To the Stockholders of Fossil, Inc.:
NOTICE IS HEREBY GIVEN that the
1. To elect ten (10)A.M.
2. To hold
3.
4. To30, 2023.
5. To vote on a stockholder proposal as described in these materials, if properly presentedquorum may be assured at the Annual Meeting.
6. To transact any You may vote your shares via a toll-free telephone number or over the Internet. Alternatively, if you request or receive a paper copy of the proxy materials by mail, you may vote by signing, dating and all other businessmailing the proxy card in the envelope provided. Voting in one of these ways will ensure that may properly come beforeyour shares are represented at the meeting or any adjournment(s) or postponement(s) thereof.
Annual Meeting. Your proxy will be revoked if you request its revocation in the manner provided in the enclosed proxy statement.
You are cordially invited to attend the meeting. Whether or not you expect to attend the meeting in person, however, you are urged to vote your shares as soon as possible so that your shares of stock may be represented and voted in accordance with your wishes and in order that the presence of a quorum may be assured at the meeting. You may vote your shares via a toll-free telephone number or over the Internet. Alternatively, if you request or receive a paper copy of the proxy materials by mail, you may vote by signing, dating and mailing the proxy card in the envelope provided. Voting in one of these ways will ensure that your shares are represented at the meeting. Your proxy will be returned to you if you are present at the meeting and request its return in the manner provided for revocation of proxies in the enclosed proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
Randy S. HyneVice President,General Counsel and Secretary
April [ • ], 2013Richardson, Texas
Important notice regarding the availability of proxy materials for the annual meeting to be held on May 22, 2013: Our official Notice of Annual Meeting of Stockholders,MATERIALS
| Compensation Decision Making Process | | | | | 32 | | |
| Additional Information | | | | | 33 | | |
| Compensation and Talent Management Committee Report | | | | | 34 | | |
| Compensation and Talent Management Committee Interlocks and Insider Participation | | | | | 34 | | |
| | | | | 35 | | | |
| | | | | 36 | | | |
| Perquisites | | | | | 37 | | |
| Employment Agreements | | | | | 37 | | |
| | | | | 37 | | | |
| 2016 Incentive Plan | | | | | 39 | | |
| 2008 Incentive Plan | | | | | 39 | | |
| | | | | 39 | | | |
| | | | | 40 | | | |
| | | | | 45 | | | |
| Post-Termination Compensation | | | | | 46 | | |
| | | | | 48 | | | |
| Certain Relationships and Related Transactions | | | | | 48 | | |
| PROPOSAL 2: APPROVAL, ON AN ADVISORY BASIS, OF COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS | | | | | 50 | | |
| | | | | 51 | | | |
| PROPOSAL 4: APPROVAL OF THE FOSSIL GROUP, INC. 2023 LONG-TERM INCENTIVE PLAN | | | | | 52 | | |
| | | | | 52 | | | |
| | | | | 53 | | | |
| | | | | 62 | | |
4. To vote on an amendment to the Company's certificate of incorporation to change its corporate name to Fossil Group, Inc.
5. To vote on a stockholder proposal as described in these materials, if properly presented at the Annual Meeting.
6. 30, 2023.
this process will expedite stockholders'stockholders’ receipt of proxy materials, lower the costs of the Annual Meeting and help to conserve natural resources. Each stockholder (other than those who previously requested electronic delivery of all materials or previously elected to receive delivery of a paper copy of the proxy materials) will receive a Notice of Internet Availability of Proxy Materials (the "Proxy Notice")Notice containing instructions on how to access and review the proxy materials, including the Annual Meeting Notice, this proxy statementProxy Statement and ourthe Annual Report,
| 2023 PROXY STATEMENT | | | 1 | |
| 2 | | | WWW.FOSSILGROUP.COM | |
The executive offices of the Company are located at, and the mailing address of the Company is, 901 S. Central Expressway, Richardson, Texas 75080.
This proxy statement (the "Proxy Statement") and form of proxy are being mailed or made available to stockholders on or about April [ • ], 2013. The accompanying Annual Report to Stockholders (the "Annual Report") covering the Company's fiscal year ended December 29, 2012 does not form any part of the materials for solicitation of proxies.
Management does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the Annual Meeting Notice and has no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law and their judgment on such matters.
The cost of preparing, assembling, posting on the Internet, printing and mailing the Proxy Notice, Annual Meeting Notice, Annual Report, this Proxy Statement, and the form of proxy, as well as the reasonable costs of forwarding solicitation materials to the beneficial owners of shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), and other costs of solicitation, will be borne by the Company. Officers and employees of the Company may solicit proxies, either through personal contact or by mail, telephone or other electronic means. These officers and employees will not receive additional compensation for soliciting proxies, but will be reimbursed for out-of-pocket expenses. Brokerage houses and other custodians, nominees, and fiduciaries, with shares of Common Stock registered in their names, will be requested to forward solicitation materials to the beneficial owners of such shares of Common Stock.
With respect to eligible stockholders who share a single address, we are sending only one Proxy Statement or Proxy Notice to that address unless we received instructions to the contrary from any stockholder at that address. This practice, known as "householding," is designed to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate Proxy Statement in the future, he or she may contact Investor Relations, Fossil, Inc., 901 S. Central Expressway, Richardson, Texas 75080 or call (972) 234-2525 and ask for Investor Relations. Eligible stockholders of record receiving multiple copies of our proxy statement can request householding by contacting us in the same manner. Stockholders who own shares through a bank, broker or other nominee can request householding by contacting the nominee.
We hereby undertake to deliver promptly, upon written or oral request, a copy of the Proxy Statement or Proxy Notice to a stockholder at a shared address to which a single copy of the document was delivered. Requests should be directed to the address or phone number set forth above.
The record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 28, 2013 (the "Record Date"). On the Record Date, there were [ • ] shares of Common Stock issued and outstanding.
Each holder of Common Stock is entitled to one vote per share on all matters to be acted upon at the meeting and neither the Company's Third Amended and Restated Certificate of Incorporation (the "Charter") nor its Third Amended and Restated Bylaws (the "Bylaws"), allow for cumulative voting rights. The presence, in person or by proxy, of the holders of a majority of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum to transact business. If a quorum is not present or represented at the Annual Meeting, the stockholders entitled to vote thereat, present in person or by proxy, may adjourn the Annual Meeting from time to time without notice or other announcement until a quorum is present or represented.
Assuming the presence of a quorum, the affirmative vote of the holders of a plurality of the shares of Common Stock voting at the Annual Meeting is required for the election of directors (Proposal 1). However, pursuant to the Company's Corporate Governance Guidelines, in an uncontested election of directors, any nominee for director who has a greater number of votes "withheld" from his or her election than votes "for" such election (a "Majority Withheld Vote") is required to promptly tender his or her resignation following certification of the stockholder vote. The Nominating and Corporate Governance Committee will recommend to the Board of Directors whether to accept such resignation; however, if each member of the Nominating and Corporate Governance Committee received a Majority Withheld Vote at the same election, then the independent directors who did not receive a Majority Withheld Vote shall appoint a committee among themselves and recommend to the Board of Directors whether to accept such resignations. The Board of Directors will act upon such recommendation(s) within 90 days following certification of the stockholder vote.
Assuming the presence of a quorum, the affirmative vote of the holders of a majority of the shares of Common Stock present, in person or by proxy, and entitled to vote on Proposals 2, 3, 4 and 5 is required to approve the compensation of the Company's named executive officers, ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm, approve the amendment to our certificate of incorporation to change our corporate name to Fossil Group, Inc. and approve the stockholder proposal. An automated system administered by an independent third party tabulates the votes. Each proposal is tabulated separately. Abstentions and broker non-votes are each included in the determination of the number of shares present for determining a quorum. Abstentions will have the effect of a vote against Proposals 2, 3, 4 and 5. Abstentions will have no effect with respect to Proposal 1. Broker non-votes will have no effect with respect to Proposals 1, 2, 4 and 5 and are inapplicable to Proposal 3.
You may vote by proxy or in person at the Annual Meeting. We suggest that you vote by proxy even if you plan to attend the meeting. If you are the stockholder of record, you can vote by proxy via a toll-free telephone number, over the Internet or by mail. Please refer to your Proxy Notice or the proxy card included with these proxy materials for instructions on how to access an electronic proxy card to vote on the Internet, vote by telephone, or to receive a paper copy of the proxy materials to vote by mail.
If you are not the record holder of your shares of Common Stock, please follow the instructions provided by your broker, bank or other nominee.
Any stockholder of the Company giving a proxy may revoke the proxy at any time before its exercise by voting in person at the Annual Meeting, by submitting a duly executed proxy bearing a later date by
telephone, via the Internet or by mail or by giving written notice of revocation to the Company addressed to Randy S. Hyne, Vice President, General Counsel and Secretary, Fossil, Inc., 901 S. Central Expressway, Richardson, Texas 75080. No such revocation shall be effective, however, unless the notice of revocation has been received by the Company at or prior to the Annual Meeting.
To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at (972) 234-2525.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's only outstanding class of equity securities is its Common Stock. The following table sets forth information regarding the beneficial ownership of Common Stock as of March 14, 2013 by (i) each Named Executive Officer (as defined in "Compensation Discussion and Analysis"); (ii) each director and director nominee of the Company; (iii) all present executive officers and directors of the Company as a group; and (iv) each other person known to the Company to own beneficially more than five percent (5%) of the Common Stock as of March 14, 2013. The address of each officer and director is c/o Fossil, Inc., 901 S. Central Expressway, Richardson, Texas 75080.
| Shares Beneficially Owned(1)(2) | ||||||
---|---|---|---|---|---|---|---|
Name of Beneficial Owner | Number | Percent | |||||
Darren E. Hart | 10,226 | (3) | * | ||||
Kosta N. Kartsotis | 6,413,039 | (4) | 10.8 | % | |||
Mike Kovar | 46,905 | (5) | * | ||||
Jennifer Pritchard | 35,629 | (6) | * | ||||
Mark D. Quick | 62,780 | (7) | * | ||||
Dennis R. Secor | 3,014 | (8) | * | ||||
John A. White | 4,384 | (9) | * | ||||
Elaine Agather | 3,957 | (10) | * | ||||
Jeffrey N. Boyer | 22,257 | (11) | * | ||||
Diane Neal | 1,938 | (12) | * | ||||
Thomas M. Nealon | 1,787 | (13) | * | ||||
Elysia Holt Ragusa | 9,257 | (14) | * | ||||
Jal S. Shroff | 550,402 | (15) | * | ||||
James E. Skinner | 27,657 | (16) | * | ||||
Michael Steinberg | 11,679 | (17) | * | ||||
Donald J. Stone | 39,653 | (18) | * | ||||
James M. Zimmerman | 18,257 | (19) | * | ||||
All executive officers and directors as a group (19 persons) | 7,302,984 | (20) | 12.3 | % | |||
Brown Advisory Incorporated | 3,266,860 | (21) | 5.5 | % | |||
FMR LLC | 9,000,530 | (22) | 15.2 | % | |||
T. Rowe Price Associates, Inc. | 10,680,023 | (23) | 18.0 | % | |||
The Vanguard Group | 3,098,118 | (24) | 5.2 | % |
or entity holding such securities but are not outstanding for computing the percentage of any other person or entity.
Mutual Funds, for which Price Associates serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. The address of Price Associates is 100 E. Pratt Street, Baltimore, Maryland 21202.
PROPOSAL 1: ELECTION OF DIRECTORS(Proposal 1)
Directors and Nominees
| | NAME | | | | AGE | | | | POSITION | | | | TENURE (YEARS)* | | |
| | Mark R. Belgya | | | | 62 | | | | Director | | | | 5 | | |
| | William B. Chiasson | | | | 70 | | | | Director | | | | 10 | | |
| | Susie Coulter | | | | 57 | | | | Director | | | | 0.5 | | |
| | Kim Harris Jones | | | | 63 | | | | Director | | | | 3.5 | | |
| | Kosta N. Kartsotis | | | | 70 | | | | Chairman of the Board and Chief Executive Officer | | | | 33 | | |
| | Kevin Mansell | | | | 70 | | | | Lead Independent Director | | | | 4 | | |
| | Marc R. Y. Rey | | | | 59 | | | | Director | | | | 3 | | |
| | Gail B. Tifford | | | | 53 | | | | Director | | | | 6 | | |
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Elaine Agather
Jeffrey N. Boyer was appointed to the Board of Directors effective December 20, 2007. Mr. Boyer is currently Chairperson of the Company'sCompany’s Audit Committee and a member of the FinanceCompensation and Talent Management Committee. He hasMr. Belgya served as Executive Vice PresidentChair and Chief OperatingFinancial Officer of 24 Hour Fitness Worldwide, oneThe J.M. Smucker Company (NYSE: SJM), a leading manufacturer and distributor of consumer food, beverage, and pet food products (“Smucker”), from May 2016 until his retirement in September 2020. Mr. Belgya joined Smucker in an internal audit capacity in 1985 and rose through finance positions of increasing responsibility becoming Corporate Controller in 1997, Treasurer in 2001, and Chief Financial Officer in 2005. Prior to joining Smucker, Mr. Belgya was a staff auditor from 1982 until 1985 for
| 2023 PROXY STATEMENT | | | 3 | |
CFO of large organizations, andextensive experience in accounting, finance, capital markets, strategic planning and risk management developed through his CFO and public accounting experience and has been determined by the Board of Directors to meet the qualifications of an "audit“audit committee financial expert"expert” in accordance with SEC rules.
| 4 | | | WWW.FOSSILGROUP.COM | |
Diane L. Neal
Thomas M. Nealonhas over 40 years of retail experience.
Mark D. Quickhas over 25 years of consumer products experience.
Elysia Holt Ragusa was appointed to the Board of Directors effective December 20, 2007. Ms. Ragusa is currently a member of the Company's Compensation Committee and Chairperson of theCompany’s Nominating and Corporate Governance Committee. Ms. Ragusa is also currently the Lead Independent Director and has served in that role since May 2010. Ms. Ragusa currently serves on the Board of Directors of Texas Capital Bancshares Inc. SheTifford has served as Senior Managing Directora partner at True Search, a global platform for talent management products and International Director for Jones Lang LaSalleservices, since July 2008. Jones Lang LaSalle provides integrated real estate and investment management services to owner, occupier and investor clients worldwide. SheMay 2022. Ms. Tifford previously served as Chief Brand Officer for WW International, Inc. (f/k/a Weight Watchers), a global weight management service company, from March 2018 until August 2021. Previously, Ms. Tifford
| 2023 PROXY STATEMENT | | | 5 | |
Jal S. Shroff is formerly an employee of Fossil (East) Limited and servedevolving digital landscape.
| 6 | | | WWW.FOSSILGROUP.COM | |
James E. Skinner was appointed to the Board of Directors effective December 20, 2007. Mr. Skinner is currently a member of the Company's Audit Committee and Chairperson of the Finance Committee. He has served as Executive Vice President, Chief Operating Officer and Chief Financial Officer ofstockholders. The Neiman Marcus Group, Inc., a luxury retailer, since October 2010, and prior to that date had been serving as Executive Vice President and Chief Financial Officer. From 2001 until October 2007, he held the position of Senior Vice President and Chief Financial Officer of The Neiman Marcus Group, Inc. Mr. Skinner served as Senior Vice President and Chief Financial Officer of CapRock Communications Corp. in 2000. Mr. Skinner has extensive leadership experience as CFO of large organizations and experience in accounting, finance, capital markets, strategic planning and risk management developed through his CFO and public accounting experience and has been determined by the Board of Directors to meet the qualifications of an "audit committee financial expert" in accordance with SEC rules.
