UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Securities Exchange Act of 1934
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FOOT LOCKER, 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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ANNUAL MEETINGOF SHAREHOLDERS
Proxy Statement
330 West 34th Street
New York, New York 10001
Chairman’s Letter to our Shareholders
April 7, 201712, 2019
Dear Fellow Shareholders:
Last year, I highlighted how our customers’ rapidly-changing preferences and shopping behaviors–fueled by access to information, influences, and ideas from around the world–were challenging for our Company and the broader retail industry. This year, I am pleased to invite youreport that, by focusing on our commitment to elevate the customer experience across each of our channels and leveraging our strategic brand partnerships, we continued to differentiate our business and build positive momentum through each quarter of 2018. In 2019, we will continue to build on our strengths and seize opportunities to evolve our business by developing our internal assets and expanding into new markets.
Everything we do starts with the customer. Our new strategic framework is built on knowing, engaging, and serving our customers–wherever and however they want to interact with us–in store or online. By executing against this framework, we believe we will have the focus and tools to achieve our four key strategic imperatives:
elevate the customer experience | invest for long-term growth | drive productivity | leverage the power of our people |
Sales Mid-Single Digit Compounded Annual Growth Rate | Sales per Gross Square Foot $525 - $575 | Earnings Before Interest and Taxes Margin Low Double-Digits* | Net Income Margin High-Single Digit | Return on Invested Capital Mid-Teens | Inventory Turnover 3-4 Times* |
* | Because these non-GAAP measures are uncertain, these amounts have not been reconciled to GAAP. |
Welcome to the Foot Locker, Inc.’s 2019 Annual Meeting of Shareholders
○ | Carbon38 – a destination for women’s luxury activewear |
○ | GOAT Group – a managed marketplace for customers to buy and sell authentic sneakers |
○ | PENSOLE – a footwear design academy that, together with us and our vendor partners, will collaborate on new educational programs and the design and manufacture of exclusive products |
○ | Rockets of Awesome – a children’s direct-to-customer apparel company |
○ | Super Heroic – a lifestyle brand that designs, manufactures, and markets children’s footwear, clothing, and accessories |
Opportunity | Community | Worker Dignity | Sustainability |
We continuously look for new and better ways to foster a diverse and inclusive work environment, engage our surrounding communities, improve employee safety, and minimize our environmental impact, all while creating value for our shareholders.
The Notice of 2019 Annual Meeting of Shareholders and Proxy Statement contain details of the business to be conducted at 125the 2019 Annual Meeting.
Your vote is very important to us, so regardless of whether you attend the meeting, please vote your shares.
This is an exciting time for Foot Locker, Inc. We are proud of what we accomplished in 2018, but we are just getting started on our new journey toinspire and empower youth culture. By focusing on our strategic imperatives, leveraging our global presence, and putting the customer at the center of everything we do, we believe we will build upon last year’s momentum and deliver against our updated long-term goals. I look forward to sharing our success with each of you at the 2019 Annual Meeting.
Sincerely,
Richard A. Johnson Chairman, President and Chief Executive Officer |
330 West 33rd34th Street
New York, New York 10001 at 9:00 a.m., Eastern Daylight Time.
You are being asked to vote on the following proposals at the Annual Meeting:
Date and Time | Location | Record Date |
May 22, 2019 at 9:00 a.m., Eastern Daylight Time (“EDT”) | NYC33, 125 West 33rd Street, ► (see page 76 for directions | Shareholders of record as of March 25, 2019 can vote at this meeting |
Items of Business
Proposal | Board’s Voting Recommendation | |
Elect | ✓ FOReach nominee | |
Approve, on an advisory basis, our named executive officers’ (“NEOs”) compensation | ✓ FOR | |
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the | ||
If you plan to attendTransact such other business as may properly come before the meeting please see Page 91 for admission requirements. Regardlessand at any adjournment or postponement of whether you attend the meeting your vote is important to us, so please vote your shares. For instructions on how to vote, please see Page 90 of this Proxy Statement.
ThankProxy Voting
You may vote using any of the following methods:
Telephone | If you are located within the United States or Canada, you may vote your shares by calling 800-690-6903 and following the recorded instructions. Telephone voting is available 24 hours a day and will be accessible until 11:59 p.m. EDT on May 21, 2019. The telephone voting system has easy to follow instructions and allows you to confirm that the system has properly recorded your vote. If you vote by telephone, you do NOT need to return a proxy card or voting instruction form. | |
Scanning | You may scan the QR Code provided to you to vote your shares through the internet with your mobile device. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. EDT on May 21, 2019. You will be able to confirm that the system has properly recorded your vote. If you scan your QR code to vote, you do NOT need to return a proxy card or voting instruction form. | |
Ballot | You may vote by ballot at the Annual Meeting if you decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting. If you plan to vote by ballot at the Annual Meeting, you do NOT need to return a proxy card or voting instruction form. | |
Internet | You may vote your shares through the internet atproxyvote.com. Internet voting is available 24 hours a day and will be accessible until 11:59 p.m. EDT on May 21, 2019. As with telephone voting, you will be able to confirm that the system has properly recorded your vote. If you vote via the internet, you do NOT need to return a proxy card or voting instruction form. | |
If you received printed copies of the proxy materials by mail, you may vote by mail. Simply mark your proxy card or voting instruction form, date and sign it, and return it in the postage-paid envelope that we included with your materials. |
All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you for beingsign and return a shareholder and forproxy card but do not give voting instructions, the trust you have in Foot Locker, Inc.shares represented by that proxy card will be voted as recommended by the Board.
Sincerely,Your vote is very important to us. Please exercise your right to vote.
Richard A. Johnson
Chairman and Chief Executive Officer
330 West 34th StreetNew York, New York 10001
Important Notice Regarding the Availability of 2017Proxy Materials for the Annual Meeting of Shareholders to be Held on May 22, 2019
The Company’s Proxy Statement and 2018 Annual Report on Form 10-K are available atmaterials.proxyvote.com/344849.
April 12, 2019
Sheilagh M. Clarke
Senior Vice President,
General Counsel and Secretary
Proxies are being solicited by the Board of Directors of Foot Locker, Inc. (NYSE: FL) (“Foot Locker,” the “Company,” “we,” “our,” or “us”) to be voted at our 2019 Annual Meeting. As this is a summary of our Proxy Statement, please refer to the complete Proxy Statement for more complete information.
2019 Annual Meeting of Shareholders
Date and Time: | Proposal | Board’s Voting Recommendation | Page | ||
May 22, 2019 at 9:00 a.m. EDT Location: NYC33, 125 West 33rd Street, Record Date: March 25, 2019 | Elect ten members to the Board to serve for one-year terms | ✓FOReach nominee | 1 | ||
Approve, on an advisory basis, our NEOs’ compensation | ✓FOR | 32 | |||
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the | ✓FOR | 69 |
On or about April 12, 2019, we started mailing a Notice Regarding the Internet Availability of Proxy Materials to our shareholders.
Director Nominees
Ten directors are standing for election at the 2019 Annual Meeting for one-year terms. The table below provides summary information about each of the nominees for director. See pages 6 through 12 for additional information about each nominee and pages 25 through 27 for additional information about the Committees of the Board.
2019 Proxy Statement | 1 |
Proxy Statement Summary
Board Snapshot
Attendance
Over97%Attendance of Directors
at Board and Committee Meetings in 2018
Independence
9out of10directors are independent
All directors are independent, except the CEO
Diversity
Our directors represent a range of backgrounds and experience. The majority are women or ethnically diverse. Our Nominating and Corporate Governance Committee (the “Nominating and Governance Committee”) is focused on ensuring continued diversity on the Board—in terms of gender, age, ethnicity, skills, business experience, service on our Board and the boards of other organizations, and viewpoints—during refreshment activities by requiring that candidate pools include diverse individuals meeting the recruitment criteria.
Tenure
Directors with varied tenure contribute to a range of perspectives and ensure we transition knowledge and experience from longer-serving members to those newer to our Board. We have a good mix of new and longer-serving directors.
Refreshment
3 New Directors Added Over Past Five Years
3 Directors Retired Over Past Five Years
Age
2 | Foot Locker, Inc. |
Proxy Statement Summary
Environmental, Social, and Governance Highlights
The Company and the Board are focused on corporate social responsibility. We continuously look for new and better ways to foster a diverse and inclusive work environment, engage our surrounding communities, improve employee safety, and minimize our environmental impact, all while creating value for our shareholders. Below are some recent highlights of our diversity and sustainability initiatives.
April 7, 2017
Important Notice Regarding the Availability of Proxy Materials forthe Annual Meeting of Shareholders to be Held on May 17, 2017
The Company’s Proxy Statement and 2016 Annual Report on Form 10-K are available athttp://materials.proxyvote.com/344849.
Table of Contents
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2017 Annual Meeting of Shareholders
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● | We have several women in senior leadership roles, including the Chief Financial Officer, Chief Human Resources Officer, General Counsel and Secretary, Chief Accounting Officer, Vice President—Global Total Rewards, and Vice President and General Manager, Foot Locker Pacific | ● | Our independent directors represent a diverse range of backgrounds and experience | |||||
● | We strive to have a workforce that reflects the | |||||||
● | Raised and donated over$9 millionfor scholarships since 2004, plus footwear and apparel donations to | ● | U.S. non-store employees permitted paid time-off for volunteering in | |||||
Global Sourcing Guidelines (GSG) are distributed annually to | ||||||||
Reduced energy (including the replacement of |
On or about April 7, 2017, we started mailing to most of our shareholders in the United States a Notice Regarding the Availability of Proxy Materials.
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Director Nominees
Eleven directors are standing for election at this meeting for one-year terms. Mr. DiPaolo will be retiring from the Board when his term expires at the conclusion of the 2017 Annual Meeting in accordance with the retirement policy for directors. The table below provides summary information about each of the nominees for director. Please see Pages 3 through 9 for additional information about each nominee and Pages 18 through 20 for additional information about the Committees of the Board.
Committee Membership** | ||||||||||||||||||
Name and Primary Occupation | Age* | Director Since | Independent | Other Public Company Boards | Audit | Finance | Compensation | Nominating | Executive | |||||||||
Maxine Clark | ||||||||||||||||||
Founder, Retired Chairman and Chief Executive Bear of Build-A-Bear Workshop, Inc. | 68 | 2013 | Build-A-Bear Workshop, Inc. Gymboree Corp. | l | l | |||||||||||||
Alan D. Feldman | ||||||||||||||||||
Retired Chairman, President and Chief Executive Officer of Midas, Inc. | 65 | 2005 | GNC Holdings, Inc. John Bean Technologies Corporation | l | l | |||||||||||||
Jarobin Gilbert, Jr. | ||||||||||||||||||
President and Chief Executive Officer of DBSS Group, Inc. | 71 | 1981 | None | l | l | |||||||||||||
Richard A. Johnson | ||||||||||||||||||
Chairman, President and Chief Executive Officer of Foot Locker, Inc. | 59 | 2014 | H&R Block Inc. | |||||||||||||||
Guillermo G. Marmol | ||||||||||||||||||
President of Marmol & Associates | 64 | 2011 | Vitamin Shoppe, Inc. | l | l | |||||||||||||
Matthew M. McKenna | ||||||||||||||||||
Executive in Residence of Georgetown University, McDonough School of Business | 66 | 2006 | None | l | l |
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Committee Membership** | ||||||||||||||||||
Name and Primary Occupation | Age* | Director Since | Independent | Other Public Company Boards | Audit | Finance | Compensation | Nominating | Executive | |||||||||
Steven Oakland | ||||||||||||||||||
Vice Chair and President, U.S. Food and Beverage of The J.M. Smucker Company | 56 | 2014 | None | l | l | |||||||||||||
Ulice Payne, Jr. | ||||||||||||||||||
President and Managing Member of Addison-Clifton, LLC | 61 | 2016 | ManpowerGroup Inc. The Northwestern Mutual Life Insurance Company WEC Energy Group, Inc. | l | l | |||||||||||||
Cheryl Nido Turpin | ||||||||||||||||||
Retired President and Chief Executive Officer of the Limited Stores | 69 | 2001 | None | l | l | |||||||||||||
Kimberly Underhill | ||||||||||||||||||
Global President of Kimberly-Clark Professional | 52 | 2016 | None | l | l | |||||||||||||
Dona D. Young | ||||||||||||||||||
Retired Chairman, President and Chief Executive Officer of The Phoenix Companies, Inc. | 63 | 2001 | Aegon N.V. | l | l | l |
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Board Attendance
2016
99%
Attendance of Directorsat Board and CommitteeMeetings in 2016
Board Composition*
All directors areindependent,except the CEO(10 out of 11 directorsare independent)
Board Refreshment*
Foot Locker Policy: Retirement age 72
* As of May 17, 2017.
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Named Executive Officers
Fiscal 2016 Results
Our 2016 fiscal year was a very strong year for Foot Locker. The power and relevance of our strategic initiatives, as well as our team’s outstanding execution of them, can be seen in the financial success we achieved in 2016, as shown in this brief list of highlights:
*A reconciliation to GAAP is provided on Pages 16 through 18 U.S. workforce represents 74% of our 2016 Annual Report on Form 10-K.global workforce.
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Proxy Statement Summary
Recognition
For additional information, seeEnvironmental, Social, and Governance Highlightsbeginning on page 20.
Fiscal 2018 Results
We built positive momentum and improved our financial results in 2018. Highlights include the following:
* | A reconciliation to GAAP is provided beginning on page 16 of our 2018 Annual Report on Form 10-K. |
4 | Foot Locker, Inc. |
Proposal 1: Election of Directors
ThereThere are currently 1210 directors on our Board. Nicholas DiPaolo will be retiring when his term expires at the conclusion of this Annual Meeting, and theThe Board has fixed the number of directors at 11 effective at such time. At our 2014 Annual Meeting, shareholders approved a proposal to declassify the Board beginning in 2015. Consequently, this year all10. All current directors other than Mr. DiPaolo are standing for election for a one-year term at this meeting.
We have refreshed our Board over the past sixfive years, as seventhree highly-qualified directors were added to the Board and fivethree directors will have retired as of the Annual Meeting.retired. We believe that the Board possesses the appropriate mix of diversity in terms of gender, age, ethnicity, skills, business experience, service on our Board and the boards of other organizations, and viewpoints.
Our Nominating and Corporate Governance Committee (the “Nominating Committee”) is responsible for recommending director candidates to fill current and anticipated Board vacancies. The Nominating Committee identifies and evaluates potential candidates from recommendations from the Company’s directors, management, shareholders, and other outside sources, including professional search firms. In evaluating proposed candidates, the Nominating Committee may review their résumés, obtain references, and conduct personal interviews. The Nominating Committee considers, among other factors, the Board’s current and future needs for specific skills and the candidate’s experience, leadership qualities, integrity, diversity, ability to exercise judgment, independence, and ability to make the appropriate time commitment to the Board. The Nominating Committee strives to ensure the Board has a rich mix of relevant skills and experiences to address the Company’s needs by our strategic plan.
During 2016, the Nominating Committee conducted a director search for potential director candidates whose experience, skills, qualifications, and independence met the criteria it previously established, and the Nominating Committee reviewed its findings with the Board. In conducting its search, the Nominating Committee collected names of potential candidates from existing Foot Locker directors and engaged SpencerStuart, a third-party search firm, to identify and recruit qualified candidates. After reviewing the qualifications of the potential pool of candidates and narrowing the field to a handful of candidates, our Chairman and our Lead Director interviewed the candidates. Based on the Nominating Committee’s review, the candidates’ résumés, and director interviews with the candidates, the Nominating Committee recommended and the Board approved the nomination of Ulice Payne, Jr. and Kimberly Underhill, each of whom was identified by SpencerStuart.
Maxine Clark, Alan D. Feldman, Jarobin Gilbert, Jr., Richard A. Johnson, Guillermo G. Marmol, Matthew M. McKenna, Steven Oakland, Ulice Payne, Jr., Cheryl Nido Turpin, Kimberly Underhill, and Dona D. Young will be considered for election as directors to serve for one-year terms expiring at the 20182020 Annual Meeting. Each nominee has been nominated by the Board for election and has consented to serve. Ms. Clark, Mr. Feldman, Mr. Gilbert, Mr. Johnson, Mr. Marmol, and Mrs. Young were elected to serve for their present terms at the 2016 Annual Meeting; Mr. McKenna, Mr. Oakland, and Ms. Turpin were elected to serve for their present terms at the 2014 Annual Meeting; and Mr. Payne and Ms. Underhill were elected by the Board on November 16, 2016 to serve for their present terms, effective December 1, 2016. If, prior to the 20172019 Annual Meeting, any nominee is unable to serve, then the persons designated as proxies for this meeting (Sheilagh M. Clarke, John A. Maurer, and Lauren B. Peters) will have full discretion to vote for another person to serve as a director in place of that nominee.nominee or the Board may reduce the size of the Board.
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Proposal 1
The Nominating and Governance Committee reviewed and updated the director skill setskill-set matrix in light of the Company’s 2015-20 long-term strategic plan and evaluated each of the directors’ skills, experience, and qualifications under the updated matrix, which is shown beginning on Page 9.
page 11.
The Board, acting through the Nominating and Governance Committee, considers its members, including those directors being nominated for reelection to the Board at the 20172019 Annual Meeting, to be highly qualified for service on the Board due to a variety of factors reflected in each director’s education, areas of expertise, and experience serving on the boards of directors of other organizations during the past five years. Generally, the Board seeks individuals with broad-based experience and who have the background, judgment, independence, and integrity to represent the shareholders in overseeing the Company’s management in their operation of the business, rather than specific, niche areas of expertise.business. Within this framework, specific items relevant to the Board’s determination for each director are listed in each director’s biographical information beginning on Page 3.page 6. The ages shown are as of April 7, 2017.12, 2019. There are no family relationships among our directors or executive officers.
The Board recommends that shareholders voteFORthe election of each of theeleven identified nominees to the Board.
✓ | The Board recommends that shareholders voteFOR the election of each of the ten identified nominees to the Board. |
2019 Proxy Statement |
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Proposal 1: Election of Directors
Maxine Clark | |
Proposal 1
Independent Director Age: Director since:2013
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Ms. Clark served as Chief Executive Bear of Build-A-Bear Workshop, Inc.
| Ms. Clark has extensive experience in both domestic and international retailing, including founding and leading Build-A-Bear Workshop, serving as President of Payless ShoeSource, Inc., and serving for 19 years as an executive of The May Department Stores Company. She adds significant experience to our Board in strategic planning, real estate, digital technology, and marketing. Her retail and business background, as well as her financial expertise, are particularly useful for her service as a member of the Finance and Strategic Planning Committee (the “Finance Committee”). |
Alan D. Feldman | ||
Independent Director Age: Director since:2005
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Mr. Feldman served as Chairman, President and Chief Executive Officer of Midas, Inc. (automotive repair and maintenance services) from May 2006 to April 2012, and as President and Chief Executive Officer of Midas, Inc. from January 2003 to April 2006. He was an independent consultant from March 2002 to January 2003. Mr. Feldman previously served as an executive at PepsiCo, Inc., Pizza Hut, Inc., and McDonald’s Corporation. Mr. Feldman is a director of John Bean Technologies Corporation and GNC Holdings, Inc.
| Mr. Feldman is a recognized business leader with a broad base of experience in |
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6 | Foot Locker, Inc. |
Proposal 11: Election of Directors
Richard A. Johnson | ||
Age: Director since: 2014 |
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Mr. Johnson has served as the Company’s Chairman of the Board since May 2016, and President and Chief Executive Officer since December 2014. Mr. Johnson served as Executive Vice President and Chief Operating Officer from May 2012 to November 2014. He served as Executive Vice President and Group
| Mr. Johnson has extensive experience as a retail company executive, including |
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Proposal 1
Guillermo G. Marmol | ||
Independent Director Age: Director since:2011 |
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Mr. Marmol has served as President of Marmol & Associates (consulting firm that provides advisory services and investment capital to early stage technology companies) since March 2007 and, prior to that, from October 2000 to May 2003. He served as Division Vice President and a member of the Executive Committee of Electronic Data Systems Corporation (global technology services company) from June 2003 to February 2007, and as a director and Chief Executive Officer of Luminant Worldwide Corporation (internet professional services company) from July 1998 to September 2000. He served as Vice President and Chair of the Operating Committee of Perot Systems Corporation (information technology and business solutions company) from December 1995 to June 1998. He began his career at McKinsey & Company (management consulting firm) from 1990 to 1995, rising to Senior Partner, and was a leader of the organization and business process redesign practices. Mr. Marmol is a director of Vitamin Shoppe, Inc.
Principal Solar Inc. | Mr. Marmol has a significant background in information technology and systems, which continues to be highly important to the Company as we enhance our technology and systems and build a more powerful digital business to connect with our customers. He also serves as a director and Chair of the Nomination and Governance Committee of another public company,Vitamin Shoppe, Inc. Through his long tenure as a management consultant focusing on strategic analysis and business processes, he brings valuable knowledge and expertise to his service on the Board, |
2019 Proxy Statement | 7 |
Proposal 1: Election of Directors
Matthew M. McKenna | ||
Independent Director Age: Director since:2006 |
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Mr. McKenna has served as Executive in Residence of Georgetown University’s McDonough School of Business since February
| Mr. McKenna has extensive |
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Proposal 1
Independent Director Age: Director since:2014 |
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Mr. Oakland has served as Chief Executive Officer and President of TreeHouse Foods, Inc. (manufacturer of packaged foods and beverages) since March 2018. He previously served as Vice Chair and President, U.S. Food and Beverage of The J.M. Smucker Company (“Smucker’s”) (manufacturer of
Foster Farms, a privately-held poultry business. | Mr. Oakland brings to our Board a broad-based business background and extensive experience in domestic and international consumer products operations, with particular strength in customer engagement, marketing, brand-building, and strategic planning. Additionally, Mr. Oakland is actively involved in management resources issues and governance matters as |
8 | Foot Locker, Inc. |
Proposal 1: Election of Directors
Ulice Payne, Jr. | ||
Independent Director Age: Director since:2016
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Mr. Payne has served as President and Managing Member of Addison-Clifton, LLC (global trade compliance advisory services provider) since May 2004. He previously served as
The Marcus Corporation from 1996 to 2000. | Mr. Payne brings to our Board significant managerial, operational, financial, public service, and global experience as a result of the many senior positions he has held, including as President and Managing Member of Addison-Clifton, LLC, President and Chief Executive Officer of the Milwaukee Brewers Baseball Club, |
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Proposal 1
Cheryl Nido Turpin | ||
Independent Director Age: Director since: |
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Ms. Turpin served as President and Chief Executive Officer of
| Ms. Turpin brings to our Board long experience as a retail executive, most recently as President and Chief Executive Officer of The Limited Stores, where she worked in a multi-divisional retail structure similar to |
2019 Proxy Statement | 9 |
Proposal 1: Election of Directors
Kimberly Underhill | ||
Independent Director Age: Director since:2016
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Ms. Underhill has served as
consumer goods industries). | Ms. Underhill brings to our Board a broad-based business background and extensive experience in domestic and international consumer products operations, with particular strength in marketing, brand-building, strategic planning, and international business development. Additionally, Ms. Underhill is actively involved in management resources issues as a senior executive of a public company, which provides relevant expertise to both our Compensation Committee, of which she is Chair, and Finance Committee, of which she is a member. Through her senior executive position at Kimberly-Clark, Ms. Underhill also has significant international and business development experience. |
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Proposal 1
Dona D. Young | ||
Independent Lead Director Age: Director since:2001
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Mrs. Young retired in April 2009 as Chairman, President and Chief Executive Officer of The Phoenix Companies, Inc. (at the time an insurance and asset management company) after a nearly 30-year career. She currently engages in independent strategic advising and consulting, with a focus on corporate social responsibility and board governance
| Mrs. Young brings significant financial, |
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Proposal 11: Election of Directors
Summary of Director Qualifications and Experience and Demographic Matrix
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The Board is committed to good corporate governance and has adopted Corporate Governance Guidelines and other policies and practices to guide the Board and senior management.
We believe that the Boardour slate of director nominees possesses the appropriate mix of diversity in terms of gender, age, ethnicity, skills, business experience, service on our Board and the boards of other organizations, and viewpoints. We have refreshed our Board over the past sixfive years, as seventhree highly-qualified directors were added to the Board, and fivethree directors will have retired asretired. Each director is individually qualified to make unique and substantial contributions. Collectively, our directors’ diverse viewpoints and independent-mindedness enhance the quality and effectiveness of this Annual Meeting.Board deliberations and decision making. This blend of qualifications, attributes, and tenure results in highly effective leadership and is summarized below.
Knowledge, Skills, and Experience | Clark | Feldman | Johnson | Marmol | McKenna | Oakland | Payne | Turpin | Underhill | Young | |
Leadership | |||||||||||
Chief Executiveexperience is important because directors who have served as CEOs of public or substantial privately-held or non-profit companies have experience working, communicating, and engaging with a variety of important stakeholder groups, including shareholders, bondholders, and investment analysts | ● | ● | ● | ● | ● | ● | ● | ● | |||
Strategy | |||||||||||
Broad-Based Businessexpertise provides a depth of experience to leverage in evaluating issues, and making business judgments | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Digital and Channel Connectivityexperience is important to the Company as we build a more powerful digital experience for our customers | ● | ● | ● | ||||||||
Public Serviceexperience is relevant to the Company as it is affected by government actions | ● | ● | |||||||||
Information Securityexperience is relevant given the importance of protecting both the Company’s and our customers’ information | ● | ● | |||||||||
Internationalexperience is important in understanding and reviewing our business and strategy outside of the United States, particularly in Europe and Asia | ● | ● | ● | ● | ● | ● | |||||
Retail, Brand Marketing, and Social Mediaexperience gives directors an understanding of assessing, developing, and implementing our marketing and customer engagement strategies | ● | ● | ● | ● | ● | ● | |||||
Strategic Investmentsexperience is important in evaluating our financial statements and investment strategy | ● | ● | ● | ||||||||
Strategic Planning and Analysisexperience provides a practical understanding of assessing, developing, and implementing the metrics of our long-term financial objectives and strategic priorities | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||
Supply Chainexperience is important to understand the omnichannel commerce distribution model with multiple fulfilment points to serve the customer | ● | ● | ● | ||||||||
2019 Proxy Statement | 11 |
Proposal 1: Election of Directors
Knowledge, Skills, and Experience | Clark | Feldman | Johnson | Marmol | McKenna | Oakland | Payne | Turpin | Underhill | Young | |
Technology and Systemsexperience is important given the importance of technology to the retail marketplace, our internal operations, and our customer engagement initiatives | ● | ● | |||||||||
Youth Culture/Target Marketexperience is important to understand our business and strategy as our brands keenly focus on their target customers, particularly youth culture | ● | ● | ● | ● | |||||||
Governance | |||||||||||
Accounting or Financialexpertise gained from experience as a CEO, audit professional, or finance executive is important because it assists our directors in understanding and overseeing our financial reporting and internal controls | ● | ● | ● | ● | ● | ● | ● | ● | |||
Business Development / Mergers and Acquisitionsexperience is important because it helps in assessing potential growth opportunities | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||
Environmental, Social, and Governanceexperience is important because it supports our goals of strong Board and management accountability, transparency, and protection of shareholder interests | ● | ● | ● | ● | ● | ● | ● | ||||
Risk Managementexperience is helpful to the Board’s role in overseeing the risks facing the Company | ● | ● | ● | ● | ● | ● | |||||
Demographic Background | |||||||||||
Board Tenure (Year Joined) | 2013 | 2005 | 2014 | 2011 | 2006 | 2014 | 2016 | 2001 | 2016 | 2001 | |
Years | 6 | 14 | 5 | 8 | 13 | 5 | 3 | 18 | 3 | 18 | |
Gender | ● | ● | ● | ● | ● | ● | |||||
Male | ● | ● | ● | ● | |||||||
Female | |||||||||||
Age (at April 12, 2019) | |||||||||||
Years old | 70 | 67 | 61 | 66 | 68 | 58 | 63 | 71 | 54 | 65 | |
Race/Ethnicity | |||||||||||
African American | ● | ||||||||||
Hispanic | ● | ||||||||||
White | ● | ● | ● | ● | ● | ● | ● | ● | |||
Number of Other Public Company Boards | 1 | 2 | 1 | 1 | — | 1 | 2 | — | — | 1 |
12 | Foot Locker, Inc. |
Corporate Governance Guidelines
The Board is committed to good corporate governance and has adopted Corporate Governance Guidelines.Guidelines and other policies and practices to guide the Board and senior management.
Our By-Laws provide for a Board consisting of between 7 and 13 directors. The exact number of directors is determined from time to time by the entire Board. The Board periodically reviewshas fixed the guidelinesnumber of directors at 10, and revises them, as appropriate. Thethere are currently 10 directors on our Board.
Directors’ Independence
A director is not considered independent under New York Stock Exchange (“NYSE”) rules if he or she has a material relationship with the Company that would impair his or her independence. In addition to the independence criteria established by the NYSE, the Board has adopted categorical standards to assist it in making its independence determinations regarding individual directors. These categorical standards are contained in the Corporate Governance Guidelines, which are availableposted on the corporate governance section of the Company’s corporate website atwww.footlocker.com/corpgovfootlocker.com/corp. You may also obtain a printed copy of the guidelines by writing to the Secretary at the Company’s headquarters.
The Board has adopted chartersdetermined that the following categories of relationships are immaterial for purposes of determining whether a director is independent under the NYSE listing standards:
Categorical Relationship | Description |
Investment Relationships with the Company | A director and any family member may own equities or other securities of the Company. |
Relationships with Other Business Entities | A director and any family member may be a director, employee (other than an executive officer), or beneficial owner of less than 10% of the shares of a business entity with which the Company does business, provided that the aggregate amount involved in a fiscal year does not exceed the greater of $1 million or 2% of either that entity’s or the Company’s annual consolidated gross revenue. |
Relationships with Not-for-Profit Entities | A director and any family member may be a director or employee (other than an executive officer or the equivalent) of a not-for-profit organization to which the Company (including the Foot Locker Foundation) makes contributions, provided that the aggregate amount of the Company’s contributions in any fiscal year do not exceed the greater of $1 million or 2% of the not-for-profit entity’s total annual receipts. |
We individually inquire of each of our directors and executive officers about any transactions in which the Company and any of these related persons or their immediate family members are participants. We also make inquiries within the Company’s records for information on any of these kinds of transactions. Once we gather the information, we then review all relationships and transactions of which we are aware in which the Company and any of our directors, executive officers, their immediate family members or five-percent shareholders are participants to determine, based on the facts and circumstances, whether the related persons have a direct or indirect material interest. The General Counsel’s office coordinates the related person transaction review process. The Nominating and Governance Committee reviews any reported transactions involving directors and their immediate family members in making its recommendation to the Board on the independence of the directors. In approving, ratifying, or rejecting a related person transaction, the Nominating and Governance Committee considers such
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Corporate Governance
information as it deems important to determine whether the transaction is on reasonable and competitive terms and is fair to the Company. The Company’s written policies and procedures for related person transactions are included within both the Corporate Governance Guidelines and the Code of Business Conduct. There were no related person transactions in 2018.
The Board, upon the recommendation of the Nominating and Governance Committee, has determined that the following directors are independent under NYSE rules because they have no material relationship with the Company that would impair their independence:
Jarobin Gilbert, Jr. served as a director of the Company during 2018 until his retirement from the Board in May 2018. The Board determined that Mr. Gilbert was independent under NYSE rules through the end of his term as a director because he had no material relationship with the Company that would impair his independence.
In making its independence determination, the Board reviewed recommendations of the Nominating and Governance Committee and considered Dona D. Young and Ulice Payne, Jr.’s relationships as directors of companies with which we do business. The Board has determined that these relationships meet the categorical standard for Relationships with Other Business Entities and are immaterial with respect to determining independence.
The Board has determined that all members of the Audit Committee, the Compensation Committee, the Finance Committee, and the Nominating Committee. Copies ofand Governance Committee are independent as defined under the charters for these committees are available onNYSE listing standards and the corporate governance section ofdirector independence standards adopted by the Company’s corporate website atwww.footlocker.com/corpgov. You may also obtain printed copies of these charters by writing to the Secretary at the Company’s headquarters.Board.
Policy on Voting for DirectorsBoard Leadership Structure
Our Corporate Governance Guidelines provide that if a nominee for directorBoard evaluates, from time to time as appropriate, whether the same person should serve as Chairman and Chief Executive Officer, or whether the positions should be held by different persons, in an uncontested election receives more votes “withheld” from his or her election than votes “for” election, then the director must offer his or her resignation for consideration by the Nominating Committee. The Nominating Committee will evaluate the resignation, weighinglight of all relevant facts and circumstances and what it considers to be in the best interests of the Company and its shareholders,our shareholders. Since May 2016, the positions of Chairman and make a recommendation to theChief Executive Officer have been held by Richard A. Johnson, with Dona D. Young serving as independent Lead Director. The Board on the action to be taken. For example, the Nominating Committee may recommend (i) accepting the resignation, (ii) maintaining the director but addressing what the Nominating Committee believes to be the underlying cause of the withheld votes, (iii) resolving that the director will not be re-nominated in the future for election, or (iv) rejecting the resignation. When making its determination, the Nominating Committee will consider all factors that it deems relevant, including (i) any stated reasons why shareholders withheld votes from the director, (ii) any alternatives for curing the underlying cause of the withheld votes, (iii) the director’s tenure, (iv) the director’s qualifications, (v) the director’s past and expected future contributions to the Board and to the Company, and (vi) the overall composition of the Board, including whether accepting the resignation would cause the Company to fall below the minimum number of directors required under the Company’s By-Laws or fail to meet any applicable U.S. Securities and Exchange Commission (the “SEC”) or New York Stock Exchange (the “NYSE”) requirements. We will promptly disclose the Board’s decision on whether to accept the director’s resignation, including, if applicable, the reasons for rejecting the offered resignation.has utilized various leadership structures since 2010, as shown below:
At this Annual Meeting, shareholders are being asked to approve an amendment to the By-Laws, which is recommended by the Board, to provide for majority voting for directors in uncontested elections. Please see Page 81 for more information on this proposal.
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January 2010 | December 2014 | May 2015 | May 2016 |
Positions combined, with an independent Lead Director | Positions separated, with the former Chairman and Chief Executive Officer serving as Executive Chairman, and an independent director serving as Lead Director | Positions separated, with an independent director serving as Non-Executive Chairman | Positions combined, with an independent Lead Director |
Corporate Governance
The Board believes that, a significant majority of its members should be independent, as determined by the Board based on the criteria established by the NYSE. Each year, the Nominating Committee reviews any relationships between outside directors and the Company that may affect independence. Currently, one of the twelve members of the Board serves as an officer of the Company, and the remaining eleven directors are independent under the criteria established by the NYSE. Please see Pages 16 through 17 for more information regarding director independence.
As a general principle, the Board believes that the periodic rotation of committee assignments on a staggered basis is desirable and provides an opportunity to foster diverse perspective and develop breadth of knowledge within the Board.
The Board believes that whenparticularly because the positions of Chairman and Chief Executive Officer are held by the same person, the appointment of an independent lead director should be appointed.is appropriate.
The Lead Director’s responsibilities include:
14 | Foot Locker, Inc. | |
Corporate Governance
The Board considers the periodic rotation of the Lead Director from time to time, taking into account experience, continuity of leadership, and the best interests of the Company.
Dona D. Young currently serves as the Lead Director. The Board believes that Mrs. Young is well suited to serve as Lead Director, given her business, financial, and governance background, as well as her more than sixteeneighteen years of service on our Board.
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Corporate Governance
Our Board evaluates, from time to time as appropriate, whether the same person should serve as Chairman and Chief Executive Officer, or whether the positions should be bifurcated, in light of all relevant facts and circumstances and what it considers to be in the best interests of the Company and our shareholders. In May 2016, the positions of Chairman and Chief Executive Officer were re-combined and are held by Richard A. Johnson, with Dona D. Young serving as independent Lead Director. The Board has utilized various leadership structures since 2001, as shown below:
The Board believes that, based on the Company’s current facts and circumstances, its Board leadership structure is appropriate.
Executive Sessions of Non-Management Directors
The Board holds regularly scheduled executive sessions of non-management directors in conjunction with each quarterly Board meeting. Dona D. Young, as Lead Director, presides at these executive sessions.
Each year, the Board and its committees conduct self-evaluations. The Nominating Committee oversees the evaluation process and reviews the procedures, which may vary from year to year, in advance of each year’s evaluation process. The self-evaluation process is designed to elicit candid feedback regarding the areas where the Board and its committees could improve their effectiveness. In addition, in a prior year, the Nominating Committee engaged a third party to conduct a survey of the directors with regard to the assessment process and other governance areas and report to the full Board on the survey results and benchmark information, and may consider engaging a third party in the future with regard to the evaluation process.
Board Members’ Attendance at Annual Meetings
Directors are expected to attend annual meetings of shareholders. The annual meeting is normally scheduled on the same day as a quarterly Board meeting. In 2016, all of the directors then serving attended the annual meeting.
