UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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☒ | Definitive Proxy Statement | |
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☐ | Soliciting Material under§240.14a-12 |
SALLY BEAUTY HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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3001 Colorado Boulevard, Denton, Texas 76210
Letter from our President and Chief Executive OfficerLETTER FROM OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER
To our stockholders,
Fiscal 2022 was a busy year for Sally Beauty Holdings, Inc. as we continued putting the infrastructure and core capabilities in place to take our business into the future. I want to thank our team for all that it accomplished and the strides we made towards becoming a more agile and focused organization, all while navigating inflationary pressures and supply chain headwinds to continue delivering for our customers. As a result of our solid performance, we were able to strengthen our balance sheet and return cash to our stockholders, repurchasing almost seven million shares in 2022.
Our New Key Strategic Initiatives
As we enter fiscal 2023, our historically strong cash flow generation and healthy balance sheet leave us well positioned to invest in new business models and services to drive growth and profitability. We will continue leveraging our core competencies and the modern infrastructure SBH has built in recent years, while focusing on three new key strategic initiatives to better position the Company for long term success:
Enhance our customer centricity, including an expanded services ecosystem that supports professional stylists, and increased education and expertise to inspire and support all customers;
Grow high margin owned brands at Sally Beauty and amplify innovation; and
Increase the efficiency of operations and optimize our capabilities.
In addition, we are focused on advancing our ESG and our diversity, inclusion and belonging commitments. Diversity, inclusivity, and self-expression fuel innovation and growth, and we are committed to doing what it takes to inspire a more colorful, confident, and welcoming world.
Annual Meeting Details
You are cordially invited to attend the annual meeting of stockholders of Sally Beauty Holdings, Inc., which will take place at the Sally Beauty Headquarters, 3001 Colorado Boulevard, Denton, Texas 76210SBH, to be held virtually on Thursday, January 30, 2020,26, 2023 at 9:00 a.m., localcentral time. Details of the business to be conducted at the annual meeting are given in the Official Notice of the Meeting, Proxy Statement, and form of proxy enclosed with this letter.
Even if you intend to join us in person, we We encourage you to vote in advance so that we will know that we have a quorum of stockholders for the meeting. Please see the Question and Answer section on page 67 of the enclosed Proxy Statement for instructions on how to obtain an admission ticket if you plan to personally attend the annual meeting.
Whether you are able to personally attend the annual meeting, itIt is important that your shares be represented and voted.voted whether you plan to attend the annual meeting. Your prompt vote over the Internet, by telephone via toll-free number or by mailing a written proxy will save us the expense and extra work of additional proxy solicitation. Voting by any of these methods at your earliest convenience will ensure your representation at the annual meeting if you choose not to attend in person. If you decide to attend the annual meeting, you will be able to vote in person, even if you have personally submitted your proxy. Please review the instructions on the proxy card or the information forwarded by your bank, broker, or other holder of record concerning each of these voting options.meeting.
On behalf of the Board of Directors,SBH team, I would like to express our appreciation for your continued interestinvestment in Sally Beauty Holdings, Inc.SBH.
Denise Paulonis Director, President and Chief Executive Officer December 14, 2022
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December 18, 2019
SALLY BEAUTY
HOLDINGS, INC.
3001 Colorado Boulevard, Denton, Texas 76210
LETTER FROM OUR BOARD CHAIR
Dear Fellow Stockholders,
In my time as Chair of Sally Beauty Holdings, Inc., it has been my privilege to write letters such as this one to you, our stockholders. As I prepare to retire from the Board and my role as Chair, I am confident the Company is well positioned to deliver sustainable growth and value creation.
SBH remains committed to the long-term interests of our stockholders and continues to value Boardroom diversity as integral to effective corporate governance, along with our core tenets of outstanding qualifications, experience and professional skills. Our Nominating, Governance and Corporate Responsibility Committee regularly engages in intentional and thoughtful Board refreshment to ensure we have the right mix of skills to meet the evolving needs of our business. The changes being made to our Board this year are reflective of these efforts.
I am pleased that the Board has elected Diana Ferguson to succeed me as Chair, effective at the conclusion of the year’s Annual Meeting. Diana has been a valued addition to our Board since joining in January 2019, and she has brought fresh insights from her extensive track record of success in corporate financial management, strategic planning and transaction execution.
In July 2022, the Board welcomed Rachel Bishop, President of Hefty Tableware at Reynolds Consumer Products, Jeffrey Boyer, Chief Operating Officer of Fossil Group, and Lawrence “Chip” Molloy, Chief Financial Officer of Sprouts Farmers Market, as new directors. These three highly respected executives enhance our expertise across retail operations, strategy and finance, and the Board has already benefitted from their experience.
Following the appointments, and in addition to my retirement, Marshall Eisenberg, John Miller and Edward Rabin will not be standing for re-election at the Annual Meeting. On behalf of the full Board, I want to express our sincere gratitude for their many contributions during their time as directors and thank them for their years of service to SBH.
I am proud of the SBH Board and management team and am confident in their ability to lead and steward the business successfully going forward. I believe that our management team has set the proper course for SBH with wise and appropriate strategic pillars – enhancing customer centricity, growing high margin owned brands with greater innovation, and increasing operational efficiencies. On behalf of the Board, thank you for your continued investment, support and confidence in SBH.
Sincerely,
Robert R. McMaster
Chair of the Board
December 14, 2022
Notice of Annual Meeting of Stockholders
SALLY BEAUTY
HOLDINGS, INC.
3001 Colorado Boulevard, Denton, Texas 76210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To our stockholders:
The annual meeting of stockholders of Sally Beauty Holdings, Inc. (the “Corporation”“Company”) will take place at the Sally Beauty Headquarters, 3001 Colorado Boulevard, Denton, Texas 76210be held virtually on Thursday, January 30, 2020,26, 2023, at 9:00 a.m., localcentral time, for the purpose of considering and acting upon the following:
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Only stockholders of record at the close of business on December 2, 2019November 28, 2022 will be entitled to receive notice of and to vote at the meeting.
meeting and any adjournment or postponement thereof.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders
to be held on January 30, 2020:
26, 2023:
The Proxy Statement and the 20192022 Annual Report to stockholders are available at:
www.edocumentview.com/sbh
By Order |
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December 18, 2019
IMPORTANT:
If you plan to attend the annual meeting you must have an admission ticket or other proof of share ownership as of the record date. Please see the Question and Answer section on Page 67Board of this Proxy Statement for instructions on how to attend the annual meeting. Please note that the doors to the annual meeting will open at 8:00 a.m. and will close promptly at 9:00 a.m.
Whether you expect to personally attend the meeting, weDirectors,
John Henrich
Corporate Secretary
December 14, 2022
IMPORTANT:
We urge you to vote your shares at your earliest convenience to ensure the presence of a quorum at the meeting. Promptly voting your shares via the Internet, by telephone via toll-free number or by signing, dating, and returning the enclosed proxy card will save us the expense and extra work of additional solicitation. The Internet voting and telephone voting facilities for stockholders of record will be available until 1:00 a.m., local time, on January 30, 2020. If your shares are held in street name by a bank, broker or other similar holder of record, your bank, broker or other similar holder of record is not permitted to vote on your behalf on Proposal 1 (election of directors) or Proposal 2 (approval of an advisory resolution regarding the compensation of the Corporation’sCompany’s named executive officers, including the Corporation’sCompany’s compensation practices and principles and their implementation) or Proposal 3 (how frequently should stockholders vote on executive compensation) unless you provide specific instructions by completing and returning a voting instruction form or following the voting instructions provided to you by your bank, broker or other similar holder of record. Enclosed is an addressed, postage-paid envelope for those voting by mail in the United States. Because your proxy is revocable at your option, submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so. Please refer to the voting instructions included on your proxy card or the voting instructions forwarded by your bank, broker, or other similar holder of record if you hold your shares in street name.
TABLE OF CONTENTS
4 20192022 PROXY STATEMENT SUMMARY
10 PROPOSAL 1 -– ELECTION OF DIRECTORS
15 BOARD NOMINEE QUALIFICATIONS AND EXPERIENCE
16 BOARD NOMINEE DIVERSITY
17 CORPORATE GOVERNANCE, THE BOARD AND ITS COMMITTEES 16
17 Board Purpose and Structure 16
17 Corporate Governance Philosophy 17
18 Board Diversity 18
19 Environmental, Social And Corporate ResponsibilityGovernance
19 ESG – Purpose and Values
19 ESG – Governance
19 ESG – Ethics Code
20 Human Capital
24 Diversity, Inclusion and Belonging
26 Philanthropy and Community Impact
27 Environmental Sustainability
28 Responsible Sourcing
29 Data Protection and Cybersecurity
30 Director Independence 20
30 Nomination of Directors 20
31 Stockholder Recommendations or Nominations for Director Candidates 21
31 Director Qualifications 21
31 Annual Election of Directors 21
32 Mandatory Retirement Age of Directors 21
32 Directors Who Change Their Present Job Responsibilities 22
32 Board Self Evaluations 22
32 Board Meetings and Attendance 22
32 Board Leadership Structure 22
SALLYBEAUTY HOLDINGS, INC. 2022 Proxy Statement
TABLE OF CONTENTS
33 Communications with the Board 23
33 Board’s Role in the Risk Management Process 23
33 Committees of the Board of Directors 25
36 Compensation Committee Interlocks and Insider Participation 25
36 Compensation Risk Assessment 26
36 Related Party Transactions 2 SALLYBEAUTY HOLDINGS, INC. 2019 Proxy Statement
TABLE OF CONTENTS 27
38 Directors’ Compensation and Benefits 28
38 Narrative Discussion of Director Compensation Table 29
40 Director Indemnification Agreements 29
40 No Material Proceedings 30
41 BENEFICIAL OWNERSHIP OF THE COMPANY’S STOCK 31
42 Securities Owned by Directors and Executive Officers 32
43 Persons Owning More than Five-percent 33of the Company’s Common Stock
44 PROPOSAL 2 -– ADVISORY VOTE ON EXECUTIVE COMPENSATION 34
45 PROPOSAL 3 – ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTES ON EXECUTIVE OFFICERS 36COMPENSATION
46 EXECUTIVE OFFICERS
48 EXECUTIVE COMPENSATION 36
48 Compensation Discussion and Analysis 54
72 Compensation and Talent Committee Report 55
73 Compensation Tables 62
85 CEO PAY RATIO 63
86 PROPOSAL 3 -4 – RATIFICATION OF SELECTION OF AUDITORS 64
87 Report of the Audit Committee 66
88 DEADLINES AND PROCEDURES FOR NOMINATIONS AND STOCKHOLDER PROPOSALS 67
89 QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING 70
93 OTHER MATTERS
A-1 APPENDIX 1 NON-GAAP FINANCIAL NUMBERS RECONCILIATION
www.sallybeautyholdings.com 3
2019
2022 PROXY STATEMENT SUMMARY
Proxies are being solicited by the Board of Directors of Sally Beauty Holdings, Inc. (NYSE: SBH) (“we,” “us,” or the “Corporation”“Company”) to be voted at our 20202023 Annual Meeting. This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Annual Meeting of Stockholders Time and Date
ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE
9:00 a.m., Central Time, January 30, 2020 Place Sally Beauty Headquarters, 3001 Colorado Boulevard, Denton, Texas 76210 Record Date December 2, 2019 Voting 26, 2023
PLACE
This year’s meeting will be a virtual annual meeting and will be held solely online via live webcast. You will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting meetnow.global/MRAZFNL and following the instructions on your Notice, proxy card, or on the instructions that accompanied your proxy materials. Please refer to the Q&A section beginning on page 89 for instructions on how to attend the virtual meeting.
RECORD DATE
November 28, 2022
VOTING
Stockholders as of the Record Date are entitled to notice of, and to vote at, the Annual Meeting.annual meeting. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on. Entry If you decide to attend the meeting in person, upon your arrival you will need to register as a visitor with the security desk on the first floor of the Sally Beauty Headquarters and you must have an admission ticket or other proof of share ownership as of the Record Date along with a government-issued identification card in order to attend the meeting.
On or about December 18, 2019,14, 2022, we will mail a Notice of Internet Availability of Proxy Materials to our stockholders of record as of the Record Date. The Notice contains instructions on how to access over the internet the Company’s Notice of Annual Meeting of Stockholders, Proxy Statement, form of proxy and Annual Report on Form 10-K for the fiscal year ended September 30, 2019 (FY19)2022 (FY22). Voting Matters Proposal Board Vote Recommendation Page Reference (for
VOTING MATTERS
PROPOSAL
BOARD VOTE
RECOMMENDATION
PAGE
REFERENCE
(for more detail)
Proposal 1: Elect twelvenine directors
FOR each Nominee
10
Proposal 2: Approve, on an advisory basis, compensation of our named executive officers (NEOs)
FOR 33
44
Proposal 3: Express view on how frequently advisory votes on compensation of our NEOs should occur
FOR
“1 Year”
45
Proposal 4: Ratify KPMG LLP as our independent registered public accounting firm for fiscal 2020 2023
FOR 63 4 SALLYBEAUTY
86
SALLY BEAUTY HOLDINGS, INC. 20192022 Proxy Statement
2019
2022 PROXY STATEMENT SUMMARY Director Nominees Twelve
DIRECTOR NOMINEES
Nine directors are standing for election at the 20202023 Annual Meeting for one-year terms. The following table provides summary information about each of the director nominees as well as their committee memberships. The table also discloses the Board’s determination as to the independence of each nominee under the listing standards of the New York Stock Exchange (“NYSE”) and relevant rules of the Securities and Exchange Commission (“SEC”). Additional information about each nominee’s background and experience can be found beginning on page 10. To be elected, each nominee must receive more votes cast “for” such nominee’s election than votes cast “against” such nominee’s election.
Name Age Director since Occupation Experience/Qualification IndependentIndep. AC CC EC MC NG/ CR Christian A. Brickman 55 September 2012EC
Denise Paulonis 50 May 2018 President & Chief Executive Officer,CEO, Sally Beauty Holdings, Inc. Management, InternationalFinance, Audit, Retail • Timothy
Rachel R. BaerBishop, Ph.D. 49 July 2022 President, Hefty Tableware, Reynolds Consumer Products Consumer Products, Retail, ESG, M&A ✓ • •
Jeffrey Boyer 64 July 2022 COO, Fossil Group Management, Audit, Retail ✓ • •
Diana S. Ferguson (Board Chair Elect) 59 FounderJan. 2019 Principal, Scarlett Investments LLC Management, Finance ✓ C • •
Dorlisa K. Flur 57 Jan. 2020 Snr. Advisor, Former Chief Strategy & ManagingTransformation Officer, Southeastern Grocers, Inc. Management, Mass Market Retail Transformation ✓ • • •
James M. Head 57 Jan. 2021 EVP and CFO, MultiPlan Corporation Finance, Strategy, M&A ✓ • CE
Linda Heasley 67 May 2017 President and CEO, Janie and Jack Management, Retail ✓ • •
Lawrence “Chip” P. Molloy 61 July 2022 CFO, Sprouts Farmers Market Management, Finance, Audit ✓ CE •
Erin Nealy Cox 52 July 2021; also Aug. 2016 to Nov. 2017 Partner, TRB Partners LLC; Former EVP, ChiefKirkland & Ellis Cyber Security, Governance, Legal Officer and Corporate Secretary, Target Corporation Legal, Governance, Management ✓ CE •
DIRECTORS NOT STANDING FOR RE-ELECTION
Name Age Director since Occupation Experience/Qualification Indep. AC CC NG/ CR EC
Marshall E. Eisenberg 7477 November 2006 Founding Partner, Neal Gerber & Eisenberg LLP Governance, Risk Management, Legal ✓ • • C Diana S. Ferguson 56 January 2019 Principal, Scarlett Investments LLC Management, Finance ✓ • Dorlisa K. Flur 54 Senior Advisor and Former Chief Strategy and Transformation Officer, Southeastern Grocers, Inc. Management, Mass Market Retail Transformation ✓ Linda Heasley 64 May 2017 Former Chief Executive Officer, J.Jill, Inc. Management, Retail ✓ • • •
Robert R. McMaster 71(Board Chair) 74 November 2006 Retired Executive and Independent Auditor Management, Finance, Audit ✓ C •
John A. Miller 6669 November 2006 President & Chief Executive Officer, North American CorporationCo-Chairman of Envoy Solutions Management, Finance ✓ • C P. Kelly Mooney 55 August 2018 Former Chief Experience Officer of IBM iX Management, Digital Marketing ✓ C • Susan R. Mulder 49 November 2014 Chief Executive Officer, Nic & Zoe Co. Management, Retail ✓ • • Denise Paulonis 47 May 2018 Executive Vice President and Chief Financial Officer, Michaels Companies Management, Finance ✓ •
Edward W. Rabin 7376 November 2006 Retired Executive Management ✓ C •
Committees:
AC = Audit CC = Compensation EC = Executive MC = Marketing& Talent NG/CR = Nominating, Governance and Corporate Responsibility EC = Executive
C = Chair of Committee IfCE = Chair Elect
Each director nominee elected the director nominees will serve until the 20212024 annual meeting. The Board recommends a vote FOR each director nominee. www.sallybeautyholdings.com 5
2019
2022 PROXY STATEMENT SUMMARY Board Nominees Snapshot Gender
BOARD NOMINEES SNAPSHOT
Diversity Board
Independence 50%
67%
Women
6 of 12 9
Director Nominees are Women 92% 11
1 of 12 9
Director Nominees is
racially/ethnically diverse
Independence
8 of 9
Director Nominees are
Independent
89%
Independent
Age Mix SBH Board Tenure 2
40S 50S
57 years
Median Age
1 5 2 3 40s 50s 60s 70s 580
60S 70S
Tenure
6
3
0
0-3 yrs 4-7 yrs 8+ yrs
2.4 years Median Age 6 2 4 0-4 yrs 5-10 yrs 11+ yrs 5.8 years
Average Tenure 6 SALLYBEAUTY
SALLY BEAUTY HOLDINGS, INC. 20192022 Proxy Statement
2019
2022 PROXY STATEMENT SUMMARY FY19 Performance SAME STORE
FY22 PERFORMANCE
COMPARABLE SALES GROWTH 2.9% -0.7% -1.5% 0.3% FY16 FY17 FY18 FY19 DILUTED EARNINGS PER SHARE $1.56 $2.08 $1.50 $2.26 ADJUSTED OPERATING INCOME (1)(2) ($ in Millions) $515 $501 $468 $458 FY16 FY17 FY18 FY19 3-YEAR AVERAGE ROIC (3)
OI
($ in Millions)
AOI (1)(2) 22.2% 21.3% 21.4%
($ in Millions)
DILUTED EPS ADJUSTED DILUTED EPS (2)
-0.3% -8.9%
9.6% 0.6%
FY19 FY20 FY21 FY22
21.5% FY16 FY17 FY18 19.1% 18.9% 16.2%
FY17-19 FY18-20 FY19-21 FY20-22
$459
$259
$418 $338
FY19 FY14-16 FY15-17 FY16-18 FY17-19 FY20 FY21 FY22
$458
$294
$461 $391
FY19 FY20 FY21 FY22
$2.26
$0.99
$2.10 $1.66
FY19 FY20 FY21 FY22
$2.26
$1.22
$2.40 $2.16
FY19 FY20 FY21 FY22
(1) Please see page 59 for Comparable Sales and Adjusted Operating Income (“AOI”) definition.
(2) Please see Appendix 1 for a reconciliation of non-GAAP numbers. (2) Please see page 45 for Adjusted Operating Income definition and page 47 for
(3) 3-Year Average ROIC definition. Return on Invested Capital (“ROIC”) is defined as net income plus after-tax interest expense divided by monthly invested capital over the three-year performance period.
Net Sales were $3.88 billion. Cash Flow from Operations$3.82 billion, a decrease of $320.4 million—used to fund investment in1.5% over the business, reduce our debt levels by $185prior year.
Global E-Commerce Sales were $333 million and fund the repurchaserepresented 8.7% of $46.6total net sales.
GAAP operating earnings of $338 million and GAAP operating margin of 8.8%, Adjusted Operating Earnings of $391 million and Adjusted Operating Margin of 10.3%.
Repurchased 6.8 million shares at an aggregate cost of $130.3 million and completed full repayment of $300 million of our shares. E-Commerce Sales Increased by 29.4% compared to the prior year. Gross Profit was $1.91 billion.8.75% senior secured notes. www.sallybeautyholdings.com 7
2019 PROXY STATEMENT SUMMARY FY19 Strategic Objectives and Accomplishments Refocusing our efforts around our differentiated core of hair color and hair care Continued to build our innovation pipeline with new exciting brands. SBS: Added new brands such as vivid color lines (Good Dye Young and Arctic Fox). BSG: Added the prestigious color and care brand, Pravana, and Swedish vegan brand, Maria Nila. Launched Box Color across Sally Beauty network. Invested in marketing focused on building awareness and education of these brands. Improving retail fundamentals with targeted investments in people, processes, technology and our stores Launched new Sally Beauty Rewards Loyalty Program, with over 15.9 million active members at the end of FY19. Installed newstate-of-the-art POS system in over 1,400 Sally Beauty and CosmoProf stores as of the end of FY19. Launched phase one of JDA, our new merchandising and supply chain platform. Optimized our supply chain footprint and transportation network to enhance speed and efficiency. Tested new store concepts for both Sally Beauty and BSG. Advancing our digital commerce capabilities Launched redesigned mobile-first Sally Beauty website. Launched new Sally Beauty app which allows consumers to access their Sally Beauty Rewards points and shop directly from the app. Enhanced CosmoProf app to remove friction from the buying experience for our pro customers. Continuing to drive costs out of the business and operate efficiently In FY19 we found efficiencies and savings in how we operate the business through negotiations with service providers, more streamlined operations and better sourcing. 8 SALLYBEAUTY HOLDINGS, INC. 2019 Proxy Statement
20192022 PROXY STATEMENT SUMMARY FY19 Corporate Governance Highlights
FY22 STRATEGIC OBJECTIVES AND ACCOMPLISHMENTS
Leverage Our Digital Platform | ✓ Create an Easy and Reliable Omni-Channel Platform for Do-It-Yourself (“DIY”) Enthusiasts and Stylists ✓ Optimize BSG’s Redesigned E-commerce Site and Fulfillment Options of Buy Online / Pick-up in Store (“BOPIS”) and 2-Hour Delivery ✓ Increase Adoption Rates of Sally’s Fulfillment Model: BOPIS, Ship From Store, and 2-Hour Delivery ✓ Scale and Optimize the Full Suite of Omni-channel Services to Drive E-commerce Penetration to 15% or More Over Time | |
Drive Loyalty and Personalization | ✓ Drive Customer Engagement and Sales ✓ Grow Loyalty Programs: Sally US/Canada Sales From Loyalty Members & BSG Sales From Rewards Credit Card (Fall 2020 Launch) ✓ Sally: Recommend Product Usage, Send Reminders to Replenish, and Incorporate DIY and Educational Content into the Customer Journey ✓ BSG: Showcase New Product Arrivals and Send Reminders to Restock Back Bars ✓ Drive Higher Customer Lifetime Value by Growing Transaction Spend and Increasing Purchasing Frequency | |
Deliver Product Innovation | ✓ Focus on Sustainable and Clean Products ✓ Expand our Owned Brand Penetration at Sally ✓ Launch New Products at BSG in Color and Care ✓ Expand Nail Category at Both Sally and BSG | |
Advance our Supply Chain | ✓ Create a Highly Automated, Integrated Best-In-Class Capabilities Across Inventory Forecasting, Assortment, Pricing/Promotions, & In-Stocks ✓ Execute Final Phase of JDA (Merchandising and Supply Chain Platform) Implementation ✓ Complete JDA Rollout to Remaining Sally Stores; BSG Stores Completed ✓ Fully Integrate JDA with Our North Texas Distribution Center | |
Progress on ESG | Our Environmental, Social and Governance (“ESG”) strategy focuses primarily on the areas where we believe we can have a meaningful impact: ✓ Employees – Safety, Health and Well-being ✓ Diversity, Inclusion and Belonging ✓ Philanthropy and Community Engagement ✓ Energy and Environment ✓ Product Development and Sourcing ✓ Data Protection and Cybersecurity | |
2022 Proxy Statement
2022 PROXY STATEMENT SUMMARY
FY22 CORPORATE GOVERNANCE HIGHLIGHTS
Continued thoughtful, orderly transition of Board adopted a revised charterleadership, thereby strengthening Board governance.
Appointed three new directors to the Board in July.
Appointed new Board Chair Elect (Ferguson).
Appointed new Committee Chair Elects of newly-renamed “Nominating,Audit (Molloy), Executive (Head) and Nominating, Governance and Corporate Responsibility” (NGCR) Committee. NGCR Committee given authority to oversee corporate responsibilityResponsibility (Nealy Cox).
Current Nominee slate will result in gender-diverse Board with 2/3 women, 1/3 men.
Continued integration of Company’s purpose and ESG-related matters.values across our ESG plans.
FY22 ESG HIGHLIGHTS The Board initiatedcontinued its focus on advancing company-wide ESG and sustainability materiality assessment of the Company. Company’s ESG-related efforts, which are focused on threefive main areas where we can have a material, meaningful impact:
1) Energy / Environment—we madeEmployees – focused on key areas relevant to our team, especially:
Safety, health and well-being
Input and feedback from team through surveys and other mechanisms
Engagement, retention, succession and talent development
2) Diversity, Inclusion, Belonging – diversity and inclusion are at the heart of SBH:
Continued multi-phase, year-round Diversity Inclusion and Belonging leadership training
Scored 95 on the Human Rights Campaign’s Corporate Equality Index
Launched Employee Resource Groups (ERGs) for Women, LGBTQ+, Black and Hispanic associates
3) Philanthropy and Community Impact:
Established disaster relief fund and raised over $31,000 to assist Company employees impacted by hurricanes in Florida and Puerto Rico during 2022
Raised over $8,000 for the National Breast Cancer Foundation
Built out infrastructure and governance of non-profit entity, SBH Inspires Foundation
4) Environmental Sustainability, Responsible Sourcing: Made progress towards reducing our environmental impact by reducing energy usage and increasing energy efficiency. We initiated
5) Data Privacy and CyberSecurity Oversight: Each quarter during FY22, our SBH Going Green Program, which we hope will eliminate plastic bags in our North American stores,Chief Information Security Officer delivered detailed reports to the Audit Committee on: risk identification and reduce wastemanagement strategies, cybersecurity strategy and increase recycling capabilities at our Sally Beauty Headquarters. 2) Product Developmentgovernance structure, consumer data protection, risk mitigation activities, learnings from data security incidents of peer companies, results of third-party assessments and Sourcing—we continue to make progress toward our long-term sustainability goals by using best practices in product developmenttesting, and sourcing. 3) Diversity and Inclusionupdates on employee training.
FY22 STOCKHOLDER OUTREACH – we continue efforts to show that diversity and inclusion are at the heart of our company: at the Board level, throughout our global workforce and in our shared commitment to serving a diverse customer base and their communities. FY19 Stockholder Outreach During FY19FY22, we engaged with investors and sell-side analysts by hosting numerous meetings, and investor calls and attending equity conferences and non-deal roadshows.virtual events. We believe that listening to investors is essential to good governance and to the long-term sustainability of our company. Our senior management is open and accessible. As such, we want to engage with and listen to our investors and sell-side analysts in order to have productive conversations in which we review our strategic objectives, operations and progress, and listen to their feedback. FY19 Executive Compensation Highlights
FY22 EXECUTIVE COMPENSATION HIGHLIGHTS – Highlights of our Named Executive Officer compensation program as– including NEO Changes and Compensation Program Changes for FY22 and FY23 – are described in the Compensation Discussion and AnalysisCD&A section beginning on page 40, include: Emphasis on performance-based compensation, with base salary being the only fixed component of direct compensation Annual long-term equity grants in the form of stock options, which provide value only to the extent our stock price increases after the date of grant Performance-based restricted stock units, which serve to reward long-term performance Time-based restricted stock units, which serve as a strong retention tool thereby aligning management with the long-term interests of our stockholders through the various equity grant vehicles Double-trigger severance benefits and no tax gross-ups Appropriate risk-management practices, including an annual review of our compensation-related risk profile, clawback and anti-hedging policies and stock ownership requirements 48.
www.sallybeautyholdings.com 9
PROPOSAL 1 -
ELECTION OF DIRECTORS
Our current Board of Directors consists of eleventhirteen individuals, tentwelve of whom qualify as independent of us under the rules of the NYSE. The BoardNine of Directors, acting pursuant to our By-laws, is proposing two new nominees (Timothy R. Baer & Dorlisa K. Flur), with David W. Gibbs notthirteen directors are standing for re-election. Our Certificate of Incorporation and our By-Laws provide for the annual election of each of our directors for one-year terms.
Following the recommendations of our Nominating, Governance and Corporate Responsibility Committee, our Board of Directors has nominated Mr. Brickman, Mr. Baer, Mr. Eisenberg, Ms. Ferguson, Ms. Flur, Ms. Heasley, Mr. McMaster, Mr. Miller, Ms. Mooney, Ms. Mulder, Ms. Paulonis and Mr. Rabinthe following nine individuals for election to our Board of Directors.Directors: Ms. Paulonis, Ms. Bishop, Mr. Boyer, Ms. Ferguson, Ms. Flur, Mr. Head, Ms. Heasley, Mr. Molloy and Ms. Nealy Cox. Accordingly, this Proposal 1 seeks the election of these twelvenine individuals to be directors, each with a one-year term that will expire at the annual meeting of stockholders in 2021. 2024.
Unless otherwise indicated, all proxies that authorize the proxy holders to vote for the election of directors will be voted “FOR” the election of the nominees listed below. If a nominee becomes unavailable for election as a result of unforeseen circumstances, it is the intention of the proxy holders to vote for the election of such substitute nominee, if any, as the Board of Directors may propose. As of the date of this Proxy Statement, each of the nominees has consented to serve and the Board is not aware of any circumstances that would cause a nominee to be unable to serve as a director. Except for Mr. Baer and Ms. Flur who are standing for election to our Board for the first time, each
Each director nominee is a current director with a term expiring at this annual meeting. Each director nominee has furnished to us the following information with respect to their principal occupation or employment and principal directorships: Christian A. Brickman
Denise Paulonis
Director, President and Chief Executive Officer, age 55 Mr. Brickman50
Ms. Paulonis has served on our Board of Directors since September 2012May 2018 and is the Corporation’sCompany’s President and Chief Executive Officer, a role heshe has held since February 2015.October 2021. Prior to being appointed to hisher current role, Mr. BrickmanMs. Paulonis served as Chief Financial Officer of Sprouts Farmers Market, Inc. Prior to joining Sprouts in February 2020, Ms. Paulonis was the Executive Vice President and Chief Financial Officer of The Michaels Companies, a position she held from August 2016 to January 2020. Ms. Paulonis joined Michaels in September 2014 and served as its Senior Vice President, Finance and Treasurer from November 2015 to August 2016 and as its Vice President, Corporate Finance, Investor Relations and Treasury from September 2014 to November 2015.
Prior to joining Michaels, Ms. Paulonis held various senior level positions with PepsiCo and McKinsey & Company, after starting her career at Procter & Gamble. She holds an M.B.A. from The Wharton School at the University of Pennsylvania and a Bachelors of Science in Finance and Economics from Miami University. Ms. Paulonis has served on the Conagra Brands Board of Directors since August 2022. We believe that Ms. Paulonis’ executive, management and finance experience well qualifies her to serve on our Board.
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
PROPOSAL 1
ELECTION OF DIRECTORS
Rachel R. Bishop, Ph.D.
Director, age 49
Ms. Bishop was elected to our Board of Directors in July 2022. Ms. Bishop brings more than 20 years of experience in consumer goods, manufacturing and retail. She currently serves as President, Hefty Tableware at Reynolds Consumer Products (NASDAQ: REYN), where she oversees a $1Bn portfolio of consumer products and leads Reynolds’ ESG programming. She was a member of the management team that led Reynolds through a successful IPO in January 2020. Prior to joining Reynolds in 2019, she held senior positions with Treehouse Foods, Inc., (NYSE: THS) from 2014 through 2018, including President, Snacks Division and SVP & Chief Strategy Officer. Her previous roles include GVP Retail Development and Global Merchandising at The Walgreen Co., now Walgreens Boots Alliance Inc., and started her business career with eight years at McKinsey & Company. Ms. Bishop holds a Ph.D. in Materials Science and Engineering from Northwestern University, and a Bachelor of Science in Materials Science and Engineering, and in Geophysics from Brown University. We believe that Ms. Bishop’s strong executive background in consumer products, retail, ESG, M&A and strategic planning well qualifies her to serve on our Board.
Jeffrey Boyer
Director, age 64
Mr. Boyer was elected to our Board of Directors in July 2022. Mr. Boyer is an experienced finance and operations executive and retail industry veteran. He currently serves as Chief Operating Officer of Fossil Group (NASDAQ: FOSL) after having held the Corporationrole of Chief Financial Officer and Treasurer from June 2014October 2017 to February 2015.April 2020. Mr. Boyer also served as a director on Fossil Group’s Board from 2007 to 2017, including serving as Chair and a member of its Audit Committee. Prior to joining Fossil Group, Mr. Boyer held Chief Financial Officer roles at Pier 1 Imports, Tuesday Morning, and Michaels Stores, Inc., among others. He began his career at PricewaterhouseCoopers. Mr. Boyer holds a Bachelor of Science in Finance from the Corporation, Mr. Brickman served as PresidentUniversity of Kimberly-Clark International from May 2012 to February 2014.Illinois. We believe that Mr. Brickman’sBoyer’s extensive finance and operations experience, and his executive and management experience, including his experience as President of two large international companies,leadership in retail, well qualifies him to serve on our Board. 10 SALLYBEAUTY HOLDINGS, INC. 2019 Proxy Statementwww.sallybeautyholdings.com 11
PROPOSAL 1 -
ELECTION OF DIRECTORS Timothy R. Baer Director Nominee, age 59 Mr. Baer founded and has been Managing Partner of TRB Partners LLC since 2017 and of TRB Law PPLC since 2019. In addition, Mr. Baer has served asCo-Chair of the PJT Camberview Advisory Council since 2017. From 2016 to 2017 Mr. Baer was Senior Advisor to Target Corporation and from 2004 to 2016 he was Target’s Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Baer has previously served as a board member for Greater MSP and Greater Twin Cities United Way. We believe that Mr. Baer’s legal and management experience well qualifies him to serve on our Board. Marshall E. Eisenberg Director, age 74 Mr. Eisenberg has served on our Board of Directors since November 2006. Mr. Eisenberg is a founding partner of the Chicago law firm of Neal, Gerber & Eisenberg LLP and has been a member of the firm’s Executive Committee for the past 30 years. Mr. Eisenberg is a director ofJel-Sert Company and was formerly a director of Ygomi, Inc. and Engineered Controls International, Inc. We believe that Mr. Eisenberg’s extensive legal experience, including his extensive corporate governance experience, well qualifies him to serve on our Board. Diana S. Ferguson
Director, age 56 59
Ms. Ferguson was elected to our Board of Directors in January 2019. She has served as a consultant to Cleveland Avenue, LLC, a venture capital investment firm, since September 2015, and in 2018 became its Chief Financial Officer. In addition, Ms. Ferguson has served as a principal of Scarlett Investments, LLC, a private investment firm, since 2013. She formerly served as Chief Financial Officer to Cleveland Avenue, LLC, a venture capital investment firm, from September 2015 to December 2020. She also served as Chief Financial Officer of the Chicago Board of Education from February 2010 to May 2011 and as Senior Vice President and Chief Financial Officer of The Folgers Coffee Company from April 2008 to November 2008 when Folgers was sold. Prior to joining Folgers, she was Executive Vice President and Chief Financial Officer of Merisant Worldwide, Inc. Ms. Ferguson also served as the Chief Financial Officer of Sara Lee Foodservice, a division of Sara Lee Corporation, and in a number of leadership positions at Sara Lee Corporation, including Senior Vice President of Strategy and Corporate Development, as well as Treasurer.