James M. Zimmerman was appointed to the Board of Directors effective September 5, 2007. Mr. Zimmerman is currently a member of the Company's Finance Committee and Nominating and Corporate Governance Committee. Mr. Zimmerman currently serves as a memberCommittee makes recommendations to the Board concerning the composition of the Board and its committees, including size and qualifications for membership. The Nominating and Corporate Governance Committee evaluates prospective nominees against the standards and qualifications set forth in the Company’s Corporate Governance Guidelines, as well as other relevant factors it deems appropriate.
boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relationship between a board and the CEO and other management personnel, the importance of particular agenda items and oversight of a changing mix of strategic, operational and compliance matters.
| 2023 PROXY STATEMENT | | | 7 | |
| | Board Diversity Matrix (As of April 12, 2023) | | | ||||||||||||||||||||||||||||
| | Total Number of Directors | | | | 8 | | | ||||||||||||||||||||||||
| | | | | | Female | | | | Male | | | | Non-Binary | | | | Did Not Disclose Gender | | | ||||||||||||
| | Part I: Gender Identity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Directors | | | | | | 3 | | | | | | | 5 | | | | | | | 0 | | | | | | | 0 | | | |
| | Part II: Demographic Background | | | ||||||||||||||||||||||||||||
| | African American or Black | | | | | | 1 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | Alaskan Native or Native American | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | Asian | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | Hispanic or Latinx | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | Native Hawaiian or Pacific Islander | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | White | | | | | | 2 | | | | | | | 5 | | | | | | | 0 | | | | | | | 0 | | | |
| | Two or More Races or Ethnicities | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | | | | | 0 | | | |
| | LGBTQ+ | | | | 0 | | | ||||||||||||||||||||||||
| | Did Not Disclose Demographic Background | | | | 0 | | |
| 8 | | | WWW.FOSSILGROUP.COM | |
| The Board of Directors unanimously recommends that stockholders vote “FOR” the election of each Director Nominee set forth above for the Board of Directors. | |
| 2023 PROXY STATEMENT | | | 9 | |
Michael Steinberg has been a directoroversight of the Board and its committees, operates within a comprehensive plan of corporate governance for the purpose of defining independence, assigning responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. The Company since March 2000. Mr. Steinberg is currently a memberregularly monitors developments in the area of corporate governance. Copies of the Company's Compensation Committee and Nominating andCompany’s Corporate Governance Committee. Mr. Steinberg served as Chairman and Chief Executive OfficerGuidelines can be obtained free of Macy's West, a Division of Federated Department Stores, Inc.charge from the Company’s website,
experience in retailing, merchandising and strategic planning. He has deep knowledge ofby contacting the Company and its businesses, having served on our Board since 2000.
Donald J. Stone has been a directorat 901 S. Central Expressway, Richardson, Texas 75080 to the attention of the Company since April 1993. Mr. Stone is currently a member of the Company's Nominating and Corporate Governance Committee. Mr. Stone served as the Lead Independent Director from May 2007 until May 2010. Mr. Stone served as Vice Chairman of Federated Department Stores until February 1988,Investor Relations, or by telephone at which time he retired. Mr. Stone has extensive experience in leading a large retail company and substantial experience in retailing and strategic planning. He has deep knowledge of the Company and its businesses, having served on our Board since 1993.
Unless otherwise directed in the proxy, it is the intention of the persons named in the proxy to vote the shares represented by such proxy for the election of each of the director nominees. Each of the director nominees is presently a director of the Company.
THE (972) 234-2525.
Board Committees and Meetings
COMMITTEES AND MEETINGS
The
| | DIRECTOR | | | | AUDIT COMMITTEE | | | | COMPENSATION AND TALENT MANAGEMENT COMMITTEE | | | | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | | |
| | Mark R. Belgya | | | | C | | | | X | | | | | | |
| | William B. Chiasson | | | | X | | | | | | | | X | | |
| | Susie Coulter | | | | | | | | | | | | X | | |
| | Kim Harris Jones | | | | X | | | | | | | | X | | |
| | Kosta N. Kartsotis | | | | — | | | | — | | | | — | | |
| | Kevin Mansell | | | | | | | | C | | | | | | |
| | Marc R. Y. Rey | | | | | | | | X | | | | | | |
| | Gail B. Tifford | | | | | | | | | | | | C | | |
| | Number of Committee Meetings in Fiscal Year 2022 | | | | 9 | | | | 5 | | | | 4 | | |
Director | Audit Committee | Compensation Committee | Finance Committee | Nominating and Corporate Governance Committee | ||||
---|---|---|---|---|---|---|---|---|
Elaine Agather | X | X (Chairperson) | ||||||
Jeffrey N. Boyer | X (Chairperson) | X | ||||||
Diane L. Neal | X | X | ||||||
Thomas M. Nealon | X | X | ||||||
Elysia Holt Ragusa | X | X (Chairperson) | ||||||
James E. Skinner | X | X (Chairperson) | ||||||
Michael Steinberg | X | X | ||||||
Donald J. Stone | X | |||||||
James M. Zimmerman | X | X | ||||||
Number of Committee Meetings in fiscal 2012: | 9 | 9 | 5 | 4 |
| 10 | | | WWW.FOSSILGROUP.COM | |
auditors; and
Finance Committee. The functions of the Finance Committee are to oversee all areas of corporate finance for the Company, including capital structure, equity and debt financings, capital expenditures, cash management, banking activities and relationships, investments, foreign exchange activities, and share repurchase activities. All members of the Finance Committee have been determined to meet the Nasdaq standards for independence. See "Director Independence."
Nominating and Corporate Governance Committee.Committee
| 2023 PROXY STATEMENT | | | 11 | |
Risk Oversight
The Board of Directors takes an active role in overseeing management of the Company's risks through its review of risks associated with our operations and strategic initiatives and through each of the Board committees. Our Audit, Compensation, Finance and Nominating and Corporate Governance Committees are comprised solely of independent directors and have responsibility for the review of certain risks as defined in their governing documents. The Audit Committee reviews and discusses with management our major financial risks, including any risk assessment or risk management policies. The Audit Committee receives regular reports regarding enterprise risk from our Internal Audit Department and independent accountants and informs the Board of Directors of such matters through regular committee reports. In addition to receiving regular reports from the Audit Committee concerning our enterprise risk, the Board of Directors also reviews information concerning other risks through regular reports of its other committees, including information regarding financial risk management from the Finance Committee, compensation-related risk from the Compensation Committee and governance-related risk from the Nominating and Corporate Governance Committee.
Report of the Audit Committee
The following is the report of the Audit Committee with respect to the Company's audited consolidated financial statements for the fiscal year ended December 29, 2012, which includes the consolidated balance sheets of the Company as of December 29, 2012 and December 31, 2011, and the related consolidated statements of income and comprehensive income, stockholders' equity and cash flows for each of the three fiscal years in the period ended December 29, 2012, and the notes thereto. The information contained in this report shall not be deemed to be "soliciting material" or to be "filed with the SEC" or subject to the liabilities of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.
Review and Discussions with Management
The Audit Committee has reviewed and discussed the Company's audited consolidated financial statements with management.
Review and Discussions with Independent Registered Public Accounting Firm
The Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Codification of Statements on Auditing Standards, AU 380), "Communication with Audit Committees" that includes, among other items, matters related to the conduct and the results of the audit of the Company's consolidated financial statements.
The Audit Committee has also received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLP's communications with the Audit Committee concerning independence and has discussed with Deloitte & Touche LLP its independence from the Company.
Based on the review and discussions referred to above, the Audit Committee recommended to the Company's Board of Directors that the Company's audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012.
AUDIT COMMITTEEJeffrey N. Boyer, ChairpersonElaine AgatherJames E. Skinner
Corporate Governance
The Company, with the oversight of the Board of Directors and its committees, operates within a comprehensive plan of corporate governance for the purpose of defining independence, assigning responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. The Company regularly monitors developments in the area of corporate governance. Copies of the Company's Corporate Governance Guidelines can be obtained free of charge from the Company's web site,www.fossil.com, by contacting the Company at the address appearing on the first page of this proxy statement to the attention of Investor Relations, or by telephone at (972) 234-2525.
Director Independence
officer of another entity where at any time during the past three years any of the Company'sCompany’s executive officers served on the compensation committee would not be independent; and (v) a director who is, or who has an
Board Leadership Structure
CEO.
| 12 | | | WWW.FOSSILGROUP.COM | |
year 2022.
sense for Mr. Kartsotis is well-suited to chair such discussions. This allows him to highlight important issues without unnecessary procedural delay. It also allows him to provide the proper context and background, including access to members of management and Company and industry reports, for each issue considered by the Board. Such background material is important given our size and complexity and the competitive nature of our industry. Mr. Kartsotis'Kartsotis’s extensive knowledge of the Company and involvement with day-to-day activities also helps ensure effective risk oversight for the Company. Mr. Kartsotis adheres to an "open door"“open door” policy in his communications with Board members and talks frequently with Board members. Furthermore, Board members are encouraged to freely communicate with any member of management at any time. The Board also believes it has been beneficial, in terms of its relationship with employees, stockholders, customers, business partners and others, to provide a single voice for the
Director Nomination Policy
| 2023 PROXY STATEMENT | | | 13 | |
through committees, which play a significant role in carrying out risk oversight. The Board reviews information concerning enterprise risks through regular reports of each Board committee, including information regarding financial reporting, accounting, cybersecurity, compliance and internal audit risk matters from the Audit Committee, compensation-related risk from the Compensation and Talent Management Committee and environmental, social and governance-related risk from the Nominating and Corporate Governance Committee. In addition, our Audit, Compensation and Talent Management and Nominating and Corporate Governance Committees are comprised solely of independent directors and have responsibility for the review of certain risks as defined in their governing documents. As part of its oversight, the Board receives and reviews regular reports from members of senior management, including our Chief Compliance Officer, who facilitates our Enterprise Risk Management Committee (the “ERM Committee”), comprised of a group of cross-functional executive leaders. The ERM Committee meets on a quarterly basis to review, prioritize, and address mitigation strategies for major risk exposures. The ERM Committee also considers
Communication with
| 14 | | | WWW.FOSSILGROUP.COM | |
hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a stockholder to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the stockholder to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the stockholder may no longer have the same objectives as the Company’s other stockholders. Therefore, under our Insider Trading Policy, directors, officers and employees are prohibited from engaging in any such hedging transactions.
Executive Officers
| 2023 PROXY STATEMENT | | | 15 | |
Livio Galanti has served as Executive Vice President since August 2007. Mr. Galanti served as Senior Vice President of Luxury Brands from December 2006 until July 2007. From November 2004 to November 2006, Mr. Galanti served as Senior Vice President ofAudit Committee Charter, the Sports Division. Prior to joining the Company, Mr. Galanti served for three years as General Manager and joint venture partner in Timex Group Italia, a watch distribution, design and development company.
Darren E. Hart has served as Executive Vice President, Human Resources, since June 2011. From 2001 until June 2011, Mr. Hart served in various roles for Limited Brands, an international company that sells personal care and beauty products, apparel and accessories. At Limited Brands, Mr. Hart most recently served as Executive Vice President for Bath & Body Works, a national retailer of personal care products. From 2001 until 2005, Mr. Hart served as Director of Leadership and Organizational Development for Victoria's Secret Stores, a global retailer of intimate apparel,
sleepwear, hosiery and other apparel and beauty products. From 2005 until 2006, he served as Vice President of HR for Stores for Limited Brands, and from 2006 until 2007, he served as Senior Vice President of HR for Retail Operations for Limited Brands.
Thomas M. Kennedy has served as Executive Vice President, Fossil Brand, since July 2012. From December 2009 until July 2012, Mr. Kennedy served as Senior Vice President, General Merchandising, for Fossil Stores I, Inc., a subsidiary of the Company. From January 2009 until December 2009, Mr. Kennedy served as a consultantAudit Committee recommended to the retail industry. Mr. Kennedy served as PresidentCompany’s Board of Pacific Sunwear of California, Inc., a California lifestyle clothing retailer, from May 2004 to December 2008. From April 2001 to April 2004, he served as the Vice President of U.S. Apparel for Nike, Inc., an international company that sells footwear, apparel, equipmentDirectors, and accessories.
Jennifer Pritchard has served as President, Retail Division since September 2006. From January 2004 until March 2006, she served as President of Arden B., a division of Wet Seal, Inc., a specialty retailer of apparel and accessory items. Prior to that, from October 2002 until January 2004, Ms. Pritchard served as President of Zutopia, another division of Wet Seal, and from April 2001 until October 2002, she served as Executive Vice President Product Development and Marketing of Tex 38, LLC, a Hong-Kong based design and production company.
Dennis R. Secor has served as Executive Vice President, Chief Financial Officer and Treasurer since December 10, 2012. From July 2006 until December 2012, Mr. Secor served as Senior Vice President and Chief Financial Officer for Guess?, Inc., a national retailer of contemporary apparel, denim, handbags, watches, footwear and other fashion accessories. From August 2004 until July 2006, Mr. Secor served as Vice President and Chief Financial Officer for Electronic Arts (Canada), Inc., a Canadian video game developer.
John A. White has served as Executive Vice President and Chief Operating Officer since September 4, 2012. From March 2007 until September 2012, Mr. White served in various roles for Pandora, A/S ("Pandora"), a global jewelry company headquartered in Denmark. At Pandora, Mr. White most recently served as President of Pandora North America, a division of Pandora. Prior to joining Pandora, Mr. White served as a Strategy Consultant for the Operations and Supply Chain Strategy and Design Team for Booz -- Allen -- Hamilton from April 2006 until March 2007.
FISCAL 2012 DIRECTOR COMPENSATION TABLE
The following table provides information regarding director compensation during fiscal 2012.
