher utilizing the 2018 Compensation Peer Group. The 2018 Compensation Peer Group that was developed by Gallagher, and agreed upon by the 2018 Compensation Committee, and upon which Gallagher based its recommendations for fiscal 2018 compensation, consisted of 19 retail companies of a size range based on revenue and net income relatively closely aligned with the Company’s revenue and net income. Gallagher benchmarked the NEOs’ total compensation and their cash compensation against data from the 2018 Compensation Peer Group.
The 2018 Compensation Peer Group was modified from the compensation peer group utilized in 2017 to remove two companies, Staples, Inc. (due to becoming a private company in 2017) and GameStop Corp. (due to lowmarket-value-to-sales ratio), and to add three companies, Big Lots, Inc., Burlington Stores, Inc., and Tractor Supply Company that were considered to be relevant peers due to size and similar retail operations to the Company.
The 2018 Compensation Peer Group consisted of the following19 companies at the time of the analysis:
Advance Auto Parts, Inc. | Kohl’s Corporation | |
AutoZone, Inc. | L Brands, Inc. | |
Big Lots, Inc. | Macy’s, Inc. | |
Burlington Stores, Inc. | Nordstrom, Inc. | |
Dick’s Sporting Goods, Inc. | Office Depot, Inc. | |
Dillard’s, Inc. | O’Reilly Automotive, Inc. | |
Dollar General Corporation | Ross Stores, Inc. | |
Dollar Tree, Inc. | Tractor Supply Company | |
Foot Locker, Inc. | Williams-Sonoma, Inc. | |
The Gap, Inc. |
2018 Performance Peer Group
With respect to the grants of PSUs, the 2018 Compensation Committee, with assistance from Gallagher, adopted the 2018 Performance Peer Group, a wider peer group of 36 retail companies against which the relative performance goals applicable to the 2018 PSU awards is measured. This wider separate peer group, which includes 14 of the 19 companies in the 2018 Compensation Peer Group described above, was created to establish a larger, more stable statistical base over the duration of the performance periods.
The 2018 Performance Peer Group was modified from the performance peer group utilized in 2017, with a net decrease of five companies. The following companies were removed due to acquisition or liquidation: TheBon-Ton Stores, Inc.; Staples, Inc.; Toys “R” Us, Inc.; Cabelas, Incorporated; and Whole Foods Market, Inc. In addition, the following companies were removed due to having lowmarket-value-to-sales ratios: Barnes & Noble, Inc.; GameStop Corp.; Hudson’s Bay Company; J.C. Penney Company, Inc.; Office Depot, Inc.; Pier 1 Imports, Inc.; Sears Holdings Corporation; and Stein Mart, Inc. In lieu of these eight companies, the following companies were added for a variety of reasons, including merchandise sold (e.g., furniture, home goods) and retail distribution channel (e.g., stand-alone retail store in a strip mall setting): At Home Group Inc.; Floor & Decor Holdings, Inc.; Haverty Furniture Companies, Inc.; The Michaels Companies, Inc.; Party City Holdco Inc.; Sally Beauty
EXECUTIVE COMPENSATION
Holdings; Inc.; Tractor Supply Company; and Ulta Beauty, Inc. This larger group of peer companies, which includes 14 of the 19 companies in the benchmarking peer group described above, was created to establish a larger, more stable statistical base over the duration of the performance periods.
The 2018 Performance Peer Group consisted of the following36 companies at the time the 2018 PSU awards were made:
Abercrombie & Fitch Co. | Kirkland’s, Inc. | |
At Home Group, Inc. | Kohl’s Corporation* | |
AutoNation, Inc. | L Brands, Inc.* | |
Best Buy Co., Inc. | Lowe’s Companies, Inc. | |
Big Lots, Inc.* | Macy’s, Inc.* | |
CarMax, Inc. | The Michaels Companies, Inc. | |
The Container Store Group, Inc. | Murphy USA Inc. | |
Costco Wholesale Corporation | Nordstrom, Inc.* | |
Dick’s Sporting Goods, Inc.* | Party City Holdco Inc. | |
Dillard’s, Inc.* | Restoration Hardware Holdings, Inc. | |
Dollar General Corporation* | Ross Stores, Inc.* | |
Dollar Tree, Inc.* | Sally Beauty Holdings, Inc. | |
DSW Inc. | Target Corporation | |
Floor & Decor Holdings, Inc. | The TJX Companies, Inc. | |
Foot Locker, Inc.* | Tractor Supply Company* | |
The Gap, Inc.* | Ulta Beauty, Inc. | |
Haverty Furniture Companies, Inc. | Walmart Inc. | |
The Home Depot, Inc. | Williams-Sonoma, Inc.* |
* | Also included in 2018 Compensation Peer Group |
The New Compensation Committee undertook a review of the 2018 Performance Peer Group used for purposes of the fiscal 2018 PSU grant and found that the 2017 performance peer group was used in determining the achievement of performance goals instead of the 2018 Performance Peer Group, which resulted in seven of the Company’s NEOs being issued 163,351 additional shares in the aggregate. Without limiting any of the Company’s rights, the New Compensation Committee plans to request return from the former NEOs of the additional shares paid to them and has reduced the target share amounts for the fiscal 2019 PSU grants made to the actively employed NEOs by the number of additional shares paid to them.
2019 Peer Group
Consistent with the new compensation philosophy pillars, the New Compensation Committee established a single, updated and relevant peer group in 2019 that will be used consistently for setting appropriate compensation levels and for measuring performance metrics. The New Compensation Committee believes that a single peer group will reduce complexity, increase transparency, and be sized to provide a sufficient number of comparator companies, with the relevant breadth, to support both compensation benchmarking and any relative performance measurements.
The new 2019 Peer Group with respect to benchmarking compensation and PSUs awarded in 2019 consisted of the following22 companies:
Advance Auto Parts, Inc. | L Brands, Inc. | |
AutoZone, Inc. | Macy’s, Inc. | |
Big Lots, Inc. | The Michaels Companies, Inc. | |
Burlington Stores, Inc. | Nordstrom, Inc. | |
Dick’s Sporting Goods, Inc. | Office Depot, Inc. | |
Dillard’s, Inc. | O’Reilly Automotive, Inc. | |
Dollar General Corporation | Ross Stores, Inc. | |
Dollar Tree, Inc. | Tractor Supply Company | |
Foot Locker, Inc. | Ulta Beauty, Inc. | |
The Gap, Inc. | Wayfair Inc. | |
Kohl’s Corporation | Williams-Sonoma, Inc. |
EXECUTIVE COMPENSATION
Design of 2019 Executive Compensation
In view of the search for a permanent CEO and the New Compensation Committee’s intention to review and make appropriate modifications for the compensation of the NEOs once the compensation for the new permanent CEO has been determined, for fiscal 2019, the New Compensation Committee determined to keep base salaries of the current NEOs at the same levels as for fiscal 2018. However, the Committee revised the 2019 equity compensation granted to the executive officers, including the NEOs, to more closely align to market standards and to allocate 100% of the value of equity compensation to performance-based PSU awards rather than to allocate a portion to stock options as we have done in the past. On June 28, 2019, the New Compensation Committee granted awards of performance-based PSUs for fiscal 2019 based on the following performance goals: 25% based on aone-year Company EBIT goal; 37.5% based on a three-year cumulative Company EBIT goal; and 37.5% based on a relative three-year TSR goal against the new unified 2019 Peer Group described above. Consistent with prior practice, the 2019 PSU awards are subject to a TSR “Regulator” that caps the PSU award payouts at 100% of the target if the Company’s TSR over the performance period is negative.
On June 26, 2019, the Company entered into an employment agreement with Mary A. Winston. The terms of Ms. Winston’s employment agreement were set by the New Compensation Committee upon advice of Gallagher and were benchmarked against market practices with respect to compensation of interim chief executive officers at companies with comparable annual revenues. Ms. Winston’s employment agreement provides forat-will employment without a specified term, an annual base salary equal to $1,100,000, and a grant of shares of time-vesting restricted stock under the 2012 Plan equal in value to $1,900,000 based on the average of the high and lowper-share trading price of the Company’s common stock on the date of grant (the “TVRS Award”). The TVRS Award was granted to Ms. Winston on June 28, 2019, and will vest on May 12, 2020, subject, in general, to Ms. Winston remaining in the Company’s employ on the vesting date. Ms. Winston’s employment agreement also provides that the TVRS Award will vest in full if, prior to the vesting date, (i) the Company terminates Ms. Winston’s employment other than for “Cause” (including a termination because the Company hires a replacement chief executive officer), (ii) a “constructive termination” of Ms. Winston’s employment occurs, or (iii) Ms. Winston’s employment is terminated due to her death or disability, in each case, subject to Ms. Winston’s execution andnon-revocation of a release of claims. “Cause” is defined in Ms. Winston’s employment agreement as when Ms. Winston has: (i) acted in bad faith or with dishonesty; (ii) willfully failed to follow reasonable and lawful directions of the Board; (iii) performed her duties with gross negligence; or (iv) been convicted of a felony. A “constructive termination” is defined in Ms. Winston’s employment agreement as the Company’s material breach of one or more terms of the employment agreement.
Impact of Accounting and Tax Considerations
The Compensation Committee considers various accounting and tax implications of equity-based and other compensation.
When determining the amounts of equity-based awards to be granted, the Compensation Committee examines the accounting cost associated with equity compensationthe grants. Under ASC 718, grants of stock options, performance stock units and other equity-based awards result in an accounting charge for the impactCompany equal to the fair value of the awards being issued.
Section 162(m) of the Code which generally prohibits any publicly held corporation from takingdisallows a federal income tax deduction for compensation paid in excess of $1 million in any taxable year paid to certain executives, subject to an exception for qualified performance-based compensation that was eliminated by recent tax reform legislation under the Tax Act for tax years beginning on or after January 1, 2018. The Tax Act also expanded the scope of “covered employees” whose compensation may be subject to this deduction limit by, among other things, including the principal financial officer and providing that once an individual becomes a covered employee for any tax year beginning after December 31, 2016, that individual will remain a covered employee for all future years to the extent that they receive compensation (including after any termination of employment). The Tax Act includes a transition rule under which these changes to Section 162(m) of the Code will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date.
Historically, we have structured certain exceptionscomponents of our executive compensation program in a manner intended to be performance-based for performance-based compensation. Stockpurposes of Section 162(m) of the Code (as in effect prior to the enactment of the Tax Act) in order to preserve deductibility for federal income tax purposes, although we also paid compensation that was not deductible if we determined that doing so was in the best interest of our shareholders. Prior to fiscal 2018, stock options and performance-based compensationperformance stock units granted to our NEOs arewere intended to satisfy the performance-based exception and be deductible. BasePrior to fiscal 2018, base salary or other de minimis amounts totaling in excess of $1 million arewere not deductible by the Company.
EXECUTIVE COMPENSATION
In light of the repeal of the performance-based exception to Section 162(m) of the Code and other Tax Act changes, compensation granted to any NEO (or other person who is a “covered employee”) during fiscal 2018 and thereafter that exceeds $1 million will not be deductible by the Company for federal income tax purposes. Also, the Compensation Committee expects in the future to grant compensation (including compensation tied to performance), that will not be deductible for federal income tax purposes. Further, because of uncertainties as to the application and interpretation of the transition rule described above, no assurances can be given at this time that our existing compensation arrangements, even if in place on November 2, 2017, will meet the requirements of the transition rule. Moreover, to maintain flexibility in attracting and retaining talented executives, the Compensation Committee may not limit its actions with respect to executive compensation to preserve deductibility under Section 162(m) of the Code if the Compensation Committee determines that doing so is in the best interests of our shareholders.
Policy on the Recovery of Incentive Compensation
In fiscal 2009, the Board adopted a policy as part of the Company’s corporate governance guidelines on the recovery of incentive compensation, commonly referred to as a “clawback policy,” applicable to the Company’s NEOs (as defined under Item 402(a)(3) of RegulationS-K). The policy appears in the Company’s Corporate Governance Guidelines, available in the Investor Relations section of the Company’s website at www.bedbathandbeyond.com. The Compensation Committee is monitoring the issuance of regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to incentive compensation recoupment and will amend its policy to the extent necessary to comply with such Act.
EXECUTIVE COMPENSATION
Set forth below is information concerning individuals who were our executive officers as of May 5, 2017.29, 2019.
Name | Position | |||
Mary A. Winston | ||||
57 | Interim Chief Executive Officer and Director | |||
Eugene A. Castagna | 53 | President and Chief | ||
Susan E. Lattmann | 51 | Chief Administrative Officer | ||
Robyn M. D’Elia | 47 | Chief Financial Officer and Treasurer | ||
Matthew Fiorilli | 62 | Senior Vice President—Stores |
The biographies for Messrs. Eisenberg, FeinsteinMary A. Winston has served as Interim Chief Executive Officer of the Company and Temares areas a director since May 2019. Ms. Winston joined the Board of Directors on May 1, 2019 and was appointed Interim Chief Executive Officer on May 12, 2019. Ms. Winston’s biography and work history is set forth above under Election of Directors (Proposal 1). Biographies for our other executive officers are as follows:
Arthur Stark has been President and Chief Merchandising Officer since 2006. Mr. Stark has served as Chief Merchandising Officer since 1999 and was a Senior Vice President from 1999 to 2006. Mr. Stark joined the Company in 1977.
“Our Directors” above.
Eugene A. Castagna has been President and Chief Operating Officer since 2014.June 2018. Mr. Castagna served as Chief Operating Officer from 2014 to 2018, as Chief Financial Officer and Treasurer from 2006 to 2014, as Assistant Treasurer from 2002 to 2006 and as Vice President—Finance from 2000 to 2006. Mr. Castagna joined the Company in 1994.
Susan E. Lattmann has been Chief Administrative Officer since June 2018. Ms. Lattmann served as Chief Financial Officer and Treasurer since 2014.from 2014 to 2018. Ms. Lattmann served as Vice President—Finance from 2006 to 2014, as Vice President—Controller from 2001 to 2006 and as Controller from 2000 to 2001. Ms. Lattmann is a certified public accountant and joined the Company in 1996.
Robyn M. D’Elia has been Chief Financial Officer and Treasurer since June 2018. Ms. D’Elia served as Vice President—Finance from 2015 to 2018, as Vice President—Controller from 2006 to 2015, Vice President—Financial Planning & Control in 2006, and Assistant Controller from 2000 to 2006. Prior to joining the Company, Ms. D’Elia was with the public accounting firm of Arthur Andersen. Ms. D’Elia joined the Company in 1996.
Matthew Fiorilli has been Senior Vice President—Stores since 1999. Mr. Fiorilli joined the Company in 1973.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE FOR FISCAL 2016,2018,
FISCAL 20152017 AND FISCAL 2014
2016
The following table sets forth information concerning the compensation of the Company’s Named Executive OfficersNEOs for the last three completed fiscal years. As set forth above, the Company has made significantyears (except with regard to Messrs. Eisenberg and extensive changes to its executive compensation programsFeinstein and Ms. D’Elia, who were not NEOs for fiscal 2017.2017 or fiscal 2016 and, consequently, have information included for the last fiscal year only). The following table does not reflect the effects of any such changes.changes made for fiscal 2019.