She currently is a director of Mattel, Inc., where she serves on the Audit Committee and is also a director of Gartner, Inc. where she serves on the Audit Committee. We believe that Ms. Ferguson’s executive, management and finance experience well qualifies her to serve on our Board. www.sallybeautyholdings.com 11
PROPOSAL 1 - ELECTION OF DIRECTORS
Dorlisa K. Flur
Director, Nominee, age 5457
Ms. Flur has served on our Board of Directors since 2020. Ms. Flur is a corporate director and strategic advisor to companies in the retail industry. She currently serves as a director of Hibbett, Inc., where she is a member of its Audit Committee and chairs its Nominating and Corporate Governance Committee. She also serves as a director of United States Cold Storage, a wholly-owned subsidiary of John Swire & Sons, Ltd., and chairs its Strategy Committee. Ms. Flur has served as senior advisor to Southeastern Grocers, Inc. since August 2018 and was previously its Chief Strategy and Transformation Officer from August 2016 to July 2018. Prior to that Ms. Flur previously served as Executive Vice President, OmnichanelOmnichannel for Belk, Inc. from February 2013 to January 2016, where she integrated stores and eCommerce and also led supply chain. ShePrior to that she was previously Vice Chair, Strategy and Chief Administrative Officer at Family Dollar Stores, Inc. where she held a series of top operationaloperating roles including real estate, marketing and merchandising as the company scaled from 5000 to 7500 stores.
Ms. Flur is a former partner of McKinsey & Company, Inc. where sheand co-led its Charlotte, North Carolina office. She currently servesis recognized by the National Association of Corporate Directors as a director of Hibbett Sports, Inc., where she is a member ofNACD Directorship Certified™ and has also completed its Audit Committee, and United States Cold Storage, a wholly-owned subsidiary of John Swire & Sons, Inc.climate governance cohort. We believe that Ms. Flur’s governance, executive and management experience, including extensive work driving transformations within mass market retail, well qualifies her to serve on our Board. Linda Heasley
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
PROPOSAL 1
ELECTION OF DIRECTORS
James M. Head
Director, age 64 57
Mr. Head was elected to our Board of Directors in January 2021. Mr. Head has served as the Executive Vice President and Chief Financial Officer of MultiPlan Corporation since November, 2021. Prior to being appointed to his current role he served as a Partner at BDT & Company, LLC from 2016 until June 2021 and, prior to that, worked at Morgan Stanley for 22 years where he held various executive leadership roles, including Co-Head of the Mergers, Acquisitions and Restructuring Group, Americas from 2013 to 2016; Co-Head of the Financial Institutions M&A Group, Americas from 2008 to 2013; and Managing Director from 2003 to 2016. We believe that Mr. Head’s financial, strategic, and transactional experience – including over 30 years as an investment banker involved in complex financial and strategic transactions – well qualifies him to serve on our Board.
Linda Heasley
Director, age 67
Ms. Heasley has served on our Board of Directors since May 20172017. Prior to her current role as President and Chief Executive Officer of Janie and Jack, a children’s brand, she was President and Chief Executive Officer of Downshift LLC providing advisory services to start ups from January 2020 to November 2021, and President and Chief Executive Officer of J.Jill Inc. from April 2018 untilto December 2019. Before joining J.Jill, Inc., Ms. Heasley served as the Chief Executive Officer and a Director of The Honey Baked Ham Company, LLC from February 2017 to March 2018. Ms. Heasley served as the President and Chief Executive Officer and President of Lane Bryant Inc. from February 2013 until February 2017 and as the Chairman,Chair, President and Chief Executive Officer. Officer at Limited Stores LLC from August 2007 until February 2013.
Prior to this, Ms. Heasley held senior leadership roles at CVS Health Corporation, Timberland, LLC, Bath and Body Works and L Brands,LBrands, Inc. She currently servesMs. Heasley previously served as a director atof J.Jill Inc. We believe that Ms. Heasley’s executive and management experience well qualifies her to serve on our Board. Robert R. McMaster www.sallybeautyholdings.com 13
PROPOSAL 1
ELECTION OF DIRECTORS
Lawrence “Chip” P. Molloy
Director, age 71 61
Mr. McMasterMolloy was elected to our Board of Directors in July 2022. Mr. Molloy brings finance, private equity and board experience to Sally Beauty. He currently serves as Chief Financial Officer of Sprouts Farmers Market (NASDAQ: SFM) having served as a director and Chair of the Audit and Compensation Committees of Sprouts’ board from 2012 to 2021 and Interim Chief Financial Officer of Sprouts from June 2019 to February 2020. Previously, Mr. Molloy served as a director and Chair of Torrid’s Audit Committee from 2018 to 2021 and Interim Chief Executive Officer of Torrid from January 2018 through August 2018. His previous roles include serving as Senior Advisor at Roark Capital Group, a private equity firm focused predominately on the restaurant and retail sectors, as well as holding Chief Financial Officer roles at Under Armour and Petsmart. Prior to his business career, Chip served as a U.S. Navy fighter pilot for 10 years, later retiring from the Naval Reserve with the rank of Commander. Mr. Molloy holds an MBA from the University of Virginia and a Bachelor of Science in Computer Science from the US Naval Academy. We believe that Mr. Molloy’s extensive executive and finance experience well qualifies him to serve on our Board.
Erin Nealy Cox
Director, age 52
Ms. Nealy Cox has served on our Board of Directors since November 2006July 2021 and asis a partner in the Chairman of our Board since February 2016. Mr. McMasterGovernment, Regulatory and Internal Investigations Group at Kirkland & Ellis. Ms. Nealy Cox is a trial attorney, cybersecurity expert and former federal prosecutor who served as our Lead Independent Director from November 2012 until he was named Chairman of the Board. Mr. McMaster has been aan independent director of Carpenter Technology Corporation, a NYSE listed manufacturer and distributor of specialty metals, since 2007, where he currently serves as a member of its audit and strategy committees. Mr. McMaster is also chairman of the audit committee of The Columbus Foundation, a charitable trust and nonprofit corporation. Mr. McMaster previously served as a director of American Eagle Outfitters, Inc. and Dominion Homes, Inc., and as an executive officer of ASP Westward, LLC, ASP Westward, L.P., Westward Communications Holdings, LLC and Westward Communications, L.P. Mr. McMaster is a former partner of KPMG LLP and a former member of its management committee. He also served as the Senior Financial Advisor to the CEO of Worthington Industries, Inc. from October 2008 to May 2013. We believe that Mr. McMaster’s long and varied business career, including his extensive accounting experience, well qualifies him to serve on our Board. 12 SALLYBEAUTY HOLDINGS, INC. 2019 Proxy Statement
PROPOSAL 1 - ELECTION OF DIRECTORS John A. Miller Director, age 66 Mr. Miller has served on our Board of Directors sincefrom August 2016 to November 2006. Mr. Miller is2017. She resigned from the PresidentBoard when she was nominated and Chief Executive Officer of North American Corporation, a multi-divisional company specializing in industrial paper products, packaging, printing and other commercial consumables. Mr. Miller has servedconfirmed as the PresidentU.S. Attorney for the Northern District of North American Corporation since 1987. Mr. Miller is also a director of Wirtz Corporation, where he is a member of its Audit and Compensation Committees and Breakthru Beverage, where he is a member of its Audit Committee. We believe that Mr. Miller’s long business career, including service as CEO of a large distribution company and his previous service on the board of our previous owner, well qualifies him to serve on our Board. P. Kelly Mooney Director, age 55Texas. Ms. Mooney hasNealy Cox served on our Board of Directors since August 2018. Ms. Mooney joined IBM iX in September 2017 and served as Chief Experience Officerthis role until May 2018. January 2021.
Prior to this, Ms. Mooney heldher appointment as the U.S. Attorney, she served briefly in 2017 as a variety of executive roles with Resource/Ammirati, a digital marketing firm, including Chief Executive Officer from January 2011 to September 2017, President from June 2001 to January 2011, and Chief Experience Officer and Director of Intelligence from March 1995 to May 2001. Ms. Mooney helped grow Resource/Ammirati to be one of the largest independent and largest female-owned digital consultancy agenciessenior advisor at McKinsey & Co. in the consulting firm’s cybersecurity and risk practice. From 2008 to 2016 Ms. Nealy Cox was executive managing director at Stroz Friedberg, a cybersecurity and investigations consulting firm. She began her career serving as an Assistant U.S. by attracting several Fortune 500 clients. During her tenure, she ledAttorney for ten years in the development and deliveryNorthern District of integrated marketing, digital experience, ecommerce, mobile and innovation consulting services and was also accountable for Human Resources, IT, Finance and Operations. In 2016, Resource/Ammirati was sold to IBM to become part of IBM iX, one of the world’s largest digital consultancy agencies. She currently serves as a director of J.Jill, Inc.Texas. We believe that Ms. Mooney’sNealy Cox’s executive management, cybersecurity and marketinglegal experience well qualifies her to serve on our Board. Susan R. Mulder Director, age 49 Ms. Mulder has served on our Board of Directors since November 2014 and is the Chief Executive Officer of Nic & Zoe Co., a privately-held woman’s apparel company, a role she has held since April 2012. Under her leadership, the brand has grown its wholesale footprint and introduced anE-Commerce platform and NIC+ZOE branded retail locations. Ms. Mulder is also a director of Nic & Zoe Co. Prior to joining Nic & Zoe Co., Ms. Mulder was a Senior Partner with McKinsey & Company where she was a leader in the retail and consumer practice for over 10 years specializing in marketing and organization. Ms. Mulder is also a member of the Board of Overseers of Boston Children’s Hospital. We believe that Ms. Mulder’s executive and retail and consumer experience well qualifies her to serve on our Board. www.sallybeautyholdings.com 13
PROPOSAL 1 - ELECTION OF DIRECTORS Denise Paulonis Director, age 47 Ms. Paulonis has served on our Board of Directors since May 2018 and is the Executive Vice President and Chief Financial Officer of The Michaels Companies, a position she has held since August 2016. Ms. Paulonis joined Michaels in September 2014 and served as its Senior Vice President, Finance and Treasurer from November 2015 to August 2016 and as its Vice President, Corporate Finance, Investor Relations and Treasury from September 2014 to November 2015. Prior to joining Michaels, Ms. Paulonis held various senior level positions with PEPSICO from August 2009 to September 2014, including Vice President, Financial Planning and Analysis, Frito Lay from August 2013 to September 2014, Vice President, Finance and Strategy, PepsiCo U.S. Sales from January 2011 to July 2013, and Vice President, Global Corporate Strategy from August 2009 to December 2010. We believe that Ms. Paulonis’ executive, management and finance experience well qualifies her to serve on our Board. Edward W. Rabin Director, age 73 Mr. Rabin has served on our Board of Directors since November 2006. Mr. Rabin was President of Hyatt Hotels Corporation until his retirement in 2006, having served in various senior management roles since joining the Corporation in 1969. Mr. Rabin was a director of PrivateBancorp, Inc., a NASDAQ listed bank holding company, from December 2003 until the bank was acquired in June 2017. Mr. Rabin served as lead director of WMS Industries Inc., a formerly NYSE listed company in the gaming industry, from July 2008 until that company was sold in October 2013 and as a member of its audit and compensation committees from December 2005 to October 2013. He also served as a director of SMG Corporation from 1992 through June 2007. We believe that Mr. Rabin’s executive and management experience, including his experience as president of a large hotel company, well qualifies him to serve on our Board. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE. 14 SALLYBEAUTY
SALLY BEAUTY HOLDINGS, INC. 20192022 Proxy Statement
Board Nominee Qualifications and Experience
SKILLS TABLE
The following table summarizes the key knowledge, skills and experience that qualifies each nominee for our Board of Directors. CEO/Senior Executive Experience Experience as CEO, COO, CFO, President or senior executive of company or partnership, or significant subsidiary, operating division or business unit. Public Board Governance Experience as director on board of publicly-traded company. Independence Satisfy the NYSE’s independence requirements. Financial Expertise Possess the knowledge and experience to be qualified as an “audit committee financial expert.” International Operations Executive-level experience working in organization with global operations. Marketing; Merchandising; Sales Experience in a senior management position responsible for managing a marketing, merchandising and/or sales function. Retail Operations Experience in a senior management position responsible for managing retail operations. Diversity Add perspective through diversity in gender, ethnic background or race. Legal or Consulting Background Brickman ✓ ✓ ✓ ✓ ✓ ✓ Baer ✓ ✓ ✓ ✓ ✓ ✓ Eisenberg ✓ ✓ ✓ ✓ ✓ Ferguson ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Flur ✓ ✓ ✓ ✓ ✓ ✓ ✓ Heasley ✓ ✓ ✓ ✓ ✓ ✓ McMaster ✓ ✓ ✓ ✓ ✓ Miller ✓ ✓ ✓ ✓ Mooney ✓ ✓ ✓ ✓ ✓ ✓ ✓ Mulder ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Paulonis ✓ ✓ ✓ ✓ ✓ ✓ ✓ Rabin ✓ ✓ ✓ ✓
CEO/Senior Executive Experience Experience as CEO, COO, President or senior executive of company or partnership, or significant subsidiary, operating division or business unit. | Public Board Governance Experience publicly- traded company. | Independence Satisfy the NYSE’s independence requirements. | Financial Expertise Possess the knowledge and experience to be qualified as an “audit committee financial expert.” | International Operations Executive- level experience working in organization with global operations. | Marketing; Merchandising; Sales Experience in a management position responsible for managing a marketing, merchandising and/or sales function. | Retail Operations Experience in a senior management position responsible for managing retail operations. | Legal or Consulting Background | Cybersecurity Experience, | ||||||||||
Paulonis | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Bishop | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Boyer | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Ferguson | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Flur | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Head | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Heasley | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Molloy | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Nealy Cox | ✓ | ✓ | ✓ | ✓ | ✓ |
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Gender Identity | ||||||||
| Female | Male | Non-Binary | Did Not Disclose Gender | ||||
Director Nominees (9) | 6 | 3 | — | — | ||||
Demographic Background | ||||||||
Asian, South Asian, Southeast Asian or East Asian | — | — | — | — | ||||
Native Hawaiian or Pacific islander | — | — | — | — | ||||
Middle Eastern | — | — | — | — | ||||
Black or African American | 1 | — | — | — | ||||
Hispanic or Latino | — | — | — | — | ||||
Native American or Alaskan Native | — | — | — | — | ||||
White | 5 | 3 | — | — | ||||
Multiracial or Biracial | — | — | — | — | ||||
LGBTQ+ | 1 | |||||||
Did Not Disclose Demographic Background | — |
2022 Proxy Statement
THE BOARD AND ITS COMMITTEES
Board Purpose and StructureBOARD PURPOSE AND STRUCTURE
The Board oversees, counsels, and directs management in the long-term interests of the CorporationCompany and our stockholders. The Board’s responsibilities include:
providing strategic guidance to our management;
overseeing the conduct of our business and the assessment of our business and other enterprise risks to evaluate whether the business is being properly managed;
selecting, evaluating the performance of, and determining the compensation of the CEO and other executive officers;
planning for succession with respect to the position of CEO and monitoring management’s succession planning for other executive officers; and
overseeing the processes for maintaining our integrity with regard to our financial statements and other public disclosures, and compliance with law and ethics.
Corporate Governance PhilosophyCORPORATE GOVERNANCE PHILOSOPHY
We are committed to conducting our business in a way that reflects best practices and high standards of legal and ethical conduct. To that end, our Board of Directors has approved and oversees a comprehensive system of corporate governance policies and programs. These documents meet or exceed the requirements established by the NYSE listing standards and by the SEC and are reviewed periodically and updated as necessary under the guidance of our Nominating, Governance and Corporate Responsibility Committee to reflect changes in regulatory requirements and evolving oversight practices.
Because our Board is committed to corporate governance best practices, we are committed to integrating responsible sustainability and corporate responsibility initiatives into our operations and strategic business objectives.
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Board DiversityBOARD DIVERSITY
We value boardroom diversity as integral to effective corporate governance. We believe that board diversity —– gender, race, age, insight, background, personality, and professional experience —– is a necessity that improves the quality of strategic decision-making and long-term vision, and represents the kind of company we aspire to be.
In the past fourfive years the Board has made meaningful efforts to diversify board membership, even further, increasing the percentage of women on our Board from 22 percent to 4246 percent.If the current slate of Director Nominees is elected, the Board will be comprised 66 percent of women. In addition, beginning this year we are disclosing the demographic background and gender identity of each director nominee. This enhanced diversity has strengthened board-level expertise in critical areas such as: consumer goods and global retailing; corporate financial management; strategic planning and transaction execution; data protection and cybersecurity; and integrated marketing, digital experience,e-commerce and mobile.
Our Board’s leadership by example on diversity These awards showcase
Under our Corporate Governance Guidelines, the Nominating, Governance and Corporate Responsibility Committee recommends to the Board criteria for selection of directors and reviews periodically with the Board the criteria adopted by the Board. Although the Guidelines do not contain a specific policy on diversity, the Board demonstrates — by its own diverse composition — its commitment to diversity and inclusion. |
Our Board recognizes that they play a crucial role in setting the tone for the Company’s workplace culture. The Board has encouraged leaders to hire exceptional employees with thethat bring diversity of thought that canallows us to better anticipate the needs and concerns of our various customers. By hiring people with diverse voices, listening to them, and responding accordingly, we believe that we are taking the necessary steps to maintain our long-term sustainability.
2022 Proxy Statement
Corporate Responsibility and ESG — Environmental, Social, GovernanceENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
COREThe Board and the Nominating, Governance and Corporate Responsibility Committee have oversight of the Company’s ESG VALUES REFLECTED IN OURplan. On a quarterly basis, this committee receives updates on management’s execution against ESG initiatives. On an annual basis, this committee advises on the long-term design of the Company’s ESG program. In 2020, the Compensation and Talent Committee was delegated oversight authority over the Company’s diversity and inclusion programs and goals. The charters for both Committees are available at http://investor.sallybeautyholdings.com. We have not incorporated by reference into this Proxy Statement the information included on or linked from our website, and you should not consider it to be part of this Proxy Statement.
Management of ESG-related projects is jointly led by our General Counsel, our CIO & Chief Transformation Officer and our Chief Human Resources Officer. Together they coordinate a cross-functional team of subject matter experts to drive progress towards ESG goals. Management reports quarterly to and engages with the Board and its Committees regarding progress against our ESG goals.
ESG – ETHICS CODE OF CONDUCT AND ETHICS:
Our Company’s core values regarding ESG and corporate responsibility are reflected in our Code of Business Conduct and Ethics (the “Code” (“Ethics Code”), which is the standard of conduct that applies to all of our employees, officers and directors. The Ethics Code reflects the Board’s beliefs about how we should conduct ourselves individually and as a company, and includes the following core valuesprinciples relating to corporate responsibility and ESG matters: conductingwe intend to operate our business as a good corporate citizen, in compliance with all laws, rules and regulations applicable to us and the conduct of our business; conducting operations with regard to the welfare of our employees and for the protection of the environmentenvironment; and the general public; and providingprovide equal opportunity to all employees and job applicants.employees.
TheOur Ethics Code is available on our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations. We intend to disclose on our website any substantive amendment to, or waiver from, a provision of the Ethics Code that applies to our principal executive officer, our principal financial officer, our principal accounting officer or persons performing similar functions. We have not incorporated
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Our ESG and sustainability strategy is informed by reference into this Proxy Statement the information includedSASB standards for specialty retailers and focuses primarily on or linked from our website, and you should not consider it to be part of this Proxy Statement.
STOCKHOLDER ENGAGEMENT:
Based on informal discussions with stockholders during the past year, the Board initiated a sustainability materiality assessment of the Company. As a result the Board determined that the Company’s ESG strategy should focus onfollowing five areas where we believe we can continue to have a material, meaningful impact, which include Energyimpact: Human Capital; Diversity, Inclusion and Environment; Product DevelopmentBelonging; Philanthropy and Community Impact; Environmental Sustainability and Responsible Sourcing; and DiversityData Protection and Inclusion.CyberSecurity.
Energy/Environment:HUMAN CAPITAL
OUR PEOPLE AND PURPOSE Our Company’s purpose is “To inspire a more colorful, confident, and welcoming world.” Our purpose represents the impact that we intend to have in the world. We continuebelieve that the most immediate impact our Company can have is how we support, engage with and value our employees. At SBH, we deeply appreciate and care for our associates and believe they are a material and essential part of our global operations and strategy.
OUR CULTURE AND VALUES Our Company values are the beating heart of our Company, and they embody how we intend to live up to and achieve our purpose. Our five core values form the bedrock of our culture, and are reflected in our greatest asset – our people. Very simply, our values underscore SBH’s commitment to building a diverse, inclusive company by helping each associate experience a genuine sense of belonging. They embody a culture where each associate can bring their full selves to work, and where everyone contributes to the conversation. Where each employee inspires their team and their customers with their passion and knowledge. Where employees are empowered to make progress toward reducingdecisions, to deliver for our environmental impact by reducing energy usagecustomers, and increasing energy efficiency. We have implemented a numberto take ownership of initiatives designed in part to reducetheir growth and development through education, training, and leadership opportunities. Where we take care of each other, our impact oncommunities, and the environment.planet.
In 2019, we rapidly consolidated our energy footprint, transitioning
TALENT OVERSIGHT/GOVERNANCE Our Board has made oversight of talent and culture a priority through its Compensation and Talent Committee, which oversees the Company’s human resource strategies and initiatives on compensation and benefits, diversity and inclusion, and associate engagement and well-being. The Compensation and Talent Committee regularly receives updates from two home office buildings into one,SBH senior management regarding diversity and closing four distribution centers.inclusion, talent development, retention and turnover, employee engagement and succession planning.
In 2019, we proactively replaced 400 of our most inefficient heating/air condition units in SBS and BSG stores with units having a higher SEER energy efficiency rating. 2022 Proxy Statement
Our key human capital management objectives are to retain, develop and recruit a diverse group of highly qualified and dynamic employees and leaders throughout the Company. At SBH, we intend that our talent oversight policies and programs will create an inclusive environment and empower everyone at SBH to contribute to and share responsibility for our Company’s success.
TALENT AND CAREER DEVELOPMENT SBH is committed to encouraging growth, well-being and career development of our associates through continuous learning opportunities online, independent development plans, and education financial assistance.
Our new distribution center in Texas has energy saving features that should result in substantial energy reduction, such as high-flow air rotation units, motion sensor LED lights andR-19 value insulation in the roof.
We installed centralized energy management systemsoffer employees a streamlined learning and development platform (“Thrive”), which is designed to onboard, upskill and communicate with our employees by connecting them with relevant content. Thrive helps our employees facilitate their role, career and personal growth.
We also have a variety of Leadership Development programs and trainings available to leaders (and potential leaders) at various levels throughout our field, supply chain and corporate teams.
We have a comprehensive Performance Management process, which includes opportunities for lightingemployees to receive feedback and heatingto design for themselves an Individual Development Plan, which is a tool designed to help each employee grow as an individual and as a professional, and strengthen leadership competencies and succession pipelines.
Through our Education Assistance Program we offer financial assistance either for professional certification programs or courses in 64 storespursuit of an associates, bachelor’s or graduate degree through an accredited institution.
We have designed and on average, realized 34% reductionlaunched various Academies within SBH to help support career growth and grow key job skills and competencies to ensure that we can train and retain talent in energy per store. Based on the successful pilot, we will be implementing the energy conservation program in 200 stores, targeting those with the historically highest energy usage.a competitive labor market.
This year, we launched “SBH Going Green”,COMMUNICATION AND ENGAGEMENT SBH’s senior leadership team strives to maintain consistent communication and an open-door policy with our company-wide effort to beassociates. We encourage dialogue and transparency on a better corporate citizen by reducing waste and conserving energy, thereby enhancing the sustainability of our planet and the communitiesregular basis. Ways in which we operate. This initiative includes:communicate with and hear back from our teams include:
• | Town Hall Meetings. These are held at least 4 times per year. Each Town Hall consists of business updates from our CEO and other senior leaders, followed by open-ended Q&A in an “Ask Me Anything” format. |
• | Live Streams and Virtual Meetings. Our leaders engage with our dispersed field and supply chain teams through both formal updates and more informal live sessions using tools such as WebEx, Zoom and Facebook Live. |
• | Summits.Our Sally and Beauty Systems Group teams have conducted summits with field leadership teams every fall for a number of years, usually at the beginning of our fiscal year. These summits include everything from leadership development to systems training to product knowledge showcases, and everything in between. More recently, we have had more cross-functional summits in our Corporate Support Center focused on marketing, social media, technology and E-Commerce. |
• | Associate Engagement Survey. We conduct an annual engagement survey open to all our associates in the U.S. and Canada. From this, we identify key themes, needs and actions to be taken across our different departments and groups. The survey is conducted anonymously by an independent third party and is structured to allow associates to voice any concerns, questions and expectations. Results of the survey (which are entirely anonymized) are pushed upwards through managers, allowing transparency to the views of both direct and indirect reports, as well as to other departments. Each department holds meetings to address and respond to questions or concerns and to set action plans/priorities for making improvements. |
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• | Engagement on Diversity Issues. We actively seek to engage with our employees on issues of diversity and inclusion. We want our employees to tell us how we are doing and where and how we can improve. We are committed to listening to our associates about their experiences and concerns in this important area, and to responding with empathy and action in a responsible, proactive way. Over the last few years, we have conducted substantive, thoughtful training of SBH leaders and teams, focusing on building empathy and understanding of issues such as prejudice, discrimination, privilege, social identity, unconscious bias and mental wellness. Over the past two years we provided a comprehensive set of e-learning training sessions and we also began a series of open dialogues between leaders and their teams about issues of Diversity, Inclusion and Belonging (DIB). We also began a DIB Ambassador Program with people from across SBH dedicated to learning more, and helping to facilitate and elevate our discussions across the Company. Both our company-wide Engagement Survey and dedicated DIB-focused Survey provide all associates a voice on issues of diversity, inclusion and belonging, with questions specifically focused on those issues. Our separate DIB-focused survey allows us to dive deeper into these matters while giving associates an opportunity to be heard. We then share the key findings from this survey and hold focused town halls with our teams to continue the dialogue on how we are doing, what our priorities should be. |
Based on what we heard from our team in our FY21 DIB Survey results, we launched the first of four Employee Resource Groups (ERGs) in FY22. Our initial ERGs are for Women, LGBTQ+, Black and Hispanic employees. Each ERG has an Executive sponsor, Lead and co-lead as well as a group of self-elected employees. The ERGs are engaging with employees throughout the organization, connecting with departmental leaders to share the voice of their ERGs to help shape business strategies, and seeking ways to connect within our communities.
2022 Proxy Statement
• | DIB/Inclusion Improvement: Our FY22 Engagement Survey showed meaningful improvement from FY21: |
removing plastic bags
HEALTH, SAFETY, WELL-BEING SBH places a high value on the health, safety and well-being of our associates and this is reflected in our values and culture. As a company we evidence this commitment in many ways, including: our continuing, agile and empathetic treatment of associates throughout the pandemic; our compensation and benefits package; and our provision of safe, healthy working conditions.
• | COVID-19 Update. In FY22 SBH has continued to prioritize the health, safety and well-being of our approximately 29,000 global associates who are the backbone of our global business. Over the course of FY22, we continued to adapt and respond to the various impacts of COVID-19 across our business. Our associates continued to show themselves to be resilient and creative, all with a great amount of grace and grit. The health and safety of our associates remains a priority. Such efforts included various safety protocols such as detailed cleaning protocols, personal protective equipment requirements, and visual cues regarding social distancing, mask-wearing, etc. At times of peak case counts or the emergence of the new variants, we instituted rolling, rapid testing for COVID-19 at a number of our distribution centers. We continued to maintain and update these protocols, monitor for compliance and make improvements and adjustments where needed throughout FY22. We have also managed through closures and capacity restrictions where required by local law, and sought to provide as much notice and support to our teams as reasonably possible. While the need for many of these COVID-related measures subsided later in FY22, we stand ready to respond quickly and effectively should the need arise. |
• | Compensation.Wage, Holiday, Leave Programs, Parental Leave: Our full-time employees receive vacation, sick time, 6 holidays and 3 floating holidays annually. SBH also provides medical leave for up to 6 weeks for all associates that do not otherwise qualify for leave under the U.S. Family and Medical Leave Act. In addition, we provide personal leave (up to 30 days) for employees who have been with SBH for at least 6 months with an average of 30 work hours per week. We recently added a paid parental leave program providing 6 weeks of fully paid leave for the birth, adoption or placement of a child. Bonuses and incentives: Our Annual Incentive Plan (AIP) provides annual incentive awards to participating associates based on company-wide sales and performance metrics established periodically by the Board. The AIP is designed to attract and retain key employees and motivate participants to achieve profitability and growth for our Company. We also provide a quarterly bonus program for field management teams – District Managers, Area Managers, Store Managers and Distribution Center Warehouse Managers and Supervisors. |
• | Benefits.Healthcare and pension: SBH offers medical coverage, pharmacy coverage, telehealth coverage for minor medical needs, and preventive in-network care is covered 100% on all plans. Three medical plans are offered and the Company makes monthly contributions to each plan. We offer access to health and well-beingresources through an employee assistance program and other resources. Beginning in 2022, many of these benefits – including fundamental medical benefits – were made available to our part-time associates. SBH also offers a 401(k) Retirement Savings Plan that gives employees an opportunity to save for retirement on a tax-advantaged basis, with company-funded match. Flexible working hours: we instituted a Flex Work Week Program at our Corporate Support Center and offer flexible scheduling in our distribution centers. Our stores |
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also do their best to accommodate scheduling needs as much as possible. In our Corporate Support Center, we have instituted hybrid work arrangements for most positions, and expanded remote work opportunities based on the type of work performed. We will monitor and continue to evolve how this works over time. |
• | Safe Working Conditions; Supplier Vendor Code of Conduct.We believe that every associate has the right to safe and humane working conditions and we require all our suppliers to understand and comply with our Supplier Code of Conduct. SBH values our partnerships with suppliers and vendors and understands the impact they can have on our associates. Thus, SBH has included rules governing their conduct, both with respect to expectations while interacting with our associates, and, with our foreign suppliers, assurances that they too are providing a safe and healthy working environment for their associates. Whistleblower Policy: We have an Employee Concern Line – operated by an independent company – which allows for complaints to be made securely and anonymously. To further strengthen the integrity and protections of this confidential reporting mechanism, complaints about any Vice President or above are reported to an independent ombudsperson. The Employee Concern Line is only one part of our broad-scope effort to provide employees with resources to safely deal with and report any harassment, discrimination, bullying, retaliation, etc. We have formalized these procedures in our Freedom from Discrimination and Harassment Policy and our SBH Cares Policy, each of which reflects our core values and is made available to all employees. Our Supplier Code of Conduct reflects our whistleblower policy; we require vendors and suppliers to provide their employees with whistleblower protection without fear of retaliation for calling attention to legal or ethical issues. Our commitment to the safety of our associates is also evidenced by our background check policy for new hires, training and policy communications related to handling both associate and customer incidents, partnerships to maintain the stores and make necessary repairs, as well as ongoing support in the field and at the Corporate Support Center. |
DIVERSITY, INCLUSION AND BELONGING
OUR VALUES At Sally Beauty CosmoProfwe celebrate differences, inclusivity and Armstrong McCall stores (will eliminate ~104 million plastic bags from landfills per year);
removing Styrofoam cups and lids fromself-expression. This fundamental aspect of SBH Corporate Headquarters (will eliminate ~280,000 pieces of Styrofoam from landfills per year); and
launching a cardboard recycling program at SBH Corporate Headquarters(~5-7 tons of cardboard per year).
Product Development and Sourcing: We continue to make progress toward our long-term sustainability goals by using best practices in product development and sourcing. All finished formulasis rooted in our owned-brand products are cruelty-free, i.e., not tested on animals. Most (90%)belief that beauty is for everyone and everyone should find their own path to beauty.
Our associates and our customers care about celebrating diversity and self-expression. We want our company and our stores to be places where all of our owned-brand productsassociates and customers feel valued for who they are, vegan and experience a sense of belonging. We want to lead on this issue – both internally with our people, and externally with customers and investors – and that is how we aimwant to have at least 95% ofbe viewed and perceived going forward. We believe we should take action when appropriate and stand up for the right things.
Diversity, Inclusion and Belonging are core to our owned-brand products be vegan in fiscal year 2020. Our Company strives to avoid product formulations that contain parabensbrand values and phthalates.
Diversity and Inclusion: Diversity and Inclusion are at the heart of ourwho we are as a Company —– atthe Board level, throughout ourglobal workforce, and in our shared commitment to serving adiverse customer base and their communities.
At the Board Level:OUR BOARDOur Board’s composition showsleads the Company’s commitment to diversityDiversity, Inclusion and inclusion. Board level diversity has enhanced our Company’s board-level expertise and broadened its viewpoint.Belonging. Having diverse voices on our Board enhances the Board’s expertise, broadens its viewpoint and sets the tone to encourage leaders at all levels of the Company to listen to the concerns of our workforceassociates and customers alike. ByOur Compensation and Talent Committee provides regular hands-on oversight of our Diversity, Inclusion and Belonging initiatives. Our Board believes that listening to theseand understanding diverse voices is crucial to the Company’s success and responding accordingly, we are continuously evolving as a socially responsible corporate citizen and are maintaining our long-term sustainability.
Our Board’s
2022 Proxy Statement
OUR WORKFORCE One of our core values is “Be We are committed to fostering a diverse and inclusive Our SBH team in the U.S. and Canada is over 90% women |
OUR CUSTOMERS We have an incredibly diverse customer base that we serve in almost every community in the US, and we have an obligation to be accepting and inclusive composition and practices are being noticed and championed by others, as noted on page 17.