Name(1)(2) | Fees Earned or Paid in Cash ($)(5)(6) | Stock Awards ($)(7) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Elaine Agather | 89,250 | 119,981 | 209,231 | |||||||
Jeffrey N. Boyer | 93,500 | 119,981 | 213,481 | |||||||
Gary Kusin(3) | 27,125 | 0 | 27,125 | |||||||
Diane L. Neal | 54,538 | 150,608 | 205,146 | |||||||
Thomas M. Nealon | 47,962 | 133,917 | 181,879 | |||||||
Mark D. Quick(4) | 11,058 | 84,176 | 95,234 | |||||||
Elysia Holt Ragusa | 94,250 | 119,981 | 214,231 | |||||||
Jal S. Shroff | 58,500 | 119,981 | 178,481 | |||||||
James E. Skinner | 86,000 | 119,981 | 205,981 | |||||||
Michael Steinberg | 66,750 | 119,981 | 186,731 | |||||||
Donald J. Stone | 63,500 | 119,981 | 183,481 | |||||||
James M. Zimmerman | 64,500 | 119,981 | 184,481 |
about his compensation is listed in the Fiscal 2012, 2011 and 2010 Summary Compensation Table below.
| 16 | | | WWW.FOSSILGROUP.COM | |
| | POSITION | | | | AMOUNT | | | |||
| | Non-Employee Director | | | | | $ | 60,000 | | | |
| | Lead Independent Director | | | | | $ | 35,000 | | | |
| | Audit Committee Chairperson | | | | | $ | 25,000 | | | |
| | Audit Committee Member | | | | | $ | 15,000 | | | |
| | Compensation and Talent Management Committee Chairperson | | | | | $ | 20,000 | | | |
| | Compensation and Talent Management Committee Member | | | | | $ | 10,000 | | | |
| | Nominating and Corporate Governance Committee Chairperson | | | | | $ | 15,000 | | | |
| | Nominating and Corporate Governance Committee Member | | | | | $ | 10,000 | | | |
Position | Amount ($) | |||
---|---|---|---|---|
Non-Employee Director | $ | 52,500 | ||
Lead Independent Director | $ | 17,500 | ||
Audit Committee Chairperson | $ | 20,000 | ||
Audit Committee Member | $ | 2,500 | ||
Compensation Committee Chairperson | $ | 15,000 | ||
Nominating and Corporation Governance Committee Chairperson | $ | 10,000 | ||
Finance Committee Chairperson | $ | 10,000 |
Each non-employee director also received a fee of $1,500 for each in-person Board meeting, and each committee member received a fee of $1,250 for each in-person committee meeting. Each non-employee director and committee member received a fee of $1,000 for each telephonic Board or committee meeting in excess of one hour. Payment is made for each Board and committee meeting attended even if a non-employee director attends more than one Board or committee meeting on the same day. The Company also reimbursed its directors for ordinary and necessary travel expenses incurred in attending such meetings.
Stock Awards. Prior to 2008, the Company made grants of stock options to non-employee directors pursuant to the Company's 1993 Non-employee Director Stock Option Plan. That plan was terminated when the 2008 Incentive Plan was adopted in May 2008, and the Company commenced granting stock options to non-employee directors under the 2008 Incentive Plan. The terms of the 1993 Non-employee Director Stock Option Plan continue to govern outstanding grants made under it prior to its termination. Effective January 2010, the Board terminated its practice of granting stock options to non-employee directors and instead grants restricted stock units. Each outside director of the Company who does not elect to decline to participate in the 2008Fossil Group, Inc. 2016 Long-Term Incentive Plan (the “2016 Plan”) is automatically granted restricted stock units (“RSUs”) as follows: (1) on the date of the annual stockholders meeting, each outside director is automatically granted restricted stock unitsRSUs with a fair market value of $100,000,approximately $130,000, which restricted stock unitsRSUs will vest 100% on the earlier of (i)(a) the date of the next annual stockholders meeting or (ii)(b) one year from the date of grant, provided the outside director is providing services to the Company or a subsidiary on that date; and (2) each individual who first becomes an outside director is automatically granted a one-time grant, effective as of the date of appointment, equal to the grant he or she would have received if he or she had been elected at the previous annual stockholders meeting, pro-rated based on the number of days such director will actually serve before the one-year anniversary of such previous annual stockholders meeting, which restricted stock unitsRSUs will vest 100% one year from the date of grant, provided the outside director is providing services to the Company or a subsidiary on that date. Notwithstanding the foregoing, in the event of an outside director'sdirector’s termination of service due to his or her death, all unvested restricted stock unitsRSUs will immediately become 100% vested. Restricted stock unitsRSUs are awarded subject to such terms and conditions as established by the Compensation and Talent Management Committee, which may include the requirement that the holder forfeit the restricted stock unitsRSUs upon termination of service during the period of restriction. Based
| 2023 PROXY STATEMENT | | | 17 | |
| | NAME (1)(2) | | | | FEES EARNED OR PAID IN CASH ($)(3) | | | | STOCK AWARDS ($)(4) | | | | TOTAL ($) | | | |||||||||
| | Mark R. Belgya | | | | | | 95,000 | | | | | | | 71,130 (5) | | | | | | | 166,130 | | | |
| | William B. Chiasson | | | | | | 85,000 (6) | | | | | | | 71,130 (5) | | | | | | | 156,130 | | | |
| | Susie Coulter (7) | | | | | | 4,402 | | | | | | | 44,640 | | | | | | | 49,042 | | | |
| | Kim Harris Jones | | | | | | 85,000 | | | | | | | 71,130 (5) | | | | | | | 156,130 | | | |
| | Kevin Mansell | | | | | | 115,000 | | | | | | | 71,130 | | | | | | | 186,130 | | | |
| | Diane L. Neal (8) | | | | | | 30,549 | | | | | | | — | | | | | | | 30,549 | | | |
| | Marc R. Y. Rey | | | | | | 70,000 | | | | | | | 71,130 | | | | | | | 141,130 | | | |
| | Gail B. Tifford | | | | | | 75,000 | | | | | | | 71,130 | | | | | | | 146,130 | | | |
| 18 | | | WWW.FOSSILGROUP.COM | |
| 2023 PROXY STATEMENT | | | 19 | |
| | | | | | SHARES BENEFICIALLY OWNED (1)(2) | | | ||||||||||
| | NAME OF BENEFICIAL OWNER | | | | NUMBER | | | | PERCENT | | | ||||||
| | Jeffrey N. Boyer | | | | | | 371,450 (3) | | | | | | | * | | | |
| | Sunil M. Doshi | | | | | | 32,551 (4) | | | | | | | * | | | |
| | Darren E. Hart | | | | | | 91,348 (5) | | | | | | | * | | | |
| | Kosta N. Kartsotis | | | | | | 3,200,837 | | | | | | | 6.2% | | | |
| | Greg A. McKelvey | | | | | | 840,918 (6) | | | | | | | 1.6% | | | |
| | Mark R. Belgya | | | | | | 19,644 (7) | | | | | | | * | | | |
| | William B. Chiasson | | | | | | 60,889 (8) | | | | | | | * | | | |
| | Susie Coulter | | | | | | 0 | | | | | | | | | | |
| | Kim Harris Jones | | | | | | 11,466 (9) | | | | | | | * | | | |
| | Kevin Mansell | | | | | | 34,483 (10) | | | | | | | * | | | |
| | Marc R. Y. Rey | | | | | | 25,300 (11) | | | | | | | * | | | |
| | Gail B. Tifford | | | | | | 42,449 (12) | | | | | | | * | | | |
| | All executive officers and directors as a group (14 persons) | | | | | | 4,764,556 (13) | | | | | | | 9.2% | | | |
| | BlackRock, Inc. | | | | | | 3,118,437 (14) | | | | | | | 6.0% | | | |
| | FMR, LLC | | | | | | 4,451,387 (15) | | | | | | | 8.6% | | | |
| | Liechtensteinische Landesbank Aktiengesellschaft | | | | | | 2,805,194 (16) | | | | | | | 5.4% | | | |
| | The Vanguard Group | | | | | | 2,607,668 (17) | | | | | | | 5.0% | | | |
| 20 | | | WWW.FOSSILGROUP.COM | |
be beneficially owned by BWM AG, an unaffiliated third party investment adviser which manages the position pursuant to an investment advisory agreement with LLB FS. The Compensation Committeeaddress of Liechtensteinische Landesbank Aktiengesellschaft is Städtle 44, P.O. Box 384, FL-9490 Vaduz, Liechtenstein.
| 2023 PROXY STATEMENT | | | 21 | |
| | NAME | | | | AGE | | | | POSITION | | | |||
| | Jeffrey N. Boyer | | | | | | 64 | | | | | Executive Vice President, Chief Operating Officer | | |
| | Holly L. Briedis | | | | | | 36 | | | | | Executive Vice President, Chief Growth Officer | | |
| | Sunil M. Doshi | | | | | | 51 | | | | | Executive Vice President, Chief Financial Officer and Treasurer | | |
| | Darren E. Hart | | | | | | 60 | | | | | Executive Vice President, Chief Human Resources Officer | | |
| | Melissa B. Lowenkron | | | | | | 48 | | | | | Chief Brand Officer | | |
| | Greg A. McKelvey | | | | | | 50 | | | | | Executive Vice President, Chief Commercial Officer | | |
| 22 | | | WWW.FOSSILGROUP.COM | |
distribution, recapitalization, stock split, reorganization, merger or certain other corporate transactions. Subject to certain limitations, the Compensation Committee is authorized to amend the 2008 Incentive Planleading food and beverage company, including his most recent role as it deems necessary, but no amendment may adversely affect the rights ofExecutive Vice President and Chief Strategy and Transformation Officer. From 2002 until 2005, Mr. McKelvey worked at Bain & Company (“Bain”), a participant with respect to an outstanding award without the participant's consent.
leading global strategy consulting firm, as a Manager in Bain’s consumer and private equity practices.
| 2023 PROXY STATEMENT | | | 23 | |
Proxy Statement.
| | NAME | | | | POSITION | | |
| | Kosta N. Kartsotis | | | | Chairman of the Board, Chief Executive Officer | | |
| | Sunil M. Doshi | | | | Executive Vice President, Chief Financial Officer and Treasurer | | |
| | Jeffrey N. Boyer | | | | Executive Vice President, Chief Operating Officer | | |
| | Darren E. Hart | | | | Executive Vice President, Chief Human Resources Officer | | |
| | Greg A. McKelvey | | | | Executive Vice President, Chief Commercial Officer | | |
| | TITLE | | | | PAGE | | | |||
| | | | | | | 24 | | | | |
| | | | | | | 26 | | | | |
| | | | | | | 27 | | | | |
| | | | | | | 32 | | | | |
| | Additional Information | | | | | | | | |
| 24 | | | WWW.FOSSILGROUP.COM | |
Our goalVice President.
| 2023 PROXY STATEMENT | | | 25 | |
For fiscal 2012, Mr. Kartsotis, our CEO, continued to refuse all formssummary of compensation expressing his belief that, given his level of stock ownership, his primary compensation is met by continuingpractices we have adopted to drive stock price growth, thereby aligning hisperformance and to align with stockholder interests, with stockholders' interests. Asas well as a result, the following references to Named Executive Officers in this Compensation Discussion and Analysissummary of those practices we do not include Mr. Kartsotis.
In September 2012, we hired John A. White as our Executive Vice President and Chief Operating Officer. In December 2012, we hired Dennis R. Secor as our new Chief Financial Officer. We describe Mr. White's and Mr. Secor's fiscal 2012employ.
| | WHAT WE DO | | | | WHAT WE DON’T DO | | |
| | ✓ Follow a primarily pay-for-performance philosophy ✓ Use multiple performance metrics within our annual compensation plan ✓ Use a thorough process for setting rigorous performance goals ✓ Maintain executive and director stock ownership guidelines ✓ Retain an independent compensation consultant ✓ Provide severance and change in control arrangements that are aligned with market practices ✓ Retain a double trigger equity acceleration upon a change in control. ✓ Provide modest perquisites with reasonable business rationale ✓ Regularly review share utilization and burn rate ✓ Maintain a clawback policy | | | | × No discounting, reloading or repricing of stock options without stockholder approval × No employment agreements × No excise tax gross-ups upon a change in control × No excessive perquisites × No guaranteed salary increases × No permitted pledging, hedging, short sales or derivative transactions in company stock. | | |
In setting fiscal 2012 base salary and equity awards for the Named Executive Officers, our Compensation Committee considered our overall fiscal 2011 financial performance, the individual contributions of the Named Executive Officers to our overall fiscal 2011 financial performance, individual performance appraisals of the Named Executive Officers for fiscal 2011 and benchmarking data of our industry peer group. In addition, under our 2010 Cash Incentive Plan, cash bonus amounts for our Named Executive Officers were based on our fiscal 2012 financial performance and individual performance appraisals of the Named Executive Officers for fiscal 2012.
Our financial performance for fiscal 2011 was again outstanding. We reported record levels of operating income for fiscal 2011, driven by double-digit sales growth across our operating segments. Our record results were achieved despite some continuing challenges in the global economy and product cost pressure. Financial highlights as reported for fiscal 2011 included:
The Compensation Committee's fiscal 2012 compensation decisions reflected our strong performance for fiscal 2011. As a result, in fiscal 2012, the Compensation Committee approved:
In fiscal 2012, the Compensation Committee also set operating income target thresholds for fiscal 2012 cash incentive awards at $520 million, $540 million and $590 million for payouts of 10%, 50% and 110%, respectively, of each Named Executive Officer's eligible cash incentive bonus amount as determined by such Named Executive Officer's 2012 performance rating. These target levels were set approximately 20% higher than the target levels set for fiscal 2011 to incentivize our Named Executive Officers to achieve increasingly higher levels of operating income.
Our strong financial performance continued in fiscal 2012, in which we again reported record levels of operating income, driven by net sales increases in all segments. Our operating income increased 3.6% to $488.8 million, compared to fiscal 2011. However, we did not achieve the minimum threshold amount of $520 million set by the Compensation Committee for the payment of cash incentive awards in fiscal 2012. As a result, none of the Named Executive Officers received any of his or her eligible cash incentive bonus amount under our 2010 Cash Incentive Plan.
