def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
240.14a-12
American Eagle Outfitters, Inc.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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AMERICAN
EAGLE OUTFITTERS, INC.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
to be held
June 21, 2011
and
PROXY STATEMENT
TABLE OF CONTENTS
American Eagle Outfitters, Inc.
77 Hot Metal Street
Pittsburgh, Pennsylvania 15203
412-432-3300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 21, 2011
April 29,
2011
To the Stockholders of
American Eagle Outfitters, Inc.:
The 2011 Annual Meeting of Stockholders of American Eagle
Outfitters, Inc., a Delaware corporation, will be held at the
Companys offices located at 77 Hot Metal Street,
Pittsburgh, Pennsylvania, on Tuesday, June 21, 2011, at
11:00 a.m., local time, for the following purposes:
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1.
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To elect the following three Class I directors to serve
until the 2014 Annual Meeting of Stockholders, or until their
successors are duly elected and qualified: Michael G. Jesselson;
Roger S. Markfield; and Jay L. Schottenstein;
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2.
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To ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending January 28, 2012;
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3.
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To hold an advisory vote on the compensation of our named
executive officers;
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4.
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To hold an advisory vote on the frequency of future stockholder
advisory votes on the compensation of our named executive
officers; and
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5.
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To transact such other business as may properly come before the
meeting or any adjournment thereof.
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We have elected to furnish proxy materials and our Fiscal 2010
Annual Report on
Form 10-K
(Annual Report) to many of our stockholders over the
Internet pursuant to the rules of the U.S. Securities and
Exchange Commission. On or about April 29, 2011, we mailed
to most of our stockholders a Notice of Internet Availability of
Proxy Materials (the Notice) containing instructions
on how to gain access to our Proxy Statement and Annual Report
and how to vote online. All other stockholders received a copy
of the Proxy Statement and Annual Report by mail. The Notice
also contains instructions on how you can elect to receive a
printed copy of the Proxy Statement and Annual Report, if you
only received a Notice by mail.
Whether or not you plan to attend the meeting, please vote your
shares promptly as outlined in the following Proxy Statement. If
you attend the meeting, you may vote in person and your proxy
will not be used.
By Order of the Board of Directors
Cornelius Bulman, Jr.
Corporate Secretary
AMERICAN
EAGLE OUTFITTERS, INC.
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 21, 2011
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of American
Eagle Outfitters, Inc., a Delaware corporation, (the
Board) for use at the Annual Meeting of Stockholders
to be held on June 21, 2011, at 11:00 a.m., local
time, at the Companys offices located at
77 Hot Metal Street, Pittsburgh, Pennsylvania and at
any adjournment thereof. It is being mailed to the stockholders
on or about April 29, 2011. (We,
our, and the Company refer to American
Eagle Outfitters, Inc.)
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Who is
entitled to vote?
Stockholders of record at the close of business on
April 25, 2011, the record date for the Annual Meeting, are
entitled to vote at the Annual Meeting. As of the record date,
there were 194,870,958 shares of Common Stock, par value
$0.01 per share, outstanding and entitled to vote. Each share
that you own entitles you to one vote.
What is
the purpose of the Annual Meeting?
Stockholders will be asked to vote on the following matters at
the Annual Meeting:
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1.
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The election of the following three Class I directors to
serve until the 2014 Annual Meeting of Stockholders, or until
their successors are duly elected and qualified: Michael G.
Jesselson; Roger S. Markfield; and Jay L. Schottenstein;
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2.
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The ratification of the appointment of Ernst & Young
LLP as our independent registered public accounting firm for the
fiscal year ending January 28, 2012;
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3.
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An advisory vote on the compensation of our named executive
officers; and
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4.
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An advisory vote on the frequency of future stockholder advisory
votes on the compensation of our named executive officers.
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How does
the Board recommend I vote on these proposals?
The Board of Directors recommends a vote:
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FOR each of the nominees for director listed in this Proxy
Statement;
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FOR the ratification of the appointment of Ernst &
Young LLP as our independent registered public accounting firm
for the fiscal year ending January 28, 2012;
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FOR the approval of the compensation of our named executive
officers; and
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FOR annual non-binding votes on the compensation of our named
executive officers.
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Why did I
receive a Notice of Internet Availability of Proxy
Materials?
In order to both save money and protect the environment, we have
elected to provide access to our proxy materials and Fiscal 2010
Annual Report on
Form 10-K
(Annual Report) on the Internet, instead of mailing
the full set of printed proxy materials, in accordance with the
rules of the U.S. Securities and Exchange Commission
(SEC) for the electronic distribution of proxy
materials. On or about April 29, 2011, we mailed
to most of our stockholders a Notice of Internet Availability of
Proxy Materials (the Notice) containing instructions
on how to gain access to our Proxy Statement and Annual Report
and how to vote online. If you received a Notice by mail, you
will not receive a printed copy of the proxy materials in the
mail unless you request it. Instead, the Notice instructs you on
how to obtain and review all of the important information
contained in the Proxy Statement and Annual Report. The Notice
also instructs you on how you may submit your proxy over the
Internet. If you received a Notice by mail and would like to
receive a printed copy of our proxy materials, you should follow
the instructions for requesting such materials included in the
Notice.
How do I
vote my shares?
If your shares are registered directly in your name (i.e.,
you are a registered stockholder), you received
a proxy card along with a printed copy of the proxy materials.
You may complete and sign the enclosed proxy card and return it
in the pre-paid envelope. Alternatively, you may attend and vote
in person at the Annual Meeting.
If you are a beneficial owner of shares registered in the name
of your broker, bank or other agent (i.e., your shares
are held in street name), you should receive either
a Notice or a voting instruction form along with a Proxy
Statement. You should follow the instructions on the Notice or
the voting instruction form in order to ensure that your vote is
counted. To vote in person at the Annual Meeting, you must
obtain a legal proxy from the broker, bank or agent that holds
your shares to present at the meeting.
Can I
change or revoke my proxy?
Yes. If you are a registered stockholder, you may revoke your
proxy at any time before it is voted by delivering written
notice to the Company (Attention: Cornelius Bulman, Jr.,
Corporate Secretary), by submitting a properly executed proxy
bearing a later date or by attending the meeting and voting in
person.
If your shares are held in street name, you may revoke your
proxy by submitting new voting instructions to your broker or,
if you have obtained a legal proxy from your broker, by
attending the Annual Meeting and voting in person.
What
constitutes a quorum?
A quorum of stockholders is necessary to transact business at
the Annual Meeting. A quorum will be present if a majority of
the outstanding shares of the Companys common stock, as of
the close of business on the record date, are represented by
stockholders present at the meeting or by proxy. At the close of
business on the record date, there were 194,870,958 shares
of Common Stock outstanding and entitled to vote. Therefore,
97,435,480 shares will be required to be represented by
stockholders present at the meeting or by proxy in order to
establish a quorum.
Abstentions and broker non-votes will count as present in
determining whether there is a quorum. Broker non-votes occur
when brokers, who hold their customers shares in street
name, sign and submit proxies for such shares and vote such
shares on some matters but not others. This would occur when
brokers have not received any instructions from their customers,
in which case the brokers, as the holders of record, are
permitted to vote on routine matters, which include
the ratification of the appointment of an independent registered
public accounting firm, but not on non-routine
matters, such as the election of directors; the advisory vote on
the compensation of our named executive officers; or the
advisory vote on the frequency of future stockholder advisory
votes on the compensation of our named executive officers.
Therefore, if you do not instruct your broker how to vote on
certain proposals, your shares will not be counted for those
proposals, and, therefore, we urge you to give voting
instructions to your broker on all voting items.
What vote
is required to approve each proposal?
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Item 1.
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Once a quorum is established, directors in an uncontested
election are elected by a majority of the votes cast in respect
to that directors election. In the event of a contested
election of directors, directors shall be elected by the vote of
a plurality of the votes represented by the shares of
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Common Stock present at the meeting in person or by proxy.
Properly executed proxies marked Abstain and broker
non-votes are not voted with respect to the nominee or nominees
indicated, although they are counted for purposes of determining
if a quorum is present.
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Item 2.
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Appointment of Ernst & Young as our independent
registered public accounting firm is ratified by the affirmative
vote of a majority of the shares of Common Stock present at the
meeting, in person or by proxy.
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Item 3.
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The advisory vote on the compensation of our named executive
officers requires the affirmative vote of a majority of the
shares of Common Stock present at the meeting, in person or by
proxy.
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Item 4.
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The advisory vote on the frequency of future stockholder
advisory votes on the compensation of our named executive
officers requires a plurality of the votes represented by the
shares of Common Stock present at the meeting in person or by
proxy. The frequency option that receives the most affirmative
votes of all of the votes cast is the frequency that will be
deemed recommended by the stockholders.
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For any other item that is properly submitted to stockholders
for approval at the Annual Meeting, an affirmative vote of a
majority of the shares of Common Stock voting on the matter is
required for approval. For purposes of determining the number of
shares of Common Stock voting on a matter, abstentions are
counted and will have the effect of a negative vote; broker
non-votes are not counted and have no effect on the vote.
Who bears
the costs of this solicitation?
We bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of stock.
Our representatives may solicit proxies by mail, telegram,
telephone or personal interview. To solicit proxies, we request
the assistance of banks, brokerage houses and other custodians,
and, upon request, reimburse such organizations for their
reasonable expenses in forwarding soliciting materials to
beneficial owners and in obtaining authorization for the
execution of proxies.
Can I
nominate someone for election to the Board of
Directors?
Yes, for election at next years Annual Meeting. You may do
so by delivering to the Corporate Secretary, no earlier than
March 24, 2012 and no later than April 23, 2012, a
notice stating: (i) the name and address of the stockholder
who intends to make the nomination; (ii) the name, age,
business address and, if known, residence address of each
nominee; (iii) the principal occupation or employment of
each nominee; (iv) the number of shares of stock of the
Company that are beneficially owned by each nominee and the
nominating stockholder; and (v) the other information
specified in Article Tenth (b) of our Certificate of
Incorporation. Our Certificate of Incorporation is available on
our website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Corporate Governance, Other Governance Documents.
Additionally, you may recommend a nominee for consideration by
our Nominating and Corporate Governance Committee (the
Nominating Committee). Recommendations should be
submitted to our Nominating Committee in accordance with the
procedures described below under the Nominating
Committee section.
May I
submit a stockholder proposal for next years Annual
Meeting?
Yes. Stockholder proposals to be included in the proxy statement
for the 2012 Annual Meeting of Stockholders must be received by
the Company (addressed to the attention of the Corporate
Secretary) by December 31, 2011. We may omit from the proxy
statement and form of proxy any proposals that are not received
by the Corporate Secretary by December 31, 2011. Any
stockholder proposal submitted outside the processes of
Rule 14a-8
under the Securities Exchange Act of 1934 for presentation at
our 2012 Annual Meeting will be considered untimely for purposes
of
Rule 14a-4
and 14a-5
under the Securities Exchange Act of 1934 if notice thereof is
received before March 24, 2012 or after April 23,
2012. To be submitted at the meeting, any such proposal must be
a proper subject for stockholder action under the laws of the
State of Delaware, and must otherwise conform to applicable
requirements of the proxy rules of the SEC.
3
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table shows, as of April 1, 2011, certain
information with regard to the beneficial ownership of our
Common Stock by: (i) each person known by the Company to
own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each of the Companys directors;
(iii) each executive officer named in the summary
compensation table below; and (iv) all directors and
executive officers as a group.
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Shares Beneficially Owned
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Common
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Right to
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Percent
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Stock (1)
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Acquire (2)
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Total
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(3)
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5% Beneficial Owners
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BlackRock, Inc. (4)
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11,337,111
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11,337,111
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5.8
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%
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Royce & Associates, LLC (5)
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9,963,985
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9,963,985
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5.1
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%
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Directors and Executive Officers
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Fredrick W. Grover
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10,362
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234,682
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245,044
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*
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Joan Holstein Hilson
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67,894
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311,669
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379,563
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*
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Michael G. Jesselson
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226,825
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2,903
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229,728
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*
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Joseph E. Kerin (6)
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76,722
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342,930
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419,652
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*
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Thomas R. Ketteler
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4,181
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4,181
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Roger S. Markfield
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324,790
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1,870,354
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2,195,144
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1.1
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%
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Cary D. McMillan
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18,193
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20,186
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38,379
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LeAnn Nealz (7)
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76,286
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76,286
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James V. ODonnell
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1,969,052
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2,352,500
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4,321,552
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2.2
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%
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Janice E. Page
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32,502
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16,766
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49,268
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Dennis R. Parodi
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54,002
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291,989
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345,991
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Jay L. Schottenstein (8)
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8,916,504
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232,262
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9,148,766
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4.7
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%
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Gerald E. Wedren
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17,801
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26,127
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43,928
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All directors and executive officers as a group
(15 in group)
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11,835,313
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6,160,806
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17,996,119
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9.0
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%
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Represents less than 1% of the Companys shares of Common
Stock. |
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Unless otherwise indicated, each of the stockholders has sole
voting power and power to sell with respect to the shares of
Common Stock beneficially owned. |
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Includes (a) shares for options exercisable within
60 days of April 1, 2011 and (b) total deferred
share units as well as the respective dividend equivalents. |
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Percent is based upon the 194,859,943 shares outstanding at
April 1, 2011 and the shares which such director or
executive officer has the right to acquire upon options
exercisable within 60 days of April 1, 2011, share
units and dividend equivalents, if applicable. |
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In a Schedule 13G filed with the SEC on February 3,
2011, BlackRock, Inc., a parent holding company or control
person, reported beneficial ownership of 11,337,111 shares.