Change in | ||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||
Deferred | ||||||||||||||||||||||||||||
Stock | Option | Compensation | All Other | |||||||||||||||||||||||||
Fiscal | Salary(1) | Awards(2)(3) | Awards(2) | Earnings | Compensation | Total | ||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Steven H. Temares(4)(5)(6) | 2016 | 3,967,500 | 10,446,121 | 2,486,425 | 31,044 | 15,309 | 16,946,399 | |||||||||||||||||||||
Chief Executive Officer | 2015 | 3,967,500 | 10,446,137 | 5,224,624 | (242,787 | ) | 14,194 | 19,409,668 | ||||||||||||||||||||
2014 | 3,967,500 | 9,712,323 | 4,856,147 | 556,242 | 23,828 | 19,116,040 | ||||||||||||||||||||||
Arthur Stark(7)(8) | 2016 | 1,849,277 | 1,775,020 | 600,004 | — | 11,424 | 4,235,725 | |||||||||||||||||||||
President and Chief | 2015 | 1,770,769 | 1,675,035 | 600,015 | — | 15,112 | 4,060,931 | |||||||||||||||||||||
Merchandising Officer | 2014 | 1,670,769 | 1,550,022 | 600,012 | — | 14,699 | 3,835,502 | |||||||||||||||||||||
Eugene A. Castagna(9)(10) | 2016 | 1,928,846 | 1,900,031 | 750,002 | — | 11,991 | 4,590,870 | |||||||||||||||||||||
Chief Operating Officer | 2015 | 1,811,154 | 1,750,034 | 750,001 | — | 12,000 | 4,323,189 | |||||||||||||||||||||
2014 | 1,670,769 | 1,550,022 | 600,012 | — | 13,878 | 3,834,681 | ||||||||||||||||||||||
Susan E. Lattmann(11)(12) | 2016 | 1,021,154 | 1,100,021 | 500,010 | — | 8,296 | 2,629,481 | |||||||||||||||||||||
Chief Financial Officer | 2015 | 871,154 | 900,064 | 400,002 | — | 8,262 | 2,179,482 | |||||||||||||||||||||
and Treasurer | 2014 | 730,769 | 750,013 | 300,006 | — | 7,955 | 1,788,743 | |||||||||||||||||||||
Matthew Fiorilli(13)(14) | 2016 | 1,730,468 | 1,525,042 | 600,004 | — | 14,433 | 3,869,947 | |||||||||||||||||||||
Senior Vice | 2015 | 1,655,769 | 1,425,060 | 600,015 | — | 18,572 | 3,699,416 | |||||||||||||||||||||
President—Stores | 2014 | 1,555,769 | 1,300,038 | 600,012 | — | 22,154 | 3,477,973 |
Name and Principal Position | Fiscal Year | Salary(1) ($) | Stock Awards(2)(3) ($) | Option Awards(2) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation(21) | Total ($) | ||||||||||||||||||||||||||||
Warren Eisenberg(4)(5) Co-Chairman andCo-Founder |
| 2018 |
| 602,098 |
| 1,000,003 |
| — |
| — |
| 174,959 |
| 1,777,060 |
| ||||||||||||||||||||
Leonard Feinstein(6)(7) Co-Chairman andCo-Founder |
| 2018 |
| 602,098 |
| 1,000,003 |
| — |
| — |
| 190,228 |
| 1,792,329 | |||||||||||||||||||||
Steven H. Temares(8)(9)(10)(11) Chief Executive Officer |
| 2018 |
| 3,582,885 |
| 7,530,747 |
| 836,415 |
| (30,858 | ) |
| 227,765 |
| 12,146,954 | ||||||||||||||||||||
| 2017 |
| 3,967,500 |
| 8,947,298 |
| 1,636,415 |
| (69,732 | ) |
| 123,561 |
| 14,605,042 | |||||||||||||||||||||
| 2016 |
| 3,967,500 |
| 10,446,121 |
| 2,486,425 |
| 31,044 |
| 15,309 |
| 16,946,399 | ||||||||||||||||||||||
Arthur Stark(12)(13) Former President and Chief Merchandising Officer |
| 2018 |
| 6,048,851 |
| — |
| — |
| — |
| 60,285 |
| 6,109,136 | |||||||||||||||||||||
| 2017 |
| 1,863,390 |
| 1,775,013 |
| 600,001 |
| — |
| 31,506 |
| 4,269,910 | ||||||||||||||||||||||
| 2016 |
| 1,849,277 |
| 1,775,020 |
| 600,004 |
| — |
| 11,424 |
| 4,235,725 | ||||||||||||||||||||||
Eugene A. Castagna(14)(15) Chief Operating Officer |
| 2018 |
| 1,988,462 |
| 1,900,015 |
| 750,004 |
| — |
| 68,730 |
| 4,707,211 | |||||||||||||||||||||
| 2017 |
| 1,950,000 |
| 1,900,022 |
| 750,007 |
| — |
| 31,657 |
| 4,631,686 | ||||||||||||||||||||||
| 2016 |
| 1,928,846 |
| 1,900,031 |
| 750,002 |
| — |
| 11,991 |
| 4,590,870 | ||||||||||||||||||||||
Susan E. Lattmann(16)(17) Chief Administrative Officer |
| 2018 |
| 1,203,846 |
| 1,350,009 |
| 600,004 |
| — |
| 28,661 |
| 3,182,520 | |||||||||||||||||||||
| 2017 |
| 1,050,000 |
| 1,200,027 |
| 600,001 |
| — |
| 14,449 |
| 2,864,477 | ||||||||||||||||||||||
| 2016 |
| 1,021,154 |
| 1,100,021 |
| 500,010 |
| — |
| 8,296 |
| 2,629,481 | ||||||||||||||||||||||
Robyn M. D’Elia(18) Chief Financial Officer and Treasurer |
| 2018 |
| 653,900 |
| 425,026 |
| — |
| — |
| 10,770 |
| 1,089,696 | |||||||||||||||||||||
Matthew Fiorilli(19)(20) Senior Vice President—Stores |
| 2018 |
| 1,762,906 |
| 1,525,012 |
| 600,004 |
| — |
| 50,266 |
| 3,938,188 | |||||||||||||||||||||
| 2017 |
| 1,743,675 |
| 1,525,034 |
| 600,001 |
| — |
| 31,901 |
| 3,900,611 | ||||||||||||||||||||||
| 2016 |
| 1,730,468 |
| 1,525,042 |
| 600,004 |
| — |
| 14,433 |
| 3,869,947 |
(1) | Except as otherwise described in this Summary Compensation Table, salaries to |
(2) | The value of stock awards and option awards represents their respective total fair value on the date of grant calculated in accordance with |
(3) | The value of stock awards granted in fiscal |
EXECUTIVE COMPENSATION
(4) | On April 21, 2019, Mr. Eisenberg transitioned to the role ofCo-Founder andCo-Chairman Emeritus of the Board of Directors of the Company. As a result of the transition, Mr. Eisenberg ceased to be an officer of the Company, effective April 21, 2019. |
(5) | All Other Compensation for Mr. Eisenberg includes incremental costs to the Company for tax preparation services of $31,900, car service of $88,823 and car allowance of $24,014. Also included in All Other Compensation for fiscal 2018 were dividends of $30,222 that were paid on previously unvested stock awards that vested in fiscal 2018. During fiscal 2018, total dividends of $59,383 were accrued on Mr. Eisenberg’s unvested stock awards. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent that, the associated stock awards vest and the underlying shares are paid. |
(6) | On April 21, 2019, Mr. Feinstein transitioned to the role ofCo-Founder andCo-Chairman Emeritus of the Board of Directors of the Company. As a result of the transition, Mr. Feinstein ceased to be an officer of the Company, effective April 21, 2019. |
(7) | All Other Compensation for Mr. Feinstein includes incremental costs to the Company for tax preparation services of $31,900, car service of $95,629 and car allowance of $32,477. Also included in All Other Compensation for fiscal 2018 were dividends of $30,222 that were paid on previously unvested stock awards that vested in fiscal 2018. During fiscal 2018, total dividends of $59,383 were accrued on Mr. Feinstein’s unvested stock awards. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent that, the associated stock awards vest and the underlying shares are paid. |
(8) | On May 12, 2019, Mr. Temares stepped down as Chief Executive Officer, and on May 13, 2019, Mr. Temares resigned from the Board of Directors of the Company. |
(9) | Salary for Mr. Temares includes a deferral of |
(10) | The change in pension value for fiscal |
(11) | All Other Compensation for Mr. Temares includes incremental costs to the Company for car allowance of |
(12) | Mr. Stark departed the Company effective as of May 17, 2018. Salary for Mr. Stark for fiscal 2018 of $6,048,851 includes amounts paid in cash and in accordance with the terms of his employment agreement, the severance due to him of three times his current salary (see discussion below in Employment Agreement with Mr. Stark). Also, included in salary for Mr. Stark was a deferral of |
(13) |
EXECUTIVE COMPENSATION
All Other Compensation for Mr. Stark includes incremental costs to the Company for car allowance of |
(14) | Salary for Mr. Castagna includes a deferral of |
(15) | All Other Compensation for Mr. Castagna includes incremental costs to the Company for car allowance of |
(16) | Salary for Ms. Lattmann includes a deferral of |
EXECUTIVE COMPENSATION
(17) | All Other Compensation for Ms. Lattmann includes incremental costs to the Company for employer 401(k) plan and nonqualified deferred compensation plan matching contributions (for 2017 and 2016) of |
(18) | All Other Compensation for Ms. D’Elia includes incremental costs to the Company for employer 401(k) plan matching contributions of $9,029 for fiscal 2018. Also included in All Other Compensation for fiscal 2018 were dividends of $1,741 that were paid on previously unvested stock awards that vested in fiscal 2018. During fiscal 2018, total dividends of $15,953 were accrued on Ms. D’Elia’s unvested stock awards. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent that, the associated stock awards vest and the underlying shares are paid. |
(19) | Salary for Mr. Fiorilli includes a deferral of |
(20) | All Other Compensation for Mr. Fiorilli includes incremental costs to the Company for car allowance of |
(21) | All Other Compensation includes dividends in the amounts paid to all shareholders as of the record date for each dividend declared. |
EXECUTIVE COMPENSATION
Grants of Stock Options, and Performance Stock Units and Restricted Stock for Fiscal 20162018
The following table sets forth information with respect to stock options granted and performance stock units awarded during fiscal 20162018 to each of the Named Executive OfficersNEOs under the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”).Plan. The Company did not grant anynon-equity incentive plan awards in fiscal 2016.2018.
All Other | ||||||||||||||||||||||||||||||||
Option | Exercise | |||||||||||||||||||||||||||||||
Awards: | or | Closing | Grant Date | |||||||||||||||||||||||||||||
Number of | Base | Market | Fair | |||||||||||||||||||||||||||||
Estimated Future Payouts Under | Securities | Price of | Price on | Value of Stock | ||||||||||||||||||||||||||||
Equity Incentive Plan Awards | Underlying | Option | Date of | and Option | ||||||||||||||||||||||||||||
Grant | Threshold(1) | Target(1) | Maximum(1) | Options(1) | Awards(2) | Grant | Awards(3) | |||||||||||||||||||||||||
Name | Date | (#) | (#) | (#) | (#) | ($/Sh) | ($/Sh) | ($) | ||||||||||||||||||||||||
Steven H. Temares | 5/10/2016 | 0 | 229,459 | 344,189 | $ | 10,446,121 | ||||||||||||||||||||||||||
5/10/2016 | 209,542 | $ | 45.53 | $ | 45.74 | $ | 2,486,425 | |||||||||||||||||||||||||
Arthur Stark | 5/10/2016 | 0 | 38,990 | 58,486 | $ | 1,775,020 | ||||||||||||||||||||||||||
5/10/2016 | 50,565 | $ | 45.53 | $ | 45.74 | $ | 600,004 | |||||||||||||||||||||||||
Eugene A. Castagna | 5/10/2016 | 0 | 41,736 | 62,604 | $ | 1,900,031 | ||||||||||||||||||||||||||
5/10/2016 | 63,206 | $ | 45.53 | $ | 45.74 | $ | 750,002 | |||||||||||||||||||||||||
Susan E. Lattmann | 5/10/2016 | 0 | 24,163 | 36,245 | $ | 1,100,021 | ||||||||||||||||||||||||||
5/10/2016 | 42,138 | $ | 45.53 | $ | 45.74 | $ | 500,010 | |||||||||||||||||||||||||
Matthew Fiorilli | 5/10/2016 | 0 | 33,499 | 50,249 | $ | 1,525,042 | ||||||||||||||||||||||||||
5/10/2016 | 50,565 | $ | 45.53 | $ | 45.74 | $ | 600,004 |
Name | Grant Date |
Estimated Future Payouts Under | All Other Option Awards: Number of Securities Underlying Options(1) (#) | Exercise Base | Closing Market Price on Date of Grant ($/Sh) | Grant Date Fair Value of Stock and Option Awards(3) ($) | ||||||||||||||||||||||||||||||||||
Threshold(1) (#) | Target(1) (#) | Maximum(1) (#) | ||||||||||||||||||||||||||||||||||||||
Warren Eisenberg |
| 5/10/2018 |
| 14,843 |
| 59,365 |
| 89,049 | $ | 1,000,003 | ||||||||||||||||||||||||||||||
Leonard Feinstein |
| 5/10/2018 |
| 14,843 |
| 59,365 |
| 89,049 | $ | 1,000,003 | ||||||||||||||||||||||||||||||
Steven H. Temares(4) |
| 5/10/2018 |
| 145,387 |
| 581,543 |
| 872,315 | $ | 7,530,747 | ||||||||||||||||||||||||||||||
| 5/10/2018 |
| 194,199 | $ | 16.85 | $ | 16.91 | $ | 836,415 | |||||||||||||||||||||||||||||||
Eugene A. Castagna |
| 5/10/2018 |
| 28,200 |
| 112,794 |
| 169,192 | $ | 1,900,015 | ||||||||||||||||||||||||||||||
| 5/10/2018 |
| 174,136 | $ | 16.85 | $ | 16.91 | $ | 750,004 | |||||||||||||||||||||||||||||||
Susan E. Lattmann |
| 5/10/2018 |
| 20,036 |
| 80,143 |
| 120,215 | $ | 1,350,009 | ||||||||||||||||||||||||||||||
| 5/10/2018 |
| 139,309 | $ | 16.85 | $ | 16.91 | $ | 600,004 | |||||||||||||||||||||||||||||||
Robyn M. D’Elia |
| 5/10/2018 |
| — |
| 1,485 | $ | 25,015 | ||||||||||||||||||||||||||||||||
| 6/5/2018 |
| 5,384 |
| 21,532 |
| 32,299 | $ | 400,011 | |||||||||||||||||||||||||||||||
Mathew Fiorilli |
| 5/10/2018 |
| 22,635 |
| 90,532 |
| 135,799 | $ | 1,525,012 | ||||||||||||||||||||||||||||||
| 5/10/2018 |
| 139,309 | $ | 16.85 | $ | 16.91 | $ | 600,004 |
(1) | Number of shares when converted from dollars to shares, which number is rounded up to the nearest whole share. |
(2) | The exercise price of option awards is the average of the high and low trading prices of the Company’s common stock on the date of grant. |
(3) | Pursuant to the SEC rules, PSU, stock and option awards are valued in accordance with ASC 718. See footnote 2 to the Summary Compensation Table in this Proxy Statement. The fair value of PSU awards are reported at 100% of target, which is the estimated outcome of performance conditions associated with the PSU awards on the grant date. |
(4) | The value of Mr. Temares’ 2018 PSU awards have been reduced to reflect a discount applied by virtue of a requiredtwo-year post-vesting holding period. |
Vesting of stock option awards depends on time vesting, subject in general to the executive remaining in the Company’s service on specific vesting dates. The options granted in fiscal 20162018 to Messrs. Temares, Stark, Castagna and Fiorilli and Ms. Lattmann vest in five equal installments starting on the first anniversary of the grant date. At the time of grant or thereafter, option awards and underlying shares of common stock are not transferable other than by will or the laws of descent and distribution, except as the Compensation Committee may permit.