Compensation Program
Compensation Program Objectives and Philosophy
Our compensation objectives are to maintain competitive pay practices that will enable usorder to attract, retain and reward executives who are capablemotivate top talent and to drive company success. Our goal is to target total direct compensation around the median of leading us in achieving our strategic business objectives. To meet these goals, we use base salary, performance-based short-term incentive compensation and long-term equity-based incentive awards. We believe this mix of short-term and long-term compensation rewards and reinforces the value-added contributions and attainment ofmarket, with actual pay levels based on actual performance objectives that aid us in achieving profitability goals and creating stockholder value. A significant portion of senior management's compensation is equity-based in order to emphasize the link between executive compensation and the creation of stockholder value as measured by increases in the price of our shares of Common Stock.
above or below targets. We utilize external benchmarking data and a comparable industry peer groupgroups to establish competitivepay levels and practices. In addition, the Compensation and Talent Management Committee believes in a pay-for-performance approach to executive compensation that aligns executive compensation with stockholder interests. This means that a significant portion of an executive’s compensation is at risk and will vary from the targeted compensation opportunity based upon the level of achievement of specified performance objectives and stock price performance. We emphasize equity-based long-term incentives to ensure that our executives are focused on longer term operating and stock price performance in addition to short-term goals. Of the targeted total compensation pay practices that are appropriate for our industry. We evaluate our executives' compensation on an annual basis and make changes accordingly. We also take into consideration current economic conditions and our financial projections. We target overalldirect compensation for a Named Executive Officer achieving a "meets expectations"fiscal year 2022, approximately 57% to 69%* of the NEO’s compensation would be at risk or tied to changes in stock price or pre-determined performance ratingobjectives.
| 26 | | | WWW.FOSSILGROUP.COM | |
| 2023 PROXY STATEMENT | | | 27 | |
| | NAME | | | | START OF YEAR ANNUAL SALARY RATE | | | | CHANGE % | | | | END OF YEAR ANNUAL SALARY RATE | | | |||||||||
| | Kartsotis | | | | | $ | 0 | | | | | | | 0.0% | | | | | | $ | 0 | | | |
| | Doshi | | | | | $ | 490,000 | | | | | | | 7.14% | | | | | | $ | 525,000 | | | |
| | Boyer | | | | | $ | 700,000 | | | | | | | 2.75% | | | | | | $ | 719,250 | | | |
| | Hart | | | | | $ | 678,500 | | | | | | | 3.25% | | | | | | $ | 700,550 | | | |
| | McKelvey | | | | | $ | 721,000 | | | | | | | 2.75% | | | | | | $ | 740,800 | | | |
| | | | | | PERFORMANCE METRIC | | | | DESCRIPTION | | | | WEIGHTING | | | |||
| | Financial goals: | | | | Net sales | | | | Target of $2.02 billion | | | | | | 30% | | | |
| Adjusted operating income | | | | Target of $150 million | | | | | | 50% | | | | |||||
| | Strategic goals: | | | | New consumers | | | | • Consumer email file size growth | | | | | | 10% | | | |
| Digital capabilities | | | | • Digital roadmap execution • 1P marketplace launch • Marketing investment stewardship | | | | | | 10% | | | |
| 28 | | | WWW.FOSSILGROUP.COM | |
| | PERFORMANCE METRIC | | | | THRESHOLD* PERFORMANCE | | | | THRESHOLD* PAYOUT | | | | TARGET PERFORMANCE | | | | TARGET PAYOUT | | | | STRETCH* PERFORMANCE | | | | MAXIMUM* PAYOUT | | | |||||||||||||||
| | Net sales | | | | | | 95% | | | | | | | 50% | | | | | $2.02 billion | | | | | | 100% | | | | | | | 109% | | | | | | | 200% | | | |
| | Adjusted operating income | | | | | | 83% | | | | | | | 50% | | | | | $150 million | | | | | | 100% | | | | | | | 133% | | | | | | | 200% | | | |
| | NAME | | | | BASE SALARY | | | | PERCENTAGE | | | | COMPANY PAYOUT % | | | | TOTAL BONUS AMOUNT | | | ||||||||||||
| | Kartsotis | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | Doshi | | | | | $ | 525,000 | | | | | 50% – 75%* | | | | | | 27.4% | | | | | | $ | 93,731 | | | | |||
| | Boyer | | | | | $ | 719,250 | | | | | | | 100% | | | | | | | 27.4% | | | | | | $ | 197,075 | | | |
| | Hart | | | | | $ | 700,550 | | | | | | | 75% | | | | | | | 27.4% | | | | | | $ | 143,963 | | | |
| | McKelvey | | | | | $ | 740,800 | | | | | | | 100% | | | | | | | 27.4% | | | | | | $ | 202,979 | | | |
| 2023 PROXY STATEMENT | | | 29 | |
| | NAME | | | | ANNUAL EQUITY AWARD (1) | | | | RSUS (50%) | | | | PSUS (50%) | | | | RSU SHARES | | | | PSU SHARES | | | |||||||||||||||
| | Kartsotis | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | Doshi | | | | | $ | 305,912 (2) | | | | | | $ | 305,912 (3) | | | | | | | — | | | | | | | 28,104 | | | | | | | — | | | |
| | Boyer | | | | | $ | 862,570 | | | | | | $ | 431,285 | | | | | | $ | 431,285 | | | | | | | 39,622 | | | | | | | 39,622 | | | |
| | Hart | | | | | $ | 629,850 | | | | | | $ | 314,925 | | | | | | $ | 314,925 | | | | | | | 28,932 | | | | | | | 28,932 | | | |
| | McKelvey | | | | | $ | 888,456 | | | | | | $ | 444,228 | | | | | | $ | 444,228 | | | | | | | 40,811 | | | | | | | 40,811 | | | |
| 30 | | | WWW.FOSSILGROUP.COM | |
Although substantial
| | | | | | VESTING | | | | 2022 ADJUSTED OPERATING MARGIN | | | ||||||
| | Stretch | | | | | | 200% | | | | | | | 5.8% | | | |
| | Maximum | | | | | | 150% | | | | | | | 4.8% | | | |
| | Target | | | | | | 100% | | | | | | | 4.3% | | | |
| | Threshold | | | | | | 50% | | | | | | | 3.8% | | | |
| | | | | | VESTING | | | | 2022 ADJUSTED OPERATING INCOME | | | |||
| | Stretch | | | | | | 200% | | | | | $165 million | | |
| | Maximum | | | | | | 150% | | | | | $150 million | | |
| | Target | | | | | | 100% | | | | | $135 million | | |
| | Threshold | | | | | | 50% | | | | | $120 million | | |
| 2023 PROXY STATEMENT | | | 31 | |
| 32 | | | WWW.FOSSILGROUP.COM | |
| Caleres, Inc. Chico’s FAS, Inc. Columbia Sportswear Company Crocs, Inc. Deckers Outdoor Corporation | | | Express, Inc. Genesco, Inc. G-III Apparel Group, Ltd. Guess?, Inc. Movado Group, Inc. | | | Oxford Industries, Inc. Steven Madden, Ltd. Urban Outfitters, Inc. Wolverine World Wide, Inc. | |
Overview
Our compensation programexecutive interests with stockholders, we maintain policies that require executives to accumulate and hold substantial amounts of Common Stock, and we prohibit executives from hedging the risk of such ownership. Pledging of shares as collateral is designed to achieve our objectivesalso prohibited. We also maintain a clawback policy that enables the recapture of attracting, retainingpreviously paid cash and motivating employees and rewarding them for achievements that we believe will bring us success and create stockholder value. This program is designed to be competitive with the companies in the industry with which we compete for talent. A significant portion of the compensation for our Named Executive Officers includes annual long-term equity awards that have extended vesting periods. The purpose of these awards is to serve as both a retention tool and incentive mechanism that will encourage recipients to remain with us and create value for both the award recipient and our stockholders.
In the first quarter of fiscal 2012, our Compensation Committee considered the following factors in establishing the base salary and long-term equity incentive compensation in certain circumstances involving a financial restatement.
| 2023 PROXY STATEMENT | | | 33 | |
| | Position | | | | Base Salary Multiple | | |
| | Chief Executive Officer | | | | Six Times | | |
| | Other Executive Officers | | | | Two Times | | |
Compensation Decision-Making
The Compensation Committee
The Compensation Committee is appointed by the Board to exercise the Board's authority to compensate the executive management team and administer our stock-based and incentive compensation plans. The Compensation Committee typically meets in separate sessions at least on a quarterly basis. In addition, the Compensation Committee sometimes schedules special meetings or non-meeting "work sessions," either by telephone or in person, as necessary to fulfill its duties. Meeting agendas are established by the chairperson after consultation with other members of the Compensation Committee, the EVP of HR and Mr. Kartsotis, our CEO. The current members of the Compensation
Committee are Ms. Agather, who serves as chairperson, Ms. Neal, Ms. Ragusa and Mr. Steinberg. Each of these Compensation Committee members served on the Compensation Committee during all of fiscal 2012, other than Ms. Neal who was appointed to the committee in February 2012. The Compensation Committee's full responsibilities with respect to our compensation practices are set forth in its charter and summarized above under "Board Committees and Meetings—Compensation Committee."
In late 2011, the Compensation Committee again engaged FWC to assist the Compensation Committee and management in reviewing and determining appropriate, competitive compensation for our executive officers for fiscal 2012. The Compensation Committee has engaged FWC since 2009 and believes FWC's familiarity with the Company and its compensation policies allows FWC to provide more meaningful insights to the Compensation Committee. FWC also reviewed the design and competitiveness of the Company's non-employee director compensation program. FWC has continued to provide to us, at our request, benchmarking, best practices and other data relevant to our compensation programs, and changes thereto. In fiscal year 2012, FWC did not provide any other services to us.
The Compensation Committee determined that the work of FWC did not raise any conflicts of interest in fiscal 2012. In making this assessment, the Compensation Committee considered the independence factors enumerated in new Rule 10C-1(b) under the Exchange Act, including the fact that FWC does not provide any other services to the Company, the level of fees received from the Company as a percentage of FWC's total revenue, policies and procedures employed by FWC to prevent conflicts of interest, and whether the individual FWC advisers to the Compensation Committee own any stock of the Company or have any business or personal relationships with members of the Compensation Committee or our executive officers.
Role of Executives in Establishing Compensation
Our CEO, other members of management (particularly the EVP of HR), and Compensation Committee members regularly discuss our compensation issues and the performance and retention of our Named Executive Officers. Mr. Kartsotis with the assistance of the EVP of HR typically recommends to the Compensation Committee for its review, modification and approval the annual base salary, bonus and equity awards (if any) for the other members of the executive management team.
The Compensation Committee would typically establish the base salary, bonus and equity incentive awards for the CEO, Mr. Kartsotis. However, Mr. Kartsotis again refused all forms of compensation for fiscal 2012. Mr. Kartsotis is one of the initial investorswe utilize are determined primarily by their effectiveness in our company and expressed his belief that his primary compensation is met by continuing to drive stock price growth.
Certain members of the executive management team and other employees regularly attend portions of Compensation Committee meetings in order to provide information and recommendations to the Compensation Committee as requested, although the Compensation Committee meets in executive session with only Compensation Committee members present when it deems appropriate. The CEO attended a portion of all of the Compensation Committee's formal meetings during fiscal 2012.
Use of Performance Rating
Each Named Executive Officer's performance is evaluated annually in a performance review. The performance review leads to a performance rating, determined on the basis of both business metrics, which are quantitative measures of our performance and positioning, and position competencies, which are qualitative measures of individual performance and talent. Some of the business metrics include net sales, operating expense leverage, operating income, and gross margin. Some of the position competencies that are evaluated for each Named Executive Officer include setting direction and vision for the organization, cultivating corporate culture, managing resources, driving execution, decision
making, leading communications, inspiring creativity and change, resolving conflict and collaborating, identifying and maximizing talent, coaching and developing, scorekeeping, and teambuilding. The overall performance review rating is used in determining base salary increases, short-term incentive payouts and the size of any equity grants.
Performance ratings for each Named Executive Officer range from "outstanding," "exceeds expectations," "meets expectations," "improvement needed" to "unsatisfactory." The Compensation Committee and CEO review the qualitative and quantitative measures and subjectively determine the appropriate performance rating. The Compensation Committee and CEO do not assign any specific weights to the various qualitative and quantitative factors nor do they use any formulas to determine the appropriate performance rating. In addition, no one qualitative or quantitative factor is material to the ultimate determination of each Named Executive Officer's performance rating.
During the first quarter of fiscal 2012, the Compensation Committee considered each Named Executive Officer's 2011 performance appraisal in setting his or her base salary and equity incentive awards for fiscal 2012. In addition, during the first quarter of fiscal 2012, each Named Executive Officer's 2012 cash bonus was paid based on his or her 2011 performance appraisal.
For fiscal year 2011, Mr. Quick received an "outstanding" performance rating and each of Mr. Hart, Mr. Kovar and Ms. Pritchard received an "exceeds expectations" performance rating.
Use of Industry Comparative Data
We operate in a highly competitive industry and retaining qualified personnel is critical to operating a successful business. As a result, we gather as much information as possible about the total compensation levels and practices at other companies in our industry peer group. Determining the companies to use for this comparison is a complex task. Because some of our competitors are not publicly traded, it is difficult to obtain information about their specific executive positions that are comparable to those of our executives. With the help of the Human Resources Department and FWC, the Compensation Committee has developed a peer group of companies that it reviews. The Compensation Committee reviews the group annually and makes any necessary adjustments. The peer group is comprised so that the median revenue size of the peer group is at or close to our annual revenue. In fiscal 2012, the peer group consisted of the following 15 companies:
The Human Resources Department, with the assistance of FWC, obtains relevant data for each company from that company's SEC filings or as otherwise available. In addition, the Human Resources Department utilizes executive compensation surveys to benchmark comparable positions.
The data reviewed by the Compensation Committee in setting fiscal 2012 compensation included compensation information for each of the named executive officers identified by each company as well as each company's financial performance data. From this company-specific information as well as the surveys reviewed, our EVP of HR presented the data to the Compensation Committee by each compensation element. This data provided visibility into how the compensation of each of our Named Executive Officers compared to his or her peer group counterpart with respect to each compensation component and total compensation. The Compensation Committee evaluated base salaries, target bonuses, actual bonuses, stock option awards, restricted stock awards, and any other equity or incentive programs for which we could obtain data. The Compensation Committee did not assign any particular weights or formulas to the individual elements of compensation at peer companies or shown in the
surveys. Rather, the Compensation Committee evaluated the compensation of each of the Named Executive Officers in light of the totality of the information reviewed for their peers.
Other Compensation Policies
Consistentcreating maximum alignment with our compensation philosophies described above, our goal for fiscal 2012 was to provide each Named Executive Officer with an executive compensation program that was appropriate to our business, as well as competitive with the compensation paid to comparable executives in our industry peer group.
Historically, the Compensation Committee has not used a pre-established policy or target for allocating between either cashkey strategic objectives and non-cash or short-term and long-term incentive compensation. The CEO reviews information, surveys and other information he considers relevant, which includes information from FWC, to determine the appropriate level and mix of incentive compensation for each Named Executive Officer and make recommendations to the Compensation Committee, which also has access to the background material reviewed by the CEO. The portion of an executive's total compensation that is contingent upon our performance tends to increase commensurate with the executive's position within the Company. This approach is designed to provide more upside potential and downside risk for executives in more senior positions.