BlackRock, Inc. has sole voting and dispositive power over the
11,337,111 shares. The address for BlackRock, Inc. is 40
East 52nd Street, New York, New York 10022. |
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In a Schedule 13G filed with the SEC on January 11,
2011, Royce & Associates, LLC, an investment adviser,
reported beneficial ownership of 9,963,985 shares.
Royce & Associates, LLC has sole voting and
dispositive power over the 9,963,985 shares. The address
for Royce & Associates, LLC. is 745 Fifth Avenue,
New York, NY 10151. |
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Mr. Kerin, former Executive Vice President of Supply Chain
and Real Estate, ended his employment with the Company on
November 30, 2010 but he is deemed to be a named executive
officer for the fiscal year ended January 29, 2011 because
of the level of his total compensation and because he served as
an |
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executive officer during the year. Shares of Common Stock were
calculated based on the Companys stock records as of
November 30, 2010. No further ownership information was
available to the Company after Mr. Kerin ceased being a
Section 16 reporting person. |
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Ms. Nealz, former Executive Vice President and Chief Design
Officer, resigned effective October 27, 2010 but she is
deemed to be a named executive officer for the fiscal year ended
January 29, 2011 because of the level of her total
compensation and because she served as an executive officer
during the year. Shares were calculated based on the
Companys stock records as of September 28, 2010. No
further ownership information was available to the Company after
Ms. Nealz ceased being a Section 16 reporting person. |
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(8) |
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Mr. Schottenstein has sole power to vote and dispose as
trustee of a trust that owns 6,300 shares and has shared
power to vote and dispose of a trust that owns
245,406 shares. Additionally, Mr. Schottenstein serves
as Chairman of SEI, Inc. and has or shares voting power for 59%
of SEI, Inc. Accordingly, he may be deemed to be the beneficial
owner of the 7,979,994 shares of the Company held by SEI,
Inc., and they are included under his name in the table. |
5
PROPOSAL ONE:
ELECTION OF DIRECTORS
General
The Board of Directors is divided into three classes. Each class
of directors is elected for a three-year term. On the
recommendation of the Nominating Committee, the Board of
Directors fixed the size of the board at eight directors and
nominated three candidates, all of whom are currently directors
of the Company, to be elected as Class I directors at the
Annual Meeting. Class I directors serve for three-year
terms ending at the 2014 annual meeting, or when their
successors are duly elected and qualified. The terms of the
remaining Class II and Class III directors expire at
the annual meetings to be held in 2012 and 2013, respectively.
Any director over age 72 shall not be eligible for
re-election.
Each of the nominees has consented to be named as a nominee. If
any nominee should become unavailable to serve, the Board of
Directors may decrease the number of directors pursuant to the
Bylaws or may designate a substitute nominee. In that case, the
persons named as proxies will vote for the substitute nominee
designated by the Board of Directors. The Board has no reason to
believe that any nominee will be unavailable or, if elected,
unable to serve.
Certain information regarding each nominee and incumbent
director is set forth below as of April 1, 2011, including
age, principal occupation, and a brief description of business
experience and directorships held with other public corporations
during at least the last five years.
The Board of Directors recommends that the stockholders vote
FOR each of the following nominees for Class I
Director:
Michael G. Jesselson, age 59, has served as a
Director of the Company since November 1997. Mr. Jesselson
is President of Jesselson Capital Corporation, a private
investment corporation headquartered in New York City. He also
serves on the Board of Directors of a number of nonprofit
institutions. Mr. Jesselson provides investment expertise
to the Board and as one of the Companys longest-serving
non-employee Directors, he also brings an important historical
company view to the Board of Directors.
Roger S. Markfield, age 69, has served as Vice
Chairman, Executive Creative Director of the Company since
February 2009 and as a Director since March 1999. From February
2007 to February 2009, Mr. Markfield served as a
non-executive officer employee of the Company. Prior to February
2007, he served the Company as Vice-Chairman since November
2003, as President from February 1995 to February 2006, and as
Co-Chief Executive Officer of the Company from December 2002 to
November 2003. Mr. Markfield also served the Company and
its predecessors as Chief Merchandising Officer from February
1995 to December 2002 and as Executive Vice President of
Merchandising from May 1993 to February 1995. Prior to joining
the Company, he served as Executive Vice President-General
Merchandising Manager for the Limited Division of The Limited,
Incorporated, a large national specialty retailer, from May 1992
to April 1993. From 1969 to 1976 and from 1979 to 1992, he was
employed by R.H. Macy & Co., a national retailer
operating department and specialty stores, as a Buyer in
Boys Wear rising to the office of President of Corporate
Buying-Mens. From 1976 to 1979, Mr. Markfield served
as Senior Vice President of Merchandising and Marketing for the
Gap Stores, Inc. Mr. Markfields experience as
Executive Creative Director of the Company gives him unique
insights into the Companys challenges, opportunities and
operations. He has a deep understanding of the needs and desires
of our customers and brings a long history of relevant retail
executive experience to the Board.
Other Public Company Board Service: Mr. Markfield
also serves on the Board of Directors of DSW, Inc.
Jay L. Schottenstein, age 56, has served as Chairman
of the Company and its predecessors since March 1992. He served
the Company as Chief Executive Officer from March 1992 until
December 2002 and prior to that time, he served as a Vice
President and Director of the Companys predecessors
since 1980. He has also served as Chairman of the Board and
Chief Executive Officer of Schottenstein Stores Corporation
(SSC), a private company, since March 1992 and as
President since 2001. Prior thereto, Mr. Schottenstein
served as Vice Chairman of SSC from 1986 to 1992. He has been a
Director of SSC since 1982. He has also served as
6
Chairman since March 1992 and as Chief Executive Officer from
July 1999 through December 2000 and from April 1991 through July
1997 of Retail Ventures, Inc. (RVI), a company
traded on the New York Stock Exchange. Mr. Schottenstein
also served as Chief Executive Officer from March 2005 to April
2009 and as Chairman of the Board since March 2005 of DSW, Inc.,
a company traded on the New York Stock Exchange. He has also
served as an officer and director of various other corporations
owned or controlled by members of his family since 1976. As the
Companys former Chief Executive Officer,
Mr. Schottenstein is familiar with all aspects of the
Company including its management, operations and financial
requirements. He brings extensive knowledge and understanding of
our business and the retail industry to the Board.
Other Public Company Board Service:
Mr. Schottenstein also serves on the Board of Directors of
RVI and DSW, Inc.
The following Class II Directors have been previously
elected to terms that expire as of the 2012 Annual Meeting:
Janice E. Page, age 62, has served as a Director of
the Company since June 2004. Prior to her retirement in 1997,
Ms. Page spent 27 years in retailing holding numerous
merchandising, marketing and operating positions with Sears
Roebuck & Company, including Group Vice President from
1992 to 1997. Ms. Page is currently a private investor. She
holds a BA from Pennsylvania State University. Ms. Page has
extensive knowledge of the retail industry and her service on
other public company boards allows her to provide the Board of
Directors with a variety of perspectives on corporate governance
issues.
Other Public Company Board Service: Ms. Page also
serves as a Director and Compensation Committee Chair of R.G.
Barry Corporation, a company which develops and markets
footwear, and as a Director and Nominating and Governance
Committee Chair of Hampshire Group, Limited, a developer and
marketer of mens and womens sweaters and sportswear.
She was formerly on the Board and served as Compensation
Committee Chair of Kellwood Company from 2000 to 2008 and served
as Trustee of Glimcher Realty Trust from 2001 to 2004.
Gerald E. Wedren, age 74, has been a Director of the
Company since November 1997. Mr. Wedren has served as
President of Craig Capital Co., a Washington D.C. based merger
and acquisition firm since 1973. Mr. Wedren was President
of G.E.W. Inc., an owner of fast food restaurants, from 1981 to
1988. Mr. Wedren holds a BBA and a JD from Case Western
Reserve University. Mr. Wedren brings entrepreneurial and
venture development experience to the Board and as one of the
Companys longest-serving non-employee Directors, he brings
an important historical company view to the Board of Directors.
Other Public Company Board Service: Mr. Wedren also
serves on the Board of Directors of Encompass Group, Inc. He was
formerly on the Board of Westaff, Inc. from 2007 to 2010.
The following Class III Directors have been previously
elected to terms that expire as of the 2013 Annual Meeting:
Thomas R. Ketteler, age 68, has been a Director of
the Company since February 2011. Prior to his retirement from
SSC in 2005, Mr. Ketteler served as Chief Operating Officer
since 1995, as Executive Vice President of Finance and Treasurer
from 1981, and as a director since 1985. Prior to SSC, he was a
partner in the firm of Alexander Grant and Company, Certified
Public Accountants. Mr. Ketteler currently provides
consulting services to SSC and served as a consultant to the
Companys Board from 2003 until June 2010.
Mr. Ketteler provides expertise in financial and accounting
issues and his historical experience with the Company is
invaluable to the Board.
Other Public Company Board Service: Mr. Ketteler
previously served on the Companys Board from 1994 to 2003
and currently serves on the Board of Directors and as Audit
Committee Chair of Encompass Group, Inc.
Cary D. McMillan, age 53, has been a Director of the
Company since June 2007. He has served as Chief Executive
Officer of True Partners Consulting, LLC, a professional
services firm providing tax and other financial services, since
December 2005. From October 2001 to April 2004, he was the Chief
Executive
7
Officer of Sara Lee Branded Apparel. Mr. McMillan served as
Executive Vice President of Sara Lee Corporation, a branded
consumer packaged goods company, from January 2000 to April
2004. From November 1999 to December 2001, he served as Chief
Financial and Administrative Officer of Sara Lee Corporation.
Prior thereto, Mr. McMillan served as an audit partner with
Arthur Andersen LLP. He holds a BS from the University of
Illinois and is a Certified Public Accountant. Mr. McMillan
brings to the Board demonstrated leadership abilities as a Chief
Executive Officer and an understanding of business, both
domestically and internationally. His experience as a former
audit partner also provides him with extensive knowledge of
financial and accounting issues. Furthermore,
Mr. McMillans service on other public boards also
provides knowledge of best practices.
Other Public Company Board Service: Mr. McMillan
also serves on the Board of Directors of McDonalds
Corporation. Mr. McMillan was formerly on the Board of
Directors of Hewitt Associates, Inc. from 2002 to 2010 and Sara
Lee Corporation from 2000 to 2004.
James V. ODonnell, age 70, has served as Chief
Executive Officer of the Company since November 2003 and prior
thereto as Co-Chief Executive Officer of the Company since
December 2002 and as Chief Operating Officer for the Company
since December 2000. Mr. ODonnell became a member of
the Board in December 2000. Prior to joining the Company, since
December 1999, he served as President and Chief Operating
Officer of Lyte, Inc., a retail technology services company.
From 1997 to 2000, Mr. ODonnell served as Director of
Merchant Banking for Colmen Capital Advisors, Inc., and as a
Project Consultant for the C. Everett Koop Foundation. From 1992
to 1997, Mr. ODonnell was an owner and Chief
Executive Officer of Computer Aided Systems, Inc. From 1980 to
1992, Mr. ODonnell held various executive positions
at The Gap Inc., and from 1987 to 1992 he was Executive Vice
President. From 1989 to 1992, he served as Chief Operating
Officer of The Gap Inc. Mr. ODonnell holds a BS from
Villanova University. He is also a member of the Board of
Trustees of Villanova University. Mr. ODonnells
day to day leadership as Chief Executive Officer of the Company
provides him with intimate knowledge of our operations. His
extensive knowledge and understanding of our business and the
retail industry is invaluable to the Board.
Other Public Company Board Service:
Mr. ODonnell was formerly on the Board of Directors
of The Gap Inc. from 1987 to 1992.