Director On-Boarding and Education
We have an on-boarding program for new directors that is intended to educate a new director on the Company and the Board’s practices. OverDuring the coursefirst year of the one-year on-boarding program,director’s service, the newly-elected director meets with the Company’s Chief Executive Officer, Chief Financial Officer, Chief Human Resources Officer, General Counsel and Secretary, and other members of senior management, to review the Company’s business operations, financial matters, strategy, investor relations, risk management, corporate governance, composition of the Board and its committees, and succession and development plans. Additionally, he
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Corporate Governance
or she visits our stores atnear the Company’s New York headquarters, and elsewhere, with senior management for an introduction to store operations. During the on-boardingthis first year, new directors periodically meet with the Lead Director and will meet with the committee chairs for a deep divean immersion into the work of the committees.
The second phase of the on-boarding program commences approximately 18 months after the director joins the Board and is specifically tailored to the individual director, taking into consideration his or her experience as a director of other public companies, the committees of our Board on which he or she serves, and areas of our business and strategy that the director would like to explore more thoroughly with management. For example, during this second phase of the program, directors participate in enhanced discussions in the areas of customer data, retail accounting and operations, and risk management, and meet with key talent. Regular check-ins with the Lead Director continue throughout the on-boarding program.
We also provide the Board with educational training, from time to time on subjects applicable to the Board and the Company, including with regard to retailing, accounting, financial reporting, and corporate governance, using both internal and external resources, in connection with each quarterly Board meeting and weprovide outside speakers on relevant topics during Board dinners. We encourage all directors to attend other continuing education programs to maintain their expertise and provide feedback to the other directors on these programs.
PaymentMandatory Resignation or Retirement
The Board has established a policy whereby a non-employee director is required to advise the Chair of the Nominating and Governance Committee of any change to his or her principal employment. If requested by the Chair, after consultation with the members of the Committee, the director will submit a letter of resignation to the Chair of the Committee, and the Committee would then meet to consider whether to accept or reject the resignation.
The Corporate Governance Guidelines also require that directors retire from the Board at the annual meeting of shareholders following the director’s 72nd birthday.
Corporate Governance Guidelines
The Board has responsibility for establishing broad corporate policies, reviewing significant developments affecting the Company, overseeing the business strategy, and monitoring the general performance of the Company.
The Board has adopted Corporate Governance Guidelines. The Board periodically reviews the guidelines and revises them, as appropriate. The Corporate Governance Guidelines are available on the corporate governance section of the Company’s corporate website atfootlocker.com/corp. You may also obtain a printed copy of the guidelines by writing to the Secretary at the Company’s headquarters.
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Corporate Governance
Board Attendance
The Board held six meetings during 2018. All of our directors attended at least 75% of the aggregate of the meetings of the Board and of the committees on which they served in 2018.
The Board holds regularly scheduled executive sessions of non-management directors in conjunction with each Board meeting. Dona D. Young, as Lead Director, presides at these executive sessions.
Directors Feesare expected to attend annual meetings of shareholders. The annual meeting is normally scheduled on the same day as a quarterly Board meeting. In 2018, all of the directors attended the annual meeting.
Retention of Outside Advisors
The Board and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by, and report directly to, the Audit Committee. In addition, the Audit Committee is responsible for overseeing the qualifications, performance, and compensation of the internal auditors to which the Company has outsourced in part. Similarly, the consultant retained by the Compensation Committee to assist in the evaluation of senior executive compensation reports directly to that committee.
Board Evaluations
Each year, the Board and its committees engage in a robust evaluation process consistent with the Board’s goal of continuous improvement. The Nominating and Governance Committee oversees the evaluation process and reviews the procedures, which may vary from year to year, in advance of each year’s evaluation. The process is designed to elicit candid feedback regarding the areas in which the Board and its committees could improve their effectiveness and utilizes surveys, individual interviews, and action planning.
In addition, in 2018, the Board enhanced its evaluation process and undertook a 360-degree peer evaluation process facilitated by an independent third party. Each director completed an evaluation and individual interview with the third party. The Chair of the Nominating and Governance Committee and the Lead Director each received copies of the completed evaluations. The Lead Director met separately with each director, and the Chair of the Nominating and Governance Committee met with the Lead Director, to discuss the results of the individual evaluations. The Board plans to conduct peer evaluations approximately every two to three years.
Stock Ownership Guidelines
The Board has adopted Stock Ownership Guidelines applicable to the Board, the Chief Executive Officer, and other covered executives. The Guidelines are as follows:
Covered Position | Stock Ownership Guidelines |
Non-employee Director | 4xAnnual Retainer Fee (both Cash and Equity)
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Chief Executive Officer | 6xAnnual Base Salary
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Executive Vice President | 3xAnnual Base Salary |
Senior Vice President; Senior Vice President and General Manager | 2xAnnual Base Salary
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Corporate Vice President; Vice President and General Manager | 0.5xAnnual Base Salary
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16 | Foot Locker, Inc. |
Corporate Governance
Shares of unvested restricted stock, unvested restricted stock units (“RSUs”), and deferred stock units (“DSUs”) are counted towards ownership for purposes of the Stock Ownership Guidelines. Performance-based RSUs (“PBRSUs”) are counted once earned. Stock options and shares held through the Foot Locker 401(k) Plan are disregarded in calculating ownership.
Directors, the Chief Executive Officer, and other covered executives are required to be in compliance within five years of becoming subject to these guidelines. In the event of any increase in the required ownership level, whether as a result of an increase in the annual retainer fee or base salary or an increase in the required ownership multiple, the target date for compliance with the increased ownership guideline would be five years after the effective date of such increase.
All executives and directors who were required to be in compliance with the guidelines as of the end of the 2018 fiscal year are in compliance. The Company measures compliance with the guidelines at the end of the prior fiscal year based on the market value of the Company’s stock at that time.
If a director, the Chief Executive Officer, or other covered executive fails to be in compliance with the guidelines as of the end of the prior fiscal year, he or she must hold the net shares obtained through future stock option exercises and restricted stock and RSU vestings, after payment of applicable taxes, until again regaining compliance with the guidelines. In order to take into consideration fluctuations in the Company’s stock price, any person who has been in compliance with the guidelines as of the end of at least one of the two preceding fiscal years and who has not subsequently sold shares will not be subject to this holding requirement. For non-employee directors, the Nominating and Governance Committee will consider a director’s failure to comply with the Stock Ownership Guidelines when considering that director for reelection.
The non-employee directors receive one-half of their annual retainer fees, including committee chair retainer fees, in shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), with the balance payable in cash. Directors may elect to receive up to 100% of their annual retainer fees in stock.
Director RetirementPolitical Contributions
Our Code of Business Conduct prohibits making contributions on behalf of the Company to political parties, political action committees, political candidates, or holders of public office. The Board has establishedCompany is a policymember of several trade associations which, as part of their overall activities, may engage in its Corporate Governance Guidelines that directors retire fromadvocacy activities with regard to issues important to the Board atretail industry or the annual meeting of shareholders following the director’s 72nd birthday.business community generally.
Change in a Director’s Principal Employment
The Board has established a policy whereby a director is required to advise the ChairOur Board’s Oversight of the Nominating Committee of any change to his or her principal employment. If requested by the Chair of the Committee, after consultation with the members of the Committee, the director will submit a letter of resignation to the Chair of the Committee, and the Committee would then meet to consider whether to accept or reject the letter of resignation.Our Business
The Board engages in an effective planning process to identify, evaluate, and select potential successors to the Chief Executive Officer and other members of senior management. The Chief Executive Officer reviews senior management succession planning with the Board. Each director has complete and open access to any member of management. Members of management are invited regularly to make presentations at Board and committee meetings and meet with directors in informal settings to allow the directors to form a more complete understanding of the executives’ skills and character.Risk Oversight
The Board has oversight responsibilities regarding risks that could affect the Company. This oversight is conducted primarily through the Audit Committee.
The Audit Committee has established procedures for reviewing the Company’s risks. These procedures include regular risk monitoring by management to update current risks and identify potential new and emerging risks, quarterly risk reviews by management with the Audit Committee, and an annual risk report to the full Board. In addition, the Audit Committee receives regular briefings from our Chief Information and Customer Connectivity Officer, Chief Financial Officer, Chief Accounting Officer, General Counsel, head of our internal audit function, and outside experts on cybersecurity risks and cyber risk oversight. During these meetings, the Audit Committee and management discuss these risks, risk management activities and efforts, best practices, lessons learned from incidents at other companies, the effectiveness of our security measures, and other related matters. The Audit Committee Chair reports on the committee’s meetings, considerations, and actions to the full Board at the next Board meeting following each committee meeting. In addition, the
The Compensation Committee considers risk in relation to the Company’s compensation policies and practices. The Compensation Committee’s independent compensation consultant provides an annual report to the committee on risk relative to the Company’s compensation programs.
The Company believes that this process for risk oversight is appropriate in light of the Company’s business, size, and active senior management participation, including by the Chief Executive Officer, in managing risk and holding regular discussions on risk with the Audit Committee, the Compensation Committee, and the Board.
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Corporate Governance
Cybersecurity |
We are subject to technology risks including failures, security breaches, and cybersecurity risks which could harm our business, damage our reputation, and increase our costs in an effort to protect against such risks. Our cybersecurity program includes the following elements:
Privacy |
Our Privacy Policy and Privacy Statement govern our treatment of customer data. Our policies provide explanations of the types of customer personal information we collect, how we use and share that information and the measures we take to protect the security of that information. Our policies provide multiple points of contact through which our customers may initiate inquiries and raise concerns to us regarding our collection, sharing, and use of their personal data. Our privacy policies and practices in the European Union were updated in 2018 in response to the EU Global Data Protection Regulation (GDPR) requirements. Our privacy statements and practices in the United States are currently being reviewed in response to the requirements of the California Consumer Privacy Act (CCPA), which is scheduled to come into force in January 2020.
Code of Business Conduct
The Company has adopted a Code of Business Conduct for directors, officers, and other employees, including its Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. The Company periodically reviews the Code of Business Conduct and revises it, as appropriate. A copy of the Code of Business Conduct is available on the corporate governance section of the Company’s corporate website atfootlocker.com/corp. You may obtain a printed copy of the Code of Business Conduct by writing to the Secretary at the Company’s headquarters.
Any waivers of the Code of Business Conduct for directors and executive officers must be approved by the Audit Committee. The Company promptly discloses amendments to the Code of Business Conduct and any waivers of the Code of Business Conduct for directors and executive officers on the corporate governance section of the Company’s corporate website atfootlocker.com/corp.
Global Sourcing Guidelines
The Company has adopted Global Sourcing Guidelines that set out standards applicable to the production of all products sold in our stores. The Company periodically reviews the guidelines and revises them, as appropriate. The Global Sourcing Guidelines are available on the corporate governance section of the Company’s corporate website atfootlocker.com/corp. You may also obtain a printed copy of the guidelines by writing to the Secretary at the Company’s headquarters.
Succession Planning
The Board has adopted Stock Ownership Guidelines applicableengages in an effective planning process to the Board,identify, evaluate, and select potential successors to the Chief Executive Officer and other covered executives.members of senior management. The GuidelinesChief Executive Officer reviews senior management succession planning with the Board. Each director has complete and open access to any member of management. Members of management, including those several levels below senior management, are as follows:invited regularly to make presentations at Board and committee meetings and meet with directors in informal settings to allow the directors to form a more complete understanding of the executives’ skills and character.
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Shares of unvested restricted stock, unvested restricted stock units (“RSUs”), and deferred stock units (“DSUs”) are counted towards beneficial ownership. Performance-based RSUs are counted once earned. Stock options and shares held through the Foot Locker 401(k) Plan are disregarded in calculating beneficial ownership for purposes of the Stock Ownership Guidelines.
Corporate Governance
Non-employee directors
Shareholder Engagement and executives whoVoting
We value our shareholders’ views and insights, which is why last year we extended our proactive shareholder engagement program with a specific focus on corporate governance and compensation. This program complements the ongoing dialogue throughout the year among our shareholders and our Chief Executive Officer, Chief Financial Officer, and Investor Relations team on financial and strategic performance. Our engagement program is designed to reach out to our shareholders and hear their perspectives about issues that are covered byimportant to them, both generally and with regard to the guidelines are required to be in compliance within five years afterCompany, and gather feedback. We believe that this engagement program promotes transparency between the effective date of becoming subject to these guidelines. In the event of any increaseBoard and our shareholders and builds informed and productive relationships.
Beginning in the required ownership level, whetherfall of 2018, our Lead Director and a member of management met individually with seven of our larger shareholders, as well as proxy advisory firms, and discussed topics such as board refreshment and composition, the board evaluation process, boardroom and company culture, executive compensation, and environmental, social, and governance topics. The Lead Director shared the feedback gained from these meetings with the full Board and the Nominating and Governance Committee, as well as compensation-specific feedback with the Compensation Committee, and, as a result of an increasethe feedback, enhancements have been made to this proxy statement to further improve transparency. As reflected in the annual retainer fee or base salary or an increase infollowing engagement cycle, the required ownership multiple, the target date for compliance with the increased ownership guideline would be five years after the effective date of such increase.Company oversees a rigorous and comprehensive shareholder engagement process:
All non-employee directors and executives who were required to be in compliance with the guidelines as of the end of the 2016 fiscal year are in compliance. The Company measures compliance with the guidelines at the end of the prior fiscal year based on the market value of the Company’s stock at that time.
If a directorPlease continue to share your thoughts or covered executive fails to be in compliance with the guidelines as of the end of the prior fiscal year, he or she must hold the net shares obtained through future stock option exercises and the vesting of restricted stock and RSUs, after payment of applicable taxes, until coming into compliance with the guidelines. In order to take into consideration fluctuations in the Company’s stock price,concerns at any person who has been in compliance with the guidelines as of the end of at least one of the two preceding fiscal years and who has not subsequently sold shares will not be subject to this holding requirement. For non-employee directors, the Nominating Committee will consider a director’s failure to comply with the Stock Ownership Guidelines when considering that director for reelection.
Our Code of Business Conduct prohibits making contributions on behalf of the Company to political parties, political action committees, political candidates, or holders of public office. The Company is a member of several trade associations which, as part of their overall activities, may engage in advocacy activities with regard to issues important to the retail industry or the business community generally.
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Corporate Governance
time. The Board has established a procedure forprocess to facilitate communication by shareholders and other interested parties to send communications towith the non-management members ofBoard, described below.
Communications with the Board. Board
Shareholders and other interested parties who wish to communicate directly with the non-management directors of the Company should send a letter to the Board of Directors, c/o Secretary, Foot Locker, Inc., 330 West 34th Street, New York, New York 10001.
The Secretary will promptly send a copy of the communication to the Lead Director, who may direct the Secretary to send a copy of the communication to the other non-management directors and may determine whether a meeting of the non-management directors should be called to review the communication.
A copy of the Procedures for Communications with the Board of Directors is available on the corporate governance section of the Company’s corporate website atwww.footlocker.com/corpgovfootlocker.com/corp. You may obtain a printed copy of the procedures by writing to the Secretary at the Company’s headquarters.
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Corporate Governance
Majority Voting in the Election of Outside AdvisorsDirectors
Directors must be elected by a majority of the votes cast in elections for which the number of nominees for election does not exceed the number of directors to be elected. A plurality vote standard applies to contested elections where the number of nominees exceeds the number of directors to be elected. Our Corporate Governance Guidelines provide that any incumbent director who does not receive a majority of the votes cast in an uncontested election is required to tender his or her resignation for consideration by the Nominating and Governance Committee. The BoardNominating and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by, and report directlyGovernance Committee will make a recommendation to the Audit Committee. In addition,Board whether to accept or reject the Committee is responsible for the selection, assessment, and termination of the internal auditors to which the Company has outsourced a portion of its internal audit function, which is ultimately accountable to the Audit Committee. Similarly, the consultant retained by the Compensation Committee to assistresignation, or whether other action should be taken. The director who tenders his or her resignation will not participate in the evaluation of senior executive compensation reports directly to that committee.
The Company has adopted a Code of Business Conduct for directors, officers, and other employees, including its Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. A copy of the Code of Business Conduct is available on the corporate governance section of the Company’s corporate website atwww.footlocker.com/corpgov. You may obtain a printed copy of the Code of Business Conduct by writing to the Secretary at the Company’s headquarters.
Any waivers of the Code of Business Conduct for directors and executive officers must be approved by the Audit Committee. The Company promptly discloses amendments to the Code of Business Conduct and any waivers of the Code of Business Conduct for directors and executive officers on the corporate governance section of the Company’s corporate website atwww.footlocker.com/corpgov.
We individually inquire of each of our directors and executive officers about any transactions in which the Company and any of these related persons or their immediate family members are participants. We also make inquiries within the Company’s records for information on any of these kinds of transactions. Once we gather the information, we then review all relationships and transactions of which we are aware in which the Company and any of our directors, executive officers, their immediate family members or five-percent shareholders are participants to determine, based on the facts and circumstances, whether the CompanyCommittee’s or the related persons have a direct or indirect material interest. The General Counsel’s office coordinates the related person transaction review process. The Nominating Committee reviews any reported transactions involving directors and their immediate family members in makingBoard’s decision. In determining its recommendation to the Board, on the independenceNominating and Governance Committee will consider all factors that it deems relevant. Following such determination, the Company will promptly disclose publicly the Board’s decision, including, if applicable, the reasons for rejecting the tendered resignation.
Proxy Access
Under our proxy access by-law, a shareholder, or a group of up to 20 shareholders, owning at least 3% of the directors.Company’s outstanding Common Stock continuously for at least three years as of the date of the notice of nomination, may nominate and include in the Company’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater (subject to certain limitations set forth in the By-Laws), provided that the shareholder(s) and nominee(s) satisfy the requirements specified in the By-Laws.
Environmental, Social, and Governance Highlights
Foot Locker recognizes the importance of environmental, social, and governance (ESG) issues to shareholders and formed a global cross-functional team, including Legal, Human Resources, Supply Chain, Sourcing, and Real Estate/Construction, among other functions, to monitor our ESG efforts. The Company’s written policiesBoard oversees our ESG program and procedures for related person transactionsreceives regular updates from management.
Foot Locker’s ESG priorities are included within both the Corporate Governance Guidelinescentered onOpportunity;Community;Worker Dignity; and the Code of Business Conduct. There were no related person transactions in 2016.Sustainability.
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We aim to create opportunities for all of Directorsour employees.
The Board has responsibility for establishing broad corporate policies, reviewing significant developments affecting the Company,
The Board held five meetings during 2016. All of our directors attended at least 75% of the aggregate of the meetings of the Board are ethnically diverse
* | U.S. workforce represents 74% of global workforce. |
A director is not considered independent under NYSE rules if he or she has a material relationship with the Company that would impair his or her independence. In addition to the independence criteria established by the NYSE, the Board has adopted categorical standards to assist it in making its independence determinations regarding individual directors. These categorical standards are contained in the Corporate Governance Guidelines, which are posted on the Company’s corporate website atwww.footlocker.com/corpgov.
The Board has determined that the following categories of relationships are immaterial for purposes of determining whether a director is independent under the NYSE listing standards:
| Foot Locker, Inc. |
Corporate Governance
Fostering Diversity, Inclusion, and Equality | |||
Our goal is to attract, develop, and retain employees from all walks of life. As of the fiscal year-end, women comprised 46% of our total employees globally, 33% of our executives, and 44% of our independent directors. At Foot Locker, women serve in several key leadership roles, including as Chief Financial Officer, Chief Human Resources Officer, General Counsel and Secretary, Chief Accounting Officer, Vice President—Global Total Rewards, and Vice President and General Manager, Foot Locker Pacific. As of the fiscal year-end, 84% of our U.S. employees, and 22% of the independent directors of the Board were ethnically diverse. Foot Locker treats all employees fairly regardless of their race, gender, age, ethnicity, sexual orientation, disability, or national origin. Foot Locker was recognized again in 2018 for our industry leading ESG practices with awards for Best Workplaces for Diversity, and Best Workplaces in Retail, both conferred by the Great Place to Work Institute. Foot Locker was also rated on Forbes’ Most Engaged Customer List in 2018 for its “relentless focus on the customer experience.” We are also committed to Board diversity; 66% of the independent directors are ethnically diverse or female, including our Lead Director. In 2018, the NACD honored the Board with an NACD NXT recognition award for excellence in harnessing board diversity and innovation as a strategy for building long-term value. According to NACD, Foot Locker was chosen “for its devotion to diversity and inclusion which is clearly systemic and strategic for the board, management, and operations.” We also recently created a disability hiring initiative in partnership with the | |||
Advancing Careers and Developing Talent | |||
We strive to develop a diverse pipeline of talent and provide our employees with | |||
At Foot Locker, | |||
2019 Proxy Statement | 21 |
Corporate Governance
|
Benefits | ||
We believe we offer competitive compensation and benefits, including health and wellness benefits (i.e., medical, dental and vision coverage), financial benefits (i.e., pension, 401(k) Plan with Company matching contribution, Employee Stock Purchase Plan (ESPP) at a 15% discount, and commuter benefits), and work-life balance and lifestyle benefits (paid time off (PTO) and Employee Discount Program). | ||
To be the best, employees need to feel their best. As part of our comprehensive benefits offering, we provide eligible employees with personalized wellness coaching. The one-on-one program integrates phone and mail-based communications with an online interactive health coach and is designed to target specific goals around nutrition, exercise, and heart health. Select facilities feature an on-site gym for convenient workouts and our employee discount platform, “YouDecide,” offers discounted rates for local fitness clubs. While health is a year-round priority, some corporate offices organize a Wellness Month with free workout classes, a health fair, and fresh fruit delivery. | ||
We are our customers—our employees are true sneakerheads. One of the great aspects of our culture is our ability to celebrate and fuel the sneaker passion of not just our customers, but also our employees. To celebrate that passion, we offer employee product discounts and access to exclusive offerings from a range of vendors. With the ever-evolving retail landscape, Foot Locker is committed to fostering elevated in-store experiences featuring high-profile guests through vendor partnerships that make us stand out from the crowd. Our employees gain exposure to unique opportunities with athletes, celebrities, and other tastemakers who impact the youth culture that inspires and fuels the Company, as well as access to events like the New York City Marathon (employees can gain coveted entry in the race), NBA All Star Weekend, NBA Drafts, and concerts. | ||
Ensuring Worker Safety | ||
We are dedicated to fundamental worker safety. We strive to prevent and promptly address any employee work-related injuries. Over time, we have experienced a decrease in the number of recorded accidents and lost time from employees out of work due to work-related injuries. We have a centralized online reporting system that tracks all incidents and injuries. We analyze the information at least quarterly to assess risks and develop preventive measures. Our Risk Management team analyzes recurring injuries and issues to determine trends and if current policies or practices need to be amended or if more training is required to address risks. Our field auditors review safety measures in their audit process. | ||
Ethics and Compliance | ||
Culture is the foundation of everything we do at Foot Locker. We define culture as our values in action. Our culture is one of high performance, and it is how we live out our values.How we do business is just as important aswhat we do. The COBC serves as our ethical compass for the commitment we make to our stakeholders, customers, and one another. Our Global Legal Department manages our COBC program by providing training and online education, and partners with the Internal Controls Department to audit employee assessments. Employees are required to certify COBC compliance annually. When issues arise, our employees are encouraged to speak up and use our open-door process for discussing any concerns. We also provide a confidential COBC hotline. The General Counsel reports to the Audit Committee on the COBC program. | ||
Community | ||
We aim to help strengthen and support local communities where we do business. | ||
● Raised and donated over $9 million for scholarships since 2004, plus footwear and apparel donations to several organizations | ||
● U.S. non-store employees permitted paid time-off for volunteering in their communities | ||
Board of Directors
22 | Foot Locker, Inc. |
The Board, upon the recommendation of the Nominating Committee, has determined that the following directors are independent under the NYSE rules because they have no material relationship to the Company that would impair their independence:
Corporate Governance
Adopt One Village Inc, a not-for-profit organization that provides aid to small villages in Ghana At Foot Locker, we do well by doing good. Giving back to those in need and enriching people’s lives is a deep-rooted philosophy imbued in our corporate culture that extends to our employees around the world. That’s why we permit all U.S. non-store employees one paid day off each year to give back to their communities. In 2018, our employees exemplified our core value of community by uniting to effect positive change during times of need. In addition to monetary contributions from the Foot Locker Foundation and our long-standing partner, the Two Ten Footwear Foundation, we donated footwear and apparel to families in need. The Foot Locker Foundation channels our support to those in need through educational initiatives, namely the Foot Locker Scholar Athletes Program, which awards 19 $20,000 scholarships, and one $25,000 scholarship (known as the Ken C. Hicks Scholar Athletes Scholarship), annually to student athletes since 2011. The program has invested nearly $3 million in the education and future of some of America’s most promising student athletes since 2011. We have also raised millions of dollars in support of higher education through our annual “On Our Feet” fundraising gala, benefitting hundreds of students through a joint scholarship program with our partner, the United Negro College Fund, Inc. We have raised and donated over $9 million for scholarships since 2004. In addition, Kids Foot Locker collaborates with the Boys & Girls Clubs of America (BGCA) on the “In My Shoes Challenge” by inviting children from BGCA to share their interests and what it means to them—such as sports, music, art, writing, or photography—by posting a photo and caption through social media. Foot Locker also dedicates significant resources to many other important social causes around the world, such as the Fred Jordan Missions, the Two Ten Foundation, the American Red Cross, the American Cancer Society’s Making Strides Against Breast Cancer Walk, Adopt One Village Inc. (Ghana), the Pluryn Foundation (The Netherlands), the Starlight Children’s Foundation (Australia), and the Special Olympics (Canada). | |||||
Worker Dignity | |||||
We respect all workers involved in our supply chain. | |||||
● Global Sourcing Guidelines (GSG) are distributed annually to our suppliers | |||||
● Foot Locker has consolidated its private label supplier base to work more closely with fewer suppliers with deeper partnerships | |||||
● Private label products sourced by Foot Locker are produced in China (59%), Pakistan (27%), Vietnam (10%), and Other (Thailand, United States, Portugal, Turkey, and Honduras) (4%) | |||||
Foot Locker is concerned with the safety and fair treatment of all workers involved in our supply chain, wherever the workers are located. We work hard to choose reputable business partners who are committed to ethical standards and business practices. At a minimum, we expect our suppliers to comply, and to ensure that their subcontractors comply, with all legal requirements applicable to their business. Foot Locker will only do business with suppliers whose workers are, in all cases, present voluntarily, compensated fairly and allowed the right of free association and who are neither put at risk of physical harm, discriminated against, nor exploited in any way. To this end, Foot Locker has developed GSG, which are distributed annually and require all branded and private-label vendors and suppliers globally to respect certain standards, notwithstanding more relaxed standards, if any, imposed by applicable local law. We have also developed several other policies to address specific ESG concerns, including the Anti-Corruption Policy and Conflict Minerals Policy. The GSG are incorporated into our Vendor Standards Manual. Regular factory audits are performed by a third party or our in-house auditors. Foot Locker also reserves the right to make periodic, unannounced inspections to verify compliance with the GSG. Suppliers agree to maintain and provide, upon request, all documentation necessary to demonstrate compliance. In recent years, we have taken steps to consolidate our supplier base so that we are working more closely with fewer suppliers, and deepen our partnerships with suppliers to forge a more collaborative approach grounded in continuous engagement and improvement. | |||||
In making its independence determination, the Board reviewed recommendations of the Nominating Committee and considered Dona D. Young’s and Ulice Payne, Jr.’s relationships as directors of companies with which we do business. The Board has determined that these relationships meet the categorical standard for Relationships with Other Business Entities and are immaterial with respect to determining independence.
The Board also considered, in making its independence determination, Matthew M. McKenna’s relationship as an adjunct professor of Fordham University School of Law because the Foot Locker Foundation awarded a $5,000 scholarship to a Fordham University student in 2016. The Board has determined that this relationship meets the categorical standard for Relationships with Not-for-Profit Entities and is immaterial with respect to determining independence.
The Board has determined that all members of the Audit Committee, the Compensation Committee, the Finance Committee, and the Nominating Committee are independent as defined under the NYSE listing standards and the director independence standards adopted by the Board.
|
Corporate Governance
Sustainability | ||
We aim to enhance the sustainability of our operations and value chains. | ||
● Reduced energy and eliminated waste | ||
Our dedication to reducing the environmental impact of our stores, distribution centers, and offices means implementing practices that are more efficient and reducing our waste production. These efforts both reduce our environmental impact and are cost-effective. | ||
Energy | ||
Foot Locker is in the process of a multi-year rollout to replace all of its fluorescent fixtures with LED lights—which consume 80% less energy than conventional lights—in its stores, warehouses, and distribution centers. Not only are these changes good for the environment, but they could reduce our annual energy costs over time and they last five to 10 times longer. We have also begun installing “lightstat” thermostats in many of our stores. These “smart” thermostats utilize a photocell to determine whether a space is occupied and resets the heating or cooling accordingly. We are also exploring other options that achieve significant energy reductions while balancing business needs. Our corporate headquarters in New York has partnered with our landlord to set corporate goals to reduce our energy consumption in our headquarters by 35%, aligning with the NYC Mayor’s commitment of reducing 80% of carbon emissions by 2050. | ||
Distribution | ||
Foot Locker has implemented measures to reduce its greenhouse gas emissions. We have committed to increasing the amount of freight we ship within each carrier and only shipping trucks or containers once full. We have committed to using cleaner modes of transportation and encouraging the use of fuel-saving strategies and technologies. We are also enhancing our data collection capabilities to better measure results. We are working with our vendor partners and adding mini-distribution centers into our supply chain network to accept and distribute product. This decreases shipping runs and accelerates speed of product to the customer. Our trucks frequently run overnight to reduce idling time and pollution. We also make efforts to ship intermodal when available. | ||
Waste | ||
Our biggest waste stream is from packaging, namely boxes used to transport and protect our merchandise as it moves from our distribution centers to stores. We curtail this waste, however, by reusing boxes within our supply chain system and for products returned to the vendors. We do not utilize hangers or tote bags for shipping. We primarily utilize corrugated and recycled boxes and sell back several thousand tons of corrugated boxes for recycling each year. We also continue to search for additional solutions, including through partnerships with our brands, suppliers, and the greater footwear and apparel industry, to reduce packaging weight and change packaging materials to decrease overall waste volume and allow for greater recycling. For example, the Retail Industry Leaders Association (RILA), of which we are a member, has convened retailers to explore ways to collect and recycle these major waste streams. | ||
24 | Foot Locker, Inc. |
Board of Directors
The Board has delegated certain duties to committees, which assist the Board in carrying out its responsibilities. There are five standing committees of the Board. Each independent director serves on at least two committees. The key oversight responsibilities of the committees, the current committee memberships, and the number of meetings held during 20162018 are described below.
The Board has adopted charters for each of the Audit Committee, the Compensation Committee, the Finance Committee, and the Nominating and Governance Committee. Copies of the charters for these committees are available on the corporate governance section of the Company’s corporate website atfootlocker.com/corp. You may also obtain printed copies of these charters by writing to the Secretary at the Company’s headquarters.
As a general principle, the Board believes that the periodic rotation of committee assignments on a staggered basis is desirable and provides an opportunity to foster diverse perspective and develop breadth of knowledge within the Board. In 2018, Mr. Feldman rotated off as Chair of the Compensation Committee, remaining as a member of the Committee, and Ms. Underhill took on the role of Committee Chair.
Audit |
| ||||
Key Oversight Responsibilities
○the qualifications, independence, and performance of the independent
● establishes procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, and auditing matters |
| ||||
This committee consists of | |||||
Chair Guillermo G. Marmol | |||||
Other Members McKenna, Payne, Young 9meetings in 2018 |
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25 |
Board of Directors
Compensation | |||||
| Key Oversight Responsibilities
|
| |||
This committee consists of | |||||
See theCompensation Discussion and Analysis(“CD&A”) on | |||||
Chair Kimberly Underhill | |||||
Other Members Clark, Feldman, Oakland, Turpin 6meetings in 2018 |
Finance
| F | ||
Key Oversight Responsibilities
● reviews the Company’s allocation of capital, annual capital budget, and policies related to capital and other expenditures ● reviews and makes recommendations to the Board regarding the Company’s uses of cash, including capital expenditures, stock and bond repurchases, and dividend payments ● reviews and
● reviews the Company’s derivatives policy and its use of derivatives ● reviews and makes recommendations to the Board regarding proposed mergers, combinations, acquisitions, offers to purchase the Company’s shares or significant assets, divestitures, and strategic investments ● reviews the Company’s Corporate Development Approval process ● reviews reports from the Retirement Plan Committee regarding the asset allocation and investment performance of the Company’s North America pension funds | |||
Chair Matthew M. McKenna | |||
Clark, 9meetings in 2018 |
26 |
|
Board of Directors
Nominating and Governance
| N | ||||
Key Oversight Responsibilities
● considers the re-nomination of existing directors after it conducts an annual review of each director’s qualifications, experience, and independence
● reviews trends and governance with regard to non-employee | |||||
Shareholders who wish to recommend candidates for Board membership may contact the Nominating and Governance Committee in the manner described on | |||||
Chair Steven Oakland | |||||
Other Members Payne, Turpin, Young 4meetings in 2018 |
Executive
| E | ||
Key Oversight Responsibilities
| |||
Chair Richard A. Johnson | |||
Oakland, Underhill, Young No meetings in 2018 |
2019 Proxy Statement | 27 |
|
Board of Directors
The Nominating and Governance Committee and Compensation Committee jointly oversee our non-employee director compensation program, and Management Resourcesconduct annual reviews and make recommendations for adjustments, as appropriate, to the Board. The Compensation Committee Interlocksreviews non-employee directors’ compensation and Insider Participationmakes recommendations to the Board concerning the form and amount of non-employee directors’ compensation. The Nominating and Governance Committee reviews trends and governance with regard to non-employee directors’ compensation.
Nicholas DiPaolo, Alan D. Feldman, Steven Oakland, Cheryl Nido Turpin, Kimberly Underhill,
Our non-employee directors are paid an annual retainer fee and Dona D. Young servedmeeting fees for attendance at each Board and committee meeting. The Lead Director and the committee chairs are each paid additional retainer fees for service in these capacities. Our non-employee directors’ compensation program consists of a balance of cash and equity, with an emphasis on equity over cash.
In connection with the review conducted in fiscal year 2018, the independent outside consultant on director compensation retained by the Compensation Committee during 2016. Noneassessed the compensation paid to our non-employee directors against non-employee director compensation trends and data from our company peer group, including overall trends and governance principles, market competitiveness of our program, and the mix of cash and equity provided under our program. After consultation with the independent outside consultant, the Nominating and Governance Committee and Compensation Committee found the non-employee director compensation program to be appropriate, and no changes to the compensation program were recommended or implemented in 2018, as the compensation approximates the peer group median and the pay mix is aligned with peer and broad market practice.
In February 2019, on the recommendation of the committee members was an officer or employeeNominating and Governance Committee, the Board placed a cap of the Company or any$600,000 on non-employee directors’ compensation, inclusive of its subsidiaries,cash and there were no interlocks with other companies within the meaning of the SEC’s proxy rules.equity, for each non-employee director for each fiscal year.
Directors’Key Principles of Director Compensation and BenefitsProgram
Non-employee
● | Peer Groups: When establishing reference points for market comparisons of our outside directors’ compensation program, we consider the retail peer group used for our executive compensation purposes and general industry data for similarly-sized companies. SeeBenchmarking Approachon page 45 for more information on our peer group. |
● | Pay Evaluation Perspective: When assessing the competitive position of our outside directors’ compensation program, the primary focus is on total targeted compensation opportunity. |
● | Pay Position: The targeted pay position for our outside directors’ compensation program is the median of the retail and general industry market reference points. |
● | Pay Mix: Our outside directors’ compensation program consists of a balance of cash and equity, with an emphasis on equity over cash. SeeComponents of Director Compensation Programon page 29 for further information. |
● | Differentiation: The outside directors’ compensation provides additional compensation for leadership positions on the Board, including non-executive chair, lead director, and committee chair roles. SeeComponents of Director Compensation Programon page 29 for further information. |
● | Stock Ownership: Significant stock ownership guidelines established for outside directors encourage better alignment with shareholders’ interests, with compliance measured at least annually, as described further inStock Ownership Guidelineson page 16. |
● | Deferral Opportunities: Outside directors are provided with the opportunity to defer compensation by making additional investments in our Common Stock on an elective basis. SeeDeferral Electionon page 29 for further information. |
● | Total Compensation Limits: Meaningful limits on outside directors’ compensation have been established to ensure consistency with sound governance practices. |
● | Regular Review: The Nominating and Governance Committee conducts regular reviews of governance practices and trends in directors’ compensation to ensure consistency of our program with sound governance practices and makes recommendations, as appropriate, to the Board. The Compensation Committee conducts regular reviews of our outside directors’ compensation program and makes recommendations to the Board regarding the amount and form of directors’ compensation each year. |
28 | Foot Locker, Inc. |
Board of Directors
Components of Director Compensation Program
Our non-employee directors are paid an annual retainer fee and meeting fees for attendance at each Board and committee meeting. The Lead Director and the committee chairs are each paid additional retainer fees for service in these capacities. We do not pay additional compensation to any director who is also ana Company employee of the Company for service on the Board or any committee. The independent compensation consultant retained by the Compensation Committee conducts an annual review and analysisNone of the directors’ compensation program and makes recommendationscurrent independent directors is entitled to the Compensation Committee and Nominating Committee, jointly, with regard to the program structure. receive any retirement benefits.