We attempt to ensure that both cash and equity components of total compensation are tax deductible, to the maximum extent possible and applicable, by the use of stockholder-approved plans that are intended to comply, to the extent practicable, with Section 162(m) of the Code. In fiscal 2010, upon recommendation of the Compensation Committee, the Board of Directors adopted, and our stockholders approved, the Fossil, Inc. 2010 Cash Incentive Plan, which formalized our annual cash incentive award program and made it compliant with Section 162(m) of the Code.
For fiscal 2012, our compensation program was structured to provide each Named Executive Officer with the opportunity to earn, through a combination of base salary and bonus target awards, total cash compensation around the 50th percentile of our industry peer group for a "meets expectations" performance rating. We also attempted to ensure that a substantial amount of each Named Executive Officer's total compensation was performance-based, was linked to our operating performance, and derived its long-term value from the market price of our Common Stock.
In 2012, the Compensation Committee again discussed stock ownership guidelines. However, certain of our Named Executive Officers have been with us for a number of years and already have a significant portion of their financial net worth tied to the performance of our Common Stock. Therefore, the Compensation Committee decided not to institute any stock ownership guidelines in fiscal 2012.
Stockholder Say-on-Pay Votes
Following our 2012 Annual Meeting of Stockholders, the Compensation Committee also considered the advisory vote of our stockholders on executive compensation when reviewing our compensation decisions and policies. Of those stockholders voting, on an advisory basis, for or against the proposal, approximately 95% voted to approve our executive compensation. The Compensation Committee believes this affirms stockholders' support of our approach to executive compensation and did not change its approach in fiscal 2012. The Compensation Committee will continue to consider the outcome of the Company's say-on-pay votes when making future compensation decisions for the Named Executive Officers.
Hiring of New Executive Officers
In September 2012, we hired John A. White as our Executive Vice President and Chief Operating Officer. To incentivize Mr. White to accept our offer of employment, we paid Mr. White a $100,000 signing bonus and granted Mr. White restricted stock units with a grant date fair value of $367,500 and stock appreciation rights with a grant date fair value of $367,500. We also guaranteed Mr. White a cash bonus in the amount of $450,000, pro-rated for the number of months in which he was an employee in 2012, in lieu of his participation in our fiscal 2012 cash incentive plan. We set Mr. White's base salary at $600,000 per year.
In December 2012, we hired Dennis R. Secor as our Chief Financial Officer. To incentivize Mr. Secor to accept our offer of employment, we paid Mr. Secor a $200,000 signing bonus and granted Mr. Secor restricted stock units with a grant date fair value of $306,250 and stock appreciation rights with a grant date fair value of $306,250. We set Mr. Secor's base salary at $500,000 per year.
Elements of Compensation
During fiscal 2012, our Named Executive Officer compensation program included four components: (i) base salary; (ii) a performance-based short-term cash bonus program; (iii) the grant of long-term equity incentives in the form of stock-settled stock appreciation rights and restricted stock units; and (iv) other compensation and employee benefits generally available to all of our employees, such as health insurance, group life and disability insurance and participation in our 401(k) plan. During fiscal 2012, Mr. Kartsotis again refused all forms of compensation.
Base Salaries
Annually, the CEO reviews and recommends to the Compensation Committee individual salaries for the Named Executive Officers. In reviewing the CEO's recommendations and determining individual salaries, the Compensation Committee considers the scope of job responsibilities, individual performance and contributions, as well as our overall performance and annual budget guidelines for merit increases. The Compensation Committee's objective is to award base compensation levels for each Named Executive Officer around the median for the comparable position within our industry peer group based upon market data and assuming the Named Executive Officer merits a "meets expectations" performance rating. However, salaries may be set higher when considered necessary to attract or retain key executives or when an executive consistently achieves "outstanding" or "exceeds expectations" performance ratings. Base salaries are reviewed annually and adjustments are based on both financial and non-financial results. Typically, adjustments to salaries are made in the first quarter of each fiscal year during our performance review process.
For fiscal 2012, based on an analysis of our peer group companies, comparative, competitive compensation packages and our fiscal 2011 operating performance, our CEO recommended to the Compensation Committee base pay increases of approximately 5.5% to 10.7% for our Named Executive Officers. The Compensation Committee approved the recommended increases.
The following table shows the base salary for each Named Executive Officer in fiscal 2012 and 2011 and the percentage change year-over-year:
Name | Fiscal 2012 | Fiscal 2011 | Change | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Darren E. Hart | $ | 480,000 | $ | 450,000 | 6.7 | % | ||||
Mike L. Kovar | $ | 415,000 | $ | 375,000 | 10.7 | % | ||||
Jennifer Pritchard | $ | 610,000 | $ | 555,000 | 9.9 | % | ||||
Mark D. Quick | $ | 675,000 | $ | 640,000 | 5.5 | % |
Short-Term Annual Cash Incentive Opportunities
Our 2010 Cash Incentive Plan is a performance-based annual cash incentive plan that links cash incentive awards to achieving pre-established performance goals. For fiscal 2012, award opportunities were determined based upon two performance-based measures: (i) the Named Executive Officer's overall performance rating based on fiscal 2012 performance, and (ii) achievement of our fiscal 2012 operating income targets. The same criteria were used for all other employees eligible to participate in the incentive plan.
For fiscal 2012, each Named Executive Officer was eligible for a payout under the plan ranging from 0% of base salary for a "needs improvement" performance rating to 125% of base salary for our President and 100% of base salary for our other executive officers for an "outstanding" performance rating. We refer to this as the "Performance Rating Percentage." Once the Performance Rating Percentage is determined, the actual cash incentive amounts are paid based on the extent to which our operating income targets are achieved. The actual cash incentive amounts range from 10% to 110% of the eligibility amount determined by the performance rating. We refer to this as the "Bonus Payout Percentage." In fiscal 2012, the Compensation Committee did not change the Performance Rating Percentages nor the Bonus Payout Percentages.
Operating income targets are pre-approved by the Compensation Committee in our first fiscal quarter and include a threshold for initial payout, midpoint and maximum payment targets. For example, if our President received an "outstanding" performance rating, he or she would be eligible for a cash incentive award equal to 125% of base salary, but would only be paid 50% of the amount if we achieved operating income levels at the 50% payout level. Cash incentive awards are paid only if our operating income threshold is achieved and the employee's performance rating is at least a "meets expectations." The calculation of bonus amounts described above can be summarized by the following formula:
Named Executive Officer Bonus Amount = Named Executive Officer Salary × Bonus Payout Percentage × Performance Rating Percentage
The Compensation Committee approves the specific payments to the Named Executive Officers under the 2010 Cash Incentive Plan. The Compensation Committee also retains discretion to recommend additional discretionary cash bonuses during the year based on factors such as promotions and business segment, department or individual performance.
The Bonus Payout Percentage is based on the Company's operating income for the fiscal year. For fiscal 2012, the Compensation Committee set the operating income target thresholds for an initial payout (10% award), midpoint (50% award) and maximum (110% award) at $520 million, $540 million and $590 million, respectively. At the time the Compensation Committee set the operating income target levels, it also set a scale of percentage award amounts, so that if we had achieved operating income between the threshold and midpoint or the midpoint and maximum, the award percentage would be proportionately adjusted. In fiscal year 2012, the Company achieved record operating income of $488.8 million, which was 3.6% higher than fiscal year 2011 operating income. However, because the fiscal year 2012 operating income did not exceed the $520 million threshold for an initial payout under the plan, the Bonus Payout Percentage for each Named Executive Officer was 0%. As a result, none of the Named Executive Officers received any of his or her eligible cash incentive bonus amount under our 2010 Cash Incentive Plan for fiscal year 2012.
In the first quarter of fiscal 2012, the Compensation Committee awarded Mr. Hart a discretionary cash bonus of $125,000 for retention purposes.
Long-Term Retention and Incentive Equity Awards
We believe that substantial equity ownership and equity awards encourage management to take actions favorable to the medium and long-term interests of the Company and its stockholders and align
their interests with the interests of the Company and itsour stockholders. We believe that including equity awards in the compensation program serves our longer term goals, including management retention, because the value of equity, whether in the form of stock options, stock appreciation rights, restricted stock or restricted stock units, is realized over several years. Accordingly, equity-based compensation constitutes a significant portion of the overall compensation of the Named Executive Officers.
In the first quarter of fiscal 2012, the CEO and Human Resources Department recommended to the Compensation Committee, and the Compensation Committee approved, guidelines for the grant of equity awards for each management level within the Company eligible to participate in the Company's equity plan for fiscal 2011 performance. These equity grant guidelines set out the percentage of an employee's total cash compensation that may be granted in the form of stock appreciation rights, restricted stock units or restricted stock for a "meets expectations", "exceeds expectations" and "outstanding" performance review rating. The higher the performance review rating, the higher the amount of equity awarded as a percentage of total cash compensation. Total cash compensation consists of the employee's adjusted base salary following his or her annual performance review and any bonus amount paid to the employee, including payments made under our cash incentive plan for fiscal 2011 performance.
Based on these equity grant guidelines, in the first quarter of fiscal 2012, the CEO and Human Resources Department recommended to the Compensation Committee the percentages of total cash compensation that may be granted in the form of equity incentive awards for each of the Named Executive Officers based on such Named Executive Officer's performance review rating. In recommending the size, frequency and type of long-term incentive grants to the Named Executive Officers, the CEO may also take into account tax implications to the Named Executive Officer and to the Company as well as the expected accounting impact and dilution effects.
In March 2012, the Compensation Committee granted to the Named Executive Officers a combination of restricted stock units and stock appreciation rights both of which vest pro-rata over three years. Stock appreciation rights are made at a specified strike price set forth in the applicable award agreement, which is generally the mean of the highest and lowest sales price of our Common Stock on the date of grant of the award or on the last preceding trading date if no sales are made on the date of grant.
The grants of restricted stock units and stock appreciation rights to our Named Executive Officers are made using a value-based granting system. Under our value-based granting system, the amount of equity our Named Executive Officers receive is individually calculated using the Named Executive Officer's total cash compensation multiplied by the percentages recommended by the CEO and approved by the Compensation Committee. Once the cash value for each grant is calculated, we convert the cash value into a number of stock appreciation rights using the Black-Scholes value on the date of grant and a number of restricted units using the fair market value of our Common Stock (as defined in our 2008 Incentive Plan) on the date of grant. Starting in fiscal 2011, we used a value-based granting system in order to provide our Named Executive Officers with equity grants that had a set cash value on the date of grant. In general, in prior fiscal years, grants made to our Named Executive Officers were made using a unit-based granting system that resulted in the value of the grants changing from year-to-year strictly based on the market price of our Common Stock on the date of grant.
Mr. Quick was eligible to receive a grant of restricted stock units and a grant of stock appreciation rights, each with a cash value equal to 25%, 50% or 63% of his total cash compensation for a fiscal 2011 performance review rating of "meets expectations", "exceeds expectations" or "outstanding", respectively. Each of our other Named Executive Officers were eligible to receive grants of restricted stock units and grants of stock appreciation rights, each with a cash value equal to 18%, 35% or 43%
of the Named Executive Officer's total cash compensation for a fiscal 2011 performance review rating of "meets expectations", "exceeds expectations" or "outstanding", respectively.
Because Mr. Quick received an "outstanding" fiscal 2011 performance review rating, in March 2012, he received a grant of restricted stock units and a grant of stock appreciation rights, each with a cash value equal to 63% of his total cash compensation. Because Mr. Hart, Mr. Kovar and Ms. Pritchard each received an "exceeds expectations" fiscal 2011 performance review rating, in March 2012, each received a grant of restricted stock units and a grant of stock appreciation rights, each with a cash value equal to 35% of his or her total cash compensation.
In addition, in light of the Company's exceptional financial performance in fiscal 2011, the Compensation Committee granted each of the Named Executive Officers an additional award of restricted stock units with a grant date cash value of $100,000.
As described below under "Post-Termination Compensation," awards under our 2008 Incentive Plan and 2004 Long-Term Incentive Plan (the "2004 Incentive Plan") are subject to either optional vesting in the discretion of the Compensation Committee or immediate vesting following a "change in control." The events used to define "change in control" under these agreements were chosen because each reflects a circumstance in which, through a party's acquisition of a significant voting block, a shift in the control of the majority of the Board of Directors, or a corporate transaction, a person or group would be expected to obtain control or effective control over our policies and direction. In those circumstances, the Compensation Committee believes it may be appropriate to provide management the benefit of the awards that have been conveyed prior to such event and to waive the service and other conditions applicable to management's rights to such awards, because such change could reasonably be expected to materially alter our policies and objectives, and/or result in a material change in the composition of management.
Employee Benefits
Benefit programs are generally egalitarian. Our qualified defined contribution 401(k) plan is available to our U.S. employees. Our Named Executive Officers may also participate in a deferred compensation plan. None of our Named Executive Officers contributed to the deferred compensation plan in fiscal 2012, except Mr. Kovar. Our Named Executive Officers do not receive perquisites. All of our employees, including our Named Executive Officers, receive discounts on Fossil products.
The CompensationTalent Management Committee has reviewed and discussed the Compensation Discussion and Analysis with the members of management of the Company, and, based on such review and discussions, the Compensation and Talent Management Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company'sCompany’s proxy statement.