8
INFORMATION
CONCERNING THE BOARD OF DIRECTORS
Board
Meetings
During the fiscal year ended January 29, 2011 (Fiscal
2010), the Board of Directors met seven times. During
Fiscal 2010, all members of the Board of Directors attended 75%
or more of the total number of meetings of the Board and of the
committees of the Board on which they served. It is the
expectation of the Company that all incumbent directors attend
the Annual Meeting of Stockholders. All incumbent members of the
Board of Directors were present at our 2010 Annual Meeting,
except for Mr. Wedren.
Director
Compensation
Directors who are employees of the Company do not receive
additional compensation for serving as directors. The table
below sets forth the compensation for directors who are not
employees of the Company. In addition, the Company pays
attorneys fees related to the preparation and filing of director
stock ownership forms with the SEC. The Company also reimburses
travel expenses to attend Board and committee meetings and
director continuing education expenses.
Fiscal
2010 Director Compensation (1)
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Fees Earned or
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Stock
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Paid in Cash
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Awards
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Total
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Name
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($)
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($)
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($)
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(2)
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(3)
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Jon P. Diamond (4)
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$
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13,750
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$
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30,000
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$
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43,750
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Michael G. Jesselson
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$
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115,000
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$
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120,000
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$
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235,000
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Alan T. Kane (5)
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$
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98,250
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$
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120,000
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$
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218,250
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Cary D. McMillan
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$
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116,500
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$
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120,000
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$
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236,500
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Janice E. Page
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$
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127,000
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$
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120,000
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$
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247,000
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J. Thomas Presby (6)
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$
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135,000
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$
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120,000
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$
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255,000
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Jay L. Schottenstein (7)
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$
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275,000
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$
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200,000
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$
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475,000
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Gerald E. Wedren
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$
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115,000
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|
|
$
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120,000
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|
$
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235,000
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|
|
|
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(1) |
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Fiscal 2010 refers to the fifty-two week period ended
January 29, 2011. |
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(2) |
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Amounts represent fees paid during Fiscal 2010. Directors who
are not employees of the Company are paid a retainer of $55,000
per year, payable in installments on the first business day of
each calendar quarter. Non-employee directors who serve on a
Board committee receive a retainer of $20,000 per year for each
committee, paid in installments on the first business day of
each calendar quarter. Non-employee directors who serve as
committee chairs receive an additional retainer, also paid in
installments on the first day of each calendar quarter, as
follows: $25,000 per year for the Audit Committee; $15,000 per
year for the Compensation Committee; and $12,000 per year for
the Nominating Committee. Non-employee directors also receive a
per meeting fee of $1,500 for an in-person meeting or $1,000 for
a telephonic meeting for serving on a special committee of the
Board and the non-employee director chair of a special committee
receives a per meeting fee of $3,000 for an in-person meeting or
$2,000 for a telephonic meeting. The Lead Independent Director
also receives an additional retainer of $20,000 per year paid in
installments on the first business day of each calendar quarter. |
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(3) |
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Under the Companys 2005 Stock Award and Incentive Plan, as
amended, (the 2005 Amended Plan) directors who are
not employees of the Company received an automatic stock grant
of a number of shares equal in value to $30,000 based on the
closing sale price of the Companys stock on the first day
of each calendar quarter. Directors may defer receipt of up to
100% of the shares payable under the quarterly stock grant in
the form of a share unit account. None of the directors elected
to defer their quarterly share |
9
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retainer during calendar 2010. Mr. McMillan elected to
defer his quarterly share retainer during calendar 2011. |
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(4) |
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Mr. Diamond served on the Board of Directors until the 2010
Annual Meeting of Stockholders held on June 9, 2010. |
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(5) |
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Mr. Kane served on the Board of Directors until
January 31, 2011. |
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(6) |
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Mr. Presby served on the Board of Directors until
January 10, 2011. |
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(7) |
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In connection with his services as our Chairman,
Mr. Schottenstein receives cash compensation of $275,000
per year. Under the Companys 2005 Amended Plan,
Mr. Schottenstein additionally receives an automatic
quarterly stock grant of a number of shares equal in value to
$50,000 based on the closing sale price of the Companys
stock on the first day of each calendar quarter. |
Until June 2005, non-employee directors received an automatic
quarterly grant of options to purchase shares of common stock.
At January 29, 2011, the aggregate number of option awards
outstanding was: Mr. Jesselson2,903 shares;
Ms. Page14,515 shares; and
Mr. Wedren26,127 shares. Mr. Schottenstein
also received various stock option awards prior to June 2005, as
determined by the Compensation Committee, and awards for
325,167 shares remained outstanding at January 29,
2011.
In June 2005, the Board of Directors determined that each
director should own common stock of the Company and established
the following ownership guidelines. Within three years of
joining the Board or the implementation of the ownership
guidelines, each director must hold stock of the Company worth
at least four times the current annual cash base retainer
amount, or currently $220,000. The following forms of equity
interests in the Company count towards the stock ownership
requirement: shares purchased on the open market; shares
obtained through stock option exercise; shares held as deferred
stock units; shares held in benefit plans; shares held in trust
for the economic benefit of the director or spouse or dependent
children of the director; and shares owned jointly or separately
by the spouse or dependent children of the director. Stock
options do not count towards the stock ownership requirement.
Leadership
Structure
Since 2002, the positions of Chairman of the Board and Chief
Executive Officer have been held by two different persons.
Mr. ODonnell is the Companys Chief Executive
Officer while the Board is led by our Chairman,
Mr. Schottenstein. Mr. Schottenstein is the former
Chief Executive Officer of the Company and has significant
experience in our industry and with the Company, which
experience provides our Board with significant leadership
advantages. The Company has also established a Lead Independent
Director position. The Lead Independent Director is appointed by
the independent directors annually. Mr. Jesselson was
appointed as the Companys Lead Independent Director for
Fiscal 2010. The Lead Independent Director is responsible for:
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Presiding over the meetings of independent directors;
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Serving as a liaison between the Chairperson and independent
directors;
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Having input on information sent to the Board;
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Having input on meeting agendas for the Board; and
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Approving meeting schedules to assure that there is sufficient
time for discussion of all agenda items.
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The Lead Independent Director also has the authority to call
meetings of the independent directors, and if requested by major
stockholders, is available, if appropriate, for consultation and
direct communication. We believe that this leadership structure
provides our Board with the greatest depth of leadership and
experience, while also providing balance for the direction of
the Company.
10
Meetings
of Independent Directors
The Boards policy is to have the independent directors
meet separately in executive session in connection with each
regularly scheduled board meeting (at least four times
annually). During each meeting of the independent directors, the
Lead Independent Director will lead the discussion.
Director
Independence
The Board has determined that the following directors are
independent as defined in the applicable rules of the New York
Stock Exchange:
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Michael G. Jesselson
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Cary D. McMillan
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Jay L. Schottenstein
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Thomas R. Ketteler
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Janice E. Page
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Gerald E. Wedren
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In particular, the Board has determined that none of these
directors have relationships that would cause them not to be
independent under the specific criteria of Section 303A.02
of the NYSE Listed Company Manual.
In making these determinations, the Board took into account all
factors and circumstances that it considered relevant, including
the following:
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Whether the director is currently, or at any time during the
last three years was, an employee of the Company or any
subsidiary of the Company;
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Whether any immediate family member of the director is
currently, or at any time during the last three years was, an
executive officer of the Company or any subsidiary of the
Company;
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Whether the director is an employee or any immediate family
member of the director is an executive officer of a company that
has made payments to, or received payments from, the Company or
any subsidiary of the Company for property or services in an
amount which is in excess of the greater of $1 million, or
2% of such other companys consolidated fiscal gross
revenues in the current year or any of the past three fiscal
years;
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Whether the director is an executive officer of a charitable
organization which received contributions from the Company or
any subsidiary of the Company in the past three years in an
amount which exceeds the greater of $1 million, or 2% of
the charitable organizations consolidated gross revenues;
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Whether the director or any of the directors immediate
family members is, or has been in the past three years, employed
by a company that has or had, during the same period, an
executive officer of the Company on its compensation committee;
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Whether the director or any of the directors immediate
family members is, or has been in the past three years, a
partner or employee of the Companys independent registered
public accounting firm;
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Whether the director or any of the directors immediate
family members accepted any payment from the Company or any of
its subsidiaries in excess of $120,000 during the current fiscal
year or any of the past three fiscal years, other than
compensation for board or board committee service and pension or
other forms of deferred compensation for prior service; and
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Whether the director has any other relationship with the Company
or any subsidiary of the Company, either directly or as a
partner, stockholder or officer of an organization that has a
relationship with the Company or any subsidiary of the Company.
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Board
Committees
The Board has a standing Audit Committee, a standing
Compensation Committee and a standing Nominating Committee.
These committees are governed by written charters, which were
approved by the Board of Directors and are available on the
Companys website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Corporate Governance.
11
The following sets forth Committee memberships as of the date of
this proxy statement:
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Audit
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Compensation
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Nominating
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Director
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Committee
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Committee
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Committee
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Michael G. Jesselson (1)
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X
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X
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Thomas R. Ketteler
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X
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X
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Cary D. McMillan
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XX
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X
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X
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Janice E. Page
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X
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X
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XX
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Gerald E. Wedren
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X
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XX
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X
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X = Member
XX = Committee Chair
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(1) |
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Mr. Jesselson also serves as the Companys Lead
Independent Director. |
Audit
Committee
The primary function of the Audit Committee is to assist the
Board in monitoring: (1) the integrity of the financial
statements of the Company; (2) the qualifications,
performance and independence of the independent registered
public accounting firm; (3) the performance of the internal
auditors; and (4) the Companys compliance with
regulatory and legal requirements. The Audit Committee also
reviews and approves the terms of any new related party
agreements. The Audit Committee met ten times during Fiscal 2010.
The Board has determined that Mr. Ketteler and
Mr. McMillan qualify as audit committee financial
experts as defined by the SEC rules adopted pursuant to
the Sarbanes-Oxley Act of 2002.
Compensation
Committee
The function of the Compensation Committee is to aid the Board
in meeting its responsibilities with regard to oversight and
determination of executive compensation. Among other things, the
Compensation Committee reviews, recommends and approves salaries
and other compensation of executive officers and administers the
Companys stock award and incentive plans (including
reviewing, recommending and approving stock award grants to
executive officers). The Compensation Committee met eight times
during Fiscal 2010.
Nominating
Committee
The function of the Nominating Committee is to aid the Board in
meeting its responsibilities with regard to the organization and
operation of the Board, selection of nominees for election to
the Board and other corporate governance matters. The Nominating
Committee met six times during Fiscal 2010. The Nominating
Committee developed and reviews each year the Companys
Corporate Governance Guidelines, which were adopted by the Board
and are available on our website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Corporate Governance. The Nominating Committee
periodically reviews the appropriate size of the Board, whether
any vacancies are expected due to retirement or otherwise, and
the need for particular expertise on the Board. In evaluating
and determining whether to recommend a candidate to the Board,
the Nominating Committee reviews the appropriate skills and
characteristics required of Board members in the context of the
background of existing members and in light of the perceived
needs for the future development of the Companys business,
including issues of diversity and experience in different
substantive areas such as retail operations, marketing,
technology, distribution, real estate and finance. The Board
seeks the best director candidates based on the skills and
characteristics required without regard to race, color, national
origin, religion, disability, marital status, age, sexual
orientation, gender, gender identity and expression, or any
other basis protected by federal, state or local law.
Candidates may come to the attention of the Nominating Committee
from a variety of sources, including current Board members,
stockholders, and management. All candidates are reviewed in the
same manner
12
regardless of the source of the recommendation. In the past, the
Nominating Committee has retained the services of a search firm
to assist in identifying and evaluating qualified director
candidates.
The Nominating Committee will consider the recommendations of
stockholders regarding potential director candidates. In order
for stockholder recommendations regarding possible candidates
for director to be considered by the Nominating Committee:
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Such recommendations must be submitted to the Nominating
Committee in care of: Corporate Secretary, American Eagle
Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203, in
writing at least 120 days prior to the date of the next
scheduled Annual Meeting;
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The nominating stockholder must meet the eligibility
requirements to submit a valid stockholder proposal under
Rule 14a-8
of the Securities Exchange Act of 1934; and
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The stockholder must describe the qualifications, attributes,
skills or other qualities of the recommended director candidate.
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Board
Oversight of Risk Management
The Board has allocated responsibilities for overseeing risk
associated with the Companys business among the Board as a
whole and the Committees of the Board. In performing its risk
oversight function, the Board:
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Oversees managements development and execution of
appropriate business strategies to mitigate the risk that such
strategies will fail to generate long-term value for the Company
and its stockholders or that such strategies will motivate
management to take excessive risks; and
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Oversees the development and implementation of processes and
procedures to mitigate the risk of failing to assure the orderly
succession of the Chief Executive Officer and the senior
executives of the Company.