PSUs were granted on May 10, 2018 to the named executive officers (other than Ms. D’Elia, who was not an executive officer at the time) and PSUs were granted to Ms. D’Elia on June 5, 2018 in connection with a promotion. Vesting of PSUs depends on (i) the Company’s achievement of a performance-based test during aone-year period from the date of grant and during a three-year period from the date of grant, and (ii) assuming achievement of the performance-based test, time vesting, subject, in general, to the executive remaining in the Company’s service on specified vesting dates. Performance during theone-year period is based on EBIT margin relative to a peer group of the Company comprising 46 companies. UponCompany. Subject to the certification of achievement of theone-year performance-based test, the corresponding PSUs will vest annually in substantially equal installments over a two year period starting one year from the date of grant. Performance during the three-year period is based on a combination of EBIT margin and ROIC relative to such peer group. UponSubject to the certification of achievement of the three-year performance-based test, the corresponding PSUs will vest annually in substantially equal installments over a two-year period starting three years fromon the third anniversary of the date of grant. The awards based on EBIT margin and ROIC are capped at 150% of target achievement, with a floor of zero. PSUs are converted into shares of common stock upon payment following vesting.
Vesting of the restricted stock awards granted on May 10, 2018 to Ms. D’Elia depends solely on time vesting, subject in general to Ms. D’Elia remaining in the Company’s employ on specific vesting dates.
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information for each of the Named Executive OfficersNEOs with respect to the value of all unexercised options, unvested restricted stock awards and unvested performance stock units as of February 25, 2017,March 2, 2019, the end of fiscal 2016.2018.
Option Awards | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1)($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Plan Awards: Market or Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)($) | ||||||||||||||||||||||||||||||||||||||||||||||
Warren Eisenberg |
| 25,440 |
|
| — |
| $ | 56.1850 |
|
| 5/10/2019 |
|
| 5,286 | (7) | $ | 88,223 |
|
| 95,844 | (13) |
| $1,599,636 |
| ||||||||||||||||||||||||||||||||||||||
| 21,682 |
|
| — |
| $ | 68.9100 |
|
| 5/10/2020 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 22,442 |
|
| — |
| $ | 69.7750 |
|
| 5/10/2021 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 23,855 |
|
| — |
| $ | 62.3400 |
|
| 5/12/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,629 |
|
| — |
| $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,092 |
|
| 14,046 | (2) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Leonard Feinstein |
| 25,440 |
|
| — |
| $ | 56.1850 |
|
| 5/10/2019 |
|
| 5,286 | (7) | $ | 88,223 |
|
| 95,844 | (13) |
| $1,599,636 |
| ||||||||||||||||||||||||||||||||||||||
| 21,682 |
|
| — |
| $ | 68.9100 |
|
| 5/10/2020 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 22,442 |
|
| — |
| $ | 69.7750 |
|
| 5/10/2021 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 23,855 |
|
| — |
| $ | 62.3400 |
|
| 5/12/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,629 |
|
| — |
| $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,092 |
|
| 14,046 | (2) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Steven H. Temares | 296,109 | — | $ | 28.3300 | 5/11/17 | 168,669 | (6) | $ | 6,922,176 | 305,214 | (11) | $ | 12,525,983 |
| 254,400 |
|
| — |
| $ | 56.1850 |
|
| 5/10/2019 |
|
| 36,806 | (8) | $ | 614,292 |
|
| 902,223 | (14) |
| $15,058,102(20) |
| |||||||||||||||||||||||||
263,930 | — | $ | 45.2000 | 5/10/18 |
| 249,347 |
|
| — |
| $ | 68.9100 |
|
| 5/10/2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||
254,400 | — | $ | 56.1850 | 5/10/19 |
| 302,956 |
|
| — |
| $ | 69.7750 |
|
| 5/10/2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||
199,477 | 49,870 | (2) | $ | 68.9100 | 5/10/20 |
| 185,345 |
|
| 46,337 | (3) | $ | 62.3400 |
|
| 5/12/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||
181,773 | 121,183 | (2) | $ | 69.7750 | 5/10/21 |
| 135,601 |
|
| 90,402 | (3) | $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||
92,672 | 139,010 | (2) | $ | 62.3400 | 5/12/22 |
| 83,816 |
|
| 125,726 | (3) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||
45,200 | 180,803 | (2) | $ | 70.9550 | 5/11/23 |
| 34,461 |
|
| 137,848 | (3) | $ | 37.4950 |
|
| 5/10/2025 |
| |||||||||||||||||||||||||||||||||||||||||||||
— | 209,542 | (2) | $ | 45.5250 | 5/10/24 |
| — |
|
| 194,199 | (3) | $ | 16.8450 |
|
| 5/10/2026 |
| |||||||||||||||||||||||||||||||||||||||||||||
Arthur Stark | 8,933 | — | $ | 28.3300 | 5/11/17 | 52,518 | (7) | $ | 2,155,339 | 51,108 | (12) | $ | 2,097,472 |
| — |
|
| — |
| $ | — |
|
| — |
|
| — |
| $ | — |
|
| 55,000 | (15) |
| $917,950 |
| |||||||||||||||||||||||||
Eugene A. Castagna |
| 30,528 |
|
| — |
| $ | 56.1850 |
|
| 5/10/2019 |
|
| 9,359 | (9) | $ | 156,202 |
|
| 171,668 | (16) |
| $2,865,139 |
| ||||||||||||||||||||||||||||||||||||||
32,101 | — | $ | 45.2000 | 5/10/18 |
| 26,019 |
|
| — |
| $ | 68.9100 |
|
| 5/10/2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||
30,528 | — | $ | 56.1850 | 5/10/19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20,815 | 5,204 | (3) | $ | 68.9100 | 5/10/20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,158 | 10,772 | (3) | $ | 69.7750 | 5/10/21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11,450 | 17,176 | (3) | $ | 62.3400 | 5/12/22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,191 | 20,764 | (3) | $ | 70.9550 | 5/11/23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 50,565 | (3) | $ | 45.5250 | 5/10/24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Eugene A. Castagna | 32,101 | — | $ | 45.2000 | 5/10/18 | 48,761 | (8) | $ | 2,001,151 | 54,118 | (13) | $ | 2,221,003 | |||||||||||||||||||||||||||||||||||||||||||||||||
30,528 | — | $ | 56.1850 | 5/10/19 |
| 26,930 |
|
| — |
| $ | 69.7750 |
|
| 5/10/2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||
20,815 | 5,204 | (4) | $ | 68.9100 | 5/10/20 |
| 22,900 |
|
| 5,726 | (4) | $ | 62.3400 |
|
| 5/12/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||
16,158 | 10,772 | (4) | $ | 69.7750 | 5/10/21 |
| 19,465 |
|
| 12,978 | (4) | $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||
11,450 | 17,176 | (4) | $ | 62.3400 | 5/12/22 |
| 25,282 |
|
| 37,924 | (4) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||
6,488 | 25,955 | (4) | $ | 70.9550 | 5/11/23 |
| 15,794 |
|
| 63,179 | (4) | $ | 37.4950 |
|
| 5/10/2025 |
| |||||||||||||||||||||||||||||||||||||||||||||
— | 63,206 | (4) | $ | 45.5250 | 5/10/24 |
| — |
|
| 174,136 | (4) | $ | 16.8450 |
|
| 5/10/2026 |
| |||||||||||||||||||||||||||||||||||||||||||||
Susan E. Lattmann | 5,725 | 8,588 | (5) | $ | 62.3400 | 5/12/22 | 16,579 | (9) | $ | 680,402 | 30,343 | (14) | $ | 1,245,277 |
| 11,450 |
|
| 2,863 | (5) | $ | 62.3400 |
|
| 5/12/2022 |
|
| 4,900 | (10) | $ | 81,781 |
|
| 116,229 | (17) |
| $1,939,862 |
| ||||||||||||||||||||||||
3,460 | 13,843 | (5) | $ | 70.9550 | 5/11/23 |
| 10,381 |
|
| 6,922 | (5) | $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||
— | 42,138 | (5) | $ | 45.5250 | 5/10/24 |
| 16,855 |
|
| 25,283 | (5) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 12,635 |
|
| 50,543 | (5) | $ | 37.4950 |
|
| 5/10/2025 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
|
| 139,309 | (5) | $ | 16.8450 |
|
| 5/10/2026 |
|
EXECUTIVE COMPENSATION
Option Awards | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1)($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Plan Awards: Market or Value of Unearned Shares, Units or Other Rights That Have Not Vested(1)($) | ||||||||||||||||||||||||||||||||||||||||||||||||
Robyn M. D’Elia |
| — |
|
| — |
| $ | — |
|
| — |
|
| 8,852 | (11) | $ | 147,740 |
|
| 21,532 | (18) |
| $359,369 |
| ||||||||||||||||||||||||||||||||||||||||
Matthew Fiorilli | 44,664 | — | $ | 28.3300 | 5/11/17 | 43,258 | (10) | $ | 1,775,308 | 43,734 | (15) | $ | 1,794,843 |
| 30,528 |
|
| — |
| $ | 56.1850 |
|
| 5/10/2019 |
|
| 8,214 | (12) | $ | 137,092 |
|
| 137,787 | (19) |
| $2,299,665 |
| |||||||||||||||||||||||||||
32,101 | — | $ | 45.2000 | 5/10/18 |
| 26,019 |
|
| — |
| $ | 68.9100 |
|
| 5/10/2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
30,528 | — | $ | 56.1850 | 5/10/19 |
| 26,930 |
|
| — |
| $ | 69.7750 |
|
| 5/10/2021 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
20,815 | 5,204 | (3) | $ | 68.9100 | 5/10/20 |
| 22,900 |
|
| 5,726 | (6) | $ | 62.3400 |
|
| 5/12/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||||
16,158 | 10,772 | (3) | $ | 69.7750 | 5/10/21 |
| 15,573 |
|
| 10,382 | (6) | $ | 70.9550 |
|
| 5/11/2023 |
| |||||||||||||||||||||||||||||||||||||||||||||||
11,450 | 17,176 | (3) | $ | 62.3400 | 5/12/22 |
| 20,226 |
|
| 30,339 | (6) | $ | 45.5250 |
|
| 5/10/2024 |
| |||||||||||||||||||||||||||||||||||||||||||||||
5,191 | 20,764 | (3) | $ | 70.9550 | 5/11/23 |
| 12,635 |
|
| 50,543 | (6) | $ | 37.4950 |
|
| 5/10/2025 |
| |||||||||||||||||||||||||||||||||||||||||||||||
— | 50,565 | (3) | $ | 45.5250 | 5/10/24 |
| — |
|
| 139,309 | (6) | $ | 16.8450 |
|
| 5/10/2026 |
|
(1) | Market value is based on the closing price of the Company’s common stock of |
(2) | Messrs. Eisenberg and Feinstein’s unvested option awards were scheduled to vest on May 10, 2019. In connection with Messrs. Eisenberg and Feinstein’s departure as officers of the Company, effective as of April 21, 2019, and as directors of the Company, effective as of May 1, 2019, the options that were unvested as of May 1, 2019 were forfeited. |
(3) | Mr. Temares’ unvested option awards |
(4) | Mr. Castagna’s unvested option awards are scheduled to vest as follows: (a) |
(5) | Ms. Lattmann’s unvested option awards are scheduled to vest as follows: (a) |
(6) | Mr. Fiorilli’s unvested option awards are scheduled to vest as follows: (a) 5,726 on May 12, 2019, (b) 5,191 on each of May 11, 2019 and 2020; (c) 10,113 on each of May 10, 2019, 2020 and 2021; (d) 12,636 on each of May 10, 2019, 2021 and 2022 and 12,635 on May 10, 2020; and (e) 27,861 on May 10, 2019 and 27,862 on each of May 10, 2020, 2021, 2022 and 2023. |
(7) | Messrs. Eisenberg and Feinstein have an aggregate of 5,286 shares underlying unvested PSUs, which have satisfied the applicable performance-based test, and were scheduled to vest on May 11, 2019. In connection with Messrs. Eisenberg and Feinstein’s departure as officers of the Company, effective as of April 21, 2019, and as directors of the Company, effective as of May 1, 2019, the PSUs became fully vested. |
(8) | Mr. Temares has an aggregate of |
(9) | Mr. Castagna has an aggregate of 3,193 shares of unvested restricted stock and an aggregate of |
(10) | Ms. Lattmann has an aggregate of |
2019.
EXECUTIVE COMPENSATION
(11) | Ms. D’Elia has an aggregate of |
(12) | Mr. Fiorilli has an aggregate of 3,193 shares of unvested restricted stock and an aggregate of 5,021 shares underlying unvested PSUs. Mr. Fiorilli’s unvested restricted stock awards were scheduled to vest on May 10, 2019. Mr. Fiorilli’s unvested PSU awards that have satisfied the applicable performance-based test |
(13) | Messrs. Eisenberg and Feinstein’s unvested PSU awards are valued at target achievement and include |
(14) | Mr. |
(15) | Mr. |
(16) | Mr. Castagna’s unvested PSU awards are valued at target achievement and include |
(17) | Ms. Lattmann’s unvested PSU awards are valued at target achievement and include |
(18) | Ms. D’Elia’s unvested PSU awards are valued at target achievement and include 5,383 PSU awards, subject to aone-year performance goal, and 16,149 PSU awards, subject to a three-year performance goal. Upon attainment of theone-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards were scheduled to vest on May 10, 2019. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: (a) 5,383 on May 10, 2021; and (b) 10,766 on May 10, 2021. |
(19) | Mr. Fiorilli’s unvested PSU awards are valued at target achievement and include 22,633 PSU awards, subject to aone-year performance goal, and 115,154 PSU awards, subject to a three-year performance goal. Upon attainment of theone-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards were scheduled to vest on May 10, 2019. Upon attainment of the three-year performance goal and after the Compensation Committee certifies achievement of the performance goal, the PSU awards are scheduled to vest as follows: (a) 8,375 on each of May 10, 2019 and |
(20) | Pursuant to SEC rules, market value is based on the closing price of the Company’s common stock of $16.69 per share on March 1, 2019, the last trading day in fiscal 2018, rather than the grant date value under ASC 718. Accordingly, market value does not reflect a discount applied to Mr. Temares’ PSU awards by virtue of a requiredtwo-year post-vesting holding period. |
EXECUTIVE COMPENSATION
OPTION EXERCISES AND STOCK VESTED
Option Exercises and Stock Awards Vested for Fiscal 20162018
The following table includes certain information with respect to the exercise of options and vesting of stock awards by Named Executive OfficersNEOs during fiscal 2016.2018.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Steven H. Temares(1)(2) | 374,288 | 4,525,505 | 131,117 | 5,841,110 | ||||||||||||
Arthur Stark(3)(4) | 17,139 | 319,793 | 37,233 | 1,667,022 | ||||||||||||
Eugene A. Castagna(5)(6) | 17,866 | 313,118 | 32,295 | 1,443,825 | ||||||||||||
Susan E. Lattmann(7) | — | — | 10,341 | 459,029 | ||||||||||||
Matthew Fiorilli(8)(9) | 41,029 | 612,341 | 30,147 | 1,349,544 |
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares (#) | Value Realized on Exercise ($) | Number of Shares (#) | Value Realized on Vesting ($) | ||||||||
Warren Eisenberg(1) | — | — |
| 30,505 |
|
| 513,857 |
| ||||
Leonard Feinstein(1) | — | — |
| 30,505 |
|
| 513,857 |
| ||||
Steven H. Temares(2) | — | — |
| 221,116 |
|
| 3,724,699 |
| ||||
Arthur Stark(3) | — | — |
| 56,047 |
|
| 954,768 |
| ||||
Eugene A. Castagna(4) | — | — |
| 46,414 |
|
| 781,759 |
| ||||
Susan E. Lattmann(5) | — | — |
| 22,383 |
|
| 377,008 |
| ||||
Robyn M. D’Elia(6) | — | — |
| 1,756 |
|
| 29,580 |
| ||||
Matthew Fiorilli(7) | — | — |
| 38,971 |
|
| 656,466 |
|
(1) | Messrs. Eisenberg and |
(2) | Mr. |
(3) | Mr. |
(4) | Mr. Castagna acquired (i) |
(5) |
Ms. Lattmann acquired (i) |
(6) | Ms. D’Elia acquired (i) 1,756 shares in total on May 10, 2018, May 11, 2018 and May 12, 2018 upon the lapse of restrictions on previously granted shares of restricted stock. |
(7) | Mr. Fiorilli acquired (i) 10,193 shares in total on May 10, 2018 upon the lapse of restrictions on previously granted shares of restricted stock and (ii) 28,778 shares in total on May 10, 2018, May 11, 2018 and May 12, 2018 upon the vesting of PSUs for which the performance test had been met. |
EXECUTIVE COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
Effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of employees defined by the Internal Revenue Service as highly compensated. A certain percentage of an employee’s contributions may be matched by the Company, subject to certain plan limitations, as more fully described below. On December 27, 2017, the Company terminated the Bed Bath & Beyond Inc. Nonqualified Deferred Compensation Plan 2016 Restatement, effective January 1, 2016, and its predecessor plan, the Bed Bath & Beyond Inc. Nonqualified Deferred Compensation Plan, adopted December 18, 2008 and frozen effective January 1, 2016 and all similar arrangements (together, the “Nonqualified Deferred Compensation Plans”). After December 27, 2017, no participant deferrals were accepted and all balances were to be liquidated more than 12 months but less than 24 months after December 27, 2017. During fiscal 2018, all participants balances were liquidated and disbursed to those participants. The following table provides compensation information for the Company’s nonqualified deferred compensation plan for each of the Named Executive OfficersNEOs for fiscal 2016.