In Our Workforce: Our Company is 92% Female and 48% racially/ethnically diverse. In 2019 Forbes named our Company one of America’s Best Employers for Diversity.
In 2019, the Company established aDiversity and Inclusion Committee to ensure all associates feel their views, cultures and beliefs are recognized, respected and includedthem and to provideserve them to our associates with internal advocacy and support. We recognize the value of diversity and inclusion within our teams to drive the success of the business, as our associates should — and do — reflect the various qualities of our customers and what they desire and expect from our Company.
We scored 75 out of 100 on theHuman Rights Campaign’s annual Corporate Equality Index (CEI), which measures and rates workplaces based on LGBTQ equality with respect to policies and benefits. The Company anticipates making additional adjustments during FY20 to improve our rating.
In Our Customer Base: Ourbest ability. SBH customers span the entire continuum of gender and ethnic diversity. We sell products to treat and style every kind of hair; we deliver a tailored assortment of beauty products that serve the local communities where our 4,150over 4,080 U.S. and Canadian stores are located. Serving the diverse demographics and needs of our customers drives a culture and workforce that embraces and reflects the communities we serve.
Some examples of customer-focused actions we have taken in the past few years include:
We established our DIB Operations Leadership Team, ensuring Diversity, Inclusion and Belonging have a “seat-at-the-table” for our strategic and operational decision-making with respect to customers, product assortment and vendor partners.
Our Beauty Systems Group segment launched its “MOVE Initiative,” which is focused on strengthening connections with textured hair-focused salons and stylists and the Black entrepreneurs that own those salons.
For the last two years, we have hosted our “World of Texture Summit” with 8,200 stylists attending virtually.
We have seen continued success with our accelerator program, Cultivate, which helps beauty entrepreneurs grow their business and has empowered female-owned beauty brands to bring their visions and business plans to life. Our most recent winners were Luxxi (founded by Jasmine Shamberger) – an innovative and modern press-on nail line – and Juices & Botanics (Whitney Eaddy, CEO), a luxury hair care line. More information is available at www.sallybeauty.com/cultivate.
April Holt, Group Vice President of Stores for Beauty Systems Group, was recently named “Corporate Ally of the Year” by Sadiaa Black Beauty Room & Awards! This award “recognizes an executive in the beauty, fashion and retail industries who has impacted beauty diversity, equity, and inclusion by providing groundbreaking education, resources, and marketing support. April was recognized “for the efforts she has led to bring more focus to textured hair and other relevant issues in the world of professional beauty.”
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MINORITY AND WOMEN-OWNED BRANDS SBH has a long history of partnering with women and minority-owned beauty brands, with SBH often providing their first major distribution point with a national or even international footprint. In the past two years 22 minority-owned brands have launched new products that SBH distributes. As of the end of FY22, our assortment includes:
57 Female Owned or Founded Brands
59 Black Owned or Founded Brands
17 Hispanic Owned or Founded Brands
14 Asian Owned or Founded Brands
3 LGBTQ+ Owned or Founded Brands
SBH intends to actively build off this legacy of success by maintaining and growing our assortment of minority and women owned or founded brands.
FY22 ACCOMPLISHMENTS In FY22, in addition to continuing many of the initiatives and programs already in place, we made progress on Diversity, Inclusion and Belonging in the following ways:
• | We continued our multi-phase, year-round DIB leadership training (partnering with an external expert: the NOVA Collective) focused on building an understanding of issues such as prejudice, discrimination, privilege, social identity, unconscious bias and mental and emotional well-being, which were followed by leaders having open dialogues with their teams about these important issues. |
We continued SBH’s Diversity, Inclusion and Belonging initiative, “One & All”. To help address issues of racial injustice, part of this initiative is designed to give our Black associates and their concerns a greater voice on issues of diversity, inclusion, and belonging and forums in which to be heard.
We established our first Employee Resource Groups (ERGs), which are associate-led groups organized around a common identity or passion. Our first four ERGs are Women, LGBTQ+, and Black and Hispanic associates. As we learn from our ERGs’ continuing work and interaction with the business, we plan to expand ERGs across resource groups, as well as geographically.
Launched our public-facing DIB website at www.sallybeautyholdings.com/our-company/diversity-inclusion-and-belonging to share our vision, progress, associate stories and initiatives.
Updated our Careers websites with focus on DIB, our Purpose & Values and ESG.
Launched our DIB initiatives and strategies within our global LATAM and Sally Europe business units, adapting plans to accommodate local differences.
The Company’s DIB leaders and ambassadors continue to help ensure that all associates feel their views, cultures and beliefs are recognized, respected and included, and to provide our associates with internal advocacy and real action.
In FY22, we improved our score to 95 out of 100 on the Human Rights Campaign’s annual Corporate Equality Index (CEI), which measures and rates workplaces based on LGBTQ+ equality with respect to policies and benefits.
We will continue to develop and evolve how we enhance Diversity, Inclusion & Belonging throughout SBH. We recognize the value these initiatives bring to our Company, our associates, our customers and the communities we serve.
PHILANTHROPY AND COMMUNITY IMPACT
OUR VALUES We are guided in our philanthropy and volunteering strategy by our purpose and core values. To us this means we place a high value on sharing our passion with, and taking care of, our community and the planet. We are committed to positively impacting the growth and well-being of our associates, customers and the communities in which we live and work by supporting causes that reflect the passion of our associates and customers. We want
2022 Proxy Statement
our associates and customers to realize the power of taking action – as an individual and as a team – and how much change we can drive in the world from small actions that we chose to take together.
OUR PEOPLE SBH encourages employees to be aware of and involved in charitable works in their community. Our primary mechanism for accomplishing this has been our long-standing partnership with the United Way of Denton County in Denton, Texas where our Corporate Support Center is located. Our company has two senior leaders who sit on the local United Way Board of Directors, and three of our associates from our Corporate Support Center are involved in the United Way’s leadership development program. Each year we organize a pledge drive for employees and allow payroll deductions to be applied to the United Way or to another 501(c)(3)-qualified charity of their choice. And we organize other fundraising events to raise awareness and funds for the United Way.
OUR FOUNDATION In FY22, we established SBH Inspires Foundation to implement our charitable initiatives and facilitate ESG-related goals consistent with the company’s purpose, values and long-term vision. In FY23, we will be working towards identifying core causes to support, and we expect that these will be rooted in our commitment to engage and inspire associates and customers and to contribute positively to the communities where our employees work and live. Going forward we plan to leverage the Foundation both to reflect and bring life to our purpose and values.
ACTIONS During FY22 and through fall 2022, we took the following steps to inspire our associates and customers, and to drive positive change through philanthropy:
Continued developing infrastructure and governance for our strategic non-profit organization, SBH Inspires Foundation.
Established disaster relief fund and raised over $31,000 to assist Company employees impacted by hurricanes in Florida and Puerto Rico during 2022.
Raised over $8,000 for the National Breast Cancer Foundation during Breast Cancer Awareness Month.
Director IndependenceENVIRONMENTAL SUSTAINABILITY
PURPOSE AND VALUES In FY22 we continued to build on the strong progress we have made to responsibly manage our environmental impact. This progress is consistent with our desire to inspire a more colorful, confident and welcoming world, and to ultimately be part of something bigger than ourselves. We believe we have a duty to take care of the communities in which we operate, and to take care of our planet. We will continue to focus on improving our long-term sustainability and reducing our environmental impact across our global footprint.
GOVERNANCEThe Board and the Nominating, Governance and Corporate Responsibility Committee have strategic oversight over ESG matters and initiatives. Management of ESG-related projects is jointly led by our General Counsel, our CIO & Chief Transformation Officer and our Chief Human Resources Officer. Together they coordinate a cross-functional team of subject matter experts to drive progress towards ESG goals. Management reports quarterly to and engages with the Board and its Committees regarding progress against our ESG goals.
ACCOMPLISHMENTS In FY22, we continued to evolve our focus on our global sustainability efforts. This year we partnered with Slalom, a global business and technology consulting company, who is a leader in partnering with companies to build out and advance their ESG framework. With the help of Slalom and our cross-functional ESG Working Group, Sally aligned to focus on two key areas: sustainable packaging and responsible supply chain. Within our two key focus areas, we will continue our journey with an explicit focus on energy management and sustainable packaging for our own brand products.
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Some of our Energy Management Accomplishments in FY22:
In North America, we are partnering with Engie a company that provides visibility to all gas and electric across our DC and store networks.
We reduced working hours in our Corporate Support Center and stores along with installation of LED lighting in all new, relocated and remodeled stores contributing to a reduction in energy usage companywide.
In North America, new and replacement exterior store signage is now universally LED lighted.
In our Corporate Support Center (Texas), we upgraded area lighting to motion sensors and upgraded all parking lot and exterior lighting with LED lights.
Since 2018, we have installed over 1000 new energy efficient HVAC units in stores (over 200 in FY22). All new equipment are equipped with economizers and analog thermostats have been replaced with set-back digital models.
In Europe, we installed solar panels on warehouses, LED lighting and smart meters in stores and changed our fleet policy to use only hybrid and electrical cars. And we are testing additional energy monitoring options for stores that would allow us to centrally monitor energy and light consumption.
In LATAM, we are focused on reducing energy usage by migrating to LED lighting and energy saving HVAC equipment. Since FY18, we have replaced incandescent bulbs in 59% (165) of our stores and we will replace the remainder in FY23. All new stores are fitted with LED lighting.
In North America, all new and relocation store projects since 2019, as well as any maintenance replacement requests, are fulfilled with low flow toilets and faucets. Low flow equipment has also been installed in the restrooms at our Corporate Support Center.
Over the past few years we converted our store delivery system to a more efficient pool distribution model, reducing truck miles required for store delivery. We are transitioning parts of the fleet to off-hours deliveries, thereby increasing more efficient night time driving.
Our store and distribution center optimization efforts during late 2021 and 2022 have reduced our overall footprint and impact – by over 400 stores and 2 distribution centers – while still allowing us to best serve our customers where, when and how they prefer to shop with us – whether that is in-person or online.
Going forward we will continue to align environmental and sustainable initiatives with our purpose, values and core business strategies to create a more sustainable company across our global footprint. In FY23 we are planning to:
Assess and better understand the data relating to our carbon footprint and to build out and refine our ESG strategy with a focus on sustainability; and
Identify sustainability opportunities and baseline measurements to inform our carbon neutrality commitments.
At SBH we believe that we are part of something bigger, and have a responsibility to take care of our community and our planet; we want to look outside our company and seek out ways to contribute positively in the world. We believe that one way we can achieve our purpose and reflect core values in our global operations is to accelerate sustainability in product development, packaging and sourcing, and we are committed to doing that. We continue to make progress toward our long-term sustainability goals.
Our Merchandising and Sourcing teams are regularly in contact with our vendors and suppliers about using more sustainable, cleaner and greener products and packaging. We seek to lock arms with vendors on the approach to sustainability issues and products. All finished formulas in our owned-brand products are cruelty-free, i.e., not tested on animals. In addition, our Company strives to avoid product formulations that contain parabens and phthalates.
In FY20, we launched Inspired By Nature, a line of hair color and care under our Ion brand, that utilizes strict sustainability guidelines as it relates to packaging: hair color is filled in 100% recycled aluminum tubes; hair color
2022 Proxy Statement
caps are made from PCR; unit cartons for all hair color are produced with materials that are sourced from sustainably-managed forests; and hair care packaging is fully recyclable.
In Europe, we adopted new policies around eco-friendly owned brands development, and have (1) consistently altered packaging to sustainable solutions, and (2) offered products with eco-friendly ingredients and eco-friendly certification. We have also issued a “Green Magazine” to share our initiatives with outside stakeholders.
In Europe, we launched WUNDERBAR, a fully re-shaped Care and Styling range that includes sustainable packaging (plastic from the ocean), eco-friendly ingredients and eco-friendly certification.
Our commitment to sustained responsible sourcing and ethical practices throughout our supply chain is also reflected in our Supplier Code of Conduct and Code of Business Conduct and Ethics.
Our Supplier Code of Conduct (Supplier Code) applies to our vendors’ and suppliers’ business activities, including work performed through subcontractors. The Supplier Code requires suppliers to comply with our standards regarding “Ethical Sourcing” (e.g., forced labor, child labor, human trafficking, conflict minerals, land rights), “Employment Practices” (e.g., fair treatment, non-discrimination, wages and benefits, and freedom of association), and “Health and Safety” (e.g., occupational safety, occupational injury and illness, sanitation and housing).
In addition, we expect all suppliers to comply fully with all laws and regulations applicable to their business. Under our Supplier Code we may conduct an investigation or audit to confirm compliance and in some cases may terminate a business relationship due to non-compliance.
Our commitment to responsible sourcing and ethical business practices is also reflected in our Code of Business Conduct and Ethics (Ethics Code), which applies to all SBH employees. The Ethics Code makes clear that we intend to operate “with regard to the welfare of SBH employees and for the protection of the environment and the general public.” Our Ethics Code requires employees to comply with our hazard communications program and to comply fully with all laws, rules and regulations affecting our business, including the national and local environmental and labor laws of our host nations and communities.
DATA PROTECTION AND CYBERSECURITY
Our Board of Directors understands the critical importance of managing evolving risks associated with cybersecurity threats. Our Company is committed to protecting the privacy and security of customer information and the integrity of our information technology systems.
The Audit Committee of the Board has primary responsibility for overseeing risks related to the cybersecurity threat landscape, including data protection and security breach readiness, although the full Board also exercises oversight over these risks. Our Chief Information Security Officer (CISO) reports directly to the Chair of the Audit Committee. We believe this accountability structure helps maintain the independence of the CISO while giving the Board direct and meaningful line-of-sight governance. The Audit Committee Chair regularly reports on cybersecurity discussions to the full Board.
On a quarterly basis, the CISO delivers a detailed report to the Audit Committee and/or the full Board on data protection and cybersecurity matters. The topics covered by these reports include risk identification and management strategies, cybersecurity strategy and governance structure, consumer data protection, the Company’s ongoing risk mitigation activities, learnings from data security incidents of peer companies, results of third-party assessments and testing, updates on annual associate training and other specific training initiatives.
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Numerous times per year, all employees receive simulated phishing attacks and are measured on how they interact with the attack and how quickly they report it. All employees participate in security awareness training throughout the year and specialized training is given to those within the Company that have elevated privileges.
In FY22 Erin Nealy Cox was re-elected by Shareholders as an independent director of the Company’s Board. In November 2022 the Board appointed Ms. Nealy Cox Chair Elect of the Nominating, Governance and Corporate Responsibility Committee. The addition of Ms. Nealy Cox strengthens the Board’s governance of cybersecurity matters and enhances overall Board-level subject-matter expertise and competency. Ms. Nealy Cox is a cybersecurity expert and former federal prosecutor with deep expertise in InfoSec issues and board governance. She is a partner at Kirkland & Ellis in their Government, Regulatory and Internal Investigations Group, and from 2003-2016 was executive managing director at Stroz Friedberg, a cybersecurity and investigation consulting firm, where she ultimately led the firm’s incident response business. In 2017 she served briefly as senior advisor to McKinsey & Co. in the firm’s cybersecurity and risk practice.
Our Board of Directors is currently comprised of tentwelve non-management directors and Mr. Brickman,Ms. Paulonis, who is our President and Chief Executive Officer. Under the Corporate Governance Guidelines, our directors are deemed independent if the Board has made an affirmative determination that such director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us) and such director also satisfies the other independence requirements of the NYSE. Our Board of Directors has affirmatively determined that all of our current directors other than Mr. Brickman, and both new nominees for directors (Mr. Baer and Ms. Flur),Paulonis satisfy the independence requirements of our Corporate Governance Guidelines, as well as the NYSE, relating to directors. As part of its annual evaluation of director independence, the Board examined (among other things) whether any transactions or relationships exist currently (or existed during the past three years), between each independent director and us, our subsidiaries, affiliates, or independent auditors and the nature of those relationships under the relevant NYSE and SEC standards. The Board also examined whether there are (or have been within the past year) any transactions or relationships between each independent director and members of the senior management of the CorporationCompany or its affiliates.
All of our directors who serve as members of the Audit Committee, Compensation and Talent Committee and Nominating, Governance and Corporate Responsibility Committee are independent as required by the NYSE corporate governance rules. In addition, all of our Audit Committee members also satisfy the separate SEC independence requirements applicable to audit committee members and all of our Compensation and Talent Committee members satisfy the additional NYSE independence requirements applicable to compensation committee members.
Nomination of DirectorsNOMINATION OF DIRECTORS
The Board of Directors is responsible for nominating directors for election by our stockholders and filling any vacancies on the Board of Directors that may occur. The Nominating, Governance and Corporate Responsibility Committee is responsible for identifying individuals it believes are qualified to become members of the Board of Directors. The Nominating, Governance and Corporate Responsibility Committee considers recommendations for director nominees from a wide variety of sources, including other members of the Board of Directors, management, stockholders and, if deemed appropriate, from professional search firms. The Nominating, Governance and Corporate Responsibility Committee will take into account the applicable requirements for directors under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the listing standards of the NYSE. In addition, the Nominating, Governance and Corporate Responsibility Committee will take into consideration such other factors and criteria as it deems appropriate in evaluating a candidate, including such candidate’s judgment, skill, integrity, and business and other experience and the perceived needs of the Board of Directors at that time. With regard to diversity, the Board of Directors and the Nominating, Governance and Corporate Responsibility Committee believe that sound governance of the CorporationCompany requires a wide range of viewpoints. As a result,
2022 Proxy Statement
although the Board of Directors does not have a formal policy regarding board diversity, the Board of Directors and Nominating, Governance and Corporate Responsibility Committee believe that the Board of Directors should be comprised of a well-balanced group of individuals with diverse backgrounds, educations, experiences and skills that contribute to board diversity, and the Nominating, Governance and Corporate Responsibility Committee considers such factors when reviewing potential director nominees.
Stockholder Recommendations or Nominations for Director CandidatesSTOCKHOLDER RECOMMENDATIONS OR
NOMINATIONS FOR DIRECTOR CANDIDATES
Our Corporate Governance Guidelines provide that our Nominating, Governance and Corporate Responsibility Committee will accept for consideration submissions from stockholders of recommendations for the nomination of directors. Acceptance of a recommendation for consideration does not imply that the Nominating, Governance and Corporate Responsibility Committee will nominate the recommended candidate. Director nominations by a stockholder or group of stockholders for consideration by our stockholders at our annual meeting of stockholders, or at a special meeting of our stockholders that includes on its agenda the election of one or more directors, may only be made pursuant to Section 1.06 or Section 1.07, as applicable, of ourBy-Laws or as otherwise provided by law. Nominations pursuant to ourBy-Laws are made by delivering to our Corporate Secretary, within the time frame
described in ourBy-Laws, all of the materials and information that ourBy-Laws require for director nominations by stockholders. All notices of intent to make a nomination for election as a director shall be accompanied by the written consent of each nominee to serve as a director.
Stockholders wishing to recommend or nominate a director must provide a written notice to our Corporate Secretary that includes, among other information required to be provided by ourBy-Laws, (a) the name, age, business address and residence address of the nominee(s), (b) the principal occupation or employment of the nominee(s), (c) such person’s written consent to serve as a director if elected, (d) the class or series and number of shares of Common Stock which are owned beneficially or of record by the nominee(s), (e) a description of all arrangements or understandings between the stockholder and the nominee(s) pursuant to which nominations are to be made by the stockholder, and (f) such other information as the CorporationCompany may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the CorporationCompany or whether such nominee would be independent under applicable Securities and Exchange Commission rules and regulations and New York Stock Exchange rules and the Corporation’sCompany’s publicly disclosed Corporate Governance Guidelines. No person shall be eligible to serve as a director of the CorporationCompany unless nominated in accordance with the procedures set forth in Section 1.06 or Section 1.07, as applicable, of ourBy-Laws; any nominee proposed by a stockholder not nominated in accordance with Section 1.06 or Section 1.07, as applicable, shall not be considered or acted upon for execution at such meeting. Stockholders’ notice for any proposals requested to be included in the Corporation’sCompany’s Proxy Statement pursuant toRule 14a-8 under the Exchange Act (including director nominations), must be made in accordance with that rule.
Director QualificationsDIRECTOR QUALIFICATIONS
In order to be recommended by the Nominating, Governance and Corporate Responsibility Committee, our Corporate Governance Guidelines require that each candidate for director must, at a minimum, have integrity, be committed to act in the best interest of all of our stockholders, and be able and willing to devote the required amount of time to our affairs, including attendance at Board of Director meetings. In addition, the candidate cannot jeopardize the independence of a majority of the Board of Directors. The candidate should preferably also have the following qualifications: business experience, demonstrated leadership skills, experience on other corporate boards and skill sets that add to the value of our business.
Annual Election of DirectorsANNUAL ELECTION OF DIRECTORS
In 2014, the Board of Directors began the process of declassifying the Board to provide for the annual election of all directors forone-year terms. Our stockholders approved the declassification of the Board at our 2014 annual meeting of stockholders. At the annual meeting each year, all directors of the Board will be elected forone-year terms.
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At the 20202023 annual meeting, our stockholders will elect twelvenine individuals to serve on our Board.
Mandatory Retirement Age of DirectorsMANDATORY RETIREMENT OF DIRECTORS
Pursuant to our Corporate Governance Guidelines, it is the policy of the Board that nonon-management director should serve for more than 15 years in that capacity, although the Board may request that a director who would otherwise be due to retire continue his or her service if (a) the policy would result in multiple retirements in any12-month period or (b) the Board deems such service to be in the best interest of our stockholders. The Board remains committed to intentional, responsible succession planning and to maintaining an appropriate balance of outstanding qualifications, experience, professional skills and tenure.
Directors Who Change Their Present Job ResponsibilitiesDIRECTORS WHO CHANGE THEIR PRESENT JOB RESPONSIBILITIES
Pursuant to our Corporate Governance Guidelines, a director who experiences a significant change in job responsibilities or assignment will be required to submit aan offer of resignation to the Board. The remaining directors, upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee, will then determine the appropriateness of continued Board membership.
Board Self EvaluationsBOARD SELF EVALUATIONS
The Nominating, Governance and Corporate Responsibility Committee oversees a self-evaluation of the Board each year to determine whether the Board is functioning effectively. In addition, each committee of the Board conducts a self-evaluation each year and reports its findings to the Board.
Board Meetings and AttendanceBOARD MEETINGS AND ATTENDANCE
Pursuant to our Corporate Governance Guidelines, our directors are expected to:
regularly attend meetings of the Board and the committees of which they are members (as well as each annual meeting of stockholders);
spend the time needed to properly discharge their responsibilities;
with respect to ournon-management directors, meet at regularly scheduled executive sessions in which management does not participate, which sessions are chaired by the ChairmanChair of the Board;
with respect to our independent directors, meet at least once a year in an executive session without management, which session is chaired by the ChairmanChair of the Board.
In FY19, ourFY22, all but three directors attended 100% of the meetings of the Board (during his or her time of service on the Board) and of the committees on which he or she served. Our Board of Directors met 7six times, our Audit Committee met 5six times, our Compensation and Talent Committee met 7five times, our Executive Committee met 6 times, our Marketing Committee met 4four times, and our Nominating, Governance and Corporate Responsibility Committee met 4five times. Our independent directors met in executive session 6four times. During FY19, each of our directors attended at least 75% percent of the total number of meetings of the Board (during his or her service on the Board) and each committee on which he or she served (during his or her service on such committee). In 2019, except for Ms. Mulder,2022, all members of the Board who were up for election orre-election attended the Corporation’sCompany’s annual meeting of stockholders.
Board Leadership StructureBOARD LEADERSHIP STRUCTURE
In accordance with ourBy-Laws, the Board elects our Chief Executive Officer and our Chairman,Chair, and each of these positions may be held by the same person or may be held by two persons. Under our Corporate Governance Guidelines, the Board does not have a policy, one way or the other, on whether the role of the ChairmanChair and Chief Executive Officer should be separate and, if it is to be separate, whether the ChairmanChair should be selected from thenon-management directors or be a management director. However, our Corporate Governance Guidelines require that, if the ChairmanChair of the Board is not an independent director, the independent directors shall appoint from among themselves a Lead Independent Director. The ChairmanChair of the Board is responsible for chairing Board meetings and meetings of stockholders, establishing the agendas for Board meetings along with the Lead Independent Director, if
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any, and providing information to the Board members in advance of meetings and between meetings. The Lead Independent Director, if any, is responsible for, among other things, coordinating the activities of the independent directors, coordinating with the ChairmanChair to set the agenda for Board meetings, chairing executive sessions of the independent (andnon-management) directors, reviewing and approving meeting schedules and information sent to the Board and liaising with the ChairmanChair and the Chief Executive Officer and the other independent directors.
Mr. BrickmanMs. Paulonis serves as our Chief Executive Officer and Mr. McMaster serves as our ChairmanChair of the Board. Ms. Ferguson serves as the Board’s Chair Elect. Our Board has determined that this leadership structure is appropriate at this time. In particular, our Board believes that this structure streamlines decision making and enhances accountability. Furthermore, our Board believes that the presence of an independent ChairmanChair of the Board and a majority of independent directors provides effective oversight of management.
Communications with the BoardCOMMUNICATIONS WITH THE BOARD
Stockholders and other interested parties may contact any member (or all members) of our Board (including thenon-management directors as a group, the ChairmanChair of the Board, any Board committee or any chair of any such committee) by addressing written correspondence to the attention of our Corporate Secretary at 3001 Colorado Boulevard, Denton, Texas 76210.76210. Our Corporate Secretary’s office will open all communications received for the
sole purpose of determining whether the contents represent a message to our directors. Any contents that legitimately relate to our business and operations and that are not in the nature of advertising, promotions of a product or service, patently offensive material, charitable requests, repetitive materials, or designed to promote a political or similar agenda will be forwarded promptly to the addressee.
Board’s Role in the Risk Management ProcessBOARD’S ROLE IN THE RISK MANAGEMENT PROCESS
The Board’s role in the risk management process is to understand and oversee the Corporation’sCompany’s strategic plans, the associated risks and the steps that senior management is taking to manage and mitigate those risks. To ensure proper oversight of the risk management process, the Audit Committee outlines our risk principles and management framework and sets high level strategy and risk tolerances. Our risk profile is managed by our Director of Internal Audit, reporting to the ChairmanChair of the Audit Committee. The Director of Internal Audit meets at least quarterly in executive session with the Audit Committee, and conducts an annual Enterprise Risk Assessment for the Corporation.Company. This assessment is then presented to the Audit Committee (for development of action items and responsible parties for oversight), and shared with the full Board (for information) and the Nominating, Governance and Corporate Responsibility Committee (to ensure appropriate Board oversight of the identified risks). This approach is designed to enable the Board and management to establish a mutual understanding of the Corporation’sCompany’s risk management practices and capabilities, to review the Corporation’sCompany’s risk exposure and to elevate certain key risks for discussion at the Board level. The Board also meets regularly in executive session without management to discuss a variety of topics, including risk management. Through this system of checks and balances, the Board is able to monitor our risk profile and risk management activities on an ongoing basis. Certain officers who report to the Chief Financial Officer also monitor various financial risks which add to the Corporation’sCompany’s overall risk management strategy.
Committees of the Board of DirectorsCOMMITTEES OF THE BOARD OF DIRECTORS
Pursuant to ourBy-Laws, our Board of Directors has established the following committees:
Executive Committee;
Audit Committee;
Compensation and Talent Committee;
Nominating, Governance and Corporate Responsibility Committee; and
Marketing Committee.
The function of each committee is described below. Each committee, pursuant to its charter adopted by the Board of Directors, consists of at least three members.members and is led by a Chair.
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Executive Committee. The Executive Committee consists of Messrs.Mr. Miller (chair)(Chair), Brickman, EisenbergMr. Head (Chair Elect), Ms. Ferguson, Mr. McMaster, Mr. Molloy, Ms. Nealy Cox and McMaster.Ms. Paulonis. The purpose of the Executive Committee is to assist our Board of Directors with its responsibilities and, except as may be limited by law, our Certificate of Incorporation or ourBy-Laws, to exercise the powers and authority of our Board of Directors when it is not in session. The Executive Committee is governed by the Executive Committee charter. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.
Audit Committee. The Audit Committee currently consists of Mr. McMaster (chair)(Chair), Mr. Eisenberg,Molloy (Chair Elect), Mr. Boyer, Ms. Ferguson,Flur, Mr. Gibbs,Head and Mr. Miller, and Ms. Paulonis.Miller. The Board has determined that each member of the Audit Committee is financially literate, that each member of the Audit Committee meets the independence requirements of the NYSE andRule 10A-3 of the Exchange Act and that each of Mr. Eisenberg, Mr. Gibbs, Mr. McMaster, Mr. Miller,Molloy, Mr. Boyer, Ms. Flur, Mr. Head and Ms. PaulonisMr. Miller qualifies as an “audit committee financial expert” under SEC rules.
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities for:
the quality and integrity of our financial statements, including oversight responsibility for management’s design and implementation, and the effectiveness of, internal controls;
the independent auditor’s qualifications and independence;
the performance of our internal audit function and independent auditors;
our compliance with legal and regulatory requirements;
our information technology function;
preparation of the report of the Audit Committee required for our annual proxy statements; and
our financing strategy, financial policies and financial condition
The Audit Committee is governed by the Audit Committee charter. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.
Compensation Committee.and Talent Committee. The Compensation and Talent Committee consists of Ms. Ferguson (Chair), Ms. Bishop, Mr. Rabin (chair),Boyer, Ms. Flur, Ms. Heasley and Ms. Mulder.Mr. Rabin. The Board has determined that each such member meets the independence requirements of the NYSE, as well as the“Non-Employee Director” requirements underRule 16b-3 of the Exchange Act and the “outside director” requirements under Section 162(m) of the Internal Revenue Code. The purpose of the Compensation and Talent Committee is to, among other things:
discharges the Board’s responsibilities relating to oversight of the Company’s compensation and talent programs and policies;
establish our general compensation philosophy and objectives, in consultation with senior management, oversee and assess the development and implementation of compensation programs;programs, policies and practices;
review and approve corporate goals and objectives relevant to Chief Executive Officer compensation and evaluate the Chief Executive Officer’s performance in light of those goals and objectives;
determine and approve the Chief Executive Officer’s compensation level (and forms thereof) based on this evaluation;
review and approve the compensation (and forms thereof) of the other executive officers and our Board of Directors;non-employee, independent directors;
review and recommend to the Board of Directors equity-based incentiveapprove all compensation plans in which senior management will participate;for all other executive officers;
consider the results of the most recent advisory vote on executive compensation in evaluating or making recommendations regarding executive compensation; and
prepare the reports and analysis on executive compensation, which are required to be included in our annual proxy statements.statements;
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establish the Company’s talent philosophy and objectives and, in consultation with management, oversee the development and implementation of talent programs, policies and practices; and
establish the Company’s diversity and inclusion philosophy and objectives, and, in consultation with management, oversee the development and implementation of diversity and inclusion programs, policies and practices.
The Compensation and Talent Committee’s processes for fulfilling its responsibilities and duties with respect to executive compensation and the role of our executive officers and management in the compensation process are each described under “Compensation Discussion and Analysis —– Compensation Decision-Making Process” of this Proxy Statement.
The Compensation and Talent Committee is governed by the Compensation and Talent Committee charter.charter, which was amended in 2020 to reflect the Committee’s new name and its additional oversight over talent, diversity and inclusion policies and initiatives. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations. Pursuant to its charter, the Compensation and Talent Committee may create one or more subcommittees and may delegate, in its discretion, all or a portion of its duties and responsibilities to such subcommittees.
Pursuant to its charter, the Compensation and Talent Committee may retain such compensation consultants, outside counsel and other advisors as it may deem appropriate in its sole discretion and it has the sole authority to approve related fees and other retention terms. As described in greater detail in “Compensation Discussion and Analysis —– Compensation Decision-Making Process” of this Proxy Statement, the Compensation and Talent Committee engages an independent executive compensation consultant, Frederic W. Cook & Co., Inc., or FW Cook, to assist it in its review of our management compensation levels and programs to ensure that our executive compensation program is commensurate with those of public companies similar in size and scope to us. During its engagement, FW Cook has participated in meetings of the Compensation and Talent Committee and advised it with respect to compensation trends and practices, plan design and the reasonableness of individual awards. FW Cook has not performed any services for our management.
Nominating, Governance and Corporate Responsibility Committee. The Nominating, Governance and Corporate Responsibility Committee consists of Mr. Eisenberg (chair)(Chair), Ms. Heasley,Nealy Cox (Chair Elect), Ms. MooneyBishop, Ms. Ferguson, Ms. Flur and Ms. Mulder.Heasley. The Board has determined that each such member meets the independence requirements of the NYSE. The purpose of the Nominating, Governance and Corporate Responsibility Committee is to, among other things:
identify individuals qualified and suitable to become members of our Board of Directors and to recommend to our Board of Directors the director nominees for each annual meeting of stockholders;
consider any director candidates recommended by our stockholders pursuant to the procedures described in this Proxy Statement and in ourBy-Laws;
recommend to our Board of Directors individual directors to serve on our various Board committees;
develop and recommend to our Board of Directors a set of corporate governance principles applicable to us; and
oversee the evaluation of the Board of Directors and management; and
assist the Board in overseeing the Company’s corporate responsibility and sustainability initiatives.
The Nominating, Governance and Corporate Responsibility Committee is governed by the Nominating, Governance and Corporate Responsibility Committee charter, which was revised on January 31,in 2019 to reflect the Committee’s additional oversight over the Corporation’sCompany’s corporate responsibility and sustainability initiatives. The Committee periodically reviews the Company’s strategies, activities, policies and communications regarding sustainability and other
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environmental, social and governance-related matters and makes recommendations to the Board. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.
Marketing CommitteeCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The MarketingCompensation and Talent Committee which was established in 2019, consists of Ms. Mooney (chair) andFerguson (Chair), Ms. Heasley. The purpose of the Marketing Committee is to advise the Board on marketing matters, including overall customer insight, marketing strategy and capability development, and the development and implementation of the Company’s marketing plan.
The Marketing Committee is governed by the Marketing Committee charter, which was adopted on April 24, 2019. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists ofBishop, Mr. Rabin (chair),Boyer, Ms. Flur, Ms. Heasley and Ms. Mulder.Mr. Rabin. No member of our current Compensation and Talent Committee is or has been one of our officers or employees or has had any relationship requiring disclosure under SEC rules. In addition, during FY19,FY22, none of our executive officers of which served as:
a member of the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board of directors) of another corporation,company, one of whose executive officers served on the Compensation and Talent Committee;
a director of another corporation,company, one of whose executive officers served on the Compensation and Talent Committee; or
a member of the compensation committee (or other board committee performing similar functions or, in the absence of such committee, the entire board of directors) of another corporation,company, one of whose executive officers served as one of our directors.