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The Board also regularly reviews information regarding the
Companys financial, operational and strategic risks. The
full Board receives quarterly updates from managements
Risk Management Committee which is responsible for identifying,
quantifying and assisting leaders across the Company in
mitigating risks. Each of the Boards Committees also
oversees the management of Company risks that fall within the
Committees areas of responsibility. In performing this
function, each Committee has full access to management, as well
as the ability to engage advisors. As set forth in its charter,
the Audit Committee is responsible for discussing with
management the Companys major financial risk exposures and
the steps management has taken to monitor and control those
exposures. The Audit Committee gives updates to the Board at its
regular meetings, including updates on financial and information
technology risks. The Audit Committee also meets privately with
the Companys independent auditor, the internal auditor and
the Chief Financial Officer quarterly. As set forth in its
charter, the Compensation Committee oversees the Companys
risk management related to employee compensation plans and
arrangements. The Nominating Committee manages risks associated
with the independence of the Board of Directors and the
Companys corporate social responsibility program. While
each committee is responsible for overseeing the management of
those risk areas, the entire Board of Directors is also
regularly informed through committee reports.
Compensation
Committee Interlocks and Insider Participation
During Fiscal 2010 and currently, the members of the
Compensation Committee have included Messrs. Wedren
(Chairman), Kane, Ketteler, McMillan, Presby and Ms. Page.
None of the current or former members of the Compensation
Committee are present or former officers of the Company or its
subsidiaries or have affiliates that are parties to agreements
with the Company.
13
Communications
with the Board
The Board provides a process for all interested parties to send
communications to the independent members of the Board. That
process is described on the Companys website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Corporate Governance, Board of Directors.
Corporate
Governance Information
The Companys corporate governance materials, including our
corporate governance guidelines, the charters of our audit,
compensation and nominating committees and our Code of Ethics
that applies to all of our directors, officers (including the
Principal Executive Officer, Principal Financial Officer,
Principal Accounting Officer and Controller) and employees may
be found on the Companys website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Corporate Governance. Any amendments or waivers to our
code of ethics will also be available on our website. A copy of
the corporate governance materials is also available in print to
any stockholder who requests it.
14
EXECUTIVE
OFFICERS
The following persons are executive officers of the Company as
of the date of this proxy statement. For information regarding
officers who are also directors, see Election of
Directors. The officers of the Company are elected
annually by the Board and serve at the pleasure of the Board.
Thomas A. DiDonato, age 52, has served the Company
as Executive Vice President of Human Resources since July 2005.
Prior to joining the Company, Mr. DiDonato served the H.J.
Heinz Company as Chief People Officer from September 2004 to
July 2005, as Vice President of Global Leadership and
Development for the Heinz World Headquarters from December 2003
to September 2004 and prior thereto as Vice President of Human
Resources for Heinz North America since July 2001. From 1997 to
2001, Mr. DiDonato served as Senior Vice President of Human
Resources for Merck-Medco Managed Care LLC. Prior to that time,
Mr. DiDonato held various Vice President level positions
with Pepsico from 1990 to 1997 and with Philip Morris Companies,
Inc. from 1982 to 1990.
Fredrick W. Grover, age 60, has served the Company
as Executive Vice President of Brand Merchandising, Marketing
and AE Direct since April 2011. Prior thereto, Mr. Grover
served the Company as Executive Vice President of Brand
Marketing and AE Direct since April 2009, as Executive Vice
President of AE Direct from December 2004 to April 2009 and as
President of Bluenotes from January 2003 to December 2004. From
2001 to 2003, Mr. Grover served the Company as Senior Vice
President of Merchandising and from 1992 to 2001 he served the
Company as Vice President, General Merchandising Manager. Prior
to that time, Mr. Grover held various retail positions with
the Company starting as an Assistant Store Manager in 1978 and
rising to the position of Divisional Merchandising Manager in
1988.
Joan Holstein Hilson, age 51, has served the Company
as Executive Vice President, Chief Financial Officer, since
April 2009 and as Principal Financial and Accounting Officer
since April 2006. Prior thereto, Ms. Hilson served as
Executive Vice President, Chief Financial Officer, AE Brand,
since April 2006 and as Senior Vice President, Finance from
September 2005 to April 2006. Prior to joining the Company,
Ms. Hilson held various positions at the Victorias
Secret Stores division of Limited Brands, Inc., including
Executive Vice President and Chief Financial Officer from July
2002 to August 2005, Vice President of Planning and Allocation
from April 1997 to June 2002, Vice President of Finance from
February 1996 to March 1997 and Vice President of Financial
Planning from August 1995 to January 1996. Prior to that time,
Ms. Hilson held various other management level positions
with Limited Brands, Inc. from April 1993 to July 1995.
Ms. Hilson held various finance management positions at
Sterling Jewelers, Inc. from August 1985 to January 1993 and
prior thereto she worked as a Certified Public Accountant with
Coopers & Lybrand.
Dennis R. Parodi, age 59, has served the Company as
Executive Vice President, Store Operations since April 2009.
Prior thereto, he served the Company as Executive Vice President
and Chief Operating Officer, New York Design Center, since
February 2006, as Senior Vice President of Real Estate and
Construction since May 2004 and as Vice President and Chief
Operating Officer, New York Design Center, since March 2003.
Prior to joining the Company, Mr. Parodi served as a
consultant for Whelans International Corporation from
January 2002 to March 2003. From February 1983 to December 2001,
Mr. Parodi held various positions with GAP, Inc., including
Executive Vice President-U.S. Stores & Global
Operations from 1998 to 2001, Senior Vice
President-Director
of Stores from 1993 to 1998, Vice President-Eastern Zone from
1988 to 1993 and Regional Manager from 1983 to 1988.
Michael R. Rempell, age 37, has served the Company
as Executive Vice President and Chief Operating Officer, New
York Design Center, since April 2009. Prior thereto, he served
the Company as Senior Vice President and Chief Supply Chain
Officer from May 2006 to April 2009, Senior Vice President of
Information Technology and Supply Chain from May 2003 to April
2006, Vice President of Supply Chain from April 2002 to May 2003
and Senior Director of AE Direct from February 2000 to April
2002. Prior to joining the Company, Mr. Rempell was an
associate with PricewaterhouseCoopers Consulting and Accenture.
15
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys executive officers, directors or
persons who are beneficial owners of more than ten percent of
the Companys Common Stock (reporting persons)
to file reports of ownership and changes in ownership with the
SEC. Reporting persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms
filed by them. Based on its review of the copies of
Section 16(a) forms received by it, the Company believes
that, during Fiscal 2010, with the exception of one late
Form 4 filing for each of Messrs. DiDonato, Fiore,
Kane and Markfield, all reporting persons complied with
applicable filing requirements.
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the
compensation philosophy, objectives, policies and practices with
respect to our named executive officers (the NEOs).
For Fiscal 2010, our NEOs were our (1) Chief Executive
Officer; (2) Vice Chairman and Executive Creative Director;
(3) Executive Vice President, Supply Chain and Real Estate;
(4) Executive Vice President and Chief Financial Officer;
(5) Executive Vice President and Chief Design Officer;
(6) Executive Vice PresidentBrand
Marketing & AEO Direct; and (7) Executive Vice
PresidentStore Operations. The Executive Vice President,
Supply Chain and Real Estate ended his employment with the
Company on November 30, 2010 but is deemed to be a NEO for
Fiscal 2010 because of the level of his total compensation and
because he served as an executive officer during the year. The
Executive Vice President and Chief Design Officer resigned
effective October 27, 2010 but is deemed to be a NEO for
Fiscal 2010 because of the level of her total compensation and
because she served as an executive officer during the year.
Executive
Summary
During Fiscal 2010, the Company and the specialty retail
industry faced many challenges. The economic climate of rising
fuel prices, raw material cost increases, high unemployment and
housing and credit crises continued to lead consumers to be
discriminating with their discretionary income. This led us to
focus on operational practices and expenses such as pricing
strategies, promotional activity, production, inventory
management, distribution and non-merchandise procurement. When
reviewing the results for the year, the Compensation Committee
considers the economys impact on the financial and
operational performance of the Company as well as executive
leaderships efforts to drive the Company strategy
affecting top and bottom-line growth. Review of year-end results
and associated pay decisions incorporate current-year, past and
expected performance from the Company, including all brands and
lines of business. For Fiscal 2010, achievement of the
performance goals was affected by both external and internal
factors, resulting in performance that fell below the
Board-approved annual operating plan but consistent with
threshold goals under the variable incentive plans. Threshold
goals establish the minimum acceptable level of performance
against the established performance objectives. This resulted in
earn-outs under the performance-based compensation elements for
Fiscal 2010 that were below the targeted award opportunity for
the NEOs.
For Fiscal 2010, NEO compensation was driven by the
Companys financial results, as measured by Net Income and
Comparable Store Sales as described in more detail below in the
Fiscal 2010 Performance Metrics section. Net
Income excludes (1) extraordinary charge(s);
and/or
(2) any accruals for restructuring programs, merger
integration costs, or merger transaction costs;
and/or
(3) other unusual or infrequent items (whether gains or
losses);
and/or
(4) asset impairment charges;
and/or
(5) discontinued operations (Adjusted Net
Income). Comparable Store Sales is a measure of sales
growth for stores that have been open for more than one year.
The goals were intended to drive growth in all brands while also
recognizing the difficult economic environment that began in
2008 and continued throughout 2010. As described herein, our
Adjusted Net Income results achieved threshold-level
performance. Accordingly, this resulted in a payout equal to 25%
of the target annual incentive bonus and failure of the full
restricted stock units award for the fiscal year to vest. All
performance awards were based on pre-established goals and
discretion was not exercised in determining NEO earnings.
16
The objectives and framework of our executive compensation
program in Fiscal 2010 remained relatively consistent with those
of Fiscal 2009. The overall philosophy of our executive
compensation program is to attract highly skilled,
performance-oriented executives and to motivate them to achieve
outstanding results through appropriate means. Our plan is
guided by four core principles: Performance; Competitiveness;
Affordability; and Simplicity. Executive compensation is
delivered to our NEOs primarily through three elements:
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Annual Base Salary
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Provides a baseline compensation level that delivers cash income
to the NEOs.
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Annual Incentive Bonus
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Provides additional cash income to NEOs while focusing them on key annual objectives.
Bonus is earned between threshold and maximum level based on achievement of pre-established annual performance goals.
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Equity Awards (Stock
Options, Restricted
Stock Units,
Performance Shares)
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Aligns NEO compensation with Company performance objectives and shareholder value creation.
Stock Options provide compensation only to the extent that vesting requirements are satisfied and our share price appreciates.
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Restricted Stock Units vest proportionately over three years
from grant, but may accelerate to fully vest in the first year
based on achievement of the pre-established performance goal.
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Performance Shares vest between threshold and maximum level only
to the extent that the pre-established, year three performance
goal is met. If below threshold-level performance is achieved,
the award forfeits.
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Working within our principles, these elements enable the Company
to offer a competitive total annual compensation opportunity in
which realized pay and costs are highly sensitive to the degree
to which key operational performance objectives are attained.
The compensation for our NEOs is carefully balanced to provide a
mix of cash and equity-based awards and focused on both annual
and long-term performance to ensure that executives are rewarded
for, and held accountable for, achievement of both annual and
long-term financial and strategic objectives.
We regularly review our programs to ensure alignment with our
principles, the competitive environment and corporate governance
best practices. Our overall program aligns with recognized
corporate governance best practices, including: a long-term
performance-based goal; share ownership requirements; exclusion
of gross-ups
on taxable benefits; executive payment for personal use of the
Company aircraft; and change in control and retirement benefit
provisions that are modest in relation to many of our peers.
Changes were made to the design of the overall compensation
program in Fiscal 2009. During Fiscal 2010, the Compensation
Committee made additional adjustments in support of the
Companys long-standing policy of employing a program with
a balanced mix of cash and equity focused on annual and
long-term performance measurement and metrics that are key
drivers of sustainable shareholder value creation over time. The
overall program is intended to ensure that management is held
accountable for long-term results and does not pursue overly
risky business strategies in order to maximize short-term
compensation payouts. Following an extensive executive
compensation analysis and benchmark project during Fiscal 2010,
we implemented additional changes effective for Fiscal 2011.
Details of these plan design changes are discussed below in the
Compensation Program Changes section.
Compensation
Program Changes
The following compensation program changes were adopted for
Fiscal 2011 as a result of the Companys continuing effort
to adhere to corporate governance best practices:
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Adjustments to the Chief Executive Officers compensation
package consisting of a reduction of total equity grant value by
50% (resulting in a 37.2% reduction in target total
compensation) and reallocating the entire equity grant into the
long-term, three-year Performance Share Plan;
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Elimination of Stock Options as an element of the executive
compensation plan in order to move more of the NEOs
equity-based compensation into performance-based awards;
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The equity mix for senior executives, including the NEOs, has
been altered to shift a greater percentage of overall equity
into performance-based elements. This resulted in a majority of
the NEOs equity awards being issued under the long-term,
three-year Performance Share Plan (100% for the Chief Executive
Officer, 82% for the Vice Chairman, Executive Creative Director,
and 55% for all other NEOs); and
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Redesign of the long-term performance plan, the Performance
Share Plan, so that performance is measured cumulatively over a
three year period with relative vesting at the end of the
performance period.