2018.
Nonqualified Deferred Compensation for Fiscal 20162018
Name | Executive Contributions for Fiscal 2016(1) ($) | Company Contributions for Fiscal 2016(2) ($) | Aggregate Earnings (Losses) in Fiscal 2016(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Fiscal Year End 2016(4) ($) | Executive Contributions for Fiscal 2018 ($) | Company Contributions for Fiscal 2018 ($) | Aggregate Earnings (Losses) in Fiscal 2018(1) ($) | Aggregate ($) | Aggregate Balance at Fiscal Year End 2018 ($) | |||||||||||||||||||||||||||||||||||
Warren Eisenberg |
| — |
| — |
| (520,326 | ) |
| 7,233,384 |
| — | ||||||||||||||||||||||||||||||||||
Leonard Feinstein |
| — |
| — |
| (547,484 | ) |
| 7,613,760 |
| — | ||||||||||||||||||||||||||||||||||
Steven H. Temares | 42,000 | 1,126 | 76,732 | — | 507,732 |
| — |
| — |
| (6,884 | ) |
| 617,697 |
| — | |||||||||||||||||||||||||||||
Arthur Stark | 4,000 | 1,450 | 236 | (33,584 | ) | 6,075 | |||||||||||||||||||||||||||||||||||||||
Arthur Stark(2) |
| — |
| (1,600 | ) |
| 33 |
| 10,024 |
| — | ||||||||||||||||||||||||||||||||||
Eugene A. Castagna | 192,462 | 925 | 357,497 | — | 2,033,511 |
| — |
| — |
| (19,647 | ) |
| 2,510,625 |
| — | |||||||||||||||||||||||||||||
Susan E. Lattmann | 50,000 | 3,105 | 71,692 | — | 406,570 |
| — |
| — |
| (21,779 | ) |
| 505,791 |
| — | |||||||||||||||||||||||||||||
Robyn M. D’Elia |
| — |
| — |
| (3,477 | ) |
| 289,473 |
| — | ||||||||||||||||||||||||||||||||||
Matthew Fiorilli | 34,557 | 2,100 | 184,387 | — | 1,059,725 |
| — |
| — |
| (29,116 | ) |
| 1,228,323 |
| — |
(1) |
Amounts reported in this column represent returns on participant-selected investments. |
(2) | Mr. Stark departed from the Company on May 17, 2018. As such, he was not employed by the Company on the date the fiscal 2017 Company contribution was credited to participants accounts and therefore, he was not eligible for the match reported in |
UnderPrior to the termination of the Company’s nonqualified deferred compensation plan, a participant’s regular earnings maycould be deferred at the election of the participant, excluding incentive compensation, welfare benefits, fringe benefits, noncash remuneration, amounts realized from the sale of stock acquired under a stock option or grant and moving expenses.
When a participant electselected to make a deferral under the plan, the Company creditscredited the account of the participant with a matching contribution equal to fifty percent of the deferral, offset dollar for dollar by any matching contribution that the Company makesmade to the participant under the Company’s 401(k) plan. The payment of this matching contribution iswas made upon the conclusion of the fiscal year. The maximum matching contribution that was allowed to be made by the Company to a participant between the Company’s nonqualified deferred compensation plan and the Company’s 401(k) plan cannot exceedwas the lesser of $7,950$8,250 or three percent of a participant’s eligible compensation.
A participant iswas fully vested in amounts deferred under the nonqualified deferred compensation plan. A participant hashad a vested right in matching contributions made by the Company under the nonqualified deferred compensation plan, depending on the participant’s years of service with the Company: 20% at one to two years of service,service; 40% at two to three years of service,service; 60% at three to four years of service,service; 80% at four to five years of serviceservice; and 100% at five or more years of service. As each of the Named Executive Officers hasNEOs had more than five years of service to the Company, they arewere each fully vested in the matching contributions made by the Company under the plan.
Amounts in a participant’s account in the nonqualified deferred compensation plan arewere payable either in a lump sum or substantially equal annual installments over a period of five or ten years, as elected by the participant. Such distributions maywere required to be delayed to a period of six months following a participant’s termination of employment to comply with applicable law.
EXECUTIVE COMPENSATION
Employment Agreements and Potential Payments Upon Termination or Change in Control
Each NEO has an employment agreement with the Company which providethat provides for severance pay and other benefits upon a termination of theirhis or her employment. For a complete description of payments due to each NEO upon termination of his or her employment with the Company, see “Potential Payments Upon Termination or Change in Control” below. These agreements also provide fornon-competition andnon-solicitation of the Company’s employees during the term of employment and, typically, for one year thereafter (two years in the case of Mr. CastagnaCastagna). Ms. Lattmann’s agreement, as amended, and Ms. Lattmann),D’Elia’s agreement provide for atwo-yearnon-solicitation restriction andnon-competition restriction for one year but provide the Company with the ability to extend the period ofnon-competition for an additional year provided the Company also extends severance payments for such period. Mr. Eisenberg’s agreement and Mr. Feinstein’s agreement provide for anon-solicitation restriction for one year and provide for anon-competition restriction for the duration of required salary continuation payments under the agreements. Each NEO employment agreement provides confidentiality during the term of employment and surviving the end of the term of employment.
Potential Payments Upon Termination or Change in Control
Each NEO’s employment agreements and certain of the plans in which the NEOs participate require the Company to pay compensation to the executives if their employment terminates.
Because Messrs. Eisenberg and Feinstein transitioned to the role ofCo-Founders andCo-Chairmen Emeriti of the Board and ceased to be officers of the Company effective April 21, 2019, Mr. Temares separated from the Company effective May 12, 2019, and Mr. Stark separated from the Company during fiscal 2018, in each case, such separation or transition, as applicable, was treated as a termination of employment by the Company other than for “cause”, the below descriptions of the applicable agreements and arrangements describe only the provisions applicable to, and amounts payable and benefits provided as a result of, a termination of each of Messrs. Eisenberg, Feinstein, Temares and Stark by the Company without “cause.”
The table below lists the estimated amount of compensation payable to each NEOof Messrs. Castagna and Fiorilli and Mses. Lattmann and D’Elia in each termination situation is listed in the table below. The table is presented using an assumed termination date and an assumed change in control date of February 25, 2017,March 2, 2019, the last day of fiscal 20162018 and a price per share of common stock of $41.04$16.69 (the “Per Share Closing Price”), the closing per share price as of February 24, 2017,March 1, 2019, the last business day of fiscal 2016.2018.
Employment Agreements with Messrs. Castagna and Fiorilli and Mses. Lattmann and D’Elia
The agreementsagreement with Messrs. Temares, Stark andMr. Fiorilli provideprovides for severance pay equal to three years’ salary, and the agreements with Mr. Castagna, Ms. Lattmann and Ms. LattmannD’Elia provide for severance pay equal to one year’s salary, if the Company terminates their employment other than for “cause” (including by reason of death or disability). Additionally, the agreements with Messrs. Temares, Stark, Castagna and Fiorilli also provide for one year’s severance pay if the executive voluntarily leaves the employ of the Company. Severance pay will be paid in accordance with normal payroll; however, other than for Ms. Lattmann, any amount due prior to the six months after termination of employment will be paid in a lump sum on the date following the six monthsix-month anniversary of termination of employment. AnyExcept in the cases of Ms. Lattmann and Ms. D’Elia, any severance payable to these executives will be reduced by any monetary compensation earned by them as a result of their employment by another employer or otherwise. “Cause” is defined in the agreements as when the executive has: (i) acted in bad faith or with dishonesty; (ii) willfully failed to follow reasonable and lawful directions of the Company’s Chief Executive OfficerCEO or the Board of Directors, as applicable; (iii) performed his or her duties with gross negligence; or (iv) been convicted of a felony. Upon a termination of employment by the Company for any reason other than for cause and, in the cases of Ms. Lattmann and Ms. D’Elia, also upon a “constructive termination” (as defined below), all unvested options will vest and become exercisable. In addition, pursuant to their respective restricted stock and PSU agreements, or, in the casecases of Ms. Lattmann herand Ms. D’Elia, also pursuant to their respective employment agreement,agreements, shares of restricted stock and PSUs granted will vest upon death or disability, or upon a termination of employment without cause subject to attainment of any applicable performance goals. Further, the employment agreements with Ms. Lattmann and Ms. D’Elia provide for payment of their respective severance and the vesting of any shares of restricted stock and PSUs, subject to the attainment of any applicable performance goals, benefits in the event of a “constructive termination,” defined as the Company’s relocation of their respective places of employment by more than twenty-five miles, or the Company’s material breach of one or more terms of their respective employment agreements. Additionally, the employment agreement with Ms. D’Elia provides that if the Company terminates her employment other than for “cause” (including by reason of death or disability) or upon her “constructive termination”, the unvested portion of Ms. D’Elia’s deferred cash award will immediately vest and become payable, subject to the execution andnon-revocation of a release of claims. These agreements also provide fornon-competition andnon-solicitation during the term of employment and for one year thereafter (twoin the case of Mr. Fiorilli,
EXECUTIVE COMPENSATION
two years thereafter, in the case of Mr. Castagna, and one year thereafter in the cases ofnon-competition for Ms. Lattmann),Lattmann and Ms. D’Elia, subject to the Company’s ability, in the cases of Ms. Lattmann and Ms. D’Elia, to extend thenon-competition period for an additional year provided the Company also extends their respective severance payments for such additional period. Each agreement provides for confidentiality during the term of employment and surviving the end of the term of employment.
Employment Agreement with Mr. Temares
Mr. Temares hasdeparted the Company effective as of May 12, 2019. In accordance with the terms of his employment and equity award agreements, he was entitled to three times his then-current salary, totaling in the amount of $11,902,500 (calculated without regard to any past voluntary waiver of base salary), payable over three years in normal payroll installments, except that any amount due prior to the six months after his departure, $1,983,750, will be paid in a lump sum after suchsix-month period. Such amounts will be reduced by any compensation earned with any subsequent employer or otherwise and will be subject to his compliance with aone-yearnon-competition andnon-solicitation covenant. Further, as a result of his departure, the time-vesting component of Mr. Temares’ equity-based awards accelerated, including (i) his stock options (which currently are “underwater”), (ii) $865,064 of PSU awards which had previously met the related performance-based test, had been certified by the Compensation Committee, and remained subject solely to time-vesting, and (iii) $9,682,989 of PSU awards (assuming target level of performance) which remain subject to attainment of any performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under his award agreements. For this purpose, the value of the PSU awards is based on the value of the shares of our common stock on the date of Mr. Temares’ departure. The actual value of Mr. Temares’ PSU awards upon vesting will depend on the actual performance as certified by the Compensation Committee.
Mr. Temares’ Supplemental Retirement Benefit
Mr. Temares is a party to a supplemental executive retirement benefit agreement (“SERP”) and a related escrow agreement, underpursuant to which he is entitled to receive a supplemental retirement benefit onas a result of his retirement or other separation from service from the Company. The retirement benefit will be payable inPursuant to the formSERP, as a result of his separation from service with the Company as of May 12, 2019 being treated as a termination without cause, Mr. Temares is entitled to a lump sum payment equal to the present value of an annual amount equal to 50% of Mr. Temares’ annual base salary on the date of termination of employment if such annual amount were paid for a period of 10 years in accordance with the Company’s normal payroll practices. Except in the case ofpractices (which amount equals $17,654,834), subject to Mr. Temares’ death (intimely execution andnon-revocation of a release of claims in favor of the Company, which case the supplemental retirement benefit will be immediately payable) and the agreement as to escrow, the supplemental retirement benefit will be paid on the first business day following the six monthsix-month anniversary of Mr. Temares’ termination and will be includible in his income for tax purposes at such time.
In the event Mr. Temares elects to retire or voluntarily terminates his employment with the Company, a portion of the supplemental retirement benefit, net of withholdings, will be deposited into an escrow account governed by a separate agreement. No portion of the supplemental retirement benefit will be deposited into the escrow account, however, in the event Mr. Temares dies, is terminated by the Company without cause (as such term is defined in his employment agreement), terminates due to disability, or terminates employment within 12 months following a change of control. In the event Mr. Temares elects to retire or voluntarily terminates his employment with the Company, 1/10 of the lump sum supplemental retirement benefit distribution (net of applicable withholding taxes) will be distributed to Mr. Temares; and 9/10 of the lump sum supplemental retirement benefit distribution (net of applicable withholding taxes) will be deposited into an escrow account to be distributed in nine equal annual installments on each of the following nine anniversaries of the deposit date, subject to acceleration in the case of Mr. Temares’ death or a change of control of the Company. The entire escrow account will be distributed to Mr. Temares’ beneficiary no later than 30 days following his death or to Mr. Temares no later than 30 days following a change of control of the Company. If Mr. Temares does not comply with the restrictive covenant not to compete
EXECUTIVE COMPENSATION
with the Company (as described in his employment agreement, for the term of the escrow agreement) prior to the payment of the entire escrow amount, the Company will have the right to direct the escrow agent to pay the remaining escrow amount to the Company no later than 15 days after notice to the escrow agent and Mr. Temares will forfeit any and all rights to such remaining escrow amount. Mr. Temares has agreed that in the event any amount in escrow is forfeited, he will use commercially reasonable efforts to obtain a refund of applicable taxes and remit such refund to the Company and the Company has agreed to reimburse Mr. Temares, or to pay on his behalf, reasonable legal fees and expenses incurred in connection with such a refund request.service. Although the amended Supplemental Executive Retirement Plan (“SERP”)SERP provides that Mr. Temares will be protected from any impact resulting from the possible application of Section 409A of the Code to the terms of the SERP due to the complexities surrounding Section 409A, the Company believes that no such payment will be required.