Compensation Committee Interlocks and Insider Participation
| 34 | | | WWW.FOSSILGROUP.COM | |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kosta N. Kartsotis(6) | 2012 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||
Chief Executive Officer | 2011 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||
and Director | 2010 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||
Mike L. Kovar | 2012 | 408,846 | -0- | 343,876 | 243,714 | -0- | 8,534 | 6,341 | 1,011,311 | |||||||||||||||||||
Executive Vice | 2011 | 372,692 | -0- | 235,242 | 235,211 | 281,250 | (6,674 | ) | 5,264 | 1,122,985 | ||||||||||||||||||
President and former | 2010 | 356,008 | 27,000 | 305,509 | 217,150 | 270,000 | 5,123 | 5,361 | 1,186,151 | |||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
Dennis R. Secor(7) | 2012 | 9,615 | 200,000 | -0- | -0- | -0- | -0- | 21,524 | (8) | 231,139 | ||||||||||||||||||
Executive Vice | ||||||||||||||||||||||||||||
Darren E. Hart(9) | 2012 | 475,385 | 125,000 | 386,317 | 286,127 | -0- | -0- | 81,011 | (10) | 1,353,840 | ||||||||||||||||||
Executive Vice | 2011 | 233,654 | 300,000 | 801,428 | 275,662 | 337,500 | -0- | 233,565 | (11) | 2,181,809 | ||||||||||||||||||
President, HR | ||||||||||||||||||||||||||||
Jennifer L. Pritchard | 2012 | 601,539 | -0- | 459,311 | 359,206 | -0- | -0- | 91 | 1,420,147 | |||||||||||||||||||
President, Retail | 2011 | 549,616 | -0- | 344,090 | 344,081 | 416,250 | -0- | 364 | 1,654,401 | |||||||||||||||||||
Division | 2010 | 511,042 | 39,000 | 436,551 | 313,657 | 390,000 | -0- | 364 | 1,690,614 | |||||||||||||||||||
Mark D. Quick | 2012 | 578,750 | -0- | 928,594 | 828,465 | -0- | -0- | 4,631 | 2,340,440 | |||||||||||||||||||
Vice Chairman | 2011 | 630,000 | 100,000 | 557,238 | 557,206 | 640,000 | -0- | 4,039 | 2,488,483 | |||||||||||||||||||
2010 | 568,161 | 43,125 | 638,163 | 495,457 | 431,250 | -0- | 4,929 | 2,181,085 | ||||||||||||||||||||
John A. White(12) | 2012 | 170,769 | 250,000 | 367,522 | 367,512 | -0- | -0- | 122,280 | (13) | 1,278,083 | ||||||||||||||||||
Executive Vice |
| | NAME AND PRINCIPAL POSITION | | | | YEAR | | | | SALARY ($) | | | | BONUS ($) | | | | STOCK AWARDS ($)(1) | | | | OPTION AWARDS ($) | | | | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(2) | | | | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($) | | | | ALL OTEHR COMPENSATION ($) | | | | TOTAL ($) | | | |||||||||||||||||||||||||||
| | Kosta N. Kartsotis (3) Chief Executive Officer and Director | | | | | | 2022 | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | |
| | | 2021 | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | |||||
| | | 2020 | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | |||||
| | Sunil M. Doshi Executive Vice President, Chief Financial Officer and Treasurer (4) | | | | | | 2022 | | | | | | | 499,654 | | | | | | | -0- | | | | | | | 305,912 | | | | | | | -0- | | | | | | | 93,731 | | | | | | | -0- | | | | | | | 9,438 | | | | | | | 908,735 | | | |
| | | 2021 | | | | | | | 435,442 | | | | | | | -0- | | | | | | | 260,284 | | | | | | | -0- | | | | | | | 313,600 | | | | | | | -0- | | | | | | | 8,211 | | | | | | | 1,017,537 | | | | |||||
| | Jeffrey N. Boyer Executive Vice President, Chief Operating Officer | | | | | | 2022 | | | | | | | 716,288 | | | | | | | -0- | | | | | | | 862,571 | | | | | | | -0- | | | | | | | 197,075 | | | | | | | -0- | | | | | | | 27,066 (5) | | | | | | | 1,803,000 | | | |
| | | 2021 | | | | | | | 662,308 | | | | | | | -0- | | | | | | | 1,096,811 | | | | | | | -0- | | | | | | | 896,000 | | | | | | | -0- | | | | | | | 20,221 | | | | | | | 2,675,340 | | | | |||||
| | | 2020 | | | | | | | 630,000 | | | | | | | 87,500 | | | | | | | 387,300 | | | | | | | -0- | | | | | | | 576,450 | | | | | | | -0- | | | | | | | 20,324 | | | | | | | 1,701,574 | | | | |||||
| | Darren E. Hart Executive Vice President, Chief Human Resources Officer | | | | | | 2022 | | | | | | | 697,158 | | | | | | | -0- | | | | | | | 629,850 | | | | | | | -0- | | | | | | | 143,963 | | | | | | | -0- | | | | | | | 18,807 (6) | | | | | | | 1,489,778 | | | |
| | | 2021 | | | | | | | 641,965 | | | | | | | -0- | | | | | | | 837,191 | | | | | | | -0- | | | | | | | 651,360 | | | | | | | -0- | | | | | | | 21,775 | | | | | | | 2,152,291 | | | | |||||
| | | 2020 | | | | | | | 610,650 | | | | | | | 84,813 | | | | | | | 192,692 | | | | | | | -0- | | | | | | | 558,745 | | | | | | | -0- | | | | | | | 22,659 | | | | | | | 1,469,559 | | | | |||||
| | Greg A. McKelvey Executive Vice President, Chief Commercial Officer | | | | | | 2022 | | | | | | | 737,754 | | | | | | | -0- | | | | | | | 888,455 | | | | | | | -0- | | | | | | | 202,979 | | | | | | | -0- | | | | | | | 8,176 | | | | | | | 1,837,364 | | | |
| | | 2021 | | | | | | | 682,177 | | | | | | | -0- | | | | | | | 1,129,719 | | | | | | | -0- | | | | | | | 922,880 | | | | | | | 4,383 | | | | | | | 12,769 | | | | | | | 2,751,928 | | | | |||||
| | | 2020 | | | | | | | 648,900 | | | | | | | 67,594 | | | | | | | 393,264 | | | | | | | -0- | | | | | | | 593,744 | | | | | | | -0- | | | | | | | -0- | | | | | | | 1,703,502 | | | |
| 2023 PROXY STATEMENT | | | 35 | |
| | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | | | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | |||||||||||||||||||||||
Name | Grant Date | Threshold(2) ($) | Target(3) ($) | Maximum(4) ($) | |||||||||||||||||||||
Kosta N. Kartsotis(5) | N/A | N/A | N/A | N/A | -0- | -0- | N/A | N/A | |||||||||||||||||
Mike L. Kovar | 16,600 | 155,625 | 456,500 | ||||||||||||||||||||||
3/15/12 | 2,690 | (6) | 343,876 | ||||||||||||||||||||||
3/15/12 | 4,212 | (7) | 127.84 | 243,714 | |||||||||||||||||||||
Dennis R. Secor(8) | N/A | N/A | N/A | N/A | -0- | -0- | N/A | N/A | |||||||||||||||||
Darren E. Hart | 19,200 | 180,000 | 528,000 | ||||||||||||||||||||||
3/15/12 | 3,022 | (6) | 386,317 | ||||||||||||||||||||||
3/15/12 | 4,945 | (7) | 127.84 | 286,127 | |||||||||||||||||||||
Jennifer L. Pritchard | 24,400 | 228,750 | 671,000 | ||||||||||||||||||||||
3/15/12 | 3,593 | (6) | 459,311 | ||||||||||||||||||||||
3/15/12 | 6,208 | (7) | 127.84 | 359,206 | |||||||||||||||||||||
Mark D. Quick | 27,000 | 253,125 | 742,500 | ||||||||||||||||||||||
3/15/12 | 7,264 | (6) | 928,594 | ||||||||||||||||||||||
3/15/12 | 14,318 | (7) | 127.84 | 828,465 | |||||||||||||||||||||
John A. White(9) | N/A | N/A | N/A | ||||||||||||||||||||||
10/15/12 | 4,384 | (6) | 367,522 | ||||||||||||||||||||||
10/15/12 | 9,272 | (7) | 83.83 | 367,512 |
| | NAME | | | | GRANT DATE | | | | ESTIMATED FUTURE PAYOUTS UNDER NON- EQUITY INCENTIVE PLAN AWARDS (1) | | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS (2) | | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (3)(#) | | | | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($) | | | |||||||||||||||||||||||||||||||||||||||||||
| THRESHOLD (4) | | | | TARGET (5) | | | | MAXIMUM (6) | | | | THRESHOLD (#) | | | | TARGET (#) | | | | MAXIMUM (#) | | | ||||||||||||||||||||||||||||||||||||||||||||
| | Kosta N. Kartsotis (7) | | | | | | N/A | | | | | | | N/A | | | | | | | N/A | | | | | | | N/A | | | | | | | N/A | | | | | | | N/A | | | | | | | N/A | | | | | | | -0- | | | | | | | N/A | | | |
| | Sunil M. Doshi | | | | | | 4/15/2022 | | | | | | | 157,500 | | | | | | | 393,750 | | | | | | | 787,500 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | 4/15/2022 | | | | | | | | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 28,104 | | | | | | | 305,912 | | | | |||||
| | Jeffrey N. Boyer | | | | | | 4/15/2022 | | | | | | | 287,700 | | | | | | | 719,250 | | | | | | | 1,438,500 | | | | | | | 19,811 | | | | | | | 39,622 | | | | | | | 79,244 | | | | | | | — | | | | | | | 431,285 | | | |
| | | 4/15/2022 | | | | | | | | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 39,622 | | | | | | | 431,285 | | | | |||||
| | Darren E. Hart | | | | | | 4/15/2022 | | | | | | | 210,165 | | | | | | | 525,413 | | | | | | | 1,050,826 | | | | | | | 14,466 | | | | | | | 28,932 | | | | | | | 56,864 | | | | | | | — | | | | | | | 314,925 | | | |
| | | 4/15/2022 | | | | | | | | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 28,932 | | | | | | | 314,925 | | | | |||||
| | Greg A. McKelvey | | | | | | 4/15/2022 | | | | | | | 296,320 | | | | | | | 740,800 | | | | | | | 1,481,600 | | | | | | | 20,405 | | | | | | | 40,811 | | | | | | | 81,622 | | | | | | | — | | | | | | | 444,228 | | | |
| | | 4/15/2022 | | | | | | | | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 40,811 | | | | | | | 444,228 | | | |
| 36 | | | WWW.FOSSILGROUP.COM | |
Perquisites
Except for certain moving expenses that we reimbursed to certain Named Executive Officers as reflected in the Summary Compensation Table above, the Named Executive Officers
Employment Agreements
benefits other than a financial advisory services benefit up to $15,000, an annual wellness benefit, 401(k) Company matching contributions, Company paid life and disability insurance premiums and, upon reaching 55 years of age and 10 years of service with the Company, retirement benefits to include continuation of health care coverage for 18 months and continuation of Company product discounts. All of our employees, including our NEOs, receive discounts on our products.
| | Option Awards | Stock Awards | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||||
Kosta N. Kartsotis(1) | N/A | — | — | N/A | N/A | — | — | |||||||||||||||
Mike L. Kovar | 3/15/08 | — | 3,600 | (2) | 30.71 | 3/15/16 | 1,400 | (3) | 111,104 | |||||||||||||
3/15/09 | — | 2,400 | (4) | 13.65 | 3/15/17 | 1,000 | (5) | 79,360 | ||||||||||||||
3/15/10 | — | 3,860 | (6) | 38.40 | 3/15/18 | 1,914 | (7) | 151,895 | ||||||||||||||
3/15/11 | — | 4,622 | (6) | 81.23 | 3/15/19 | 1,930 | (7) | 153,165 | ||||||||||||||
3/15/12 | — | 4,212 | (6) | 127.84 | 3/15/20 | 2,690 | (7) | 213,478 | ||||||||||||||
Darren E. Hart | 7/15/11 | 1,781 | (6) | 3,562 | (6) | 128.29 | 7/15/19 | 2,864 | (7) | 227,287 | ||||||||||||
3/15/12 | — | 4,945 | (6) | 127.84 | 3/15/20 | 3,022 | (7) | 239,825 | ||||||||||||||
Jennifer L. Pritchard | 6/01/07 | 1,200 | (2) | — | 31.24 | 6/01/15 | — | — | ||||||||||||||
3/15/08 | — | 3,000 | (2) | 30.71 | 3/15/16 | 1,500 | (3) | 119,040 | ||||||||||||||
3/15/09 | — | 9,600 | (4) | 13.65 | 3/15/17 | 3,600 | (5) | 428,544 | ||||||||||||||
3/15/10 | — | 5,575 | (6) | 38.40 | 3/15/18 | 2,765 | (7) | 219,430 | ||||||||||||||
3/15/11 | — | 6,761 | (6) | 81.23 | 3/15/19 | 2,824 | (7) | 224,113 | ||||||||||||||
3/15/12 | — | 6,208 | (6) | 127.84 | 3/15/20 | 3,593 | (7) | 285,140 | ||||||||||||||
Mark D. Quick | 3/15/08 | — | 6,000 | (2) | 30.71 | 3/15/16 | 3,600 | (3) | 285,696 | |||||||||||||
3/15/09 | — | 12,000 | (4) | 13.65 | 3/15/17 | 7,200 | (5) | 571,392 | ||||||||||||||
3/15/10 | — | 8,806 | (6) | 38.40 | 3/15/18 | 4,368 | (7) | 346,644 | ||||||||||||||
3/15/11 | — | 10,949 | (6) | 81.23 | 3/15/19 | 4,573 | (7) | 362,913 | ||||||||||||||
3/15/12 | — | 14,318 | (6) | 127.84 | 3/15/20 | 7,264 | (7) | 576,471 | ||||||||||||||
10/26/12 | — | — | — | — | 964 | (8) | 76,503 | |||||||||||||||
Dennis R. Secor | — | — | — | — | — | — | — | |||||||||||||||
John A. White | 10/15/12 | — | 9,272 | (6) | 83.83 | 10/15/20 | 4,384 | (7) | 347,914 |
| | NAME | | | | | | | | | | | OPTION AWARDS (1) | | | | STOCK AWARDS | | | ||||||||||||||||||||||||||||||||||||||||||||||||
| GRANT DATE | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | | | | OPTION EXERCISE PRICE ($) | | | | OPTION EXPIRATION DATE | | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(2) | | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) | | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) | | | ||||||||||||||||||||||||||||||||
| | Kosta N. Kartsotis (3) | | | | | | N/A | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | Sunil M. Doshi | | | | | | 7/15/2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 13,333 | | | | | | | 57,465 | | | | | | | — | | | | | | | — | | | |
| | | 4/15/2021 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 13,096 | | | | | | | 56,444 | | | | | | | — | | | | | | | — | | | | |||||
| | | 4/15/2022 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 28,104 | | | | | | | 121,128 | | | | | | | — | | | | | | | — | | | | |||||
| | Jeffrey N. Boyer | | | | | | 4/15/2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 8,788 | | | | | | | 37,876 | | | | | | | 8,788 (4) | | | | | | | 37,876 | | | |
| | | 4/15/2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 50,000 (5) | | | | | | | 215,500 | | | | | | | — | | | | | | | — | | | | |||||
| | | 4/14/2021 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 23,773 | | | | | | | 102,462 | | | | | | | 23,773 (6) | | | | | | | 104,462 | | | | |||||
| | | 4/15/2022 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 39,622 | | | | | | | 170,771 | | | | | | | 39,662 (7) | | | | | | | 170,771 | | | |
| 2023 PROXY STATEMENT | | | 37 | |
| | NAME | | | | | | | | | | | OPTION AWARDS (1) | | | | STOCK AWARDS | | | ||||||||||||||||||||||||||||||||||||||||||||||||
| GRANT DATE | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | | | | OPTION EXERCISE PRICE ($) | | | | OPTION EXPIRATION DATE | | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(2) | | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) | | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) | | | ||||||||||||||||||||||||||||||||
| | Darren E. Hart | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | 3/15/ 2015 | | | | | | | 11,212 | | | | | | | — | | | | | | | 80.22 | | | | | | | 3/15/ 2023 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | |||||
| | | 3/15/ 2016 | | | | | | | 18,515 | | | | | | | — | | | | | | | 47.99 | | | | | | | 3/15/ 2024 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | |||||