Below is a summary of the fees paid to the non-employee directors in 2016:2018:
Amount | |||||
Annual | $ | ||||
Committee Chair | $25,000: | Audit | |||
$25,000: | Compensation Committee Chair | ||||
$15,000: | Finance Committee Chair | ||||
$15,000: | Nominating and Governance Committee Chair | ||||
None: | Executive Committee Chair | ||||
The committee chair retainers are paid in the same form as the annual retainer. | |||||
Lead Director | $50,000 payable in cash. | ||||
Meeting | $2,000 per Board and committee meeting attended. | ||||
RSUs | |||||
|
Board of Directors
Deferral Election
Non-employee directors may elect to receive all or a portion of the cash component of their annual retainer fee, including committee chair retainers, in the form of DSUs or to have these amounts placed in an interest account. Directors may also elect to receive all or part of the stock component of their annual retainer fee in the form of DSUs. A DSU is an accounting equivalent of one share of Common Stock. The interest account is a hypothetical investment account bearing interest at the rate of 120% of the applicable federal long-term rate, compounded annually, and set as of the first day of each plan year. A stock unitNone of the current directors have elected to place any amount of their annual retainer fee in an interest account.
Directors’ Retirement Plan
The Directors’ Retirement Plan was frozen as of December 31, 1995. No current directors are eligible to participate in this plan. Currently, two former directors participate in the plan. The retirement benefit under this plan is an accounting equivalent$24,000 per year, payable quarterly for the lesser of one share of Common Stock.10 years after the director leaves the Board or until the director’s death.
Miscellaneous
We reimburse non-employee directors for reasonable expenses incurred in attending Board and committee meetings, other meetings with management, and continuing education programs, including their transportation, hotel accommodations, and meals. Directors and their immediate families are eligible to receive the same discount on purchases of merchandise from our stores, catalogs, and Internet siteswebsites that is available to employees.
2019 Proxy Statement | 29 |
Board of Directors
Fiscal 20162018 Director Compensation
The amounts paid to each non-employee director for fiscal 2016,2018, including amounts deferred under the Company’s Stock Incentive Plan, and the RSUs granted to each director are reported in the tables below:
Director Compensation
(a) Name | (b) Fees Earned or Paid in Cash ($) | (c) Stock Awards ($)(1)(2) | (d) Total ($) | |||
M. Clark | 101,462 | 129,957 | 231,419 | |||
N. DiPaolo | 143,546 | 129,957 | 273,503 | |||
A. Feldman | 103,954 | 171,579 | (3) | 275,533 | ||
J. Gilbert, Jr. | 103,462 | 129,957 | 233,419 | |||
G. Marmol | 113,954 | 142,465 | 256,419 | |||
M. McKenna | 108,942 | 137,473 | 246,415 | |||
S. Oakland | 61,535 | 164,118 | (3) | 225,653 | ||
U. Payne, Jr. | 20,666 | — | 20,666 | |||
C. Turpin | 83,712 | 176,605 | (3) | 260,317 | ||
K. Underhill | 18,666 | — | 18,666 | |||
D. Young | 126,712 | 207,407 | (3) | 334,119 |
|
Board of Directors
(a) | (b) | (c) | (d) | (e) | ||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||
M. Clark | 112,028 | 139,994 | — | 252,022 | ||||
A. Feldman | 121,425 | 190,831 | — | 312,256 | ||||
J. Gilbert, Jr.(2) | 39,384 | 29,115 | 18,000 | (3) | 86,499 | |||
G. Marmol | 130,550 | 152,472 | — | 283,022 | ||||
M. McKenna | 125,552 | 147,470 | — | 273,022 | ||||
S. Oakland | 111,552 | 149,616 | — | 261,168 | ||||
U. Payne, Jr. | 104,028 | 139,994 | — | 244,022 | ||||
C. Turpin | 104,028 | 201,456 | — | 305,484 | ||||
K. Underhill | 115,153 | 139,994 | — | 255,147 | ||||
D. Young | 120,417 | 263,200 | — | 383,617 |
Notes to Director Compensation Table
(1) Column (c) reflects the following three items:
(1) | Column (c) reflects the following four items: |
Retainer fees paid in stock or deferred by the director
(i) | the grant date fair value determined in accordance with FASB ASC 718 for the portion of a director’s annual retainer fees (including committee chair retainer fees) for fiscal year 2018 paid in shares of Common Stock (including any portions deferred in the form of DSUs under the Stock Incentive Plan) ($52.65 per share representing the closing price of a share of Common Stock on June 29, 2018). Such shares of Common Stock are fully vested on grant, regardless of whether deferred into DSUs. |
(ii) | the grant date fair value determined in accordance with FASB ASC 718 for the portion of a director’s quarterly retainer fees (including committee chair retainer fees) for fiscal year 2018 payable in cash but deferred in the form of DSUs under the Stock Incentive Plan ($47.29 per share for DSUs granted on January 1, 2018 (pro rated for two months of 2018 fiscal year), $43.83 per share for DSUs granted on April 1 2018, $52.04 per share for DSUs granted on July 1, 2018, and $50.20 per share for DSUs granted on October 1, 2018 representing the closing price of a share of stock on the quarterly grant date). Such shares of Common Stock are fully vested on grant. |
(iii) | the grant date fair value determined in accordance with FASB ASC 718 for RSUs granted in fiscal year 2018 ($45.03 per share representing the closing price of a share of Common Stock on the grant date). The RSUs will vest in May 2019. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
(iv) | the grant date fair value, determined in accordance with FASB ASC 718, for dividend equivalents paid on DSUs and credited in the form of additional DSUs, made to Messrs. Feldman and Oakland and Mmes. Turpin and Young ($41.67 per share for DSUs granted on May 4, 2018, $47.16 per share for DSUs granted on August 3, 2018, $48.80 per share for DSUs granted on November 2, 2018, and $55.60 per share for DSUs granted on February 1, 2019, representing the closing price of a share of stock on the quarterly payment date). Such DSUs are fully vested on grant. |
The fiscal 2016following table sets forth the grant date fair value for the portion of the annual retainer fees, including committee chair retainer fees, paidabove stock awards granted to our directors in shares of Common Stock or deferred by the director, is shown in the following table:fiscal year 2018:
Name | Shares (#) | DSUs (#) | Grant Date Fair Value ($) | Stock Fees (including DSUs) ($) | RSUs ($) | Dividend Equivalents ($) | Total ($) | |||||||
M. Clark | 1,184 | — | 64,954 | 69,972 | 70,022 | — | 139,994 | |||||||
N. DiPaolo | 1,184 | — | 64,954 | |||||||||||
A. Feldman | 1,412 | — | 77,462 | 82,450 | 70,022 | 38,359 | 190,831 | |||||||
J. Gilbert, Jr. | 1,184 | — | 64,954 | 29,115 | — | — | 29,115 | |||||||
G. Marmol | 1,412 | — | 77,462 | 82,450 | 70,022 | — | 152,472 | |||||||
M. McKenna | 1,321 | — | 72,470 | 77,448 | 70,022 | — | 147,470 | |||||||
S. Oakland | 1,777 | — | 97,486 | 77,448 | 70,022 | 2,146 | 149,616 | |||||||
U. Payne, Jr. | — | — | — | 69,972 | 70,022 | — | 139,994 | |||||||
C. Turpin | 1,184 | — | 64,954 | 69,972 | 70,022 | 61,462 | 201,456 | |||||||
K. Underhill | — | — | — | 69,972 | 70,022 | — | 139,994 | |||||||
D. Young | — | 1,440 | 80,040 | 106,000 | 70,022 | 87,178 | 263,200 |
Stock portion of retainer fee.We made the annual stock payment to each director on July 1, 2016 (other than to Mr. Payne and Ms. Underhill who were not then serving). Under the terms of the Stock Incentive Plan, the stock payment was valued at the closing price of a share of Common Stock on June 30, 2016, which was $54.86. The 2016 grant date fair value is equal to the number of shares received or deferred by the director multiplied by $54.86, calculated in accordance with stock-based compensation accounting rules (ASC Topic 718). One director, who deferred the stock portion of her annual retainer, was credited with DSUs on the annual payment date, valued at $54.86 per unit.
Cash portion of retainer fee.For fiscal 2016, one director deferred part of the cash portion of her annual retainer fee and was credited during the fiscal year with DSUs on the quarterly cash retainer payment dates, valued at the fair market value on the payment dates, as follows: January 4, 2016 ($65.31; pro rated for 2 months of 2016 fiscal year), April 1, 2016 ($63.75), July 1, 2016 ($54.92), October 1, 2016 ($67.52), and January 3, 2017 ($71.73; pro rated for one month of 2016 fiscal year). The 2016 grant date fair value is equal to the number of DSUs received multiplied by the fair market value on the payment dates, calculated in accordance with stock-based compensation accounting rules (ASC Topic 718).
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Board of Directors
Dividend equivalents
The fiscal 2016 grant date fair value for dividend equivalents credited in the form of additional stock units to four directors during the year on the quarterly dividend payment dates, valued at the fair market value of the Common Stock on the dividend payment dates, is shown in the following table:
Name | 04/29/16 FMV: $61.44 (#) | 07/29/16 FMV: $59.62 (#) | 10/28/16 FMV: $67.15 (#) | 01/27/17 FMV: $68.01 (#) | ||||
A. Feldman | 118 | 122 | 108 | 108 | ||||
S. Oakland | 7 | 7 | 6 | 6 | ||||
C. Turpin | 188 | 195 | 174 | 173 | ||||
D. Young | 248 | 262 | 234 | 232 |
The total number of DSUs credited to directors’ accounts for fiscal 2016, including the dividend equivalents and the units credited representing 2016 retainer fees reported in the above two tables, and the total number of units held at the end of fiscal 2016, are shown in the following table:
Total DSUs | |||||||
Name | Credited for 2016 (#) | Held at 1/28/17 (#) | |||||
A. Feldman | 456 | 26,747 | |||||
S. Oakland | 26 | 1,496 | |||||
C. Turpin | 730 | 42,855 | |||||
D. Young | 2,416 | 57,668 |
Restricted Stock Units
The fiscal 2016 grant date fair value for the RSUs granted to the non-employee directors in 2016 is shown in the table below. The number of RSUs granted was calculated by dividing $65,000 by $57.12, which was the closing price of a share of Common Stock on the date of grant. The RSUs will vest in May 2017. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions, please refer to Note 21 to the Company’s financial statements in our 20162018 Annual Report on Form 10-K. The following table shows the aggregate number
30 | Foot Locker, Inc. |
Board of RSUs granted in 2016 andDirectors
As of end of fiscal year 2018, the number of RSUs outstanding at the end of the 2016 fiscal year:and DSUs held by our directors was as follows:
Name | RSUs Outstanding on 02/02/19 (#) | DSUs Outstanding on 02/02/19 (#) | ||
M. Clark | 1,555 | — | ||
A. Feldman | 1,555 | 28,279 | ||
G. Marmol | 1,555 | — | ||
M. McKenna | 1,555 | — | ||
S. Oakland | 1,555 | 1,582 | ||
U. Payne, Jr. | 1,555 | — | ||
C. Turpin | 1,555 | 45,310 | ||
K. Underhill | 1,555 | — | ||
D. Young | 1,555 | 64,779 |
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Board of Directors
Name | RSUs Granted (#) | Grant Date Fair Value ($) | RSUs Outstanding on 1/28/17 (#) | |||
M. Clark | 1,138 | 65,003 | 1,138 | |||
N. DiPaolo | 1,138 | 65,003 | 1,138 | |||
A. Feldman | 1,138 | 65,003 | 1,138 | |||
J. Gilbert, Jr. | 1,138 | 65,003 | 1,138 | |||
G. Marmol | 1,138 | 65,003 | 1,138 | |||
M. McKenna | 1,138 | 65,003 | 1,138 | |||
S. Oakland | 1,138 | 65,003 | 1,138 | |||
U. Payne, Jr. | — | — | — | |||
C. Turpin | 1,138 | 65,003 | 1,138 | |||
K. Underhill | — | — | — | |||
D. Young | 1,138 | 65,003 | 1,138 |
(3) |
Directors’ Retirement Plan
The Directors’ Retirement Plan was frozen as of December 31, 1995. Consequently, only Jarobin Gilbert, Jr. is entitled to receive a benefit under this plan after he completes his service as a director because he completed at least five years of service as a director prior to December 31, 1995. The retirement benefit under this plan is $24,000 per year, payable quarterly for the lesser of 10 years after the director leaves the Board or until his death.
Directors and Officers Indemnification and Insurance
We have purchased directors and officers liability and corporation reimbursement insurance from a group of insurers comprising ACE American Insurance Co. (Chubb), Zurich American Insurance Co., ArchNorth American Specialty Insurance Co. (SwissRe), Travelers Casualty and SuretySt. Paul Mercury Insurance Company of America,(Travelers), Freedom Specialty Insurance Co. (Nationwide), Berkley Insurance Co., NavigatorsArgonaut Insurance Co., Aspen AmericanBeazley Insurance Co.Company, Inc., XL InsuranceCatlin Bermuda Ltd., Illinois National Insurance Co.Union (AIG), and Endurance American Insurance Co. These policies insure the Company and all of the Company’sits wholly-owned subsidiaries. They also insure all of the directors and officers of the Company and the covered subsidiaries. The policies were written for a term of 12 months, from October 12, 20162018 until October 12, 2017.2019. The total annual premium for these policies, including fees and taxes, is $852,189.$914,448. Directors and officers of the Company, as well as all other employees with fiduciary responsibilities under the Employee Retirement Income Security Act of 1974, as amended, are insured under policies issued by a group of insurers comprising ArchZurich American Insurance Co., Travelers Casualty, and Surety Company of America, and ACE American Insurance Co. (Chubb), which have a total premium, including fees and taxes, of $380,954$330,250 for the 12-month period ending October 12, 2017.2019.
The Company has entered into indemnification agreements with its directors and officers, as approved by shareholders at the 1987 Annual Meeting.
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Beneficial Ownership of theCompany’s Stock
Directors and Executive Officers
The table below shows the number of shares of Common Stock reported to us as beneficially owned by each of our directors and named executive officers as of March 20, 2017. The table also shows beneficial ownership by all directors, named executive officers, and executive officers as a group as of that date, including shares of Common Stock that they have a right to acquire within 60 days after March 20, 2017 by the exercise of stock options.
No director or named executive officer beneficially owned 1% or moreThe Board is asking our shareholders to approve, on a non-binding, advisory basis, the compensation of our NEOs, as described in this Proxy Statement on pages 33 through 67. We currently hold our “Say-on-Pay” vote every year. Shareholders have an opportunity to cast an advisory vote on the frequency of Say-on-Pay votes at least every six years. The next advisory vote on the frequency of the total numberSay-on-Pay vote is expected to occur at the 2022 Annual Meeting.
As described in detail under the CD&A beginning on page 33, our compensation program is designed to attract, motivate and retain talented executives responsible for leading our strategic priorities and, in turn, deliver value to our shareholders. Our executive compensation program ties pay closely to performance. A significant portion of outstanding shares asthe compensation provided to the NEOs is based upon the Company’s performance or the performance of March 20, 2017. Each person has sole votingour share price, and investment powerwe believe this compensation structure closely aligns the interests of our NEOs with the interests of our shareholders. The more senior an executive’s position, the greater portion of his or her compensation that is tied to performance.
At the 2018 Annual Meeting, almost 95% of the votes cast on the advisory vote to approve the compensation of our NEOs were voted in favor of the proposal. The Compensation Committee believes this affirms our shareholders’ support for the number of shares shown unless otherwise noted.Company’s approach to executive compensation. We believe you should read the CD&A and the compensation tables beginning on page 33 in determining whether to approve this proposal.
Common Stock | Stock Options | |||||||||||||||
Beneficially Owned | Exercisable Within | |||||||||||||||
Excluding | 60 Days After | RSUs and | ||||||||||||||
Stock Options | 3/20/17 | DSUs | Total | |||||||||||||
Name | (#) (a) | (#) | (#) (b) | (#) | ||||||||||||
Paulette R. Alviti | 51,032 | 29,417 | 6,302 | 86,751 | ||||||||||||
Maxine Clark | 8,275 | — | 1,138 | 9,413 | ||||||||||||
Nicholas DiPaolo | 70,014 | (c) | — | 1,138 | 71,152 | |||||||||||
Alan D. Feldman | 59,832 | — | 27,885 | 87,717 | ||||||||||||
Jarobin Gilbert, Jr. | 13,426 | — | 1,138 | 14,564 | ||||||||||||
Stephen D. Jacobs | 63,991 | 53,236 | 9,147 | 126,374 | ||||||||||||
Richard A. Johnson | 286,838 | 539,726 | 21,736 | 848,300 | ||||||||||||
Lewis P. Kimble | 41,875 | 42,503 | 7,250 | 91,628 | ||||||||||||
Guillermo G. Marmol | 27,336 | — | 1,138 | 28,474 | ||||||||||||
Matthew M. McKenna | 43,189 | — | 1,138 | 44,327 | ||||||||||||
Steven Oakland | 4,861 | — | 2,634 | 7,495 | ||||||||||||
Ulice Payne, Jr. | — | — | — | — | ||||||||||||
Lauren B. Peters | 140,197 | 215,836 | 7,657 | 363,690 | ||||||||||||
Cheryl Nido Turpin | 43,066 | — | 43,993 | 87,059 | ||||||||||||
Kimberly Underhill | — | — | — | — | ||||||||||||
Dona D. Young | 40,401 | — | 58,806 | 99,207 | ||||||||||||
All 21 directors and executive officers as a group,including the named executive officers | 1,026,677 | 1,035,602 | 202,022 | 2,264,301 | (d) |
The Board recommends approval of the following resolution:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of our NEOs, as disclosed in the Company’s Proxy Statement for the 2019 Annual Meeting pursuant to the SEC’s compensation disclosure rules, including the CD&A, the 2018 Summary Compensation Table, and the other related tables and disclosures.”
✔The Board recommends a voteFORProposal 2.
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Beneficial Ownership of the Company’s Stock
Notes to Beneficial Ownership Table
Persons Owning More Than Five-Percent of the Company’s Common Stock
The table below provides information on shareholders who beneficially own more than 5% of our Common Stock as of December 31, 2016 according to reports filed with the SEC. To the best of our knowledge, there are no other shareholders who beneficially own more than 5% of a class of the Company’s voting securities.
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Beneficial Ownership of the Company’s Stock
Notes to Table on Persons Owning More than Five-Percent of the Company’s Common Stock
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our directors, executive officers, and persons who own more than 10% of the Company’s Common Stock file reports of ownership and changes in ownership of Foot Locker’s Common Stock with the SEC. Based solely on our review of copies of such forms furnished to the Company and written representations that no other reports were required during the 2016 fiscal year, we believe that during the 2016 fiscal year, the persons subject to Section 16(a) reporting complied with all applicable SEC filing requirements.
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The Company has completed a risk-related review and assessment of our compensation program and considered whether our executive compensation is reasonably likely to result in a material adverse effect on the Company. As part of this review, the independent compensation consultant to the Compensation Committee reviewed risk in relation to the Company’s compensation policies and practices with the Company’s human resources executives directly involved in compensation matters. The consultant reviewed the compensation policies and practices in effect for corporate and division employees through the manager level, store managers, and store associates, and reviewed the features we have built into the compensation programs to discourage excessive risk taking by employees, including a balance between different elements of compensation, differing time periods for different elements, consistent Company-wide programs, plan performance targets based on the corporate budgeting process, and stock ownership guidelines for senior management.
Compensation Discussion and Analysis
This CD&A focuses on how our named executive officers were compensated in 2016, and how their 2016 compensation aligns with our pay-for-performance philosophy. Our CD&A is divided into the following four sections:Executive Summary, Our Compensation Program Design and Structure, Procedures for Determining Compensation,andAdditional Information.
As part of an internal reorganization in 2016, we made a number of strategic changes designedThis Compensation Discussion and Analysis, or CD&A, describes our compensation philosophy and objectives and provides context for compensation decisions for our NEOs, and discusses how our 2018 compensation is linked to strengthenperformance against the Company’s position ingoals that were established for the global marketplace, align withannual and long-term incentive compensation programs. For 2018, our vendor partners, and achieve our long-term goals across two macro geographies: North America and International. We appointed Stephen D. Jacobs to lead North America and Lewis P. Kimble to lead International, and theyNEOs were designated as executive officers of the Company as a result of this reorganization.follows:
Our five named executive officers included in this CD&A and the related compensation tables are listed below.
Richard A. Johnson | Lauren B. Peters | Stephen D. “Jake” Jacobs | Lewis P. Kimble* | Pawan Verma | ||||
Chairman, | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Executive Vice President and Chief Executive Officer—North America | ||||||||
Executive Vice President and Chief Executive Officer— | ||||||||
Executive Vice President and Chief |
* | Mr. Kimble served as Executive Vice President and Chief Executive Officer-International during 2018. He has been Executive Vice President and Chief Executive Officer-Asia Pacific since March 11, 2019. |
Table of Contents
2019 Proxy Statement | 33 |
Executive Compensation
Our Compensation Committee, comprised of five independent directors, oversees the executive compensation program. We design our executive compensation program to attract, motivate, and retain talented executives in order to achieveresponsible for leading the Company’s short- and long-term strategic priorities and, in turn, deliver value to our shareholders. We do this by tyingThe centerpiece of our program is our pay-for-performance philosophy that aligns pay closelyoutcomes to the achievement of our businessannual operating plan and long-term strategy, and the creation of shareholder value. This is especially true at senior levels of the Company performance. The more senior an executive’s position, the greater thewhere a significant portion of his or her compensation that is tied to Company performance. The Compensation Committee, which is comprisedAs shown in the charts below, 92% of six independent directors, oversees the executiveCEO’s target compensation program.mix and 80%, on average, of the other NEOs’ target compensation mix for the compensation program represented performance-based compensation for 2018.
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ExecutiveCEO’s 2018 Target Compensation Mix
Average of Other NEOs’ 2018 Target Compensation Mix
Our Key Compensation Governance Policies
What We Do
Closely align executive pay with performance and Company’s strategy |
✔ | Set rigorous, objective performance goals |
✔ | Maintain a clawback policy |
✔ | Impose and monitor meaningful stock ownership guidelines |
✔ | Require a one-year time-based vesting period for earned long-term incentive plan (“LTIP”) payouts following attainment of performance goals |
✔ | Include double-trigger change in control provisions in employment agreements and equity awards |
✔ | Mitigate undue risk in compensation programs |
✔ | Provide reasonable perquisites |
✔ | Retain independent compensation consultant to advise the Compensation Committee |
✔ | Hold annual “Say-on-Pay” advisory vote |
✔ | Conduct shareholder outreach | |
What We Do Not Do
✖ | No tax gross-ups for perquisites or change in control payments |
✖ | No hedging of the Company’s |
✖ | No repricing of stock options without shareholder approval |
✖ | No stock options granted below fair market value |
✖ | No dividends or dividend equivalents on |
✖ | No excessive severance benefits | |
34 | Foot Locker, Inc. |
Executive Compensation
We built positive momentum and improved our financial results in 2018. Highlights include the following:
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Executive Compensation
2016 Performance Highlights
Our 2016 fiscal year was a very strong year for Foot Locker. The power and relevance of our strategic initiatives, as well as our team’s outstanding execution of them, can be seen in the financial success we achieved in 2016, as shown in this brief list of highlights:
* A reconciliation to GAAP is provided on Pages 16 through 18 of our 2016A reconciliation to GAAP is provided beginning on page 16 of our 2018 Annual Report on Form 10-K.
Strategic Plan Results
We have now completed two years under our 2015-20 long-term strategic framework, which is described below. This framework established priorities over the near-term, intermediate-term, and long-term to enhance our performance and achieve even more challenging long-term financial objectives than under the prior long-term strategic plan, and we have made significant progress towards achieving these long-term objectives, as shown below.
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Executive Compensation
Progress Made Towards Achieving Our Strategic Plan
2015-20 | ||||||||||
Long-Term | ||||||||||
Financial Metrics | 2015 | 2016 | Objectives | |||||||
Sales (billions) | $7.4 | $7.8 | $10 | |||||||
Sales Per Gross Square Foot | $504 | $515 | $600 | |||||||
Adjusted Earnings Before Interest and Taxes (EBIT) Margin | 12.8 | % | 13.0 | % | 12.5 | % | ||||
Adjusted Net Income Margin | 8.2 | % | 8.4 | % | 8.5 | % | ||||
Return on Invested Capital (ROIC) | 15.8 | % | 15.1 | % | 17 | % |
The chart above reflects non-GAAP results. There is a reconciliation to GAAP on Pages 16 through 18 of our 2016 Annual Report on Form 10-K.
Impact of Company Performance on Annual and Long-Term Incentive Pay
Foot Locker strives to be a consistently high-performing company, with a history of setting very challenging performance goals. WhenOnly when we achieve or exceed our goals are incentive payouts are earned. As shown above,
Our most-recently completed performance periods illustrate our 2016 performancecommitment to pay for performance. Overall, our 2018 fiscal year was quitevery strong, but, compared to the very high barand we set for ourselves, that strong performancewere highly profitable; however, we fell short of our 2016 plan in certain areas of the business. As a result, Mr. Johnson, Ms. Peters, and Mr. Verma earned annual incentive payouts of 84.5% of their respective target awards for 2018.
Annual Bonus Plan target performance goals. for Corporate Executives
Performance Metric | Target | Payout | |||
Financial Performance Metric (in millions) Adjusted Pre-Tax Income (weighted 80%) |
| Profit Payout 87.6% | |||
Customer Connected Scorecard Know Our Customers/ Satisfy Our Customers (weighted 20%) | Customer Connected Payout 72.1% | ||||
Total Annual Bonus Payout (Corporate Executives) | 84.5% |
2019 Proxy Statement | 35 |
Executive Compensation
As a result, below-targetdivision executives, Mr. Jacobs’s and Mr. Kimble’s annual incentive awards were based on their respective division’s omni-channel profit (weighted 80%) and customer connected scorecard (weighted 20%). Mr. Jacobs earned an annual incentive payout of 157.2% of his target award. Mr. Kimble did not earn a payout for 2016 under the Annual Bonus Plan. 2018.
LTIP
For the 2015-16two-year 2017-18 performance period under the Long-Term Incentive Plan (“LTIP”), however, especially strongLTIP, no payouts were earned by any of the NEOs because our performance in 2015 helpedover this two-year period did not meet the Company to exceedrigorous goals we established for the applicable target performance goals and the named executive officers earned above-target LTIP awards. Please see Pages 37period.
Performance Metrics | Target | Payout | |
Average Annual Adjusted Net Income (in millions) | $727.2 | 0% of Target Award | |
Two-Year Average ROIC | 15.5% |
See pages 38 through 40 and the Summary Compensation Table on Pages 48 through 4942 for more details on these incentive programs and the named executive officers’ earned awards under the plans.performance goals.
Compensation Program Changes for 2016 and Beyond
The Compensation Committee reviewed the executive compensation program for 2016 and, following its review, made certain changes to the program, which we describe below. The purpose of these changes was to continue to incentivize strong performance and provide the executives with competitive total compensation opportunities appropriate to their positions, while further aligning their interests with our shareholders.
Increased Equity Portion of LTIP Payout.Beginning with the 2016-17 performance period, the LTIP payout was changed to 75% RSUs and 25% cash to further align the compensation for our executives with the interests of our shareholders. For prior performance periods, the payout mix was 50% RSUs and 50% cash. Beginning with the 2017-18 performance period, the payout mix for our CEO will be 100% RSUs.
Instituted an LTIP Performance Floor.The Compensation Committee approved a “performance floor” set at 85% of the target goal for LTIP awards. As a result, beginning with awards made for the 2016-17 performance period, no payouts will be earned if actual performance is below 85% of the pre-established target goal. In setting a performance floor, the Compensation Committee considered various factors, such as our long-term strategic plan and financial objectives, the consistent rigor of LTIP performance goals established by the Compensation Committee based on the financial plans approved by the Finance Committee and the Board, the market environment, and the overall objectives of our compensation program. Previously (including for the completed 2015-16 performance period), LTIP awards were subject to a “performance gate,” meaning that no amounts would be earned unless the Company’s average annual after-tax income for the performance period exceeded the Company’s after-tax income in the year prior to the beginning of the relevant performance period. The Committee made this change to set a consistent performance threshold for each performance period relative to the approved financial plans and ensure that our LTIP is market-competitive among peer companies with similar program designs. We believe this change supports the goals of our overall compensation program, which are to attract, motivate, and retain executives most critical to the long-term success of the Company.
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Executive Compensation
Rebalanced Long-Term Incentive Awards to CEO.The Compensation Committee changed the mix of long-term incentives awarded to the CEO so that a majority of his long-term incentives is awarded in the form of performance-based LTIP. The remainder is delivered in annual stock option grants. After this rebalance, the target LTIP award represents approximately 80% of the total long-term incentives granted to the CEO, and the grant date value of his stock option awards equals approximately 20% of his total long-term incentives.
2016 Say-on-Pay Shareholder Vote
At our 20162018 Annual Meeting, 91%almost 95% of shareholders voting on the advisory vote on executive compensation supported the executive compensation program. The Compensation Committee considered the results of the 20162018 Say-on-Pay vote and our shareholders’ strong support of our executive compensation program in reviewing the executive compensation program for 2017.2019. In light of this support, the Compensation Committee decided to retain the general program design, which ties executive pay closely withbut added new customer connected objectives to the annual incentive plan, reflecting the Company’s customer-centric priorities, and granted a new long-term incentive intended to accelerate growth and better enable the Company performance.to compete in a rapidly changing retail landscape. In the future, the Compensation Committee will continue to considerassess the executive compensation program in light ofagainst changing circumstancesbusiness conditions and shareholder feedback. Our Say-on-Pay vote is currently held on an annual basis, consistent with the viewspreference expressed by a majority of our shareholders last year.shareholders.
2018 Compensation Design Changes
2016During the Compensation Committee’s 2018 compensation planning cycle, the Committee considered the Company’sstrategic initiatives and long-term goals, recognizing the significant disruption that was occurring in the retail industry, and discussed the actions and results that were critical to incentivize through the executive compensation program. As a result, the 2018 incentive compensation design represents a portfolio approach that is intended to motivate the right behaviors and reward achievement of our short- and long-term business results. In addition to providing incentives through the core annual cash incentive plan and LTIP, the Committee determined that an additional long-term incentive award distinctly focused on accelerating the Company’s growth, both organic and inorganic, in this disruptive environment was appropriate and in the best interests of the Company and our shareholders.
Our executive compensation program uses distinct metrics and varying time periods, which the Committee believes provide the appropriate incentives while also managing risk. The changes to the short- and long-term incentives for the NEOs, which are described below, are designed to incentivize the execution of the Company’s customer connected strategy, to accelerate our long-term growth, and to further align our executives’ and shareholders’ interests.
36 | Foot Locker, Inc. |
Executive Compensation
Annual Cash Incentive | ● | Incorporated strategic metrics in addition to financial metrics into the core design of the annual incentive plan. Knowing and focusing on the customers of each of our brands increases the opportunity to provide the products and experiences they desire and increases the opportunity to satisfy our customers. Given the Company’s customer-centric culture, the Committee added “customer connected” objectives and enablers composed of additional project milestones that support these objectives to the financial metrics in the annual cash incentive program. The customer connected objectives are weighted at 20%. The remaining 80% of the annual incentive is based on pre-tax income (for corporate executives) or division omni-channel profit (for division executives). | ||
● | Modified the maximum for the annual incentive performance range from 120% to 110%, which is consistent with our peers. | |||
Long-Term Equity Incentives | ● | Rebalanced the annual equity awards for executives by splitting the total value of the award between stock options and time-based RSUs, rather than granting the full value of the award in stock options, in order to increase the retentive aspect of the awards. | ||
● | Eliminated the cash portion of the payout for earned awards under the LTIP beginning with the 2018-19 performance period and paying the entire earned award in equity for all NEOs to further align our executives’ and shareholders’ interests. | |||
● | Provided an additional long-term incentive opportunity through the Accelerate Future Growth (“AFG”) award specifically focused on accelerating the Company’s growth, expanding our direct-to-customer business, and maintaining the profitability of our “brick and mortar” stores over a three-year period (2018-20). The AFG award is 100% performance-based for the CEO and 75% performance-based for the other NEOs and is payable in RSUs. |
The Compensation Committee made certain compensation decisions for our named executive officersNEOs in 2016,2018, including setting and approving incentive compensation performance goals, which are described below.goals. In making its decisions, the Committee considered (i) the significant disruption occurring in the retail industry, (ii) each executive’s compensation components in light of his or her position and responsibilities, (iii) internal peer pay comparisons, (iv) relevant market data for comparable positions and, where applicable, year-over-year changes in market data, and (v) retention and succession planning.
Base Salaries | ● | No base salary increases were approved for the NEOs for 2018 given the Committee’s desire to provide accountability for the Company’s below-threshold performance in 2017. | ||
CEO Annual Incentive Award | ● | The Committee increased the target annual incentive award for Mr. Johnson to 200% of his annual base salary, from 150% in the prior year, which positions his target total cash compensation slightly above the peer median. | ||
AFG Award | ● | The Committee granted the AFG award to the NEOs that is designed to incentivize efforts to accelerate the Company’s growth, expand our direct-to-customer business, and maintain the profitability of our stores over the three-year performance period. | ||
Long-Term Equity Incentives | ● | Beginning with the 2018-19 performance period, earned payouts for all NEOs will be in the form of equity, as the Committee eliminated the cash component of the LTIP awards to further align the executives’ interests with shareholders. This decision is consistent with the payout structure the Committee instituted for the CEO beginning with the 2017-18 performance period. |
2019 Proxy Statement | 37 |
Executive Compensation
Base SalariesCompensation Program Design and Structure
As part
Components of its annual reviewExecutive Compensation Program
Another goal of compensation, the Compensation Committee approvedis to align the compensation program with our business strategy and our shareholders’ interests. In order to achieve these objectives, our executive compensation program includes a mix of annual and long-term compensation, as well as a mix of cash and equity compensation. The key components of our executive compensation program are described in the following chart:
Compensation Component | Description and Purpose | |||
Base Salary | Annual fixed compensation supports the objective of attracting and retaining talented executives. | |||
Provides executives with market-competitive fixed compensation appropriate to their position, experience, and responsibilities. | ||||
ANNUAL | Performance-Based Annual Cash Incentive | Links annual cash compensation to attainment of short-term performance goals based on the Company’s pre-tax income, division omni-channel profit, and customer connected objectives. | ||
LTI Program | Comprises the performance-based LTIP, stock options, and time-based RSUs. These long-term incentives and awards, which are linked to multi-year performance goals and the Company’s stock price, provide an incentive to work towards achievement of long-term strategic objectives. Long-term incentives support executive retention. | |||
LTIP | Two-year performance goals based on net income (70%) and ROIC (30%), with an additional one-year vesting period for earned awards. Earned awards are payable in equity. | |||
LONG-TERM | Stock Options | Provide the opportunity to purchase stock at the exercise price over a ten-year period from the grant date, subject to applicable vesting and exercisability conditions. | ||
Link realized compensation over long-term appreciation in stock price and represent value to executives only if the stock price increases. | ||||
RSUs | Time-based RSUs align executives’ and shareholders’ interests with value that fluctuates based on stock price performance. | |||
AFG Award | AFG award incentivizes accelerated growth over a three-year period (2018-20) to build on our strength and grow our business in a disruptive retail environment. This award is 100% performance based for the CEO and 75% performance based for the other NEOs. | |||
OTHER | Retirement Benefits | Provide pension and retirement savings benefits, which align with the objective of attracting and retaining talented executives. | ||
Perquisites | Offer reasonable perquisites similar to our peer companies, which also aid in attracting and retaining talented executives. |
The Compensation Committee did not approve any base salary increases effective May 1, 2016 for eachthe NEOs for 2018, given the Committee’s desire to provide accountability for the Company’s below-threshold performance in 2017.