Employment Agreements with Messrs. Eisenberg and Feinstein
The Company is party to employment agreements with each of Messrs. Eisenberg and Feinstein. Under these agreements, each of Messrs. Eisenberg and Feinstein had the option to elect senior status at any time (i.e., to be continued to be employed to providenon-line executive consultative services). On May 11, 2017, Messrs. Eisenberg and Feinstein notified the Company that they elected to commence their Senior Status Period, effective May 21, 2017. Pursuant to the “senior status” provisions of their employment agreements, each of Messrs. Eisenberg and Feinstein is entitled to base salary, termination payments, postretirement benefits and other terms and conditions of employment, during the Senior Status Period.
On April 21, 2019, each of Messrs. Eisenberg and Feinstein transitioned to the role ofCo-Founders andCo-Chairmen Emeriti of the Board of Directors of the Company. As a result of this transition, Messrs. Eisenberg and Feinstein ceased to be officers of the Company effective as of April 21, 2019, and became entitled to the payments and benefits provided under their employment agreements that apply in the case of termination without cause, which generally include continued senior status payments until May 2027 and continued participation for them (and their spouses, if applicable) at the Company’s expense, in medical, dental, hospitalization and life insurance and in all other employee plans and programs in which they (or their families) were participating as of the date of termination and other or additional benefits in accordance with the applicable plans and programs until the earlier of death of the survivor of the Co-Chairmen Emeriti and his spouse or the date(s) he receives equivalent coverage and benefits from a subsequent employer. In addition, the Co-Chairmen Emeriti are entitled to supplemental pension payments specified in their employment agreements of $200,000 per year (as adjusted for a cost of living increase), until the death of the survivor of the Co-Chairmen Emeriti and his spouse, reduced by the continued senior status payments referenced in the foregoing sentence.
EXECUTIVE COMPENSATION
Pursuant to their respective restricted stock and performance stock unit agreements, shares of restricted stock and PSUs granted to Messrs. Eisenberg and Feinstein vested upon their resignation as members of the Board of Directors effective May 1, 2019, subject, however, to attainment of any applicable performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under their award agreements.
The annual amount of senior status payments to be made to each of the Co-Chairmen Emeriti until May 2027 equals $602,386, subject to future adjustment for cost of living, as provided in the applicable employment agreements. The estimated annual value of the continued benefits provided pursuant to their employment agreements equals $248,760 and $344,400 for Messrs. Eisenberg and Feinstein, respectively. As a result of this transition, $86,162 of PSU awards held by each of Messrs. Eisenberg and Feinstein, which had previously met the related performance-based test, had been certified by the Compensation Committee, and remained subject solely to time-vesting, were accelerated. Further, as a result of the transition, the time-vesting component of PSUs held by each of Messrs. Eisenberg and Feinstein equal in value to $1,562,257 (assuming target level of performance) accelerated, and the PSUs remain subject to attainment of any applicable performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under their award agreements. For this purpose, the value of the PSU awards is based on the value of the shares of our common stock on the date of Messrs. Eisenberg’s and Feinstein’s transition.
The agreements also provide that upon a change in control of the Company, the Company will fund a “rabbi trust” for each to hold an amount equal to the value of the payments and certain benefits payable to each upon his termination of employment with the Company. In the event of termination of employment, the executives are under no obligation to seek other employment and there is no reduction in the amount payable to the executive on account of any compensation earned from any subsequent employment. To the extent that any payments under the employment agreements due following the termination of Messrs. Eisenberg and Feinstein are considered to be deferred compensation under Section 409A, such amounts will commence to be paid on the earlier of thesix-month anniversary of termination of employment or his death.
In substitution for a split-dollar life insurance benefit previously provided to such executives, in fiscal 2003, the Company entered into deferred compensation agreements with Messrs. Eisenberg and Feinstein under which the Company is obligated to pay Messrs. Eisenberg and Feinstein $2,125,000 and $2,080,000, respectively, in each case payable only on the last day of the first full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result in the loss of a deduction for such payment pursuant to applicable federal income tax law, provided that, in the event that the applicable federal income tax law is changed in a manner that would result in the payments in materially all events being nondeductible, then such amount shall be paid at such time as it would have been paid if such change in law had not been made.
Employment Agreement with Mr. Stark
Mr. Stark departed the Company effective as of May 17, 2018. In accordance with the terms of his employment and equity award agreements, he was entitled to three times his then-current salary in the amount of $5,590,170, payable over three years in normal payroll installments, except that any amount due prior to the six months after his departure, $903,027, was paid in a lump sum after suchsix-month period. Such amounts will be reduced by any compensation earned with any subsequent employer or otherwise and will be subject to his compliance with aone-yearnon-competition andnon-solicitation covenant. Further, Mr. Stark’s equity-based awards vested, including $69,954 of restricted stock, $105,351 of PSU awards, which had previously met the performance-based test and have been certified by the Compensation Committee, and $981,750 of PSU awards, subject to attainment of any performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under their award agreements.
EXECUTIVE COMPENSATION
Table and related footnotes follow:
Cash Severance | Option Acceleration(1) | Restricted Stock Acceleration(1) | PSU Acceleration(2) | Nonqualified Deferred Compensation Balance(3) | Supplemental Pension(4) | Total | ||||||||||||||||||||||
Steven H. Temares(6) | ||||||||||||||||||||||||||||
Termination Without Cause(5) | $ | 11,902,500 | $ | — | $ | 2,323,795 | $ | 11,026,205 | $ | 507,732 | $ | 18,842,018 | $ | 44,602,250 | ||||||||||||||
Voluntary Termination(7) | $ | 3,967,500 | $ | — | $ | — | $ | — | $ | 507,732 | $ | 18,842,018 | $ | 23,317,250 | ||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Change in Control + Termination(5) | $ | 11,902,500 | $ | — | $ | 2,323,795 | $ | 11,026,205 | $ | 507,732 | $ | 18,842,018 | $ | 44,602,250 | ||||||||||||||
Arthur Stark(8) | ||||||||||||||||||||||||||||
Termination Without Cause(5) | $ | 5,547,831 | $ | — | $ | 1,428,776 | $ | 1,811,078 | $ | 6,075 | $ | — | $ | 8,793,760 | ||||||||||||||
Voluntary Termination(7) | $ | 1,849,277 | $ | — | $ | — | $ | — | $ | 6,075 | $ | — | $ | 1,855,352 | ||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Change in Control + Termination(5) | $ | 5,547,831 | $ | — | $ | 1,428,776 | $ | 1,811,078 | $ | 6,075 | $ | — | $ | 8,793,760 | ||||||||||||||
Eugene A. Castagna(8) | ||||||||||||||||||||||||||||
Termination Without Cause(7) | $ | 1,928,846 | $ | — | $ | 1,251,272 | $ | 1,889,849 | $ | 2,033,511 | $ | — | $ | 7,103,478 | ||||||||||||||
Voluntary Termination(7) | $ | 1,928,846 | $ | — | $ | — | $ | — | $ | 2,033,511 | $ | — | $ | 3,962,357 | ||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Change in Control + Termination(7) | $ | 1,928,846 | $ | — | $ | 1,251,272 | $ | 1,889,849 | $ | 2,033,511 | $ | — | $ | 7,103,478 | ||||||||||||||
Susan E. Lattmann(8) | ||||||||||||||||||||||||||||
Termination Without Cause(7) | $ | 1,021,154 | $ | — | $ | 299,389 | $ | 1,012,142 | $ | 406,570 | $ | — | $ | 2,739,255 | ||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Change in Control + Termination(7) | $ | 1,021,154 | $ | — | $ | 299,389 | $ | 1,012,142 | $ | 406,570 | $ | — | $ | 2,739,255 | ||||||||||||||
Matthew Fiorilli(8) | ||||||||||||||||||||||||||||
Termination Without Cause(5) | $ | 5,191,404 | $ | — | $ | 1,159,744 | $ | 1,541,384 | $ | 1,059,725 | $ | — | $ | 8,952,257 | ||||||||||||||
Voluntary Termination(7) | $ | 1,730,468 | $ | — | $ | — | $ | — | $ | 1,059,725 | $ | — | $ | 2,790,193 | ||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Change in Control + Termination(5) | $ | 5,191,404 | $ | — | $ | 1,159,744 | $ | 1,541,384 | $ | 1,059,725 | $ | — | $ | 8,952,257 |
Cash Severance | Cash Award Acceleration(1) | Restricted Stock Acceleration(2) | PSU Acceleration(3) | Total | |||||||||||||||||||||
Eugene A. Castagna(6) | |||||||||||||||||||||||||
Termination Without Cause(5) | $ | 2,000,000 | $ | — | $ | 58,336 | $ | 978,071 | $ | 3,036,407 |
| ||||||||||||||
Voluntary Termination(5) | $ | 2,000,000 | $ | — | $ | — | $ | — | $ | 2,000,000 | |||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Change in Control + Termination(5) | $ | 2,000,000 | $ | — | $ | 58,336 | $ | 978,071 | $ | 3,036,407 | |||||||||||||||
Susan E. Lattmann(6) | |||||||||||||||||||||||||
Termination Without Cause(5) | $ | 1,250,000 | $ | — | $ | 31,570 | $ | 622,691 | $ | 1,904,261 | |||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Change in Control + Termination(5) | $ | 1,250,000 | $ | — | $ | 31,570 | $ | 622,691 | $ | 1,904,261 | |||||||||||||||
Robyn M. D’Elia(6) | |||||||||||||||||||||||||
Termination Without Cause(5) | $ | 750,000 | $ | 75,000 | $ | 158,949 | $ | 92,426 | $ | 1,076,375 | |||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Change in Control + Termination(5) | $ | 750,000 | $ | 75,000 | $ | 158,949 | $ | 92,426 | $ | 1,076,375 | |||||||||||||||
Matthew Fiorilli(6) | |||||||||||||||||||||||||
Termination Without Cause(4) | $ | 5,306,025 | $ | — | $ | 58,336 | $ | 786,365 | $ | 6,150,726 | |||||||||||||||
Voluntary Termination(5) | $ | 1,768,675 | $ | — | $ | — | $ | — | $ | 1,768,675 | |||||||||||||||
Change in Control (No Termination) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Change in Control + Termination(4) | $ | 5,306,025 | $ | — | $ | 58,336 | $ | 786,365 | $ | 6,150,726 |
(1) | Represents the value of unvested deferred cash awards that would vest and become payable, subject to the execution andnon-revocation of a release of claims, on a termination by the Company other than for “cause” (including by reason of death or disability) or upon Ms. D’Elia’s “constructive termination” on March 2, 2019. These deferred cash awards are based solely on time vesting and were granted to Ms. D’Elia prior to her becoming an NEO. |
(2) | Represents the value of unvested outstanding |
(3) | Represents the value of unvested outstanding |
EXECUTIVE COMPENSATION
assumptions regarding the performance of the peer companies. The portion of 2015 and 2016 PSU awards subject to a three-year performance test, based on relative performance against the peer companies, was substantially uncertain on February 25, 2017 and is not included. The value of accelerated PSU awards includes dividend equivalents on the underlying shares of the applicable PSU award that are subject to the same vesting restrictions that apply to the entire PSU award. The value of accrued dividend equivalents credited as of February 25, 2017 and included above were approximately: $99,839 for Mr. Temares; $16,399 for Mr. Stark; $17,112 for Mr. Castagna; $9,165 for Ms. Lattmann; and $13,957 for Mr. Fiorilli. For a more complete discussion of the metrics and method of calculating the applicable performance metrics for PSU awards, please see the discussion of Performance Stock Units relative performance against the peer companies, was substantially uncertain on March 2, 2019 and is not included. The value of accelerated PSU awards includes dividend equivalents on the underlying shares of the applicable PSU award that are subject to the same vesting restrictions that apply to the entire PSU award. The value of accrued dividend equivalents credited as of March 2, 2019 and included above were approximately: $56,249 for Mr. Castagna; $33,718 for Ms. Lattmann; $2,584 for Ms. D’Elia; and $45,262 for Mr. Fiorilli. For a more complete discussion of the metrics and method of calculating the applicable performance metrics for PSU awards, please see the discussion of PSUs in the Equity Compensation section of the Compensation Discussion & Analysis above.
(4) |
Cash severance represents three times current salary payable over a period of three years following a termination without cause. |
(5) |
Cash severance represents one times current salary payable over a period of one year. |
(6) | In the event of a termination of employment due to death or disability, the |
EXECUTIVE COMPENSATION
The Company has prepared the following information required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, regarding the ratio of the compensation of our CEO to that of the Company’s median employee, using certain permitted methodologies.
The median employee at the Company, not counting the CEO, was determined by:
using our total employee population (whether employed on a full-time, part-time, seasonal or temporary basis), which as of March 2, 2019, the Company’s fiscal year end, includes approximately 62,000 employees, comprised of approximately 59,900 U.S. employees and approximately 2,100non-U.S. employees; of our total number of employees, more than 50% were part-time and more than 90% were hourly;
using payroll records as of March 2, 2019, the Company’s fiscal year end; and
excluding, under the de minimis exemption to the pay ratio rule, all of our associates in each of Canada (2,086), Mexico (7), Panama (4) and the Dominican Republic (4), which in total are 2,101 associates, or approximately 3.7%, of our total associate population, excluding the CEO.
The median employee was identified using the total cash compensation, which, for this purpose, included base salary, bonus and commissions, per payroll records for the twelve months ended March 2, 2019 and pay for any permanent full-time and part-time associates (whether salaried or hourly) who were not employed for the full fiscal year were annualized.
The individual identified as the median employee is a part-time hourly associate working in a Bed Bath & Beyond store receiving a total annual compensation for fiscal 2018 of $15,474. The identification of the median employee was influenced by the Company having a workforce significantly composed of part-time, hourly store associates.
The compensation of the Company’s CEO for fiscal 2018 as reported in the Summary Compensation Table was $12,146,954. This includes the grant date fair value of stock awards and stock options which may not necessarily reflect the actual value, if any, that may be realized by the CEO. The ratio of the annual total compensation of the Company’s CEO to that of the median employee was estimated to be 785:1, about 18% lower than in the prior year. This estimate was calculated in a manner consistent with the applicable SEC rules and guidance, based upon the payroll and employment records of the Company. The rules and guidance applicable to this disclosure permit a variety of methods and a range of reasonable estimates and assumptions to reflect compensation practices. Therefore, the pay ratio reported by other companies in similar industries may well not be comparable to the pay ratio reported above.
In connection with the preparation of the foregoing disclosure, management has provided the Compensation Committee with the analysis of the CEO to median employee pay ratio and accompanying contextual narrative, for its information when setting executive pay decisions.
PROPOSAL 3—APPROVAL, BYNON-BINDING VOTE, OF 20162018 EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, the Company is providing its shareholders the opportunity to cast an advisory vote on the compensation of its Named Executive Officers (NEOs) for fiscal 2016.2018. This proposal, commonly known as a “say-on-pay”“say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on Named Executive Officers’NEOs’ compensation.
The Board of Directors recommends a vote in favor of the following resolutions:
“RESOLVED, that the compensation paid to the Company’s Named Executive OfficersNEOs for fiscal 2016,2018, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
This proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive officer compensation program, values the opinions expressed by shareholders in the Compensation Committee’s ongoing engagement, discussed above, and considers the views provided by shareholders when making future compensation decisions for Named Executive Officers.NEOs. The affirmative vote of the holders of a majority of the votes cast by our shareholders in person or represented by proxy and entitled to vote is required to approve this proposal.