| | | 4/15/ 2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 8,518 | | | | | | | 36,713 | | | | | | | 8,518 (4) | | | | | | | 36,713 | | | | |||||
| | | 4/15/ 2021 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 17,359 | | | | | | | 74,817 | | | | | | | 17,359 (6) | | | | | | | 74,817 | | | | |||||
| | | 4/15/ 2022 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 28,932 | | | | | | | 124,697 | | | | | | | 28,932 (7) | | | | | | | 124,697 | | | | |||||
| | Greg A. McKelvey | | | | | | 3/15/ 2015 | | | | | | | 10,656 | | | | | | | — | | | | | | | 80.22 | | | | | | | 3/15/ 2023 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | 12/22/2015 | | | | | | | 12,885 | | | | | | | — | | | | | | | 36.73 | | | | | | | 12/22/2023 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | |||||
| | | 3/15/ 2016 | | | | | | | 17,634 | | | | | | | — | | | | | | | 47.99 | | | | | | | 3/15/ 2024 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | |||||
| | | 4/15/ 2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 9,052 | | | | | | | 39,014 | | | | | | | 9,052 (4) | | | | | | | 39,014 | | | | |||||
| | | 4/15/ 2020 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 50,000 (5) | | | | | | | 215,500 | | | | | | | — | | | | | | | — | | | | |||||
| | | 4/15/ 2021 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 24,486 | | | | | | | 105.535 | | | | | | | 24,486 (6) | | | | | | | 105,535 | | | | |||||
| | | 4/15/ 2022 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 40,811 | | | | | | | 175,895 | | | | | | | 40,811 (7) | | | | | | | 175,895 | | | |
| 38 | | | WWW.FOSSILGROUP.COM | |
2008 Incentive Plan
2004 Incentive Plan
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | |||||||||
Kosta N. Kartsotis | -0- | -0- | -0- | -0- | |||||||||
Mike L. Kovar | 12,699 | 1,676,860 | 6,887 | 823,210 | |||||||||
Dennis R. Secor | -0- | -0- | -0- | -0- | |||||||||
Darren E. Hart | -0- | -0- | 3,383 | 345,372 | |||||||||
Jennifer L. Pritchard | 14,617 | 2,649,054 | 10,014 | 1,222,950 | |||||||||
Mark D. Quick | 16,093 | 3,095,720 | 20,214 | 2,347,243 | |||||||||
John A. White | -0- | -0- | -0- | -0- |
| | NAME | | | | OPTION AWARDS | | | | STOCK AWARDS | | | ||||||||||||||||||||
| NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | | | | VALUE REALIZED ON EXERCISE ($) | | | | NUMBER OF SHARES ACQUIRED ON VESTING (#) | | | | VALUE REALIZED ON VESTING ($)(1) | | | |||||||||||||||||
| | Kosta N. Kartsotis | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | |
| | Sunil M. Doshi | | | | | | -0- | | | | | | | -0- | | | | | | | 19,881 | | | | | | | 148,206 | | | |
| 2023 PROXY STATEMENT | | | 39 | |
| | NAME | | | | OPTION AWARDS | | | | STOCK AWARDS | | | ||||||||||||||||||||
| NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | | | | VALUE REALIZED ON EXERCISE ($) | | | | NUMBER OF SHARES ACQUIRED ON VESTING (#) | | | | VALUE REALIZED ON VESTING ($)(1) | | | |||||||||||||||||
| | Jeffrey N. Boyer | | | | | | -0- | | | | | | | -0- | | | | | | | 84,000 | | | | | | | 914,340 | | | |
| | Darren E. Hart | | | | | | -0- | | | | | | | -0- | | | | | | | 72,894 | | | | | | | 793,451 | | | |
| | Greg A. McKelvey | | | | | | -0- | | | | | | | -0- | | | | | | | 86,517 | | | | | | | 941,738 | | | |
FISCAL 2012 NONQUALIFIED DEFERRED COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | | | | | | | | | | | | | ||||||||||
| | Fiscal Year (a) | | | | Summary Compensation Table Total for PEO (b) | | | | Compensation Actually Paid to PEO (c) | | | | Average Summary Compensation Table Total for non-PEO NEOs (d) | | | | Average Compensation Actually Paid to non-PEO NEOs (e) | | | | Total Shareholder Return (f) | | | | Peer Group Total Shareholder Return (g) | | | | Net Income (in $m) (h) | | | | Adjusted EBITDA (in $m) (i) | | | ||||||||||||||||||||||||
| | 2022 | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,509,719 | | | | | | $ | 553,910 | | | | | | $ | 55.68 | | | | | | $ | 114.12 | | | | | | $ | (44.2) | | | | | | $ | 36.1 | | | |
| | 2021 | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,157,293 | | | | | | $ | 2,403,236 | | | | | | $ | 132.95 | | | | | | $ | 167.85 | | | | | | $ | 25.4 | | | | | | $ | 159.6 | | | |
| | 2020 | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,603,279 | | | | | | $ | 1,818,903 | | | | | | $ | 112.02 | | | | | | $ | 141.19 | | | | | | $ | (96.1) | | | | | | $ | 7.7 | | | |
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($)(1) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Kosta N. Kartsotis | -0- | -0- | -0- | -0- | -0- | |||||||||||
Mike L. Kovar | 110,312 | -0- | 8,534 | (2) | -0- | 202,926 | ||||||||||
Dennis R. Secor | -0- | -0- | -0- | -0- | -0- | |||||||||||
Darren E. Hart | -0- | -0- | -0- | -0- | -0- | |||||||||||
Jennifer L. Pritchard | -0- | -0- | -0- | -0- | -0- | |||||||||||
Mark D. Quick | -0- | -0- | -0- | -0- | -0- | |||||||||||
John A. White | -0- | -0- | -0- | -0- | -0- |
| 40 | | | WWW.FOSSILGROUP.COM | |
Deferred Compensation Plan
Named Executive Officers may participate in the DCP. The DCP is available in general to officer level employees and allows participants to make annual irrevocable elections to defer pre-tax amounts
up to 50% of base salary and 100% of bonus payments. We may also make contributions to the DCP on behalf of a participant. Participants in the DCP may select investments from among 16 different investment alternatives for existing balances and future contributions, which include various mutual funds that invest in stocks, money market investments and bonds. Participants may change their investments at any timefinancial measure selected by contacting the plan administrator. Applicable daily interest rates are determined by multiplying (i) the sum of the one year London Interbank Offered Rate on the first and last business day of the period, by (ii) fifty percent by (iii) 1 divided by 360.
Under the DCP, employer contributions will become 100% vested upon a change in control or separation of service for reason of death, disability or normal retirement at or after attaining age 65, and participants in the DCP may receive a single distribution of the benefits accrued thereunder upon termination of employment. A "change in control" under the DCP is generally defined as (i) the acquisition by any person of 50% or more of the combined voting power of the total fair market value or total voting power of the stock of the Company, (ii) the acquisition by any person during a 12-month period of ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company, (iii) a majority of members of the Board is replaced during any twelve month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of the appointment or election, or (iv) the acquisition by any person of assets from the Company that, havein accordance with SEC rules, represents, in our assessment, the most important financial performance measure used to link compensation actually paid to the NEOs to Company performance for 2022. We define Adjusted EBITDA as our net income (loss) before the impact of income tax expense (benefit), plus interest expense, amortization and depreciation, impairment expense, other non-cash charges, stock-based compensation expense, restructuring expense and unamortized debt issuance costs included in loss on extinguishment of debt minus interest income.
| 2023 PROXY STATEMENT | | | 41 | |
| 44 | | | WWW.FOSSILGROUP.COM | |
| | EMPLOYEE POPULATION | | | | TOTAL EMPLOYEES | | | |||
| | U.S. Employees | | | | | | 2,488 | | | |
| | Non-U.S. Employees* | | | | | | 5,602 | | | |
| | Global Workforce | | | | | | 8,090 | | | |
The Company has not made any recent employer contributionsrequirements of Item 402(c)(2)(x) of Regulation S-K to determine the DCPmedian employee’s annual total compensation.
| 2023 PROXY STATEMENT | | | 45 | |
Post-Termination Compensation
Post-Termination Arrangements. We have not entered into change in control or other post-termination agreements with any of our Named Executive Officers or other members of the executive management team. However, pursuant2008 Plan
Company's Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; or (v) any tender or exchange offer is made to acquire 30% or more of the securities of the Company, other than an offer made by the Company, and shares are acquired pursuant to that offer.
In addition, in the event of death or a change in control of the Company, all outstanding restricted stock units and stock appreciation rights under our 2004 Incentive Plan will become fully exercisable or vested. Unvested restricted stock units and stock appreciation rights granted under the 2004 Incentive Plan terminate upon any other termination of employment.
A "change in control" under the 2004 Incentive Plan is generally defined as (i) the acquisition by any person of 30% or more of the combined voting power of our outstanding securities, or (ii) the occurrence of a transaction requiring stockholder approval and involving the sale of all or substantially all of our assets or the merger of our Company with or into another corporation.
Executive Retirement Agreements. In March 2012, the Company entered into an Executive Retirement Agreement with each of Messrs. Hart, Kovar and Quick and Ms. Pritchard. Pursuant to the Executive Retirement Agreement, following such Named Executive Officer's retirement at a minimum of age 55 and 10 years of service with the Company ("Retirement"), (i) the Named Executive Officer's outstanding equity awards will continue to vest in accordance with their respective vesting schedules for 12 months following Retirement and (ii) all stock appreciation rights vested upon Retirement, or during the 12 months following Retirement, will remain exercisable for the 12 months following Retirement or 90 days after vesting, whichever is later. The foregoing vesting and exercise provisions apply to all equity awards outstanding on the date of the Executive Retirement Agreement and to all future equity awards granted to such Named Executive Officer.
Each Executive Retirement Agreement contains non-competition and non-solicitation provisions pursuant to which the Named Executive Officer will be prohibited from competing with, or soliciting clients, manufacturers or suppliers of, the Company and from soliciting the Company's employees or independent contractors for 12 months following such Named Executive Officer's Retirement. In addition, the Executive Retirement Agreement contains a clawback provision pursuant to which the Named Executive Officer's compensation will be subject to recovery by the Company if, in the year such compensation is paid or within the three year period thereafter, (i) the Company is required to prepare an accounting restatement due to material noncompliance by the Company or an affiliate with any financial reporting requirement under applicable securities laws and during such three year period the Named Executive Officer was either a named executive officer of the Company or an employee of the Company who was responsible for the preparation of the Company's financial statements, or (ii) the Company is required by applicable law to require repayment by the Named Executive Officer of such compensation.
Post-Employment Compensation Table.
| | POSITION | | | | RESTRICTED STOCK UNITS ($) | | | | STOCK APPRECIATION RIGHTS ($) | | | | PERFORMANCE STOCK UNITS ($) | | | | TOTAL ($) | | | ||||||||||||
| | Kosta N. Kartsotis | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | | | | | -0- | | | |
| | Sunil M. Doshi | | | | | | 235,037 | | | | | | | -0- | | | | | | | -0- | | | | | | | 235,037 | | | |
| | Jeffrey N. Boyer | | | | | | 526,609 | | | | | | | -0- | | | | | | | 311,109 | | | | | | | 837,718 | | | |
| | Darren E. Hart | | | | | | 236,227 | | | | | | | -0- | | | | | | | 236,227 | | | | | | | 472,454 | | | |
| | Greg A. McKelvey | | | | | | 535,944 | | | | | | | -0- | | | | | | | 320,444 | | | | | | | 856,388 | | | |
Name | Restricted Stock Units ($) | Stock Appreciation Rights ($) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Kosta N. Kartsotis | -0- | -0- | -0- | |||||||
Mike L. Kovar | 797,896 | 626,420 | 1,424,316 | |||||||
Dennis R. Secor | -0- | -0- | -0- | |||||||
Darren Hart | 525,679 | -0- | 525,679 | |||||||
Jennifer L. Pritchard | 1,275,525 | 1,240,605 | 2,516,130 | |||||||
Mark D. Quick | 2,411,817 | 1,796,292 | 4,208,109 | |||||||
John White | 391,535 | 50,728 | 442,263 |
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Equity Compensation
and the 2008 Plan) (a “Change in Control”), such NEO will be entitled to the following Severance Benefits under the Agreement: (i) 18 months of such NEO’s then current base salary in effect at the Termination Date (“Base Salary”), payable in 39 equal installments over an 18-month period in accordance with the Company’s normal payroll practices; (ii) the following cash bonuses under any cash bonus plan for which such NEO was eligible on the Termination Date: (x) a pro-rata amount payable in a lump sum, of the target bonus the NEO would have received for the fiscal year under such cash bonus plan, and (y) 1.5 times the full target bonus for which such NEO was eligible, payable in 39 equal installments over an 18-month period in accordance with the Company’s normal payroll practices; (iii) any outstanding non-performance-based RSU and SARs granted pursuant to the 2008 Plan or the 2016 Plan (collectively, “Time-Based Awards”), will continue to vest for an additional 18 months, to the same extent such awards would have otherwise vested had such NEO remained employed during such period; (iv) any outstanding PSUs granted pursuant to the 2008 Plan or the 2016 Plan will vest pro-rata, as set forth in the Agreement; and (v) all vested SARs will be exercisable until the earlier of (x) the expiration date of such award or (y) 24 months from the Termination Date.