In 2018, the Compensation Committee considered the Company’s strategic initiatives relating to customer engagement and creating desired experiences in an environment where customers have many shopping choices. Given this, the Committee incorporated “customer connected” objectives into the annual incentive plan to further incentivize execution of the named executive officers, as shown below, based on each executive’s performance and a position-oriented analysis of market salaries. Mr. Johnson’s salary increase reflected his expanded role as Chairman of the Boardour customer-centric initiatives, in addition to Chief Executive Officerthe financial metrics that have historically been utilized for this performance-based plan. The financial targets are weighted 80%, and was made to ensure a competitive base salary in this role. In 2016, Ms. Peters’ role as Chief Financial Officer was expanded to include responsibility for Sourcing and Logistics, and Mr. Jacobs’ and Mr. Kimble’s roles expanded when they were promoted to head, respectively, the newly-established North America and International divisions. The Committee considered the increased scope of the roles for Ms. Peters, Mr. Jacobs, and Mr. Kimble in determining the level of salary increase for these executives in 2016.customer connected objectives are weighted 20%.
Named Executive Officer | 2015 Base Salary | 2016 Base Salary | Base Salary Increase (%) | ||||||
Richard A. Johnson | $1,050,000 | $1,100,000 | 4.8 | % | |||||
Lauren B. Peters | $605,000 | $675,000 | 11.6 | % | |||||
Stephen D. Jacobs | $780,000 | $850,000 | 9.0 | % | |||||
Lewis P. Kimble | $555,000 | $650,000 | 17.1 | % | |||||
Paulette R. Alviti | $475,000 | $490,000 | 3.2 | % |
Annual Bonus Plan
At the beginning of 2016,The financial targets established by the Compensation Committee established annual bonus performance targets under the Annual Bonus Plan.annual incentive plan are based upon the business plan and budget reviewed and approved each year by our Finance Committee and the Board. The financial targets with regardapplicable to Mr. Johnson, Ms. Peters, and Ms. AlvitiMr. Verma were based on the Company achieving adjusted pre-tax incomeAdjusted Pre-Tax Income of $1,038.0$766.8 million a 9.3% increase over 2015 adjusted pre-tax income,for 2018, in line with the Company’s financial plan and strategic objectives. Based on adjusted pre-tax incomeobjectives and reflects an increase of $1,010.12.2% compared to 2017 results. Actual Adjusted Pre-Tax Income totaled $754.1 million these executives earned a bonus of 79.8% of their respective target awards for 2016.2018.
38 |
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Executive Compensation
TheAs division executives, the 2018 annual bonus targetincentive targets for Mr. Jacobs isand Mr. Kimble were based on a division omni-channel profit targettargets and customer connected objectives for the North America division and for Mr. Kimble the annual bonus target is based on a division profit target for the International division. We established these divisions in 2016,division, respectively, which include both store and non-store brand digitaldirect-to-customer operations for these regions, in order to further “channel-agnostic” behavior and performance. Theregions.
In 2018, the North America division comprisescomprised the storesstore and digitaldirect-to-customer operations of Foot Locker U.S., Lady Foot Locker, Kids Foot Locker, SIX:02, Champs Sports, Footaction,
In 2018, the International division included the store and Foot Locker Canada. International comprises the stores and digitaldirect-to-customer operations of Foot Locker Europe, Foot Locker Asia Pacific, Runners Point, and Sidestep. Based on the profit achieved by each of the divisions, Mr. Jacobs earned a bonus of 82.4% and Mr. Kimble earned a bonus of 66.0% of their respective target awards for 2016.
For competitive reasons, we do not disclose the profit targets for the North America or International divisions, as we do not publicly disclose results of these divisions on a separate basis, and we consider it competitively harmful to make that information public. Consistent with our objective of setting challenging goals for executives throughout the Company, we believe that the achievement of the profitperformance goals for these divisions was demanding as evidenced by the below-target awards earned by these executives despite the overall strong performancein light of there being a zero bonus payout for one of the divisions despite being profitable in 2016.2018.
The Compensation Committee increasedestablished the annual target awardscustomer connected objectives for 2016the NEOs based on:
Knowing our Customers- Increasing the percentage of identified customers through in-store, digital and app touch-points for certain executives, reflecting the increased scope of their rolesNorth America and to differentiate among the roles most criticalInternational, and
Engaging and Servicing Our Customers- Improving overall customer satisfaction favorability percentage measured by results on purchaser surveys compared to the continued success of the Company. Annual target awards are based on a percentage of base salary, and for 2016 the named executive officers’ target awards are shown below, along with changes, as applicable, to the 2015 target awards:
Executive | 2015 Annual Target Award | 2016 Annual Target Award | ||||
R. Johnson | 125 | % | 150 | % | ||
L. Peters, S. Jacobs, and L. Kimble | 65 | % | 75 | % | ||
P. Alviti | 50 | % | 50 | % |
Please see Pages 37 through 38 and the Summary Compensation Table on Pages 48 through 49 for more details on the Annual Bonus Plan and the named executive officers’ earned payouts.prior year.
Long-Term Incentive Program
Our long-term incentive program includes (i)Along with these objectives, the performance-based LTIP delivered in cash under this plan and equity under the Stock Incentive Plan and (ii) long-term equity awards under the Stock Incentive Plan in the form of stock options, time-based restricted stock and RSUs. Performance-based LTIP awards and stock options are granted annually, while time-vested restricted stock and RSU awards are granted in special circumstances, such asCommittee established “enablers” for new hires, promotions, or retention purposes.measuring progress based on:
LTIP.AtOrganizational Enrollment- Focusing all employees throughout the beginningorganization on the importance of 2015,customer-leading metrics to our go-forward strategy and communicating scorecard progress;
Brand Satisfaction- Establishing a methodology and tracking customer satisfaction both in-store and on-line; and
Digital Enhancements- Implementing the Compensation Committee establishednew point-of-sale system in our global store fleet and achieving 2018 milestones in our efforts to enhance our digital capabilities.
The evaluation of full-year customer connected objectives utilizes the Company’s global performance targets for the 2015-16management rating scale, and performance period under the LTIP. The targets that the Compensation Committee established werecan range from 25% - 200% based on the Company achieving two-year average annual net income of $572.4 million (which accounts for 70%relative achievement of the payout)metrics and ROIC of 15.3% (which accounts for 30% of the payout). Based on actual resultsenablers. As described above, payout percentages associated with ratings for the performance period, eachmetrics and enablers were averaged and resulted in an overall corporate payout percentage of our named executive officers earned a payout of 141.3% of his or her respective target award. The amounts earned for this two-year performance period will not be paid to participants until 2018, following the completion of a one-year time-based vesting period. Please see Pages 38 through 40 and the Summary Compensation Table on Pages 48 through 49 for more details on the LTIP and the named executive officers’ earned payouts.
In 2016, the Compensation Committee established LTIP performance targets for the 2016-17 performance period based on two-year average annual net income (70%) and ROIC (30%)72.1%. Since this performance period is still on-going, the Committee will determine whether payouts have been earned following the end of the Company’s 2017 fiscal year. If awards are earned for the 2016-17 performance period, payment will be made to participating executives in 2019, following the completion of a one-year time-based vesting period.
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Executive Compensation
Stock Options.The Compensation Committee granted stock options to each of the named executive officers as part of its annual compensation review in 2016. In deciding to grant the stock options and determining the value of the awards, the Compensation Committee considered each executive’s position and the competitive market for equivalent talent. For Mr. Johnson, the approximate grant date value of his stock option award equalled 200% of base salary. For other executives, the Committee awarded a standardized grant to executives at similar levels. These awards are shown in the chart below. All of the stock options have a three-year vesting schedule, with one-third of each option grant vesting on the first, second, and third anniversary of the grant date, subject to continuous service through each vesting date. The values shown for the stock option grants are based on a Black-Scholes value of $15.78 on the date of grant.
Named Executive Officer | Stock Options (#) | Stock Options Black-Scholes Value ($) | ||||
R. Johnson | 139,380 | 2,200,016 | ||||
L. Peters | 28,510 | 450,010 | ||||
S. Jacobs | 28,510 | 450,010 | ||||
L. Kimble | 28,510 | 450,010 | ||||
P. Alviti | 14,255 | 225,005 |
Special Retention RSU Awards.The Compensation Committee granted special RSU awards in 2016 for retention and succession planning objectives to each of the named executive officers, other than Mr. Johnson. In deciding to grant these awards and determining the value of the awards, the Compensation Committee considered each executive’s position, including those with expanded scope and responsibilities, and the competitive market for equivalent talent. These awards are shown in the chart below. Other than for Mr. Kimble, all of the special awards will vest 50% on the third anniversary of the date of grant and 50% on the fourth anniversary of the date of grant, subject to continuous service through the vesting dates. Mr. Kimble’s special award will cliff vest on the third anniversary of the date of grant, which aligns with the time period of his current international assignment, and is subject to his continuous service through the vesting date. The values shown for the RSU awards are based on the closing stock price of $63.79 on the date of grant. Other than with regard to these special awards, no awards of time-vested restricted stock or RSUs were granted to the named executive officers in 2016.
Named Executive Officer | RSUs (#) | Grant Date Fair Value ($) | ||||
L. Peters | 18,812 | 1,200,017 | ||||
S. Jacobs | 23,515 | 1,500,022 | ||||
L. Kimble | 15,677 | 1,000,036 | ||||
P. Alviti | 15,677 | 1,000,036 |
Special Performance-Based RSU Award.In 2014, the Compensation Committee approved a special performance-based RSU (“PBRSU”) award for Mr. Jacobs based on total Company EBIT for 2014-16, with the EBIT targets for each fiscal year within this performance period set at the beginning of each fiscal year. The Compensation Committee granted this special award to incentivize Mr. Jacobs, as a division executive, to focus on achieving total Company performance, as well as division performance. Under this special award, if 90%-120% of the EBIT target for the three-year period was achieved, Mr. Jacobs would earn 10,000 RSUs; and if greater than 120% of the three-year target was achieved, Mr. Jacobs would earn 12,000 RSUs. Based on achieving 104.3% of the target for the three-year period, Mr. Jacobs earned 10,000 RSUs, which fully vested on March 31, 2017. The targets and actual performance for each of the years in the performance period are shown in the table below.
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Executive Compensation
Our Compensation Program Design and Structure
Pay Components and Mix
Our compensation program objectives are to pay for performance by establishing challenging objectives that support the attainment of Foot Locker’s long-term strategic plan, to align the interests of our executives with our shareholders through the use of equity vehicles, and to provide a balance of incentives that reward the attainment of both short- and long-term goals. Consistent with these objectives, a significant portion of compensation for our executives is performance-based using a combination of annual bonus and long-term incentives. For 2016, 85% of the total direct compensation delivered to our CEO was performance based and, on average, 68% of the other named executive officers’ compensation was performance based. The variability in performance-based compensation directly ties the executives’ pay to our performance, including our financial results, strategic priorities, and stock price performance. The payment of a base salary provides a balance between fixed, cash compensation and compensation at risk through Company performance.
Benchmarking Approach
We have established benchmarks for compensation, including cash and equity, for each named executive officer. These benchmarks are reviewed annually and are based upon compensation for comparable positions in a peer group consisting of publicly-traded global retail companies with revenues of approximately one-third to two and one-half times the Company’s revenue. We also use the peer group data to assess the competitiveness of total direct compensation awarded to our senior executives and as a data point in designing compensation plans, benefits, and perquisites.
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Executive Compensation
The Compensation Committee has determined that the following companies comprise the appropriate peer group for executive compensation purposes based upon the nature of their businesses, their revenues, and the pool from which they recruit their executives. The companies included in our peer group for 2016 compensation decisions were:
One goal of the Compensation Committee is to provide competitive total compensation opportunitiesannual incentive plan for the named executive officers that vary with Company performance. The Compensation Committee uses the peer group benchmark information as a reference point in evaluating executive compensation, assessing the competitiveness of total direct compensation awarded to our senior executives, and designing compensation plans, benefits, and perquisites; it does not, however, attempt to match the compensation of each executive position in the Company precisely with that of an equivalent position in the peer group. In general, the Compensation Committee looks to position an executive’s total compensation between the median and 75th percentile of comparable positions at peer companies, consistent with the Company’s revenue in relation to peer companies. The Compensation Committee also considers other factors, including performance, responsibility, experience, tenure, and market positioning, when determining compensation.
Components of Our Executive Compensation Program
Another goal of the Compensation Committee is to align the compensation program with our business strategy and our shareholders’ interests. In order to achieve these objectives, our executive compensation program includes a mix of annual and long-term compensation, as well as a mix of cash and equity compensation. The components of our executive compensation program are: base salary, Annual Bonus, Long-Term Incentive Program, retirement and other benefits, and perquisites.
Base Salary
Base salaries represent the fixed portion of total direct compensation for our executives. We pay base salaries to provide our named executive officers with market-competitive fixed compensation that is appropriate to their position, experience, and responsibilities. Base salaries aid in attracting and retaining talented executives. The Compensation Committee annually reviews the named executive officers’ salaries. Annual salary increases are not automatic. Salary adjustments are made after consideration of pay for similar positions among our peer group, internal pay equity, and scope of responsibilities for each position. Base salaries of named executive officers rarely change materially from year-to-year unless there has been a promotion, other change in responsibility, or other special factors apply.
Performance-Based Annual Cash Bonus
We pay performance-based annual cash bonuses to our named executive officers under the Annual Bonus Plan in order to incentivize them to work toward achievement of annual performance goals established by the Compensation Committee. Payments are calculated as a percentage of actual base salary earned by the executive during the year.
Our Annual Bonus Plan is formula driven, with targets established by the Compensation Committee based upon the business plan and budget reviewed and approved each year by our Finance Committee and the Board. Our Annual Bonus Plan allows the Compensation Committee, in establishing performance targets under the plan, to choose one or more performance measures from a list of factors that have been approved by shareholders. The Compensation Committee established a corporate performance target under the Annual Bonus Plan for Mr. Johnson, Ms. Peters, and Ms. Alviti for 2016 based upon
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Executive Compensation
the Company’s achievement of a prescribed level of pre-tax income, and established performance targets based on division profit for Mr. Jacobs and Mr. Kimble. The Annual Bonus Plan for the named executive officersNEOs makes bonus payments based upon the Company’sCompany or relevant division’s results, without individual performance adjustments. Executives who receive a “not meeting performance” rating in their annual performance review are ineligible to receive an annual bonus payment. All bonus targets and calculations are based on the results of continuing operations.operations through the end of the 2018 fiscal year.
The Company achieved adjusted pre-tax incomepayment of $1,010.1 million in 2016, a 7.3% increase over 2015. While this performance was quite strong, we had established even more challenging performance goals under the Annual Bonus Plan, which we did not achieve. As a result, below-targetperformance-based annual cash bonuses wereis calculated as a percentage of actual base salary earned by Mr. Johnson, Ms. Peters, and Ms. Alviti. Similarly, based on the division profit resultsexecutive during the year. The maximum payout under this plan is 200% of target, with a maximum payout in any year for any participant capped at $6 million.
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Executive Compensation
The 2018 annual incentive target awards for the North America and International divisions relative to their performance targets, Mr. Jacobs and Mr. Kimble earned below-target annual cash bonuses. Consistent with our objective of setting challenging goals for executives throughout the Company, we believe that the achievement of the division profit goals for these divisions was demanding, as evidencedNEOs approved by the below-target awards earned by these executives despite strong performance of the divisions in 2016. The corporate performance targets under the Annual Bonus Plan, the actual results achieved for 2016, and the corresponding payout percentagesCompensation Committee are shown below. As previously stated, for competitive reasons, we do not disclosein the division profit for the North America or International divisions, as we do not publicly disclose results of these divisions on a separate basis, and we consider it competitively harmful to make that information public.table below.
Total Company | Threshold | Target | Maximum | Actual | ||||
Adjusted Pre-tax profit | $934.2 million | $1,038.0 million | $1,245.5 million | $1,010.1 million | ||||
Payout as Percentage of Target Award | 25% | 100% | 175% | 79.8% |
Name | 2017 Annual Target Award | 2018 Annual Target Award | ||
R. Johnson | 150% | 200% | ||
L. Peters | 75% | 75% | ||
S. Jacobs | 100% | 100% | ||
L. Kimble | 75% | 75% | ||
P. Verma | 75% | 75% |
Bonus payouts are calculated on the basis of straight-line interpolation between the threshold, target, and maximum points. If the Company does not achieve threshold performance, then no annual bonus is earned or paid. Target payments under the Annual Bonus Plan
Target as a Percentage of Base Salary | Actual 2018 Payout Percentage as a Percent of Target | Actual 2018 Payout ($) | ||||
R. Johnson | 200% | 84.5% | 1,859,000 | |||
L. Peters | 75% | 84.5% | 427,781 | |||
S. Jacobs | 100% | 157.2% | 1,336,200 | |||
L. Kimble | 75% | – | — | |||
P. Verma | 75% | 84.5% | 348,562 |
See page 35 for the namedtargets, along with the adjusted actual performance for the period.
The Compensation Committee considered the significant disruption occurring in the retail industry and the strategic work that would be necessary by the executives to accelerate the Company’s long-term growth in this environment. In light of this, the Committee provided an additional long-term incentive award to the NEOs and other senior executives focused on accelerating the strategic growth initiatives, expanding our direct-to-customer business, and maintaining the profitability of our stores. This AFG award is designed to encourage and reward long-term strategic achievements, as well as serve a retentive purpose for executives who are critical to executing the Company’s strategic plan. The AFG award covers a three-year performance period-2018-20-and is based on three equally-weighted metrics: total revenue growth, direct-to-customer revenue growth, and EBIT margin. Prior to granting this new award, the Finance Committee reviewed and approved the 2018-19 financial plan and the forecast for 2020 on which the metrics are based. |
In determining to grant this award and the behavior to be incentivized by it, the Committee first considered the existing executive officers,incentive programs, including the annual cash incentive awards which are based on a combination of pre-tax income (or division omni-channel profit) and actual payments for 2016 based uponcustomer-centric objectives, and the Company’slong-term performance-based equity awards with metrics tied to a combination of average two-year net income and applicable divisions’ performance, are shownROIC. Given the desire to accelerate the pace by which the Company drives growth, both organically and inorganically, the Committee believed that it was important to provide additional incentive directly focused on profitable top-line growth, which would complement the other incentive programs during this dynamic period.
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Executive Compensation
For Mr. Johnson, 100% of the award is in the chart below.form of PBRSUs, and he would earn a payout following the end of the performance period only if the performance goals are achieved. For each of the other NEOs, 75% of the award is in the form of PBRSUs and 25% is in the form of time-based RSUs, payable following the end of the performance period, subject to the achievement of the performance goals with regard to the PBRSUs.
Target as a Percentage of Base Salary | Actual 2016 Payout Percentage | Actual 2016 Payout ($) | Target Value of Performance-Based Component ($) | Target Value of Time-Based Payout Component ($) | Total Target Value ($) | ||||||||||
R. Johnson | 150 | % | 79.8 | % | 1,301,738 | 5,000,000 | – | 5,000,000 | |||||||
L. Peters | 75 | % | 79.8 | % | 393,514 | 750,000 | 250,000 | 1,000,000 | |||||||
S. Jacobs | 75 | % | 82.4 | % | 521,867 | 1,125,000 | 375,000 | 1,500,000 | |||||||
L. Kimble | 75 | % | 66.0 | % | 318,018 | 750,000 | 250,000 | 1,000,000 | |||||||
P. Alviti | 50 | % | 79.8 | % | 194,014 | ||||||||||
P. Verma | 562,500 | 187,500 | 750,000 |
The percentage of achievement of the performance goals at the end of the performance period will be applied to the target number of PBRSUs granted to each of the executives to determine the actual number of PBRSUs that may be earned. The percentage of the target number of PBRSUs that may be earned at threshold is 25% and at maximum is 200% for each executive. If the threshold performance goals are not met, no PBRSUs will be earned or paid out to any executive.
As the AFG performance period is on-going, we have not disclosed the actual targets because we believe it would be competitively harmful to do so. At the end of the performance period-in 2021-the Committee will determine whether the performance goals have been achieved, and we will provide specific disclosure regarding the targets, performance results relative to those targets, and the earned payouts, if any, for the completed performance period. For the time-based component of the AFG applicable to the NEOs other than Mr. Johnson, the RSUs will vest in March 2021, subject to continuous employment by the executives.
Our long-term incentive program consists ofincludes the (i) performance-based LTIP delivered in cash under the LTIP Planawards and equity under the Stock Incentive Plan, and (ii)other long-term equity awards granted under the Stock Incentive Plan in the form of stock options, time-based restricted stock, and RSUs. Performance-based LTIP awards, stock options, and time-based RSUs are granted annually. Time-vested restricted stock or time-vested RSUs. We provide long-term incentives and make thesespecial RSU awards to our named executive officersnormally are granted only in order to incentivize them to work toward the Company’s achievement of performance goals established by the Compensation Committee for each performance period. We provide equity-based long-term incentives to our named executive officers in order to provide alignment with shareholder value creation and enhance the retentive value of our compensation program.
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Executive Compensationspecial circumstances, such as promotions, recruitment, or retention.
LTIP
The LTIP is designed to reward executives for achieving multi-year performance targets. OurThe LTIP is formula-driven, with targets established by the Compensation Committee based upon financial targets included in the business plan reviewed and approved each year by our Finance Committee and the Board. The LTIP pays out based upon the Company’s results, without individual performance adjustments. Key design features of the LTIP are:
Increased Equity Component | The payout structure of the LTIP award had been a mix of cash payable under the LTIP, and equity in the form of RSUs payable under the Stock Incentive Plan. Beginning with the 2018-19 performance period, 100% of earned payouts will be made in equity under the Stock Incentive Plan for all of the NEOs. |
Two-Year Performance Period and Additional One-Year Vesting Period | The performance period is two years; however, while award payouts are calculated following the end of the two-year performance period, payments require continued employment and are subject to forfeiture, as well as stock price fluctuations, for another year—that is, payments are not made until the end of a three-year period. |
Net Income and ROIC Targets | The performance targets are based on adjusted net income (70%) and ROIC (30%) that are contained in the business and financial plan approved by the Finance Committee and the Board for the performance period. |
Target Awards are a Percentage of Base Salary | The target awards are expressed as a percentage of initial base salary—that is, the base salary paid to the executive following any salary adjustments that take place on May 1 of the first year of the performance period, adjusted only for promotion-related salary increases. |
Mix of Cash and RSUs.For the completed 2015-16 performance period, the LTIP awards were denominated 50% in cash payable under the LTIP and 50% in RSUs payable under the Stock Incentive Plan. Beginning with the 2016-17 performance period, awards are denominated 25% in cash and 75% in RSUs. The same performance target is established for both the cash and RSU portions of the award.
Two-Year Performance Period and Additional One-Year Vesting Period.The performance period is two years; however, while award payouts are calculated following the end of the two-year performance period, payments require continued employment and are subject to forfeiture, as well as stock price fluctuations, for another year—that is, payments are not made until the end of a three-year period.
2019 Proxy Statement | 41 |
Net Income and ROIC Targets.The performance targets are based on net income (70%) and ROIC (30%) that are contained in the business and financial plan adopted by the Finance Committee and the Board for the performance period.
Target Awards are a Percentage of Base Salary.The target awards are expressed as a percentage of initial base salary—that is, the base salary paid to the executive following any salary adjustments that take place on May 1 of the first year of the performance period, adjusted only for promotion-related salary increases. Mr. Johnson has a 250% target award for 2016 and 175% for 2015. The target award for the other named executive officers is established by position level and is 75% of initial base salary.Executive Compensation
The target awards for the NEOs are listed in the following table:
Name | Target Award as a Percentage of Base Salary | |
R. Johnson | 250% | |
L. Peters | 100% | |
S. Jacobs | 100% | |
L. Kimble | 75% | |
P. Verma | 75% |
Determination of Payout for 2017-18 LTIP Awards.Consistent with our high-performance culture, the Compensation Committee established therigorous net income and ROIC targets at the beginning of 20152017 for the 2015-162017-18 performance period.period and set a “performance floor” for each performance measure. The targets the Compensation Committee established were based on the Company achievedachieving two-year average annual net income of $632.3$727.2 million (which accounts for 70% of the payout) and ROIC of 15.5% (which accounts for 30% of the payout). The Company achieved two-year average annual net income of $541.6 million and ROIC of 15.7%11.9% for this performance period, which resulted in above-target LTIP awards beingwere below the threshold performance floor. As a result, no payouts were earned by the named executive officers. The LTIP awards for this performance period were denominated 50% in cash and 50% in RSUs and will be paid out in 2018, following a one-year time-based vesting period. TheSee page 36 for the targets, along with the adjusted actual performance for the period, and the calculation of ROIC are shown in the charts below:period.
Threshold | Target | Maximum | Actual | |||||
Average Annual Net Income (weighted 70%) | $519.9 million | $572.4 million | $686.9 million | $632.3 million | ||||
Two-Year Average ROIC (weighted 30%) | 14.1% | 15.3% | 17.8% | 15.7% | ||||
Payout as Percentage of Target Award | 25% | 100% | 200% | 141.3% |
ForDetermination of Performance Targets for 2018-19 LTIP Awards.In 2018, the 2015-16Compensation Committee established LTIP performance targets for the 2018-19 performance period, LTIPwhich are also based on two-year average annual net income (70%) and ROIC (30%). For competitive reasons, since this performance period is still on-going, we have not disclosed the targets established for the period. The Committee will determine whether payouts were subject to a “performance gate,” which provided that no amounts would be paid out underhave been earned following the plan unlessend of the Company’s average annual after-tax income for2019 fiscal year, and we will provide specific information on the performance period exceededtargets and results after the Company’s after-tax income in the year prior to the commencementcompletion of the performance period. Once thisIf awards are earned for the current 2018-19 performance level is achieved, LTIP payouts are calculated onperiod, payment will be made to participating executives in 2021, following the basiscompletion of straight-line interpolation between the threshold, target, and maximum points. If the Company did not achieve threshold performance, then no LTIP would have been paid.
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Executive Compensation
ROIC Calculation for LTIP.Return on Invested Capital, or ROIC, is a non-GAAP financial measure. For purposes of calculating this long-term incentive, we define ROIC as follows:
Operating Profit After Taxes | |||||
Pre-tax income | |||||
+/- |
+ | implied interest portion of operating lease payments | ||||
+/ | Unusual/non-recurring items | ||||
+ | LTIP award expense | ||||
= | Earnings before LTIP award expense, interest and taxes | ||||
- | Estimated income tax expense | ||||
= | Operating Profit After Taxes | ||||
ROIC = | |||||
Average Invested Capital | |||||
Average total assets | |||||
- | average cash and cash equivalents | ||||
- | average year-end inventory | ||||
- | non-interest-bearing current liabilities | ||||
+ | 13-month average inventory | ||||
+ | average estimated asset base of capitalized operating leases | ||||
= |
Certain items used in the calculation of ROIC for bonus purposes, such as the implied interest portion of operating lease payments, certain unusual or non-recurring items, average estimated asset base of capitalized operating leases, and 13-month average inventory, while calculated from our financial records, cannot be calculated from our audited financial statements. Prior to the Compensation Committee determining whether bonus targets have been achieved, the Company’s independent registered public accounting firm, at the request and for the restricted use of the Compensation Committee, reviews the bonus calculations to ensure that the payout is calculated in accordance with the plan. There is a calculation of basic ROIC, which is not precisely the same as the calculation used for incentive compensation purposes because of the exclusion of certain items (please see Page 46(see page 49 for a discussion of disregarded items, and a reconciliation to GAAP on Pagespages 16 through 1819, of our 20162018 Annual Report on Form 10-K).
For the 2015-16 performance period, LTIP awards were denominated 50% in cash and 50% in RSUs. There is an additional one-year vesting period, so that the payouts earned for the 2015-16 performance period will not be made to executives until 2018. The RSUs allocated to each executive were valued at the closing price on the date of grant in March 2015. The target payment level, actual percentage payout, and cash
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Executive Compensation
Stock Options and RSUs earned, based on
The Compensation Committee granted equity awards to the Company’s actual performance measured againstNEOs in 2018, splitting the performance goals,total value of the award between stock options and time-based RSUs in order to enhance the retentive value of the LTI awards. In prior years the annual equity award was made in the form of stock options only. In deciding to grant these awards and determining the value of the awards, the Compensation Committee considered each executive’s position and the competitive market for equivalent talent. For Mr. Johnson, the approximate grant date value of his awards was equivalent to 200% of his base salary. These awards are shown in the chart below.
Target as a Percentage of Initial Base Salary | Actual as a Percentage of Initial Base Salary | Cash Earned ($) | RSUs Earned (#) | |||||||||
R. Johnson | 175 | % | 141.3 | % | 1,298,194 | 20,902 | ||||||
L. Peters | 75 | % | 141.3 | % | 320,574 | 5,162 | ||||||
S. Jacobs | 75 | % | 141.3 | % | 430,371 | 6,910 | ||||||
L. Kimble | 75 | % | 141.3 | % | 317,244 | 5,093 | ||||||
P. Alviti | 75 | % | 141.3 | % | 251,691 | 4,053 |
Long-Term Equity Awards
Equity awards are generally designed to reward executives for increasing our return to our shareholders through increases in our stock price and are made under the Stock Incentive Plan, which has been approved by our shareholders. Equity awards may, in addition, serve to help retain key executives.
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Executive Compensation
Stock Options
We grant stock options to our named executive officers to align their interests more closely with those of our shareholders. The Compensation Committee awards stock options with exercise prices equal to the fair market value of our stock on the date of grant. Therefore, executives who receive stock options will only realize value if there is appreciation in the share price.
Stock option grants of the same value are normally made each year to executives holding comparable positions, with larger awards being made to those with greater responsibility. The Compensation Committee determines the number of options granted based on a fixed value, using the Black-Scholes values on the date of grant. The option exercise price is equal to the closing price of the Company’s common stockCommon Stock on the grant date. Stock options normally vest at the rate of one-third of the total grant per year over the first three years of the ten-year option term, subject to continuous service through each vesting date and accelerated vesting in certain limited circumstances. The Compensation Committee does not normally consider an executive’s gains from prior stock awards in makinggranting new awards. The Committee determines the number of options granted based on a fixed value, using the Black-Scholes value on the grant date. The values shown below for the stock option grants are based on a Black-Scholes value of $12.35 on the grant date.
Restricted Stock and Restricted Stock Units
We normally make restricted stock or time-vested RSU awards only in special circumstances, such as related to promotions, recruitment, special performance, or retention, rather than as part of an executive’s normal compensation. Restricted stock and RSUs are valued based upon the share price at the time of grant.
Name | Stock Options (#) | Grant Date Fair Value ($) | RSUs (#) | Grant Date Fair Value ($) | ||||
R. Johnson | 91,093 | 1,124,999 | 25,123 | 1,125,008 | ||||
L. Peters | 20,243 | 250,001 | 5,583 | 250,007 | ||||
S. Jacobs | 20,243 | 250,001 | 5,583 | 250,007 | ||||
L. Kimble | 18,219 | 225,005 | 5,025 | 225,020 | ||||
P. Verma | 12,146 | 150,003 | 3,350 | 150,013 |
Retirement and Other Benefits
Retirement Plan and Excess Cash Balance Plan
All U.S.-based associates and expatriate U.S. employees of the Company who meet the eligibility requirements are participants in the Foot Locker Retirement Plan (the “Retirement Plan”). The Retirement Plan and the method of calculating benefits payable under it are described on Pages 63 through 64.page 63. All of the named executive officersNEOs are participants in the Retirement Plan. The Internal Revenue Code (“IRC”) limits the amount of compensation that may be taken into consideration in determining an individual’s retirement benefits. Therefore, those participants in the Retirement Plan whose compensation exceeds the Internal Revenue CodeIRC limit are also participants in the Excess Cash Balance Plan, described on Page 64,page 63, which provides a benefit equal to the difference between the amount a participant receives from the Retirement Plan and the amount the participant would have received were it not for the Internal Revenue CodeIRC limits. The Retirement Plan and Excess Cash Balance Plan take into account only base salary and annual bonus in determining pension benefits. Therefore, long-term incentives, stock options, and stock awards have no effect on the calculation of benefits or payments under these plans.
The Company has a 401(k) Plan that is available to employees whose primary place of employment is in the United States, as well as to expatriate U.S. employees. TheEligible associates may contribute to the 401(k) Plan limits participation to employees who have attained at least the agefollowing 28 days of twenty-oneemployment and have completedare eligible for Company matching contributions upon completion of one year of service consisting of at least 1,000 hours. All of the named executive officersNEOs participate in the 401(k) Plan, other than Mr. Kimble. TheAs of January 1, 2019, the 401(k) Plan allows eligible employees to contribute up to 40% of their compensation on a pre-tax basis, subject to a maximum of $18,000.$19,000. The Company matches 25% of employees’ pre-tax contributions on up to the first 4% of the employees’ compensation (subject to certain limitations). The Summary Compensation Table on Pages 48 through 49 includes, under All Other Compensation, the amount of the Company match for each of the named executive officers. Beginning with the 2015 plan year, the matching contribution is made in cash. Prior to this, it was made in Company stock. Matching contributions are vested incrementally over the first five years of participation. See Note 6 to the Summary Compensation Table on pages 53 through 54 for the amount of the Company match for each of the NEOs.
Supplemental Executive Retirement Plan
The Company maintains a Supplemental Executive Retirement Plan (the “SERP”), described on Pagepage 64, for certain senior officers of the Company and other key employees, including the named executive officers.NEOs. The SERP is an unfunded plan that sets an annual target for each participant consisting of a percentage of base salary and annual bonus based on the
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Company’s performance against target. This is the same target as set under the Annual Bonus Plan. Contributions range from 4% to 12% of salary and annual bonus, depending on the Company’s performance against an established target, with an 8% contribution being made for target performance. The Compensation Committee establishes the SERP target each year, and it is normally the same as the performance target under
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the Annual Bonus Plan.annual bonus plan. In addition, performance-based participant accounts accrue interest at the rate of 6% annually. The SERP also provides for the continuation of medical and dental insurance benefits following retirement to vested participants who were participants in the SERP prior to the start of the 2014 fiscal year when this benefit was closed to new participants.
Based upon the Company’s performance in 2016,2018, a credit of 6.9%7.3% of 20162018 base salary and annual bonus was made to the SERP for each of the named executive officers.NEOs. Credits to the SERP are based only on base salary and annual bonus;bonus, if paid; therefore, long-term incentives, stock options, and stock awards have no effect on the calculation of benefits or payments under this plan. As of the end of 2016,2018, the account balances of the named executive officersNEOs ranged from $256,730$178,053 for Ms. AlvitiMr. Verma to $1,945,883$2,449,041 for Mr. Johnson. Under the terms of the SERP, executives are vested in their account balances based upon a combination of age and service. As of the end of 2016,2018, all of the named executive officers,NEOs, other than Ms. AlvitiMr. Verma who has not yet met the age and service requirements, were vested in the SERP.
International Assignment Compensation
We provide expatriate employees on long-term international assignments, such as Mr. Kimble, with additional benefits and allowances that are designed to minimize any financial detriment or gain to the employee from thean international assignment. For Mr. Kimble, who was the only named executive officerNEO who was an expatriate employee in 2016,2018, we provideprovided benefits and allowances for certain home leave, goods and services differential, dependent education, housing, relocation, automobile costs, and tax preparation assistance.
We provide the named executive officersNEOs with certain perquisites, which the Compensation Committee believes to be reasonable and consistent with its overall objective of attracting and retaining talented executives. The Company provides the named executive officersNEOs with an automobile allowance, financial planning, medical expense allowance, annual physical, supplemental long-term disability insurance, and life insurance. In addition, the Company reimburses Mr. Johnson for reasonable expenses of using car service for transportation in the New York metropolitan area. We also provide for continuation of medical and dental insurance benefits following retirement to participants who vested in the SERP prior to the start of the 2014 fiscal year when the benefit became closed to new participants. We do not provide a gross-up to executives for the income tax liability they incur due to their receipt of these perquisites.
Executive Employment Agreements
As more fully described on pages 54 through 55, we have employment agreements with each of our NEOs. Other than the agreement with Mr. Johnson as CEO, the agreements are substantially in the same form.
Our employment agreements with the NEOs provide for severance payments to the executive if we terminate the executive’s employment without cause or if the executive terminates his or her employment for good reason. These payments to the NEOs, calculated as if termination of employment occurred at the end of our last fiscal year, are set out in the tables on pages 65 through 67.
The NEOs would receive an enhanced severance payment if the executive’s employment is terminated without cause or if the executive terminates employment for good reason within two years following a change in control. For an executive to receive the enhanced severance payment, two events must occur: first, employment must be terminated for one of the specified reasons, and second, this termination must occur within two years following a change in control. We believe that these provisions, which we have had in place for a number of years, provide appropriate protection to our executives, comparable to that available at other public companies, and, with regard to the enhanced severance following a change in control, protect us from losing key executives during a period when a change in control may be threatened or pending. None of the NEOs is entitled to a gross-up payment for any excise taxes that may become payable in connection with a change in control.
All of the NEOs have agreed in their employment contracts not to compete with the Company for two years following their termination of employment and not to hire Company employees during that same period. This restriction does not apply following a change in control.