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The following adjustments were made for Fiscal 2010 to further
align the interests of our NEOs with the long-term
interests of our stockholders as well as to focus operational
strategies and performance on two key metrics:
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Aligning the elements and equity mix of the Chief Executive
Officers and Vice Chairman, Executive Creative
Directors compensation package with the other NEOs
compensation program by replacing the
Long-Term
Incentive Cash Plan (LTICP) with Performance Shares
and issuing Restricted Stock Units; and
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Measuring performance of the annual incentive bonus against two
critical operational metrics (previously one metric).
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As described in the Fiscal 2009 Compensation
Discussion & Analysis, the executive compensation
program was redesigned for Fiscal 2009 with the following
changes:
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Eliminated the LTICP for all NEOs other than the Chief Executive
Officer and Vice Chairman, Executive Creative Director (due to
contract terms which were negotiated prior to the plan changes
taking effect);
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Established an annual Restricted Stock Unit award that vests
proportionately over three years but may accelerate to fully
vest in the first year based on achievement of a target
performance goal;
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Established an annual Performance Shares award that vests based
on performance achieved against a long-term, year three
goal; and
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Reduced the overall compensation opportunity for our NEOs.
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Overview
Role of
Our Compensation Committee
Our Compensation Committee reviews and approves annual base
salaries and other compensation of our NEOs and makes awards and
other decisions relating to the Companys 2005 Amended
Plan. The Compensation Committee also reviews and approves,
where applicable, others aspects of executive compensation.
Furthermore, the Compensation Committee reviews and approves
changes to the Companys compensation peer group, as deemed
appropriate, taking into consideration suggestions made by
Mr. ODonnell.
Role of
Executive Officers in Compensation Decisions
Mr. ODonnell annually reviews the performance of each
NEO with the Compensation Committee and makes recommendations
with respect to each element of executive compensation for the
NEOs, excluding himself. Mr. ODonnell considers brand
and individual performance in his recommendations to the
Compensation Committee with regard to grants of equity for all
executives including the NEOs. However, adjustments suggested by
Mr. ODonnell must not result in an expansion of the
overall grant value pools
18
under any circumstances. The Compensation Committee makes the
final determination of individual equity awards taking into
consideration Mr. ODonnells recommendations.
During Fiscal 2010, Mr. ODonnell did not recommend
adjustments to target awards for any executives including the
NEOs.
Role of
Compensation Consultants
The Compensation Committee has the authority under the
Compensation Committee Charter to retain outside consultants or
advisors to assist the Compensation Committee. In accordance
with this authority, the Compensation Committee retained the
services of Frederic W. Cook & Co., Inc. as its
primary outside independent compensation consultant to advise on
all matters related to Chief Executive Officer and other
executive compensation. The services provided by Frederic W.
Cook & Co., Inc. are subject to a written agreement
with the Compensation Committee. The Compensation Committee has
sole authority to terminate the relationship. Representatives of
Frederic W. Cook & Co., Inc. attended four of the
eight Compensation Committee meetings during Fiscal 2010.
Frederic W. Cook & Co., Inc does not provide any other
services to the Company. The Compensation Committee may engage
other consultants as needed in order to provide analysis,
recommendations or other market data.
For Fiscal 2010, the Compensation Committee primarily engaged
consultants from Frederic W. Cook & Co. to provide
guidance and insights related to the executive compensation
analysis and benchmark project, changes to the executive
compensation program for Fiscal 2011 and review and adjustment
of the Chief Executive Officers compensation package for
Fiscal 2011.
Under the direction of the Compensation Committee, Frederic W.
Cook & Co., Inc. interacts with members of the senior
management team to provide insights into market practices and to
ensure that management is fully informed with regard to emerging
best practices and market trends. This ensures that proposals
developed by management align with the marketplace, the
Companys overall compensation objectives and the
objectives of stockholders.
Management engages the Hay Group, Inc. as needed to provide
market data and analysis with regard to competitive market
compensation rates. This data is used as a supplement to that
provided to the Compensation Committee by Frederic W.
Cook & Co. and to validate and verify the accuracy of
data used by the Compensation Committee in its deliberations.
Compensation
Program Objectives
We focus on the following core principles in structuring an
effective compensation program that meets our stated philosophy:
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PerformanceWe endeavor to align executive
compensation with the achievement of measureable operational and
financial results and increases in shareholder value. Our
compensation program includes significant performance based
remuneration and is designed for our executives to have a
similar or larger portion of their total compensation at
risk based on Company performance than our peer companies.
We believe this feature creates a meaningful incentive to
achieve challenging, yet realistic, performance objectives. In
addition, our program features a substantial equity component in
order to align executive interests with the interests of our
stockholders and retain executive talent through a multi-year
vesting schedule. These features ensure that actual compensation
varies above or below the targeted compensation opportunity
based on the degree to which performance goals are attained and
changes in shareholder value over time.
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CompetitivenessWe structure executive compensation
to be competitive relative to a group of specialty retail peers.
We target total compensation opportunity at the
75th percentile, on average, of our peer group in
recognition of our emphasis on performance-based compensation
and the fact that we are near the 75th percentile of the peer
group based on size, as measured primarily by annual revenue.
Target total compensation for individual NEOs deviates above or
below the 75th percentile
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based on a variety of factors, including the executives
skill set and experience relative to the market peers, historic
performance and the criticality of each position to the Company.
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AffordabilityWe design our compensation program to
limit fixed compensation expense and tie realized compensation
costs to the degree to which budgeted financial objectives are
attained. In addition, we structure our incentive plans to
maximize financial efficiency by establishing programs that are
tax deductible, accounting efficient and by making performance
based payments only to the extent that underlying performance
supports the expense.
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SimplicityWe have endeavored to create a simple,
straight-forward compensation program; one that our associates
and stockholders can easily understand. This approach allows our
associates to focus on the goals which both drive our business
results and determine the performance-based incentive payout.
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Compensation
Program Elements
Our executive compensation program is designed to place a
sizeable amount of pay at risk for all executives. This
philosophy is intended to cultivate a
pay-for-performance
environment. Our executive compensation plan design has five key
elements:
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Base Salary
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Annual Incentive Bonus
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Restricted Stock Units (RSUs)
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Performance Shares (PS)
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Non-Qualified Stock Options (NSOs)
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The Annual Incentive Bonus was entirely at risk
based on the Companys performance during Fiscal 2010 and
therefore subject to forfeiture if the Company did not achieve
threshold performance goals. Performance Shares are also
entirely at risk and subject to forfeiture if the
Company does not achieve threshold performance goals by the
close of Fiscal 2012, as described below. At threshold
performance, the Chief Executive Officers total annual
compensation declines by 37% relative to target performance. The
other NEOs total annual compensation declines by an
average of 36% relative to target performance. Company
performance below threshold levels results in forfeiture of all
elements of direct compensation other than base salary, RSUs and
NSOs. NSOs provide compensation only to the extent that vesting
requirements are satisfied and our share price appreciates.
Our compensation program is intended to ensure that a similar or
larger portion of our executives total compensation is
at risk and varies based on Company performance than
our peer companies. For Fiscal 2010, our Chief Executive Officer
had approximately 63% of his total compensation at risk and the
remaining NEOs had approximately 55% of their total compensation
at risk. Elements of our executive compensation program which we
consider at risk are described further below in the
Compensation Program Elements section.
The portion of total pay attributable to long-term incentive
compensation and equity compensation increases at successively
higher levels of management. This philosophy ensures that
executive compensation closely aligns with changes in
stockholder value and achievement of performance objectives
while also ensuring that executives are held accountable for
results relative to position level.
Base
Salary
Base salary provides a baseline compensation level that delivers
current cash income to the NEOs and reflects his or her job
responsibilities, experience and value to the company. To aid in
attracting and retaining high quality executives, salaries for
our NEOs are generally targeted and paid on average at the
75th
percentile of our peer group to reflect the Companys large
size relative to the peer group as measured by annual revenue,
the highly competitive approach in recruiting available talent
in the apparel industry and the
20
performance-based nature of the other elements of the direct
compensation program. Salaries are set at an appropriate level
in order to mitigate executives from taking excessive risk to
maximize the annual cash incentive as a means to ensure enough
cash compensation to meet their living needs. We review base
salaries in the last quarter of the fiscal year and increases,
where applicable, are typically effective for the beginning of
the new fiscal year. Individual salaries range above or below
the
75th percentile
based on a variety of factors, including position level,
executive experience relative to industry peers, individual
performance, future potential, leadership qualities and unique
skill sets.
Annual
Incentive Bonus
We structure the Annual Incentive Bonus to encourage the
achievement of competitive annual performance targets and to
recognize and reward short-term Company performance. The Annual
Incentive Bonus focuses the executive team on key annual
objectives and business drivers that support growth of the
Companys financial position, improvement in overall
operations and increases in shareholder value. We establish an
executives annual incentive bonus as a percentage of base
salary, with increases in target percentages directly related to
position level and individual performance. This approach places
a proportionately larger percentage of total annual pay at risk
for our executives relative to position level and ensures that
accountability is directly proportionate to each
executives role and responsibility. During Fiscal 2010,
the target award opportunity for our Chief Executive Officer was
equal to 130% of his base salary and the target award
opportunities for our other NEOs ranged from 60% to 100% of
their respective base salary. Annual Incentive Bonus payouts
fluctuate based upon Adjusted Net Income and Comparable Store
Sales results, with actual payments ranging from 0% of the
targeted percentage amount for below threshold performance, to
25% of the targeted percentage amount at threshold performance,
to 100% of the targeted percentage amount at target performance,
to 200% of the targeted percentage amount if the Company
achieves goals that are substantially above our business plan
for the fiscal year (the Compensation Goals). Refer
to the Fiscal 2010 Performance Metrics
section below for a description of the Fiscal 2010 Annual
Incentive Bonus metrics. During Fiscal 2010, threshold-level
bonuses (25%) were earned based on Adjusted Net Income of
$209 million.
Equity
Awards
Equity compensation is designed to align executive compensation
with long-term Company performance. The Company utilizes a
combination of time-based RSUs, performance-based RSUs and
time-based NSO grants to focus management on corporate
performance and sustainable earnings growth. The overall plan
design has a heavier emphasis on restricted stock units than on
stock options to support our retention and performance
objectives and provide a better balance of the risk/reward ratio
for our executives while maintaining our commitment to
increasing long-term stockholder value. Total equity grant
values are pre-determined based upon the framework of the
executive compensation plan design.
During Fiscal 2010, Mr. ODonnell did not recommend
adjustments to target awards for any executives including the
NEOs.
Restricted Stock Units (RSUs): We determine the
number of RSUs based on the overall dollar value of the award
divided by the closing price of our common stock on the grant
date. Dividend equivalents on RSUs are reinvested in additional
RSUs and paid to the extent the RSUs vest.
RSU awards represent approximately 35% of the value of a
NEOs overall equity awards. Annual RSU grants vest
proportionately over three years from the grant date assuming
continued employment but may accelerate to fully vest in the
first year (on the Compensation Committee certification date)
based on achievement of a pre-established target annual Net
Income goal which is described below. The performance
acceleration feature of the RSU award is intended to focus
participants on achievement of the annual goals and is a
distinctive feature of the Companys compensation plan to
enhance recruitment and retention. If the annual goals are not
achieved, the RSUs serve as a retention tool.
21
An RSU award recipient cannot earn more than 100% of the award
and, unlike the Annual Incentive Bonus, above-target performance
does not result in receipt of additional shares of RSUs. Based
on Fiscal 2010 Adjusted Net Income of $209 million, 33.33%
of the target RSUs granted during Fiscal 2010 were earned and
vested. The remaining units will vest proportionately in 2012
and 2013 on the anniversary of the grant date.
Performance Shares (PS): PS were established as a
long-term incentive to replace the LTICP. PS, issued as RSUs,
represent approximately 25% of the value of a NEOs overall
long-term incentive/equity. We determine the number of PS based
on the overall dollar value of the award divided by the closing
price of our common stock on the grant date. Dividend
equivalents on the PS are reinvested in additional RSUs and paid
out to the extent the RSUs vest.
Annual PS grants feature year three performance based vesting.