We believe the preceding Compensation Discussion and Analysis, including the significant changes in equity compensation design implemented for fiscal 2017,2019 by the newly constituted Compensation Committee, reflects the Compensation Committee’s ongoing receptiveness and responsiveness to shareholder concerns regarding executive compensation, and supports the recommendation by the Board of a vote approving the fiscal 20162018 executive compensation program.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTEFOR
THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE
COMPANY’S NAMED EXECUTIVE OFFICERS FOR FISCAL 20162018 AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL 4—ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, the Company is seeking the input of its shareholders on the frequency with which it will hold a non-binding, advisory vote on the compensation of its Named Executive Officers (commonly known as a “frequency of say-on-pay” proposal). In voting on this Proposal 4, shareholders are provided with four choices. Shareholders may indicate their preference as to whether the advisory vote on the compensation of the Company’s Named Executive Officers (NEOs) should occur once every (i) one year, (ii) two years, or (iii) three years; or the shareholders may abstain from voting on this Proposal 4.
After careful consideration, it is the opinion of the Board of Directors that the frequency of the shareholder vote on the compensation of the Company’s NEOs should be once every one year. The Board of Directors recommends an annual advisory vote because an annual vote will allow shareholders to provide direct input on the Company’s compensation policies and practices, and the resulting compensation for the NEOs, every year. Shareholders would have the opportunity to consider the Company’s most recent compensation decisions in the context of its pay for performance philosophy and focus on increasing long-term shareholder value, and to provide feedback to the Company in a timely way.
While the Board recommends an annual vote, shareholders are not voting to approve or disapprove of the Board’s recommendation. Rather, shareholders are being provided with the opportunity to cast an advisory vote on whether the shareholder advisory vote on executive officer compensation should occur once every (i) one year, (ii) two years, or (iii) three years, or to abstain from voting on the matter.
As an advisory vote, this proposal is not binding on the Company. Notwithstanding the advisory nature of this vote, the Board of Directors values the opinions expressed by shareholders in their vote on this proposal, and will consider the outcome of the vote when making a determination as to the frequency of future advisory votes on executive compensation. The alternative (every one year, two years or three years) receiving the majority of votes cast will be the frequency that shareholders approve. If no alternative receives a majority of votes cast, then the alternative receiving the greatest number of votes will be deemed the frequency that shareholders approve.
THE BOARD OF DIRECTORS RECOMMENDS THAT THEOUR SHAREHOLDERSVOTE ON AN ADVISORY BASIS, FOR A FREQUENCY OF SAY-ON-PAY VOTEOFONCE EVERY ONE YEAR.
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
Shareholders are being asked to re-approve the performance goals under the Bed Bath & Beyond Inc. 2012 Incentive Compensation Plan (the “2012 Plan”). The 2012 Plan was initially adopted by the Board of Directors as the 2004 Incentive Compensation Plan on May 13, 2004 and was thereafter approved by our shareholders at the 2004 Annual Meeting of Shareholders. The 2004 Incentive Compensation Plan was thereafter amended, restated and renamed the 2012 Incentive Compensation Plan, which was approved by the Board of Directors on May 18, 2012 and by our shareholders at the 2012 Annual Meeting of Shareholders.
The purpose of asking shareholders to re-approve the performance goals under the 2012 Plan is so that certain incentive awards granted thereunder may qualify as exempt performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Section 162(m) of the Code generally disallows the corporate tax deduction for certain compensation paid in excess of $1,000,000 annually to each of the chief executive officer and the three other most highly paid executive officers (other than the chief financial officer) of publicly-held companies, unless compensation is performance-based or satisfies other conditions. To satisfy the performance-based exception, Section 162(m) of the Code generally requires such performance goals to be approved by shareholders every five years.
We are not proposing any amendment to the terms of the 2012 Plan at this time. These performance goals must be shareholder approved to preserve, to the extent possible, our tax deduction for certain awards made under the 2012 Plan in accordance with the terms of Section 162(m) of the Code and the related regulations.
The Board recommends that shareholders re-approve the performance goals under the 2012 Plan. If the requisite shareholder approval of the performance goals is not obtained, we may continue to grant awards under the 2012 Plan in accordance with its current terms. However, certain awards under the Plan may not constitute “performance-based” compensation under Section 162(m) of the Code and accordingly, may not be tax deductible by the Company depending on the facts and circumstances.
The following description of the 2012 Plan is summary of its principal provisions. Please also refer to the complete copy of the 2012 Plan, which was filed as Exhibit A to our definitive 2012 Proxy Statement on Schedule 14A filed with the SEC on May 24, 2012.
Description of the 2012 Plan
Administration
The Board of Directors has appointed two committees to administer the 2012 Plan: the Compensation Committee which is authorized to grant awards to executive officers and certain other key executives; and a second committee, consisting of the Co-Chairmen and Chief Executive Officer, which is authorized to grant awards to other employees and consultants. All members of the Compensation Committee are intended to be “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, “outside directors” within the meaning of Section 162(m) of the Code and “independent directors” under NASDAQ Listing Rule 5605(a)(2). Under the 2012 Plan, the entire Board of Directors has the authority to grant awards to non-employee directors.
Eligibility and Types of Awards
Employees, consultants and prospective employees and consultants of the Company and its affiliates and non-employee directors of the Company are eligible to be granted non-qualified stock options, SARs, restricted stock awards, performance awards and other stock-based awards under the 2012 Plan. Only employees of the Company or its subsidiaries are eligible to be granted incentive stock options (“ISOs”) under the 2012 Plan. Eligibility for awards under the 2012 Plan is determined by the applicable Committee in its sole discretion, provided that no award may be made to any non-employee director unless all similarly situated non-employee directors have the right to receive the same award on the same terms.
Available Shares
The aggregate number of shares of common stock of the Company that may be issued or used for reference purposes under the 2012 Plan may not exceed 43,200,868 shares (which includes 14,300,000 shares approved in 2012 by shareholders plus 19,000,000 shares approved by shareholders in 2004 plus shares of common stock that were available for grant under the 1996, 1998, 2000 and 2001 Stock Option Plan). As of May 5, 2017, 15,205,511 shares of common stock of the Company remained available for grant under the 2012 Plan, taking into account grants thereunder as well as cancellations and forfeitures. This share reserve remains in effect through the remainder of the 2012 Plan’s term (due to expire May 18, 2022).
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
Shares of common stock that are subject to stock options or SARs will be counted against the overall limit as one share for every share granted. If any stock option or SAR is cancelled, expires or terminates unexercised for any reason, the shares covered by such award will again be available for the grant of awards under the 2012 Plan, except that any options or SARs that are not issued as the result of a net settlement or that are used to pay any exercise price or tax withholding obligation will not be available for the grant of awards. Shares of common stock repurchased on the open market by the Company with the proceeds of an option exercise price also will not be available for the grant of awards. Shares of common stock that are subject to other types of awards will be counted against this limit as 2.2 shares for every share granted. If such other awards are forfeited for any reason, 2.2 shares will again be available for the grant of awards under the 2012 Plan that we granted after the 2012 Annual Meeting of Shareholders and 1.80 shares will again become available for the grant of awards made under the 2012 Plan that were granted prior to the date of the 2012 Annual Meeting of Shareholders.
The maximum number of shares of common stock subject to any option and/or SAR that may be granted under the 2012 Plan during any fiscal year of the Company to each employee is, in the aggregate, 1,000,000 shares. The maximum number of shares of common stock subject to any restricted stock award and/or other stock-based award that is subject to the attainment of specified performance goals that may be granted under the 2012 Plan during any fiscal year of the Company to each employee is 750,000 shares. The maximum number of shares of common stock subject to any performance award denominated in shares of common stock that may be granted to an employee under the 2012 Plan attributable to any year of a performance period is 750,000 shares. The maximum payment that may be made to an employee under the 2012 Plan and denominated in dollars for a cash-based award attributable to any year of a performance period is $5,000,000. The above per-participant limits will be increased for an employee to the extent that awards made to the employee in any prior year under the 2012 Plan were for less than the maximum number of shares or the amounts permitted to be granted, in the aggregate, to the employee.
The Committee may, in accordance with the term of the 2012 Plan, make appropriate adjustments to the above limits and the terms of outstanding options and other awards to reflect any stock dividend or distribution, stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, split-up, combination, reclassification, or exchange of shares, partial or complete liquidation, issuance of rights or warrants, sale or transfer of the Company’s assets or business, or any special cash dividend (or any other event affecting the Company’s capital structure or business).
On May 5, 2017, the closing price of a share of common stock on the Nasdaq Stock Market was $37.34.
Awards under the 2012 Plan
Stock Options. The 2012 Plan authorizes the Committee to grant ISOs (only to eligible employees) and non-qualified stock options to purchase shares of common stock. The Committee will determine the number of shares of common stock subject to each option, the term of each option, the exercise price (which may not be less than the fair market value of the common stock at the time of grant, or 110% of fair market value in the case of ISOs granted to 10% shareholders), any vesting schedule, and the other material terms of each option. Options will be exercisable at such times and subject to such terms as are determined by the Committee at grant. The maximum term of options under the 2012 Plan is eight years (or five years in the case of ISOs granted to 10% shareholders). Options with vesting conditions based on the attainment of performance goals will be exercisable no earlier than one year after grant and options with vesting conditions based on the continued service of the recipient will be fully exercisable no earlier than three years after grant (permitting pro-rata vesting over such three year period), subject to acceleration of vesting in the event of a change in control, retirement, death or disability, at the discretion of the Committee. However, up to 5% of the shares reserved for issuance may be granted without these minimum vesting requirements. Upon the exercise of an option, the recipient must make payment of the full exercise price, either: in cash, check, bank draft or money order; solely to the extent permitted by law, through the delivery of irrevocable instructions to a broker reasonably acceptable to the Company to deliver promptly to the Company an amount equal to the aggregate purchase price; or on such other terms and conditions as may be acceptable to the Committee (including, without limitation, the relinquishment of options or by payment in full or in part in the form of common stock).
Stock Appreciation Rights. The 2012 Plan authorizes the Committee to grant SARs either in tandem with an option or independent of an option. The exercise price of a tandem SAR will be the exercise price of the related option. A SAR is a right to receive a payment either in cash or common stock equal in value to the excess of the fair market value of one share of common stock on the date of exercise over the exercise price per share of the SAR. The Committee will determine the terms and conditions of SARs at the time of grant, but generally SARs will be subject to the same terms and conditions as options (as described above).
Restricted Stock Awards. The 2012 Plan authorizes the Committee to grant restricted stock awards. Recipients of restricted stock awards enter into an agreement with the Company subjecting the restricted stock awards to transfer and other restrictions and providing the criteria or dates on which such awards vest and such restrictions lapse. The restrictions on
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
restricted stock awards may lapse and the awards may vest over time, based on performance criteria or other factors (including, without limitation, performance goals that are intended to comply with the performance-based compensation exception under Section 162(m) of the Code), as determined by the Committee at grant. For restricted stock awards that vest or whose restrictions lapse based on the attainment of performance goals, the minimum restriction or vesting period will be no less than one year after grant, and for restricted stock awards that vest or whose restrictions lapse based on the continued service of the recipient, the restriction or vesting period will be no less than three years after grant (permitting restrictions to lapse or awards to vest pro-rata over such three year period), subject to the earlier vesting or lapsing of restrictions in the event of a change in control, retirement, death or disability, at the discretion of the Committee. However, up to 5% of the shares reserved for issuance may be granted without these minimum vesting requirements or restriction periods. Except as otherwise determined by the Committee, a recipient of a restricted stock award has all of the attendant rights of a shareholder, including the right to receive dividends, if any, subject to vesting conditions as described below, the right to vote shares and, subject to and conditioned upon the vesting and restrictions lapsing for all of shares, the right to tender such shares. The right to receive dividends on a restricted stock award is subject to the vesting or lapsing of the restrictions on the restricted stock award.
Performance Awards. The 2012 Plan authorizes the Committee to grant performance awards entitling recipients to receive a fixed number of shares of common stock or cash, as determined by the Committee, upon the attainment of performance goals with respect to a designated performance period. Unless the Committee determines otherwise at grant, the minimum performance period will be one year.
Other Awards. The 2012 Plan authorizes the Committee to grant awards of common stock and other awards that are valued in whole or in part by reference to, or are payable in or otherwise based on, common stock, including but not limited to: shares of common stock awarded purely as a bonus in lieu of cash and not subject to any restrictions or conditions; shares of common stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an affiliate; stock equivalent units; restricted stock units; and awards valued by reference to book value of shares of common stock. The Committee may also permit eligible employees and non-employee directors to defer all or a portion of their cash compensation in the form of such other awards under the 2012 Plan, subject to the terms and conditions of any deferred compensation arrangement established by the Company.
As noted above, performance-based awards granted under the 2012 Plan that are intended to satisfy the performance-based compensation exception under Section 162(m) of the Code will vest based on attainment of specified performance goals established by the Committee. These performance goals will be based on the attainment of a certain target level of, or a specified increase in (or decrease where noted) one or more of the following criteria selected by the Committee:
The criteria to establish performance goals also include the growth in the value of an investment in the common stock of the Company assuming the reinvestment of dividends, or a transaction that results in the sale of stock or assets of the Company.
Unless the Committee determines otherwise, the Committee will disregard and exclude the impact of an item, event, occurrence or circumstance including: restructurings, discontinued operations, disposal of a business, extraordinary items and other unusual or non-recurring charges; an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; a change in accounting standards required by generally accepted accounting principles; or other similar events, to the extent permitted by Section 162(m) of the Code.
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, division or other operational unit of the Company) performance under one or more of the measures described above relative to the performance of other corporations. The Committee may designate additional business criteria on which the performance goals may be based or adjust, modify or amend those criteria.
Term
Awards under the 2012 Plan may not be made after May 18, 2022, but awards granted prior to such date may extend beyond that date. Awards (other than stock options and stock appreciation rights) that are intended to be “performance-based” under Section 162(m) of the Code will not be made on or after the first shareholders’ meeting in the fifth year following the year of the last shareholder approval of the performance goals in the 2012 Plan (i.e., the first shareholders’ meeting in 2017).
However, if this Proposal to re-approve the performance goals in the 2012 Plan is approved by shareholders, awards (other than stock options and stock appreciation rights) that are intended to be “performance-based” under Section 162(m) of the Code will not be made on or after the first shareholders’ meeting in the fifth year following this re-approval (i.e., the first shareholders’ meeting in 2022, if this Proposal is approved by shareholders).
Amendment and Termination
Subject to the rules referred to in the balance of this paragraph, the Board of Directors or an authorized Committee consisting solely of two or more non-employee directors may at any time amend, in whole or in part, any or all of the provisions of the 2012 Plan, or suspend or terminate it entirely, retroactively or otherwise. Except to correct obvious drafting errors or as required to comply with applicable law or accounting rules, no such amendment may reduce the rights of a participant with respect to awards previously granted without the consent of such participant. In addition, without the approval of shareholders, no amendment may be made that would: increase the aggregate number of shares of common stock that may be issued under the 2012 Plan; increase the maximum individual participant share limitations for a fiscal year or year of a performance period; change the classification of individuals eligible to receive awards under the 2012 Plan; extend the maximum option term; decrease the minimum exercise price of (i.e., reprice) any award; reduce the exercise price of any option or SAR or cancel any outstanding “in-the-money” option or SAR in exchange for cash; substitute any option or SAR in exchange for an option or SAR (or similar other award) with a lower exercise price; alter the performance goals; or require shareholder approval in order for the 2012 Plan to continue to comply with Section 162(m) of the Code, Section 422 of the Code or to satisfy applicable Nasdaq rules.
Nontransferability
Except as the Committee may permit, at the time of grant or thereafter, awards granted under the 2012 Plan are not transferable by a participant other than by will or the laws of descent and distribution. Shares of common stock acquired by a permissible transferee will continue to be subject to the terms of the 2012 Plan and the applicable award agreement.
Future Plan Awards
Because future awards under the 2012 Plan will be based upon prospective factors including the nature of services to be rendered and a participant’s potential contributions to the success of the Company or its affiliates, actual awards cannot be determined at this time.