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Executive Compensation
Procedures for Determining Compensation
Setting Compensation, Establishing Goals, and Evaluating Performance
The
As reflected in the following timeline, the Compensation Committee oversees a rigorous and comprehensive compensation approval, and goal setting, process. and performance review process:
Annual Review | • | The Compensation Committee reviews any feedback from shareholder engagement meetings | |
and Approvals | regarding the compensation program. | ||
(January - | • | At its February meeting, the Committee discusses further refined planning and preliminary | |
March) | recommendations for the following fiscal year’s compensation program. | ||
• | At its March meeting, final recommendations are presented, and the Committee approves the executive compensation design, components, and awards for each executive, and establishes the applicable annual bonus and LTIP performance goals. The Committee meets privately with the independent consultant to review and approve the CEO’s compensation. | ||
Compensation
| • | During its meetings over this period, the Committee has preliminary discussions with management and compensation consultants regarding the compensation program design for the following year, including reviewing compensation trends, peer group composition, a competitive analysis of individual executives’ compensation relative to market, preliminary pay recommendations, and the current incentive payout forecast. The Committee provides feedback and direction regarding the program design for the next fiscal year. | |
• | The Committee meets privately with the independent consultant regarding the CEO’s compensation. | ||
Additional Reviews (During Year) | • | The Compensation Committee meets at other times during the year with management and privately with the independent consultant to review performance against the established performance goals, discuss developments, emerging trends, and to review specific issues related to executive compensation or other issues related to management resources. The Compensation Committee also has | |
responsibility for annually reviewing the compensation paid to non-employee directors and making recommendations to the full Board regarding the directors’ compensation program. | |||
Each year, in advance of making compensation decisions for the forthcoming year, the Compensation Committee meets with management and reviews the Company’s overall executive compensation program in light of the Company’s long-term strategy and financial objectives approved by the Finance Committee and the Board. The Compensation Committee meets with management, the Company’s compensation consultant, and the Compensation Committee’s independent compensation consultant to review the executive compensation environment, including recent developments and trends in executive compensation relative to the Company’s executive compensation program, and a historical view of the pay-for-performance correlation in the program and any changes to the program being recommended by management or either of the consultants.
After the financial results for the prior year have been finalized and audited, the Compensation Committee meets to review and approve bonus and incentive compensation payments for the prior year and to review and approve compensation arrangements—base salaries, stock awards, and incentive plan targets—for the upcoming year. The Compensation Committee meets privately with its independent compensation consultant for the purpose of establishing the compensation
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of the Chief Executive Officer,CEO, including establishing target awards under the Annual Bonus Plan and the LTIP, and making stock awards to him under the Stock Incentive Plan. Except in the case of promotions or other unusual circumstances, the Compensation Committee considers granting stock awards only at this meeting, which is normally held within a few weeks following the issuance of the Company’s full-year earnings release for the prior year.
We have established benchmarks for compensation, including cash and equity, for each NEO. These benchmarks are reviewed annually and are based upon compensation for comparable positions in a peer group consisting of publicly-traded athletic footwear and apparel retailers and other specialty retail companies having revenues of approximately one-third to two and one-half times the Company’s revenue. We also use the peer group data to assess the competitiveness of total direct compensation awarded to our senior executives and as a data point in designing compensation plans, benefits, and perquisites.
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The Compensation Committee may hold other meetings duringdetermined that the year to review specific issues related tofollowing companies, which comprised the peer group for 2018 compensations decisions, was the appropriate peer group for executive compensation new developmentspurposes based upon the nature of their businesses, revenues, and the pool from which they recruit their executives.
Peer Group for 2018 Compensation Decisions
Abercrombie & Fitch Co. | Dick’s Sporting Goods Inc. | Genesco Inc. |
American Eagle Outfitters, Inc. | DSW Inc. | L Brands, Inc. |
Ascena Retail Group, Inc. | The Finish Line Inc. | Ross Stores, Inc. |
Autozone, Inc. | GameStop Corp. | Signet Jewelers Limited |
Bed, Bath & Beyond Inc. | The Gap Inc. | Williams-Sonoma, Inc. |
Caleres, Inc. | ||
One goal of the Compensation Committee is to provide competitive total compensation opportunities for the NEOs that vary with Company performance. The Compensation Committee uses the peer group benchmark information as a reference point in evaluating executive compensation, or other issues relatedassessing the competitiveness of total direct compensation awarded to management resources. It also has responsibility, alongour senior executives, and designing compensation plans, benefits, and perquisites; it does not, however, attempt to match the compensation of each executive position in the Company precisely with that of an equivalent position in the peer group. In general, the Compensation Committee looks to position an executive’s total compensation at the median of comparable positions at peer companies, consistent with the NominatingCompany’s revenue in relation to peer companies. The Compensation Committee also considers other factors, including performance, responsibility, experience, tenure, internal equity, and market positioning, when determining compensation.
Changes to Peer Group for annually reviewing compensation paid to non-employee directors2019 Compensation Planning
During 2018, the Committee reviewed the peer group in light of merger and making recommendationsacquisition activity affecting certain peer companies, as well as the standing of certain peer companies in terms of revenues and market capitalization relative to the full Board regardingpeer group criteria and determined that a refresh of the directors’peer group based on a revised set of criteria was appropriate. For 2019 compensation program.decisions, the peer group criteria is as follows: (i) companies having revenues of approximately 0.5 to 2 times the Company’s revenue and market capitalization of approximately 0.25 to 4 times the Company’s market capitalization; and (ii) select sub-industries within the consumer discretionary sector most comparable to the Company’s business-apparel retail; apparel, accessories, and luxury goods; footwear; home furnishing retail; internet and direct marketing retail; and specialty stores. Based on the updated criteria, the peer group for 2019 compensation planning, which is shown below, reflects a larger, more diverse group of peers:
Deletions | Additions | Peer Group for 2019 Compensation Planning | ||||
Abercrombie & Fitch Co. | Burlington Stores, Inc. | American Eagle Outfitters, Inc. | Ralph Lauren Corp. | |||
Ascena Retail Group, Inc. | Expedia, Inc. | Bed Bath & Beyond Inc. | Sally Beauty Holdings, Inc. | |||
Autozone, Inc. | Hanesbrands, Inc. | Burlington Stores, Inc. | Signet Jewelers Ltd. | |||
Caleres, Inc. | Michaels Companies, Inc. | Dick’s Sporting Goods, Inc. | Skechers USA, Inc. | |||
DSW Inc. | PVH Corp. | Expedia, Inc. | Tapestry, Inc. | |||
The Finish Line Inc. | Qurate Retail, Inc. | The Gap, Inc. | Tiffany & Co. | |||
GameStop Corp. | Ralph Lauren Corp. | Hanesbrands, Inc. | Tractor Supply Co. | |||
Genesco Inc. | Sally Beauty Holdings, Inc. | L Brands, Inc. | Ulta Beauty, Inc. | |||
Ross Stores, Inc. | Skechers USA, Inc. | Michaels Companies, Inc. | Under Armour, Inc. | |||
Williams Sonoma, Inc. | Tapestry, Inc. | PVH Corp. | Urban Outfitters, Inc. | |||
Tiffany & Co. | Qurate Retail, Inc. | Wayfair, Inc. | ||||
Tractor Supply Co. | ||||||
Ulta Beauty, Inc. | ||||||
Under Armour, Inc. | ||||||
Urban Outfitters, Inc. | ||||||
Wayfair, Inc. | ||||||
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Executive Compensation
Use of Compensation Consultants
The Compensation Committee has retained as its advisor a nationally-recognized executive compensation consultant—consultant, Compensation Advisory Partners (“CAP”)—, that is independent and performs no work for management. CAP reports directly to the Compensation Committee, meets with the Compensation Committee privately without management present, and regularly communicates privately with the Compensation Committee Chair. CAP also meets with the Nominating and Governance Committee regarding non-employee directors’ compensation and reports on related governance and trends. The Compensation Committee has assessed the independence of CAP based on standards promulgated by the SEC and concluded that no conflict of interest exists that would prevent it from serving as an independent consultant to the Compensation Committee. Each year, the Compensation Committee’s compensation consultantCAP reviews a report on risk in relation to the Company’s compensation policies and practices, provides a pay-for-performance analysis of our executive compensation program, and reviews the Chief Executive Officer’sCEO’s compensation. In addition, each year the Compensation Committee’s consultantCAP reviews and makes recommendations regarding the compensation program for non-employee directors, and the Compensation Committee together with the Nominating Committee, considerconsiders the consultant’s report on the program. Management utilizes the services of ClearBridge Compensation Group, a nationally-recognized compensation consultant, to provide advice on the executive compensation program and plan design.
Management Involvement in Developing the Compensation Program
Management is involved in various aspects of developing the executive compensation program. Our Senior Vice President and Chief Human Resources Officer, Vice President—Global Total Rewards, and staff in the Human Resources Department work with our Chief Executive OfficerCEO to develop compensation recommendations for all corporate and executive officers other than the Chief Executive Officer.CEO. The Chief Executive OfficerCEO or the Senior Vice President and Chief Human Resources Officer reviews these proposals with the Compensation Committee Chair, and may make changes to the recommendations based upon hisher input, before the recommendations are forwardedpresented to the Compensation Committee for review. Our Senior Vice President and General Counsel also attends meetings of the Compensation Committee and participates in some of these discussions and preparations.
Key Compensation Governance Policies
Independent Compensation Consultant
With regard to executive and director compensation matters, our Compensation Committee directly retains, and is advised by, an independent compensation consultant who performs no other work for the Company.
Clawback Policy
We have adopted a clawback policy that provides for the recovery of incentive compensation—paid in cash or equity—if the Compensation Committee determines that an executive (1) engaged in fraud or gross misconduct which results in an accounting adjustment, whether or not the adjustment results in a restatement of our financial statements.statements, or (2) committed a significant legal or compliance violation of the Company’s policies or Code of Business Conduct. The Compensation Committee is closely monitoring the proposed SEC proposed rules in 2015 on clawback policies,regarding recoupment of incentive-based compensation and we intend to review our clawbackwill amend the policy onceif necessary when the SEC and NYSE establish final rules governing clawbacks.
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Executive Compensationare adopted.
Stock Ownership Guidelines
We have meaningful stock ownership guidelines for our senior executives. These are set at six times annual base salary for the Chief Executive Officer,CEO, three times annual base salary for executive vice presidents, two times annual base salary for senior vice presidents, and a multiple of annual base salary for other covered executives. If an executive has not met the ownership requirements following a five-year phase-in period, the executive is required to hold 100% of net shares acquired from the vesting of restricted stock or RSUs or the exercise of stock options until they comply with the stock ownership guidelines. At the end of 2016,2018, all of the named executive officersNEOs met or exceeded their applicable ownership guidelines.
No Tax Gross-Ups
We do not provide a tax gross-up with regard to any compensation, benefit, or perquisite paid by the Company, other than our international assignment policy (“IAP”) or relocation program that is applicable to all employees. We also do not provide tax gross-ups for any amount paid to an executive upon termination of employment or in connection with a change in control.
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Anti-Hedging Policy
We do not permit our executive officersexecutives to take short positions in our shares or to hedge their economic interest in their shares.
No Stock Option Repricing
Our Stock Incentive Plan does not permit the repricing of stock options without shareholder approval.
We believe that our compensation program encourages our named executive officersNEOs to take energetic action to improve the Company’s performance without encouraging them to take undue risk. The performance-based annual cash bonusincentive and LTIP elements of the program are paid based upon performance as compared to the Company’s annual and two-year financial plans, which are prepared each year by the Company’s management and reviewed and approved by the Finance Committee and the Board. The AFG awards are based on the approved 2018-19 financial plan and 2020 forecast reviewed by the Finance Committee and the Board. No bonusesincentive awards are earned or paid unless the applicable performance goals are achieved. We believe that, on balance, the plans are reasonably achievable under normal business conditions. This encourages our executives to manage the business well without pressuring them to take undue risks in order to obtain a bonus payment.payout.
Our equity-based compensation for the named executive officersNEOs is designed with a similar goal in mind. We believe that our equity grants are reasonable in relation to overall compensation. Stock options normally vest ratably over a three-year period and have a 10-year term, reducing the risk that an executive will take short-term action to inflate the price of the Company’s stock for a brief period.
LTIP payouts are calculated at the conclusion of a two-year performance period, but are not actually paid to the participant until after an additional year of vesting has been satisfied. In addition to serving as a retention vehicle, this also requires that the executive continue to have the value of the stock portion of his or her award at risk, dependent on fluctuations in stock price, for an additional year. It also allows a year to pass in which any issues concerning the Company’s operating or financial performance may come to light before payments are made.
In addition, there are certain other factors related to our compensation programs for the named executive officersNEOs that we believe help reduce the likelihood that our compensation programs will encourage our executives to take undue risk, as described below. Please also see Page 29See page 50 for a discussion of compensation and risk in our compensation plans more generally, and the procedures we followed to evaluate this.risk.
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Description | ||
ROIC as Bonus Measurement | As a retail company, we believe that one of the potential risks we have is thatmanagement will attempt to achieve profit targets without taking into account | |
No Bonus Payments to Executives with Poor Performance Ratings | We have designed our plans so that executives who receive a “Not MeetingPerformance” rating under the Company’s annual performance appraisal process | |
Bonus Targets | Bonus targets are based on the financial plan that is reviewed and approved by theBoard. | |
Incentive Payments Proportional to Base Salary | We believe that our cash incentive payments are not outsized in relation to base salary.Mr. Johnson, as | |
Bonus Caps | Annual cash bonus | |
Mix of Components | We use a mix of annual and long-term incentive components, as well as a mix betweenthe use of cash and equity. |
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Executive Employment Agreements
As more fully described on Pages 52 through 54, we have employment agreements with each of our named executive officers. Other than the agreements with Mr. Johnson as Chief Executive Officer, the agreements with the named executive officers are in the same form.Compensation
Our employment agreements with the named executive officers provide for severance payments to the executive if we terminate the executive’s employment without cause or if the executive terminates his or her employment for good reason. These payments to the named executive officers, calculated as if termination of employment occurred at the end of our last fiscal year, are set out in the tables on Pages 66 through 76.
The named executive officers would receive an enhanced severance payment if the executive’s employment is terminated without cause or if the executive terminates employment for good reason within two years following a change in control. For an executive to receive the enhanced severance payment, two events must occur: first, employment must be terminated for one of the specified reasons, and second, this termination must occur within two years following a change in control. We believe that these provisions, which we have had in place for a number of years, provide appropriate protection to our executives, comparable to that available at other public companies, and, with regard to the enhanced severance following a change in control, protect us from losing key executives during a period when a change in control may be threatened or pending. None of the named executive officers is entitled to a gross-up payment for any excise taxes that may become payable in connection with a change in control.
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All of the named executive officers have agreed in their employment contracts not to compete with the Company for two years following the termination of employment and not to hire Company employees during that same period. This restriction does not apply following a change in control.
The Compensation Committee currently has delegated authority to its Chair to approve, between committee meetings, of the Committee, time-vested RSU awards up to 7,500 RSUs per individual award and stock option awards up to 25,000 shares per individual award, in both cases only to executives who are not corporate or executive officers of the Company, division chief executive officers, or general managers. It is expected that the Chair would use this authority to approve awards made during the course of the year in connection with promotions, new hires, or special retention purposes. Options are priced at fair market value on the date the Chair signs the approval, which is the grant date of grant for awards made under this delegation authority. Similarly, the value of RSU awards is based on the fair market value on the date the Chair signs the approval. In 2016, theThe Chair used this authority one timethree times in 2018, approving stock options and approved a special retentiontime-based RSU award.awards. The Compensation Committee has not delegated authority to management to make stock option, restricted stock, RSU, or other equity-based awards.
Items Disregarded for Bonus Calculations
Annual Bonus and LTIP payments are formula-driven based upon Company performance, and our 2018 program for the named executive officersNEOs does not provide for discretionary adjustments based upon individual performance. The Compensation Committee may, however, in its sole discretion, determine to eliminate or reduce the amounts payable under these incentive programs, consistent with Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), but has no discretion to increase Annual Bonus or LTIP payments. The Compensation Committee has not adjusted any of the Annual Bonus or LTIP payments to the named executive officers shown in the Summary Compensation Table from payouts calculated based upon the applicable formula. When determining bonus and incentive payments, consistent with Section 162(m), the Compensation Committee is required to disregard certain events that it determines to be unusual or non-recurring. When establishing the targets, the Compensation Committee normally specifies certain items that it considers to be unusual or non-recurring, and these events, if they occur, are automatically excluded when calculating payments. All of the references in this CD&A to target and actual performance levels refer to amounts after taking these adjustments into consideration.
Accounting and Tax Considerations of Executive Compensation
While we review both the accounting and tax effects of various components of compensation, these effects are not a significant factor in the Compensation Committee’s allocation of compensation among the different components. In general,With respect to awards made before the 2017 tax reform legislation, it is our positionwas the Committee’s intent that compensation paid to executive officers should generally be fully deductible for U.S. tax purposes, and, we haveconsistent with this intent, the Committee structured our bonus, long-term incentive, and stock option programs so that payments made under them are deductible. Ingenerally qualified for the performance-based exception of Section 162(m) of the IRC (“Section 162(m)”). However, the Committee believes that in certain instances however, we believe that it is in the Company’s and our shareholders’ best interests and that of our shareholders, to have the flexibility to pay compensation that is not deductible under the limitations of Section 162(m) in order toso that we may provide compensation consistent with our program and objectives.
The portion2017 U.S. Tax Reform Legislation amended Section 162(m) to eliminate the “performance-based compensation” exception effective for tax years beginning after December 31, 2017, subject to a transition rule allowing companies to deduct compensation payable pursuant to a written binding contract in effect on November 2, 2017 and not materially modified after that date. Notwithstanding the change in the tax law, the Committee is committed to the principles of base salary paidlinking executive pay closely to Mr. Johnsonthe Company’s strategy and performance, establishing challenging and measurable performance goals, and providing payout limits under annual and long-term incentive plans. Further, the Compensation Committee reserves the right to modify compensation that exceeds $1 million, the value of time-based restricted stock awards made to Mr. Johnson, the taxable portion of certain perquisites provided to Mr. Johnson, and potentially a portion of the value of time-based restricted stock or RSU awards made to one or more of the other named executive officers, are not expectedwas initially intended to be deductible.exempt from Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
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Compensation and Management Resources Committee Report
The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and, based on that review and discussion, has recommended to the Board that the CD&A be included in this Proxy Statement.
Members of the Compensation Committee
Kimberly Underhill, Chair | |||||
Maxine Clark | Alan D. Feldman | Steven Oakland | |||
Cheryl Nido Turpin |
Compensation Committee Interlocks and Insider Participation
Maxine Clark, Alan D. Feldman, Steven Oakland, Cheryl Nido Turpin, and Kimberly Underhill served on the Compensation Committee during 2018. None of the committee members was an officer or employee of the Company or any of its subsidiaries, and there were no interlocks with other companies within the meaning of the SEC’s proxy rules.
The Company has completed a risk-related review and assessment of our compensation program and concluded that our executive compensation is not reasonably likely to result in a material adverse effect on the Company. As part of this review, the independent compensation consultant to the Compensation Committee reviewed risk in relation to the Company’s compensation policies and practices with the Company’s human resources executives directly involved in compensation matters. The consultant reviewed the compensation policies and practices in effect for corporate and division employees through the manager level, store managers, and store associates, and reviewed the features we have built into the compensation programs to discourage excessive risk taking by employees, including a balance between different elements of compensation, differing time periods for different elements, consistent Company-wide programs, plan performance targets based on the corporate budgeting process, and stock ownership guidelines for senior management.
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||
Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change inPension Value and Non-Qualified Deferred CompensationEarnings | All Other Compensation | Total | ||||
Name and Principal Position | Year | ($)(1) | ($)(2)(3) | ($)(2) | ($)(4) | ($)(5) | ($)(6) | ($) | ||
Richard A. Johnson | 2018 | 1,100,000 | 8,875,069 | 1,124,999 | 1,859,000 | 380,307 | 62,601 | 13,401,976 | ||
Chairman, President and | 2017 | 1,100,000 | 2,750,061 | 2,200,005 | — | 294,161 | 48,995 | 6,393,222 | ||
ChiefExecutive Officer | 2016 | 1,087,500 | 2,062,522 | 2,200,016 | 2,599,932 | 403,443 | 572,455 | 8,925,868 | ||
Lauren B. Peters | 2018 | 675,000 | 1,925,101 | 250,001 | 427,781 | 182,072 | 13,404 | 3,473,359 | ||
ExecutiveVice President and | 2017 | 675,000 | 506,314 | 500,009 | — | 174,281 | 7,646 | 1,863,250 | ||
Chief Financial Officer | 2016 | 657,500 | 1,579,759 | 450,010 | 714,088 | 205,626 | 84,011 | 3,690,994 | ||
Stephen D.“Jake” Jacobs | 2018 | 850,000 | 2,600,048 | 250,001 | 1,336,200 | 246,502 | 23,980 | 5,306,731 | ||
ExecutiveVice President and | 2017 | 850,000 | 637,554 | 500,009 | — | 179,511 | 32,924 | 2,199,998 | ||
ChiefExecutive Officer—North America | 2016 | 844,445 | 2,654,792 | 450,010 | 952,238 | 222,934 | 117,513 | 5,241,932 | ||
LewisP.Kimble | 2018 | 650,000 | 1,712,620 | 225,005 | — | 247,830 | 1,314,603 | 4,150,058 | ||
ExecutiveVice President and | 2017 | 650,000 | 365,679 | 450,013 | — | 263,152 | 386,641 | 2,115,485 | ||
ChiefExecutive Officer—AsiaPacific | 2016 | 642,460 | 1,365,680 | 450,010 | 635,262 | 326,186 | 235,970 | 3,655,568 | ||
PawanVerma | 2018 | 550,000 | 1,312,563 | 150,003 | 348,562 | 90,599 | 42,514 | 2,494,241 | ||
ExecutiveVicePresident and | 2017 | 493,333 | 1,785,721 | 225,006 | — | 49,737 | 43,855 | 2,597,652 | ||
ChiefInformationandCustomer Connectivity Officer | 2016 | 461,250 | 261,603 | 225,005 | 360,252 | 70,795 | 239,928 | 1,618,833 |
Notes to Summary Compensation Table
The amounts in columns (c) and (f) reflect the annual base salaries and non-equity incentive plan compensation, respectively, earned by our NEOs for the designated years. For 2018, these combined amounts represented the following percentage of the NEOs’ total compensation: Mr. Johnson (22.1%), Ms. Peters (31.7%), Mr. Jacobs (41.2%), Mr. Kimble (15.7%), and Mr. Verma (36.0%). Information on the NEOs’ employment agreements appears beginning on page 54. |
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Position | Salary | Stock Awards | Option Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||||||||
(1) | Year | ($)(2) | ($)(3)(4) | ($)(3) | ($)(5) | ($)(6) | ($)(7) | ($) | |||||||||||||||||||||||||||||||||
Richard A. Johnson | 2016 | 1,087,500 | 2,062,522 | 2,200,016 | 2,599,932 | 403,443 | 366,199 | 8,719,612 | |||||||||||||||||||||||||||||||||
Chairman, President and | 2015 | 1,037,500 | 918,793 | 3,328,479 | 2,866,278 | 420,164 | 49,353 | 8,620,567 | |||||||||||||||||||||||||||||||||
Chief Executive Officer | 2014 | 931,250 | 4,728,272 | 1,596,328 | 1,690,209 | 365,092 | 427,558 | 9,738,709 | |||||||||||||||||||||||||||||||||
Lauren B. Peters | 2016 | 657,500 | 1,579,759 | 450,010 | 714,088 | 205,626 | 84,011 | 3,690,994 | |||||||||||||||||||||||||||||||||
Executive Vice President | 2015 | 595,000 | 226,888 | 512,320 | 857,976 | 196,559 | 20,404 | 2,409,147 | |||||||||||||||||||||||||||||||||
and Chief Financial Officer | 2014 | 561,250 | 1,196,558 | 506,437 | 762,160 | 231,420 | 377,010 | 3,634,835 | |||||||||||||||||||||||||||||||||
Stephen D. Jacobs | 2016 | 844,445 | 2,654,792 | 450,010 | 952,238 | 222,934 | 117,513 | 5,241,932 | |||||||||||||||||||||||||||||||||
Executive Vice President and | |||||||||||||||||||||||||||||||||||||||||
Chief Executive Officer—North America | |||||||||||||||||||||||||||||||||||||||||
Lewis P. Kimble | 2016 | 642,460 | 1,365,680 | 450,010 | 635,262 | 326,186 | 235,970 | 3,655,568 | |||||||||||||||||||||||||||||||||
Executive Vice President and | |||||||||||||||||||||||||||||||||||||||||
Chief Executive Officer—International | |||||||||||||||||||||||||||||||||||||||||
Paulette R. Alviti | 2016 | 486,250 | 1,275,673 | 225,005 | 445,705 | 82,626 | 178,857 | 2,694,116 | |||||||||||||||||||||||||||||||||
Senior Vice President and | 2015 | 472,500 | 178,131 | 256,160 | 597,324 | 109,543 | 46,814 | 1,660,472 | |||||||||||||||||||||||||||||||||
Chief Human Resources Officer | 2014 | 461,250 | 693,556 | 253,218 | 495,404 | 121,769 | 223,333 | 2,248,530 | |||||||||||||||||||||||||||||||||
Notes to Summary Compensation Table | |||||||||||||||||||||||||||||||||||||||||
(1) Richard A. Johnson has served as Chairman of the Board since May 2016, and President and Chief Executive Officer since December 2014. Mr. Johnson previously served as Executive Vice President and Chief Operating Officer from May 2012 to November 2014; Executive Vice President and Group President—Retail Stores from July 2011 to May 2012; President and Chief Executive Officer of Foot Locker U.S., Lady Foot Locker, Kids Foot Locker, and Footaction from January 2010 to June 2011; President and Chief Executive Officer of Foot Locker Europe from August 2007 to January 2010; and President and Chief Executive Officer of Footlocker.com/Eastbay from April 2003 to August 2007.
Lauren B. Peters has served as Executive Vice President and Chief Financial Officer since July 2011.
Stephen D. Jacobs has served as Executive Vice President and Chief Executive Officer—North America since February 2016 and has been an executive officer of the Company as of this date. Mr. Jacobs previously served as Executive Vice President and Chief Executive Officer Foot Locker—North America from December 2014 through February 2016; President and Chief Executive Officer of Foot Locker U.S., Lady Foot Locker, Kids Foot Locker, and Footaction from July 2011 to November 2014; and President and Chief Executive Officer of Champs Sports from January 2009 to June 2011.
Lewis P. Kimble has served as Executive Vice President and Chief Executive Officer—International since February 2016 and has been an executive officer of the Company as of this date. Mr. Kimble previously served as President and Chief Executive Officer of Foot Locker Europe from February 2010 to February 2016; and Managing Director of Foot Locker Asia Pacific from February 2006 to February 2010.
Paulette Alviti has served as Senior Vice President and Chief Human Resources Officer since June 2013. | (2) The amounts in column (c) reflect the annual base salaries earned by our named executive officers for the designated years. Including the non-equity incentive plan compensation included in column (f), these amounts represented the following percentages of the named executive officers’ total compensation for 2016: Mr. Johnson (42.3%), Ms. Peters (37.2%), Mr. Jacobs (34.3%), Mr. Kimble (34.9%), and Ms. Alviti (34.6%). Information on the named executive officers’ employment agreements appears beginning on Page 52.
(3) The amounts in these columns reflect the stock and option awards granted in the designated years. The amounts represent the aggregate grant date fair value of the awards granted in each respective year calculated in accordance with stock-based compensation accounting rules (ASC Topic 718). A discussion of the assumptions used in computing the award values may be found in Note 21 to our financial statements in our 2016 Annual Report on Form 10-K. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions and include, for restricted stock awards, expected dividend payments at the same rate as paid on our shares of Common Stock. Please see the Grants of Plan-Based Awards Table on Page 55 for additional information on awards granted in 2016. The amounts shown in the table do not necessarily reflect the actual value that may be recognized by the named executive officers.
(4) The amounts in column (d) include the grant date fair value of performance-based RSUs granted for the long-term performance measurement periods of 2016-17, 2015-16, and 2014-15, valued at grant date based upon the probable outcome of meeting the performance conditions. The amounts are consistent with the estimates of the aggregate compensation cost to be recognized over the service period determined at the grant date under FASB ASC Topic 718, and exclude the effect of estimated forfeitures. Column (d) also includes restricted stock awards, where applicable. Please see the Grants of Plan-Based Awards Table on Page 55 for additional information on the awards granted in 2016. |
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|
Executive Compensation
(4) | For 2018, this column reflects the cash incentive payouts made in 2019 under the Annual Bonus Plan for 2018, as shown in Table I below. No LTIP payouts were earned for the 2017-18 performance measurement period. For 2017, there were no cash incentive payouts made under the Annual Bonus Plan for 2017 and no LTIP payouts were earned for the 2016-17 performance measurement period. For 2016, this column reflects the sum of the cash incentive payouts made in 2017 under the Annual Bonus Plan for 2016 and the cash portion of the earned LTIP payout |
I—Cash Incentive Payouts for 2018
I—
Payout in 2019 | Payout in 2020 | |||
LTIP 2017-18 | ||||
Performance Period | Total | |||
Annual Bonus Plan | (Cash Payout Earned— | As Shown in Summary | ||
Cash Payment for 2018 | Payable in 2020) | Compensation Table | ||
Name | ($) | ($) | ($) | |
R. Johnson | 1,859,000 | N/A | 1,859,000 | |
L. Peters | 427,781 | — | 427,781 | |
S. Jacobs | 1,336,200 | — | 1,336,200 | |
L. Kimble | — | — | — | |
P. Verma | 348,562 | — | 348,562 |
II—Cash Incentive Payouts for 2016
Payout in 2017 | Payout in 2018 | |||||||||||||||
Payout in 2017 | Payout in 2018 | LTIP 2015-16 | ||||||||||||||
LTIP | Performance Period | Total | ||||||||||||||
2015-16 Performance Period | Total | Annual Bonus Plan | (Cash Payout Earned— | As Shown in Summary | ||||||||||||
Annual Bonus Plan | (Cash Payout Earned— | As Shown in Summary | Cash Payment for 2016 | Paid in 2018) | Compensation Table | |||||||||||
Name | Cash Payment for 2016 ($) | Payable in 2018) ($) | Compensation Table ($) | ($) | ($) | |||||||||||
R. Johnson | 1,301,738 | 1,298,194 | 2,599,932 | 1,301,738 | 1,298,194 | 2,599,932 | ||||||||||
L. Peters | 393,514 | 320,574 | 714,088 | 393,514 | 320,574 | 714,088 | ||||||||||
S. Jacobs | 521,867 | 430,371 | 952,238 | 521,867 | 430,371 | 952,238 | ||||||||||
L. Kimble | 318,018 | 317,244 | 635,262 | 318,018 | 317,244 | 635,262 | ||||||||||
P. Alviti | 194,014 | 251,691 | 445,705 | |||||||||||||
P. Verma | 184,039 | 176,213 | 360,252 |
II—Cash Incentive Payouts for 2015
Payout in 2016 | Payout in 2017 | |||||||||||
LTIP | ||||||||||||
2014-15 Performance Period | Total | |||||||||||
Annual Bonus Plan | (Cash Payout Earned— | As Shown in Summary | ||||||||||
Name | Cash Payment for 2015 ($) | Paid in 2017) ($) | Compensation Table ($) | |||||||||
R. Johnson | 1,719,656 | 1,146,622 | 2,866,278 | |||||||||
L. Peters | 512,831 | 345,145 | 857,976 | |||||||||
P. Alviti | 313,267 | 284,057 | 597,324 |
III—Cash Incentive Payouts for 2014
Payout in 2015 | Payout in 2016 | |||||||||||
LTIP | ||||||||||||
2013-14 Performance Period | Total | |||||||||||
Annual Bonus Plan | (Cash Payout Earned— | As Shown in Summary | ||||||||||
Name | Cash Payment for 2014 ($) | Paid in 2016) ($) | Compensation Table ($) | |||||||||
R. Johnson | 1,063,990 | 626,219 | 1,690,209 | |||||||||
L. Peters | 496,510 | 265,650 | 762,160 | |||||||||
P. Alviti | 313,881 | 181,523 | 495,404 |
The amounts in this column |
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Executive Compensation
Car | Med. | Accrual | Expatriate | ||||||||||||||||||||||||||||||||
Auto. | Service | Univ. Life | Expense | Exec. | Supp. LTD | for Post- | Financial | 401(k) | Foreign | Tax | |||||||||||||||||||||||||
Allow. | Reimb. | Ins. Prem. | Reimb. | Physical | Ins. Prem. | Retirement | Planning | Match | Earnings | Payments | Total | ||||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | Med. | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||
R. Johnson | 15,100 | 9,659 | 5,570 | 8,245 | — | 6,075 | 56,958 | 9,000 | 2,650 | — | 252,942 | 366,199 | |||||||||||||||||||||||
L. Peters | 8,485 | — | 2,967 | 1,195 | 556 | — | 68,158 | — | 2,650 | — | — | 84,011 | |||||||||||||||||||||||
S. Jacobs | 21,438 | — | — | 5,000 | — | — | 88,425 | — | 2,650 | — | — | 117,513 | |||||||||||||||||||||||
L. Kimble | — | — | 3,668 | 450 | 556 | — | 56,958 | — | — | 174,338 | — | 235,970 | |||||||||||||||||||||||
P. Alviti | 20,923 | — | 2,995 | 5,000 | 494 | 4,774 | 133,021 | 9,000 | 2,650 | — | — | 178,857 |
52 | 2019 Proxy Statement |
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Executive Compensation
Car | Med. | Supp. | Expatriate | |||||||
Auto. | Service | Univ. Life | Expense | LTD Ins. | Financial | 401(k) | Foreign | Tax | ||
Allow. | Reimb. | Ins. Prem. | Reimb. | Prem. | Planning | Match | Earnings | Payments | Total | |
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
R. Johnson | 4,845 | 28,872 | 4,927 | 6,933 | 3,662 | 10,612 | 2,750 | – | — | 62,601 |
L. Peters | 3,963 | – | 2,763 | 3,928 | – | – | 2,750 | – | — | 13,404 |
S. Jacobs | 15,975 | – | – | 5,255 | – | – | 2,750 | – | — | 23,980 |
L. Kimble | – | – | 3,581 | 766 | – | – | – | 14,243 | 1,296,013 | 1,314,603 |
P. Verma | 18,161 | – | 2,870 | 4,778 | 3,314 | 13,391 | – | – | — | 42,514 |
The Company has established a trust for certain benefit plans, arrangements, and agreements, including the SERP, the Foot Locker Excess Cash Balance Plan, the executive employment agreements, and other benefit plans, agreements or arrangements that may be covered at a later date (collectively, the “Benefit Obligations”). Upon the occurrence of a Potential Change in Control of the Company as defined in the trust agreement, the Company is required to fund the trust with an amount sufficient to pay the total amount of the Benefit Obligations. Following the occurrence, and during the pendency, of a Potential Change in Control, the trustee would be required to make payments of Benefit Obligations to the extent these payments are not made by the Company.
We have employment agreements with each of the named executive officers,NEOs, and we describe the material terms of each of these agreements below. Information on estimated potential payments and benefits upon termination of the agreements is described underPotential Payments Upon Termination or Change in Controlbeginning on Page 66.page 65.
Richard A. Johnson
Position.We entered intohave an employment agreement with Mr. Johnson on November 6, 2014 in connection with his promotion to serveposition as our Chief Executive Officer.
Term.The term of this agreement began on December 1, 2014 and ends on January 31, 2019.2021. The agreement contains an “evergreen” renewal provision that provides for additional one-year renewals of the employment term, unless either party gives notice of non-renewal one year prior to the end of the then-current term.
Base Salary and Bonus.During the term of the agreement, the Company shall pay Mr. Johnson an annual base salary of not less than $1,000,000. Mr. Johnson’s 20162018 base salary rate was $1,100,000. As Chief Executive Officer, for 2016,2018, Mr. Johnson’s annual bonus at target under the Annual Bonus Plan was 150%200% of his base salary, and his annual bonus at target under the LTIP was 250% of his base salary at the start of the performance period.
Stock Awards.Mr. Johnson’s agreement provided for certain restricted stock and stock option awards effective December 1, 2014, with vesting subject to his continued employment with the Company.
Benefit Plans and Perquisites.Mr. Johnson is entitled to participate in all bonus, incentive, and equity plans offered to senior executives. He is also eligible to participate in all pension, welfare,executives, including company-paid life insurance, long-term disability coverage, and fringe benefit plansreimbursement for certain medical, transportation, and perquisites offered to senior executives. The benefits and perquisites available to Mr. Johnson include:financial planning expenses.
Non-Compete Provision.Mr. Johnson’s agreement provides that he may not compete with the Company or solicit our employees for two years following the termination of his employment agreement.