Compensation Risk AssessmentCOMPENSATION RISK ASSESSMENT
The Compensation and Talent Committee has reviewed with management the design and operation of our incentive compensation arrangements, including the performance objectives and target levels used in connection with incentive awards, for the purpose of assuring that these arrangements do not provide our executives or employees with
incentive to engage in business activities or other behavior that would impose unnecessary or excessive risk to the value of the CorporationCompany or the investments of our stockholders. The Compensation and Talent Committee considered compensation programs that apply to employees at all levels. In addition, the Compensation and Talent Committee considered the presence of significant risk mitigation factors inherent in our compensation program, such as those described under “Compensation Discussion and Analysis —– Management of Compensation-Related Risk.”
Based on the foregoing, the Compensation and Talent Committee concluded in its April 20192022 meeting that the Corporation’sCompany’s compensation plans, programs and policies do not create incentives that encourage employees to take risks that are reasonably likely to have a material adverse effect on the Corporation.Company. We believe that our incentive compensation plans, policies and practices provide appropriate incentives for behaviors that are within the Corporation’sCompany’s ability to effectively identify and manage significant risks, are compatible with effective internal controls and our risk management practices and are supported by the oversight and administration of the Compensation and Talent Committee with regard to executive compensation programs.
Related Party TransactionsRELATED PARTY TRANSACTIONS
Our Board of Directors recognizes that interested transactions with related parties present a heightened risk of conflicts of interest, or the perception thereof, and therefore it adopted a Statement of Policy with respect to Related Party Transactions. Under this policy, an “interested transaction”, is defined as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed $20,000 in any calendar year, (2) the CorporationCompany or any of its subsidiaries is a participant, and (3) any related party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than ten percent beneficial owner of another entity). Any charitable contribution, grant or endowment by the CorporationCompany to a charitable organization, foundation or university at which a related party’s only
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relationship is as an employee, an officer or a director also constitutes an interested transaction. A “related party” is defined as any person who is or was (since the beginning of the last fiscal year for which the CorporationCompany has filed an Annual Report onForm 10-K and proxy statement, even if such person does not presently serve in that role) (1) an officer (including at the Vice President level or above), director or nominee for election as a director of the CorporationCompany or any of its subsidiaries, (2) a greater than five percent beneficial owner of any class of the Corporation’sCompany’s Common Stock or other equity securities, or (3) an immediate family member of any of the foregoing individuals.
Subject to several exceptions (as described below), all interested transactions must be approved or ratified by the Audit Committee of the Board of Directors, taking into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, as well as the extent of the related party’s interest in the transaction. An interested transaction may be approved or ratified if it is determined in good faith that, under all of the circumstances, the transaction is fair to the Corporation.Company. The Audit Committee may impose such conditions as it deems appropriate on the CorporationCompany or the related party in connection with the approval of the transaction.
No director participates in any discussion or approval of an interested transaction for which he or she is a related party, except to the extent the director provides material information concerning the transaction to the Audit Committee. If an interested transaction remains ongoing, the Audit Committee must review and assess, on at least an annual basis, ongoing relationships with the related party to ensure that the interested transaction remains appropriate. In addition, if an interested transaction involving a member of the Board may constitute an actual or potential director conflict of interest, the General Counsel shall notify the Chair of the Nominating, Governance and Corporate Responsibility Committee of such interested transaction.
Under the policy, the following categories of interested transactions have been deemed by the Audit Committee to bepre-approved, even if in excess of $20,000, unless otherwise specifically determined by the committee: (1) any employment by the CorporationCompany of an officer of the CorporationCompany or any of its subsidiaries if the related compensation is approved (or recommended to the Board of Directors for approval) by the Corporation’sCompany’s Compensation and Talent Committee,
(2) any compensation paid to a director if the compensation is consistent with the Corporation’sCompany’s director compensation policies and is required to be reported in the Corporation’sCompany’s proxy statement under Item 402, (3) any transaction with another company at which a related party’s only relationship is as an employee (other than an executive officer or director) or beneficial owner of less than ten percent of that company’s equity, if the aggregate amount involved does not exceed the greater of $120,000, or two percent of that company’s total annual revenues, and (4) any transaction where the related party’s interest arises solely from the ownership of the Corporation’sCompany’s Common Stock and all holders of the Corporation’sCompany’s Common Stock received the same benefit on a pro rata basis (e.g., dividends).
All interested transactions with related parties that are required to be disclosed under the SEC’s rules are disclosed in our Proxy Statement. A copy of our Statement of Policy with respect to Related Party Transactions is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.
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Directors’ Compensation and BenefitsDIRECTORS’ COMPENSATION AND BENEFITS
FY19FY22 Director Compensation Table (1)
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(5) | Total ($) | |||
Katherine B. Bell(2) | 43,000 | 139,986 | 182,986 | |||
Marshall E. Eisenberg | 154,000 | 139,986 | 293,986 | |||
Diana S. Ferguson(3) | 56,668 | 93,195 | 149,863 | |||
David W. Gibbs | 91,000 | 139,986 | 230,986 | |||
Linda Heasley | 104,000 | 139,986 | 243,986 | |||
Joseph C. Magnacca(4) | 103,000 | 139,986 | 242,986 | |||
Robert R. McMaster | 372,000 | 189,998 | 561,998 | |||
John A. Miller | 96,000 | 139,986 | 235,986 | |||
P. Kelly Mooney | 98,000 | 139,986 | 237,986 | |||
Susan R. Mulder | 103,000 | 139,986 | 242,986 | |||
Denise Paulonis | 91,000 | 139,986 | 230,986 | |||
Edward W. Rabin | 118,000 | 139,986 | 257,986 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(5) | Total ($) | |||||||||
Timothy R. Baer (2) | 40,000 | 139,983 | 179,983 | |||||||||
Rachel R. Bishop, Ph.D. (3) | 14,745 | — | 14,745 | |||||||||
Jeffrey Boyer (3) | 14,745 | — | 14,745 | |||||||||
Marshall E. Eisenberg | 106,000 | 139,983 | 245,983 | |||||||||
Diana S. Ferguson | 119,000 | 139,983 | 258,983 | |||||||||
Dorlisa K. Flur | 104,000 | 139,983 | 243,983 | |||||||||
James M. Head | 95,000 | 139,983 | 234,983 | |||||||||
Linda Heasley | 99,000 | 139,983 | 238,983 | |||||||||
Robert R. McMaster | 370,000 | 189,991 | 559,991 | |||||||||
John A. Miller | 95,000 | 139,983 | 234,983 | |||||||||
Lawrence “Chip” Molloy (3) | 14,745 | — | 14,745 | |||||||||
Susan R. Mulder (2) | 45,000 | 139,983 | 184,983 | |||||||||
Erin Nealy Cox | 89,000 | 139,983 | 228,983 | |||||||||
Denise Paulonis (4) | — | — | — | |||||||||
Edward W. Rabin | 90,000 | 139,983 | 229,983 |
(1) | During |
(2) | Mr. Baer and Ms. |
(3) | Ms. |
(4) |
|
(5) | Reflects the grant date fair value of restricted stock unit (RSU) awards, determined in accordance with Financial Accounting Standards Board ASC Topic 718 Stock Compensation (“ASC 718”). The grant date fair value of the RSUs is based on the fair market value of the underlying shares on the date of grant. On November |
Narrative Discussion of Director Compensation TableNARRATIVE DISCUSSION OF DIRECTOR COMPENSATION TABLE
The following is a narrative discussion of the material factors which we believe are necessary to understand the information disclosed in the Director Compensation Table. The Sally Beauty Holdings, Inc. Amended and Restated Independent Director Compensation Policy (the “Director Compensation Policy”) governs the compensation paid to our independent directors and it was last revised in October 2018 followingdirectors. Following FW Cook’sbi-annual review of our director compensation program. The newprogram in July 2022, the Director Compensation Policy became effectivewas amended with changes to take effect in FY2023, beginning October 1, 2018.2022.
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Cash Compensation
In FY19,FY22, pursuant to the Director Compensation Policy, each of our independent directors received an annual cash retainer of $70,000, payable in advance in four quarterly installments. Forin-person Board or committee meetings during FY19,FY22, each independent director in attendance received $2,000 per meeting. For telephonic Board or committee meetings for which minutes were kept, each independent director in attendance received $1,000 per meeting.
Additional annual cash retainers were paid to each independent director who served as the ChairmanChair of the Board (Mr. McMaster) or chairpersonchair of the Audit Committee (Mr. McMaster), Compensation Committee (Mr. Rabin), Marketingand Talent Committee (Ms. Mooney)Ferguson) or the Nominating, Governance and Corporate Responsibility Committee (Mr. Eisenberg). The following table sets forth the annual cash retainers for services rendered in FY19:FY22.
Board Role | Cash Retainer Amount | ||||||
Non-Executive | $150,000 | ||||||
Audit Committee | | $ 25,000 | |||||
Compensation and Talent Committee | | $ 20,000 | |||||
| |||||||
Nominating, Governance & Corporate Responsibility Committee | | $ 18,000 |
In November 20182021 the Compensation and Talent Committee awarded Mr. McMaster an additional $100,000Non-Executive cash retainer and Mr. Eisenberg an additional cash payment of $32,000, each for his increased responsibilities to the Company during FY18. Both awards wereFY22. The award was paid out in FY19FY22.
Equity-Based Compensation
Pursuant to our Director Compensation Policy, each independent director, with the exception of Mr. McMaster, was granted an annual equity-based retainer award with a value at the time of grant of $140,000. Mr. McMaster was granted an annual equity-based retainer award with a value at the time of grant of $190,000. For FY19,FY22, these awards were granted in accordance with the 20102019 Omnibus Incentive Plan in the form of RSUs that vested on September 30, 2019, the last day of the fiscal year,November 15, 2022, subject to the director’s continued service on the Board on such date. On November 5, 2019,3, 2021, each independent director, with the exception of Mr. McMaster, received an award of 8,4088,045 RSUs. Mr. McMaster received an award of 11,41110,919 RSUs. As provided in the Director Compensation Policy, each independent director may elect to defer delivery of the shares of Common Stock that would otherwise be due on the vesting date until a later date specified by the independent director. If an independent director does not make such election, he or she will receive shares of Common Stock in settlement of the RSU on the vesting date. Vesting accelerates on apro-rata basis in the event of the director’s death or disability.
Stock Ownership and Retention Guidelines
Pursuant to our stock ownership guidelines, each independent director must own shares of Common Stock in an amount equal to five times the base annual cash retainer (excluding additional annual cash retainers for the ChairmanChair of the Board and committee chairpersons,chairs, and all meeting fees). Independent directors are required to achieve the applicable level of ownership within five years of becoming subject to the requirements. Until such time as the required equity ownership is reached, the independent director must retain 100% of the shares of Common
Stock received upon settlement of his or her RSUs. Shares underlying vested RSUs (including deferred shares) count towards the stock ownership total. Unexercised options (whether vested or unvested) and unvested RSUs do not count as stock owned under the guidelines. As of September 30, 2019,2022, all of our independent directors, subject to the five-year grace period, were in compliance with our stock ownership and retention guidelines.
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Travel Expense Reimbursement
Each of our independent directors is entitled to reimbursement for reasonable travel expenses properly incurred in connection with his or her functions and duties as a director. With respect to air travel, reimbursements are limited to the cost of first-class commercial airline tickets for the trip.
Director Indemnification AgreementsDIRECTOR INDEMNIFICATION AGREEMENTS
Our Board of Directors approved and authorized us to enter into an indemnification agreement with each member of the Board. The indemnification agreement is intended to provide directors with the maximum protection available under applicable law in connection with their services to us.
Each indemnification agreement provides, among other things, that subject to the procedures set forth therein, we will, to the fullest extent permitted by applicable law, indemnify an indemnitee if, by reason of such indemnitee’s corporate status as a director, such indemnitee incurs any losses, liabilities, judgments, fines, penalties or amounts paid in settlement in connection with any threatened, pending or completed proceeding, whether of a civil, criminal, administrative or investigative nature. In addition, each indemnification agreement provides for the advancement of expenses incurred by an indemnitee, subject to certain exceptions, in connection with any proceeding covered by the indemnification agreement. Each indemnification agreement also requires that we cover an indemnitee under liability insurance available to any of our directors, officers or employees. Our indemnification obligations under these agreements are primary for all claims against our directors.
No Material ProceedingsNO MATERIAL PROCEEDINGS
As of December 6, 2019November 30, 2022 there are no material proceedings to which any of our directors, executive officers or affiliates, or any owner of record or beneficially of more than five percent of our Common Stock (or their associates) is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.
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COMPANY’S STOCK
The following tables set forth certain information regarding the beneficial ownership, as of November 15, 2019,28, 2022, of: (i) our Common Stock by each current director (including director nominees) or executive officer and of all the current directors (including director nominees) and executive officers as a group; and (ii) our Common Stock by each person believed by us (based upon their Schedule 13D or 13G filings with the SEC) to beneficially own more than 5% of the total number of outstanding shares. The number of shares beneficially owned by each person or group as of November 15, 2019,28, 2022, includes shares of Common Stock that such person or group had the right to acquire on or within 60 days after November 15, 2019,28, 2022, including upon the exercise of options. The total number of outstanding shares on which the percentages of share ownership in the tables are based is 116,326,372.107,042,649. All such information is estimated and subject to change. Each outstanding share of Common Stock entitles its holder to one vote on all matters submitted to a vote of our stockholders. Except as specified below, the business address of the persons listed is our headquarters, 3001 Colorado Boulevard, Denton, Texas 76210.
Ownership of our Common Stock is shown in terms of “beneficial ownership.” Amounts and percentages of Common Stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which he has a right to acquire beneficial ownership within 60 days. More than one person may be considered to beneficially own the same shares. In the table below, unless otherwise noted, a person has sole voting and dispositive power for those shares shown as beneficially owned by such person.
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SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
Securities Owned by Directors and Executive Officers
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock(1) | Percent of Class(2) | Amount and Nature of Beneficial Ownership of Common Stock (1) | Percent of Class (2) | |||||||||||||||||||||
Christian A. Brickman | 1,572,449 | (3) | 1.35 | % | |||||||||||||||||||||
Marlo Cormier | 62,179 | (3) | * | ||||||||||||||||||||||
Aaron E. Alt | 154,934 | (4) | * | ||||||||||||||||||||||
Mary Beth Edwards | 45,289 | (4) | * | ||||||||||||||||||||||
John H. Goss | 102,556 | (5) | * | ||||||||||||||||||||||
John M. Henrich | 127,090 | (6) | * | ||||||||||||||||||||||
Kim McIntosh | 1,448 | * | |||||||||||||||||||||||
Denise Paulonis | 124,646 | (7) | * | ||||||||||||||||||||||
Scott C. Sherman | 180,208 | (8) | * | ||||||||||||||||||||||
Mark G. Spinks | 288,154 | (5) | * | 351,931 | (9) | * | |||||||||||||||||||
Scott C. Sherman | 94,744 | (6) | * | ||||||||||||||||||||||
Rachel R. Bishop | 0 | * | |||||||||||||||||||||||
John M. Henrich | 53,263 | (7) | * | ||||||||||||||||||||||
Chad L. Selvidge | 0 | * | |||||||||||||||||||||||
Timothy R. Baer | 0 | * | |||||||||||||||||||||||
Jeffrey Boyer | 0 | * | |||||||||||||||||||||||
Marshall E. Eisenberg | 154,014 | (8) | * | 185,868 | (10) | * | |||||||||||||||||||
Diana S. Ferguson | 5,412 | (9) | * | 37,266 | (11) | * | |||||||||||||||||||
Dorlisa K. Flur | 0 | * | 30,079 | (12) | * | ||||||||||||||||||||
David W. Gibbs | 21,626 | (10) | * | ||||||||||||||||||||||
James M. Head | 14,343 | (13) | * | ||||||||||||||||||||||
Linda Heasley | 17,478 | (11) | * | 49,832 | (14) | * | |||||||||||||||||||
Joseph C. Magnacca | 15,482 | (12) | * | ||||||||||||||||||||||
Robert R. McMaster | 128,144 | (13) | * | 175,876 | (15) | * | |||||||||||||||||||
John A. Miller | 305,575 | (14) | * | 337,429 | (16) | * | |||||||||||||||||||
P. Kelly Mooney | 8,434 | (15) | * | ||||||||||||||||||||||
Lawrence “Chip” P. Molloy | 0 | * | |||||||||||||||||||||||
Susan R. Mulder | 27,165 | (16) | * | ||||||||||||||||||||||
Denise Paulonis | 10,618 | (17) | * | ||||||||||||||||||||||
Erin Nealy Cox | 13,509 | (17) | * | ||||||||||||||||||||||
Edward W. Rabin | 190,014 | (18) | * | 265,118 | (18) | * | |||||||||||||||||||
All directors and executive officers as a group (19 persons) | 3,047,506 | (19) | 2.62 | % | |||||||||||||||||||||
All directors and executive officers as a group (20 persons) | 2,104,667 | 1.97 | % |
(1) | Except as otherwise noted, the directors and named executive officers, and all directors and executive officers as a group, have sole voting power and sole investment power over the shares listed. |
(2) | An asterisk indicates that the percentage of Common Stock projected to be beneficially owned by the named individual does not exceed one percent of our Common Stock. |
(3) | Includes |
(4) | Includes |
(5) | Includes |
(6) | Includes 104,064 shares of Common Stock underlying vested stock options. |
(7) | Includes 41,781 shares of Common Stock underlying vested stock options. |
(8) | Includes 151,517 shares of Common Stock underlying vested stock options. |
(9) | Includes 311,335 shares of Common Stock underlying vested stock options and 2,283 shares held as a participant in the Sally Beauty Holdings, Inc. 401(k) and Profit Sharing |
Includes |
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(11) | Includes |
2022 Proxy Statement
(12) | Includes |
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(14) | Includes |
(15) | Includes |
(16) | Includes |
(17) | Includes 8,045 vested and deferred restricted stock units. |
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(18) | Includes |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
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Persons Owning More than Five-Percent of the Company’s Common Stock
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Class | ||||||||
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BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | ||||||||||
FMR LLC 245 Summer Street, Boston, MA 02210 | ||||||||||
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The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | ||||||||||
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8,013,130 (5) | ||||||||||
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(1) | Based solely on information provided on that certain Schedule 13G/A (Amendment No. |
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Based solely on information provided on that certain Schedule 13G/A (Amendment No. |
(3) | Based solely on information provided on that certain Schedule 13G/A (Amendment No. 8) dated February 14, 2022, which reflects sole voting power with respect to 15,337,028 shares and shared voting power with respect to 0 shares, sole dispositive power with respect to 15,337,028 shares and shared dispositive power with respect to 0 shares beneficially owned directly by ArrowMark Colorado Holdings LLC, a Delaware limited liability company. |
(4) | Based solely on information provided on that certain Schedule 13G/A (Amendment No. |
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Based solely on information provided on that certain |
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www.sallybeautyholdings.com 43
PROPOSAL 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to SEC rules, the CorporationCompany is providing in this Proxy Statement a separate resolution, subject to an advisory(non-binding) vote, to approve the compensation of its named executive officers. This proposal is commonly referred to as a “Say on Pay” proposal. As required by these rules, the Board invites you to review carefully the Compensation Discussion and Analysis beginning on page 3648 and the tabular and other disclosures on compensation under Executive Compensation beginning on page 36,48, and cast a vote “FOR” the Corporation’sCompany’s executive compensation programs through the following resolution:
“Resolved, that the stockholders approve the compensation of the Corporation’sCompany’s named executive officers, including the Corporation’sCompany’s compensation practices and principles and their implementation, as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and any narrative executive compensation disclosure contained in this Proxy Statement.”
As discussed in the Compensation Discussion and Analysis beginning on page 36,48, the Board of Directors believes that the Corporation’sCompany’s long-term success depends in large measure on the talents of our employees. The Corporation’sCompany’s compensation system plays a significant role in our ability to attract, retain, and motivate the highest quality workforce. The Board believes that its current compensation program uses a balanced mix of base salary, and annual and long-term incentives to attract and retain highly qualified executives; the compensation program also maintains a strong relationship between executive compensation and performance, thereby aligning the interests of the Corporation’sCompany’s executive officers with those of its stockholders.
This vote is advisory and will not be binding on the Corporation.Company. While the vote does not bind the Board to any particular action, the Board values the input of the stockholders, and will take into account the outcome of this vote in considering future compensation arrangements. The CorporationCompany strongly encourages all stockholders to vote on this matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2.
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
PROPOSAL 3—ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTES
ON EXECUTIVE COMPENSATION
As discussed in Proposal 2, the Board values the input of stockholders regarding the Company’s executive compensation practices. Stockholders are also invited to express their views on how frequently advisory votes on executive compensation, such as Proposal 2, should occur. Stockholders can advise the Board on whether such votes should occur every 1 year, 2 years or 3 years or may abstain from voting.
This is an advisory vote, and as such is not binding on the Board. However, the Board will take the results of the vote into account when deciding when to call for the next advisory vote on executive compensation. A scheduling vote similar to this will occur at least once every six years.
The Board of Directors recommends that the advisory vote on executive compensation be held every year. An annual approach provides for more regular input by stockholders. Stockholders are not being asked to approve or disapprove of the Board’s recommendation, but rather to indicate their own choice as among the frequency options.
Please mark on the Proxy Card your preference as to the frequency of holding stockholder advisory votes on executive compensation, as either every 1 year, 2 years, or 3 years or you may mark “abstain” on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR “1 YEAR” ON PROPOSAL 3.
www.sallybeautyholdings.com 45
EXECUTIVE OFFICERS
The executive officers of Sally Beauty Holdings, Inc., their ages (as of December 18, 2019)14, 2022), and their positions for at least the last five years are as follows:
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John H. Goss
President, Sally Beauty Supply
John Goss, 55, has been President of Sally Beauty Supply since November 2020. Prior to that he was our Group Vice President and Head of Stores and Operations for Sally Beauty Supply. His responsibilities included leading over 2,900 retail stores and supporting the operations team, and
most recently he led the deployment of Ship-From-Store (SFS) and Buy Online/Pickup in Store (BOPIS) across the Sally Beauty store network. Prior to joining the Company in 2016, Mr. Goss served consecutively as Vice President of Operations and then Vice President of Transformation Management Office for Signet Jewelers. Mr. Goss has held various leadership roles at Zales Jeweler, T-Mobile, Gap Inc., and L Brands throughout his career. Mr. Goss holds a Bachelor’s degree in Business Management from The University of Phoenix.
John M. Henrich
Senior Vice President, General Counsel and Secretary
John Henrich, 48, has been our Senior Vice President, General Counsel and Secretary since June 2019. Mr. Henrich has held various senior level positions with the Company since January 2012,
including Interim General Counsel and Secretary since January 2018; Vice President, Deputy
General Counsel, Head of Regulatory from October 2016 to January 2018; Vice President, Associate General Counsel from October 2015 to October 2016; and Senior Counsel from January 2012 to October 2015. Prior to joining the Company, Mr. Henrich was Senior Counsel at Accor Hospitality. Mr. Henrich received his J.D. from Fordham University School of Law and his B.A. in History from Columbia University in the City of New York.
Kim McIntosh | ||
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Scott C. Sherman | ||
Mark G. Spinks
President, Beauty Systems Group
Mark G. Spinks, 61, has been the President of Beauty Systems Group LLC since July 2015. Mr. Spinks previously held a number of positions of increasing responsibility with us. Mr. Spinks was most recently the Chief Operating Officer of Beauty Systems Group LLC, a position he served
in since September 2014. Prior to that, Mr. Spinks was the Vice President of Operations/GM for the Company’s Armstrong McCall franchise business, a position he held for five and a half years, and prior to that was the Director of Business Development for the Company for almost four years. Mr. Spinks received a B.A. in Economics and Criminal Justice from Indiana University.
www.sallybeautyholdings.com 47
Compensation48 . .Compensation Discussion and Analysis
49 . . . .Executive Summary
53 . . . .Compensation Philosophy and Objectives
54 . . . .FY22 Executive Compensation Program
56 . . . . . . Tying Compensation to Performance
57 . . . . . . Base Salary
58 . . . . . . Annual Incentive
61 . . . . . . Long-Term Incentives
65 . . . . . . Other Compensation
66 . . . . . . Change-in-Control Severance Protection
66 . . . . . . Additional Compensation Policies
68 . . . .Compensation Decision-Making Process
68 . . . . . . Role of Compensation and Talent
Committee
68 . . . . . . Role of Independent Compensation
Consultant
69 . . . . . . Role of Management
69 . . . . . . Market Data/Benchmarking
70 . . . . . . Total Compensation Review
70 . . . . . . Consideration of Stockholder Vote on
Executive Compensation
71 . . . .Management of Compensation-Related Risk
72 . .Compensation and Talent Committee
Report
73 . .Compensation Tables
73 . .. . .Summary Compensation Table
76 . . . .Grants of Plan-Based Awards for FY22
78 . . . ..Outstanding Equity Awards at 2022 Fiscal
Year-End
81 . . . .Option Exercises and Stock Vested in FY22
81 . . . .Potential Payments Upon Termination or
Change in Control
COMPENSATION DISCUSSION AND
ANALYSIS
The Compensation Discussion and Analysis (CD&A)(“CD&A”) explains how the Company’s executive compensation program is designed and operates with respect to the following named executive officers (NEOs)(“NEOs”) for the fiscal year 2019 (FY19)2022 (“FY22”):
NEOs Denise A. Paulonis President and Chief Executive Officer (1) Marlo M. Cormier Senior Vice President, Chief Financial Officer John H. Goss President, Sally Beauty Supply Mark G. Spinks President, Beauty Systems Group Mary Beth Edwards Senior Vice President, Chief Information Officer and Chief Transformation Officer Former NEO Pamela K. Kohn Senior Vice President, Chief Merchandising Officer (2) (1) Ms. Paulonis joined the Company as President and Chief Executive Officer effective October 1, 2021. (2) Ms. Kohn resigned from her position as Senior Vice President, Chief Merchandising Officer effective May 31, 2022. | ||
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For a complete understanding of our executive compensation program, this CD&A should be read in conjunction with the“Executive Compensation— “Executive Compensation — Compensation Tables” of this Proxy Statement.
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty retailerthe leader in the sales and distributordistribution of professional hair color and other beauty supplies with revenues of approximately $3.9 billion annually. Through theglobally through its Sally Beauty Supply (Sally)(“Sally”) and Beauty Systems Group (BSG) businesses, the(“BSG”) businesses. The Company has operations throughout the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain and Germany. Sally Beauty Supply stores offer up to 7,000 products for hair color, hair care, nails, and skin care and nails through proprietary brands such as Ion®Ion®, Generic Value Products®Products®, Beyond the Zone®Zone® and Silk Elements®Elements® as well as professional lines such as Wella®Wella®, Clairol®Clairol®, OPI®OPI®, Conair®Conair® and Hot Shot Tools®L’Oreal®. BSGBeauty Systems Group stores, branded as CosmoProfCosmoProf® or Armstrong McCallMcCall® stores, along with its outside sales consultants, sell up to 10,000 professionally branded products including Paul Mitchell®Mitchell®, Wella®Wella®, Matrix®Matrix®, Schwarzkopf®Schwarzkopf®, Kenra®Kenra®, Goldwell®Goldwell®, Joico®Joico® and CHI®Olaplex®, intended for use in salons and for resale by salons to retail consumers. For more information about Sally Beauty Holdings, Inc., please visit https://www.sallybeautyholdings.com/.
FY22
Company Strategies
Leverage Our Digital Platform
✓ Create an Easy and Reliable Omni-Channel Platform for Do-It-Yourself (“DIY”) Enthusiasts and Stylists
✓ Optimize BSG’s Redesigned E-commerce Site and Fulfillment Options of Buy Online / Pick-up in Store (“BOPIS”) and 2-Hour Delivery
✓ Increase Adoption Rates of Sally’s Fulfillment Model: BOPIS, Ship From Store, and 2-Hour Delivery
✓ Scale and Optimize the Full Suite of Omni-channel Services to Drive E-commerce Penetration to 15% or More Over Time
Drive Loyalty and Personalization
✓ Drive Customer Engagement and Sales
✓ Grow Loyalty Programs: Sally US/Canada Sales From Loyalty Members & BSG Sales From Rewards Credit Card (Fall 2020 Launch)
✓ Sally: Recommend Product Usage, Send Reminders to Replenish, and Incorporate DIY and Educational Content into the Customer Journey
✓ BSG: Showcase New Product Arrivals and Send Reminders to Restock Back Bars
✓ Drive Higher Customer Lifetime Value by Growing Transaction Spend and Increasing Purchasing Frequency
Deliver Product Innovation
✓ Focus on Sustainable and Clean Products
✓ Expand our Owned Brand Penetration at Sally
✓ Launch New Products at BSG in Color and Care
✓ Expand Nail Category at Both Sally and BSG
Advance our Supply Chain
✓ Create a Highly Automated, Integrated Best-In-Class Capabilities Across Inventory Forecasting, Assortment, Pricing/Promotions, & In-Stocks
✓ Execute Final Phase of JDA (Merchandising and Supply Chain Platform) Implementation
✓ Complete JDA Rollout to Remaining Sally Stores; BSG Stores Completed
✓ Fully Integrate JDA with Our North Texas Distribution Center
Progress on ESG
Our Environmental, Social and Governance (“ESG”) strategy focuses primarily on the areas where we believe we can have a meaningful impact:
✓ Employees – Safety, Health and Well-Being
✓ Diversity, Inclusion and Belonging
✓ Philanthropy and Community Engagement
✓ Energy and Environment
✓ Product Development and Sourcing
✓ Data Protection and Cybersecurity
www.sallybeautyholdings.com 49
Over
FY22 Company Financial Performance COMPARABLE SALES (1) 3-YEAR AVERAGE ROIC (3) OI ($ in Millions) AOI (1)(2) ($ in Millions) DILUTED EPS ADJUSTED DILUTED EPS (2) 1-YEAR TSR (4) 3-YEAR TSR (4) OIM AOIM (2)(4) -0.3% -8.9% 9.6% 0.6% FY19 FY20 FY21 FY22 21.5% 19.1% 18.9% 16.2% FY17-19 FY18-20 FY19-21 FY20-22 $459 $259 $418 $338 FY19 FY20 FY21 FY22 $458 $294 $461 $391 FY19 FY20 FY21 FY22 $2.26 $0.99 $2.10 $1.66 FY19 FY20 FY21 FY22 $2.26 $1.22 $2.40 $2.16 FY19 FY20 FY21 FY22 -18.4% -20.2% 61.7% -18.9% FY19 FY20 FY21 FY22 -50.0% -43.3% 5.1% 3.6% FY17-19 FY18-20 FY19-21 FY20-22 11.8% 7.4% 10.8% 8.8% FY19 FY20 FY21 FY22 11.8% 8.4% 11.9% 10.3% FY19 FY20 FY21 FY22
(1) Please see “Compensation Discussion and Analysis – FY22 Executive Compensation Program – Annual Incentive” section of this CD&A for Comparable Sales and Adjusted Operating Income (“AOI”) definition.
(2) Please see Appendix 1 for a reconciliation of non-GAAP numbers.
(3) 3-Year Average Return on Invested Capital (“ROIC”) is defined as net income plus after-tax interest expense divided by monthly invested capital over the last several years,three-year performance period.
(4) Please see “Compensation Discussion and Analysis – FY22 Executive Compensation Program – Long-Term Incentives” section of this CD&A for Total Shareholder Return (“TSR”) and Adjusted Operating Income Margin (“AOIM”) definition. SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
FY22 Changes
NEO Changes
✓ On October 1, 2021, Denise Paulonis joined the retailCompany as President and beauty sector has changed significantly. There has been increased competitionChief Executive Officer. Per the terms of her new hire offer, Ms. Paulonis was entitled to:
– Annual salary of $1,100,000
– Annual Incentive Plan (“AIP”) target annual bonus of 150% of her base salary
– Long-term incentive (“LTI” or “equity”) award with a grant date target value equal to $4,250,000
– Certain make-whole awards to compensate her for amounts forfeited upon termination from her prior employer, including:
Cash sign-on bonus of $400,000 (50% of which was subject to repayment if Ms. Paulonis resigned or if the Company terminated her employment for cause within her first year of employment with the Company)
Restricted stock units (“RSUs”) with a grant date value of $1,450,000
Options with a grant date value of $1,000,000
✓ Ms. Kohn resigned from her position as Senior Vice President, Chief Merchandising Officer effective May 31, 2022.
Compensation Program Changes
✓ The Committee approved AIP performance metrics of 60% AOI, 20% comparable sales and 20% strategic initiatives, as compared to the prior year of 80% operating cash flow (with a minimum inventory floor as a requirement for payout) and 20% strategic initiatives.
✓ The Committee granted LTI awards in the beauty space, retailers haveform of 50% performance stock units (“PSUs”) and 50% RSUs, as compared to prior fiscal year awards which were in the form of 34% options, 33% PSUs, and 33% RSUs.
✓ The Committee approved PSU performance metrics of 50% relative total shareholder return (“rTSR”) measured over a three-year performance period and 50% AOIM measured over three, one-year performance periods (as compared to adjusted operating income the prior fiscal year). The rTSR PSUs require above median performance to earn target and payout is capped at target if the Company’s absolute TSR over the performance period is negative.
FY22 NEO Pay
✓ Base salaries for the NEOs (other than Ms. Paulonis, Ms. Cormier and Mr. Goss) were increased investmentsbetween 0% to 3.5%, consistent with market data from our peer group. Ms. Paulonis’ base salary was set in storesconnection with her hire. Based on their recent promotions, additional time in role, performance and technology, customers have had a desirethe peer group data, Ms. Cormier’s base salary was increased from $550,000 to $600,000 and Mr. Goss’ base salary was increased from $459,000 to $525,000 for a more convenient omni-channel shopping experience,FY22.
✓ The NEOs were eligible for annual bonuses under the AIP and there have been rising labor costswere granted LTI awards in the form of 50% PSUs and a tighter job market. We have responded with these four50% RSUs.