PS vest upon achievement of pre-established Earnings per Share
(EPS) goals as further described below. If threshold
performance is not met, the award does not vest and all shares
are forfeited. Vesting ranges from 0% of the target amount for
below threshold performance, to 50% of the target amount at
threshold performance, to 100% of the target amount at target
performance, to 150% of the target amount if the Company
achieves goals that are substantially above our business plan
for the performance period. In the event of termination of
employment, executives who signed a RSU Confidentiality,
Non-Solicitation, Non-Competition and Intellectual Property
agreement, may be eligible to receive a pro-rata portion of
their PS if the performance goals are achieved. The pro-rata
amount is based on the number of days of service in the
performance period as of their separation date.
The table below describes key features of our Restricted Stock
Units & Performance Shares award programs:
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Timing
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Grant Date/Grant Price
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Approval
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New Hires & Promotions
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Awarded to all eligible newly hired or promoted executives on
the first business day of employment in executive role.
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The hire date or promotion date is the grant date and the
closing price of our common stock on the grant date is the grant
price.
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New hire/Promotion award amounts are determined by our Chief
Executive Officer based on delegation of authority from the
Compensation Committee. If the grant date fair value of a new
hire or promotion award exceeds $200,000, the Compensation
Committee must approve the award.
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Annual Award
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Awarded to all eligible active executives in the first quarter
of each fiscal year.
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The first regularly scheduled Compensation Committee meeting
date is used as the grant date and the closing price of our
common stock on the grant date is the grant price, unless
otherwise specified in an employment agreement.
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We present final annual award amounts for all NEOs to the
Compensation Committee for approval at the first regularly
scheduled Committee meeting of the new fiscal year.
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Non-Qualified Stock Options (NSO): NSOs represent
approximately 40% of the value of an NEOs overall
long-term incentive/equity. We determine the number of shares
underlying each NSO grant based on the overall value of the
grant using a Black-Scholes option pricing model and the closing
price of our common stock on the grant date. In no event will we
grant NSOs at an exercise price below the fair market value of
our common stock on the date of grant. NSO grants vest
proportionately over three years with a seven year term from the
grant date assuming continued employment.
For Fiscal 2009, Mr. Markfield was awarded
performance-based NSOs that will vest proportionately over three
years, with a seven year term. The performance-based nature of
the grant was established to focus our Vice Chairman, Executive
Creative Director on specific areas of the business for Fiscal
2009 and overall
22
Company goals in subsequent years. At the time of grant, the
Compensation Committee established annual performance goals for
each vesting year: Fiscal 2009 vesting would be measured against
individual performance goals while Fiscal 2010 and Fiscal 2011
would be measured against company performance goals. Upon
achievement of the annual pre-determined performance goals for
Fiscal 2009, Fiscal 2010 and Fiscal 2011, one third of the
original grant would vest each year. Based on Fiscal 2010
performance results, 100% of the second tranche of the NSO award
vested.
The table below describes key features of our NSO award program:
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Timing
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Grant Date/Exercise Price
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Approval
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New Hires & Promotions
First Fiscal Quarter (following the first Compensation Committee meeting of the fiscal year) through Third Fiscal Quarter
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Awarded to all eligible newly hired or promoted executives on
the first business day of the fiscal quarter following
hire/promotion.
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The first business day of the following fiscal quarter is the
grant date and the closing price on that date is the exercise
price.
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New hire/Promotion award amounts are determined by our Chief
Executive Officer based on delegation of authority from the
Compensation Committee. If the grant date fair value of a new
hire or promotion award exceeds $200,000, the Compensation
Committee must approve the award.
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New Hires & Promotions
Fourth Fiscal Quarter through First Fiscal Quarter (through the first Compensation Committee meeting of the fiscal year)
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Awarded to all eligible newly hired or promoted executives;
timed with the annual award in the first quarter of each fiscal
year.
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The date of the first regularly scheduled meeting of the
Compensation Committee for the fiscal year is used as the grant
date and the closing price on that date is the exercise price.
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Annual Award
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Awarded to all eligible active executives in the first quarter
of each fiscal year.
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The date of the first regularly scheduled meeting of the
Compensation Committee for the fiscal year is used as the grant
date and the closing price on that date is the exercise price,
unless otherwise specified in an employment agreement.
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We present final annual award amounts for all NEOs to the
Compensation Committee for approval at the first regularly
scheduled Committee meeting of the new fiscal year.
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Delegation of Authority: The Compensation
Committee delegates authority to the Chief Executive Officer to
grant RSU, PS
and/or NSOs
for internal promotions and new hires, subject to an overall
dollar value for each award ($200,000 grant date fair value) and
for all awards in total ($4,000,000 grant date fair value
cumulative cap for awards issued on any date). No authority is
delegated for awards to executive officers.
Ownership Requirements: The Company has developed
share ownership requirements to establish commonality of
interest between management and stockholders and to encourage
executives to think and act like owners. By encouraging
executives to accumulate a specific level of ownership, the
Companys compensation program ensures that pay remains at
risk not only with regard to outstanding awards but also with
regard to realized gains. Effective with stock award grants
beginning in Fiscal 2006, the Company
23
instituted a requirement for certain senior executives,
including the NEOs, to hold the equivalent value equal to one
times their current salary in company stock. The Chief Executive
Officer has an ownership requirement of five times his current
salary ($8.5 million) and the Vice Chairman, Executive
Creative Director has an ownership requirement of three times
his current salary ($2.85 million). Ownership requirements
are adjusted for increases in annual salary as necessary. This
requirement can be met through various forms of equity: vested
stock options; vested restricted stock; Employee Stock Purchase
Plan shares; or personal holdings.
Until a given executive has satisfied his or her ownership
requirement, the executive must hold half of his or her
after-tax gains from any sale of grants from Fiscal 2006 and
beyond of the Companys stock. The Chief Executive Officer
considers compliance with the ownership requirements when
recommending annual equity awards for the executives, including
the NEOs, to the Compensation Committee. If an executive does
not hold half of after-tax gains in Company stock, he or she
jeopardizes eligibility for future stock grants or awards.
Annual
Award Pool
We established a performance-based Annual Award Pool (the
Award Pool) for NEOs who are subject to Internal
Revenue Code Section 162(m) (not including the Chief
Financial Officer). At the beginning of each fiscal year, the
Compensation Committee establishes annual performance goals for
the Award Pool based on the Companys earnings before
interest, taxes, depreciation and amortization
(EBITDA) for the respective year. Achievement of the
performance goal determines the maximum amount payable as cash
awards
and/or
grants of time-based restricted stock awards to the NEOs. The
following maximum award levels were established during Fiscal
2010 as a percent of EBITDA, in each case subject to the 2005
Amended Plan maximum of $5 million per person and further
subject to the exercise of negative discretion by the
Compensation Committee to reduce the maximum award:
|
|
James
V. ODonnell, Chief Executive Officer
|
1.50% of
actual EBITDA
|
|
|
Roger
S. Markfield, Vice Chairman, Executive Creative Director
|
1.25% of
actual EBITDA
|
|
|
LeAnn
Nealz, Executive Vice President, Chief Design Officer
|
0.45% of
actual EBITDA
|
|
|
Joseph
E. Kerin, Executive Vice President, Supply Chain and Real Estate
|
0.35% of
actual EBITDA
|
During Fiscal 2010 and Fiscal 2011, the Company granted
time-based RSUs to the NEOs pursuant to the Award Pools based on
the achievement of the respective Fiscal 2009 and Fiscal 2010
performance goals. There have been no awards of cash incentives
to NEOs under the Award Pools.
Executive
Perquisites
Executive perquisites, which are disclosed below in the
Summary Compensation Table section, are not a
significant component of our executive compensation program.
Fiscal
2010 Performance Metrics
For Fiscal 2010, the Compensation Committee chose two
performance metrics to develop goals for awarding the Annual
Incentive Bonus and 100% accelerated vesting of the RSUs. The
goals, Adjusted Net Income and Comparable Store Sales were
equally weighted to reflect their shared importance in the
operational success of the business. The Annual Incentive Bonus
is contingent upon the achievement of specific Adjusted Net
Income and Comparable Store Sales goals while the accelerated
vesting of the RSUs in the first year (on the Compensation
Committee certification date) is contingent upon the achievement
of a specific Adjusted Net Income goal. The long-term, three
year performance-based PS goals are developed and measured
against EPS. The Compensation Committee has chosen Adjusted Net
Income, Comparable Store Sales and EPS as the key performance
metrics because they reflect the Companys success in
managing its core operations, growing the business and driving
sustained increases in profit. We believe that Adjusted Net
Income, Comparable Store Sales and EPS reflect all aspects of
performance, including top-line revenue, expense control and
efficient use of capital while maintaining simplicity in the
design and execution of our
24
executive compensation program. Moreover, we believe that these
targets encourage management to focus on top-line sales and
regaining market share, without having performance based
compensation impacted by extraordinary, unusual or infrequent
items (as more fully described in the definition of Adjusted Net
Income above). These metrics and the goals described below
reflect our focus on growth while also recognizing the difficult
economic climate, including the challenges that impacted
specialty retail beginning in 2008. As part of the plan design
for Fiscal 2010, the Compensation Committee had negative
discretion (i.e., authority to reduce the amount otherwise
payable based on achievement of the performance goals) on any
incentive payments based on overall operating results. Overall
operating results are considered a reflection of
leaderships ability to drive strategy and impact top and
bottom-line growth. During Fiscal 2010, the Committee did not
exercise negative discretion for any executive awards, including
the NEOs.
Our Compensation Committee establishes specific performance
metrics goals for each performance-based compensation element at
the beginning of the respective fiscal year based on a variety
of factors, including but not limited to: internal budget;
investor expectations; peer results; the Companys prior
year performance; the upcoming fiscal year business plan; and
strategic initiatives.
The Compensation Committee established the following goals for
Fiscal 2010. Except as otherwise noted, the Company measured
Adjusted Net Income and Comparable Store Sales against prior
year Adjusted Net Income and Comparable Store Sales (excluding
MARTIN+OSA which discontinued operations in Fiscal 2010):
|
|
|
|
|
Annual Incentive Bonus:
|
|
|
|
|
o
|
50% based on Adjusted Net Income: $206 million at
Threshold, $225 million at Target, and $278 million or
greater at Maximum.
|
|
|
o
|
50% based on Comparable Store Sales: 0% at Threshold, +2% at
Target, and +9% or greater at Maximum.
|
|
|
|
|
|
RSUs: $225 million Adjusted Net Income for accelerated
vesting on the Compensation Committee certification date.
|
|
|
|
PS awards with a performance period ending Fiscal 2012: $0.97
EPS at Threshold (reflecting 4% annual growth), $1.03 EPS at
Target (reflecting 6% annual growth) and $1.14 EPS at Maximum
(reflecting 10% annual growth).
|
|
|
|
Annual Award Pool: Positive EBITDA.
|
|
|
|
Performance-based NSOs (vesting of 2nd tranche):
Specific goals regarding comparable store sales for the
womens business and EPS for the fiscal year.
|
The above targets are aligned with our business strategy and
with our status as a growth company. Fiscal 2010 Adjusted Net
Income and Comparable Store Sales were two-hundred and nine
million ($209 million) and negative one percent (-1%)
respectively, and as a result there were threshold-level payouts
under the Annual Incentive Bonus (based on the Adjusted Net
Income) and proportional vesting of RSUs.
25
Compensation
Benchmarking
In addition to many other factors that affect compensation
determinations, we take into account the compensation practices
of comparable companies in formulating our compensation program.
We consider three key factors in choosing the companies that
comprise our peer group:
|
|
|
|
|
TalentCompanies with which we compete for executive-level
talent.
|
|
|
|
SizeCompanies within the specialty retail industry with
comparable revenue.
|
|
|
|
ComparabilityCompanies with which we compete for customers
and investors.
|
For Fiscal 2010, the Company used a peer group of specialty
retailers consisting of the following component companies.
(Note: company name followed by stock ticker symbol in
parenthetical):
|
|
|
|
|
Abercrombie & Fitch Co. (ANF)
|
|
|
|
Aeropostale, Inc. (ARO)
|
|
|
|
AnnTaylor Stores Corp. (ANN)
|
|
|
|
Chicos FAS, Inc. (CHS)
|
|
|
|
Dicks Sporting Goods, Inc. (DKS)
|
|
|
|
Gap, Inc. (GPS)
|
|
|
|
Guess ?, Inc (GES)
|
|
|
|
Hot Topic, Inc. (HOTT)
|
|
|
|
J. Crew Group, Inc. (JCG)
|
|
|
|
Limited Brands, Inc. (LTD)
|
|
|
|
New York & Company, Inc. (NWY)
|
|
|
|
Pacific Sunwear of California Inc. (PSUN)
|
|
|
|
Polo Ralph Lauren (RL)
|
|
|
|
Quiksilver, Inc. (ZQK)
|
|
|
|
Talbots, Inc. (TLB)
|
|
|
|
Urban Outfitters, Inc. (URBN)
|
In terms of size, our revenue and market capitalization fall
between the median and
75th
percentile of the peer group companies.