Certain Defined Terms in the Agreement:
“Cause”means with regard to Mr. Johnson:
| |
Executive Compensation
“Change in Control”means any of the following:
Foot Locker, Inc. | ||
“Good Reason”means,
Executive Compensation
Certain Defined Terms. Mr. Johnson’s agreement includes definitions of certain terms such as “Cause” (i.e., for Mr. Johnson’s dismissal), “Good Reason” (i.e., for Mr. Johnson’s resignation), and “Change in Control” (which includes, among other things, the acquisition of 35% or more of the Company’s outstanding stock).
Lauren B. Peters, Stephen D. Jacobs, Lewis P. Kimble, and Paulette R. AlvitiOther NEOs
Position/Term/Base Salary.We have substantially identical employment agreements with these executives in their current positions, as follows:
Current Base | |||
Current Term | |||
Name | Position | End Date | |
L. Peters | Executive Vice President and Chief Financial Officer | 1/31/ | 675,000 |
S. Jacobs | Executive Vice President and Chief Executive Officer—North America | 1/31/ | 850,000 |
L. Kimble | Executive Vice President and Chief Executive Officer— | 1/31/ | 650,000 |
P. | 1/31/ |
The terms of the agreements will automatically be extended for another year unless notice of non-renewal is given by the October 31 prior to the then-current expiration of the term. We pay these executives annual base salaries at rates not less than their salaries at the start of their agreements. The executives’ base salaries for 20162018 are shown in the table above.
Benefit Plans and Perquisites.These executives are entitled to participate in all benefit plans and arrangements in effect at the start of the agreement, including retirement plans, Annual Bonus Plan, LTIP, medical, dental, and disability plans, and any other plans subsequently offered to our senior executives.
Non-Compete Provision.The executives’ agreements provide that they may not compete with the Company or solicit our employees for two years following the termination of their employment agreements.
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Executive CompensationCertain Defined Terms. The executives’ agreements include definitions of certain terms such as “Cause” (i.e., for the executive’s dismissal), “Good Reason” (i.e., for the executive’s resignation), “Change in Control” (which includes, among other things, the acquisition of 35% or more of the Company’s outstanding stock), and “Disability.”
Certain Defined Terms in the Agreements:
“Cause”means each executive’s:
55 |
“Change in Control”means any of the following:
“Disability”means:
“Good Reason”means:
Prior to a Change in Control,
Following a Change in Control,
At any time,
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Executive Compensation
Grants of Plan-Based Awards Table
The following table shows the awards made to the named executive officersNEOs in 20162018 under the Annual Bonus Plan and the LTIP, as well as the AFG awards and RSU and stock option awards under the Stock Incentive Plan:
Estimated Future Payouts | Estimated Future Payouts | |||||||||||||||||||||
Under Non-Equity Incentive | Under Equity Incentive | |||||||||||||||||||||
Plan Awards | Plan Awards | |||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||
All | ||||||||||||||||||||||
All | Other | Grant | ||||||||||||||||||||
Other | Option | Date | ||||||||||||||||||||
Stock | Awards: | Fair | ||||||||||||||||||||
Awards: | Number of | Exercise | Value of | |||||||||||||||||||
Number of | Securities | or Base | Stock | |||||||||||||||||||
Shares | Under- | Price of | and | |||||||||||||||||||
of Stock | lying | Option | Option | |||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards | |||||||||||||
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($)(5) | |||||||||||
R. Johnson | 03/23/16(1) | 412,500 | 1,650,000 | 2,887,500 | ||||||||||||||||||
03/23/16(2) | 171,875 | 687,500 | 1,375,000 | |||||||||||||||||||
03/23/16(2) | 8,084 | 32,333 | 64,666 | 2,062,522 | ||||||||||||||||||
03/23/16(3) | 139,380 | 63.79 | 2,200,016 | |||||||||||||||||||
L. Peters | 03/23/16(1) | 126,563 | 506,250 | 885,938 | ||||||||||||||||||
03/23/16(2) | 31,641 | 126,563 | 253,125 | |||||||||||||||||||
03/23/16(2) | 1,489 | 5,953 | 11,905 | 379,742 | ||||||||||||||||||
03/23/16(3) | 28,510 | 63.79 | 450,010 | |||||||||||||||||||
03/23/16(4) | 18,812 | 63.79 | 1,200,017 | |||||||||||||||||||
S. Jacobs | 03/23/16(1) | 159,375 | 637,500 | 1,115,625 | ||||||||||||||||||
03/23/16(2) | 39,844 | 159,375 | 318,750 | |||||||||||||||||||
03/23/16(2) | 1,874 | 7,496 | 14,991 | 478,170 | ||||||||||||||||||
03/23/16(3) | 28,510 | 63.79 | 450,010 | |||||||||||||||||||
03/23/16(4) | 23,515 | 63.79 | 1,500,022 | |||||||||||||||||||
L. Kimble | 03/23/16(1) | 121,875 | 487,500 | 853,125 | ||||||||||||||||||
03/23/16(2) | 30,469 | 121,875 | 243,750 | |||||||||||||||||||
03/23/16(2) | 1,433 | 5,732 | 11,464 | 365,644 | ||||||||||||||||||
03/23/16(3) | 28,510 | 63.79 | 450,010 | |||||||||||||||||||
03/23/16(4) | 15,677 | 63.79 | 1,000,036 | |||||||||||||||||||
P. Alviti | 03/23/16(1) | 61,250 | 245,000 | 428,750 | ||||||||||||||||||
03/23/16(2) | 22,969 | 91,875 | 183,750 | |||||||||||||||||||
03/23/16(2) | 1,081 | 4,321 | 8,642 | 275,637 | ||||||||||||||||||
03/23/16(3) | 14,255 | 63.79 | 225,005 | |||||||||||||||||||
03/23/16(4) | 15,677 | 63.79 | 1,000,036 |
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Executive Compensation
Notes to Grants of Plan-Based Awards Table
(1) | Annual Incentive Awards |
Amounts shown reflect the payment levels at threshold, target, and maximum performance for the 20162018 fiscal year under the Annual Bonus Plan and reflect the potential amounts that would be paid at the end of the period if the applicable performance goals were achieved. The estimated bonus payouts are based on a percentage of the executive’s base salary, as shown in the table below:
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | |||
R. Johnson | 37.5% | 150% | 262.5% | 50% | 200% | 400% | |||
L. Peters, S. Jacobs, and L. Kimble | 18.75% | 75% | 131.25% | ||||||
P. Alviti | 12.5% | 50% | 87.5% | ||||||
L. Peters, L. Kimble and P. Verma | 18.75% | 75% | 150% | ||||||
S. Jacobs | 25% | 100% | 200% |
56 | Foot Locker, Inc. |
Executive Compensation
The annual bonus payments actually made to the named executive officersNEOs for 20162018 are shown in Note 54 to the Summary Compensation Table on Page 50.page 53.
(2) | LTIP Awards |
Provided the performance goals for the 2016-172018-19 long-term performance measurement period are achieved, the payout structure of the executives’ awards is as follows: (a) 25% of the award would be payable in cash under the LTIP, (b) 75%100% of the award would be payable in RSUs, under the Stock Incentive Plan, and (c) both the cash portion and the stock portion of(b) the payout would be subject to a time-based, one-year vesting period following the end of the performance measurement period before payout to the executives. The amounts shown in the table reflect the estimated payment levels in cash and number of RSUs at threshold, target, and maximum performance for the 2016-17 performance measurement period. Columns (c), (d), and (e) show the estimated cash payments and columns (f), (g), and (h) show the number of RSUs that would be paid out at threshold, target, and maximum performance if the applicable performance goals are achieved.achieved for the 2018-19 performance measurement period.
The threshold, target, and maximum number of RSUs for each executive was calculated on the grant date of grant on the basis of that day’s closing stock price of a share of Common Stock. The closing price on the grant date of March 23, 201628, 2018 for each of the named executive officersNEOs was $63.79.$44.78. Similarly, the grant date fair valuesvalue of the RSU awards are based on the closing stock price on thesethis grant dates.date. The actual number of RSUs paid out will be based on the Company’s performance compared to targets. The value of the RSUs received by an executive will depend upon the Company’s stock price on the payment date in 2019.2021. No dividends are paid or accrued for the RSUs.
The aggregate payout in cash and stock at threshold, target, and maximum performance for each of the named executive officersNEOs is based on a percentage of the executive’s base salary in the first year of the performance period, adjusted for promotion-related salary increases. The percent of base salary for each executive at threshold, target, and maximum performance is shown in the table below:
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | |||
R. Johnson | 62.5% | 250% | 500% | 62.5% | 250% | 500% | |||
L. Peters, S. Jacobs, L. Kimble, and P. Alviti | 18.75% | 75% | 150% | ||||||
L. Peters and S. Jacobs | 25% | 100% | 200% | ||||||
L. Kimble and P. Verma | 18.75% | 75% | 150% |
No amounts would be paid to the executives under the LTIP awards unless the performance goals for the performance measurement period are achieved.
|
The AFG Award is a special long-term incentive equity award covering a three-year performance period—2018-20. The payout structure of the executives’ awards is as follows: (a) for Mr. Johnson, 100% of the award is in the form of PBRSUs, and he would earn a payout following the end of the performance period only if the performance goals are achieved, and (b) for the other NEOs, 75% of the award is in the form of PBRSUs and 25% is in the form of time-based RSUs, payable following the end of the performance period, subject to the achievement of the performance goals with regard to the PBRSUs.
The threshold, target, and maximum number of RSUs for each executive was calculated on the grant date on the basis of that day’s closing stock price of a share of Common Stock. The closing price on the grant date of April 12, 2018 for each of the NEOs was $45.93. Similarly, the grant date fair value of the RSU awards are based on the closing stock price on this grant date. The actual number of RSUs paid out will be based on the Company’s performance compared to targets. The value of the RSUs received by an executive will depend upon the Company’s stock price on the payment date in 2021. No dividends are paid or accrued for the RSUs.
The percentage of achievement of the performance goals at the end of the performance period will be applied to the target number of PBRSUs granted to each of the executives to determine the actual number of PBRSUs that may be earned. If the threshold performance goals are not met, no PBRSUs will be earned or paid out to any executive.
The amounts shown in the table below reflect the estimated payment levels at threshold, target, and maximum performance for the 2018-20 performance measurement period.
Threshold | Target | Maximum | |
Name | ($) | ($) | ($) |
R. Johnson | 1,250,000 | 5,000,000 | 10,000,000 |
L. Peters and L. Kimble | 187,500 | 750,000 | 1,500,000 |
S. Jacobs | 281,250 | 1,125,000 | 2,250,000 |
P. Verma | 140,625 | 562,500 | 1,125,000 |
The amounts shown in the table represents the number of time-based RSUs awarded under the Stock Incentive Plan on the grant date. The award will vest according to the schedule below, provided that the executive remains employed by the Company through the vesting date. No dividends are paid or accrued for RSU awards.
Shares | |||
Name | Grant Date | (#) | Vest Date |
L. Peters and L. Kimble | 04/12/18 | 5,444 | 03/24/21 |
S. Jacobs | 04/12/18 | 8,165 | 03/24/21 |
P. Verma | 04/12/18 | 4,083 | 03/24/21 |
2019 Proxy Statement | 57 |
Executive Compensation
(4) | Stock Option Grants |
The amounts in column (j) reflect the number of stock options granted in 20162018 under the Stock Incentive Plan. The exercise price reflected in column (k) is equal to the closing price of a share of Common Stock on the grant date. In general, no portion of any stock option may be exercised until the first anniversary of its date of grant.grant date. Vested options may be exercised for ten years following the grant date, of grant, unless the option is cancelled or exercised sooner. If the executive retires, becomes disabled, or dies while employed by the Company or one of its subsidiaries, all unexercised options that are then exercisable, plus those options that would have become exercisable on the next anniversary of the grant date, will remain (or become) exercisable as of that date. Options granted in 20162018 will become exercisable upon a participant’s termination of employment on or within 24 months following a Change in Control. In general, options may remain exercisable for up to three years following a participant’s retirement or termination due to disability, and for up to one year for any other termination of employment for reasons other than cause.
The vesting schedule for options granted to the executives in 20162018 is as follows:
Vest Date: | Vest Date: | Vest Date: | Shares | Vest Date: Shares | |||||||||||||||||
Name | Grant Date | Shares (#) | Shares (#) | Shares (#) | Shares (#) | Grant Date | (#) | (#) | (#) | (#) | |||||||||||
R. Johnson | 03/23/16 | 139,380 | 03/23/17: | 46,460 | 03/23/18: | 46,460 | 03/23/19: | 46,460 | 03/28/18 | 91,093 | 03/28/19: | 30,364 | 03/28/20: | 30,364 | 03/28/21: | 30,365 | |||||
L. Peters | 03/23/16 | 28,510 | 03/23/17: | 9,503 | 03/23/18: | 9,503 | 03/23/19: | 9,504 | |||||||||||||
S. Jacobs | 03/23/16 | 28,510 | 03/23/17: | 9,503 | 03/23/18: | 9,503 | 03/23/19: | 9,504 | |||||||||||||
L. Peters and S. Jacobs | 03/28/18 | 20,243 | 03/28/19: | 6,747 | 03/28/20: | 6,748 | 03/28/21: | 6,748 | |||||||||||||
L. Kimble | 03/23/16 | 28,510 | 03/23/17: | 9,503 | 03/23/18: | 9,503 | 03/23/19: | 9,504 | 03/28/18 | 18,219 | 03/28/19: | 6,073 | 03/28/20: | 6,073 | 03/28/21: | 6,073 | |||||
P. Alviti | 03/23/16 | 14,255 | 03/23/17: | 4,751 | 03/23/18: | 4,752 | 03/23/19: | 4,752 | |||||||||||||
P. Verma | 03/28/18 | 12,146 | 03/28/19: | 4,048 | 03/28/20: | 4,049 | 03/28/21: | 4,049 |
RSUs |
The amounts shown in the table under column (i) represent the number of RSUs awarded to the executive under the Stock Incentive Plan on the grant date. The RSU awardsaward will vest according to the schedule below, provided that they remainthe executive remains employed by the Company through the applicable vesting dates.date. No dividends are paid or accrued for RSU awards.
Vest Date: | Vest Date: | |||||||||
Name | Grant Date | Shares (#) | Shares (#) | Shares (#) | ||||||
L. Peters | 03/23/16 | 18,812 | 03/23/19: | 9,406 | 03/23/20: | 9,406 | ||||
S. Jacobs | 03/23/16 | 23,515 | 03/23/19: | 11,757 | 03/23/20: | 11,758 | ||||
L. Kimble | 03/23/16 | 15,677 | 03/23/19: | 15,677 | ||||||
P. Alviti | 03/23/16 | 15,677 | 03/23/19: | 7,838 | 03/23/20: | 7,839 |
Shares | |||
Name | Grant Date | (#) | Vest Date |
R. Johnson | 03/28/18 | 25,123 | 03/28/21 |
L. Peters and S. Jacobs | 03/28/18 | 5,583 | 03/28/21 |
L. Kimble | 03/28/18 | 5,025 | 03/28/21 |
P. Verma | 03/28/18 | 3,350 | 03/28/21 |
|
Executive Compensation
Grant Date Fair Value |
The amounts shown in column (l) reflect the aggregate grant date fair value of the restricted stock, RSU and stock option awards granted in 2016,2018, calculated in accordance with stock-based compensation accounting rules (FASB ASC Topic 718).rules. A discussion of the assumptions used in computing the award values may beare found in Note 21 to our financial statements in our 20162018 Annual Report on Form 10-K. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For option awards, the value is calculated by multiplying the Black-Scholes value by the number of options granted. For RSUs, the fair value is calculated by multiplying the closing price of our Common Stock on the NYSE on the award date by the number of sharesRSUs granted. For the PBRSUs and the performance-based RSUs awardedportion of the AFG Awards granted under the Stock Incentive Plan, in connection with the 2016-17 long-term2018-19 and the 2018-20 performance measurement period,periods, respectively, the fair value is calculated based upon the probable outcome of meeting the performance conditions at the target performance level and multiplying the number of units that would be received at that level by the closing price of a share of our Common Stock on the grant date. This is consistent with the estimate of the aggregate compensation cost to be recognized over the service period determined at the grant date under FASB ASC Topic 718.stock-based compensation accounting rules. All of these values are shown in the table below.
AFG | ||||||||||
Black-Scholes | Black-Scholes | LTIP | Time-Based | AFG PBRSU | Time-Based | |||||
Value for Stock | Performance-Based RSU | Value for Stock | PBRSU Awards | RSU Awards | Awards | RSU Awards | ||||
Options Granted on | Awards Granted on | Options Granted on | Granted on | |||||||
March 23, 2016 | March 23, 2016 | March 28, 2018 | April 12, 2018 | |||||||
Name | ($) | ($) | ($) | |||||||
R. Johnson | 15.78 | — | 12.35 | 44.78 | 45.93 | — | ||||
L. Peters | 15.78 | 63.79 | 12.35 | 44.78 | 45.93 | |||||
S. Jacobs | 15.78 | 63.79 | 12.35 | 44.78 | 45.93 | |||||
L. Kimble | 15.78 | 63.79 | 12.35 | 44.78 | 45.93 | |||||
P. Alviti | 15.78 | 63.79 | ||||||||
P. Verma | 12.35 | 44.78 | 45.93 |
Assuming the maximum performance level, the grant date fair value of the PBRSUs granted for the long-term performance measurement period of 2018-19 would be $5,500,014 for Mr. Johnson; $1,350,027 for Ms. Peters; $1,700,028 for Mr. Jacobs; $975,040 for Mr. Kimble; and $825,027 for Mr. Verma. Assuming the maximum performance level, the grant date fair value of the performance-based AFG awards would be $10,000,017 for Mr. Johnson; $1,500,028 for Ms. Peters; $2,250,019 for Mr. Jacobs; $1,500,028 for Mr. Kimble; and $1,125,009 for Mr. Verma.
58 | |
Executive Compensation
Outstanding Equity Awards at Fiscal Year-End
The following table shows the number of outstanding stock options, both vested and unvested, and the number of unvested shares of restricted stock and RSUs held by the named executive officersNEOs at the end of the 20162018 fiscal year:
Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ( j) | |||||||||||
Equity | |||||||||||||||||||||||||||||
Incentive | |||||||||||||||||||||||||||||
Equity | Plan Awards: | ||||||||||||||||||||||||||||
Equity | Incentive | Market or | Equity | Equity | |||||||||||||||||||||||||
Incentive | Plan Awards: | Payout | Incentive | Incentive | Incentive Plan | ||||||||||||||||||||||||
Number of | Number of | Plan Awards: | Market | Number of | Value of | Plan Awards: | Market | Plan Awards: | Awards: Market | ||||||||||||||||||||
Securities | Securities | Number of | Number | Value of | Unearned | Unearned | Number of | Number | Value of | Number of | or Payout Value | ||||||||||||||||||
Underlying | Underlying | Securities | of Shares | Shares or | Shares, | Shares, | Securities | of Shares | Shares or | Unearned | of Unearned | ||||||||||||||||||
Unexercised | Unexercised | Underlying | or Units | Units of | Units or | Units or | Underlying | or Units | Units of | Shares, Units | |||||||||||||||||||
Options | Options | Unexercised | Option | of Stock | Stock | Other Rights | Other Rights | Unexercised | Option | of Stock | Stock | or Other Rights | |||||||||||||||||
(#) | (#) | Unearned | Exercise | Option | That Have | That Have | That Have | That Have | Options | Unearned | Exercise | Option | That Have | That Have Not | |||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Not Vested | Not Vested | Not Vested | Not Vested | (#) | Options | Price | Expiration | Not Vested | Vested | |||||||||||||||
Name | (1) | (1) | (#) | ($) | Date | (#)(2) | ($)(3) | (#)(2) | ($)(3) | Exercisable(1) | Unexercisable(1) | (#) | ($) | Date | (#)(2) | ($)(3) | (#)(2) | ($)(3) | |||||||||||
R. Johnson | 25,000 | — | — | 9.93 | 03/25/2019 | — | — | — | — | 80,000 | — | 15.10 | 03/23/2020 | — | |||||||||||||||
80,000 | — | — | 15.10 | 03/23/2020 | — | — | — | — | 80,000 | — | 18.84 | 03/23/2021 | — | ||||||||||||||||
80,000 | — | — | 18.84 | 03/23/2021 | — | — | — | — | 49,000 | — | 30.92 | 03/21/2022 | — | ||||||||||||||||
49,000 | — | — | 30.92 | 03/21/2022 | — | — | — | — | 47,000 | — | 34.24 | 03/28/2023 | — | ||||||||||||||||
47,000 | — | — | 34.24 | 03/28/2023 | — | — | — | — | 37,000 | — | 45.08 | 03/26/2024 | — | ||||||||||||||||
24,666 | 12,334 | — | 45.08 | 03/26/2024 | — | — | — | — | 55,000 | — | 56.35 | 12/01/2024 | — | ||||||||||||||||
36,666 | 18,334 | — | 56.35 | 12/01/2024 | — | — | — | — | 207,900 | — | 62.11 | 03/25/2025 | — | ||||||||||||||||
69,300 | 138,600 | — | 62.11 | 03/25/2025 | — | — | — | — | 92,920 | 46,460 | — | 63.79 | 03/23/2026 | — | |||||||||||||||
— | 139,380 | — | 63.79 | 03/23/2026 | — | — | — | — | 47,069 | 94,138 | — | 72.83 | 03/22/2027 | — | |||||||||||||||
— | — | — | — | — | 60,000 | 4,080,600 | — | — | — | 91,093 | — | 44.78 | 03/28/2028 | — | |||||||||||||||
— | — | — | — | — | 18,520 | 1,259,545 | — | — | — | 25,123 | 1,383,272 | — | |||||||||||||||||
— | — | — | — | — | 21,736 | 1,478,265 | — | — | — | — | 9,440 | 519,766 | |||||||||||||||||
— | — | — | — | — | — | — | 20,902 | 1,421,545 | — | — | 15,353 | 845,336 | |||||||||||||||||
— | — | — | — | — | — | — | 64,666 | 4,397,935 | — | — | 27,216 | 1,498,513 | |||||||||||||||||
L. Peters | 25,000 | — | — | 11.66 | 03/26/2018 | — | — | — | — | 40,000 | — | 24.75 | 05/26/2021 | — | |||||||||||||||
25,000 | — | — | 9.93 | 03/25/2019 | — | — | — | — | 44,000 | — | 30.92 | 03/21/2022 | — | ||||||||||||||||
40,000 | — | — | 24.75 | 05/26/2021 | — | — | — | — | 42,000 | — | 34.24 | 03/28/2023 | — | ||||||||||||||||
44,000 | — | — | 30.92 | 03/21/2022 | — | — | — | — | 34,000 | — | 45.08 | 03/26/2024 | — | ||||||||||||||||
42,000 | — | — | 34.24 | 03/28/2023 | — | — | — | — | 32,000 | — | 62.11 | 03/25/2025 | — | ||||||||||||||||
22,666 | 11,334 | — | 45.08 | 03/26/2024 | — | — | — | — | 19,006 | 9,504 | — | 63.79 | 03/23/2026 | — | |||||||||||||||
10,666 | 21,334 | — | 62.11 | 03/25/2025 | — | — | — | — | 10,697 | 21,396 | — | 72.83 | 03/22/2027 | — | |||||||||||||||
— | 28,510 | — | 63.79 | 03/23/2026 | — | — | — | — | — | 20,243 | — | 44.78 | 03/28/2028 | — | |||||||||||||||
— | — | — | — | — | 20,000 | 1,360,200 | — | — | — | 18,812 | 1,035,789 | — | |||||||||||||||||
— | — | — | — | — | 18,812 | 1,279,404 | — | — | — | 5,583 | 307,400 | — | |||||||||||||||||
— | — | — | — | — | 7,657 | 520,753 | — | — | — | 5,444 | 299,747 | — | |||||||||||||||||
— | — | — | — | — | — | — | 5,162 | 351,068 | — | — | 1,738 | 95,694 | |||||||||||||||||
— | — | — | — | — | — | — | 11,905 | 809,659 | — | — | 3,769 | 207,521 | |||||||||||||||||
— | — | 4,083 | 224,810 | ||||||||||||||||||||||||||
S. Jacobs | 8,000 | — | — | 34.24 | 03/28/2023 | — | — | — | — | 8,000 | — | 34.24 | 03/28/2023 | — | |||||||||||||||
12,667 | — | 45.08 | 03/26/2024 | — | |||||||||||||||||||||||||
13,600 | — | 56.35 | 12/01/2024 | — | |||||||||||||||||||||||||
21,000 | — | 62.11 | 03/25/2025 | — | |||||||||||||||||||||||||
6,333 | 6,334 | — | 45.08 | 03/26/2024 | — | — | — | — | 19,006 | 9,504 | — | 63.79 | 03/23/2026 | — | |||||||||||||||
9,066 | 4,534 | — | 56.35 | 12/01/2024 | — | — | — | — | 10,697 | 21,396 | — | 72.83 | 03/22/2027 | — | |||||||||||||||
7,000 | 14,000 | — | 62.11 | 03/25/2025 | — | — | — | — | — | 20,243 | — | 44.78 | 03/28/2028 | — | |||||||||||||||
— | 28,510 | — | 63.79 | 03/23/2026 | — | — | — | — | — | 23,515 | 1,294,736 | — | |||||||||||||||||
— | — | — | — | — | 23,515 | 1,599,255 | — | — | — | 5,583 | 307,400 | — | |||||||||||||||||
— | — | — | — | — | 10,000 | 680,100 | — | — | — | 8,165 | 449,565 | — | |||||||||||||||||
— | — | — | — | — | 9,147 | 622,087 | — | — | — | — | 2,189 | 120,526 | |||||||||||||||||
— | — | — | — | — | — | — | 6,910 | 469,949 | — | — | 4,746 | 261,315 | |||||||||||||||||
— | — | — | — | — | — | — | 14,991 | 1,019,538 | — | — | 6,124 | 337,187 | |||||||||||||||||
L. Kimble | 12,666 | 6,334 | — | 45.08 | 03/26/2024 | — | — | — | — | 19,000 | — | 45.08 | 03/26/2024 | — | |||||||||||||||
7,000 | 14,000 | — | 62.11 | 03/25/2025 | — | — | — | — | 21,000 | — | 62.11 | 03/25/2025 | — | ||||||||||||||||
— | 28,510 | — | 63.79 | 03/23/2026 | — | — | — | — | 19,006 | 9,504 | — | 63.79 | 03/23/2026 | — | |||||||||||||||
— | — | — | — | — | 15,677 | 1,066,193 | — | — | 9,628 | 19,256 | — | 72.83 | 03/22/2027 | — | |||||||||||||||
— | — | — | — | — | 7,250 | 493,073 | — | — | — | 18,219 | — | 44.78 | 03/28/2028 | — | |||||||||||||||
— | — | — | — | — | — | — | 5,093 | 346,375 | — | 15,677 | 863,176 | — | |||||||||||||||||
— | — | — | — | — | — | — | 11,464 | 779,667 | — | 5,025 | 276,677 | — | |||||||||||||||||
P. Alviti | 8,333 | 5,667 | — | 45.08 | 03/26/2024 | — | — | — | — | ||||||||||||||||||||
— | 5,444 | 299,747 | — | ||||||||||||||||||||||||||
— | — | 1,256 | 69,155 | ||||||||||||||||||||||||||
— | — | 2,722 | 149,873 | ||||||||||||||||||||||||||
— | — | 4,083 | 224,810 | ||||||||||||||||||||||||||
P. Verma | 11,346 | — | 73.21 | 08/10/2025 | — | ||||||||||||||||||||||||
5,333 | 10,667 | — | 62.11 | 03/25/2025 | — | — | — | — | 9,503 | 4,752 | — | 63.79 | 03/23/2026 | — | |||||||||||||||
— | 14,255 | — | 63.79 | 03/23/2026 | — | — | — | — | 4,814 | 9,628 | — | 72.83 | 03/22/2027 | — | |||||||||||||||
— | — | — | — | — | 10,000 | 680,100 | — | — | — | 12,146 | — | 44.78 | 03/28/2028 | — | |||||||||||||||
— | — | — | — | — | 15,677 | 1,066,193 | — | — | — | 43,030 | 2,369,232 | — | |||||||||||||||||
— | — | — | — | — | 6,302 | 428,599 | — | — | — | 3,350 | 184,451 | — | |||||||||||||||||
— | — | — | — | — | — | — | 4,053 | 275,645 | — | 4,083 | 224,810 | — | |||||||||||||||||
— | — | — | — | — | — | — | 8,642 | 587,742 | — | — | 2,303 | 126,803 | |||||||||||||||||
— | — | 898 | 49,444 | ||||||||||||||||||||||||||
— | — | 113 | 6,222 | ||||||||||||||||||||||||||
— | — | 57 | 3,138 | ||||||||||||||||||||||||||
— | — | 3,062 | 168,594 |
59 |
Executive Compensation
Notes to Table on Outstanding Equity Awards at Fiscal Year-End
(1) | TheVesting Schedulesfor the options shown in columns (b) and (c) are as follows: |
Total | ||||||||||||
Securities Underlying | ||||||||||||
Vesting Date for 1/3 | Vesting Date for 1/3 | Vesting Date for 1/3 | ||||||||||
Name | Grant Date | of Total Grant | of Total Grant | of Total Grant | ||||||||
R. Johnson | ||||||||||||
80,000 | 03/23/2010 | 03/23/2011 | 03/23/2012 | 03/23/2013 | ||||||||
80,000 | 03/23/2011 | 03/23/2012 | 03/23/2013 | 03/23/2014 | ||||||||
49,000 | 03/21/2012 | 03/21/2013 | 03/21/2014 | 03/21/2015 | ||||||||
47,000 | 03/28/2013 | 03/28/2014 | 03/28/2015 | 03/28/2016 | ||||||||
37,000 | 03/26/2014 | 03/26/2015 | 03/26/2016 | 03/26/2017 | ||||||||
55,000 | 12/01/2014 | 12/01/2015 | 12/01/2016 | 12/01/2017 | ||||||||
207,900 | 03/25/2015 | 03/25/2016 | 03/25/2017 | 03/25/2018 | ||||||||
139,380 | 03/23/2016 | 03/23/2017 | 03/23/2018 | 03/23/2019 | ||||||||
141,207 | 03/22/2017 | 03/22/2018 | 03/22/2019 | 03/22/2020 | ||||||||
03/28/2018 | 03/28/2019 | 03/28/2020 | 03/28/2021 | |||||||||
927,580 | ||||||||||||
L. Peters | ||||||||||||
40,000 | 05/26/2011 | 05/26/2012 | 05/26/2013 | 05/26/2014 | ||||||||
44,000 | 03/21/2012 | 03/21/2013 | 03/21/2014 | 03/21/2015 | ||||||||
42,000 | 03/28/2013 | 03/28/2014 | 03/28/2015 | 03/28/2016 | ||||||||
34,000 | 03/26/2014 | 03/26/2015 | 03/26/2016 | 03/26/2017 | ||||||||
32,000 | 03/25/2015 | 03/25/2016 | 03/25/2017 | 03/25/2018 | ||||||||
28,510 | 03/23/2016 | 03/23/2017 | 03/23/2018 | 03/23/2019 | ||||||||
32,093 | 03/22/2017 | 03/22/2018 | 03/22/2019 | 03/22/2020 | ||||||||
03/28/2018 | 03/28/2019 | 03/28/2020 | 03/28/2021 | |||||||||
272,846 | ||||||||||||
S. Jacobs | 8,000 | 03/28/2013 | 03/28/2014 | 03/28/2015 | 03/28/2016 | |||||||
12,667 | 03/26/2014 | 03/26/2015 | 03/26/2016 | 03/26/2017 | ||||||||
13,600 | 12/01/2014 | 12/01/2015 | 12/01/2016 | 12/01/2017 | ||||||||
21,000 | 03/25/2015 | 03/25/2016 | 03/25/2017 | 03/25/2018 | ||||||||
28,510 | 03/23/2016 | 03/23/2017 | 03/23/2018 | 03/23/2019 | ||||||||
32,093 | 03/22/2017 | 03/22/2018 | 03/22/2019 | 03/22/2020 | ||||||||
03/28/2018 | 03/28/2019 | 03/28/2020 | 03/28/2021 | |||||||||
136,113 | ||||||||||||
L. Kimble | 19,000 | 03/26/2014 | 03/26/2015 | 03/26/2016 | 03/26/2017 | |||||||
21,000 | 03/25/2015 | 03/25/2016 | 03/25/2017 | 03/25/2018 | ||||||||
28,510 | 03/23/2016 | 03/23/2017 | 03/23/2018 | 03/23/2019 | ||||||||
28,884 | 03/22/2017 | 03/22/2018 | 03/22/2019 | 03/22/2020 | ||||||||
03/28/2018 | 03/28/2019 | 03/28/2020 | 03/28/2021 | |||||||||
115,613 | ||||||||||||
P. | 11,346 | |||||||||||
14,255 | 03/23/2016 | 03/23/2017 | 03/23/2018 | 03/23/2019 | ||||||||
14,442 | 03/22/2017 | 03/22/2019 | 03/22/2020 | |||||||||
12,146 | 03/28/2018 | 03/28/2019 | 03/28/2020 | 03/28/2021 | ||||||||
52,189 |
(2) | The vesting dates for the |
60 | |
Executive Compensation
Type | Shares/RSUs | |||||||||
Name | Grant Date | of Award | (#) | Vesting Date | ||||||
R. Johnson | 03/ | 22/2017 | RSU | 9,440 | 03/ | |||||
03/28/2018 | RSU | 15,353 | 03/ | |||||||
03/28/2018 | 25,123 | |||||||||
04/12/2018 | RSU | 27,216 | 03/ | |||||||
L. Peters | 03/23/2016 | RSU | ||||||||
9,406 | 03/23/2019 | |||||||||
03/23/2016 | RSU | 9,406 | 03/23/2020 | |||||||
03/22/2017 | RSU | 1,738 | 03/22/2020 | |||||||
03/28/2018 | RSU | 3,769 | 03/28/2021 | |||||||
03/28/2018 | RSU | 5,583 | 03/28/2021 | |||||||
04/12/2018 | RSU | 4,083 | 03/24/2021 | |||||||
04/12/2018 | RSU | 5,444 | 03/24/2021 | |||||||
S. Jacobs | 03/23/2016 | RSU | ||||||||
11,757 | 03/23/2019 | |||||||||
03/23/2016 | RSU | 11,758 | 03/23/2020 | |||||||
03/22/2017 | RSU | 2,189 | 03/22/2020 | |||||||
03/28/2018 | RSU | 4,746 | 03/28/2021 | |||||||
03/28/2018 | RSU | 5,583 | 03/28/2021 | |||||||
04/12/2018 | RSU | 6,124 | 03/24/2021 | |||||||
04/12/2018 | RSU | 8,165 | 03/24/2021 | |||||||
L. Kimble | 03/23/2016 | RSU | ||||||||
15,677 | 03/23/2019 | |||||||||
03/ | 22/2017 | RSU | 1,256 | 03/ | ||||||
03/ | 28/2018 | RSU | 2,722 | |||||||
03/ | RSU | 5,025 | 03/28/2021 | |||||||
04/12/2018 | RSU | 4,083 | 03/24/2021 | |||||||
04/12/2018 | RSU | 5,444 | 03/24/2021 | |||||||
P. Verma | 03/22/2017 | RSU | 898 | 03/22/2020 | ||||||
09/28/2017 | RSU | 21,515 | 09/28/2020 | |||||||
09/28/2017 | RSU | 21,515 | 09/28/2021 | |||||||
10/01/2017 | RSU | 113 | 10/01/2020 | |||||||
10/01/2017 | RSU | 57 | 10/01/2020 | |||||||
03/28/2018 | RSU | 2,303 | 03/28/2021 | |||||||
03/28/2018 | RSU | 3,350 | 03/28/2021 | |||||||
04/12/2018 | RSU | 3,062 | 03/24/2021 | |||||||
04/12/2018 | RSU | 4,083 | 03/24/2021 |
(3) | Value calculated by multiplying the number of unvested shares or units by the closing price of |
the number of RSUs at | ||
were not earned following the |
the number of RSUs that may be earned at |
61 |
Executive Compensation
Option Exercises and Stock Vested
The following table provides information on the stock options exercised by the named executive officersNEOs during 20162018 and restricted stock and RSU awards that vested during the year:
Options Awards | Stock Awards | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($) | ||||||||||||
R. Johnson | 50,000 | 2,463,500 | 17,190 | 1,120,788 | ||||||||||||
L. Peters | 20,000 | 896,600 | 7,759 | 505,887 | ||||||||||||
S. Jacobs | — | — | 8,817 | 574,868 | ||||||||||||
L. Kimble | 30,667 | 1,149,245 | 26,137 | 1,690,132 | ||||||||||||
P. Alviti | 10,000 | 385,470 | 15,297 | 893,864 |
Options Awards | Stock Awards | ||||
(a) | (b) | (c) | (d) | (e) | |
Number of Shares | Number of Shares | ||||
Acquired on | Value Realized | Acquired on | Value Realized | ||
Exercise | on Exercise | Vesting | on Vesting | ||
Name | (#) | ($) | (#) | ($) | |
L. Peters | 25,000 | 1,048,000 | — | — | |
P. Verma | — | — | 6,830 | 327,635 |
The following table provides the present value of the accumulated benefit payable to each of the named executive officersNEOs and the years of service credited to each of them under the Retirement Plan, the Foot Locker Excess Cash Balance Plan (the “Excess Plan”), and the SERP determined using interest rate and mortality rate assumptions consistent with those used in our 20162018 financial statements:
(a) | (b) | (c) | (d) | (e) | ||||||||||
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | ||||||||||
R. Johnson | Retirement Plan | 18 | 174,383 | — | ||||||||||
Excess Plan | 18 | 619,196 | ||||||||||||
SERP | 14 | 1,859,225 | ||||||||||||
2,652,804 | ||||||||||||||
L. Peters | Retirement Plan | 18 | 186,739 | — | ||||||||||
Excess Plan | 18 | 330,264 | ||||||||||||
SERP | 15 | 1,202,966 | ||||||||||||
1,719,969 | ||||||||||||||
S. Jacobs | Retirement Plan | 17 | 157,065 | — | ||||||||||
Excess Plan | 17 | 309,222 | ||||||||||||
SERP | 8 | 910,138 | ||||||||||||
1,376,425 | ||||||||||||||
L. Kimble | Retirement Plan | 37 | 607,193 | — | ||||||||||
Excess Plan | 37 | 654,606 | ||||||||||||
SERP | 7 | 609,353 | ||||||||||||
1,871,152 | ||||||||||||||
P. Alviti | Retirement Plan | 2 | 16,477 | — | ||||||||||
Excess Plan | 2 | 36,886 | ||||||||||||
SERP | 4 | 306,125 | ||||||||||||
359,488 | ||||||||||||||
|
Executive Compensation
(a) | (b) | (c) | (d) | (e) |
Number of Years | Present Value of | Payments During | ||
Credited Service | Accumulated Benefit | Last Fiscal Year | ||
Name | Plan Name | (#)(1) | ($)(1) | ($) |
R. Johnson | Retirement Plan | 20 | 211,688 | — |
Excess Plan | 20 | 787,763 | ||
SERP | 16 | 2,327,821 | ||
3,327,272 | ||||
L. Peters | Retirement Plan | 20 | 225,859 | — |
Excess Plan | 20 | 402,107 | ||
SERP | 17 | 1,448,356 | ||
2,076,322 | ||||
S. Jacobs | Retirement Plan | 19 | 194,499 | — |
Excess Plan | 19 | 404,670 | ||
SERP | 10 | 1,203,269 | ||
1,802,438 | ||||
L. Kimble | Retirement Plan | 39 | 778,509 | — |
Excess Plan | 39 | 851,214 | ||
SERP | 9 | 752,411 | ||
2,382,134 | ||||
P. Verma | Retirement Plan | 2 | 16,530 | — |
Excess Plan | 2 | 24,613 | ||
SERP | 4 | 219,638 | ||
260,781 |
Notes to Pension Benefits Table
(1) | In general, the present value of accumulated benefits was determined using the same measurement date |
ASC 715 discount rate of |
Retirement age is assumed to be 65 for the Retirement Plan and the Excess Plan; for the SERP, the retirement age is assumed to be when age plus years of service equals 65 for participants in the plan on May 26, 2011 and, for participants in the SERP after this date, when the participant reaches age 55 with 10 years of service; and |
Form of payment for the Retirement Plan and the Excess Plan is a lump sum and form of payment for the SERP is 12 quarterly installments. |
The years of service for the SERP reflect the number of years that the executive has been approved by the Compensation Committee as a participant in that plan.