✓ Threshold performance levels for the AOI and comparable sales metrics were not achieved and, accordingly, the payout for this component of the AIP was 0%. The Committee determined that SBH delivered on our strategic initiatives of enhancing the customer experience, advancing our supply chain, store optimization, executing growth initiatives and progressing on ESG. Accomplishments and achievements on these included enhancements to reignite growth:our digital and omnichannel experiences, launching customer journeys, delivering key aspects of our fulfillment technology and process updates, successful store optimization with above-target sales recapture, launching our Salon HQ platform for stylists/salons to use personalized websites to sell professional brands to clients, completing an ESG focus area assessment and initial strategic planning and further enhancing our cultural and DIB initiatives, as indicated through survey responses and other inputs. These helped SBH manage through a challenging, shifting macro-environment and set SBH up well for future success on key strategies. As such, the Committee determined a 100% payout for performance with respect to our strategic initiatives was appropriate for this component of the AIP (20% weighting, at target).
www.sallybeautyholdings.com 51
FY22 NEO Pay
(Continued)
✓ Following the completion of the performance period on September 30, 2022, the Committee determined that the FY20-22 PSUs granted in November 2019 were not earned because the Company did not achieve threshold performance levels for either the AOI growth metric (60%) or the ROIC metric (40%). Per the terms of the award, the FY20-22 PSUs were cancelled without payout.
✓ Following the completion of the performance period on September 30, 2022, the Committee determined that the second one-year performance period of the FY21-23 adjusted operating income PSUs (“FY21-23 Y2AOI PSUs”) granted in January 2021 were not earned because the Company did not achieve threshold performance levels for the Y2AOI metric. Per the terms of the award, the FY21-23 Y2AOI PSUs were cancelled without payout.
✓ Following the completion of the performance period on September 30, 2022, the Committee determined that the first one-year performance period of the FY22-24 adjusted operating income margin PSUs (“FY22-24 Y1AOIM PSUs”) granted in November 2021 were not earned because the Company did not achieve threshold performance levels for the Y1AOIM metric. Per the terms of the award, the FY22-24 Y1AOIM PSUs were cancelled without payout.
FY23 Changes
Compensation Program Changes
✓ For FY23, consistent with market data from our peer group, the Committee increased:
– Base salaries for NEOs between 3.5% to 6.3%;
– AIP target award percentages for Ms. Cormier, Mr. Goss and Mr. Spinks from 70% to 75%; and
– LTI opportunities for Ms. Paulonis from $4,250,000 to $4,750,000, Ms. Cormier from $800,000 to $950,000, Mr. Goss and Mr. Spinks from $600,000 to $750,000, and Ms. Edwards from $500,000 to $575,000.
✓ Other than the above changes, there were no material changes to the compensation program for FY23.
Corporate
Governance
WHAT WE DO
WHAT WE DO NOT DO
✓ Closely align pay with performance
✓ Retain an independent compensation consultant
✓ Conduct an annual review of our peer group composition
✓ Conduct an annual review of our executive officer performance and compensation
✓ Conduct an annual review of our incentive compensation design
✓ Limit incentive compensation with a maximum payout/cap
✓ Maintain a comprehensive recoupment/clawback policy
✓ Require a minimum vesting period for equity
✓ Maintain equity ownership guidelines and retention requirements
✘ No employment agreements for executive officers
✘ No discounting or repricing of stock options without stockholder approval
✘ No pledging or hedging transactions with respect to Company stock
✘ No “single trigger” change-in-control severance benefits
✘ No “single trigger” change-in-control equity acceleration for assumed awards
✘ No 280G excise tax “gross-ups”
✘ No excessive executive benefits or perquisites
✘ No tax “gross-ups” for executive benefits or perquisites (with certain limited exceptions in the case of new-hire or health-related benefits)
✘ No compensation programs that encourage excessive risk taking
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
COMPENSATION PHILOSOPHY AND OBJECTIVES
Our Compensation and Talent Committee (“Committee”) designs our compensation programs with the following philosophies and objectives in mind:
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Alignment with Shareholders | ✓ Align executive and long-term shareholder interests by linking pay to achievement of performance objectives viewed as drivers of sustained value creation, delivering a significant portion of pay in equity compensation, | |||
Drive Annual and Long-Term Results | ✓ Ensure performance objectives are understandable and drive delivery of financial results and successful execution of strategic initiatives.
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Pay Competitively | ✓ Ensure pay remains competitive with peer
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Mitigate Undue Risk | ✓ Use a mix of annual
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✓ Maintain
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www.sallybeautyholdings.com 53
COMPENSATION PHILOSOPHY AND OBJECTIVES
Our Compensation Committee has developed the following objectives to guide the design of our executive officer compensation program and practices, including those for our NEOs. The Compensation Committee considers these objectives when making decisions regarding the forms, mix and amounts of compensation paid to our executive officers:
Attract, motivate and retain highly qualified individuals
To assure that our compensation arrangements remain competitive with the compensation paid by other employers who compete with us for talent, the Compensation Committee considers peer group information as one input in its decision-making process. In FY19, we targeted our compensation program to provide total direct compensation opportunities for our NEOs at approximately the 25th percentile to median of our peer group. The Compensation Committee uses its judgment to vary executive officer pay within the targeted range and from the targeted range based on various factors, such as an executive officer’s performance, responsibilities, experience and expected future contributions.
Align the interests of our executive officers more closely with those of our stockholders
The compensation program for our executives is weighted toward performance-based compensation, with base salary generally being the only component of an executive officer’s direct compensation that is fixed each year. Other components, including the annual and long-term incentives, are earned or derive value from the achievement of financial and strategic business objectives and/or increases in stock price. The Compensation Committee believes this performance-driven compensation will promote our long-term financial success and lead to increased stockholder returns.
Manage risk by balancing the time horizon of incentive compensation
Our compensation program is balanced between annual and long-term performance objectives, but always with a view to achieving long-term value for our stockholders. This structure, together with our compensation recoupment policy and equity ownership guidelines, encourages and rewards sustained superior performance.
We believe our compensation program provides a balanced and stable foundation for achieving our intended objectives. Our compensation philosophy emphasizes team effort, which we believe fosters rapid adjustment and adaptation to fast-changing market conditions and helps to not only achieve our annual and long-term goals, but also aligns the interests of our management team with those of the Company and our stockholders.
Internal Equity
Internal equity is one factor of many that the Compensation Committee considers in establishing compensation for our executives. While there is no formal policy, the Compensation Committee reviews compensation levels to ensure that appropriate parity exists within the senior management team. The differences in compensation levels among our NEOs reflect the significant variations in their relative responsibilities. The responsibilities of the Chief Executive Officer for management and oversight of a global enterprise are significantly higher than those of our other NEOs. As a result, the pay level and percent of pay at risk based on financial, strategic and stock price performance is commensurately higher for our Chief Executive Officer than for other officer positions.
FY19FY22 EXECUTIVE COMPENSATION PROGRAM
The following are the primary components of the FY19FY22 compensation program for our executive officers, including our NEOs:
Component |
| Performance Criteria | ||||||
Base Salary | Cash | Providing a competitive level of fixed compensation that attracts and retains skilled management, recognizing their respective roles, responsibilities, and experience. | Reviewed annually for increases. | |||||
| Cash | Communicating and driving achievement of financial and strategic annual objectives that are important to our sustained success and stock value. | Earned based on | |||||
Incentive |
| Creating a strong financial incentive for meeting or exceeding long-term financial goals, rewarding | ||||||
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| Encouraging retention through multi-year vesting requirements. | RSUs vest ratably over a three-year period with continued employment providing a retention incentive. Realized value of RSUs at vesting is tied to Company stock price. |
2022 Proxy Statement
The Company also provides the following components of compensation:
Component | Form of Compensation | Purpose | ||||
Other Compensation | Health and Welfare Benefits | Eligibility to receive available health and other welfare benefits paid for, in whole or in part, by the Company, including broad-based medical, dental, life and disability insurance. | Providing a competitive, broad-based employee benefits structure and promoting the good health of our | |||
Retirement Plan |
Eligibility to participate in, and receive Company contributions to, our 401(k) plan (available to all employees). |
Providing competitive retirement-planning benefits to attract and retain skilled management. | ||||
Executive Physical |
Reimbursement for an annual physical exam. |
Promoting the good health of our | ||||
New Hire Benefits | Limited new hire benefits (including Company-paid COBRA and relocation expenses). | Attracting new talent by providing a smooth transition to our Company. | ||||
Change-in-Control Severance Protection | Eligibility to receive cash severance (1.99 times base salary and a5-year average AIP award payout) and post-termination health and welfare benefits (24 months) in connection with involuntary termination within two years after a change | Providing a competitive compensation package for attraction and retention purposes before and after a change in control, as well as ensuring continuity of management in the event of any actual or threatened change in control of our Company. |
www.sallybeautyholdings.com 55
Tying Compensation to PerformanceTYING COMPENSATION TO PERFORMANCE
Our executive compensation program closely links realized compensation to the achievement of financial objectives and increases in the Company’s stock price, with 61%54% of Mr. Brickman’sMs. Paulonis’ and 52%45% of our other NEOs’ FY19FY22 target compensation being performance-based and contingent upon the achievement of financial or strategic performance objectives or changes in our stock price.
We use fourfive key performance metrics to measure results and determine annual incentive and PBRSUPSU payouts:
2022 Proxy Statement Use of these metrics supports the following objectives:
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Generate sustainable growth. The Compensation Committee believes these performance components —– incorporated into the Company’s annual budget and long-term planning —– represent the metrics that can be used by our stockholders to assess the Company’s value. Using these metrics, consistently, together with overlapping performance periods for our PBRSUs,PSUs, enables the Compensation Committee to evaluate the NEOs’ performance in generating sustainable growth.
Balance annual and long-term objectives. The Compensation Committee also believes that the overlap of the adjusted operating income performance metric between the AIP and PBRSUs focuses our NEOs on this measure. It highlightsthese measures highlight the importance of leading the Company to achieve both annual and long-term financial and strategic goals. ItThese measures also reducesreduce the risk that actions would be taken to sacrifice long-term growth to meet annual targets or vice versa.
Flexibility to support long-term growth. The standards for determining performance against objectives established for these metrics are derived from the Company’s financial statements, which follow generally accepted accounting principles. The terms of our AIP and PBRSUsPSUs provide the Compensation Committee the ability to adjust results to exclude certain items, either positive or negative, that it considers extraordinary when determining performance againstpre-established financial goals. The Compensation Committee believes that retaining the ability to make adjustments encourages management’s willingness to take actions that may limit annual Company performance, yet support long-term growth. When evaluating our performance against goals for our FY19 AIP andFY17-19 PBRSU awards, the Compensation Committee did not make any adjustments.
The Compensation Committee determines the base salary of each NEO on an annual basis (unless market conditions or changes in responsibilities warrant amid-year change) and targets base salaries at or near the 2550th percentile to median of our peer group. The Compensation Committee uses its judgment to vary executive officer pay based on various factors, such as an executive officer’s experience, performance and responsibilities.responsibilities, as well as internal parity. In evaluating the NEOs’ performance, the Compensation Committee relies primarily on our Chief Executive Officer’s performance review of each executive officer (other than himself)herself). The subjective factors considered by our Chief Executive Officer primarily consist of whether the executive officer met their developmental and operational goals and the financial performance within their area of responsibility.
In September 2018,2021, the Compensation Committee reviewed market data provided by FW Cook on our peer companies and generalthe retail industry generally to determine whether any significant changes to the base salaries for our executive officers were needed for FY19FY22 to align our executive team with the market. The Compensation Committee increased the base salary levels of the NEOs, with adjustments to reflect executive performance and to move executive salaries closer to the targeted competitive positionposition. The Committee believes that the base salaries paid to our NEOs during FY22, as follows:reflected in the table below, were appropriate to retain and motivate the officers and were competitive with those offered by our peer companies.
Name | Start of FY19 Base Salary | % Increase (1) | End of FY19 Base Salary | |||
Current NEOs | ||||||
Christian A. Brickman | $1,000,000 | 2.0% | $1,020,000 | |||
Aaron E. Alt(2) | $600,000 | 16.7% | $700,000 | |||
Mark G. Spinks | $450,000 | 2.0% | $459,000 | |||
Scott C. Sherman | $360,000 | 2.2% | $368,000 | |||
John M. Henrich(3) | $317,200 | 21.4% | $385,000 | |||
Former NEO | ||||||
Chad L. Selvidge(4) | $350,000 | 2.3% | $358,000 |
Name |
Start of FY22 Base Salary | % Increase | End of FY22 Base Salary | |||||||||
NEOs | ||||||||||||
Denise A. Paulonis (1) | $ | 1,100,000 |
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| — |
| $ | 1,100,000 |
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Marlo M. Cormier (2) | $ | 550,000 |
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| 9.1 | % | $ | 600,000 |
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John H. Goss (2) | $ | 459,000 |
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| 14.4 | % | $ | 525,000 |
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Mark G. Spinks | $ | 459,000 |
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| 3.5 | % | $ | 475,000 |
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Mary Beth Edwards | $ | 440,000 |
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| 3.4 | % | $ | 455,000 |
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Former NEO | ||||||||||||
Pamela K. Kohn (3) | $ | 600,000 |
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| 3.0 | % | $ | 618,000 |
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(1) |
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www.sallybeautyholdings.com 57
(2) |
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(3) |
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The Compensation Committee believes that the base salaries paid to our NEOs during FY19 were appropriate to retain and motivate such officers and were competitive with those offered by our peer companies. For the actual base salaries paid to our NEOs during FY19,FY22, please see the“Summary Compensation Table” of this Proxy Statement.
Annual IncentiveANNUAL INCENTIVE
Our Annual Incentive Plan (AIP)AIP provides each NEO the opportunity to receive an annual incentive or cash awardincentive payout based on their base salary for the fiscal year, target award percentage and achievement of performance objectives:
Base Salary | X | Target Award Percentage | X | Performance Objectives Payout % | = | Award Payout | ||||||||||||||||||
Target Award |
Target AwardTARGET AWARD
Our Chief Executive Officer made recommendations to the Compensation Committee for each NEO’s target award percentage (other than himself)herself), based on job responsibilities and peer group data provided by FW Cook. The Compensation Committee determined the Chief Executive Officer’s target award percentage, based on hisher job responsibilities and the peer group data provided by FW Cook. For FY19, the Compensation Committee increased Messrs. Alt, Spinks, and Henrich’s target award percentages to better align them with market based on the peer group data provided by FW Cook. The Compensation Committee also considered Messrs. Alt and Henrich’s promotions, which warranted a higher target award percentage. The Compensation Committee approved the following FY19FY22 target award percentages:
Name | FY18 Target Award Percentage (1) | FY19 Target Award Percentage (1) | ||||||||
Current NEOs | ||||||||||
Christian A. Brickman | 100% | 100% | ||||||||
Aaron E. Alt | 60% | 80% | ||||||||
Mark G. Spinks | 60% | 70% | ||||||||
Scott C. Sherman | 60% | 60% | ||||||||
John M. Henrich | 40% | 60% | ||||||||
Former NEO | ||||||||||
Chad L. Selvidge | 60% | 60% |
Name | FY21 Target Award Percentage (1) | FY22 Target Award Percentage (1) | ||||||
NEOs | ||||||||
Denise A. Paulonis (2) |
| — |
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| 150% |
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Marlo M. Cormier |
| 70% |
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| 70% |
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John H. Goss |
| 70% |
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| 70% |
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Mark G. Spinks |
| 70% |
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| 70% |
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Mary Beth Edwards |
| 60% |
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| 65% |
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Former NEO | ||||||||
Pamela K. Kohn (3) |
| 70% |
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| 70% |
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(1) | Reflected as a percentage of base salary |
(2) | Ms. Paulonis joined the Company as President and Chief Executive Officer effective October 1, 2021. |
(3) | Ms. Kohn resigned from her position as Senior Vice President, Chief Merchandising Officer effective May 31, 2022. |
2022 Proxy Statement
The target award opportunity for each NEO under the AIP in FY19FY22 is as follows:
Name | FY19 Base Salary (1) | Target Award Percentage | Target Award | |||
Current NEOs | ||||||
Christian A. Brickman | $1,018,521 | 100% | $1,018,521 | |||
Aaron E. Alt | $692,603 | 80% | $554,082 | |||
Mark G. Spinks | $458,334 | 70% | $320,834 | |||
Scott C. Sherman | $367,408 | 60% | $220,445 | |||
John M. Henrich(2) | $342,505 | 47% | $160,840 | |||
Former NEO | ||||||
Chad L. Selvidge (3) | $263,249 | 60% | $157,950 |
Name | FY22 Base Salary (1) | Target Award Percentage | Target Award | |||||||||||||
NEOs | ||||||||||||||||
Denise A. Paulonis | $ | 1,100,000 |
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| 150 | % | $ | 1,650,000 |
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Marlo M. Cormier | $ | 587,260 |
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| 70 | % | $ | 411,082 |
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John H. Goss | $ | 508,184 |
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| 70 | % | $ | 355,728 |
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Mark G. Spinks | $ | 470,923 |
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| 70 | % | $ | 329,646 |
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Mary Beth Edwards | $ | 451,178 |
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| 65 | % | $ | 293,266 |
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Former NEO | ||||||||||||||||
Pamela K. Kohn (2) | $ | 613,414 |
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| 70 | % | $ | 429,390 |
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(1) | Base salary used for AIP target award calculation is prorated by the day and differs slightly |
(2) |
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Performance ObjectivesPERFORMANCE OBJECTIVES
In establishing the performance objectives for FY19,FY22, the Compensation Committee determined that the primary emphasis should be on financial performance objectives. Accordingly, 80% of the NEOs’ AIP award payouts are based on achievement of two pre-establishedfinancial performance goals and 20% on achievement of strategic initiatives, subject to potential adjustment based on individual performance as described below. For FY19,The Committee approved the following FY22 AIP performance objectives consisted of the following components and weightings:
Messrs. Brickman, Sherman, Henrich & Selvidge: | Mr. Alt: | Mr. Spinks: | ||||||||||||||||||
Component | Weighting | Component | Weighting | Component | Weighting | |||||||||||||||
80% Consolidated | Same Store Sales Growth | 40% | 40% Sally USA & Canada | Same Store Sales Growth | 20% | 60% BSG | Same Store Sales Growth | 30% | ||||||||||||
Adjusted Operating Income | 20% | Adjusted Operating Income | 30% | |||||||||||||||||
Adjusted Operating Income | 40% | 40% Consolidated | Same Store Sales Growth | 20% | 20% Consolidated | Adjusted Operating Income | 20% | |||||||||||||
Adjusted Operating Income | 20% | |||||||||||||||||||
20% Strategic | Strategic Initiatives | 20% | 20% Strategic | Strategic Initiatives | 20% | 20% Strategic | Strategic Initiatives | 20% | ||||||||||||
Total | 100% | Total | 100% | Total | 100% |
For shared services officers (Messrs. Brickman, Sherman, Henrich and Selvidge), the financial performance objectives were based on consolidated (all the individual reporting units combined) achievement. For heads of a business unit (Messrs. Alt and Spinks), the financial performance objectives were based on both consolidated and business unit achievement. The percentage weighting of the various financial objectives represents the Compensation Committee’s determination regarding the relative importance of each metric to our overall financial performance. The strategic initiatives component focused on company-wide initiatives that applied to all executive officers.
In setting the financial performance objectives for the AIP, the Compensation Committee reviewed our financial projections for FY19 with Mr. Brickman. For FY19, the AIP financial performance objectives were as follows:objectives:
• |
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SBH Consolidated | Sally USA & Canada | BSG | ||||||||||||||||||||||
Payout Scale | Performance Achieved | Payout % (1) | Performance Achieved | Payout % (1) | Performance Achieved | Payout % (1) | ||||||||||||||||||
Maximum | ³ 1.95% | 200% | ³ 1.18% | 200% | ³ 2.66% | 200% | ||||||||||||||||||
Target | 0.78% | 100% | 0.18% | 100% | 1.24% | 100% | ||||||||||||||||||
Threshold | - 0.90% | 25% | -1.10% | 25% | - 0.75% | 25% | ||||||||||||||||||
Below Threshold | <- 0.90% | 0% | <-1.10% | 0% | <- 0.75% | 0% |
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60% Adjusted Operating Income |
Payout Scale – AOI pays out between 0-200% of target based on performance achieved:
SBH Consolidated | Sally USA & Canada | BSG | ||||||||||||||||||||||||||||
Payout Scale | Adjusted Operating Income (Millions) | Performance Achieved | Payout % (1) |
| Adjusted Operating Income (Millions) | Performance Achieved | Payout % (1) |
| Adjusted Operating Income (Millions) | Performance Achieved | Payout % (1) | |||||||||||||||||||
Maximum | ³$515.0 | ³110.00% | 200% | ³$368.7 | ³110.00% | 200% | ³$279.2 | ³110.00% | 200% | |||||||||||||||||||||
Target | $468.1 | 100.00% | 100% | $335.2 | 100.00% | 100% | $253.8 | 100.00% | 100% | |||||||||||||||||||||
Threshold | $425.9 | 90.98% | 25% | $301.7 | 90.00% | 25% | $233.0 | 91.81% | 20% | |||||||||||||||||||||
Below Threshold | <$425.9 | <90.98% | 0% | <$301.7 | <90.00% | 0% | <$233.0 | <91.81% | 0% |
Payout Scale (1) | AOI (Millions) | Performance Achieved | Payout % | Weighted Payout % | ||||
Maximum | ≥ $552 | ≥ 115% | 200% | 120% | ||||
Target | $480 | 100% | 100% | 60% | ||||
Threshold | $408 | 85% | 25% | 15% | ||||
Below Threshold | < $408 | < 85% | 0% | 0% |
(1) | Payouts between performance levels is determined based on straight line |
• | 20% Comparable Sales – Sally Beauty Holdings, Inc.’s store sales and digital commerce revenue that have been operating for 14 months or longer as of the last day of a month and sales to franchisees and full service sales through our Distributor Sales Consultants (“DSCs”) and wholesale business. Our comparable sales excludes the effect of changes in foreign exchange rates and generally sales from stores relocated until 14 months after the relocation. The sales from acquisitions are excluded from our comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers as the calculation varies across the retail industry. |
www.sallybeautyholdings.com 59
Payout Scale – Comparable Sales pays out between 0-200% of target based on performance achieved:
Payout Scale (1) | Comparable Sales | Performance Achieved | Payout % | Weighted Payout % | ||||||||||||||||
Maximum | ≥ 8.0% | ≥ 140% | 200% | 40% | ||||||||||||||||
Target | 5.7% | 100% | 100% | 20% | ||||||||||||||||
Threshold | 1.7% | 30% | 25% | 5% | ||||||||||||||||
Below Threshold | < 1.7% | < 30% | 0% | 0% |
(1) | Payouts between performance levels is determined based on straight line interpolation |
• | 20% Strategic Initiatives |
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The AIP is designed so that if we achievePayout Scale – Strategic Initiatives pay out between 0-150% of target based on assessment by the AIP financial performance targets and strategic initiatives (as discussed above), each NEO is eligible to earn 100% of their target award. Performance at below-target levels would result in awards as low as 0% of the target award, subject to the discretion of the Compensation Committee to adjust awards as described below. If we exceed the AIP financial performance targets, each NEO is eligible to earn an AIP award in an amount up to 200% of the financial criteria components of their target award and 150% of the strategic initiatives component.Committee:
Performance Achieved | Payout % | Weighted Payout % | ||
Exceeds | 101-150% | 21-30% | ||
Target | 100% | 20% | ||
Not Fully Achieved | 0-99% | 0-19% |
To provide flexibility to recognize overall achievements in key focus areas and operational performance, which can change throughout the year based on unanticipated contingencies, the Compensation Committee does not specify individual performance objectives for individual officers under the AIP. Instead, the Compensation Committee maintains discretion to use its qualitative judgment to reduce or increase the dollar value of an individual officer’s AIP award (by up to 50 percentage points below or above the percentage of the target award resulting from application of the financial performance formulas) based upon a subjective assessment of the individual’s performance, but the adjusted payout cannot exceed the maximum award for such individual. The Compensation Committee did not exercise any such discretion with respect to FY19.No individual adjustments were made for FY22.
AWARD PAYOUT
Actual results for FY22 were as follows:
Performance Achieved | Payout % | Weighted Payout % | ||||
Adjusted Operating Income | < $408 M | 0% | 0% | |||
Comparable Sales | < 1.7% | 0% | 0% | |||
Strategic Initiatives | Target | 100% | 20% | |||
Performance Objectives Payout % | 20% |
The Committee determined that SBH delivered on our strategic initiatives, each of which is discussed further in the “Compensation Discussion and Analysis – Executive Summary – FY22 Company Strategies” section of this Proxy Statement. Accomplishments and achievements on these included enhancements to our digital and omnichannel experiences, launching customer journeys, delivering key aspects of our fulfillment technology and process updates, successful store optimization with above-target sales recapture, launching our Salon HQ platform for stylists/salons to use personalized websites to sell professional brands to clients, completing an ESG focus area assessment and initial strategic planning and further enhancing our cultural and DIB initiatives, as indicated through survey responses and other inputs. These helped SBH manage through a challenging, shifting macro-environment and set SBH up
2022 Proxy Statement
Award Payout
The final resultswell for future success on key strategies. As such, the FY19Committee determined a 100% payout for performance objectives (financial and strategic) underwith respect to our strategic initiatives was appropriate for this component of the AIP are shown in the following table:
| SBH Consolidated | Business Unit (Sally USA & Canada or BSG) | Strategic Initiatives | Performance Objectives Payout % | ||||||||||||||||||||||||||||||
Same Store Sales Growth | Adjusted Operating Income | Same Store Sales Growth | Adjusted Operating Income | |||||||||||||||||||||||||||||||
Name | Performance Achieved | Weighted Payout | Performance Achieved | Weighted Payout | Performance Achieved | Weighted Payout | Performance Achieved | Weighted Payout | Performance Achieved | Weighted Payout | ||||||||||||||||||||||||
Current NEOs | ||||||||||||||||||||||||||||||||||
Mr. Brickman |
| 39.74% |
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| 31.61% |
| 97.88% | 32.95% |
| — |
|
| — |
|
| — |
|
| — |
| 80.00% | 16.00% | 80.56% | |||||||||||
Mr. Alt |
| 39.74% |
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| 15.80% |
| 97.88% | 16.47% |
| 455.56% |
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| 32.80% |
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| 103.63% |
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| 27.26% |
| 80.00% | 16.00% | 108.33% | |||||||||||
Mr. Spinks |
| — |
|
| — |
| 97.88% | 16.47% |
| 12.90% |
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| 17.79% |
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| 94.39% |
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| 13.56% |
| 80.00% | 16.00% | 63.82% | |||||||||||
Mr. Sherman |
| 39.74% |
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| 31.61% |
| 97.88% | 32.95% |
| — |
|
| — |
|
| — |
|
| — |
| 80.00% | 16.00% | 80.56% | |||||||||||
Mr. Henrich(1) |
| 39.74% |
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| 31.61% |
| 97.88% | 32.95% |
| — |
|
| — |
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| — |
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| — |
| 80.00% | 16.00% | 80.82% | |||||||||||
Former NEO | ||||||||||||||||||||||||||||||||||
Mr. Selvidge |
| 39.74% |
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| 31.61% |
| 97.88% | 32.95% |
| — |
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| — |
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| — |
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| — |
| 80.00% | 16.00% | 80.56% |
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The table below shows the target awards and the award payouts under the AIP for the NEOs for FY19:FY22 and the award payouts:
Name | Target Award | Performance Objectives Payout % | Award Payout | ||||||||||||
Current NEOs | |||||||||||||||
Mr. Brickman | $1,018,521 | 80.56% | $820,520 | ||||||||||||
Mr. Alt | $554,082 | 108.33% | $600,237 | ||||||||||||
Mr. Spinks | $320,834 | 63.82% | $204,756 | ||||||||||||
Mr. Sherman | $220,445 | 80.56% | $177,590 | ||||||||||||
Mr. Henrich(1) | $160,840 | 80.82% | $129,993 | ||||||||||||
Former NEO | |||||||||||||||
Mr. Selvidge(1) | $157,950 | 80.56% | $127,244 |
Name | AIP Target Award | Performance Objectives Payout % | AIP Award Payout | |||||||
NEOs | ||||||||||
Denise A. Paulonis | $ | 1,650,000 |
| 20% | $ | 330,000 |
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Marlo M. Cormier | $ | 411,082 |
| 20% | $ | 82,216 |
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John H. Goss | $ | 355,728 |
| 20% | $ | 71,146 |
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Mark G. Spinks | $ | 329,646 |
| 20% | $ | 65,929 |
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Mary Beth Edwards | $ | 293,266 |
| 20% | $ | 58,653 |
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Former NEO | ||||||||||
Pamela K. Kohn (1) | $ | 284,795 |
| 20% | $ | 56,959 |
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(1) |
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Long-Term IncentivesLONG-TERM INCENTIVES
The Compensation Committee’s policy is to grant long-term incentive orapprove equity awards and have them be effective on the same day it approves the grant.day. Other than specialone-time grants, such as at the time of a new hire or promotion, the Compensation Committee intends to grant equity awards to its executive officers once a year, and such grants are generally made at the same time that the Compensation Committee approves base salary increases and the AIP target awards for the fiscal year. These actions generally occur within the first monthquarter of the fiscal year.
Our Senior Vice President of Compensation, Benefits and HRISChief Human Resources Officer provides our Chief Executive Officer with a listing of employees eligible for equity awards. Our Chief Executive Officer then makes a grant recommendation to the Compensation Committee for each of the proposed grantees, including the NEOs other than himself,herself, based on consideration of the value of the grants that the employee received in prior years, the competitive market data provided to the Committee by FW Cook, and hisher views as to the employee’s expected future contribution to our business results. The ChairmanChair of the Compensation Committee of the Board of Directors recommends to the Compensation Committee the Chief Executive Officer’s proposed equity grant based on hisher review of competitive market data provided by FW Cook.Cook and the CEO’s performance. The Compensation Committee is ultimately responsible for determiningapproving the award grant value and the methodology for converting this value into number of options or shares to be awarded and for approving each grant.shares. In making this determination,equity grants for eligible employees, the Compensation Committee considers the recommendations of the Chief Executive Officer the long-term incentive opportunity market data provided by FW Cook, and the competitive data provided by FW Cook regarding aggregate share usage and costs associated with equity grants.
www.sallybeautyholdings.com 61
The Compensation Committee sets an aggregate long-term incentive budget to determine the total amount of equity awards that may be awarded in any fiscal year. The Compensation Committee determines the budget after discussions with FW Cook and management and a review of peer group practices, evaluation of prior year performance and the projected impact to our net income. Based upon input received from FW Cook, the long-term incentive award opportunities provided to our executive officers are conservative relative to market practice.
FY19 Equity AwardsFY22 EQUITY AWARDS
Consistent with its equity grant policy, the Compensation Committee granted optionsRSUs and TBRSAsPSUs in November 20182021 to each of our executive officers. The Compensation Committee delayed the grant of theFY19-21 PBRSUs to January 2019 to allow management additional time to assess key assumptions around business performance, investments in support of continued transformation and uses of cash for theFY19-21 period, each of which informed the performance goals for theFY19-21 PBRSUs. For more information regarding the equity awards granted to our NEOs during FY19,FY22, please see the “Grants of Plan-Based AwardsAwards”” table of this Proxy Statement. As a condition of the grant, grantees, including our NEOs, have agreed that, for one year following termination of employment, they will not solicit our employees or customers. The intended grant value of the NEOs’ FY19FY22 equity awards are reflected in the following table:
Name |
Grant Value | |||||
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| $ | 4,250,000 | ||||
| $ | 800,000 | ||||
John H. Goss | $ | 600,000 | ||||
Mark G. Spinks | $ | 600,000 | ||||
| $ | 500,000 | ||||
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Former NEO | ||||||
| $ | 800,000 |
(1) |
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• | RSUscomprised 50% of the equity award value. RSUs vest ratably over a three-year period, subject to continued employment. |
• | PSUscomprised 50% of the equity award value. PSUs are eligible to vest based on the following FY22-24 PSU performance objectives (and continued employment): |
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TSR = | Ending Stock Price – Beginning Stock Price + Reinvested Dividends | |||||||
Beginning Stock Price |
– | Beginning and EndingStock Price Determination: A 30-day trading average at the beginning and ending of the rTSR Performance Period. |
– | Dividend Reinvestment: Dividends will be determined using the Ex-Dividend date with the sum of all dividends paid throughout the performance period added to the difference between the Ending Stock Price and Beginning Stock Price. |
Sally Beauty Holdings, Inc.’s TSR is measured on a relative basis compared to the rTSR Comparator Companies.
If Sally Beauty Holdings, Inc.’s absolute TSR (as measured for the FY22-24 PSU grants) is negative, then the payout will be capped at 100%.
◾ | rTSR Performance Periodmeans fiscal years of the |
◾ | rTSR Comparator Companiesare the companies comprising the S&P Composite 1500 Specialty Stores Index. |
2022 Proxy Statement
The S&P Composite 1500 Specialty Stores Index companies are locked in as of the grant date and remain the same throughout the rTSR Performance Period even if the Index composition changes.
Award treatment if the following situations occur during the rTSR Performance Period:
Situation | Plan Treatment | |||
Adjustments | Stock splits and recapitalizations | Opening share price adjusted | ||
rTSR Comparator Company bankruptcy / delisting / liquidation | Company not removed from rTSR Comparator Companies; Company considered to be at the bottom of the rTSR Comparator Companies | |||
rTSR Comparator Company acquired or taken private | Company removed from the rTSR Comparator Companies from the beginning of the performance period | |||
rTSR Comparator Company announcement of being acquired but not yet closed | ||||
No Adjustments | Stock buybacks or issuance | No special adjustments made | ||
Significant acquisition or divestiture | Acquisition or divestiture would impact the company’s TSR, so no adjustment needed | |||
rTSR Comparator Company financial restatements which occur after the performance period ends | No adjustments made; Captured in the next annual grant cycle as |
◾ | rTSR Payout Scale– rTSR pays out between 0-200% of target based on Sally Beauty Holdings, Inc.’s percentile rank: |
Payout Scale (1)(2) | SBH’s Percentile Rank | Payout % | ||||||||
Maximum | ≥ 85 |
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| % | |||||
Target | 55th %ile | 100 | % | |||||||
Threshold | 25th %ile | 25 | % | |||||||
Below Threshold | < 25th %ile | 0 | % |
|
PBRSUs Granted | è | Adjusted OI Growth (60%) | + | ROIC (40%) | = | Total Payout | ||||||||||||
Payout Scale | Payout % (1) | Payout Scale | Payout % (1) | Payout Scale | Payout % (1) | |||||||||||||
Maximum | 200% | Maximum | 200% | Maximum | 200% | |||||||||||||
Target | 100% | Target | 100% | Target | 100% | |||||||||||||
Threshold | 50% | Threshold | 50% | Threshold | 50% | |||||||||||||
Below Threshold | 0% | Below Threshold | 0% | Below Threshold | 0% |
(1) | Payouts between performance levels will be determined |
(2) | If Sally Beauty Holdings, Inc.’s absolute TSR (as measured for the |
– | 50% AOIM measured over three, one-year performance periods. |
AOIMis defined as Sally Beauty Holdings, Inc.’s adjusted operating income divided by total sales for the AOIM Performance Period. |
AOIM Performance Period means: |
Year 1: Fiscal year of the Company beginning on October 1, 2021 and ending on September 30, 2022 (“Y1AOIM”);
Year 2: Fiscal year of the Company beginning on October 1, 2022 and ending on September 30, 2023 (“Y2AOIM”); and
Year 3: Fiscal year of the Company beginning on October 1, 2023 and ending on September 30, 2024 (“Y3AOIM”).
www.sallybeautyholdings.com 63
◾ | AOIM Payout Scale – AOIM pays out between 0-200% of target based on SBH’s performance: |
Payout Scale (1) | SBH’s Performance | Payout % | ||||||
Maximum |
| ≥ 107% |
|
| 200 | % | ||
Target |
| 100% |
|
| 100 | % | ||
Threshold |
| 93% |
|
| 25 | % | ||
Below Threshold |
| < 93% |
|
| 0 | % |
(1) | Payouts between performance levels will be determined on a straight line interpolation. |
Any Determination ofFY17-19FY22-24 PBRSUsAOIM PSUs earned are banked and paid out after completion of all performance periods on November 15, 2024, subject to the executive’s continued employment.