We evaluate our peer group on an annual basis for relevance and
propose changes when appropriate. The Compensation Committee
reviews and approves the recommended peer group changes as
necessary. For Fiscal 2010, there were no changes to the peer
group.
Timing of
Equity Awards
Although the Company does not have a formal policy relating to
the timing of equity awards and the release of material
non-public information, the Company does utilize a consistent
approach to selecting both the grant dates and the terms of
equity awards as described above. The Company makes annual
equity grants in the first quarter of the fiscal year. For the
past six years, the grant date for restricted stock and RSUs was
the Compensation Committee meeting date during which earnings
were certified for the prior fiscal year (scheduled
approximately one year in advance). The Fiscal 2010 NSOs were
also granted on the Compensation Committee meeting date. It is
the Companys intention to continue the practice of setting
the equity award grant date on the Compensation Committee
meeting date (during which time prior year financial results are
certified).
Employment
Agreements
Variations
for NEOs with Employment Agreements
The Chief Executive Officer and Vice Chairman, Executive
Creative Director are employed pursuant to individual employment
agreements which were separately negotiated with the
Compensation Committee. These individual agreements provide an
overall compensation package that may compare more favorably to
market practice than the target competitive positioning for
other NEOs based on individual circumstances and the criticality
of retaining these key leaders. However, the general design and
administration of the primary compensation elements are similar
to those provided to other NEOs thus aligning our governing
philosophy and objectives regarding executive compensation.
26
Context
for Changes to Employment Agreements
As discussed in detail in the Fiscal 2009 Proxy, the Company
entered into negotiations with Mr. Markfield (Fiscal
2008) and Mr. ODonnell (Fiscal
2009) regarding the terms of their employment agreements
with the Company. Mr. Markfields final contract was
executed on January 13, 2009 (effective for Fiscal
2009) and Mr. ODonnells final contract was
executed January 11, 2010 (effective for Fiscal 2010).
For Fiscal 2010, the equity compensation components and mix for
Mr. ODonnell and Mr. Markfield were adjusted to
align with those of the other NEOs. As a result they were issued
RSUs, PS and NSOs, as described above.
Severance
and Change of Control Payments
Our NEOs are entitled to receive severance payments and other
benefits in the event of a change in control of the Company
and/or upon
the termination of the executives employment with the
Company under specified circumstances. These arrangements
provide essential protections to both the NEO and the Company.
Agreements providing for severance and change in control
payments assist the Company in attracting and retaining
qualified executives who could have other job alternatives. At
the same time, the applicable agreements preserve valuable
Company assets by imposing upon the executives non-competition
and non-solicitation restrictions, confidentiality obligations
and cooperation covenants. For a quantification of these
severance and change of control benefits, please refer to the
section below entitled Post-Employment
Compensation.
During Fiscal 2009, the Compensation Committee approved a Change
in Control (CIC) plan which provides for CIC
agreements (the CIC Agreement) with certain
executives, including each of the NEOs. The objectives of the
CIC plan are to motivate executives to continue to work for the
best interests of the Company and its stockholders in a
potential CIC situation. In the event of a CIC, any and all
common shares (i.e., options, restricted shares, performance
shares or other forms of securities issued by the Company and
beneficially owned by the executive) that are unvested,
restricted or subject to any similar restriction shall vest and
become exercisable, or such restrictions shall lapse.
Additionally, the CIC agreement contains double-trigger change
in control provisions (i.e., the CIC plan provides severance and
other benefits only if the executives employment
terminates under-limited circumstances within eighteen months
following a CIC). The payments and benefits provided for in the
CIC plan are separate from and do not modify other active
compensation elements as described earlier. Severance and other
benefits include but are not limited to: (i) a cash
severance amount equal to 1.5 times (2 times for the Chief
Executive Officer) the executives annual compensation
(defined as annual base salary plus target annual incentive
bonus); (ii) a target annual incentive bonus prorated based
on the CIC date; and (iii) coverage under the
Companys group health insurance for the
12-month
(18-month
for Chief Executive Officer) period following termination.
Executives are not provided with an excise tax
gross-up.
Executives are subject to confidentiality,
18-month
non-solicitation
(24-months
for Chief Executive Officer), non-disparagement and no-hire
restrictions following termination of employment. Prior to
receipt of any such payments, the executive is required to
execute a general release of the Company in the form attached to
the CIC Agreement.
Upon the termination of their employment by the Company (for any
reason other than for cause as defined under their
respective employment agreements), the Chief Executive Officer
and Vice Chairman, Executive Creative Director are each eligible
to receive post-employment cash payments (in addition to other
benefits) under the terms of their employment agreements, in
recognition of their years of service with the Company and their
valuable contributions during their tenure. The Chief Executive
Officer will receive a retirement benefit equal to his total
cash compensation (annual base salary plus annual incentive
bonus) for the highest compensated fiscal year in the seven
fiscal years prior to his termination of employment. The Vice
Chairman, Executive Creative Director will receive a fixed
annual renewal term benefit for three years during which time he
will be available to management and the Board of Directors as a
consultant.
27
Tax
Matters
Section 162(m) of the Internal Revenue Code generally
permits a tax deduction to public corporations for compensation
over $1,000,000 paid in any fiscal year to a corporations
Chief Executive Officer and the three other most highly
compensated NEOs employed at the end of the year (other than the
Chief Financial Officer) only if the compensation qualifies as
being performance-based under Section 162(m). The Company
endeavors to structure its compensation policies to qualify as
performance-based under Section 162(m) whenever it is
reasonably possible to do so while meeting our compensation
objectives.
Nonetheless, from time to time certain non-deductible
compensation may be paid and the Board of Directors and the
Compensation Committee reserve the authority to award
non-deductible compensation in appropriate circumstances. In
addition, it is possible that some compensation paid pursuant to
certain equity awards that have already been granted may be
non-deductible as a result of Section 162(m). The
Section 162(m) disallowance for the tax year ended
January 29, 2011 was $89,000 with a tax impact of $34,000
at 38%.
Additionally, Section 409A of the Internal Revenue Code
governs our ability to establish the time and form of payment
under our nonqualified deferred compensation arrangements. We
believe that we have been operating our nonqualified deferred
compensation arrangements in good faith compliance with
Section 409A and the guidance available thereunder in
effect since January 1, 2005.
28
EXECUTIVE
OFFICER COMPENSATION
General
The following table summarizes the compensation for each of the
last three fiscal years of the Companys (1) Principal
Executive Officer; (2) Principal Financial Officer;
(3) the three other most highly compensated executive
officers who were serving at the end of Fiscal 2010 presented
for the periods during which they were an executive officer;
(4) Mr. Kerin, who retired from the Company effective
November 30, 2010; and (5) Ms. Nealz, who
resigned from the Company effective October 27, 2010,
ranked by their total compensation as listed in the table below.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
Base
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
Fiscal
|
|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
(1)
|
|
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
|
|
James V. ODonnell
|
|
|
2010
|
|
|
$
|
1,700,000
|
|
|
$
|
6,839,999
|
|
|
$
|
|
|
|
$
|
612,817
|
|
|
$
|
62,161
|
|
|
$
|
9,214,977
|
|
Principal Executive Officer
|
|
|
2009
|
|
|
$
|
1,600,000
|
|
|
$
|
8,560,151
|
|
|
$
|
4,560,000
|
|
|
$
|
3,175,541
|
|
|
$
|
51,063
|
|
|
$
|
17,946,755
|
|
|
|
|
2008
|
|
|
$
|
1,475,000
|
|
|
$
|
8,250,001
|
|
|
$
|
1,978,160
|
|
|
$
|
(299,624
|
)
|
|
$
|
39,520
|
|
|
$
|
11,443,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger S. Markfield (6)
|
|
|
2010
|
|
|
$
|
950,000
|
|
|
$
|
3,420,008
|
|
|
$
|
1,231,975
|
|
|
$
|
267,441
|
|
|
$
|
14,761
|
|
|
$
|
5,884,185
|
|
Vice Chairman and
|
|
|
2009
|
|
|
$
|
850,000
|
|
|
$
|
1,000,003
|
|
|
$
|
3,143,970
|
|
|
$
|
1,247,896
|
|
|
$
|
11,025
|
|
|
$
|
6,252,894
|
|
Executive Creative Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Kerin
|
|
|
2010
|
|
|
$
|
470,925
|
|
|
$
|
600,014
|
|
|
$
|
400,003
|
|
|
$
|
142
|
|
|
$
|
692,876
|
|
|
$
|
2,163,960
|
|
Former EVP - Supply
|
|
|
2009
|
|
|
$
|
517,500
|
|
|
$
|
600,002
|
|
|
$
|
399,986
|
|
|
$
|
395,707
|
|
|
$
|
20,827
|
|
|
$
|
1,934,022
|
|
Chain and Real Estate
|
|
|
2008
|
|
|
$
|
500,000
|
|
|
$
|
453,328
|
|
|
$
|
510,064
|
|
|
$
|
(66,881
|
)
|
|
$
|
24,829
|
|
|
$
|
1,421,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan Holstein Hilson
|
|
|
2010
|
|
|
$
|
571,650
|
|
|
$
|
600,001
|
|
|
$
|
400,003
|
|
|
$
|
100,136
|
|
|
$
|
14,146
|
|
|
$
|
1,685,936
|
|
Principal Financial Officer
|
|
|
2009
|
|
|
$
|
549,092
|
|
|
$
|
600,002
|
|
|
$
|
399,986
|
|
|
$
|
407,316
|
|
|
$
|
11,025
|
|
|
$
|
1,967,421
|
|
|
|
|
2008
|
|
|
$
|
510,000
|
|
|
$
|
462,393
|
|
|
$
|
520,272
|
|
|
$
|
(45,685
|
)
|
|
$
|
15,500
|
|
|
$
|
1,462,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LeAnn Nealz (7)
|
|
|
2010
|
|
|
$
|
658,400
|
|
|
$
|
600,001
|
|
|
$
|
400,003
|
|
|
$
|
276
|
|
|
$
|
20,935
|
|
|
$
|
1,679,615
|
|
Former EVP - Chief
|
|
|
2009
|
|
|
$
|
776,250
|
|
|
$
|
600,002
|
|
|
$
|
399,986
|
|
|
$
|
501,882
|
|
|
$
|
23,025
|
|
|
$
|
2,301,145
|
|
Design Officer
|
|
|
2008
|
|
|
$
|
750,000
|
|
|
$
|
649,998
|
|
|
$
|
731,346
|
|
|
$
|
(130,462
|
)
|
|
$
|
27,500
|
|
|
$
|
2,028,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fredrick W. Grover (8)
|
|
|
2010
|
|
|
$
|
540,750
|
|
|
$
|
600,001
|
|
|
$
|
400,003
|
|
|
$
|
94,798
|
|
|
$
|
27,162
|
|
|
$
|
1,662,714
|
|
EVP - Brand Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and AE Direct
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis R. Parodi
|
|
|
2010
|
|
|
$
|
506,374
|
|
|
$
|
600,001
|
|
|
$
|
400,003
|
|
|
$
|
76,061
|
|
|
$
|
43,785
|
|
|
$
|
1,626,224
|
|
EVP - Store Operations
|
|
|
2009
|
|
|
$
|
491,625
|
|
|
$
|
600,002
|
|
|
$
|
399,986
|
|
|
$
|
319,768
|
|
|
$
|
39,173
|
|
|
$
|
1,850,554
|
|
|
|
|
2008
|
|
|
$
|
475,000
|
|
|
$
|
430,665
|
|
|
$
|
484,647
|
|
|
$
|
(49,506
|
)
|
|
$
|
43,651
|
|
|
$
|
1,384,457
|
|
|
|
|
(1) |
|
2010, 2009 and 2008 refer to the fifty-two week periods ended
January 29, 2011, January 30, 2010 and
January 31, 2009, respectively. |
|
(2) |
|
The value of the stock awards included in the Summary
Compensation Table reflects the most probable outcome award
value, where applicable, and is based on the aggregate grant
date fair value computed in accordance with Accounting Standards
Codification 718, Compensation-Stock Compensation
(ASC 718). For assumptions used in determining
these values, see Note 11 of the Consolidated Financial
Statements contained in the Companys Fiscal 2010 Annual
Report on
Form 10-K.