| | NAME | | | | TOTAL BASE SALARY | | | | TARGET BONUS | | | | HEALTHCARE AND INSURANCE BENEFITS (1) | | | | FAIR MARKET VALUE OF ADDITIONAL VESTING (2) | | | | TOTAL (3) | | | |||||||||||||||
| | Boyer | | | | | $ | 1,084,125 | | | | | | $ | 1,806,875 | | | | | | $ | 17,070 | | | | | | $ | 764,982 | | | | | | $ | 3,673,052 | | | |
| | Hart | | | | | $ | 1,050,825 | | | | | | $ | 1,313,533 | | | | | | $ | 23,965 | | | | | | $ | 419,342 | | | | | | $ | 2,807,665 | | | |
| | McKelvey | | | | | $ | 1,116,750 | | | | | | $ | 1,861,250 | | | | | | $ | 23,064 | | | | | | $ | 781,470 | | | | | | $ | 3,782,534 | | | |
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| | NAME | | | | CHANGE IN CONTROL SUM | | | | HEALTHCARE AND INSURANCE BENEFITS (1) | | | | FAIR MARKET VALUE OF ACCELERATED VESTING (2) | | | | TOTAL (3) | | | ||||||||||||
| | Boyer | | | | | $ | 3,613,750 | | | | | | $ | 17,070 | | | | | | $ | 837,717 | | | | | | $ | 4,468,537 | | | |
| | Hart | | | | | $ | 2,977,339 | | | | | | $ | 23,965 | | | | | | $ | 472,454 | | | | | | $ | 3,473,758 | | | |
| | McKelvey | | | | | $ | 3,722,500 | | | | | | $ | 23,064 | | | | | | $ | 856,388 | | | | | | $ | 4,601,952 | | | |
Plan Category | (a) Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights(1) | (b) Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||
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Equity compensation plans approved by security holders | 866,175 | $63.56 | 3,173,177 | |||
Equity compensation plans not approved by security holders | Not applicable | Not applicable | Not applicable | |||
Total | 866,175 | 3,173,177 |
party transaction means a transaction, arrangement or relationship in which the Company andCompany'sCompany’s executive officers and directors, and persons who own more than 10% of a registered class of the Company'sCompany’s equity securities (the "10% Stockholders"“10% Stockholders”), to file reports of ownership and changes of ownership with the SEC. Executive officers, directors and 10% Stockholders of the Company are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms so filed. Based solely on review of copies of such forms received, the Company believes that, during the last fiscal year, all filing requirements under Section 16(a) applicable to its executive officers, directors and 10% Stockholders were timely met.Certain Relationships and Related Transactions Mr. Rasheed Shroff (the son of Mr. Jal S. Shroff) is an employee of Fossil Asia Pacific Ltd., a wholly-owned subsidiary of the Company. Mr. Rasheed Shroff earned approximately $233,000 in cash compensation in fiscal 2012. In addition, under the Company's 2008 Incentive Plan, Mr. Rasheed Shroff received a grant of options to purchase 4,250 shares of Common Stock at an exercise price of $127.84 and a grant of 456 restricted stock units.Company'sCompany’s Audit Committee charter, any proposed transaction that has been identified as a related party transaction under Item 404 of SEC Regulation S-K may be consummated or materially amended only following the approval by the Audit Committee. A related
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OFFICERS
"
”
| The Board of Directors unanimously recommends that stockholders vote “FOR” the approval, on an advisory basis, of the compensation of our Named Executive Officers as disclosed in the compensation discussion and analysis. | |
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| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE OPTION OF EVERY “1 YEAR” FOR FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION. | |
| 2023 PROXY STATEMENT | | | 51 | |
| The board of directors recommends that the stockholders vote “FOR” the approval of the 2023 Plan. | |
| | PLAN CATEGORY | | | | (A) NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (1) | | | | (B) WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | | | | (C) NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) | | | |||||||||
| | Equity compensation plans approved by security holders | | | | | | 1,967,257 | | | | | | $ | 55.31 (2) | | | | | | | 2,881,366 | | | |
| | Equity compensation plans not approved by security holders | | | | Not applicable | | | | Not applicable | | | | Not applicable | | | |||||||||
| | Total | | | | | | 1,967,257 | | | | | | $ | 55.31 | | | | | | | 2,881,366 | | | |
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| The Board of Directors recommends a vote FOR the 2023 Plan. | |
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| THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE EXCULPATION AMENDMENT. | |
| 2023 PROXY STATEMENT | | | 63 | |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
FEES
| | | | | | Fiscal Year 2022 | | | | Fiscal Year 2021 | | | ||||||
| | Audit Fees (1) | | | | | $ | 3,155,850 | | | | | | $ | 3,256,528 | | | |
| | Audit-Related Fees (2) | | | | | $ | 112,270 | | | | | | $ | 114,606 | | | |
| | Tax Fees (3) | | | | | $ | 290,561 | | | | | | $ | 193,330 | | | |
| | Other fees (4) | | | | | $ | 163,105 | | | | | | | — | | | |
| | Total Fees | | | | | $ | 3,721,786 | | | | | | $ | 3,564,464 | | | |
| Fiscal Year 2012 | Fiscal Year 2011 | |||||
---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 2,743,396 | $ | 2,389,144 | |||
Audit-Related Fees(2) | 79,500 | 79,500 | |||||
Tax Fees(3) | 192,723 | 76,400 | |||||
All Other Fees(4) | -0- | 18,923 | |||||
Total | $ | 3,015,619 | $ | 2,563,967 |
Pre-Approval of Independent Registered Public Accounting Firm Fees and Services Policy
The Audit Committee'sCommittee’s Policies and Procedures for the Engagement of the Principal Outside Auditing Firm provides for pre-approval of all audit, audit-related, tax and other permissible non-audit services provided by our principal independent registered public accounting firm on an annual basis and individual engagements as needed. The policy also requires additional approval of any engagements that were previously approved but are anticipated to exceed pre-approved fee levels. The policy permits the Audit Committee chairperson to pre-approve principal independent registered public accounting firm services where the Company deems it necessary or advisable that such services commence prior to the next regularly scheduled Audit Committee meeting (provided that the Audit Committee chairperson must report to the full Audit Committee on any pre-approval determinations).
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| The Board of Directors unanimously recommends that the stockholders vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending December 30, 2023 | |
| 2023 PROXY STATEMENT | | | 65 | |
TheSTOCKHOLDER PROPOSALS
Effect of the Proposed Name Change
In connection with the name change, our Common Stock will receive a new CUSIP number. A CUSIP number is a unique number assigned to our Common Stock to facilitate identification of the stock for trading purposes. The following describes the effect of the proposed name change on stockholders who own shares of Common Stock in "street name" or in physical certificate form.
Stockholders Holding Common Stock in "Street Name." Banks, brokers and other nominees will be instructed to effect the name change and the CUSIP changeincluded in the accountsproxy statement for the 2024 Annual Meeting of their customers holding Common StockStockholders must be received by the Company at its principal executive offices on or before December 15, 2023 for inclusion in "street name" (i.e., through a bank, broker or other nominee).
the Company’s proxy statement relating to that meeting. Stockholders Holding Common Stock in Certificate Form. Registered stockholders who hold their shares of Common Stock in certificate form are not requiredwishing to do anything. Certificates issued with our current corporate name will continuesubmit proposals to be valid after the name change. Stockholders holding shares in certificate form should not destroy their stock certificates nor submit the stock certificates to us to have them reissued.
Procedure for Effecting the Name Change
If the proposal to amend our Certificate of Incorporation to change our name to "Fossil Group, Inc." is approved by our stockholderspresented directly at the Annual Meeting instead of for inclusion in next year’s proxy statement must follow the submission criteria and deadlines set forth in our Bylaws. To be timely in connection with an amendmentannual meeting, a stockholder proposal must be received by the Company at its principal executive offices not before January 26, 2024 or after February 25, 2024. Stockholders who intend to solicit proxies in reliance on the SEC’s universal proxy rule for nominations for election to the Board submitted under the advance notice requirements of our CertificateBylaws must comply with the additional requirements of IncorporationRule 14a-(b) of the Exchange Act. With respect to other stockholder proposals, management will be filed withable to vote proxies in its discretion without advising stockholders in the Secretary of State of Delaware to effect2024 proxy statement about the name change as soon as practicable after the Annual Meeting. The amendment will change Article I of our Certificate of Incorporation to read as follows:
"ARTICLE IThe namenature of the Corporation is Fossil Group, Inc."
Vote Required
The affirmativematter and how management intends to vote of a majorityif notice of the shares present in person or by proxy, and entitled to vote on the subject matter at the Annual Meeting, is required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO CHANGE OUR CORPORATE NAME TO FOSSIL GROUP, INC.
STOCKHOLDER PROPOSAL REGARDINGENVIRONMENTAL REPORT(Proposal 5)
Calvert Social Index Fund ("Calvert"), Calvert VP S&P 500 Index Portfolio and Calvert VP NASDAQ 100 Index Portfolio, each a beneficial owner of 1,108 shares, 1,150 shares and 1,237 shares, respectively, of Common Stock as of December 14, 2012, have notified us that they intend to present the following proposal at the Annual Meeting. First Affirmative Financial Network, LLC, acting on behalf of Waterglass, LLC, which beneficially owns 448 shares of Common Stock as of December 10, 2012, has notified us that it supports such proposal.
RESOLVED: Shareholders request that the Board of Directors issue a report describing the company's supply chain standards related to environmental impacts—particularly water use and related pollution. This report, prepared at reasonable cost and omitting proprietary information, shall be released by November 1, 2013.
SUPPORTING STATEMENT: Companies that rely heavily on water or other resources in their supply chains are vulnerable to resource scarcity and reputational damage. Investors increasingly seek disclosure of how companies manage this risk and maximize opportunities for brand enhancement through reputable supply chain management.
Leading companies in apparel and accessories publish sustainability policies and reports that describe vendor standards and sustainable business practices. They disclose information about key environmental impacts throughout the value chain of their products. Nine West, Adidas, and many other companies participate in the Leather Working Group (LWG), a multi-stakeholder initiative that maintains an environmental auditing protocol and promotes sustainable business practices among companies that produce leather and leather goods.
In 2010, Nike committed to have all leather suppliers join LWG and actively worked with their suppliers toward that goal. Nike also took a leading role in developing the auditing protocol to strengthen the voluntary program. Timberland was a founding member of LWG and has continued to work closely with tanners to reduce environmental impacts.
While leather goods are a growing segment in Fossil's product line up, the company is not received by the Company at its principal executive offices before February 25, 2024.
Fossil's supply chains employ energy-intensive processes and create significant water demands and detrimental effects, particularly in leather tanning and finishing. Producing leather goods is a water intensive process. According to the Water Footprint Network, on average it takes 4,400 gallons of water to make one pair of leather shoes.
Leather tanning and finishing are polluting processes that use and discharge heavy metals, chemicals, organic matter, salts and acids. Untreated effluent is a serious problem in developing countries where leather production is growing. With suppliers located throughout the world, Fossil is well positioned to work with third party manufactures to improve sustainability practices and disclosure.
The business risks associated with water scarcity and declining water quality are likely to be worsened by climate change in certain regions. It is imperative that Fossil address these long-term business risks.
There are significant opportunities for Fossil Inc. to adopt practices that reduce supply chain environmental impacts. There are a number of readily available, free, risk mapping tools such as WBCSD Global Water Tool, GEMI's Local Water Tool, WWF and DEG's Water Risk filter, Ceres Aqua Gauge or CEO Water Mandate's Water Disclosure Guidelines.
THEREFORE, please vote FOR this common-sense proposal for improved environmental performance, transparency and success of Fossil Inc's long-term operations.
Board of Directors' Statement of Opposition
FOR THE REASONS STATED BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 5.
We are committed to compliance with applicable environmental requirements and have implemented policies and procedures designed to ensure compliance with the numerous environmental laws and regulations affecting our business. In addition, we are committed to seeing that all of our products are manufactured and distributed in compliance with applicable environmental laws and regulations.
We have a Code of Conduct for Manufacturers that sets forth the corporate responsibility requirements for our suppliers, including compliance with applicable environmental laws and regulations. Before supplying products to us, our manufacturers sign an agreement that includes a commitment to abide by our Code of Conduct for Manufacturers. We also provide training to our factories related to this code and the applicable laws in the country in which the factory is located. In addition to these contractual obligations, we evaluate our suppliers' compliance with the Code of Conduct for Manufacturers through audits conducted both by our employees and third party compliance auditing firms. We disclose information about our Code of Conduct for Manufacturers and supplier audit program in ourCompany’s Annual Report on Form 10-K.
While we are sensitive to stockholder concerns10-K for the environment, we do not believe that preparing the report requestedfiscal year ended December 31, 2022 without charge by this proposal would besending a good use of the Company's time and resources. In evaluating our supply chain, our management recognizes the importance of conducting our business in a way that complies with environmental requirements applicablewritten request to us.
Evaluating sources of supplies and suppliers and the production and distribution of our productsFossil Group, Inc., 901 S. Central Expressway, Richardson, Texas 75080, Attn: Investor Relations. The Annual Report on Form 10-K is a complex process that also requires management to evaluate a broad range of legal, business, cultural, internal and external considerations and risks, none of which can readily be isolated from other factors. A report describing our supply chain standards related to environmental impacts, as requested by the proposal, would be an incomplete portrayal of these complex evaluations and determinations that are made by our management. We do not believe that the availability of free risk-assessment tools mitigates any of these concerns. We believe that using our resources to continue our current business and programs that reflect these principles is a better use of our resources than diverting them for the production of reports that we do not believe will result in any meaningful additional benefit to our stakeholders as a whole.
During 2012, approximately 50% of the raw leather used in the manufacturing of our small leather goods, handbags and belts was sourced from tanneries that were members of the Leather Working Group, and we discontinued selling men's and women's leather shoes.
For these reasons, we do not believe that the proposed report would provide meaningful additional benefits to our stockholders, employees, customers or the communities in which we operate. We believe our time, efforts and finances would be better used in the continuation of our current policies and procedures for compliance with the various federal, state and local regulatory requirements applicable to our operations, both domestically and internationally.
In 2012, our stockholders voted against a substantially similar proposal advocated by Calvert.
FOR THESE REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "AGAINST" PROPOSAL 5.
| It is IMPORTANT that proxies be voted promptly. Stockholders who do not expect to attend the meeting and wish their stock to be voted are urged to vote by internet, phone or mail as described in the proxy card or proxy notice. | |
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Stockholder proposals to be included in the proxy statement for the 2014 Annual Meeting of Stockholders must be received by the Company at its principal executive offices on or before December [ • ], 2013 for inclusion in the Company's Proxy Statement relating to that meeting. Stockholders wishing to submit proposals to be presented directly at
You may obtain a copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012 without charge by sending a written request to Fossil Inc., 901 S. Central Expressway, Richardson, Texas 75080, Attn: Investor Relations. The75080. Following are questions and answers regarding the Annual Report on Form 10-KMeeting:
| 2023 PROXY STATEMENT | | | 67 | |
| | Proposal No. | | | | Description | | | | Board Voting Recommendations | | | | Page | | |
| | 1 | | | | Election of Directors | | | | FOR All Director Nominees | | | | | | |
| | 2 | | | | Advisory Vote to Approve the Compensation of our Named Executive Officers | | | | FOR | | | | | | |
| | 3 | | | | Advisory Vote on Whether an Advisory Vote on Executive Compensation Should Be Held Every One, Two or Three Years | | | | EVERY ONE YEAR | | | | | | |
| | 4 | | | | Approval of the Fossil Group, Inc. 2023 Long-Term Incentive Plan | | | | FOR | | | | | | |
| | 5 | | | | Approval of the Amendment to the Certificate of Incorporation to permit exculpation of officers | | | | FOR | | | | | | |
| | 6 | | | | Ratification of the Appointment of Independent Auditors | | | | FOR | | | | | |
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April [ • ], 2013Richardson, Texas
IT IS IMPORTANT THAT PROXIES BE VOTED PROMPTLY. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED TO VOTE BY INTERNET, PHONE OR MAIL AS DESCRIBED IN THE PROXY CARD.
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| | | Vote Call Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your | | | Vote Mark, sign and date your proxy card, then detach it, and return it in the postage-paid envelope provided. | |
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