DETERMINATION OF FY20-22 PSUS
Following the completion of the performance period on September 30, 2022, the Compensation Committee determined that theFY17-19FY20-22 PBRSUsPSUs granted in November 20162019 were not earned because the Company did not achieve threshold performance levels for either the salesAOI growth metric (40%(60%) or the ROIC metric (60%(40%). :
AOI Growth (60%) | ROIC (40%) | |||||||||||||||
Payout Scale (1) | Performance Achieved (2) | Payout % | Performance Achieved | Payout % | ||||||||||||
Maximum |
| ≥ 5.0% |
|
| 200% |
|
| ≥ 23.6% |
|
| 200% |
| ||||
Target |
| 4.5% |
|
| 100% |
|
| 22.6% |
|
| 100% |
| ||||
Threshold |
| 4.0% |
|
| 50% |
|
| 21.6% |
|
| 50% |
| ||||
Below Threshold |
| < 4.0% |
|
| 0% |
|
| < 21.6% |
|
| 0% |
| ||||
Actual Performance Achieved & Payout % |
| -5.1% |
|
| 0% |
|
| 16.2% |
|
| 0% |
|
(1) | Payouts between performance levels were determined based on straight line interpolation. |
(2) | AOI growth performance was calculated using the compounded annual growth rate over the three-year performance period. |
Per the terms of the award, theFY17-19FY20-22 PBRSUsPSUs were cancelled without payout.
DETERMINATION OF FY21-23 Y2AOI PSUS
Following the completion of the second of three performance periods, the Committee determined that the FY21-23 Y2AOI PSUs granted in January 2021 were not earned because the Company did not achieve threshold performance levels for the Y2AOI metric:
Payout Scale (1) | Y2AOI (Millions) | SBH’s Performance | Payout % | |||||||||
Maximum |
| ≥ $552 |
|
| ≥ 115% |
|
| 200% |
| |||
Target |
| $480 |
|
| 100% |
|
| 100% |
| |||
Threshold |
| $408 |
|
| 85% |
|
| 25% |
| |||
Below Threshold |
| < $408 |
|
| < 85% |
|
| 0% |
| |||
Actual Performance & Payout % |
| $391 |
|
| 81.5% |
|
| 0% |
|
2022 Proxy Statement
(1) | Payouts between performance levels were determined based on straight line interpolation. |
Per the terms of the award, the FY21-23 Y2AOI PSUs were cancelled without payout.
DETERMINATION OF FY22-24 Y1AOIM PSUS
Following the completion of the first of three performance periods, the Committee determined that the FY22-24 Y1AOIM PSUs granted in November 2021 were not earned because the Company did not achieve threshold performance levels for the Y1AOIM metric:
Payout Scale (1) | Y1AOIM | SBH’s Performance | Payout % | |||||||||
Maximum |
| ≥ 12.6% |
|
| ≥ 107% |
|
| 200% |
| |||
Target |
| 11.8% |
|
| 100% |
|
| 100% |
| |||
Threshold |
| 11.0% |
|
| 93% |
|
| 25% |
| |||
Below Threshold |
| < 11.0% |
|
| < 93% |
|
| 0% |
| |||
Actual Performance & Payout % |
| 10.3% |
|
| 86.9% |
|
| 0% |
|
(1) | Payouts between performance levels were determined based on straight line interpolation. |
Per the terms of the award, the FY22-24 Y1AOIM PSUs were cancelled without payout.
MS. PAULONIS SIGN-ON COMPENSATION PACKAGE
On October 1, 2021, Denise Paulonis joined the Company as President and Chief Executive Officer. Per the terms of her new hire offer, Ms. Paulonis was entitled to an annual salary of $1,100,000 and an AIP target annual bonus of 150% of her base salary. Ms. Paulonis was eligible to receive a LTI award with a grant date target value equal to $4,250,000. The Company and Ms. Paulonis entered into a change-in-control severance agreement having terms consistent with those provided to the other executive officers. In connection with her commencement of employment with the Company, Ms. Paulonis also received certain make-whole awards to compensate her for amounts forfeited upon termination from her prior employer, including a cash sign-on bonus of $400,000 (50% of which was subject to repayment if Ms. Paulonis resigned or if the Company terminated her employment for cause within her first year of employment with the Company) and an equity grant of RSUs with a grant date value of $1,450,000 and options with a grant date value of $1,000,000. The RSUs and options will vest ratably over three years beginning on the first anniversary of the date of grant, subject to Ms. Paulonis’ continued employment with the Company on each applicable vesting date and subject to such other terms and conditions of the Company’s 2019 Omnibus Incentive Plan and the individual award agreements. The Company also assisted Ms. Paulonis with her relocation to the Company’s headquarters and reimbursed Ms. Paulonis for relocation expenses (limited per our executive relocation policy).
Other CompensationOTHER COMPENSATION
Consistent with our philosophy of emphasizing performance-based pay, our executive compensation program provides limited executive benefits and perquisites. Our NEOs are eligible to participate in the benefit plans generally available to all of our U.S. employees, which include health, dental, vision, life insurance, and disability plans. In addition, our NEOs (along with our other U.S. employees) are eligible to participate in our 401(k) plan, which represents the only retirement plan that we provide to our NEOs. Under the 401(k) plan, our employees may contribute (on apre-tax basis) up to 50% of eligible compensation, subject to Internal Revenue Code limitations. After a year of service, we match each employee’s contribution (including our NEOs) at a rate of 100% on the first 4% of the employee’s eligible compensation. Employees are immediately vested in the matching contributions made by us. Our NEOs are also eligible for reimbursement of an annual physical exam. In addition, we may offer Company-paid COBRA and relocation expenses for new executive officers.
www.sallybeautyholdings.com 65
The Compensation Committee believes that offering the above-described benefits and perquisites to our NEOs is consistent with the terms and benefits offered by other similarly-situated public companies and enhances our ability to retain our NEOs. Given the fact that these items represent a relatively insignificant portion of our NEOs’ total compensation, the availability of such items does not materially influence the decisions made by the Compensation Committee with respect to the other elements of the total compensation payable to our NEOs.
Change-in-ControlCHANGE-IN-CONTROL Severance ProtectionSEVERANCE PROTECTION
Manychange-in-control transactions result in significant organizational changes, particularly at the senior executive level. To encourage our senior executive officers to remain employed with the Company during an important time when their prospects for continued employment can be uncertain, we are parties tochange-in-control severance agreements with each of our NEOs, which provide payments and benefits in the event of the executive’s termination of employment by the Company without cause or by the executive for “good reason” within two years following a change in control. Because a termination by the executive for good reason is effectively a “constructive termination” by the Company without cause, we believe it is appropriate to provide severance benefits in these circumstances. The Compensation Committee has determined that ourchange-in-control agreements were generally consistent with those in place at similarly-situated public companies, were designed to keep our executivesexecutive officers focused on their work responsibilities during the uncertainty that accompanies a potentialchange-in-control, and were necessary to retain and recruit our senior executives.executive officers. The Compensation Committee also deemed it important from a retention perspective to treat all of the NEOs similarly with respect to theirchange-in-control arrangements.
Under the terms of our 2010 and 2019 Omnibus Incentive Plans, stock options and restricted stock awardsRSUs / RSAs have “double trigger”change-in-control vesting if the awards are assumed by the surviving company and equitably converted to awards for publicly traded stock in connection with such transaction. This means that the awards would vest upon the holder’s involuntary separation from service within two years following the change in control, or such other period specified by the Compensation Committee. If the awards are not assumed by the surviving company and equitably converted, they would vest upon the change in control. In addition, upon a change in control, PBRSUs will bePSUs granted in FY20 would have been cancelled in exchange for an amount equal to the change in control price multiplied by the target number of PBRSUsPSUs granted. This vesting approach aidsOn November 4, 2020, the Committee approved an amendment to the 2019 Omnibus Plan so that commencing with FY21, PSUs will be subject to a “double trigger” change-in-control acceleration for awards that are assumed in our ability to retain key executives during the critical time leading up to and following a change in control.transaction.
Additional Compensation PoliciesADDITIONAL COMPENSATION POLICIES
Compensation Recoupment PolicyCOMPENSATION RECOUPMENT POLICY
The Company has adopted a compensation recoupment policy that complies with and goes beyond the parameters described in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Consistent with the Dodd-Frank Act, if we are required to prepare an accounting restatement due to material noncompliance with financial reporting requirements under the U.S. securities laws, we will seek to recover from any current or former executive officer incentive-based compensation (including equity compensation) received during the three-year period preceding the date on which the accounting restatement was required to be made. The amount to be recovered is the excess of the amount paid calculated by reference to the erroneous data, over the amount that would have been paid to the executive officer calculated using the corrected accounting statement data. This compensation recovery would be applied regardless of whether the executive officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement.
In addition to the above-described recoupment specified by the Dodd-Frank Act, our policy also requires the Company, to the extent permitted by governing law, to seek reimbursement ofnon-equity incentive compensation paid to any current or former employee, where: A) (i) the payment was predicated upon the achievement of specified financial results; (ii) such financial results were subsequently the subject of a restatement or other material adjustment, (iii) in the Compensation Committee’s view the person engaged in misconduct that caused or contributed to the need
2022 Proxy Statement
for the restatement or material adjustment, and (iv) a lower payment would have been made to the person based upon the correct financial results; or B) such employee commits an act of embezzlement, fraud or theft with respect to the property of the Company. In each such instance, the Company will seek to recover the person’s entirenon-equity incentive compensation payment (not just the excess amount earned based on erroneous data) paid during the12-month period preceding the Compensation Committee’s determination that the person engaged in misconduct.
In FY19,FY20, the Company amended our policy to provide that, in addition to the above-described recoupment, in the event that the Compensation Committee determines that any current or former employee engages in misconduct (as defined in the policy), then the Compensation Committee may, in its sole discretion, require (i) cancellation or forfeiture of such current or former employee’s unvested equity awards granted on or after September 18, 2019, and/or (ii) such current or former employee to reimburse the Company for their most recently receivednon-equity incentive compensation.
Equity Ownership Guidelines and Retention RequirementEQUITY OWNERSHIP GUIDELINES AND RETENTION REQUIREMENT
Consistent with our commitment to aligning the interests of our executivesexecutive officers with stockholders, the Nominating and Corporate Governance Committee of our Board of Directors has adopted equity ownership guidelines which apply to our officers at the Vice President level and above.executive officers. Pursuant to these guidelines, executive officers are encouraged to own shares of our Common Stock generally equal in value to a multiple of their annual base salary (as in effect on December 1st of each year) depending on such executive’sexecutive officer’s level in the Company.
The guidelines provide that shares owned outright by the executive officer or indirectly (e.g., owned or held in trust by an immediate family member), vested but unexercised stock options, shares the receipt of which has been deferred, as well as shares held in company sponsored benefit or retirement plans, count towards the grantee’s stockexecutive officer’s equity ownership totals, with each option counting as one share of stock owned.totals. Unvested stockoptions, vested but unexercised options, restricted shares (stock for which restrictions have not lapsed), restricted stock unitsRSUs which have not been settled, as well as unearned PBRSUs,PSUs, do not count as stock owned under the guidelines. The executive officer equity ownership guidelines, as applicable to the NEOs, are as follows:
|
| |||||||
Position | Ownership Guideline (Multiple of Base Salary) | |||||||
Chief Executive Officer | 5x | |||||||
Presidents and Senior Vice Presidents | 3x | |||||||
|
Until such time as the executive officer reaches their equity ownership guideline, the executive officer will be required to retain that percentage of the shares of Common Stock received upon vesting of restricted stock, settlement of restricted stock units, payout of PSUs and exercise of stock options (net of any shares utilized to pay for the exercise price of the option and/or tax withholding for the option, restricted stock, RSUs or restricted stock units,PSUs, as applicable) as set forth below:
|
| ||||
Position | Retention Requirement | ||||
Chief Executive Officer | 100% | ||||
Presidents and Senior Vice Presidents | 50% | ||||
|
Because executive officers must retain a percentage of shares resulting from any exercise of stock options, settlement of restricted stock unitsRSUs or PSUs or the vesting of restricted stock until they achieve the specified guidelines, there is no minimum time period required to achieve the equity ownership guidelines set forth above. As of September 30, 2019,2022, all of our executive officers were in compliance with our equity retention requirements.
The Compensation Committee may in the future consider an executive’sexecutive officer’s achievement of the equity ownership guidelines in its award of further equity grants.
www.sallybeautyholdings.com 67
USE OF Use ofPre-ApprovedPRE-APPROVED Trading PlansTRADING PLANS
We permit our executive officers and Directors to enter intopre-approved trading plans established according toRule 10b5-1 under SEC rules, with an independent broker-dealer to enable them to either a) purchase securities; or b) to recognize the value of their compensation and diversify their holdings of our securities during periods in which they might otherwise not be able to buy or sell our stock because important information about us had not been publicly released. These plans include specific instructions for the broker to exercise options or purchase or sell stock on behalf of the plan participant if our stock price reaches a specified level or certain events occur. The plan participant no longer controls the decision to purchase, exercise or sell the securities in the plan.
Policy Against Margin Trading, Pledging or Hedging Company StockPOLICY AGAINST MARGIN TRADING, PLEDGING OR HEDGING COMPANY STOCK
Certain forms of hedging or monetization transactions, such aszero-cost collars and forward sale contracts, allow a director, officer or other employee to lock in much of the value of their stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the person to continue to own the covered securities but without the full risks and rewards of ownership. When that occurs, he or she may no longer have the same objectives as the Company’s other stockholders. Therefore, pursuant to our published insider trading policy, our directors, officers and other employees are prohibited from engaging in any such transactions. Our insider trading policy also prohibits transactions in puts, calls or other derivative securities, on an exchange or in any other organized market.
COMPENSATIONDECISION-MAKING PROCESS
Role of Compensation CommitteeROLE OF COMPENSATION AND TALENT COMMITTEE
The Compensation Committee reviews each component of our executive compensation program, and the methods for determining the types and amounts of compensation, to assure that they help us meet our compensation philosophy and objectives. The Compensation Committee receives input from its independent compensation consultant as well as from members of management, as discussed below.
The Chair of our Compensation Committee has significant experience in the management of professionals and has served both as chair and as a member of the compensation committees of other publicly-traded companies, and all of our Compensation Committee members have significant experience with regard to the oversight of executive compensation practices of large publicly-traded companies. The Board believes that this experience provides the members of our Compensation Committee with a solid frame of reference within which to evaluate our executive compensation programs and practices.
Role of Independent Compensation ConsultantROLE OF INDEPENDENT COMPENSATION CONSULTANT
The Compensation Committee retained the services of an independent consultant, FW Cook, to assist in its annual review of our executive compensation program and biennial review of ournon-employee director compensation program. As part of this engagement, FW Cook assisted the Compensation Committee in the design of our current programs and continues to advise the Compensation Committee on our programs. The Compensation Committee has directly engaged FW Cook to assist with these same services for FY19,FY22, based on FW Cook’s experience, expertise and familiarity with the Company. FW Cook does not provide any services to our management, and does not provide any service to us, other than with respect to its role as the Compensation Committee’s executive compensation consultant.
The Compensation Committee determined that the work of FW Cook did not raise any conflicts of interest in FY19.FY22. In making this assessment, the Compensation Committee considered the independence factors enumerated inRule 10C-1(b) under the Securities Exchange Act of 1934 and the NYSE listing standards, including the fact that FW Cook does not provide any other services to the Company, the level of fees received from the Company as a percentage of FW Cook’s total revenue, policies and procedures employed by FW Cook to prevent conflicts of interest, and whether the individual FW Cook advisers to the Compensation Committee own any stock of the Company or have any business or personal relationships with members of the Compensation Committee or our executive officers.
2022 Proxy Statement
Role of ManagementROLE OF MANAGEMENT
The Compensation Committee also considers the views and insights of our management, including our executive officers, in making compensation decisions. Our Chief Executive Officer recommends to the Compensation Committee the base pay levels and individual compensation targets for each executive officer (other than himself)herself) based on each executive’s experience, as well as our Chief Executive Officer’s view as to the strategic importance of that executive’s role, knowledge and performance. Our Chief Executive Officer’s unique insight into our business andday-to-day interaction with our senior executivesexecutive officers provides a valuable resource to the Compensation Committee with respect to our executive compensation programs. In addition, the Compensation Committee relied on recommendations made by our Chief Executive Officer and our Chief Financial Officer in selecting the performance metrics and targets for FY19FY22 incentive awards.
Our Chief Executive Officer as well as other members of management generally attend Compensation Committee meetings to provide input on executive contributions, but no member of management participates in discussions with the Compensation Committee concerning their own compensation. The Compensation Committee also works closely with our internal legal, human resources, and finance personnel in establishing and monitoring our compensation programs. Our Chief Financial Officer provides the Compensation Committee with input on our financial performance and operational issues, and our General Counsel provides input to the Compensation Committee regarding compliance with the laws, regulations and best practices applicable to executive compensation.
Market Data/BenchmarkingMARKET DATA/BENCHMARKING
FW Cook assisted the Compensation Committee in benchmarking our compensation arrangements and aggregate equity compensation practices against public companies similar in size and scope to our company. FW Cook obtained proxy data from the peer companies described below, as well as comparative compensation surveys of general industryretail companies.
The following 16 specialty retail companies comprised our peer group for FY19FY22 and was used to set FY19FY22 compensation for our NEOs, which we refer to as our “peer companies” or “peer group”:
Abercrombie & Fitch | Foot Locker | Signet Jewelers | ||||||
American Eagle Outfitters | Guess? | Ulta Beauty | ||||||
At Home Group | Hibbett Sports | Urban Outfitters | ||||||
Caleres | Kontoor Brands | Williams-Sonoma | ||||||
Carter’s | Party City | Wolverine World Wide | ||||||
Dick’s Sporting Goods | ||||||||
The Compensation Committee selected the companies in the peer group, after reviewing data on retail companies (including financial metrics,line-of-business, stock performance and employee count for each respective company) and considering several criteria, including the comparability of specialty retailers and the volatility and maturity of potential peers. InAt the time of approval, in terms of size, our revenues were between the median and 75th percentile and our market capitalization approximatedwas between the 25th percentile and median of these peer companies. The peer group differs from our peer group for FY18. FY21.
The Compensation Committee approved the addition of the following companies based on such companies being comparable to our financials, having similar to us with respect to revenue, market capitalizationbusiness operations and international strategy, as well as our view that such companies are competitors for executive talent: American Eagle Outfitters, Carter’s, Chico’s FAS, Designer Brands, Party City, and Signet Jewelers. providing balance within the peer group: At Home Group, Guess?, and Hibbett Sports.
The Compensation Committee approved the removal of the following companies due to differing size and/or business focuses/focuses / economics: Advance Auto Parts, Columbia Sportswear, Fossil Group, GNC Holdings, O’Reilly Automotive,Chico’s FAS, Designer Brands, and Pier 1 Imports.The Michaels Companies.
www.sallybeautyholdings.com 69
Total Compensation ReviewTOTAL COMPENSATION REVIEW
As part of its process for determining the amount and mix of total compensation to be paid to our executive officers in FY19,FY22, the Compensation Committee reviewed tally sheets prepared by management containing information for each executive officer regarding, among other things:
compensation for the last four fiscal years;
length of service;
the types and amounts of long-term incentives granted in the last four fiscal years;
the types and amounts of our equity securities, both vested and unvested, owned as of the end of the most recently completed fiscal year;
the proceeds realized from option exercises and PSU / RSU / RSA releases during the last four fiscal years; and
perquisites and other compensation paid during the last four fiscal years; and
the severance and other payments that would be received upon the occurrence of certain events, taking into account the proposed compensation to be paid to such executive officer for the new fiscal year.years.
The Compensation Committee believes that this comprehensive annual review is important to understanding the total compensation paid and, in certain circumstances, payable to, our executive officers. The Compensation Committee uses these reports to test whether the various forms, targets, mix, and amounts of compensation paid and payable to our executive officers remain consistent with our compensation strategy. Based on its review for FY19,FY22, the Compensation Committee believes that the overall compensation of our executive officers was in line with the philosophy and objectives set forth above.
The Compensation Committee strives to make decisions on each component of executive compensation within the context of an officer’s entire compensation package, meaning that a decision on one compensation component (such as base salary) impacts decisions made on other compensation components (such as annual and long-term incentives). Based upon input received from FW Cook, the Compensation Committee believes that this program balances both the mix of cash and equity compensation, the mix of annual and long-term incentives, and the security ofchange-in-control severance benefits in a way that furthers the compensation objectives discussed above.
Consideration of Stockholder Vote on Executive CompensationCONSIDERATION OF STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION
At the annual meeting of stockholders on January 26, 2017, our stockholders expressed a preference that advisory votes on executive compensation occur every year. In accordance with the results of this vote, the Board determined to implement an advisory vote on executive compensation every year until the next required vote on the frequency of stockholder votes on the compensation of executives, which is scheduled to occur at the 2023 annual meeting. Therefore, the last advisory vote was held in 20192022 and the next advisory vote on executive compensation will occur at this annual meeting. Please refer to “Proposal 2 —– Advisory Vote on Executive Compensation” section of this Proxy Statement for information regarding the advisory(non-binding) resolution regarding the compensation of the Company’s NEOs, including the Company’s compensation practices and principles and their implementation, as disclosed in this Proxy Statement.
At the annual meeting of stockholders on January 31, 2019,27, 2022, in the advisory vote on executive compensation, over 96%98% of the shares voted were voted in support of the compensation of the Company’s NEOs. The Compensation Committee appreciates and values the views of our stockholders. As part of its compensation review, the Compensation Committee considered both the results of the 20192022 advisory vote on executive compensation and feedback from our stockholders, and concluded that the compensation paid to our executive officers and the Company’s overall executive pay practices have strong stockholder support and have been effective in implementing the Company’s stated compensation philosophy and objectives. The Compensation Committee recognizes that executive pay practices and notions of sound governance principles continue to evolve. Consequently, the Compensation Committee intends to continue paying close attention to the advice and counsel of its compensation advisors and invites our stockholders to communicate any concerns or opinions on executive pay directly to the Compensation Committee or the Board. Please refer to“Corporate Governance, the Board and Its Committees —CommunicationsCommittees—Communications with the Board” section of this Proxy Statement for information about communicating with the Board.
2022 Proxy Statement
MANAGEMENT OF COMPENSATION-RELATED RISK
We design our executive compensation program to avoid excessive risk-taking. The following are some of the features of our program designed to help us appropriately manage business risk:
Diversification of incentive-related risk by employing complementary performance measures linked to growth, profitability and capital efficiency;
A balanced weighting of the various performance measures, to avoid excessive attention on achievement of one measure over another;
An assortment of vehicles for delivering compensation, including cash and equity-based incentives with different time horizons, to focus our executivesexecutive officers on specific objectives that help us achieve our business plan and create an alignment with long-term stockholder interests;
A compensation recoupment/clawback policy;
Standardized equity grant procedures; and
Equity ownership and retention guidelines applicable to all executive officers.
www.sallybeautyholdings.com 71
Compensation Committee ReportCOMPENSATION AND TALENT
COMMITTEE REPORT
The Compensation and Talent Committee (“Committee”) has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K included in this Proxy Statement. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation and Talent Committee
Diana S. Ferguson (Chair)
Rachel R. Bishop, Ph.D.
Jeffrey Boyer
Dorlisa K. Flur
Linda Heasley
Edward W. Rabin (Chair)
Linda Heasley
Susan R. Mulder
The foregoing report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
Compensation TablesCOMPENSATION TABLES
The following table contains compensation information for our NEOs. The information included in this table reflects compensation earned by the NEOs for services rendered to us for the fiscal years ended September 30, 2019,2022, September 30, 20182021, and September 30, 2017.2020.