Material U.S. Federal Income Tax Consequences of Stock Options
The following discussion of the principal U.S. federal income tax consequences with respect to options under the 2012 Plan is based on statutory authority and judicial and administrative interpretations as of the date of this proxy statement, which are subject to change at any time (possibly with retroactive effect) and may vary in individual circumstances. Therefore, the following is designed to provide a general understanding of the federal income tax consequences (state, local and other tax consequences are not addressed below). This discussion is limited to the U.S. federal income tax consequences to individuals who are citizens or residents of the U.S., other than those individuals who are taxed on a residence basis in a foreign country. The U.S. federal income tax law is technical and complex and the discussion below represents only a general summary.
The following summary is included herein for general information only and does not purport to address all the tax considerations that may be relevant. Each recipient of a grant is urged to consult his or her own tax advisor as to the specific tax consequences to such recipient of the grant and the disposition of common stock.
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
Non-qualified Stock Options. In general, an optionee will recognize no taxable income upon the grant of a non-qualified stock option and the Company will not receive a deduction at the time of such grant. Upon exercise of a non-qualified stock option, an optionee generally will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price. Upon a subsequent sale of the common stock by the optionee, the optionee will recognize short-term or long-term capital gain or loss, depending upon his holding period for the common stock. Subject to the limitations of Section 162(m) of the Code and Section 280G of the Code (as described below), the Company will generally be allowed a deduction equal to the amount recognized by the optionee as ordinary income.
Incentive Stock Options. The grant or exercise of an ISO generally has no income tax consequences for the optionee or the Company. No taxable income results to the optionee upon the grant or exercise of an ISO. However, the amount by which the fair market value of the stock acquired pursuant to the exercise of an ISO exceeds the exercise price is an adjustment item and will be considered income for purposes of alternative minimum tax.
The aggregate fair market value of common stock (determined at the time of grant) with respect to which ISOs can be exercisable for the first time by an optionee during any calendar year cannot exceed $100,000. Any excess will be treated as a non-qualified stock option.
The sale of common stock received pursuant to the exercise of an option that satisfied all of the ISO requirements, as well as the holding period requirement described below, will result in a long-term capital gain or loss equal to the difference between the amount realized on the sale and the exercise price. To receive ISO treatment, an optionee must be an employee of the Company (or certain subsidiaries) at all times during the period beginning on the date of the grant of the ISO and ending on the day three months before the date of exercise, and the optionee must not dispose of the common stock purchased pursuant to the exercise of an option either (i) within two years from the date the ISO was granted, or (ii) within one year from the date of exercise of the ISO. Any gain or loss realized upon a subsequent disposition of the shares will be treated as a long-term capital gain or loss to the optionee (depending on the applicable holding period). The Company will not be entitled to a tax deduction upon such exercise of an ISO, or upon a subsequent disposition of the shares, unless such disposition occurs prior to the expiration of the holding period described above.
In general, if the optionee does not satisfy the foregoing holding periods, any gain (in an amount equal to the lesser of the fair market value of the common stock on the date of exercise (or, with respect to officers subject to Section 16(b) of the Exchange Act, the date that sale of such common stock would not create liability, referred to as Section 16(b) liability, under Section 16(b) of the Exchange Act) minus the exercise price, or the amount realized on the disposition minus the exercise price) will constitute ordinary income. In the event of such a disposition before the expiration of the holding periods described above, subject to the limitations under Code Sections 162(m) and 280G (as described below), the Company is generally entitled to a deduction at that time equal to the amount of ordinary income recognized by the optionee. Any gain in excess of the amount recognized by the optionee as ordinary income would be taxed to the optionee as short-term or long-term capital gain (depending on the applicable holding period).
Section 16(b). Any of our officers and directors subject to Section 16(b) of the Exchange Act may be subject to Section 16(b) liability with regard to both ISOs and non-qualified stock options as a result of special tax rules regarding the income tax consequences concerning their stock options.
Section 162(m) of the Code. Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in its taxable year to the extent that such compensation exceeds $1,000,000 and is not “performance-based compensation.” “Covered employees” are a company’s chief executive officer on the last day of the taxable year and the three other most highly paid executive officers (other than the chief financial officer) whose compensation is required to be reported to stockholders in its proxy statement under the Exchange Act. Compensation paid to covered employees as a result of the exercise of non-qualified stock options granted in accordance with the terms of the 2012 Plan are intended to be “performance-based compensation” enabling the Company to receive a deduction for the full amount of such compensation without regard to the $1,000,000 cap.
Parachute Payments. In the event that the payment of any award under the 2012 Plan is accelerated because of a change in ownership (as defined in Code Section 280G(b)(2)) and such payment of an award, either alone or together with any other payments made to the certain participants, constitutes parachute payments under Section 280G of the Code, then, subject to certain exceptions, a portion of such payments would be nondeductible to the Company and the participant would be subject to a 20% excise tax on such portion.
Section 409A of the Code. Section 409A provides that all amounts deferred under a nonqualified deferred compensation plan are includible in a participant’s gross income to the extent such amounts are not subject to a substantial risk of forfeiture, unless certain requirements are satisfied. If the requirements are not satisfied, in addition to current income inclusion, interest at the underpayment rate plus 1% will be imposed on the participant’s underpayments that would have occurred had the
PROPOSAL 5—RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE COMPANY’S 2012 INCENTIVE COMPENSATION PLAN
deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture. The amount required to be included in income is also subject to an additional 20% tax. While most awards under the 2012 Plan are anticipated to be exempt from the requirements of Section 409A, awards that are not exempt are intended to comply with Section 409A.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE VOTES CAST BY OUR SHAREHOLDERS IN PERSON OR REPRESENTED BY PROXY AND ENTITLED TO VOTE IS REQUIRED FOR RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE 2012 INCENTIVE COMPENSATION PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERSVOTE FOR THE RE-APPROVAL OF THE PERFORMANCE GOALS UNDER THE2012 INCENTIVE COMPENSATION PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of May 5, 201729, 2019 by (i) each person or group of affiliated persons known by us to beneficially own more than 5% of our common stock; (ii) our Named Executive Officers;NEOs; (iii) each of our directors and nominees for director; and (iv) all of our directors and executive officers as a group. Ownership data with respect to our institutional shareholders is based upon information publicly available as described in the footnotes below.
The following table gives effect to the shares of common stock issuable within 60 days of May 5, 201729, 2019 upon the exercise of all options and other rights beneficially owned by the indicated stockholders on that date. Beneficial ownership is determined in accordance with Rule13d-3 promulgated under Section 13 of the Exchange Act, and includes voting and investment power with respect to shares. Percentage of beneficial ownership is based on 144,118,966128,241,085 shares of our common stock outstanding at May 5, 2017.29, 2019. Except as otherwise noted below, each person or entity named in the following table has sole voting and investment power with respect to all shares of our common stock that he, she or it beneficially owns.
Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083.
Name | Position | Number of Shares of Common Stock Beneficially Owned and Percent of Class | Position |
Number of Shares of Common Stock Beneficially Owned and Percent of Class | ||||||||||||||||||
BlackRock, Inc. |
| 16,426,666 | (1) |
| 12.5 | % | ||||||||||||||||
The Vanguard Group | 13,695,310 | (1) | 9.5 | % |
| 14,909,473 | (2) |
| 11.4 | % | ||||||||||||
FMR LLC | 12,867,660 | (2) | 8.9 | % |
| 14,715,996 | (3) |
| 11.2 | % | ||||||||||||
BlackRock, Inc. | 12,334,965 | (3) | 8.6 | % | ||||||||||||||||||
State Street Corporation | 8,122,770 | (4) | 5.6 | % | ||||||||||||||||||
Brown Brothers Harriman & Co. | 7,328,004 | (5) | 5.1 | % | ||||||||||||||||||
Dimensional Fund Advisors LP |
| 11,259,473 | (4) |
| 8.6 | % | ||||||||||||||||
Contrarius Investment Management Limited |
| 9,207,291 | (5) |
| 7.0 | % | ||||||||||||||||
TIAA-CREF Investment Management, LLC |
| 7,047,876 | (6) |
| 5.4 | % | ||||||||||||||||
Warren Eisenberg | Co-Chairman and Director | 2,075,699 | (6) | 1.4 | % | Co-Chairman Emeritus andCo-Founder |
| 2,078,575 | (7) |
| 1.6 | % | ||||||||||
Leonard Feinstein | Co-Chairman and Director | 1,938,899 | (7) | 1.3 | % | Co-Chairman Emeritus andCo-Founder |
| 1,990,532 | (8) |
| 1.6 | % | ||||||||||
Steven H. Temares | Chief Executive Officer and Director | 2,154,973 | (8) | 1.5 | % | Former Chief Executive Officer and Director |
| 2,606,413 | (9)(10) |
| 2.0 | % | ||||||||||
Arthur Stark | President and Chief Merchandising Officer | 300,641 | (9) | * | Former President and Chief Merchandising Officer |
| 178,117 | (11) |
| * | ||||||||||||
Eugene A. Castagna | Chief Operating Officer | 287,856 | (10) | * | President & Chief Operating Officer |
| 362,376 | (12) |
| * | ||||||||||||
Susan E. Lattmann | Chief Financial Officer and Treasurer | 58,907 | (11) | * | Chief Administrative Officer |
| 171,970 | (13) |
| * | ||||||||||||
Robyn M. D’Elia | Chief Financial Officer & Treasurer |
| 15,543 | (14) |
| * | ||||||||||||||||
Matthew Fiorilli | Senior Vice President—Stores | 269,154 | (12) | * | Senior Vice President—Stores |
| 319,761 | (15) |
| * | ||||||||||||
Dean S. Adler | Director | 33,423 | (13) | * | ||||||||||||||||||
Stanley F. Barshay | Director | 25,984 | * | |||||||||||||||||||
Geraldine T. Elliott | Director | 4,884 | * | |||||||||||||||||||
Klaus Eppler | Director | 16,529 | * | |||||||||||||||||||
Stephanie Bell-Rose | Director |
| 4,086 |
| * | |||||||||||||||||
Harriett Edelman | Director |
| — |
| * | |||||||||||||||||
John E. Fleming | Director |
| 5,000 |
| * | |||||||||||||||||
Patrick R. Gaston | Director | 20,947 | * | Director |
| 33,290 |
| * | ||||||||||||||
Jordan Heller | Director | 18,441 | * | |||||||||||||||||||
Victoria A. Morrison | Director | 16,224 | * | |||||||||||||||||||
Virginia Ruesterholz | Director Nominee | 4,000 | * | |||||||||||||||||||
All Directors and Executive Officers as a Group (14 persons) | 7,222,561 | 5.0 | % | |||||||||||||||||||
Sue E. Gove | Director |
| — |
| * | |||||||||||||||||
Jeffrey A. Kirwan | Director |
| — |
| * | |||||||||||||||||
JB Osborne | Director |
| 4,086 |
| * | |||||||||||||||||
Harsha Ramalingam | Director |
| — |
| * | |||||||||||||||||
Virginia P. Ruesterholz | Director |
| 10,760 |
| * | |||||||||||||||||
Joshua E. Schechter | Director |
| — |
| * | |||||||||||||||||
Andrea Weiss | Director |
| — |
| * | |||||||||||||||||
Mary A. Winston | Interim Chief Executive Officer and Director |
| — |
| * | |||||||||||||||||
Ann Yerger | Director |
| — |
| * | |||||||||||||||||
All Directors and Executive Officers as a Group (17 persons) |
| 926,872 |
| 0.7 | % |
* Less than 1% of the outstanding common stock of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
* | Less than 1% of the outstanding common stock of the Company. |
(1) | Information regarding BlackRock, Inc. was obtained from a Schedule 13G filed with the SEC on January 24, 2019 by BlackRock, Inc. The Schedule 13G states that BlackRock, Inc. has sole voting power of 15,930,440 shares of common stock and sole dispositive power of 16,426,666 shares of common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(2) | Information regarding The Vanguard Group was obtained from a Schedule 13G filed with the SEC on |
(3) | Information regarding FMR LLC was obtained from a Schedule 13G filed with the SEC on February |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(4) | Information regarding |
(5) | Information regarding |
(6) | Information regarding TIAA-CREF Investment Management, LLC was obtained from a Schedule 13G filed with the SEC on February 14, 2019 by TIAA-CREF Investment Management, LLC. The Schedule 13G states that TIAA-CREF Investment Management, LLC has sole voting power of 7,047,876 shares of common stock and sole dispositive power of 7,047,876 shares of common stock. The address of TIAA-CREF Investment Management LLC is 730 Third Avenue, New York, NY, 10017. |
(7) | The shares shown as being owned by Mr. Eisenberg include: (a) |
(8) | The shares shown as being owned by Mr. Feinstein include: (a) |
(9) | The shares shown as being owned by Mr. Temares include: (a) |
(10) | On May 12, 2019, Mr. Temares stepped down as Chief Executive Officer and on May 13, 2019, resigned from the Board of Directors of the Company. |
(11) | The shares shown as being owned by Mr. Stark |
(12) | The shares shown as being owned by Mr. Castagna include: (a) |
(13) | The shares shown as being owned by Ms. Lattmann include: (a) |
(14) | The shares shown as being owned by Ms. D’Elia include: (a) 8,831 shares owned by Ms. D’Elia individually; and (b) 6,712 shares of restricted stock. |
(15) | The shares shown as being owned by Mr. Fiorilli include: (a) |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Section 16(a) Beneficial Ownership Reporting Compliance
The members of our Board of Directors, our executive officers and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires them to file reports with respect to their ownership of our common stock and their transactions in such common stock. Based solely upon a review of the copies of Section 16(a) reports that we have received from such persons or entities for transactions in our common stock and their common stock holdings for fiscal 2016,2018, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors and executive officers.
These proxy materials are delivered in connection with the solicitation by the Board of Directors of Bed Bath & Beyond Inc., a New York corporation, of proxies to be voted at our 2019 Annual Meeting of Shareholders and at any adjournment or adjournments.
This Proxy Statement, the proxy card and our 2018 Annual Report are being mailed starting on or about July 1, 2019.
The information regarding stock ownership and other matters in this Proxy Statement is as of the record date, May 29, 2019, unless otherwise indicated.
What may I vote on?
You may vote on the following proposals:
election of 13 directors to hold office until the Annual Meeting in 2020 (Proposal 1);
ratification of the appointment of KPMG LLP as independent auditors for the fiscal year ending February 29, 2020 (“fiscal 2019”) (Proposal 2); and
consider the approval, bynon-binding vote, of the 2018 compensation paid to the Company’s Named Executive Officers (commonly known as a“say-on-pay” proposal (Proposal 3).
THE BOARD RECOMMENDS THAT YOU VOTE:
FOR the election of the 13 directors;
FOR the ratification of the appointment of auditors; and
FOR thesay-on-pay proposal.
Who may vote?
Shareholders of record of the Company’s common stock at the close of business on May 29, 2019 are entitled to receive this notice and to vote their shares at the Annual Meeting. As of that date, there were 128,241,085 shares of common stock outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.
Who is entitled to attend the Annual Meeting?
All of our stockholders of record as of the close of business on the record date, or their duly appointed proxy holders, may attend the Annual Meeting. If you are not a stockholder of record but hold shares through a broker, bank or other nominee, you should provide proof of beneficial ownership as of the record date, such as an account statement reflecting your stock ownership as of the record date, or other similar evidence of ownership. If you do not have proof of ownership, you may not be admitted to our Annual Meeting. Each stockholder and proxy holder may be asked to present a valid government-issued photo identification, such as a driver’s license or passport, before being admitted. Cameras, recording devices and other electronic devices will not be permitted, and attendees may be subject to security inspections and other security precautions.
How do I vote?
The Company encourages you to use the electronic means available to you to vote your shares. How you vote will depend on how you hold your shares of Bed Bath & Beyond Inc. common stock.