62 | Foot Locker, Inc. |
Executive Compensation
Defined Benefit Retirement Plans
Foot Locker Retirement Plan
The Retirement Plan is a defined benefit plan with a cash balance formula, which covers eligible employees of the Company and substantially all of its U.S. subsidiaries. All qualified employees who are at least 21 years old with one year of service are covered under the Retirement Plan. Plan participants become fully vested in their benefits under this plan generally upon completion of three years of service or upon reaching normal retirement age (age 65) while actively employed.
Under the cash balance formula, each participant has an account, for record keeping purposes only, to which credits are allocated annually based upon a percentage of the participant’s W-2 Compensation, as defined in the Retirement Plan. This percentage is determined by the participant’s years of service with the Company as of the beginning of each calendar year. The following table shows the percentages used to determine credits for each of the years of service indicated:
Years of Service | Percent of All W-2 Compensation (%) | + | Percent of W-2 Compensation Over $22,000 (%) | |||||
Fewer than 6 | 1.10 | 0.55 | ||||||
6–10 | 1.50 | 0.75 | ||||||
11–15 | 2.00 | 1.00 | ||||||
16–20 | 2.70 | 1.35 | ||||||
21–25 | 3.70 | 1.85 | ||||||
26–30 | 4.90 | 2.45 | ||||||
31–35 | 6.60 | 3.30 | ||||||
More than 35 | 8.90 | 4.45 |
Years of Service | Percent of All W-2 Compensation (%) | + | Percent of W-2 Compensation Over $22,000 (%) |
< 6 | 1.10 | 0.55 | |
6-10 | 1.50 | 0.75 | |
11-15 | 2.00 | 1.00 | |
16-20 | 2.70 | 1.35 | |
21-25 | 3.70 | 1.85 | |
26-30 | 4.90 | 2.45 | |
31-35 | 6.60 | 3.30 | |
> 35 | 8.90 | 4.45 |
In addition, all balances in the participants’ accounts earn interest at the fixed rate of 6%, which is credited annually. At retirement or other termination of employment, an amount equal to the vested balance then credited to the account under the Retirement Plan is payable to the participant in the form of a qualified joint and survivor annuity (if the participant is married) or a life annuity (if the participant is unmarried). The participant may elect to waive the annuity form of benefit and receive benefits under the plan upon retirement in an optional annuity form or an immediate or deferred lump sum, or, upon other termination of employment, in a lump sum. Additional optional forms of payment are available to participants who were participating in the Retirement Plan as of December 31, 1995.
|
Executive Compensation
Foot Locker Excess Cash Balance Plan
The Internal Revenue CodeIRC limits annual retirement benefits that may be paid to, and the compensation that may be taken into account in calculating benefits for, any person under a qualified retirement plan, such as the Retirement Plan. Accordingly, for any person covered by the Retirement Plan whose annual retirement benefit, calculated in accordance with the terms of the Retirement Plan, exceeds the limitations of the Internal Revenue Code,IRC, the Company has adopted the Foot Locker Excess Cash Balance Plan (the “Excess Plan”).Plan. The Excess Plan is an unfunded, nonqualifiednon-qualified benefit plan, under which the individual is paid the difference between the Internal Revenue CodeIRC limitations and the retirement benefit to which he or she would otherwise be entitled under the Retirement Plan.
2019 Proxy Statement | 63 |
Executive Compensation
Early Retirement Eligibility
The Retirement Plan provides for a reduced benefit payment to a participant who retires after reaching early retirement age but prior to normal retirement age. Early retirement age is defined under the Retirement Plan and the Excess Plan as age 55 with at least 5 years of vesting service. OfAll of the named executive officers,NEOs other than Mr. Johnson, Ms. Peters, and Mr. KimbleVerma are currently eligible for early retirement under these plans.
Foot Locker Supplemental Executive Retirement Plan
In addition, the SERP, which is an unfunded, nonqualifiednon-qualified benefit plan, provides for payment by the Company of supplemental retirement, death, and disability benefits to certain executive officers and certain other key employees of the Company and its subsidiaries who participate in this plan. The Compensation Committee sets an annual targeted incentive award under the SERP for each participant consisting of a percentage of salary and bonus based on the Company’s performance against the target. Achievement of the target causes an 8% credit to a participant’s account for that year. The applicable percentage for the year increases or decreases proportionately to the percentage of the Company’s performance in relation to the target, but may not be less than 4% or more than 12% in any year. Participants’ accounts accrue simple interest at the rate of 6% annually.
The named executive officersNEOs and six other executive officers currently participate in the SERP. Participants in the SERP prior to May 26, 2011 are eligible to receive a benefit only if their age plus years of service at retirement equals at least 65. For persons who become participants in the SERP on or after this date, they would be eligible to receive a benefit only if they are at least age 55 at retirement with 10 years of service. Other than Ms. Alviti,Mr. Verma, each of the named executive officersNEOs participated in the SERP on May 26, 2011 and has age plus years of service totaling at least 65. Ms. AlvitiMr. Verma became a participant in the SERP upon herhis employment commencement date in June 2013August 2015 and shehe is not currently vested in the plan.
If a participant’s employment terminates due to death or disability, hethe participant (or histhe participant’s estate) would be entitled to payment of histhe participant’s SERP balance. A participant’s SERP benefit is paid in 12 quarterly installments following retirement, with the first two quarters payable no earlier than six months following retirement. Upon death or disability, a participant’s SERP benefit is paid in a lump sum. For participants in the plan prior to February 2, 2014, the SERP provides for the continuation of medical and dental insurance benefits if an executive meets the applicable age and service requirements when histhe participants’ employment terminates. The benefits would be substantially the same as those benefits to which senior executives are entitled under the Company’s medical and dental plans for active employees. The terminated executive would be required to pay the insurance premium applicable to actively employed senior executives, including any increases in the premiums, and the Company would pay the difference between the actual premium rate and the active employee rate.
64 | |
Executive Compensation
Nonqualified Deferred Compensation
(a) | (b) | (c) | (d) | (e) | (f) | |||||||||||||||
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($)(1) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | |||||||||||||||
R. Johnson | — | 1,298,194 | — | — | 2,444,816 | |||||||||||||||
L. Peters | — | 320,574 | — | — | 665,719 | |||||||||||||||
S. Jacobs | — | 430,371 | — | — | 842,712 | |||||||||||||||
L. Kimble | — | 317,244 | — | — | 644,062 | |||||||||||||||
P. Alviti | — | 251,691 | — | — | 535,748 |
|
Executive Compensation
Potential Payments Upon Termination or Change in Control
The executives’NEOs’ employment agreements and certain of the plans and programs that executivesthe NEOs participate in require the Company to pay compensation to the executivesNEOs if their employment terminates under certain circumstances. The estimated amountEstimates of the compensation, benefits, and vesting of restricted stock, RSUs, and stock optionsequity grants that may be payable to the named executive officers followingNEOs upon termination of their employment or change in control, including amounts already vested, is statedare included in the tables below. These estimates reflect that no LTIP payouts were earned for the 2016-17 or 2017-18 performance measurement periods. The information in the tables assumes a termination date of January 28, 2017.February 2, 2019. At the close of trading on February 2, 2019, our stock price was $55.06 per share.
Richard A. Johnson
Reason for Termination | Severance Payment ($) | Vesting of RS, RSUs and Options ($) | LTIP Payout Eligibility ($) | SERP Benefit ($) | Excess Cash Balance Plan Benefit ($) | Continuation of Health Benefits ($) | Senior Executive Life Insurance ($) | Total ($) | ||||||||||||||||||||||||
By Company Without Cause or By Executive if Company Breaches Employment Agreement | 4,712,375 | 1,421,545 | — | 1,945,883 | 534,989 | 899,958 | — | 9,514,750 | ||||||||||||||||||||||||
(1) | (2) | (3) | (4) | |||||||||||||||||||||||||||||
Executive Resigns Before End of Term | — | — | — | 1,945,883 | 534,989 | 899,958 | — | 3,380,830 | ||||||||||||||||||||||||
(3) | (4) | |||||||||||||||||||||||||||||||
Following Change in Control: By Executive for Good Reason or By Company Without Cause | 5,525,000 | 11,241,956 | 3,132,316 | 1,945,883 | 534,989 | 899,958 | — | 23,280,102 | ||||||||||||||||||||||||
(6) | (7) | (8) | (9) | (3) | (4) | (5) | ||||||||||||||||||||||||||
Disability | — | 10,440,963 | 3,132,316 | 1,945,883 | 534,989 | 899,958 | — | 16,954,109 | ||||||||||||||||||||||||
(10) | (11) | (12) | (4) | (5)(13) | ||||||||||||||||||||||||||||
Death | — | 10,440,963 | 3,132,316 | 1,945,883 | 534,989 | — | 1,100,000 | 17,154,151 | ||||||||||||||||||||||||
(10) | (11) | (12) | (4) | (14) | ||||||||||||||||||||||||||||
Retirement | — | 5,100,818 | 3,132,316 | 1,945,883 | 534,989 | 899,958 | — | 11,613,964 | ||||||||||||||||||||||||
(15) | (11) | (3) | (4) | (5) | ||||||||||||||||||||||||||||
Cause | — | — | — | — | 534,989 | — | — | 534,989 | ||||||||||||||||||||||||
(4) |
Payments | ||||||||||||||||||||
Time-Based RSUs, | Excess Cash | |||||||||||||||||||
PBRSUs, and | Balance | Health | Life | |||||||||||||||||
Severance | Options | SERP | Plan | Benefits | Insurance | Total | ||||||||||||||
Termination Event | ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | |||||||||||||
R. Johnson | ||||||||||||||||||||
By Company w/o Cause | 4,084,000 | (5) | 4,625,125 | (6) | 2,449,041 | 726,666 | 721,705 | — | 12,606,537 | |||||||||||
By Executive For Good Reason | 4,084,000 | (5) | 4,625,125 | (6) | 2,449,041 | 726,666 | 721,705 | — | 12,606,537 | |||||||||||
Resignation | — | — | 2,449,041 | 726,666 | 721,705 | — | 3,897,412 | |||||||||||||
Change in Control(7) | 6,625,000 | (8) | 6,008,398 | (9) | 2,449,041 | 726,666 | 721,705 | — | 16,530,810 | |||||||||||
Disability | — | 5,384,104 | (10) | 2,449,041 | 726,666 | 721,705 | — | 9,281,516 | ||||||||||||
Death | — | 5,384,104 | (10) | 2,449,041 | 726,666 | — | 1,100,000 | 9,659,811 | ||||||||||||
Retirement | — | 2,002,814 | (11) | 2,449,041 | 726,666 | 721,705 | — | 5,900,226 | ||||||||||||
Cause | — | — | — | 726,666 | — | — | 726,666 | |||||||||||||
L. Peters | ||||||||||||||||||||
By Company w/o Cause | 1,012,500 | (12) | — | 1,523,777 | 345,211 | 874,219 | — | 3,755,707 | ||||||||||||
By Executive for Good Reason | 1,012,500 | (12) | 69,359 | (13) | 1,523,777 | 345,211 | 874,219 | — | 3,825,066 | |||||||||||
Resignation | — | — | 1,523,777 | 345,211 | 874,219 | — | 2,743,207 | |||||||||||||
Change in Control(7) | 1,856,250 | (8) | 2,565,768 | (9) | 1,523,777 | 345,211 | 874,219 | — | 7,165,225 | |||||||||||
Disability | — | 2,427,029 | (10) | 1,523,777 | 345,211 | 874,219 | — | 5,170,236 | ||||||||||||
Death | — | 2,427,029 | (10) | 1,523,777 | 345,211 | — | 675,000 | 4,971,017 | ||||||||||||
Retirement | — | 484,346 | (11) | 1,523,777 | 345,211 | 874,219 | — | 3,227,553 | ||||||||||||
Cause | — | — | — | 345,211 | — | — | 345,211 | |||||||||||||
S. Jacobs | ||||||||||||||||||||
By Company w/o Cause | 1,275,000 | (12) | — | 1,265,928 | 335,514 | 1,038,844 | — | 3,915,286 | ||||||||||||
By Executive for Good Reason | 1,275,000 | (12) | 69,359 | (13) | 1,265,928 | 335,514 | 1,038,844 | — | 3,984,645 | |||||||||||
Resignation | — | — | 1,265,928 | 335,514 | 1,038,844 | — | 2,640,286 | |||||||||||||
Change in Control(7) | 2,337,500 | (8) | 3,231,938 | (9) | 1,265,928 | 335,514 | 1,038,844 | — | 8,209,724 | |||||||||||
Disability | — | 3,093,199 | (10) | 1,265,928 | 335,514 | 1,038,844 | — | 5,733,485 | ||||||||||||
Death | — | 3,093,199 | (10) | 1,265,928 | 335,514 | — | 850,000 | 5,544,641 | ||||||||||||
Retirement | — | 591,934 | (11) | 1,265,928 | 335,514 | 1,038,844 | 3,232,220 | |||||||||||||
Cause | — | — | — | 335,514 | — | — | 335,514 | |||||||||||||
L. Kimble(14) | ||||||||||||||||||||
By Company w/o Cause | 975,000 | (12) | — | 791,591 | 782,368 | 721,705 | — | 3,270,664 | ||||||||||||
By Executive for Good Reason | 975,000 | (12) | 62,430 | (13) | 791,591 | 782,368 | 721,705 | — | 3,333,094 | |||||||||||
Resignation | — | — | 791,591 | 782,368 | 721,705 | — | 2,295,664 | |||||||||||||
Change in Control(7) | 1,787,500 | (8) | 2,226,356 | (9) | 791,591 | 782,368 | 721,705 | — | 6,309,520 | |||||||||||
Disability | — | 2,101,495 | (10) | 791,591 | 782,368 | 721,705 | — | 4,397,159 | ||||||||||||
Death | — | 2,101,495 | (10) | 791,591 | 782,368 | — | 650,000 | 4,325,454 | ||||||||||||
Retirement | — | 362,150 | (11) | 791,591 | 782,368 | 721,705 | — | 2,657,814 | ||||||||||||
Cause | — | — | — | 782,368 | — | — | 782,368 | |||||||||||||
P. Verma | ||||||||||||||||||||
By Company w/o Cause | 825,000 | (12) | — | 178,053 | 15,427 | — | — | 1,018,480 | ||||||||||||
By Executive for Good Reason | 825,000 | (12) | 41,613 | (13) | 178,053 | 15,427 | — | — | 1,060,093 | |||||||||||
Resignation | — | — | 178,053 | 15,427 | — | — | 193,480 | |||||||||||||
Change in Control(7) | 1,512,500 | (8) | 3,381,770 | (9) | 178,053 | 15,427 | — | — | 5,087,750 | |||||||||||
Disability | — | 3,298,523 | (10) | 178,053 | 15,427 | — | — | 3,492,003 | ||||||||||||
Death | — | 3,298,523 | (10) | 178,053 | 15,427 | — | 550,000 | 4,042,003 | ||||||||||||
Cause | — | — | — | 15,427 | — | — | 15,427 |
Notes to Table on Richard A. Johnson
2019 Proxy Statement | |
65 |
|
Executive Compensation
This amount is the total benefit payable under the |
Benefit payable as of |
(4) | Senior executive life insurance is payable following death in a lump sum to the executive’s beneficiary. |
(5) | This severance amount includes the following items provided for under Mr. Johnson’s employment agreement: |
Salary continuation for 24 months. Payment of the first twelve months of salary continuation would be made in a lump sum within 10 days following the six-month anniversary of termination, and the remaining payments would then be made on a monthly basis beginning on the twelve-month anniversary of termination ($2,200,000).
Annual Bonus for Year of Termination. For the fiscal year in which termination occurs, payment of the annual bonus that would have otherwise been earned if such termination had not occurred, pro rated as of the Termination Date, to be paid at the same time as other annual bonuses for the fiscal year in which the termination occurs ($1,859,000).
Outplacement. The approximate cost of one year of outplacement services ($25,000).
(6) | Pro Rata Payment of any Unearned LTIP and AFG Awards. Pursuant to Mr. Johnson’s employment agreement, with respect to any non-completed performance period during which termination occurs, payment of any LTIP and AFG awards that would have otherwise been earned if such termination had not occurred, as pro rated through the termination date. The amount shown includes the sum of the value of the PBRSUs that the executive would have been entitled to receive under the (A) LTIP based on the pro rated target level achievement of the performance goals for the 2018-19 performance measurement period (30,706 PBRSUs); and (B) AFG based on the pro rated target level achievement of the performance goals for the 2018-20 performance measurement period (36,288 PBRSUs). The PBRSUs would become immediately vested and payable. The PBRSUs were valued at $55.06. |
Payment of any Earned and Unvested LTIP Award and Vesting of Stock Options. Pursuant to Mr. Johnson’s employment agreement, with respect to any completed performance period during which termination occurs, payment of any LTIP award that is earned and unvested as of the termination date. The amount shown includes the intrinsic value on February 2, 2019 of 231,691 stock options that would vest.
(7) | This covers termination by the Company without Cause or by the executive for Good Reason during the two-year period following a Change in | |
(8) | The severance amount equals two times the sum of the executive’s annual salary plus annual bonus at target under the Annual Bonus Plan or other annual incentive plan applicable to the executive. With respect to Mr. Johnson, it also includes the approximate cost of one year of outplacement services ($25,000). |
(9) | The amount shown represents the sum of the (A) value of |
LTIP | AFG | |||
Time-Based RSUs | PBRSUs | PBRSUs | Stock Options | |
(#) | (#) | (#) | (#) | |
R. Johnson | 25,123 | 30,706 | 36,288 | 231,691 |
L. Peters | 29,839 | 7,537 | 5,444 | 51,143 |
S. Jacobs | 37,263 | 9,491 | 8,165 | 51,143 |
L. Kimble | 26,146 | 5,444 | 5,444 | 46,979 |
P. Verma | 50,463 | 4,606 | 4,083 | 26,526 |
(10) | The amount shown represents the sum of the (A) value of |
66 | Foot Locker, Inc. |
Executive Compensation
the stock options that would vest. The PBRSUs would be paid out at the same time as the payouts are made to the other participants in the plan for this performance period in 2021. The time-based RSUs and PBRSUs were valued at $55.06. The actual value of the time-based RSUs to the executive would depend upon the Company’s stock price on the payout date in 2021.
LTIP | AFG | |||
Time-Based RSUs | PBRSUs | PBRSUs | Stock Options | |
(#) | (#) | (#) | (#) | |
R. Johnson | 25,123 | 30,706 | 36,288 | 123,893 |
L. Peters | 29,839 | 7,537 | 5,444 | 26,947 |
S. Jacobs | 37,263 | 9,491 | 8,165 | 26,947 |
L. Kimble | 26,146 | 5,444 | 5,444 | 25,204 |
P. Verma | 50,463 | 4,606 | 4,083 | 13,614 |
(11) | The amount shown represents the sum of the (A) value of the PBRSUs that the executive would have been entitled to receive under the LTIP based on the target level achievement of the performance goals for the 2018-19 performance period, pro rated to the termination date; and (B) intrinsic value on February 2, 2019 of the stock options that would vest. The RSUs would be paid out at the same time as the payouts are made to the other participants in the plan |
|
Executive Compensation
LTIP | ||
PBRSUs | Stock Options | |
(#) | (#) | |
R. Johnson | 30,706 | 123,893 |
L. Peters | 7,537 | 26,947 |
S. Jacobs | 9,491 | 26,947 |
L. Kimble | 5,444 | 25,204 |
P. Verma | 4,606 | 13,614 |
(12) | |
|
Executive Compensation
Lauren B. Peters
Reason for Termination | Severance Payment ($) | Vesting of RS, RSUs and Options ($) | LTIP Payout Eligibility ($) | SERP Benefit ($) | Excess Cash Balance Plan Benefit ($) | Continuation of Health Benefits ($) | Senior Executive Life Insurance ($) | Total ($) | ||||||||
By Company Without Cause | 1,012,500 | — | — | 1,259,037 | 262,086 | 1,051,962 | — | 3,585,585 | ||||||||
(1) | (2) | (3) | (4) | |||||||||||||
By Executive for Good Reason | 1,012,500 | 362,921 | — | 1,259,037 | 262,086 | 1,051,962 | — | 3,948,506 | ||||||||
(1) | (5) | (2) | (3) | (4) | ||||||||||||
Executive Resigns Before End of Term | — | — | — | 1,259,037 | 262,086 | 1,051,962 | — | 2,573,085 | ||||||||
(2) | (3) | (4) | ||||||||||||||
Following Change in Control: By Executive for Good Reason or By Company Without Cause | 1,856,250 | 4,219,928 | 792,282 | 1,259,037 | 262,086 | 1,051,962 | — | 9,441,545 | ||||||||
(6) | (7) | (8) | (9) | (2) | (3) | (4) | ||||||||||
Disability | — | 4,076,784 | 792,282 | 1,259,037 | 262,086 | 1,051,962 | — | 7,442,151 | ||||||||
(10) | (11) | (12) | (3) | (4)(13) | ||||||||||||
Death | — | 4,076,784 | 792,282 | 1,259,037 | 262,086 | — | 675,000 | 7,065,189 | ||||||||
(10) | (11) | (12) | (3) | (15) | ||||||||||||
Retirement | — | 1,437,180 | 792,282 | 1,259,037 | 262,086 | 1,051,962 | — | 4,802,547 | ||||||||
(14) | (11) | (2) | (3) | (4) | ||||||||||||
Cause | — | — | — | — | 262,086 | — | — | 262,086 | ||||||||
(3) |
Notes to Table on Lauren B. Peters
The severance amount equals one-and-a-half times the executive’s annual | |
The amount shown represents the intrinsic value on |
(#) | |
S. Jacobs | 26,947 |
L. Kimble | 25,204 |
P. Verma | 13,614 |
|
Executive Compensation
(14) | |
|
Executive Compensation
Stephen D. Jacobs
Reason for Termination | Severance Payment ($) | Vesting of RS, RSUs and Options ($) | LTIP Payout Eligibility ($) | SERP Benefit ($) | Excess Cash Balance Plan Benefit ($) | Continuation of Health Benefits ($) | Senior Executive Life Insurance ($) | Total ($) | ||||||||
By Company Without Cause | 1,275,000 | — | — | 952,559 | 235,467 | 1,216,148 | — | 3,679,174 | ||||||||
(1) | (2) | (3) | (4) | |||||||||||||
By Executive for Good Reason | 1,275,000 | 279,508 | — | 952,559 | 235,467 | 1,216,148 | — | 3,958,682 | ||||||||
(1) | (5) | (2) | (3) | (4) | ||||||||||||
Executive Resigns Before End of Term | — | — | — | 952,559 | 235,467 | 1,216,148 | — | 2,404,174 | ||||||||
(2) | (3) | (4) | ||||||||||||||
Following Change in Control: By Executive for Good Reason or By Company Without Cause | 2,337,500 | 4,172,525 | 968,900 | 952,559 | 235,467 | 1,216,148 | — | 9,883,099 | ||||||||
(6) | (7) | (8) | (9) | (2) | (3) | (4) | ||||||||||
Disability | — | 4,051,017 | 968,900 | 952,559 | 235,467 | 1,216,148 | — | 7,424,091 | ||||||||
(10) | (11) | (12) | (3) | (4)(13) | ||||||||||||
Death | — | 4,051,017 | 968,900 | 952,559 | 235,467 | — | 850,000 | 7,057,943 | ||||||||
(10) | (11) | (12) | (3) | (14) | ||||||||||||
Cause | — | — | — | — | 235,467 | — | — | 235,467 | ||||||||
(3) |
Notes to Table on Stephen D. Jacobs
|
Executive Compensation
|
Executive Compensation
Lewis P. Kimble
Reason for Termination | Severance Payment ($) | Vesting of RS, RSUs and Options ($) | LTIP Payout Eligibility ($) | SERP Benefit ($) | Excess Cash Balance Plan Benefit ($) | Continuation of Health Benefits ($) | Senior Executive Life Insurance ($) | Total ($) | ||||||||||||||||||||||||
By Company Without Cause | 975,000 | — | — | 637,755 | 563,176 | 899,958 | — | 3,075,889 | ||||||||||||||||||||||||
(1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||||||||
By Executive for Good Reason | 975,000 | 226,643 | — | 637,755 | 563,176 | 899,958 | — | 3,302,532 | ||||||||||||||||||||||||
(1) | (2) | (6) | (3) | (4) | (5) | |||||||||||||||||||||||||||
Executive Resigns Before End of Term | — | — | — | 637,755 | 563,176 | 899,958 | — | 2,100,889 | ||||||||||||||||||||||||
(3) | (4) | (5) | ||||||||||||||||||||||||||||||
Following Change in Control: By Executive for Good Reason or By Company Without Cause | 1,787,500 | 2,448,708 | 735,660 | 637,755 | 563,176 | 899,958 | — | 7,072,757 | ||||||||||||||||||||||||
(1)(6) | (8) | (9) | (10) | (3) | (4) | (5) | ||||||||||||||||||||||||||
Disability | — | 2,327,200 | 735,660 | 637,755 | 563,176 | 899,958 | — | 5,163,749 | ||||||||||||||||||||||||
(1) | (11) | (12) | (13) | (4) | (5)(14 | ) | ||||||||||||||||||||||||||
Death | — | 2,327,200 | 735,660 | 637,755 | 563,176 | — | 650,000 | 4,913,791 | ||||||||||||||||||||||||
(1) | (11) | (12) | (13) | (4) | (16) | |||||||||||||||||||||||||||
Retirement | — | 1,261,211 | 735,660 | 637,755 | 563,176 | 899,958 | — | 4,097,760 | ||||||||||||||||||||||||
(1) | (15) | (12) | (3) | (4) | (5) | |||||||||||||||||||||||||||
Cause | — | — | — | — | 563,176 | — | — | 563,176 | ||||||||||||||||||||||||
(4) |
Notes to Table onLewis P. Kimble
|
Executive Compensation
|
Executive Compensation
Paulette R. Alviti
Reason for Termination | Severance Payment ($) | Vesting of RS, RSUs and Options ($) | LTIP Payout Eligibility ($) | SERP Benefit ($) | Excess Cash Balance Plan Benefit ($) | Senior Executive Life Insurance ($) | Total ($) | |||||||||||||||||||||
By Company Without Cause | 735,000 | — | — | 256,730 | 23,172 | — | 1,014,902 | |||||||||||||||||||||
(1) | (2) | (3 | ) | |||||||||||||||||||||||||
By Executive for Good Reason | 735,000 | 181,458 | — | 256,730 | 23,172 | — | 1,196,360 | |||||||||||||||||||||
(1) | (4) | (2) | (3) | |||||||||||||||||||||||||
Executive Resigns Before End of Term | — | — | — | 256,730 | 23,172 | — | 279,902 | |||||||||||||||||||||
(2 | ) | (3) | ||||||||||||||||||||||||||
Following Change in Control: By Executive for Good Reason or By Company Without Cause | 1,225,000 | 2,919,297 | 627,623 | 256,730 | 23,172 | — | 5,051,822 | |||||||||||||||||||||
(5) | (6) | (7) | (8 | ) | (2) | (3) | ||||||||||||||||||||||
Disability | — | 2,778,930 | 627,623 | 256,730 | 23,172 | — | 3,686,455 | |||||||||||||||||||||
(9) | (10 | ) | (11) | (3) | ||||||||||||||||||||||||
Death | — | 2,778,930 | 627,623 | 256,730 | 23,172 | 490,000 | 4,176,455 | |||||||||||||||||||||
(9) | (10 | ) | (11) | (3) | (12) | |||||||||||||||||||||||
Cause | — | — | — | — | 23,172 | — | 23,172 | |||||||||||||||||||||
(3) |
Notes to Table on Paulette R. Alviti
|
Executive Compensation
|
Executive Compensation
Trust Agreement for Certain Benefit PlansCEO Pay Ratio
The Company has establishedfollowing information is a trustreasonable good faith estimate calculated in a manner consistent with the SEC pay ratio rules and methods for certain benefit plans, arrangements, and agreements, includingdisclosure. The SEC rules do not specify a single methodology for identification of the SERP,median employee or calculation of the Foot Locker Excess Cash Balance Plan, the executive employment agreements,CEO pay ratio, and other benefit plans, agreementscompanies may use different assumptions, adjustments, exclusions, or arrangements thatestimates in calculating their CEO pay ratio. Accordingly, CEO pay ratio disclosures may involve a degree of imprecision and may be covered atinconsistent in methodology among different companies. Therefore, the CEO pay ratio disclosed by other companies may not be comparable to the Company’s CEO pay ratio as disclosed below. Using the methodology described below, our CEO pay ratio based on fiscal year 2018 compensation is approximately 1,627:1.
To calculate our CEO pay ratio, we used the same median employee identified as of December 31, 2017. We believe there have been no changes in our employee population or our compensation arrangements in 2018 that would result in a later date (collectively, the “Benefit Obligations”). Under the trust agreement, if theresignificant change in our pay ratio disclosure or our median employee.
We are a global retailer and approximately 70% of our employees are part-time employees. Our median employee is a Changepart-time sales associate who worked an average of 16 hours per week in Controlone of our stores in Hawaii, and whose annual compensation was $8,241 in fiscal year 2018. Our Chief Executive Officer’s compensation during the Company (as definedsame time period was $13,411,422, including $9,446 for a health care benefit under a plan that is available generally to all salaried employees, which is not required to be reported as compensation for our Chief Executive Officer in the Trust agreement), the trustee would pay to the persons entitled to the Benefit Obligations the amounts to which they may become entitledSummary Compensation Table, as disclosed on pages 52 through 54, under the Benefit Obligations. Upon the occurrence of a Potential Change in Control of the Company as defined in the trust agreement, the Company is required to fund the trust with an amount sufficient to pay the total amount of the Benefit Obligations. Following the occurrence, and during the pendency, of a Potential Change in Control, the trustee would be required to make payments of Benefit Obligations to the extent these payments are not made by the Company.SEC rules. See pages 20 through 24 for additional employee data.
|
Executive Compensation
Equity Compensation Plan Information
The following table provides information as of January 28, 2017February 2, 2019 for compensation plans under which equity securities may be issued:
(a) | (b) | (c) | |||||||
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (#) | ||||||
Equity Compensation Plans Approved bySecurity Holders | 2,806,128 | 42.61 | 14,606,311 | (1)(2) | |||||
Equity Compensation Plans Not Approved bySecurity Holders | — | — | — | ||||||
Total | 2,806,128 | 42.61 | 14,606,311 |
(a) | (b) | (c) | |||||
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (#) | ||||
Equity Compensation Plans Approved | 2,861,447 | 52.34 | 11,237,742 | (1)(2) | |||
by Security Holders | |||||||
Equity Compensation Plans Not Approved | – | – | – | ||||
by Security Holders | |||||||
Total | 2,861,447 | 52.34 | 11,237,742 |
Notes to Equity Compensation Plan Table
(1) | Includes | |
Participating employees under the |
(2) | The Stock Incentive Plan currently is the only plan under which stock awards may be granted to directors, officers, and other employees of the Company. |
Payouts under the LTIP |
| |
Proposal 2: Ratification of the Appointment of our Independent Registered Public Accounting Firm
The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee conducts an annual evaluation of the independent registered public accounting firm’s qualifications, performance, and independence. The Audit Committee exercises sole authority to approve all audit engagement fees. In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner.
The Audit Committee engages in an evaluation of the lead audit partner and his or her qualifications. In evaluating and selecting the Company’s lead audit partner, the Audit Committee provides selection criteria to KPMG LLP to which KPMG LLP responds with a roster of qualified candidates. Two members of the Audit Committee, along with the Chair of the Committee and the Lead Director, interview the candidates. The Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer also interview the candidates. The Chair of the Committee and lead audit partner meet in executive session. The Chair of the Committee then recommends his selection to the full Audit Committee for its consideration and approval.
The Audit Committee has appointed KPMG LLP as our independent registered public accounting firm for the 20172019 fiscal year. We are asking shareholders at this meeting to ratify this appointment of KPMG LLP for 2017.2019. KPMG LLP has served as our independent registered public accounting firm since 1995. The Audit Committee and the Board believe that the continued retention of KPMG LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. Although ratification is not required by our By-Laws or otherwise, the Board is submitting the appointment of KPMG LLP to our shareholders for ratification because we value our shareholders’ views onregarding this appointment and because we view it as a matter of good corporate governance.governance practice. In the event that shareholders fail to ratify thethis appointment, it will be considered a recommendation to the Board and the Audit Committee to consider the selection ofselecting a different firm. Even if the appointment is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
Representatives of KPMG LLP will be present at the 20172019 Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.
✔ The Board recommends a voteFORProposal 2.3.