Name and Principal Position (1) | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | All Other Compensation ($) (5) | Total ($) | ||||||||||||||||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||||||||||||||||
Christian A. Brickman | 2019 | 1,018,462 | — | 2,639,992 | 1,359,995 | 820,520 | 12,895 | 5,851,864 | ||||||||||||||||||||||||||||||||
President and Chief Executive Officer | 2018 | 1,000,000 | — | 1,979,992 | 1,019,996 | 650,000 | 12,480 | 4,662,468 | ||||||||||||||||||||||||||||||||
| 2017
|
|
| 998,346
|
|
| —
|
|
| 1,016,656
|
|
| 2,033,330
|
|
| 99,829
|
|
| 14,549
|
|
| 4,162,710
|
| |||||||||||||||||
Aaron E. Alt | 2019 | 692,308 | — | 593,981 | 305,997 | 600,237 | 16,354 | 2,208,877 | ||||||||||||||||||||||||||||||||
Senior Vice President, Chief Financial Officer | 2018 | 216,923 | 250,000 | 937,997 | 462,000 | 130,192 | 184,362 | 2,181,474 | ||||||||||||||||||||||||||||||||
and President, Sally Beauty Supply
| ||||||||||||||||||||||||||||||||||||||||
Mark G. Spinks | 2019 | 458,308 | — | 395,994 | 203,998 | 204,756 | 12,400 | 1,275,456 | ||||||||||||||||||||||||||||||||
President, Beauty Systems Group | 2018 | 447,308 | — | 395,992 | 203,999 | 149,117 | 12,319 | 1,208,735 | ||||||||||||||||||||||||||||||||
| 2017
|
|
| 411,935
|
|
| —
|
|
| 183,331
|
|
| 366,666
|
|
| 49,420
|
|
| 13,520
|
|
| 1,024,872
|
| |||||||||||||||||
Scott C. Sherman | 2019 | 367,385 | — | 296,982 | 152,999 | 177,590 | 12,312 | 1,007,268 | ||||||||||||||||||||||||||||||||
Senior Vice President and Chief Human | 2018 | 360,000 | — | 263,982 | 135,996 | 148,370 | 13,541 | 921,889 | ||||||||||||||||||||||||||||||||
Resources Officer
| ||||||||||||||||||||||||||||||||||||||||
John M. Henrich | 2019 | 342,369 | — | 131,980 | 67,999 | 129,993 | 7,753 | 680,094 | ||||||||||||||||||||||||||||||||
Senior Vice President, General Counsel and Secretary | ||||||||||||||||||||||||||||||||||||||||
Former NEO
| ||||||||||||||||||||||||||||||||||||||||
Chad L. Selvidge | 2019 | 266,508 | — | 263,978 | 135,999 | 127,244 | 259,064 | 1,052,793 | ||||||||||||||||||||||||||||||||
Former Senior Vice President and Chief Merchandising Officer
|
Name and Principal Position (1) | Fiscal Year | Salary ($) | Bonus ($)(8) | Stock Awards ($)(2)(3)(4) | Option Awards ($)(5) | Non-Equity Incentive Plan Compensation ($)(6) | All Other Compensation ($)(7) | Total ($) | ||||||||||||||||||||||||
NEOs | ||||||||||||||||||||||||||||||||
Denise A. Paulonis |
| 2022 |
|
| 1,083,077 |
|
| 400,000 |
|
| 5,357,400 |
|
| 999,999 |
|
| 330,000 |
|
| 192,678 |
|
| 8,363,154 |
| ||||||||
President and Chief Executive Officer | ||||||||||||||||||||||||||||||||
Marlo M. Cormier |
| 2022 |
|
| 586,538 |
|
| — |
|
| 768,259 |
|
| — |
|
| 82,216 |
|
| 22,245 |
|
| 1,459,258 |
| ||||||||
Senior Vice President, Chief Financial Officer |
| 2021 |
|
| 531,539 |
|
| — |
|
| 320,534 |
|
| 178,495 |
|
| 491,655 |
|
| 10,859 |
|
| 1,533,082 |
| ||||||||
John H. Goss |
| 2022 |
|
| 507,231 |
|
| — |
|
| 578,453 |
|
| — |
|
| 71,146 |
|
| 16,546 |
|
| 1,173,376 |
| ||||||||
President, Sally Beauty Supply |
| 2021 |
|
| 441,289 |
|
| — |
|
| 262,529 |
|
| 146,197 |
|
| 402,029 |
|
| 18,424 |
|
| 1,270,468 |
| ||||||||
Mark G. Spinks |
| 2022 |
|
| 470,692 |
|
| — |
|
| 589,050 |
|
| — |
|
| 65,929 |
|
| 21,128 |
|
| 1,146,799 |
| ||||||||
President, Beauty Systems Group |
| 2021 |
|
| 459,000 |
|
| — |
|
| 366,327 |
|
| 203,998 |
|
| 430,542 |
|
| 21,669 |
|
| 1,481,536 |
| ||||||||
| 2020 |
|
| 427,223 |
|
| 192,780 |
|
| 395,970 |
|
| 203,996 |
|
| — |
|
| 12,493 |
|
| 1,232,462 |
| |||||||||
Mary Beth Edwards |
| 2022 |
|
| 450,962 |
|
| — |
|
| 479,940 |
|
| — |
|
| 58,653 |
|
| 16,660 |
|
| 1,006,215 |
| ||||||||
Senior Vice President, Chief Information Officer and Chief Transformation Officer | ||||||||||||||||||||||||||||||||
Former NEO | ||||||||||||||||||||||||||||||||
Pamela K. Kohn |
| 2022 |
|
| 439,638 |
|
| — |
|
| 785,433 |
|
| — |
|
| 56,959 |
|
| 364,458 |
|
| 1,646,488 |
| ||||||||
Senior Vice President, Chief Merchandising |
| 2021 |
|
| 600,000 |
|
| — |
|
| 488,455 |
|
| 271,997 |
|
| 562,800 |
|
| 30,482 |
|
| 1,953,734 |
| ||||||||
Officer |
| 2020 |
|
| 551,538 |
|
| 500,623 |
|
| 827,968 |
|
| 271,998 |
|
| — |
|
| 184,987 |
|
| 2,337,114 |
|
(1) | Reflects principal positions held as of September 30, |
www.sallybeautyholdings.com 73
(2) | Reflects the grant date fair value of the stock awards |
Name | 2022 PSUs ($)(a) | 2021 PSUs ($)(b) | 2020 PSUs ($) | |||||||||
NEOs | ||||||||||||
Denise A. Paulonis |
| 3,564,846 |
|
| — |
|
| — |
| |||
Marlo M. Cormier |
| 736,536 |
|
| 294,581 |
|
| — |
| |||
John H. Goss |
| 556,920 |
|
| 241,284 |
|
| — |
| |||
Mark G. Spinks |
| 578,114 |
|
| 336,657 |
|
| 395,970 |
| |||
Mary Beth Edwards |
| 459,909 |
|
| — |
|
| — |
| |||
Former NEO | ||||||||||||
Pamela K. Kohn |
| 770,884 |
|
| 448,925 |
|
| 527,972 |
|
(a) | Includes the FY22-24 rTSR, FY22-24 Y1AOIM and |
(b) | Includes the FY21-23 rTSR and FY21-23 Y1AOI PSU awards. |
(3) | The PSUs granted in FY22 are comprised of PSUs with one, three-year performance period with goals related to rTSR (referred to herein as the FY22-24 rTSR PSUs) and PSUs with three, one-year performance periods with goals related to AOIM (referred to herein as the FY22-24 Y1AOIM PSUs, FY22-24 Y2AOIM PSUs and FY22-24 Y3AOIM PSUs), in each case with the number of shares earned paid out at the end of the three-year performance period on November 15, 2024. The adjusted operating income margin goals for the FY22-24 Y2AOIM PSUs and FY22-24 Y3AOIM PSUs were not established on the date of grant and, as a result, for accounting purposes, are not considered granted until the respective performance goals are established. Accordingly, the grant date fair value of the |
(4) | The PSUs granted in FY21 are comprised of PSUs with one, three-year performance period with goals related to rTSR (referred to herein as |
Reflects the grant date fair value of the option awards, determined in accordance with ASC 718. The assumptions used in the calculation of the grant date fair values of the option awards are included in Note |
The amounts reported reflect AIP awards earned for |
2022 Proxy Statement
Amounts reported as “All Other Compensation” for |
Name | Company Matching ($) | Life Insurance ($) | Relocation Expenses ($) | Tax Gross-Up ($) | Other ($) | Total ($) | ||||||||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||||||
Christian A. Brickman
|
| 11,215
|
|
| 1,080
|
|
| —
|
|
| —
|
|
| 600 (a)
|
|
| 12,895
|
| ||||||||||||
Aaron E. Alt
|
| 10,769
|
|
| 1,080
|
|
| 337
|
|
| 1,182 (b)
|
|
| 2,986 (c)
|
|
| 16,354
|
| ||||||||||||
Mark G. Spinks
|
| 11,320
|
|
| 1,080
|
|
| —
|
|
| —
|
|
| —
|
|
| 12,400
|
| ||||||||||||
Scott C. Sherman
|
| 11,323
|
|
| 989
|
|
| —
|
|
| —
|
|
| —
|
|
| 12,312
|
| ||||||||||||
John M. Henrich
|
| 6,160
|
|
| 813
|
|
| —
|
|
| —
|
|
| 780 (d)
|
|
| 7,753
|
| ||||||||||||
Former NEO
| ||||||||||||||||||||||||||||||
Chad L. Selvidge
|
| 7,765
|
|
| 739
|
|
| —
|
|
| 10,701(b)
|
|
| 239,859 (e)
|
|
| 259,064
|
|
Name | Company Matching ($) | Life Insurance ($) | Relocation Expenses ($) | Tax Gross-Up ($) | Other ($) | Total ($) | ||||||||||||||||||
NEOs | ||||||||||||||||||||||||
Denise A. Paulonis |
| — |
|
| 2,377 |
|
| 112,278 |
|
| 77,397 | (a) |
| 626 | (b) |
| 192,678 |
| ||||||
Marlo M. Cormier |
| 18,615 |
|
| 3,630 |
|
| — |
|
| — |
|
| — |
|
| 22,245 |
| ||||||
John H. Goss |
| 12,258 |
|
| 4,288 |
|
| — |
|
| — |
|
| — |
|
| 16,546 |
| ||||||
Mark G. Spinks |
| 12,200 |
|
| 8,928 |
|
| — |
|
| — |
|
| — |
|
| 21,128 |
| ||||||
Mary Beth Edwards |
| 11,238 |
|
| 5,422 |
|
| — |
|
| — |
|
| — |
|
| 16,660 |
| ||||||
Former NEO | ||||||||||||||||||||||||
Pamela K. Kohn |
| 11,124 |
|
| 5,180 |
|
| — |
|
| 9,534 | (c) |
| 338,620 | (d) |
| 364,458 |
|
(a) |
|
(b) |
|
(c) |
|
(d) | Reflects |
|
(8) | Reflects Ms. Paulonis’ cash sign-on bonus (50% of which was subject to repayment if Ms. Paulonis resigned or if the Company terminated her employment for cause within her first year of employment with the Company). |
www.sallybeautyholdings.com 75
GRANTS OF PLAN-BASED AWARDS FOR FY19FY22
The following table contains information regarding plan-based awards provided during FY19FY22 to the NEOs:
AIP |
PBRSUs |
TBRSAs |
Options | |||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards (1)
| Estimated Possible Payouts Under Equity Incentive Plan Awards (2)
| All Other Units | All Other Options | Exercise Awards | Grant Date Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||||||||||||||||||||
Christian A. Brickman | 254,630 | 1,018,521 | 1,935,190 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 38,327 | 76,655 | 153,310 | 1,319,999 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 72,767 | 1,319,993 | ||||||||||||||||||||||||||||||||||||||||||
| 11/01/18
|
|
| 232,081
|
|
| 18.14
|
|
| 1,359,995
|
| |||||||||||||||||||||||||||||||||
Aaron E. Alt | 138,521 | 554,082 | 1,052,756 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 8,623 | 17,247 | 34,494 | 296,993 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 16,372 | 296,988 | ||||||||||||||||||||||||||||||||||||||||||
11/01/18 | 52,218 | 18.14 | 305,997 | |||||||||||||||||||||||||||||||||||||||||
Mark G. Spinks | 75,396 | 320,834 | 609,585 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 5,749 | 11,498 | 22,996 | 197,996 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 10,915 | 197,998 | ||||||||||||||||||||||||||||||||||||||||||
| 11/01/18
|
|
| 34,812
|
|
| 18.14
|
|
| 203,998
|
| |||||||||||||||||||||||||||||||||
Scott C. Sherman | 55,111 | 220,445 | 418,846 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 4,311 | 8,623 | 17,246 | 148,488 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 8,186 | 148,494 | ||||||||||||||||||||||||||||||||||||||||||
| 11/01/18
|
|
| 26,109
|
|
| 18.14
|
|
| 152,999
|
| |||||||||||||||||||||||||||||||||
John M. Henrich | 40,210 | 160,840 | 314,529 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 1,916 | 3,832 | 7,664 | 65,987 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 3,638 | 65,993 | ||||||||||||||||||||||||||||||||||||||||||
| 11/01/18
|
|
| 11,604
|
|
| 18.14
|
|
| 67,999
|
| |||||||||||||||||||||||||||||||||
Former NEO
| ||||||||||||||||||||||||||||||||||||||||||||
Chad L. Selvidge (7) | 39,488 | 157,950 | 300,105 | |||||||||||||||||||||||||||||||||||||||||
01/31/19 | 3,832 | 7,665 | 15,330 | 131,991 | ||||||||||||||||||||||||||||||||||||||||
11/01/18 | 7,276 | 131,987 | ||||||||||||||||||||||||||||||||||||||||||
| 11/01/18
|
|
| 23,208
|
|
| 18.14
|
|
| 135,999
|
|
AIP | PSUs | RSUs | Options | |||||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts | Estimated Possible Payouts Under Equity Incentive Plan Awards (3) |
All Other Units |
All Other Options | Exercise Awards | Grant Date Fair Value Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date (1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||
NEOs | ||||||||||||||||||||||||||||||||||||||||||||||||
Denise A. Paulonis | 412,500 | 1,650,000 | 3,135,000 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 15,265 | 61,063 | 122,126 | 1,428,264 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 5,088 | 20,354 | 40,708 | 354,160 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 122,126 | 2,124,992 | ||||||||||||||||||||||||||||||||||||||||||||||
10/01/21 | 84,844 | 1,449,984 | ||||||||||||||||||||||||||||||||||||||||||||||
10/01/21 | 125,343 | 17.09 | 999,999 | |||||||||||||||||||||||||||||||||||||||||||||
Marlo M. Cormier | 102,771 | 411,082 | 781,056 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 2,873 | 11,494 | 22,988 | 268,845 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 957 | 3,831 | 7,662 | 66,659 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 22,988 | 399,991 | ||||||||||||||||||||||||||||||||||||||||||||||
FY21-23 Y2AOI | 11/03/21 | 470 | 1,883 | 3,766 | 32,764 | |||||||||||||||||||||||||||||||||||||||||||
John H. Goss | 88,932 | 355,728 | 675,883 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 2,155 | 8,620 | 17,240 | 201,622 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 718 | 2,873 | 5,746 | 49,990 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 17,241 | 299,993 | ||||||||||||||||||||||||||||||||||||||||||||||
FY21-23 Y2AOI | 11/03/21 | 385 | 1,543 | 3,086 | 26,848 | |||||||||||||||||||||||||||||||||||||||||||
Mark G. Spinks | 82,412 | 329,646 | 626,327 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 2,155 | 8,620 | 17,240 | 201,622 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 718 | 2,873 | 5,746 | 49,990 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 17,241 | 299,993 | ||||||||||||||||||||||||||||||||||||||||||||||
FY21-23 Y2AOI | 11/03/21 | 538 | 2,152 | 4,304 | 37,445 | |||||||||||||||||||||||||||||||||||||||||||
Mary Beth Edwards | 73,317 | 293,266 | 557,205 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 1,795 | 7,183 | 14,366 | 168,010 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 598 | 2,394 | 4,788 | 41,656 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 14,367 | 249,986 | ||||||||||||||||||||||||||||||||||||||||||||||
FY21-23 Y2AOI | 11/03/21 | 291 | 1,166 | 2,332 | 20,288 | |||||||||||||||||||||||||||||||||||||||||||
Former NEO | ||||||||||||||||||||||||||||||||||||||||||||||||
Pamela K. Kohn | 107,348 | 429,390 | 815,841 | |||||||||||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 2,873 | 11,494 | 22,988 | 268,845 | |||||||||||||||||||||||||||||||||||||||||||
FY22-24 Y1AOIM | 11/03/21 | 957 | 3,831 | 7,662 | 66,659 | |||||||||||||||||||||||||||||||||||||||||||
11/03/21 | 22,988 | 399,991 | ||||||||||||||||||||||||||||||||||||||||||||||
FY21-23 Y2AOI | 11/03/21 | 717 | 2,870 | 5,740 | 49,938 |
(1) | As described in footnotes 3 and 4 in the “Summary Compensation Table” of this Proxy Statement, the FY21-23 Y2AOI PSUs were granted during FY21 on January 27, 2021, but the Committee established the applicable performance metrics for such awards during FY22 on November 3, 2021. |
2022 Proxy Statement
(2) | Reflects potential cash award payouts under the AIP. Thresholds are based on financial measures only (no threshold for Strategic Initiatives). See |
Reflects potential payouts of |
(4) | Reflects RSUs granted on November 3, 2021 and new hire equity award of RSUs granted to Ms. Paulonis on October 1, 2021, in each case under the 2019 Omnibus Plan. The restrictions upon these awards lapse ratably over three years. See “Compensation Discussion and Analysis — FY22 Executive Compensation Program — Long-Term Incentives” of this Proxy Statement for more details. |
Reflects |
|
The exercise price of options is equal to the closing price for shares of our Common Stock on the grant date. |
Reflects a grant date fair value of |
www.sallybeautyholdings.com 77 |
OUTSTANDING EQUITY AWARDS AT 20192022 FISCALYEAR-END
The following table contains information about outstanding option and stock awards held by the NEOs on September 30, 2019:2022:
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
TBRSAs | PBRSUs | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Exercisable (#) | Number of Unexercisable (#) (1) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | |||||||||||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||||||||||||
Christian A. Brickman | 01/31/19 | 76,655 | 1,141,393 | |||||||||||||||||||||||||||||||||
11/01/18 | 77,360 | 154,721 | 18.14 | 11/01/28 | 48,512 | 722,344 | ||||||||||||||||||||||||||||||
11/01/17 | 140,133 | 70,067 | 17.42 | 11/01/27 | 18,944 | 282,076 | 56,831 | 846,214 | ||||||||||||||||||||||||||||
11/01/16 | 321,409 | — | 25.53 | 11/01/26 | 39,822 | 592,950 | ||||||||||||||||||||||||||||||
10/28/15 | 302,961 | — | 23.45 | 10/28/25 | ||||||||||||||||||||||||||||||||
10/29/14 | 162,484 | — | 29.20 | 10/29/24 | ||||||||||||||||||||||||||||||||
| 06/02/14
|
|
| 130,952
|
|
| —
|
|
| 25.36
|
|
| 06/02/24
|
| ||||||||||||||||||||||
Aaron E. Alt | 01/31/19 | 17,247 | 256,808 | |||||||||||||||||||||||||||||||||
11/01/18 | 17,406 | 34,812 | 18.14 | 11/01/28 | 10,915 | 162,524 | ||||||||||||||||||||||||||||||
| 05/22/18
|
|
| 32,695
|
|
| 65,392
|
|
| 15.10
|
|
| 05/22/28
|
|
| 41,413
|
|
| 616,640
|
| ||||||||||||||||
Mark G. Spinks | 01/31/19 | 11,498 | 171,205 | |||||||||||||||||||||||||||||||||
11/01/18 | 11,604 | 23,208 | 18.14 | 11/01/28 | 7,277 | 108,355 | ||||||||||||||||||||||||||||||
11/01/17 | 28,026 | 14,014 | 17.42 | 11/01/27 | 3,789 | 56,418 | 11,366 | 169,240 | ||||||||||||||||||||||||||||
11/01/16 | 57,959 | — | 25.53 | 11/01/26 | 7,181 | 106,925 | ||||||||||||||||||||||||||||||
10/28/15 | 53,151 | — | 23.45 | 10/28/25 | ||||||||||||||||||||||||||||||||
10/29/14 | 34,204 | — | 29.20 | 10/29/24 | ||||||||||||||||||||||||||||||||
10/30/13 | 17,700 | — | 26.30 | 10/30/23 | ||||||||||||||||||||||||||||||||
10/29/12 | 14,328 | — | 23.49 | 10/29/22 | ||||||||||||||||||||||||||||||||
10/26/11 | 15,324 | — | 19.21 | 10/26/21 | ||||||||||||||||||||||||||||||||
| 10/19/10
|
|
| 25,000
|
|
| —
|
|
| 11.39
|
|
| 10/19/20
|
| ||||||||||||||||||||||
Scott C. Sherman | 01/31/19 | 8,623 | 128,396 | |||||||||||||||||||||||||||||||||
11/01/18 | 8,703 | 17,406 | 18.14 | 11/01/28 | 5,458 | 81,270 | ||||||||||||||||||||||||||||||
11/01/17 | 18,684 | 9,342 | 17.42 | 11/01/27 | 2,526 | 37,612 | 7,577 | 112,822 | ||||||||||||||||||||||||||||
11/01/16 | 14,753 | — | 25.53 | 11/01/26 | 1,827 | 27,204 | ||||||||||||||||||||||||||||||
10/28/15 | 13,287 | — | 23.45 | 10/28/25 | ||||||||||||||||||||||||||||||||
10/29/14 | 6,840 | — | 29.20 | 10/29/24 | ||||||||||||||||||||||||||||||||
10/30/13 | 8,900 | — | 26.30 | 10/30/23 | ||||||||||||||||||||||||||||||||
| 10/29/12
|
|
| 2,628
|
|
| —
|
|
| 23.49
|
|
| 10/29/22
|
| ||||||||||||||||||||||
John M. Henrich | 01/31/19 | 3,832 | 57,058 | |||||||||||||||||||||||||||||||||
11/01/18 | 3,868 | 7,736 | 18.14 | 11/01/28 | 2,426 | 36,123 | ||||||||||||||||||||||||||||||
11/01/17 | 8,174 | 4,087 | 17.42 | 11/01/27 | 1,105 | 16,453 | 3,315 | 49,360 | ||||||||||||||||||||||||||||
11/01/16 | 13,172 | — | 25.53 | 11/01/26 | 1,632 | 24,300 | ||||||||||||||||||||||||||||||
10/28/15 | 10,629 | — | 23.45 | 10/28/25 | ||||||||||||||||||||||||||||||||
10/29/14 | 1,216 | — | 29.20 | 10/29/24 | ||||||||||||||||||||||||||||||||
10/30/13 | 1,580 | — | 26.30 | 10/30/23 | ||||||||||||||||||||||||||||||||
| 10/29/12
|
|
| 424
|
|
| —
|
|
| 23.49
|
|
| 10/29/22
|
| ||||||||||||||||||||||
Former NEO
| ||||||||||||||||||||||||||||||||||||
Chad L. Selvidge (5) | — | — | — | — | — | — | — | — | — |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
RSUs / RSAs | PSUs | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Exercisable (#) | Number of Unexercisable (#) (1) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | |||||||||||||||||||||||||||
NEOs | ||||||||||||||||||||||||||||||||||||
Denise A. Paulonis | ||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 61,063 | 769,394 | |||||||||||||||||||||||||||||||||
11/03/21 | 122,126 | 1,538,788 | ||||||||||||||||||||||||||||||||||
10/01/21 | — | 125,343 | 17.09 | 10/01/31 | 84,844 | 1,069,034 | ||||||||||||||||||||||||||||||
Marlo M. Cormier | ||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 11,494 | 144,824 | |||||||||||||||||||||||||||||||||
11/03/21 | 22,988 | 289,649 | ||||||||||||||||||||||||||||||||||
FY21-23 rTSR | 01/27/21 | 5,650 | 71,190 | |||||||||||||||||||||||||||||||||
FY21-23 Y1AOI | 01/27/21 | 2,498 | 31,475 | |||||||||||||||||||||||||||||||||
11/23/20 | 3,915 | 7,832 | 11.78 | 11/23/30 | 3,268 | 41,177 | ||||||||||||||||||||||||||||||
11/04/20 | 10,341 | 20,683 | 9.09 | 11/04/30 | 8,471 | 106,735 | ||||||||||||||||||||||||||||||
04/09/20 | 7,542 | 95,029 | ||||||||||||||||||||||||||||||||||
John H. Goss | ||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 8,620 | 108,612 | |||||||||||||||||||||||||||||||||
11/03/21 | 17,241 | 217,237 | ||||||||||||||||||||||||||||||||||
FY21-23 rTSR | 01/27/21 | 4,628 | 58,313 | |||||||||||||||||||||||||||||||||
FY21-23 Y1AOI | 01/27/21 | 2,046 | 25,780 | |||||||||||||||||||||||||||||||||
11/23/20 | — | 7,608 | 11.78 | 11/23/30 | 3,175 | 40,005 | ||||||||||||||||||||||||||||||
11/04/20 | — | 15,364 | 9.09 | 11/04/30 | 6,292 | 79,279 | ||||||||||||||||||||||||||||||
11/05/19 | — | 5,002 | 16.65 | 11/05/29 | 1,652 | 20,815 | ||||||||||||||||||||||||||||||
11/01/18 | 14,505 | — | 18.14 | 11/01/28 | ||||||||||||||||||||||||||||||||
11/01/17 | 17,516 | — | 17.42 | 11/01/27 | ||||||||||||||||||||||||||||||||
11/01/16 | 26,345 | — | 25.53 | 11/01/26 | ||||||||||||||||||||||||||||||||
Mark G. Spinks | ||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 8,620 | 108,612 | |||||||||||||||||||||||||||||||||
11/03/21 | 17,241 | 217,237 | ||||||||||||||||||||||||||||||||||
FY21-23 rTSR | 01/27/21 | 6,457 | 81,358 | |||||||||||||||||||||||||||||||||
FY21-23 Y1AOI | 01/27/21 | 2,855 | 35,973 | |||||||||||||||||||||||||||||||||
11/04/20 | 17,728 | 35,456 | 9.09 | 11/04/30 | 14,522 | 182,977 | ||||||||||||||||||||||||||||||
11/05/19 | 24,008 | 12,005 | 16.65 | 11/05/29 | 3,964 | 49,946 | ||||||||||||||||||||||||||||||
11/01/18 | 34,812 | — | 18.14 | 11/01/28 | ||||||||||||||||||||||||||||||||
11/01/17 | 42,040 | — | 17.42 | 11/01/27 | ||||||||||||||||||||||||||||||||
11/01/16 | 57,959 | — | 25.53 | 11/01/26 | ||||||||||||||||||||||||||||||||
10/28/15 | 53,151 | — | 23.45 | 10/28/25 | ||||||||||||||||||||||||||||||||
10/29/14 | 34,204 | — | 29.20 | 10/29/24 | ||||||||||||||||||||||||||||||||
10/30/13 | 17,700 | — | 26.30 | 10/30/23 | ||||||||||||||||||||||||||||||||
10/29/12 | 14,328 | — | 23.49 | 10/29/22 | ||||||||||||||||||||||||||||||||
Mary Beth Edwards | ||||||||||||||||||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | 7,183 | 90,506 | |||||||||||||||||||||||||||||||||
11/03/21 | 14,367 | 181,024 | ||||||||||||||||||||||||||||||||||
FY21-23 rTSR | 01/27/21 | 3,498 | 44,075 | |||||||||||||||||||||||||||||||||
FY21-23 Y1AOI | 01/27/21 | 1,547 | 19,492 | |||||||||||||||||||||||||||||||||
11/23/20 | 559 | 1,119 | 11.78 | 11/23/30 | 467 | 5,884 | ||||||||||||||||||||||||||||||
11/04/20 | 8,864 | 17,728 | 9.09 | 11/04/30 | 7,261 | 91,489 | ||||||||||||||||||||||||||||||
11/05/19 | 9,003 | 4,502 | 16.65 | 11/05/29 | 1,487 | 18,736 | ||||||||||||||||||||||||||||||
Former NEO | ||||||||||||||||||||||||||||||||||||
Pamela K. Kohn (5) | — | — | — | — | — | — | — | — | — |
2022 Proxy Statement
(1) | The unvested options vest as follows: |
| Grant | Vest Date | ||||||||||||||||||||||||
Name | Date | 05/22/20 | 09/30/20 | 05/22/21 | 09/30/21 | Total | ||||||||||||||||||||
Current NEOs | ||||||||||||||||||||||||||
Christian A. Brickman | 11/01/18 | 77,360 | 77,361 | 154,721 | ||||||||||||||||||||||
| 11/01/17
|
|
| 70,067
|
|
| 70,067
|
| ||||||||||||||||||
Aaron E. Alt | 11/01/18 | 17,406 | 17,406 | 34,812 | ||||||||||||||||||||||
| 05/22/18
|
|
| 32,696
|
|
| 32,696
|
|
| 65,392
|
| |||||||||||||||
Mark G. Spinks | 11/01/18 | 11,604 | 11,604 | 23,208 | ||||||||||||||||||||||
| 11/01/17
|
|
| 14,014
|
|
| 14,014
|
| ||||||||||||||||||
Scott C. Sherman | 11/01/18 | 8,703 | 8,703 | 17,406 | ||||||||||||||||||||||
| 11/01/17
|
|
| 9,342
|
|
| 9,342
|
| ||||||||||||||||||
John M. Henrich | 11/01/18 | 3,868 | 3,868 | 7,736 | ||||||||||||||||||||||
| 11/01/17
|
|
| 4,087
|
|
| 4,087
|
|
Grant Date | Vest Date | |||||||||||||||||||||||||||||||||||
Name | 10/01/22 | 11/15/22 | 11/23/22 | 10/01/23 | 11/15/23 | 11/23/23 | 10/01/24 | Total | ||||||||||||||||||||||||||||
Denise A. Paulonis | 10/01/21 | 41,781 | 41,781 | 41,781 | 125,343 | |||||||||||||||||||||||||||||||
Marlo M. Cormier | 11/23/20 | 3,916 | 3,916 | 7,832 | ||||||||||||||||||||||||||||||||
11/04/20 | 10,341 | 10,342 | 20,683 | |||||||||||||||||||||||||||||||||
John H. Goss | 11/23/20 | 3,804 | 3,804 | 7,608 | ||||||||||||||||||||||||||||||||
11/04/20 | 7,682 | 7,682 | 15,364 | |||||||||||||||||||||||||||||||||
11/05/19 | 5,002 | 5,002 | ||||||||||||||||||||||||||||||||||
Mark G. Spinks | 11/04/20 | 17,728 | 17,728 | 35,456 | ||||||||||||||||||||||||||||||||
11/05/19 | 12,005 | 12,005 | ||||||||||||||||||||||||||||||||||
Mary Beth Edwards | 11/23/20 | 559 | 560 | 1,119 | ||||||||||||||||||||||||||||||||
11/04/20 | 8,864 | 8,864 | 17,728 | |||||||||||||||||||||||||||||||||
11/05/19 | 4,502 | 4,502 |
(2) | The unvested |
Grant | Vest Date | |||||||||||||||||||||||||
| Name | Date | 05/22/20 | 09/30/20 | 05/22/21 | 09/30/21 | Total | |||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||
Christian A. Brickman | 11/01/18 | 24,256 | 24,256 | 48,512 | ||||||||||||||||||||||
| 11/01/17
|
|
| 18,944
|
|
| 18,944
|
| ||||||||||||||||||
Aaron E. Alt | 11/01/18 | 5,457 | 5,458 | 10,915 | ||||||||||||||||||||||
| 05/22/18
|
|
| 20,706
|
|
| 20,707
|
|
| 41,413
|
| |||||||||||||||
Mark G. Spinks | 11/01/18 | 3,638 | 3,639 | 7,277 | ||||||||||||||||||||||
| 11/01/17
|
|
| 3,789
|
|
| 3,789
|
| ||||||||||||||||||
Scott C. Sherman | 11/01/18 | 2,729 | 2,729 | 5,458 | ||||||||||||||||||||||
| 11/01/17
|
|
| 2,526
|
|
| 2,526
|
| ||||||||||||||||||
John M. Henrich | 11/01/18 | 1,213 | 1,213 | 2,426 | ||||||||||||||||||||||
| 11/01/17
|
|
| 1,105
|
|
| 1,105
|
|
Grant Date | Vest Date | |||||||||||||||||||||||||||||||||||||||||||
Name | 10/01/22 | 11/15/22 | 11/23/22 | 04/09/23 | 10/01/23 | 11/15/23 | 11/23/23 | 10/01/24 | 11/15/24 | Total | ||||||||||||||||||||||||||||||||||
Denise A. Paulonis | 11/03/21 | 40,708 | 40,709 | 40,709 | 122,126 | |||||||||||||||||||||||||||||||||||||||
10/01/21 | 28,281 | 28,281 | 28,282 | 84,844 | ||||||||||||||||||||||||||||||||||||||||
Marlo M. Cormier | 11/03/21 | 7,662 | 7,663 | 7,663 | 22,988 | |||||||||||||||||||||||||||||||||||||||
11/23/20 | 1,634 | 1,634 | 3,268 | |||||||||||||||||||||||||||||||||||||||||
11/04/20 | 4,235 | 4,236 | 8,471 | |||||||||||||||||||||||||||||||||||||||||
04/09/20 | 7,542 | 7,542 | ||||||||||||||||||||||||||||||||||||||||||
John H. Goss | 11/03/21 | 5,747 | 5,747 | 5,747 | 17,241 | |||||||||||||||||||||||||||||||||||||||
11/23/20 | 1,587 | 1,588 | 3,175 | |||||||||||||||||||||||||||||||||||||||||
11/04/20 | 3,146 | 3,146 | 6,292 | |||||||||||||||||||||||||||||||||||||||||
11/05/19 | 1,652 | 1,652 | ||||||||||||||||||||||||||||||||||||||||||
Mark G. Spinks | 11/03/21 | 5,747 | 5,747 | 5,747 | 17,241 | |||||||||||||||||||||||||||||||||||||||
11/04/20 | 7,261 | 7,261 | 14,522 | |||||||||||||||||||||||||||||||||||||||||
11/05/19 | 3,964 | 3,964 | ||||||||||||||||||||||||||||||||||||||||||
Mary Beth Edwards | 11/03/21 | 4,789 | 4,789 | 4,789 | 14,367 | |||||||||||||||||||||||||||||||||||||||
11/23/20 | 233 | 234 | 467 | |||||||||||||||||||||||||||||||||||||||||
11/04/20 | 3,630 | 3,631 | 7,261 | |||||||||||||||||||||||||||||||||||||||||
11/05/19 | 1,487 | 1,487 |
www.sallybeautyholdings.com 79
(3) | The potential payout dates for the unearned |
Grant | Performance | Potential Payout Date | ||||||||||||||||||||||||
| Name | Date | Period | 11/29/19 | 11/29/20 | 11/29/21 | Total | |||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||
Christian A. Brickman | 01/31/19 | FY19-21 | 76,655 | 76,655 | ||||||||||||||||||||||
11/01/17 | FY18-20 | 56,831 | 56,831 | |||||||||||||||||||||||
| 11/01/16
| (a)
|
| FY17-19
|
|
| 39,822
|
|
| 39,822
|
| |||||||||||||||
Aaron E. Alt | 01/31/19 | FY19-21 | 17,247 | 17,247 | ||||||||||||||||||||||
Mark G. Spinks | 01/31/19 | FY19-21 | 11,498 | 11,498 | ||||||||||||||||||||||
11/01/17 | FY18-20 | 11,366 | 11,366 | |||||||||||||||||||||||
| 11/01/16
| (a)
|
| FY17-19
|
|
| 7,181
|
|
| 7,181
|
| |||||||||||||||
Scott C. Sherman | 01/31/19 | FY19-21 | 8,623 | 8,623 | ||||||||||||||||||||||
11/01/17 | FY18-20 | 7,577 | 7,577 | |||||||||||||||||||||||
| 11/01/16
| (a)
|
| FY17-19
|
|
| 1,827
|
|
| 1,827
|
| |||||||||||||||
John M. Henrich | 01/31/19 | FY19-21 | 3,832 | 3,832 | ||||||||||||||||||||||
11/01/17 | FY18-20 | 3,315 | 3,315 | |||||||||||||||||||||||
| 11/01/16
| (a)
|
| FY17-19
|
|
| 1,632
|
|
| 1,632
|
|
target except as otherwise noted below). The |
Grant Date | Performance Period | Potential Payout Date | Total | |||||||||||||||||
Name | 11/15/23 | 11/15/24 | ||||||||||||||||||
Denise A. Paulonis | ||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | FY22-24 | 61,063 | 61,063 | ||||||||||||||||
Marlo M. Cormier | ||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | FY22-24 | 11,494 | 11,494 | ||||||||||||||||
FY21-23 rTSR | 01/27/21 | FY21-23 | 5,650 | 5,650 | ||||||||||||||||
FY21-23 Y1AOI (a) | 01/27/21 | FY21 | 2,498 | 2,498 | ||||||||||||||||
John H. Goss | ||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | FY22-24 | 8,620 | 8,620 | ||||||||||||||||
FY21-23 rTSR | 01/27/21 | FY21-23 | 4,628 | 4,628 | ||||||||||||||||
FY21-23 Y1AOI (a) | 01/27/21 | FY21 | 2,046 | 2,046 | ||||||||||||||||
Mark G. Spinks | ||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | FY22-24 | 8,620 | 8,620 | ||||||||||||||||
FY21-23 rTSR | 01/27/21 | FY21-23 | 6,457 | 6,457 | ||||||||||||||||
FY21-23 Y1AOI (a) | 01/27/21 | FY21 | 2,855 | 2,855 | ||||||||||||||||
Mary Beth Edwards | ||||||||||||||||||||
FY22-24 rTSR | 11/03/21 | FY22-24 | 7,183 | 7,183 | ||||||||||||||||
FY21-23 rTSR | 01/27/21 | FY21-23 | 3,498 | 3,498 | ||||||||||||||||
FY21-23 Y1AOI (a) | 01/27/21 | FY21 | 1,547 | 1,547 |
(a) | The FY21-23 Y1AOI PSUs are included in this table as the amount earned (132.7%), which will vest on November 15, 2023, subject to continued employment. See last year’s Proxy Statement for more details. |
(4) | Value based on the closing price for shares of our Common Stock on September 30, |
(5) |
|
2022 Proxy Statement
OPTION EXERCISES AND STOCK VESTED IN FY19FY22
The following table contains information about options exercised, stock vested and the value realized by the NEOs during FY19:FY22:
Option Awards | Stock Awards (1) | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized On Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized On Vesting ($) | ||||
Current NEOs | ||||||||
Christian A. Brickman | — | — | 43,199 | 643,233 | ||||
Aaron E. Alt | — | — | 26,163 | 421,248 | ||||
Mark G. Spinks | — | — | 11,136 | 177,869 | ||||
Scott C. Sherman | — | — | 6,181 | 95,048 | ||||
John M. Henrich | — | — | 3,058 | 47,942 | ||||
Former NEO | ||||||||
Chad L. Selvidge | — | — | 1,187 | 21,532 |
Option Awards | Stock Awards (1) | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized On Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized On Vesting ($) | ||||||||||||
NEOs | ||||||||||||||||
Denise A. Paulonis |
| — |
|
| — |
|
| 15,401 | (2) | �� | 313,256 |
| ||||
Marlo M. Cormier |
| — |
|
| — |
|
| 13,410 |
|
| 238,904 |
| ||||
John H. Goss |
| 21,489 |
|
| 100,369 |
|
| 6,384 |
|
| 131,612 |
| ||||
Mark G. Spinks |
| — |
|
| — |
|
| 11,224 |
|
| 228,296 |
| ||||
Mary Beth Edwards |
| — |
|
| — |
|
| 5,349 |
|
| 109,057 |
| ||||
Former NEO | ||||||||||||||||
Pamela K. Kohn |
| 23,637 |
|
| 105,193 |
|
| 21,708 |
|
| 419,626 |
|
(1) | Value realized on vesting for |
NONQUALIFIED DEFERRED COMPENSATION
The following table contains information about the amounts deferred by the NEOs as of September 30, 2019:
Name | Executive Contributions in Last Fiscal Year ($) | Aggregate Balance at Last Fiscal Year-End ($) | ||||||
Current NEOs | ||||||||
Christian A. Brickman | — | 119,999 | (1) | |||||
Aaron E. Alt | — | — | ||||||
Mark G. Spinks | — | — | ||||||
Scott C. Sherman | — | — | ||||||
John M. Henrich | — | — | ||||||
Former NEO | ||||||||
Chad L. Selvidge | — | — |
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table summarizes the estimated value of the payments and benefits that each of our NEOs would receive upon termination of employment under various circumstances or a change in control. The amounts shown assume that the triggering event (termination of employment or a change in control) occurred on September 30, 2019.2022. Ms. Kohn is not included in the table because she resigned effective May 31, 2022. A description of Ms. Kohn’s separation agreement may be found below.
www.sallybeautyholdings.com 81
The amounts presented in the following table do not reflect amounts the NEO earned or accrued prior to the triggering event, such as previously vested equity awards. For information about these previously earned and accrued amounts, see the “Summary Compensation Table”, “Outstanding Equity Awards at 20192022 FiscalYear-End” table and “Option Exercises and Stock Vested in FY19”FY22” table of this Proxy Statement.