OTHER MATTERS
Shareholder of Record
If your shares are registered directly in your name with Bed Bath & Beyond Inc.’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those shares, and these proxy materials are being sent directly to you. If you hold restricted stock under the 2012 Plan, you are also considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to vote by proxy through any of the below methods.
Vote by Internet www.fcrvote.com/bbby | Vote by Phone 1-866-307-6114 | Vote by Mail First Coast Results, Inc. | ||
Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person. However, for those who will not be voting at the Annual Meeting in person, your proxy must be received by no later than 11:59 p.m. Eastern Time on July 24, 2019.
Beneficial Owner
Most shareholders of Bed Bath & Beyond Inc. hold their shares through a stockbroker, bank or other nominee, rather than directly in their own name. If you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker on how to vote. Your broker or nominee has enclosed a voting instruction form for you to use in directing the broker or nominee on how to vote your shares. If you hold your shares through a New York Stock Exchange member brokerage firm, such member brokerage firm has the discretion to vote shares held on your behalf with respect to the appointment of the Company’s auditors, but not with respect to any other proposal, as more fully described under “What is a broker‘non-vote’?”.
Can I change my vote?
Yes. If you are the shareholder of record, you may revoke your proxy before it is exercised by doing any of the following:
sending a letter to the Company stating that your proxy is revoked;
signing a new proxy and sending it to the Company; or
attending the Annual Meeting and voting by ballot.
Beneficial owners should contact their broker or nominee for instructions on changing their vote.
How many votes must be present to hold the Annual Meeting?
A “quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the shareholders entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy. Abstentions and broker“non-votes” are counted as present and entitled to vote for purposes of determining a quorum but are not counted for purposes of determining any of the proposals to be voted on.
How many votes are needed to approve the proposals?
At the Annual Meeting, a “FOR” vote by a majority of votes cast is required to (i) elect each nominee for director (Proposal 1), (ii) ratify the selection of KPMG LLP as the Company’s independent auditors for fiscal 2019 (Proposal 2) and (iii) approve, bynon-binding vote, thesay-on-pay proposal (Proposal 3).
A “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of votes “AGAINST.” Abstentions and brokernon-votes shall not constitute votes “FOR” or votes “AGAINST.”
OTHER MATTERS
With respect to Proposal 1, the election of directors, if a nominee who is an incumbent director fails to receive a “FOR” vote by a majority of votes cast, then such nominee must immediately tender his or her resignation, and the Board will decide, through a process managed by the Nominating and Corporate Governance Committee (excluding from the process such nominee), whether to accept the resignation. In the event of such a situation, the Board intends to complete this process promptly after the Annual Meeting but no later than 90 days from the date of the certification of the election results. The Company will file a Form8-K to disclose its decision and an explanation of such decision.
What is an abstention?
An abstention is a properly signed proxy card which is marked “abstain.”
What is a broker“non-vote”?
A broker“non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under current applicable rules, Proposal 2 is a “discretionary” item upon which brokers that hold shares as nominee may vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the tenth day before the Annual Meeting.
However, brokers that hold shares as nominee may not vote on behalf of the beneficial owners on the following proposals unless you provide voting instructions: Proposal 1, the election of directors; and Proposal 3, thesay-on-pay proposal. Therefore, if your shares are held by such nominee, please instruct your broker regarding how to vote your shares on each of these proposals. This will ensure that your shares are counted with respect to each of these proposals.
What if I receive more than one proxy card and/or voting instruction card?
This means that you have multiple accounts holding shares of the Company. These may include: accounts with our transfer agent; shares held by the administrator of our employee stock purchase plan; and accounts with a broker, bank or other holder of record. In order to vote all of the shares held by you in multiple accounts, you will need to vote the shares held in each account separately. Please follow the voting instructions provided on each proxy card to ensure that all of your shares are voted.
Will any other matters be acted on at the Annual Meeting?
If any other matters are properly presented at the Annual Meeting or any adjournment, the persons named in the proxy will have discretion to vote on those matters. As of April 1, 2019, which is the date by which any proposal for consideration at the Annual Meeting submitted by a shareholder must have been received by the Company to be presented at the Annual Meeting, and as of the date of this Proxy Statement, the Company did not know of any other matters to be presented at the Annual Meeting.
Who pays for this proxy solicitation?
The Company will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person or by telephone or other means by directors or associates of the Company. The Company has engaged D.F. King & Co., Inc. (“D.F. King”), for a fee of approximately $20,000 plus expenses, to assist in the solicitation of proxies. The Company will also reimburse brokerage firms and other nominees, custodians and fiduciaries for costs incurred by them in mailing proxy materials to the beneficial owners of shares held of record by such persons.
Whom should I call with other questions?
If you have additional questions about this Proxy Statement or the Annual Meeting or would like additional copies of this document or our 2018 Annual Report on Form10-K, please contact: Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, NJ 07083, Attention: Investor Relations Dept., Telephone:(908) 613-5820. These documents are also available in the investor relations section of the Company’s website at www.bedbathandbeyond.com.
Certain Relationships and Related Transactions
The Company’s Audit Committee reviews and, if appropriate, approves transactions brought to the Committee’s attention in which the Company is a participant and the amount involved exceeds $120,000, and in which, in general, beneficial owners of more than 5% of the Company’s common stock, the Company’s directors, nominees for director, executive officers, and members of their respective immediate families, have a direct or indirect material interest. The Committee’s responsibility with respect to the review and approval of these transactions is set forth in the Audit Committee’s charter.
OTHER MATTERS
Martin Eisenberg, a son of Warren Eisenberg, the Company’sCo-Chairman Emeritus, is the Company’s Regional Vice President for the Northeast Region, with responsibilities in areas that include store operations, merchandising, store design and product sourcing. For fiscal 2016,2018, his salary was $544,572$556,991 and he received other benefits consistent with his position and tenure, including a restricted stock award valued at $150,000, and an automotive$37,500, cash awards valued at $112,500, a car allowance and employer 401(k) match aggregating approximately $12,200. He$9,375. In fiscal 2018, he received no increase in total compensationdividends of $3,261 that were paid on previously unvested stock awards that vested in fiscal 2017.2018. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent, the associated stock awards vest and the underlying shares are paid. He has been employed by the Company since 1977.
Ronald Eisenberg, a son of Warren Eisenberg, the Company’sCo-Chairman Emeritus, was the founder and owner of Chef Central, Inc., a retailer of kitchenware, cookware and homeware items catering to cooking and baking enthusiasts, and certain assets of which the Company acquired on January 27, 2017 (the “Acquisition”). The Acquisition was for a cash purchase price of $1,000,000, and incremental earnout payments potentially aggregating up to $1,250,000. The incremental earnout payments are dependent on the opening and continuing in operation, which opening and operation are at the Company’s discretion, of up to 50 free-standing stores (or specialty departments within the Company’s stores) operating under the Chef Central or other agreed upon branding. Following the Acquisition, he joined the Company as an employee to build Chef Central branded stores or departments. For fiscal 2016,2018, his salary for the portion of the fiscal year in which he was employed by the Company was $9,616. For fiscal 2017, his salary is $250,000 per year, he received a restricted stock award valued at $60,000,$254,808, and he will receivereceived other benefits consistent with his position and tenure.tenure, including a restricted stock award valued at $15,000 and cash awards valued at $45,000. In fiscal 2018, he received dividends of $174 that were paid on previously unvested stock awards that vested in fiscal 2018. These dividends were not factored into the grant date fair value of such stock awards under ASC 718. In addition, these dividends do not vest and are not paid until, and only then to the extent, the associated stock awards vest and the underlying shares are paid. In addition, in fiscal 2018, he received an earnout payment of $50,000 related to the Acquisition.
Mr. Eisenberg ceased to be an officer of the Company effective April 21, 2019.
Abrother-in-law of Arthur Stark, the Company’s Former President and Chief Merchandising Officer, earned in his capacity as a sales representative employed by Blue Ridge Home Fashions commissions (aggregatingaggregating approximately $233,000)$85,000 on sales of merchandise in fiscal 20162018 by Blue Ridge Home Fashions to the Company in the amount of approximately $23.3$8.5 million. Additionally, ason-in-law of Mr. Stark is a managing member and has a minority equity interest in Colordrift LLC which had aggregate sales of merchandise to the Company of approximately $2.1$4.3 million in fiscal 2016.2018. Colordrift LLC had apre-existing sales relationship with the Company at the time such managing member became Mr. Stark’sson-in-law, which was during the Company’s fiscal 2012 year. Mr. Stark departed from the Company effective as of May 17, 2018.
Resolution of Potential Contested Solicitation
On March 26, 2019, the Company received notice from Legion Partners Holdings, LLC (together with its affiliates, “Legion Partners”), Macellum Advisors GP, LLC (together with its affiliates, “Macellum”) and Ancora Advisors, LLC (together with its affiliates, and together with Legion Partners and Macellum, collectively the “Investor Group”) announcing its nomination of 16 candidates for election to the Board at the 2019 Annual Meeting.
On May 28, 2019, the Company entered into a cooperation and support agreement (the “Cooperation and Support Agreement”) with the Investor Group pursuant to which, among other things, the Company agreed to appoint the following four new independent directors: John E. Fleming; Sue E. Gove; Jeffrey A. Kirwan; and Joshua E. Schechter, and the Investor Group terminated its proxy contest against the Company for the 2019 Annual Meeting and withdrew its nominations.
The terms of the Cooperation and Support Agreement has been publicly filed as Exhibit 99.2 to the Company’s Current Report on Form8-K filed with the SEC on June 3, 2019. Under the Cooperation and Support Agreement, the Company agreed to reimburse the Investor Group for up to $1,050,000 of its reasonable, documented,out-of-pocket third-party expenses, including attorneys’ fees and expenses, as actually incurred by the Investor Group in connection with the 2019 Annual Meeting, the Investor Group’s involvement with the Company prior to the execution of the Cooperation and Support Agreement and the negotiation and execution of the Cooperation and Support Agreement.
The foregoing summary of the Cooperation and Support Agreement does not purport to be complete and is qualified in its entirety by reference to the Cooperation and Support Agreement.
OTHER MATTERS
Unless we have received contrary instructions, we are mailing one copy of the proxy materials (other than the proxy card) to record holders who have the same address and last name. Such record holders will continue to receive separate proxy cards. We refer to this practice as householding.
If you are a record holder who participates in householding and wish to receive separate copies of the proxy materials for the 20172019 Annual Meeting or future Annual Meetings, then please contact the Company’s Corporate Secretary of the Company by writing toat 650 Liberty Avenue, Union, New Jersey 07083, or calling908-613-5820. We will promptly deliver separate copies of the proxy materials for the 20172019 Annual Meeting upon receiving your request.
If you are a record holder who is eligible for householding and do not currently participate in the program but would like to, then please contact the Secretary of the Company at the address or phone number indicated above.
If you are a beneficial owner, then please contact your stockbroker, bank or other holder of record to receive one or separate copies of the proxy materials.
Proposals which shareholders intend to be eligible for inclusion in the Company’s proxy materials for the 20182020 Annual Meeting of Shareholders pursuant to the SEC’s proxy rules (i.e., Rule14a-8) must be received by the Company no later than January 31, 2018.
OTHER MATTERS
March 3, 2020.
Any shareholder intending to include a director nominee in the Company’s proxy materials for the 20182020 Annual Meeting of Shareholders pursuant to Article II, Section 11 of the Company’s Amended and Restated Bylaws (i.e. proxy access) should carefully review the requirements for using proxy access, as described in Section 11.such Section. The Company must receive a shareholder’s nomination, with all required information, between the close of business on January 1, 2018February 2, 2020 and the close of business on January 31, 2018.
March 3, 2020.
Under the Company’s Amended and Restated Bylaws, any proposal for consideration at the 20182020 Annual Meeting of Shareholders submitted by a shareholder other than pursuant to the two methods described above will be considered timely only if it is received by the Company between the close of business on March 1, 201827, 2020 and the close of business on April 2, 2018,26, 2020, and is otherwise in compliance with the requirements set forth in the Company’s Amended and RestatedBy-laws. If the date of the 20182020 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after the anniversary date of the 20172019 Annual Meeting of Shareholders, notice must be received notno earlier than the close of business on the 120th day prior to the 20182020 Annual Meeting of Shareholders and not later than the close of business on the 90th day prior to the 20182020 Annual Meeting of Shareholders, or if the first public announcement of the date of the 20182020 Annual Meeting of Shareholders is less than 100 days prior to the date of the 20182020 Annual Meeting of Shareholders, the 10th day following the date on which notice of the date of the meeting is given to shareholders or made public, whichever occurs first.
Any information required to be received by the Company, as described above, should be sent to the Company’s Corporate Secretary at 650 Liberty Avenue, Union, New Jersey 07083, Attn: Corporate Secretary.c/o General Counsel.
PROXY CARD YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting is available through 11:59 p.m., Eastern Time, on July 24, 2019. VOTE BY INTERNET WWW.FCRVOTE.COM/BBBY Use the Internet to transmit your voting instructions up until 11:59 p.m., Eastern Time, on July 24, 2019. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. OR VOTE BY TELEPHONE 1-866-307-6114 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Time, on July 24, 2019. Have your proxy card in hand when you call and then follow the instructions. OR VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided to: First Coast Results, Inc., P.O. Box 3672, Ponte Vedra Beach, FL 32004-9911. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. CONTROL NUMBER If submitting a proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing. BED BATH & BEYOND INC. PROXY CARD THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" PROPOSALS 2 AND 3. 1. To elect 13 directors until the Annual Meeting in 2020 and until their respective successors have been elected and qualified. For Against Abstain For Against Abstain 1a. Patrick R. Gaston 1h. Johnathan B. (JB) Osborne 1b. Mary A. Winston 1i. Harsha Ramalingam 1c. Stephanie Bell-Rose 1j. Virginia P. Ruesterholz 1d. Harriet Edelman 1k. Joshua E. Schechter 1e. John E. Fleming 1l. Andrea Weiss 1f. Sue E. Gove 1m. Ann Yerger 1g. Jeffrey A. Kirwan 2. To ratify the appointment of KPMG LLP as independent auditors for the 2019 fiscal year. 3. To approve, by non-binding vote, the 2018 compensation paid to the Company's Named Executive Officers (commonly known as a "say-on-pay" proposal). 4. To transact such other business as may properly be brought before the Annual Meeting or any adjournment or adjournments. For Against Abstain Signature (Capacity) Signature (If jointly held) Date Please sign exactly as your name(s) is (are) shown on the share certificate to which the Proxy applies. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGN, DATE AND MAIL YOUR PROXY TODAY, UNLESS YOU HAVE VOTED BY INTERNET OR TELEPHONE. IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, PLEASE DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY. YOUR VOTE MUST BE RECEIVED NO LATER THAN 11:59 P.M. EASTERN TIME, JULY 24, 2019, TO BE INCLUDED IN THE VOTING RESULTS. (CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE) If submitting a proxy by mail, please sign and date the card on reverse and fold and detach card at perforation before mailing. BED BATH & BEYOND INC. ANNUAL MEETING OF SHAREHOLDERS JULY 25, 2019, 9:00 A.M. PROXY CARD THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Patrick R. Gaston, Mary A. Winston and Allan Rauch, or either one of them, acting singly, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side hereof, all the shares of common stock of Bed Bath & Beyond Inc. held of record by the undersigned on May 29, 2019 at the Annual Meeting of Shareholders to be held on July 25, 2019 or any adjournment thereof. IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED HEREBY WILL BE VOTED, IF NOT OTHERWISE SPECIFIED, FOR THE ELECTION OF ALL NOMINEES, FOR PROPOSAL 2, AND FOR PROPOSAL 3. CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.