Audit and Non-Audit Fees
The following table shows the fees we paid to KPMG LLP for the audit of the Company’s annual financial statements for 20162017 and 2015,2018, as well as the fees billed for other services KPMG LLP provided during these two fiscal years:
Category | 2015 ($) | 2016 ($) | 2017 ($) | 2018 ($) | ||||||||
Audit Fees(1) | 2,908,000 | 3,176,000 | ||||||||||
Audit-Related Fees(2) | 170,000 | 200,000 | ||||||||||
Tax Fees(3) | 253,000 | 240,000 | ||||||||||
Audit Fees(1) | 3,438,000 | 4,378,000 | ||||||||||
Audit-Related Fees(2) | 287,000 | 245,000 | ||||||||||
Tax Fees(3) | 322,000 | 294,000 | ||||||||||
All Other Fees | — | — | – | – | ||||||||
Total | 3,331,000 | 3,616,000 | 4,047,000 | 4,917,000 | ||||||||
Notes to Audit and Non-Audit Fees Table
(1) | Audit fees consisted of professional services provided in connection with the audit of our annual financial statements, reviews of financial statements included in our Quarterly Reports on Form |
|
Proposal 2
(2) | Audit-related fees consisted principally of audits of financial statements of certain employee benefit plans and the Foot Locker |
(3) | Tax fees consisted principally of assistance with matters related to tax compliance. |
2019 Proxy Statement | 69 |
Proposal 3: Ratification of the Appointment of our Independent Registered Public Accounting Firm
Audit Committee Preapproval Policies and Procedures
The Audit Committee has a policy that all audit and non-audit services to be provided by our independent accountants, including services for our subsidiaries and affiliates, are to be approved in advance by the Audit Committee, regardless of the estimated cost for providing such services. Between meetings of the Audit Committee, the Audit Committee has delegated this authority to the Audit Committee Chair. In practice, these fees are normally approved by the Audit Committee Chair and reviewed with the Audit Committee at a subsequent meeting. Management reviews with the Audit Committee at regularly scheduled meetings the total amount and nature of the audit and non-audit services provided by the independent accountants, including services for our subsidiaries and affiliates, since the Audit Committee’s last meeting.
In accordance with the charter adopted by the Board, the Audit Committee assists the Board in fulfilling its oversight responsibilities in the areas of the Company’s accounting policies and practices and financial reporting. The Audit Committee has responsibilityis responsible for appointingthe appointment, compensation, and oversight of the independent registered public accounting firm. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.
The Audit Committee consists of fivefour independent directors named below, as independence is defined under the NYSE rules. All of the Audit Committee members meet the expertise requirements under the NYSE rules.
The Audit Committee held nine meetings in 2016.2018. At its meetings during 2016,2018, the Audit Committee discussed with management, the Company’s independent registered public accounting firm (KPMG LLP), and the Company’s internal auditors the assessment of the Company’s internal control over financial reporting. The Audit Committee also discussed with KPMG its attestation report and opinion on the Company’s internal control over financial reporting contained in the 20162018 Annual Report on Form 10-K. The Audit Committee also regularly meets privately with KPMG LLP, the internal auditors, and the Director of Internal Controls during the year.
The Audit Committee reviewed and discussed with management and KPMG LLP the audited financial statements for the 20162018 fiscal year, which ended January 28, 2017.February 2, 2019. The Audit Committee also discussed with KPMG LLP the matters required to be discussed by applicable Public Company Accounting Oversight Board (the “PCAOB”) standards. The Audit Committee, both with and without management present, discussed and reviewed the results of KPMG’sKPMG LLP’s examination of the financial statements and the overall quality of the Company’s financial reporting.
The Audit Committee engages in an annual evaluation of the independent registered public accounting firm’s qualifications. In evaluating and selecting the Company’s independent registered public accounting firm, the Audit Committee considered, among other things:
● | historical and recent performance of the current independent audit firm; |
● | an analysis of known significant legal or regulatory proceedings related to the firm; |
● | external data on audit quality and performance, including PCAOB reports; |
● | industry experience; |
● | audit fee revenues; |
● | firm capabilities and audit approach; and |
● | the independence, tenure, and partner rotation of the audit firm. |
The Audit Committee also considers the advisability and potential impact of selecting a different independent registered public accounting firm. The Audit Committee obtained from KPMG LLP the written disclosures and the letter required by applicable PCAOB requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with KPMG LLP its independence and any relationships that may affect its objectivity. The Audit Committee also considered whether the non-audit services provided by KPMG LLP to the Company are compatible with maintaining KPMG’sKPMG LLP’s independence. The Audit Committee has satisfied itself that KPMG LLP is independent.
As a result of this evaluation, the Audit Committee approved the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending February 1, 2020, subject to shareholder ratification.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the 20162018 Annual Report on Form 10-K.
Members of the Audit Committee
Guillermo G. Marmol, Chair |
Matthew M. McKenna | Ulice Payne, Jr. | Dona D. Young |
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Proposal 3: Approval of an Amendment to the By-Laws to Adopt Majority Voting in Uncontested Elections of Directors
On November 16, 2016, the Board approved, subject to shareholder approval at the 2017 Annual Meeting, an amendment to Article II, Section 1 of the Company’s By-Laws to provide for majority voting in uncontested director elections, which is a change from the current plurality voting standard. For the reasons described below, the Board believes that it would be in the best interests of the Company and its shareholders to amend our By-Laws to provide for a majority voting standard in uncontested elections of directors at this time.Executive Officers
The Board proposes an amendment to our By-Laws to add a new provision changing the standard for the election of directors in uncontested elections from a plurality voting standard to a majority voting standard, and retaining a plurality standard in contested elections. Article II, Section 1 of the By-Laws is a shareholder-approved by-law, and we would continue to be required to seek our shareholders’ approval for any future amendments to this by-law.
The Board has concluded that the adoption of the proposed majority voting standard in uncontested elections will provide shareholders a greater voice in determining the composition of the Board by giving effect to shareholder votes “against” a director candidate and by requiring a majority of shareholder votes for a candidate to obtain or retain a seat on the Board. The adoption of this standard in uncontested elections is intended to reinforce the accountability of the Board to our shareholders voting in uncontested director elections. If adopted by our shareholders at the 2017 Annual Meeting, the majority vote standard would apply to all future uncontested director elections beginning in 2018.
If this proposal is approved by our shareholders, we expect to retain our director resignation policy, conformed as necessary to reflect the provisions of this proposal. Under New York law, an incumbent director who is not re-elected remains in office until his or her successor is elected, continuing as a “holdover” director. We expect our policy to continue to require an incumbent director who does not receive more votes “for” than “against” his or her election in an uncontested election to submit a written offer of resignation to the Nominating Committee, which will make a recommendation to the Board as to whether or not it should be accepted. The Board will consider the recommendation and decide whether to accept the resignation.
The full text of Article II, Section 1 of the By-Laws, as proposed to be amended, is as follows:
“The number of directors constituting the entire Board of Directors shall be not less than 7 or more than 13, the exact number of directors to be determined from time to time by resolution adopted by a majority of the entire Board of Directors. At each annual meeting of shareholders, directors shall be elected to hold office. A nominee for director shall be elected to the Board of Directors at a meeting of shareholders for the election of directors at which a quorum is present if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of shareholders for which the Secretary of the Corporation determines thattable below shows the number of nominees exceeds the numbershares of Common Stock reported to us as beneficially owned by each of our directors to be electedand NEOs as of March 25, 2019, and by all directors, NEOs, and executive officers as a group as of that date, including shares of Common Stock that they have a right to acquire within 60 days after March 25, 2019 by the date seven days prior to the scheduled mailing dateexercise of the proxy statement for such meeting.”stock options.
The Board recommends a voteFOR Proposal 3.
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Proposal 4: Approval of an Amendment to the Foot Locker Annual Incentive Compensation Plan, as Amended and Restated
The Foot Locker Annual Incentive Compensation Plan, as Amended and Restated (the “Annual Bonus Plan”) was amended on March 22, 2017 by the Compensation Committee, subject to our shareholders’ approval at the 2017 Annual Meeting as to Covered Employees. The Annual Bonus Plan is designed to comply with the requirements of Section 162(m). Under Section 162(m), the Company cannot deduct certain compensation in excess of $1 million paid to each of the chief executive officer and the three other most highly paid executive officers (other than the chief financial officer) of the Company (each, a “Covered Employee”). Certain compensation, including compensation paid based on the achievement of pre-established performance goals, is excluded from this deduction limit if the material terms under which the compensation is to be paid, including the performance goals to be used, are approved by shareholders.
2017 Amendment
We are asking shareholders to approve an amendment to the Annual Bonus Plan to increase the maximum bonus payout to any Covered Employee for any plan year from $3 million to $6 million. If the performance goals are achieved for the 2017 plan year, Mr. Johnson has the opportunity to receive a payout at maximum under this plan of $3.3 million, reflecting his base salary of $1.1 million and a maximum payout of 200% of his annual target award for the plan year. As this potential maximum payout would exceed the current $3 million payout limitation under the plan, we are requesting that shareholders approve an amendment to the plan to increase the payout limitation to $6 million. This would provide the Compensation Committee with flexibility to set increased annual incentive targets to further incent Mr. Johnson and other senior executives, if the committee determined this to be appropriate. When compared with our peer group, a $6 million payout limitation represents the median payout limitation of comparable annual incentive plans. The performance goals are unchanged from 2016 when shareholders last approved the goals. A complete copy of the Annual Bonus Plan, as proposed to be amended, is attached to this Proxy Statement asAppendix A.
Material Features of the Annual Bonus Plan
The following is only a summary of the principal features of the Annual Bonus Plan. This summary is qualified in its entirety by the complete text of the plan. Capitalized terms that are used in this summary but that are not defined here have the meanings contained in the Annual Bonus Plan.
Purpose of the Plan.The purposes of the Annual Bonus Plan are to reinforce corporate, organizational, and business development goals; to promote the achievement of year-to-year financial and other business objectives; to reward the performance of individual officers and other employees in fulfilling their personal responsibilities for year-to-year achievements; and to serve as a qualified performance-based compensation program under Section 162(m) with regard to the Company’s Covered Employees.
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Proposal 4
Administration.The Annual Bonus Plan is administered by the Compensation Committee. Each member of this committee is an “outside director” under Section 162(m). The Committee has the authority to grant awards, determine performance criteria, certify attainment of performance goals, construe and interpret the Annual Bonus Plan and make all other determinations deemed necessaryNo director or advisable for the administration of this plan.
Participation.Participation in the Annual Bonus Plan is limited to those officers and other key employees of the Company, its subsidiaries and divisions, as selected by the Compensation Committee. In determining the persons to whom awards shall be granted, the Compensation Committee takes into account such factors as it considers appropriate to accomplish the purposes of the Annual Bonus Plan. Currently, 449 executives are eligible to participate in the Annual Bonus Plan.
Awards and Payment.Awards under the Annual Bonus Plan relate to a performance period coinciding with the Company’s fiscal year (the “Performance Period”). The individual target award for each participant is expressed as a percentage of Annual Base Salary. Payment for the awards is made only if the performance goals for the Performance Period are achieved and certified by the Compensation Committee and generally only if the participant remains employed by the Company through the Payment Date. Any payments under the plan must be made within two and one-half months following the end of the applicable performance period.
Limit on Payment.As proposed to be amended, payment to a Covered Employee may not exceed $6 million for any performance period.
Performance Goals.The Annual Bonus Plan provides that the Compensation Committee generally has the authority to determine the performance goals that will be in effect for a Performance Period and to determine them for the Covered Employees solely to the extent permitted by Section 162(m). The Compensation Committee also has the authority to incorporate provisions in the performance goals allowing for adjustments in recognition of unusual or non-recurring events affecting the Company or our financial statements or in response to changes in applicable laws, regulations or accounting principles.
The performance goals for the Covered Employees will be determined by the Compensation Committee based on attaining oneNEO beneficially owned 1% or more of the following criteria:total number of outstanding shares as of March 25, 2019. Each person has sole voting and investment power for the number of shares shown unless otherwise noted.
Name | Common Stock Beneficially Owned Excluding Stock Options (#)(a) | Stock Options Exercisable Within 60 Days After 3/25/19 (#) | RSUs and DSUs (#)(b) | Total (#) | |||||
Maxine Clark | 13,150 | — | 1,555 | 14,705 | |||||
Alan D. Feldman | 65,498 | — | 29,834 | 95,332 | |||||
Stephen D. “Jake” Jacobs | 77,449 | 111,919 | — | 189,368 | |||||
Richard A. Johnson | 294,589 | 739,782 | — | 1,034,371 | |||||
Lewis P. Kimble | 39,834 | 93,839 | — | 133,673 | |||||
Guillermo G. Marmol | 32,702 | — | 1,555 | 34,257 | |||||
Matthew M. McKenna | 30,459 | — | 1,555 | 32,014 | |||||
Steven Oakland | 10,816 | — | 3,137 | 13,953 | |||||
Ulice Payne, Jr. | 1,329 | — | 1,555 | 2,884 | |||||
Lauren B. Peters | 143,527 | 248,652 | — | 392,179 | |||||
Cheryl Nido Turpin | 47,941 | — | 46,865 | 94,806 | |||||
Kimberly Underhill | 1,329 | — | 1,555 | 2,884 | |||||
Pawan Verma | 66,189 | 39,277 | — | 105,466 | |||||
Dona D. Young | 42,527 | — | 66,334 | 108,861 | |||||
All 21 directors and executive officers as a group, | 1,036,412 | 1,471,168 | 153,945 | 2,661,525 | (c) | ||||
including the NEOs |
(a) | This column includes shares held in the Company’s 401(k) Plan and, where applicable, executives’ unvested time-based RSUs over which they have sole voting power but no investment power, as follows: |
Name | Unvested RSUs (#) | |
R. Johnson | 25,123 | |
L. Peters | 29,839 | |
S. Jacobs | 37,263 | |
L. Kimble | 26,146 | |
P. Verma | 50,463 |
(b) | This column includes the number of DSUs credited as of March 25, 2019 to the accounts of the directors who elected to defer all or part of their annual retainer fee. The DSUs do not have current voting or investment power. |
(c) | This number represents approximately 2.4% of the shares of Common Stock outstanding at the close of business on March 25, 2019. |
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Proposal 4
Amendment or Termination
Beneficial Ownership of Plan.The Compensation Committee may amend, suspend, or terminate the Annual Bonus Plan, or any part of it, but no amendment that requires shareholder approval in order for the plan to continue to comply with Section 162(m) will be effective unless it is approved by the required vote of our shareholders. Also, no amendment may adversely affect the rights of any participant without the participant’s consent under any awards previously granted under the plan.Company’s Stock
Benefits Not Determinable.Because performance goal criteria may vary from year to year, benefits under the Annual Bonus Plan are not determinable. The Annual Bonus Plan is designed to provide payments only if the performance goals established by the Compensation Committee have been met and the attainmentPersons Owning More Than Five-Percent of the goals has been certified by the Compensation Committee. The payments made to the named executive officers under the Annual Bonus Plan for the 2016 fiscal year are set out in Note 5 to the Summary Compensation Table on Page 50.
The Board recommends a voteFORCompany’s Common Stock Proposal 4.
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Proposal 5: Advisory Approval of Executive Compensation
The Board is asking ourtable below provides information on shareholders to approve, on a nonbinding, advisory basis, the compensationwho beneficially owned more than 5% of our named executive officers,Common Stock as described in this Proxy Statement on Pages 29 through 77. This advisory “Say-on-Pay” vote is required under of December 31, 2018 according to reports filed with the SEC. To the best of our knowledge, there are no other shareholders who beneficially own more than 5% of a class of the Company’s voting securities.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (#) | Percent of Class | ||||
The Vanguard Group, Inc. | 12,206,275 | (a) | 10.81% | (a) | ||
100 Vanguard Boulevard | ||||||
Malvern, Pennsylvania 19355 | ||||||
AQR Capital Management, LLC and | 7,055,107 | (b) | 6.25% | (b) | ||
AQR Capital Management Holdings, LLC | ||||||
Two Greenwich Plaza | ||||||
Greenwich, Connecticut 06830 | ||||||
BlackRock, Inc. | 7,046,767 | (c) | 6.2% | (c) | ||
55 East 52nd Street | ||||||
New York, New York 10055 |
(a) | Reflects shares beneficially owned as of December 31, 2018 according to Amendment No. 8 to Schedule 13G filed with the SEC. As reported in this schedule, The Vanguard Group, an investment adviser, holds sole voting power with respect to 110,211 shares, sole dispositive power with respect to 12,088,690 shares, and shared dispositive power with respect to 117,585 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 97,750 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 30,761 shares as a result of its serving as investment manager of Australian investment offerings. |
(b) | Reflects shares beneficially owned as of December 31, 2018 according to Schedule 13G filed with the SEC. As reported in this schedule, AQR Capital Management, LLC, an investment adviser, is a wholly-owned subsidiary of AQR Capital Management Holdings, LLC. Each of AQR Capital Management, LLC and AQR Capital Management Holdings, LLC holds shared voting power and shared dispositive power with respect to 7,055,107 shares. |
(c) | Reflects shares beneficially owned as of December 31, 2018 according to Amendment No. 9 to Schedule 13G filed with the SEC. As reported in this schedule, BlackRock, Inc., a parent holding company, holds sole voting power with respect to 6,284,554 shares and sole dispositive power with respect to 7,046,767 shares. |
Section 14A16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act. Consistent with the preference expressed by a majority ofAct requires that our shareholders in 2016, we currently hold our Say-on-Pay vote every year. Shareholders will have an opportunity to cast an advisory vote on the frequency of Say-on-Pay votes at least every six years. The next advisory vote on the frequency of the Say-on-Pay vote is expected to occur at the 2022 Annual Meeting.
As described in detail under the CD&A beginning on Page 29, our compensation program is designed to attract, motivate and retain talented executives in order to maintain and enhance the Company’s performance and its return to shareholders. In order to accomplish this, we have a compensation program for our executives, including the nameddirectors, executive officers, that ties pay closely to performance. A significant portion of the compensation provided to the named executive officers is based upon the Company’s performance or the performance of our share price, and we believe this compensation structure closely aligns the interests of our named executive officers with the interests of our shareholders. Thepersons who own more senior an executive’s position, the greater portion of his or her compensation that is tied to performance. We believe you should read the CD&A and the compensation tables beginning on Page 29 and also consider the following factors in determining whether to approve this proposal:
2016 Results.Our 2016 fiscal year was the sixth consecutive year that our sales and profit results represented the highest levels ever achieved in our history as an athletic footwear and apparel business. As a result of our strong performance, we already achieved one of the objectives set in our long-range strategic plan adopted in early 2015, and made significant progress on the others, as shown in the table below:
Financial Metrics | 2015 | 2016 | 2015-20 Long-Term Objectives | ||||||||||
Sales (billions) | $7.4 | $7.8 | $10 | ||||||||||
Sales Per Gross Square Foot | $504 | $515 | $600 | ||||||||||
Adjusted Earnings Before Interest and Taxes (EBIT) Margin* | 12.8 | % | 13.0 | % | 12.5 | % | |||||||
Adjusted Net Income Margin* | 8.2 | % | 8.4 | % | 8.5 | % | |||||||
Return on Invested Capital (ROIC)* | 15.8 | % | 15.1 | % | 17 | % |
Meaningful Stock Ownership Requirements.The Company’s Stock Ownership Guidelines require that the named executive officers hold a significant amountthan 10% of the Company’s Common Stock as a percentagefile reports of their base salaries. Mr. Johnson is required to hold six times his annual base salary; Ms. Peters, Mr. Jacobsownership and Mr. Kimble are required to hold three times their annual base salaries; and Ms. Alviti is required to hold two times her annual base salary. Eachchanges in ownership of the named executive officers currently meets or exceeds these guidelines.
Pay for Performance Culture.Our executive compensation program is designedCompany’s Common Stock with the SEC. Based solely on our review of copies of such forms furnished to reinforce our pay-for-performance culture. Payouts under our Annual Bonus Plan and LTIP are earned only if the Company performs.and written representations that no other reports were required during the 2018 fiscal year, we believe that during the 2018 fiscal year, the persons subject to Section 16(a) reporting complied with all applicable SEC filing requirements, except as previously disclosed in the 2018 Proxy Statement.
72 |
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Proposal 5
Earned PayoutsProposals for Performance.Based upon the Company’s performance, payments were made to the named executive officers under the Annual Bonus Plan for 2016. LTIP payouts were earned for the 2015-16 performance measurement period and will be paid outInclusion in 2018. As described on Page 39 of the CD&A, our LTIP is based on a two-year performance measurement period with an additional one-year vesting period, payable (i) 50% in cash under the LTIP and 50% in RSUs under the Stock Incentive Plan for awards prior to and including the 2015-16 performance measurement period, and (ii) 25% in cash under the LTIP and 75% in RSUs under the Stock Incentive Plan for the 2016-17 performance measurement period, in each case only if the applicable goals are achieved.2020 Proxy Materials
The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as a whole, as described in this Proxy Statement in accordance with the SEC’s compensation disclosure rules. The vote is advisory, which means that the vote is not binding on the Company, our Board or the Compensation Committee. Our Board and the Compensation Committee value the opinions of all of our shareholders. The Compensation Committee will review and consider the results of this advisory vote.
The Board recommends approval of the following resolution:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the Company’s Proxy Statement for the 2017 Annual Meeting pursuant to the SEC’s compensation disclosure rules, including the CD&A, the 2016 Summary Compensation Table, and the other related tables and disclosures.”
The Board recommends a voteFOR Proposal 5.
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Deadlines and Procedures for Nominations and Shareholder Proposals
SEC Rule 14a-8
Under SEC Rule 14a-8, if a shareholder would like us to include a proposal in our proxy statement and form of proxy for the 20182020 Annual Meeting, our Secretary must receive the proposal at our corporate headquarters at 330 West 34th Street, New York, New York 10001 byno later than December 8, 201714, 2019 in order to be considered for inclusion in the 20182020 proxy statement.
Director Nominations for Inclusion in our 2020 Proxy Materials (Proxy Access)
Under our proxy access by-law, a shareholder, or a group of up to 20 shareholders, owning at least 3% of the Company’s outstanding Common Stock continuously for at least three years as of the date of the notice of nomination, may nominate and include in the Company’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater (subject to certain limitations set forth in the By-Laws), provided that the shareholder(s) and nominee(s) satisfy the requirements specified in the By-Laws. Our Secretary must receive the notice of a proxy access nomination for the 2020 Annual Meeting at our corporate headquarters at 330 West 34th Street, New York, New York 10001 no earlier than November 14, 2019 and no later than December 14, 2019. You should carefully review the requirements specified in the Company’s By-Laws, which are available on the corporate governance section of the Company’s corporate website atfootlocker.com/corp. You may also obtain a printed copy of the By-Laws by writing to the Secretary at the Company’s headquarters.
Other Proposals or Nominations for the 2020 Annual Meeting
For any shareholder proposal that is not submitted under SEC Rule 14a-8, including nominations forand any nomination of directors not submitted pursuant to our proxy access by-law provision, our By-Laws describe the procedures that must be followed. Under these procedures, we must receive notice of a shareholder’s intention to introduce a nomination or proposed item of business for an annual meeting not less than 90 days nor more than 120 days before the first anniversary of the prior year’s annual meeting. For the 20182020 Annual Meeting, we must receive this notice no earlier than January 17, 201823, 2020 and no later than February 16, 2018,22, 2020, assuming that our 20182020 Annual Meeting is held on schedule. However, if we hold the 20182020 annual meeting on a date that is not within 3025 days before or after the first anniversary of the prior year’s Annual Meeting, then we must receive the notice no later than ten days after the earlier of the date we first provide notice of the meeting to shareholders or announce it publicly.
Proposals for nomination for directors and other items of business should be addressed to the Secretary, 330 West 34th Street, New York, New York 10001 and must contain the information specified in the Company’s By-Laws, which are available on the corporate governance section of our corporate website atwww.footlocker.com/corpgovfootlocker.com/corp or from the Secretary.
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Questions and Answers about this Annual Meeting and Voting
Q: What is included in these proxy materials?
A:The proxy materials include our 2017 Proxy Statement and 2016 Annual Report on Form 10-K. If you received printed copies of these materials by mail, these materials also include the proxy card for the 2017 Annual Meeting.
Q: May I obtain an additional copy of the 2016 Annual Report on Form 10-K?
A:You may obtain an additional copy of our 2016 Annual Report on Form 10-K without charge by writing to our Investor Relations Department at Foot Locker, Inc., 330 West 34th Street, New York, New York 10001. It is also available free of charge through our corporate website atwww.footlocker.com/corpgov.
Q: What constitutes a quorum for the Annual Meeting?
A:We will have a quorum and will be able to conduct the business of the Annual Meeting if the holders of a majority of the shares outstanding and entitled to vote are present at the meeting, either in person or by proxy. We will count abstentions and broker non-votes, if any, as present and entitled to vote in determining whether we have a quorum.
Q: Who may vote at the Annual Meeting?
A:Only shareholders of record on the books of the Company as of March 20, 2017 (the record date) are entitled to vote at the Annual Meeting and any adjournments or postponements on the items of business described in this Proxy Statement. There were 131,233,011 shares of Common Stock outstanding as of March 20, 2017. Each share of Common Stock is entitled to one vote.
Q: Can I vote shares held in employee plans?
A:If you hold shares of Foot Locker Common Stock through the Foot Locker 401(k) Plan or the Foot Locker Puerto Rico 1165(e) Plan, your proxy card includes the number of shares allocated to your plan account. Your proxy card will serve as a voting instruction card for these shares for the plan trustee to vote the shares. The trustee will vote only those shares for which voting instructions have been given. To allow sufficient time for voting by the trustees of these plans, your voting instructions must be received by 11:59 p.m. EDT on May 14, 2017.
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Questions and Answers
Q: What proposals are shareholders voting on at this meeting and what are the voting recommendations of the Board and the vote requirements to approve the proposals?
A:The proposals that you are being asked to vote on at the Annual Meeting, our Board’s voting recommendations, and the vote required to approve each proposal are as follows:
A: | The proxy materials include our 2019 Proxy Statement and 2018 Annual Report on Form 10-K. If you received printed copies of these materials by mail, these materials also include the proxy card for the 2019 Annual Meeting. |
Q: | May I obtain an additional copy of the 2018 Annual Report on Form 10-K? |
A: | You may obtain an additional copy of our 2018 Annual Report on Form 10-K without charge by writing to our Investor Relations Department at Foot Locker, Inc., 330 West 34th Street, New York, New York 10001. It is also available free of charge through our corporate website atfootlocker.com/corp. |
Q: | What constitutes a quorum for the Annual Meeting? |
A: | We will have a quorum and will be able to conduct the business of the Annual Meeting if the holders of a majority of the shares outstanding and entitled to vote are present at the meeting, either in person or by proxy. We will count abstentions and broker non-votes, if any, as present and entitled to vote in determining whether we have a quorum. |
Q: | Who may vote at the Annual Meeting? |
A: | Only shareholders of record on the books of the Company as of March 25, 2019 (the record date) are entitled to vote at the Annual Meeting and any adjournments or postponements of the meeting on the items of business described in this Proxy Statement. There were 112,310,616 shares of Common Stock outstanding as of March 25, 2019. Each share of Common Stock is entitled to one vote. |
Q: | Can I vote shares held in employee plans? |
A: | If you hold shares of the Company’s Common Stock through the Foot Locker 401(k) Plan or the Foot Locker Puerto Rico 1165(e) Plan, your proxy card includes the number of shares allocated to your plan account. Your proxy card will serve as a voting instruction card for these shares for the plan trustee to vote the shares. The trustee will vote only those shares for which voting instructions have been given. To allow sufficient time for voting by the trustees of these plans, your voting instructions must be received by 11:59 p.m. EDT on May 19, 2019. |
Q: | What proposals are shareholders voting on at this meeting and what are the voting recommendations of the Board and the vote requirements to approve the proposals? |
A: | The proposals that you are being asked to vote on at the Annual Meeting, our Board’s voting recommendations, and the vote required to approve each proposal are as follows: |
Proposal | Board’s Voting Recommendation | Vote Required to Approve | |||||
Elect ten members to the Board to serve for one-year terms | ✔FOR | ||||||
Majority of Votes Cast by Shareholders | |||||||
Approve, on an advisory basis, our NEOs’ compensation | ✔FOR | Majority of Votes Cast by Shareholders | |||||
Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2019 fiscal year | ✔FOR | ||||||
Majority of Votes Cast by Shareholders |
Q: | Could other matters be voted on at the Annual Meeting? |
Q: Could other matters be voted on at the Annual Meeting?
A:We do not know of any other business that will be presented at the 2017
A: | We do not know of any other business that will be presented at the 2019 Annual Meeting. If any other matters are properly brought before the meeting for consideration, then the persons named as proxies will have the discretion to vote on those matters for you using their best judgment. |
74 | Foot Locker , Inc. |
Questions and Answers about this Annual Meeting and Voting
Q: | What happens if I do not vote my shares? |
Q: What happens if I do not vote my shares?
A:This depends on how you hold your shares and the type of proposal. If you hold your shares in “street name,” such as through a bank or brokerage account, it is important that you cast your vote if you want it to count for Proposals 1, 3, 4, and 5.
A: | This depends on how you hold your shares and the type of proposal. If you hold your shares in “street name,” such as through a bank or brokerage account, it is important that you cast your vote if you want it to count for Proposals 1 and 2. If you do not instruct your bank or broker regarding how
Directions By subway Take any of these subway lines: the A, B, C, D, E, F, M, N, Q, R, or W, or the Number 1, 2, or 3 trains to 34th Street. The A, C, E, 1, 2, and 3 trains stop at 34th Street-Penn Station. The B, D, F, M, N, Q, R, and W trains stop at 34th Street-Herald Square. NYC33 is on the north side of 33rd Street between 6th Avenue and 7th
By Order of the Board of Directors Sheilagh M. Clarke Senior Vice President, General Counsel and Secretary
April
Y O U R V O T E I S V E R Y I M P O R T A N T
VOTE BY INTERNET -www.proxyvote.comor scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E19110-P88728 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
FOOT LOCKER, INC.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||
E65654-P16270-Z73729 | KEEP THIS PORTION FOR YOUR RECORDS | |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
FOOT LOCKER, INC. | ||||||||
A | Proposals - The Board of Directors recommends a vote FOR EACH NOMINEE for Director in Proposal 1. | |||||||
1. | Election of Ten Directors to Serve for One-Year Terms. | |||||||
Withhold | ||||||||
1a. | Maxine Clark | |||||||
1b. | Alan D. Feldman | |||||||
1c. | ☐ | |||||||
1d. | ☐ | |||||||
1e. | ☐ | |||||||
1f. | ☐ | |||||||
1g. | ☐ | |||||||
1h. | ☐ | |||||||
1i. | ☐ | |||||||
1j. | ☐ |
The Board of Directors recommends a vote FOR Proposals 2 | For | Against | Abstain | |||||
Advisory Approval of the Company’s Executive Compensation. | ☐ | ☐ | ||||||
Ratification of the Appointment of Independent Registered Public Accounting Firm. | ☐ | |||||||
NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ||||||||
Please indicate if you plan to attend this meeting. | ☐ | |||||||
Yes | No |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] | Date |
Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report with Form 10-K are available atwww.proxyvote.com.
E65655-P16270-Z73729
E19111-P88728
FOOT LOCKER, INC.Annual Meeting of ShareholdersMay 17, 2017 at 9:00 A.M. Eastern Daylight TimeThis proxy is solicited by the Board of Directors of Foot Locker, Inc.
Sheilagh M. Clarke, John A. Maurer, and Lauren B. Peters, or any of them, each with the power of substitution, are hereby authorized to vote the shares of the undersigned at the Annual Meeting of Shareholders of Foot Locker, Inc., to be held on May 17, 2017, at 9:00 A.M., local time, at NYC33, 125 West 33rd Street, New York, New York 10001, and at any adjournment or postponement thereof, upon the matters set forth in Foot Locker, Inc.’s Proxy Statement and upon such other matters as may properly come before the Annual Meeting, voting as specified on the reverse side of this card with respect to the matters set forth in the Proxy Statement, and voting in the discretion of the above-named persons on such other matters as may properly come before the Annual Meeting.
IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE THE SHARES UNLESS YOU SIGN AND RETURN THIS CARD OR VOTE BY TELEPHONE OR INTERNET. YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS.
EMPLOYEE PLANS
IF YOU ARE A PARTICIPANT IN THE FOOT LOCKER 401(k) PLAN OR THE FOOT LOCKER PUERTO RICO 1165(e) PLAN, BY SIGNING AND RETURNING THIS PROXY CARD (OR VOTING BY TELEPHONE OR INTERNET), YOU WILL AUTHORIZE THE PLAN TRUSTEES TO VOTE THOSE SHARES ALLOCATED TO YOUR ACCOUNT AS YOU HAVE DIRECTED.
FOOT LOCKER, INC. Annual Meeting of Shareholders | ||||||||
This proxy is solicited by the Board of Directors of Foot Locker, Inc. | ||||||||
Sheilagh M. Clarke, John A. Maurer, and Lauren B. Peters, or any of them, each with the power of substitution, are hereby authorized to vote the shares of the undersigned at the Annual Meeting of Shareholders of Foot Locker, Inc., to be held on May 22, 2019, at 9:00 A.M., local time, at NYC33, 125 West 33rd Street, New York, New York 10001, and at any adjournment or postponement thereof, upon the matters set forth in Foot Locker, Inc.’s Proxy Statement and upon such other matters as may properly come before the Annual Meeting, voting as specified on the reverse side of this card with respect to the matters set forth in the Proxy Statement, and voting in the discretion of the above-named persons on such other matters as may properly come before the Annual Meeting. | ||||||||
IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE THE SHARES UNLESS YOU SIGN AND RETURN THIS CARD OR VOTE BY TELEPHONE OR INTERNET. YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. | ||||||||
EMPLOYEE PLANS | ||||||||
IF YOU ARE A PARTICIPANT IN THE FOOT LOCKER 401(k) PLAN OR THE FOOT LOCKER PUERTO RICO 1165(e) PLAN, BY SIGNING AND RETURNING THIS PROXY CARD (OR VOTING BY TELEPHONE OR INTERNET), YOU WILL AUTHORIZE THE PLAN TRUSTEES TO VOTE THOSE SHARES ALLOCATED TO YOUR ACCOUNT AS YOU HAVE DIRECTED. | ||||||||
Address Changes/Comments: | ||||||||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | ||||||||
Continued and to be signed on reverse side | ||||||||
VOTING INSTRUCTIONS | ||
As the record holder for your shares, we will vote your shares based on your instructions. | ||
Please provide us with your voting instructions before the meeting. If you do not provide us with your voting instructions, we will vote your shares at our discretion on those proposals we are permitted to vote on by New York Stock Exchange rules. | ||
If you sign and return this form, we will vote any unmarked items based on the board’s recommendations. | ||
If your securities are held by a bank, your securities cannot be voted without your specific instructions. | ||
FOOT LOCKER, INC. | ||||
THIS IS A VOTING INSTRUCTION FORM. | ||||
You are receiving this voting instruction form because you hold shares in theabove Security. You have the right to vote on proposals being presented at theupcoming Annual Meeting to be held on 05/22/19 at 09:00 A.M. EDT | ||||
Make your vote count. | ||||
Vote must be received by05/21/2019to be counted. | ||||
Visit www.ProxyVote.com | Call 1-800-454-8683 | Return this form in the enclosed postage-paid envelope. | Vote in person the day of the meeting. | |
Scan to view materials and vote via smartphone. | ||||
Voting on www.ProxyVote.com is easy and fast! | ||||
Go to www.ProxyVote.com, enter the | ||||
control number above and vote! | ||||
The following proxy material for the meeting are available at www.ProxyVote.com: | ||||
PROXY STATEMENT, ANNUAL REPORT | ||||
X | ||
E74197-P16040 | ||
THIS VOTING INSTRUCTION FORM IS VALID ONLY WHEN SIGNED AND DATED. PLEASE USE BLUE OR BLACK INK AND RETURN ONLY THE BOTTOM PORTION. |
FOOT LOCKER, INC. | |||||
The Board recommends you vote FOR the following proposal(s): 1 through 3 | |||||
1. | Election of Ten Directors to Serve for One-Year Terms. | ||||
Nominees | For | Withhold | |||
1a. | Maxine Clark | ☐ | ☐ | ||
1b. | Alan D. Feldman | ☐ | ☐ | ||
1c. | Richard A. Johnson | ☐ | ☐ | ||
1d. | Guillermo G. Marmol | ☐ | ☐ | ||
1e. | Matthew M. McKenna | ☐ | ☐ | ||
1f. | Steven Oakland | ☐ | ☐ | ||
1g. | Ulice Payne, Jr. | ☐ | ☐ | ||
1h. | Cheryl Nido Turpin | ☐ | ☐ | ||
1i. | Kimberly Underhill | ☐ | ☐ | ||
1j. | Dona D. Young | ☐ | ☐ | ||
Yes | No | ||||
HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household. | ☐ | ☐ |
Signature [PLEASE SIGN WITHIN BOX] | Date |
Please check this box if you plan to attend the Meeting and vote these shares in person. | ☐ | |||
For | Against | Abstain | ||
2. | Advisory Approval of the Company’s Executive Compensation. | ☐ | ☐ | ☐ |
3. | Ratification of the Appointment of Independent Registered Public Accounting Firm. | ☐ | ☐ | ☐ |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | ||||
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side