Name and Potential Payment Type | For Cause or Voluntary Resignation ($) | Death or Disability ($) | Retirement ($) (1) | Change in Control ($) (2) (8) | Change in Control with Termination ($) (2) (3) (8) | For Cause or Voluntary Resignation ($) | Death or Disability ($) | Retirement ($)(1) | Change in Control ($)(2)(8) | Change in Control with Termination ($)(2)(3)(9)
| ||||||||||||||||||||||||||||||
Current NEOs
| ||||||||||||||||||||||||||||||||||||||||
Christian A. Brickman | ||||||||||||||||||||||||||||||||||||||||
Current Fiscal Year AIP Award (4) | — | 820,520 | — | 820,520 | 820,520 | |||||||||||||||||||||||||||||||||||
Denise A. Paulonis | ||||||||||||||||||||||||||||||||||||||||
FY22 Bonus (4) | — | 330,000 | — | — | 330,000 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 2,873,385 | — | — | — | — | 2,845,700 | ||||||||||||||||||||||||||||||
Equity Awards (6) | — | 1,587,854 | — | 3,584,977 | 3,584,977 | — | 1,125,726 | — | — | 3,377,216 | ||||||||||||||||||||||||||||||
Health and Welfare Benefits (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 27,789
|
| — | — | — | — | 14,743 | ||||||||||||||||||||
Total |
| —
|
|
| 2,408,374
|
|
| —
|
|
| 4,405,497
|
|
| 7,306,671
|
|
|
— |
|
|
1,455,726 |
|
|
— |
|
|
— |
|
|
6,567,659 |
| ||||||||||
Aaron E. Alt | ||||||||||||||||||||||||||||||||||||||||
Current Fiscal Year AIP Award (4) | — | 600,237 | — | 600,237 | 600,237 | |||||||||||||||||||||||||||||||||||
Marlo M. Cormier | ||||||||||||||||||||||||||||||||||||||||
FY22 Bonus (4) | — | 82,216 | — | — | 82,216 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 1,858,660 | — | — | — | — | 1,837,223 | ||||||||||||||||||||||||||||||
Equity Awards (6) | — | 475,170 | — | 1,035,972 | 1,035,972 | — | 432,236 | — | — | 859,098 | ||||||||||||||||||||||||||||||
Health and Welfare Benefits (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 47,519
|
| — | — | — | — | 39,214 | ||||||||||||||||||||
Total
|
| —
|
|
| 1,075,407
|
|
| —
|
|
| 1,636,209
|
|
| 3,542,388
|
|
| — |
|
| 514,452 |
|
| — |
|
| — |
|
| 2,817,751 |
| ||||||||||
John H. Goss | ||||||||||||||||||||||||||||||||||||||||
FY22 Bonus (4) | — | 71,146 | — | — | 71,146 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 1,377,651 | |||||||||||||||||||||||||||||||||||
Equity Awards (6) | — | 283,805 | — | — | 672,628 | |||||||||||||||||||||||||||||||||||
Health and Welfare Benefits (7) | — | — | — | — | 31,699 | |||||||||||||||||||||||||||||||||||
Total |
| — |
|
| 354,951 |
|
| — |
|
| — |
|
| 2,153,124 |
| |||||||||||||||||||||||||
Mark G. Spinks | ||||||||||||||||||||||||||||||||||||||||
Current Fiscal Year AIP Award (4) | — | 204,756 | — | 204,756 | 204,756 | |||||||||||||||||||||||||||||||||||
FY22 Bonus (4) | — | 65,929 | 65,929 | — | 65,929 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 1,175,957 | — | — | — | — | 1,353,843 | ||||||||||||||||||||||||||||||
Equity Awards (6) | — | 280,482 | — | 612,143 | 612,143 | — | 402,487 | 701,026 | — | 950,381 | ||||||||||||||||||||||||||||||
Health and Welfare Benefits (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 45,067
|
| — | — | — | — | 32,105 | ||||||||||||||||||||
Total |
| —
|
|
| 485,238
|
|
| —
|
|
| 816,899
|
|
| 2,037,923
|
|
| — |
|
| 468,416 |
|
| 766,955 |
|
| — |
|
| 2,402,258 |
| ||||||||||
Scott C. Sherman | ||||||||||||||||||||||||||||||||||||||||
Current Fiscal Year AIP Award (4) | — | 177,590 | — | 177,590 | 177,590 | |||||||||||||||||||||||||||||||||||
Mary Beth Edwards | ||||||||||||||||||||||||||||||||||||||||
FY22 Bonus (4) | — | 58,653 | — | — | 58,653 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 874,545 | — | — | — | — | 1,242,799 | ||||||||||||||||||||||||||||||
Equity Awards (6) | — | 196,260 | — | 387,304 | 387,304 | — | 238,365 | — | — | 570,532 | ||||||||||||||||||||||||||||||
Health and Welfare Benefits (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 44,894
|
| — | — | — | — | 31,699 | ||||||||||||||||||||
Total
|
| —
|
|
| 373,850
|
|
| —
|
|
| 564,894
|
|
| 1,484,333
|
|
| — |
|
| 297,018 |
|
| — |
|
| — |
|
| 1,903,683 |
| ||||||||||
John M. Henrich | ||||||||||||||||||||||||||||||||||||||||
Current Fiscal Year AIP Award (4) | — | 129,993 | — | 129,993 | 129,993 | |||||||||||||||||||||||||||||||||||
Severance (5) | — | — | — | — | 858,349 | |||||||||||||||||||||||||||||||||||
Equity Awards (6) | — | 86,441 | — | 183,294 | 183,294 | |||||||||||||||||||||||||||||||||||
Health and Welfare Benefits (7)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 19,258
|
| |||||||||||||||||||||||||
Total
|
| —
|
|
| 216,434
|
|
| —
|
|
| 313,287
|
|
| 1,190,894
|
|
(1) |
|
2022 Proxy Statement
(2) | For purposes of the severance agreements, a “change in control” generally includes: (i) the acquisition by any person of 20% or more of the voting power of our outstanding Common Stock; (ii) a change in the majority of the incumbent Board of Directors; (iii) certain reorganizations, mergers or consolidations of us involving a change of ownership of 50% or more of our Common Stock or sales of substantially all of our assets; or (iv) stockholder approval of our complete liquidation or dissolution. |
(3) | For purposes of this table, a qualified termination means termination without cause or a resignation for good reason within 24 months following a change in control. “Good reason” generally includes: (i) a material diminution in authority, duties or responsibilities of the executive or the supervisor to whom the executive reports; (ii) a material reduction in the executive’s base salary; (iii) a material reduction in the budget over which the executive retains authority; (iv) a relocation of the executive’s principal location by more than 20 miles; or (v) any other material breach of the severance agreement. “Cause” generally includes: (i) the executive’s uncured demonstrably willful and deliberate material breach of duties and responsibilities, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company; and (ii) the executive’s commission of a felony involving moral turpitude. |
(4) | Reflects the current fiscal year AIP award |
(5) | Reflects a severance payment of 1.99 times the NEO’s base salary as of the end of |
(6) | Reflects the estimated value of unvestedin-the-money options, |
Equity Award Type | For Cause Voluntary Resignation | Death or Disability | Retirement (a) | Change in Control | ||||
Options | Forfeited | Accelerated Vesting (Next Tranche Only) | Continues to Vest up to 36 Months | Accelerated Vesting
| ||||
| Forfeited | In Progress, Prorated (Based on Actual Not in Progress, Forfeited | In Progress, Prorated (Based on Actual Not in Progress, Forfeited | Prior to FY21, (All at Target) FY21 and After, rTSR PSUs (Accelerated Vesting All at Target) and All Other PSUs (In Progress, at | ||||
| Forfeited | Accelerated Vesting (Next Tranche Only) | Continues to Vest up to 36 Months | Accelerated Vesting
|
(a) | Assuming the NEO agrees to restrictive covenants. |
|
(7) | Reflects the cost of continued health and welfare benefits for 24 months, based on (i) our portion of the projected cost of the benefits (the NEO pays the employee cost for such coverage) and (ii) the level of coverage selected by the NEO. |
(8) | Assuming options, RSUs / RSAs and PSUs awarded pursuant to the 2010 and 2019 Omnibus Incentive Plans are assumed by the acquirer. If, instead, the options, RSUs / RSAs and PSUs were not assumed by the buyer, then such awards would be cancelled |
www.sallybeautyholdings.com 83
in in exchange for a cash payment (based upon the difference between the price per share offered in connection with the change in control and the exercise price, in the case of options). The estimated value of such awards is reflected in the “Change in Control with Qualified Termination” column of this table. |
(9) | Pursuant to the terms of the severance agreements, any payments to the executive under such agreements will be reduced so that the present value of such payments plus any other “parachute payments” as determined under Section 280G of the Internal Revenue Code will not, in the aggregate, exceed 2.99 times the executive’s average taxable income from us over the five-year period ending prior to the year in which a change in control occurs. However, no such reduction will apply to payments that do not constitute “excess parachute payments” under Section 280G of the Internal Revenue Code. |
Separation AgreementSEPARATION AGREEMENT WITH MS. KOHN
In connection with Mr. Selvidge
Mr. Selvidge separated fromher separation, the Company on June 27, 2019, and in connection with such separation, his severance agreement expired and he was not entitled to any benefits thereunder. In addition, he forfeited his unvested outstanding equity awards. The Company and Mr. SelvidgeMs. Kohn entered into a separation agreement, pursuant to which Mr. SelvidgeMs. Kohn received an amount equal to $177,112.67, payable within 10 days following his separation(or may receive), in exchange for hisher release of all potential claims against the Company and his agreementsubject to confidentiality andnon-disparagement provisions, as well as a one yearnon-competition covenant. In addition,her compliance with the Company paid Mr. Selvidge’scovenants described below, the following benefits:
payment of the gross amount of $618,000 (6 monthly payments);
an amount equal to $29,619.60, which represents the Company’s cost forof health insurance continuation under COBRA for a period of eighteen12 months;
payment of a prorated annual bonus for fiscal year 2022 (based on actual performance); and
provision of 12 months ($33,971.94),of outplacement services.
The separation agreement contains covenants regarding confidential information and non-disparagement, as well as a non-competition covenant that applies for one year following Ms. Kohn’s separation from employment. Pursuant to the terms of outplacement services ($25,000.00), $3,774.66 for attorneys’ feesher RSU and costs, and a prorated AIP payout based onyear-end final performance, as reflected in the “Summary Compensation Table –Non-Equity Incentive Plan Compensation”. HePSU award agreements, Ms. Kohn is also received a payment of $177,112.67 for allegednon-wage related compensatory damages. Mr. Selvidge remains subject to theone-yearan employee and customernon-solicitation covenant included in his equity grant agreements, as described earlier in this Proxy Statement.for one year following her separation from employment.
2022 Proxy Statement
The CEO pay ratio figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K under the Exchange Act. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported below should not be used as a basis for comparison between companies.
SinceThe employee we did not have significant changes to our employee population and compensation programs,identified as allowed by SEC rules, we have used the same median employee thatin FY20 and FY21 is no longer employed by Sally Beauty Holdings, Inc. As a result, we identified in FY18a new median employee for purposes of our FY19 calculation.
FY22. Our median employee determination date was July 1, 2018,2022, which was within the last three months of FY18,FY22, as required by the pay ratio rule. We determined that the Company and its consolidated subsidiaries had 29,73028,317 employees as of July 1, 2018.2022. To determine our median employee, we usedW-2 “gross pay” as our consistently applied compensation measure. We then annualized gross pay for permanent employees who commenced work during FY18FY22 and any employees who were on leave for a portion of FY18.FY22. Using this methodology, we identified the median employee and determined their annual total compensation using the same methodology we use for our NEOs as set forth in the Summary Compensation Table included in this Proxy Statement.
For FY19,FY22, the total annual compensation of our CEO was $5,851,864$8,363,154 and the median employee’s total annual compensation was $14,708.$14,856. Accordingly, the ratio of CEO pay to median employee pay was 398:563:1.
www.sallybeautyholdings.com 85
PROPOSAL 34 – RATIFICATION OF SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of Directors has selected KPMG LLP, which we refer to as KPMG, to serve as our independent registered public accounting firm for the year ending September 30, 2020.2023. Although we are not required to seek stockholder ratification of this appointment, the Audit Committee and the Board believe it to be a matter of good corporate governance to do so. Representatives of KPMG will be present at the annual meeting, will have the opportunity to make a statement, if they desire to do so, and will be available to answer appropriate questions.
Fees Paid toFEES PAID TO KPMG
The fees billed by KPMG with respect to the years ended September 30, 20192022 and September 30, 20182021 were as follows:
Year Ended September 30, 2019 | Year Ended September 30, 2018 | |||||||||
Audit Fees(1) | $2,707,333 | $2,626,910 | ||||||||
Audit-Related Fees | — | — | ||||||||
Tax Fees(2) | $791,136 | $1,020,682 | ||||||||
All Other Fees | $1,780 | $1,927 | ||||||||
Total Fees(3) | $3,500,249 | $3,649,519 |
|
|
|
The Audit Committee has reviewed thenon-audit services provided by KPMG and determined that the provision of these services during fiscal 20192022 is compatible with maintaining KPMG’s independence.
Pre-Approval Policy. Our Audit Committee (or its designee, as described below) approved all audit and permissiblenon-audit fees during fiscal year 2019.2022. The Audit Committee has the sole and direct authority to engage, appoint and replace our independent auditors. In addition, the Audit Committee has established an Audit andNon-Audit ServicesPre-Approval Policy, whereby every engagement of KPMG to perform audit or permissiblenon-audit services on behalf of us or any of our subsidiaries requirespre-approval from the Audit Committee or its designee before KPMG is engaged to provide those services. Pursuant to that policy, we expect that on an annual basis, the Audit Committee will review and providepre-approval for certain types of services that may be rendered by the independent auditors, together with a budget for the applicable fiscal year. Thepre-approval policy also requires thepre-approval of any fees that are in excess of the amount budgeted by the Audit Committee. Thepre-approval policy contains a provision delegating limitedpre-approval authority to the chairmanChair of the Audit Committee in instances whenpre-approval is needed prior to a scheduled Audit Committee meeting. The chairmanChair of the Audit Committee would be required to report on suchpre-approvals at the next scheduled Audit Committee meeting. As a result, the Audit Committee or its designee has approved 100% of all services performed by KPMG on behalf of us or any of our subsidiaries subsequent to November 16, 2006, the date we became a public company.
If the stockholders do not ratify the selection of KPMG, the selection of independent auditors will be reconsidered by the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 3.4.
SALLY BEAUTY HOLDINGS, INC. 2022 Proxy Statement
The Audit Committee serves an independent oversight role by consulting with and providing guidance to management and the Corporation’sCompany’s independent auditors on matters such as accounting, audits, compliance, controls, disclosure, finance and risk management. The Board of Directors has affirmatively determined that all Audit Committee members are “independent” (within the meaning of the applicable rules of the NYSE and the SEC) and financially literate. The Board of Directors has designated Robert R. McMaster, the ChairmanChair of the Audit Committee, along with Marshall E. Eisenberg, Diana S. Ferguson, David W. Gibbs,Dorlisa K. Flur, James M. Head and John A. Miller and Denise Paulonis as audit committee financial experts under the SEC’s guidelines.
The Audit Committee’s purposes and responsibilities are described in its charter, available on the corporate governance section of the Corporation’sCompany’s website at http://investor.sallybeautyholdings.com and in print, without charge, upon written request to our Vice President of Investor Relations. They include (a) assisting the Board of Directors in its oversight of the integrity of the Corporation’sCompany’s financial statements and financial reporting processes, overseeing compliance with legal and regulatory requirements, reviewing the independent auditors’ qualifications and independence (including auditor rotation), and reviewing the performance of the Corporation’sCompany’s internal audit function; (b) deciding whether to appoint, retain or terminate the Corporation’sCompany’s independent auditors and topre-approve all audit, audit-related, tax and other services, if any, to be provided by the independent auditors; and (c) preparing this report. The Audit Committee members do not act as accountants or auditors for the Corporation.Company. Management is responsible for the Corporation’sCompany’s financial statements and the financial reporting process, including the implementation and maintenance of effective internal control over financial reporting. The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles. The independent auditors have free access to the Audit Committee to discuss any matters they deem appropriate.
The Audit Committee recognizes the importance of maintaining the independence of the Corporation’sCompany’s independent auditor, both in fact and appearance. Consistent with its charter, the Audit Committee has evaluated the qualifications, performance, and independence of KPMG LLP, the Corporation’sCompany’s independent auditors, including that of KPMG LLP’s lead audit partner. As part of its auditor engagement process, the Audit Committee considers whether to rotate the independent auditors. The Audit Committee has established in its charter a policy pursuant to which all services, audit andnon-audit, provided by the independent auditor must bepre-approved by the Audit Committee or its designee. The Corporation’sCompany’s pre-approval policy is more fully described in this Proxy Statement under the caption “Proposal 34 — Ratification of Selection of Auditors.” The Audit Committee has concluded that provision of thenon-audit services described in that section is compatible with maintaining the independence of KPMG LLP. In this context, the Audit Committee has reviewed and discussed, with management and the independent auditors, the Corporation’sCompany’s audited financial statements for the year ended September 30, 2019.2022. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the Public Company Accounting Oversight Board, or PCAOB. In addition, the Audit Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence from the CorporationCompany and its management. The Audit Committee has considered whether the independent auditors’ provision ofnon-audit services to the CorporationCompany is compatible with the auditors’ independence.
Following the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Corporation’sCompany’s Annual Report onForm 10-K for the year ended September 30, 2019,2022, for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee:
Robert R. McMaster (Chair)
Marshall E. Eisenberg
Diana S. Ferguson
David W. Gibbs
Jeffrey Boyer
Dorlisa K. Flur
James M. Head
John A. Miller
Lawrence “Chip” Molloy (Chair Elect)
www.sallybeautyholdings.com 87
Denise Paulonis
FOR NOMINATIONS AND
STOCKHOLDER PROPOSALS
Proposals for Inclusion in Proxy Materials for our 2021 Annual MeetingPROPOSALS FOR INCLUSION IN PROXY MATERIALS FOR OUR 2024 ANNUAL MEETING
Under SEC Rule14a-8, if you intend to submit a stockholder proposal and request its inclusion in the proxy statement and form of proxy for our 20212024 annual meeting, such submission must be in writing and received by our Corporate Secretary at our corporate headquarters no later than August 20, 2020.16, 2023. Submissions of stockholder proposals after this date will be considered untimely for inclusion in the proxy statement and form of proxy for our 20212024 annual meeting.
Other Proposals or Nominations for the 2021 Annual MeetingOTHER PROPOSALS OR NOMINATIONS FOR THE 2024 ANNUAL MEETING
OurBy-Laws require that any stockholder proposal or director nomination that is not submitted for inclusion in next year’s proxy statement under SECRule 14a-8, but is instead sought to be presented directly at the 2021 Annual Meeting,2024 annual meeting, must be received at our principal executive offices not less than 90 days and not more than 120 days prior to the first anniversary of the 20202023 annual meeting. As a result, proposals and director nominations submitted pursuant to these provisions of ourBy-Laws must be received no earlier than October 2, 2020,September 28, 2023, and no later than the close of business on November 1, 2020,October 22, 2023, and must otherwise comply with the requirements of ourBy-Laws. Any stockholder submissions should be sent to us by certified mail, return receipt requested, addressed to: Corporate Secretary, Sally Beauty Holdings, Inc., 3001 Colorado Boulevard, Denton, Texas 76210, United States of America.
A copy of ourBy-Laws may be obtained on the governance section of our Website at http://investor.sallybeautyholdings.com, or by written request to the Corporate Secretary, Sally Beauty Holdings, Inc., 3001 Colorado Boulevard, Denton, Texas 76210, United States of America.
2022 Proxy Statement
QUESTIONS AND ANSWERS ABOUT THE
ANNUAL MEETING AND VOTING
1. | Q: What is a proxy? |
A: A proxy is your legal designation of another person, called a proxy holder, to vote the shares that you own. If you designate someone as your proxy holder in a written document, that document is called a proxy. We have designated Aaron E. Alt,Marlo M. Cormier, our Senior Vice President, Chief Financial Officer, and President, Sally Beauty Supply and John Henrich, our General Counsel, to act as proxy holders at the annual meeting as to all shares for which proxies are returned or voting instructions are provided by internet or telephonic voting.
2. | Q: What is a proxy statement? |
A: A proxy statement is a document that SEC regulations require us to give you when we ask you to sign a proxy card designating the proxy holders described above to vote on your behalf.
3. | Q: What is the difference between a stockholder of record and a stockholder who holds stock in street name, also called a “beneficial owner?” |
A: If your shares are registered in your name at Computershare Trust Company, N.A., you are astockholder of record.
If your shares are registered at Computershare Trust Company, N.A. in the name of a broker, bank, trustee, nominee, or other similar holder of record, your shares areheld in street name and you arethe beneficial owner of the shares.
4. | Q: What is the record date and what does it mean? Who can vote at the annual meeting? |
A: The record date for our annual meeting isDecemberNovember 28, 2022 2, 2019.. The record date is established by our Board of Directors as required by Delaware law. Only stockholders of record at the close of business on the record date are entitled to receive notice of the annual meeting and to vote their shares at the meeting and any adjournment or postponements of the meeting on the items of business described in this Proxy Statement. As of the record date there were 116,723,758107,042,649 shares of our Common Stock outstanding. Each stockholder will be entitled to one vote in person or by proxy for each share of Common Stock held.
5. | Q: What different methods can I use to vote? |
A: It depends on how your shares are held.
|
• | By Written Proxy — You may vote by mailing the written proxy card. |
•By Telephone or Internet Proxy — You may also vote by telephone from the U.S. using the toll-free telephone number on the proxy card, or by the Internet, using the procedures and instructions described on the proxy card and other enclosures. The telephone and Internet voting procedures, including the use of control numbers, are designed to authenticate our stockholders’ identities, to allow our stockholders to vote their shares, and to confirm that their instructions have been properly recorded. |
www.sallybeautyholdings.com 89 |
Street Name Holders. If your shares are held in the name of a bank, broker or other similar holder of record, check your proxy card or the information provided to you by such holder of record to determine which electronic voting options are available until 1:00 a.m., local time, on January 26, 2023. Please follow their instructions carefully. As a beneficial holder, you are also invited to attend the annual meeting, which will be held virtually. However, since you are not the stockholder of record, you may not vote your shares or ask questions at the annual meeting unless you obtain a signed legal proxy from your bank, broker or other similar holder of record giving you the right to vote the shares and send it to the tabulation agent, Computershare, to obtain a control number to enter the meeting as a validated stockholder.
6. | Q: What constitutes a quorum for the annual meeting? |
A: A quorum for the transaction of business will be present if the holders of a majority of our Common Stock issued and outstanding and entitled to cast votes at the annual meeting are present, in person or by proxy, at the annual meeting. Your shares are counted as present if you attend the annual meeting and vote in person or if you properly return a proxy over the Internet, by telephone or by mail. Abstentions and brokernon-votes will be counted as “present” for purposes of establishing a quorum at the annual meeting. If a quorum is not present at the annual meeting, the annual meeting may be adjourned from time to time until a quorum is present.
7. | Q: How are abstentions and brokernon-votes counted? |
A: Votes will be counted and certified by an independent inspector of elections. Abstentions and brokernon-votes (as defined below) will be counted for purposes of establishing a quorum but will not affect the outcome of the vote on any proposal. If you hold shares through an account with a bank, broker or other similar holder of record, the voting of the shares by the bank, broker or other similar holder of record when you do not provide voting instructions is governed by the rules of the New York Stock Exchange (“NYSE”). These rules allow banks, brokers and other similar holders of record to vote shares in their discretion on “routine” matters for which their customers do not provide voting instructions. On matters considered“non-routine,” banks, brokers and other similar holders of record may not vote shares (referred to as “brokernon-votes”) without your instruction.
8. | Q: What proposals are we voting on at this meeting? What are the voting recommendations of the Board and what vote is required to approve the proposals? |
A:
The Proposals That You are Being Asked to Vote on at | Our Board’s Voting Recommendations | Vote Required to Approve | ||
Proposal 1: Election of | FOR EACH NOMINEE | Affirmative Vote of a Majority of Votes Cast by Stockholders | ||
Vote Required to Approve | ||||
Proposal 2: Advisory Approval of the Compensation of our NEOs | FOR | Affirmative Vote of a Majority of Votes Cast by Stockholders | ||
Vote Required to Approve | ||||
Proposal 3: Advisory Vote on Frequency of Advisory Approvals of the Compensation of our NEOs | FOR “1 Year” | Affirmative Vote of Plurality of Votes Cast for One of Three Options | ||
Vote Required to Approve | ||||
Proposal 4: Ratification of the Appointment of KPMG LLP as our Independent Registered Public Accounting Firm for Fiscal | FOR | Affirmative Vote of a Majority of Votes Cast by Stockholders |
2022 Proxy Statement
A “majority of the votes cast” means the number of “For” votes exceeds the number of “Against” votes. If a nominee who currently is serving as a director does not receive the required vote forre-election, Delaware law provides that such director will continue to serve on the Board as a “holdover” director. However, pursuant to the Corporation’sCompany’s Governance Guidelines, each holdover director must tender, or has already tendered, an irrevocable resignation that would be effective upon the Board’s acceptance of such resignation. In that situation, the Corporation’sCompany’s Nominating, Governance and Corporate Responsibility Committee would consider the resignation and make a recommendation to the Board about whether to accept or reject such resignation and publicly disclose its decision and the rationale behind it within 90 days following certification of the stockholder vote.
Proposals 1, 2 and 23 are considerednon-routine, and therefore banks, brokers and other similar holders of record cannot vote shares on the proposals without your instructions. Thus, abstentions (withheld votes) and brokernon-votes will have no effect in determining whether the proposals have been approved.
Proposal 34 is considered a routine matter. Thus, banks, brokers and other similar holders of record may vote shares on this proposal without your instructions. As such, there will be no brokernon-votes with respect to this proposal.
Votes cast by proxy or in person at the meeting will be tabulated by the Inspector of Election from Computershare Trust Company, N.A
9. | Q: Could other matters be voted on at the meeting? |
A: We do not know of any other business that will be presented at the 20202023 annual meeting. If any other matters properly come before the meeting that are not specifically set forth on the proxy card and in this Proxy Statement, such matters shall be decided by a majority of the votes cast at the annual meeting, unless otherwise provided in our Third Restated Certificate of Incorporation (“Certificate of Incorporation”), Amended and RestatedBy-Laws(“By-Laws (“By-Laws”), the Delaware General Corporation Law or the rules and regulations of the New York Stock Exchange. None of the members of our Board have informed us in writing that they intend to oppose any action intended to be taken by us.
10. | Q: What happens if a stockholder does not specify a choice for a matter when returning a signed proxy? |
A: If the enclosed form of proxy card is signed and returned, it will be voted as specified in the proxy, or, if no vote is specified, it will be voted “FOR” all nominees presented in Proposal 1, “FOR” the proposal set forth in Proposal 2, “FOR” the option “1 Year” in Proposal 3 and “FOR” the proposal set forth in Proposal 3.4.
11. | Q: Can I revoke my proxy? |
A: At any time before the annual meeting, you may revoke your proxy by timely delivery of written notice to our Corporate Secretary, by timely delivery of a properly executed, later-dated proxy (including an Internet or telephone vote), or by voting via ballotonline at the virtual annual meeting. Voting in advance of the annual meeting will not limit your right to vote at the annual meeting if you decide to attend in person.
12. | Q: How |
A: IfOur annual meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. You are entitled to participate in the annual meeting only if you arewere astockholder of the Company as of the close of business on the record your admission ticket is attacheddate, or if you hold a valid proxy for the annual meeting. No physical meeting will be held.
Registered stockholders will be able to attend the annual meeting online and submit your questions during the meeting by visiting meetnow.global/MRAZFNL and following the instructions on your Notice, proxy card, or on the instructions that accompanied your proxy card.materials. You also will needbe able to bring it with you to the meeting.
Ifvote your shares areheldonline by attending the annual meeting by webcast.
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To participate in street name,the annual meeting, you will need to enter the 15-digit control number included on your Notice, on your proxy card.
If you hold your shares beneficially through an intermediary, such as a bank or broker, and you intend to vote or ask questions, you must register in advance by following the instructions outlined in Question 13 below.
A control number will not be required to participate in the meeting as a guest. However, please note that guests will not have the ability to vote or ask questions during the meeting.
The online meeting will begin promptly at 9:00 a.m., local time (Central). We encourage you to access the meeting prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement.
13. | Q: How do I register to attend the annual meeting virtually on the Internet? |
A: If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the annual meeting virtually on the Internet. Please follow the instructions on the Notice or proxy card that you received.
If you hold your shares beneficially through an intermediary, such as a bank or broker, or bank for an admission ticketyou must register in advance to attend the annual meeting virtually on the Internet.
To register to attend the annual meeting online by webcast you must submit proof of your proxy power in the form of a legal proxy from your broker reflecting your Sally Beauty Holdings, Inc. holdings along with your name and youemail address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on January 23, 2023.
You will needreceive a confirmation of your registration by email after we receive your registration materials.
Requests for registration should be directed to bringus at the following:
By email: Forward the email from your broker with your legal proxy information attached or send a separate email with you to the meeting. If you do not receive theyour legal proxy in time, bringinformation attached to legalproxy@computershare.com
By mail:
Computershare
Sally Beauty Holdings Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Upon receipt of your most recent brokerage statement with youconfirmation of registration to the meeting. We can use that to verify your ownership of Common Stock and admit you to the meeting; however, you will not be able to vote your shares atparticipate in the meeting without a legal proxy. Please note that if you own shares in street name and you are issued a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear atfrom Computershare, go to meetnow.global/MRAZFNL to log into the meeting and vote in person.
Please note that whether you are a stockholder of record or street name holder, you will also need to bring a government-issued photo identification card to gain admission to the annual meeting.
Q: What if I have trouble accessing the annual meeting virtually? |
A: The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. For further assistance should you need it you may call 1-888-724-2416.
15. | Q: Who pays the cost of this proxy solicitation? |
A: The proxy accompanying this Proxy Statement is being solicited by our Board of Directors. We will bear the entire cost of this solicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement, the proxy, and any additional information furnished to our stockholders. In addition to using the mail, proxies may be solicited by directors, executive officers, and other employees of the Corporation,Company, in person or by telephone. No additional compensation will be paid to our directors, executive officers, or other employees for
2022 Proxy Statement
these services. We will also request banks, brokers, and other stockholders of record to forward proxy materials, at our expense, to the beneficial owners of our Common Stock. We have retained Alliance Advisors, LLC to assist us with the solicitation of proxies for an estimated fee of approximately $7,500,$8,500, plus normal expenses not expected to exceed $5,000.
Q: What is “householding” and how does it affect me as a stockholder? |
A: To reduce the expenses of delivering duplicate proxy materials, we may take advantage of the SEC’s “householding” rules that permit us to deliver only one set of proxy materials to stockholders who share an
address, unless otherwise requested. If you share an address with another stockholder and have received only one set of proxy materials, you may request a separate copy of these materials at no cost to you by calling our Investor Relations department at(940) 898-7500, by email at investorrelations@sallybeautyholdings.com, or by written request to the Corporate Secretary, Sally Beauty Holdings, Inc., 3001 Colorado Boulevard, Denton, Texas 76210. For future annual meetings, you may request separate voting materials, or request that we send only one set of proxy materials to you if you are receiving multiple copies, by calling or writing to us at the phone number and address given above.
Stockholders of Record: If you vote on the Internet at www.envisionreports.com/SBH, simply follow the prompts for enrolling in the electronic proxy delivery service.
Beneficial Owners: If you hold your shares in a brokerage account, you also may have the opportunity to receive copies of these documents electronically. Please check the information provided in the proxy materials mailed to you by your bank or other holder of record regarding the availability of this service.
Q: How will stockholders know the outcome of the proposals considered at the annual meeting? |
A: We will announce preliminary results at the annual meeting. We will report final results athttp://investor.sallybeautyholdings.com and in a filing with the SEC onForm 8-K.
The Board of Directors knows of no other matters to be acted upon at the annual meeting, but if any matters properly come before the meeting that are not specifically set forth on the proxy card and in this Proxy Statement, it is intended that the persons voting the proxies will vote in accordance with their best judgments.
By Order of the Board of Directors, | ||
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John Henrich Corporate Secretary | ||
December |
www.sallybeautyholdings.com 93
SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL NUMBERS RECONCILIATION
(In Millions—Millions - Unaudited)
FY16 | FY17 | FY18 | FY19 | |||||
Operating Income (as Reported GAAP) | $498.3 | $478.6 | $426.6 | $458.5 | ||||
Management Transition Expenses | $1.3 | |||||||
Executive Separation Expense | $0.7 | |||||||
Charges from Data Security Incidents | $14.6 | $7.9 | ||||||
Asset Impairment | $0.6 | |||||||
Restructuring Charges | $22.7 | $33.6 | ($0.7) | |||||
Adjusted Operating Income(non-GAAP) | $515 | $501 | $468 | $458 |
FY19 | FY20 | FY21 | FY22 | |||||||||||||
Operating Income (as Reported GAAP) |
$ |
458.5 |
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$ |
258.8 |
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$ |
418.4 |
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$ |
337.6 |
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Restructuring Charges | ($ | 0.7 | ) | $ | 14.0 | $ | 6.1 | $ | 45.9 | |||||||
COVID-19 | $ | 21.6 | $ | 36.6 | $ | 6.2 | ||||||||||
Loss on Debt Extinguishment and Other | $ | 1.5 | ||||||||||||||
Adjusted Operating Income (non-GAAP) |
$ |
458 |
|
$ |
294 |
|
$ |
461.1 |
|
$ |
391.3 |
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FY19 | FY20 | FY21 | FY22 | |||||||||||||
Net Sales (as Reported GAAP) |
$ |
3,876.4 |
|
$ |
3,514.3 |
|
$ |
3,875.0 |
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$3,815.6 |
| ||||
Operating Income Margin (as Reported GAAP) | 11.8% | 7.4% | 10.8% | 8.8% | ||||||||||||
Adjusted Operating Income Margin (non-GAAP) |
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11.8% |
|
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8.4% |
|
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11.9% |
|
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10.3% |
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FY19 | FY20 | FY21 | FY22 | |||||||||||||
Diluted EPS (as Reported GAAP) | $ | 2.26 | $ | 0.99 | $ | 2.10 | $ | 1.66 | ||||||||
Restructuring Charges | ($ | 0.00 | ) | $ | 0.09 | $ | 0.05 | $ | 0.33 | |||||||
COVID-19 | $ | 0.14 | $ | 0.25 | $ | 0.04 | ||||||||||
Loss on Debt Extinguishment and Other | $ | 0.13 | ||||||||||||||
Adjusted Diluted EPS (non-GAAP) |
$ |
2.26 |
|
$ |
1.22 |
|
$ |
2.40 |
|
$ |
2.16 |
|
www.sallybeautyholdings.com A-1
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SALLY BEAUTY VOTE HOLDINGS, INC. Your vote matters – here’sheres how to vote!
You may vote online or by phone instead of mailing this card.
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Online Go to www.envisionreports.com/SBH or scan the QR code login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/SBH Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card |
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A Proposals The Board of Directors recommends a vote FOR all nominees listed in Proposal 1, FOR Proposal 2, for every 1 YEAR on Proposal 3 and FOR Proposal 4. 1. Election of Directors For Against Abstain 01 - Rachel R. Bishop Ph. D. 04 - Dorlisa K. Flur 07 - Lawrence Chip P. Molloy For Against Abstain 02 - Jeffrey Boyer 05 - James M. Head 08 - Erin Nealy Cox For Against Abstain 03 - Diana S. Ferguson 06 - Linda Heasley 09 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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03402C
Admission Ticket
The Annual Meeting of Stockholders of
Sally Beauty Holdings, Inc.
will be held on Thursday, January 30, 2020
26, 2023 at 9:00 A.M. CST
SALLY SUPPORT CENTER
3001 Colorado Boulevard
Denton, Texas 76210
This ticket admits onlyCentral Time, virtually via the stockholder(s) whose name(s) is/areinternet at meetnow.global/MRAZFNL. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the frontreverse side of this proxy card. Please bring this admission ticket and a government issued photo identification card with you if you are attending the meeting. Directions to the Sally Support Center, the site of the meeting, are available by telephone at (940) 898-7500.
form. YOUR VOTE IS IMPORTANT
Whether or not you plan to personally attend the Annual Meeting virtually, please promptly vote over the Internet, by telephone, or by mailing in the proxy card. Voting by any of these methods will ensure your representation at the Annual Meeting if you choose not to attend in person.virtually. Voting early will not prevent you from voting in person atduring the virtual Annual Meeting if you wish to do so. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement.
q Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SBH IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proxy |
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This Proxy is Solicited on Behalf of the Board of Directors of Sally Beauty Holdings, Inc.
The undersigned hereby appoints Aaron E. Alt and John Henrich and Marlo Cormier, or anyeither of them, proxies, each with full power of substitution, to vote the shares of the undersigned at the Annual Meeting of Stockholders of Sally Beauty Holdings, Inc. on January 30, 2020,26, 2023, or any adjournments thereof, upon all matters as may properly come before the meeting. Without otherwise limiting the foregoing general authorization, the proxies are instructed to vote as indicated herein.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE. You need not mark any boxes if you wish to vote in accordance with the Board of Directors’Directors recommendations in the Proxy Statement FOR all nominees for election of directors in Proposal 1, FOR Proposal 2, for every 1 YEAR on Proposal 3 and FOR Proposal 3.4. If any other matters properly come before the meeting that are not specifically set forth on the proxy card and in the Proxy Statement, it is intended that the persons voting the proxies will vote in accordance with their best judgments. The proxies cannot vote your shares unless you sign and return this card or vote electronically over the Internet or via the toll-free number.
Please mark, sign and date on the reverse side. C Non-Voting Items Change of Address Please print new address below. +
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