See Grants of Plan-Based Awards table for
additional information regarding the vesting parameters that are
applicable to these awards. |
29
The maximum value of the restricted stock awards at the date of
grant was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
James V. ODonnell
|
|
$
|
8,265,001
|
|
|
$
|
8,560,151
|
|
|
$
|
8,250,001
|
|
Roger S. Markfield
|
|
$
|
4,132,509
|
|
|
$
|
1,000,003
|
|
|
$
|
|
|
Joseph E. Kerin
|
|
$
|
725,017
|
|
|
$
|
725,002
|
|
|
$
|
453,328
|
|
Joan Holstein Hilson
|
|
$
|
725,004
|
|
|
$
|
725,002
|
|
|
$
|
462,393
|
|
LeAnn Nealz
|
|
$
|
725,004
|
|
|
$
|
725,002
|
|
|
$
|
649,998
|
|
Fredrick W. Grover
|
|
$
|
725,004
|
|
|
$
|
|
|
|
$
|
|
|
Dennis R. Parodi
|
|
$
|
725,004
|
|
|
$
|
725,002
|
|
|
$
|
430,665
|
|
|
|
|
(3) |
|
The value of the time based NSO awards included in the Summary
Compensation Table is based on the aggregate grant date fair
value computed in accordance with ASC 718. Additional
information regarding this model is available in Note 11 of
the Consolidated Financial Statements contained in the
Companys Fiscal 2010 Annual Report on
Form 10-K.
See Grants of Plan-Based Awards Table for
additional information regarding the vesting parameters that are
applicable to these awards. |
|
(4) |
|
Non-equity incentive plan compensation includes the following
for each of 2010, 2009 and 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
|
|
|
Mr.
|
|
|
Mr.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Mr.
|
|
|
Mr.
|
|
|
|
ODonnell
|
|
|
Markfield
|
|
|
Kerin
|
|
|
Hilson
|
|
|
Nealz
|
|
|
Grover
|
|
|
Parodi
|
|
|
Fiscal 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
$
|
552,500
|
|
|
$
|
237,500
|
|
|
$
|
|
|
|
$
|
100,039
|
|
|
$
|
|
|
|
$
|
94,631
|
|
|
$
|
75,956
|
|
LTICP investment gains
|
|
|
60,317
|
|
|
|
29,941
|
|
|
|
142
|
|
|
|
97
|
|
|
|
276
|
|
|
|
167
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
612,817
|
|
|
$
|
267,441
|
|
|
$
|
142
|
|
|
$
|
100,136
|
|
|
$
|
276
|
|
|
$
|
94,798
|
|
|
$
|
76,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
$
|
2,000,000
|
|
|
$
|
765,000
|
|
|
$
|
362,250
|
|
|
$
|
384,364
|
|
|
$
|
436,641
|
|
|
$
|
|
|
|
$
|
294,975
|
|
LTICP award (a)
|
|
|
1,000,000
|
|
|
|
382,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTICP investment gains
|
|
|
175,541
|
|
|
|
100,396
|
|
|
|
33,457
|
|
|
|
22,952
|
|
|
|
65,241
|
|
|
|
|
|
|
|
24,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
3,175,541
|
|
|
$
|
1,247,896
|
|
|
$
|
395,707
|
|
|
$
|
407,316
|
|
|
$
|
501,882
|
|
|
$
|
|
|
|
$
|
319,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
LTICP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTICP investment losses
|
|
|
(299,624
|
)
|
|
|
|
|
|
|
(66,881
|
)
|
|
|
(45,685
|
)
|
|
|
(130,462
|
)
|
|
|
|
|
|
|
(49,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
(299,624
|
)
|
|
$
|
|
|
|
$
|
(66,881
|
)
|
|
$
|
(45,685
|
)
|
|
$
|
(130,462
|
)
|
|
$
|
|
|
|
$
|
(49,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Pursuant to the Companys executive compensation program,
the Company eliminated the LTICP for all NEOs during Fiscal 2009
excluding Messrs. ODonnell and Markfield due to
contract terms which were negotiated prior to the plan changes
taking effect. |
|
(5) |
|
All other compensation for 2010 includes the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
|
|
|
Mr.
|
|
|
Mr.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Mr.
|
|
|
Mr.
|
|
|
|
ODonnell
|
|
|
Markfield
|
|
|
Kerin
|
|
|
Hilson
|
|
|
Nealz
|
|
|
Grover
|
|
|
Parodi
|
|
|
Severance payment (a)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
666,281
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Car benefit
|
|
|
24,027
|
|
|
|
|
|
|
|
13,900
|
|
|
|
|
|
|
|
|
|
|
|
13,038
|
|
|
|
29,649
|
|
Commuting (b)
|
|
|
23,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial consulting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
Employer 401(k) and profit sharing contributions
|
|
|
14,224
|
|
|
|
14,761
|
|
|
|
12,695
|
|
|
|
14,146
|
|
|
|
8,935
|
|
|
|
14,124
|
|
|
|
14,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,161
|
|
|
$
|
14,761
|
|
|
$
|
692,876
|
|
|
$
|
14,146
|
|
|
$
|
20,935
|
|
|
$
|
27,162
|
|
|
$
|
43,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Mr. Kerin retired from the Company on November 30,
2010. Pursuant to his Retirement Agreement dated
November 24, 2010 (the Retirement Agreement),
the Company paid him a severance payment of |
30
|
|
|
|
|
$666,281 during Fiscal 2010. See Post-Employment
Compensation below for a full description of
Mr. Kerins Retirement Agreement. |
|
(b) |
|
Amount consists of commuting, including car services and use of
the company aircraft. The incremental cost of use of the company
aircraft is calculated based on the variable costs to the
company, including fuel costs, mileage, trip-related
maintenance, landing/ramp fees and other miscellaneous variable
costs. Fixed costs which do not change based on usage, such as
aircraft purchase costs, pilot salaries and the cost of
maintenance not related to trips are excluded. |
In addition to the benefits listed in the table above, the
Company also pays attorneys fees related to the preparation and
filing of NEO stock ownership forms with the SEC.
|
|
|
(6) |
|
Mr. Markfield served as a non-executive officer employee of
the Company from February 2007 to February 2009. |
|
(7) |
|
Ms. Nealz resigned from the Company effective
October 27, 2010. As a result, the stock and option awards
included in the Summary Compensation Table for Fiscal 2010 were
subsequently forfeited. |
|
(8) |
|
Mr. Grover served as a non-executive officer employee of
the Company until June 2010. |
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
|
|
Non-Equity Incentive Plan
|
|
Under Equity Incentive Plan
|
|
Shares
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
|
|
Awards
|
|
Awards
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
James V. ODonnell
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
552,500
|
|
|
$
|
2,210,000
|
|
|
$
|
4,420,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
228,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,989,995
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
81,662
|
|
|
|
163,324
|
|
|
|
244,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,850,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger S. Markfield
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
237,500
|
|
|
$
|
950,000
|
|
|
$
|
1,900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
40,831
|
|
|
|
81,662
|
|
|
|
122,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,425,002
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
114,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,995,006
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,506
|
|
|
$
|
16.91
|
|
|
$
|
1,231,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Kerin
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
93,278
|
|
|
$
|
373,118
|
|
|
$
|
746,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
7,164
|
|
|
|
14,327
|
|
|
|
21,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,006
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
20,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
350,008
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
$
|
16.91
|
|
|
$
|
400,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan Holstein Hilson
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
100,039
|
|
|
$
|
400,155
|
|
|
$
|
800,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
7,164
|
|
|
|
14,327
|
|
|
|
21,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,006
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
20,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
349,995
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
$
|
16.91
|
|
|
$
|
400,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LeAnn Nealz
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
149,914
|
|
|
$
|
599,653
|
|
|
$
|
1,199,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
7,164
|
|
|
|
14,327
|
|
|
|
21,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,006
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
20,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
349,995
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
$
|
16.91
|
|
|
$
|
400,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fredrick W. Grover
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
94,631
|
|
|
$
|
378,525
|
|
|
$
|
757,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
7,164
|
|
|
|
14,327
|
|
|
|
21,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,006
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
20,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
349,995
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
$
|
16.91
|
|
|
$
|
400,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis R. Parodi
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
75,956
|
|
|
$
|
303,824
|
|
|
$
|
607,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
7,164
|
|
|
|
14,327
|
|
|
|
21,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
250,006
|
|
|
|
|
(4
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
20,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
349,995
|
|
|
|
|
(5
|
)
|
|
|
3/2/10
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
$
|
16.91
|
|
|
$
|
400,003
|
|
31
|
|
|
(1) |
|
Amount represents the annual incentive cash bonus under the
Companys 2005 Amended Plan. The Compensation Committee
established individual annual bonus targets under the 2005
Amended Plan as a target percentage of the respective
participants base salary (ranging from 60% to 130%) in
accordance with the Compensation Goals described more fully in
the Annual Incentive Bonus section above. On
March 1, 2011, the Compensation Committee certified that
the Company had partially achieved its target level of
Compensation Goals, resulting in a 25% payout of the target
amount of the awards above, except for Mr. Kerin and
Ms. Nealz, each of whom ended their employment with the
Company during Fiscal 2010. |
|
(2) |
|
Pursuant to Mr. ODonnells employment agreement
dated January 11, 2010, amount represents a grant of time
based RSUs which vest over three years. |
|
(3) |
|
Amount represents a grant of PS under the Companys 2005
Amended Plan. The Compensation Committee established performance
goals based on the Companys EPS results by the end of
Fiscal 2012. Vesting of the PS ranges from 0% of the shares if
threshold performance is not attained, to 50% of the shares at
threshold performance, to 100% of the shares at target
performance and 150% of the shares at maximum goal achievement. |
|
(4) |
|
Amount represents a grant of shares of time-based RSUs with a
performance acceleration goal under the Companys 2005
Amended Plan. On March 1, 2011, the Compensation Committee
certified that the Company had not achieved the related
performance goals, resulting in vesting of one-third of the RSUs
plus the respective dividends. The remaining two-thirds of such
RSU award will vest in accordance with its terms on the second
and third anniversary of the grant date. |
|
(5) |
|
Amount represents a grant of NSOs under the Companys 2005
Amended Plan which are exercisable at the fair market value on
the grant date and vest over three years. |
32
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Payout
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Number
|
|
Value
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
of
|
|
of
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
Number
|
|
|
|
Unearned
|
|
Unearned
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
of
|
|
Market
|
|
Shares,
|
|
Shares,
|
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
|
|
|
|
Shares
|
|
Value of
|
|
Units or
|
|
Units or
|
|
|
|
|
of
|
|
of
|
|
of
|
|
|
|
|
|
or Units
|
|
Shares or
|
|
Other
|
|
Other
|
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
of Stock
|
|
Units of
|
|
Rights
|
|
Rights
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
That
|
|
Stock
|
|
That
|
|
That
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Have
|
|
That Have
|
|
Have
|
|
Have
|
|
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
Not
|
|
Not
|
|
|
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
James V. ODonnell
|
|
|
|
|
|
|
929,051
|
|
|
|
|
|
|
|
|
|
|
$
|
4.54
|
|
|
|
3/4/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
456,585
|
|
|
|
|
|
|
|
|
|
|
$
|
30.08
|
|
|
|
12/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301,982
|
|
|
|
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,839
|
|
|
|
108,420
|
|
|
|
|
|
|
$
|
20.62
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
339,623
|
|
|
|
679,249
|
|
|
|
|
|
|
$
|
16.35
|
|
|
|
1/11/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243,403
|
|
|
$
|
3,543,948
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,860
|
|
|
$
|
2,531,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger S. Markfield
|
|
|
|
|
|
|
929,051
|
|
|
|
|
|
|
|
|
|
|
$
|
7.86
|
|
|
|
4/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227,102
|
|
|
|
|
|
|
|
|
|
|
$
|
4.54
|
|
|
|
3/4/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
309,683
|
|
|
|
|
|
|
|
|
|
|
$
|
17.23
|
|
|
|
5/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
619,368
|
|
|
$
|
8.65
|
|
|
|
2/2/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,506
|
|
|
|
|
|
|
$
|
16.91
|
|
|
|
3/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,930
|
|
|
$
|
1,265,701
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,702
|
|
|
$
|
1,771,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan Holstein Hilson
|
|
|
|
|
|
|
85,163
|
|
|
|
|
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,816
|
|
|
|
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,648
|
|
|
|
24,326
|
|
|
|
|
|
|
$
|
20.62
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,398
|
|
|
|
78,798
|
|
|
|
|
|
|
$
|
8.65
|
|
|
|
2/2/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
|
|
|
|
$
|
16.91
|
|
|
|
3/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,351
|
|
|
$
|
310,871
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,499
|
|
|
$
|
633,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Kerin
|
|
|
(6
|
)
|
|
|
80,827
|
|
|
|
|
|
|
|
|
|
|
$
|
16.45
|
|
|
|
11/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,444
|
|
|
|
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
11/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,543
|
|
|
|
|
|
|
|
|
|
|
$
|
20.62
|
|
|
|
11/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,196
|
|
|
|
|
|
|
|
|
|
|
$
|
8.65
|
|
|
|
11/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
|
|
|
|
$
|
16.91
|
|
|
|
3/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,351
|
|
|
$
|
310,871
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,238
|
|
|
$
|
309,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fredrick W. Grover
|
|
|
|
|
|
|
38,710
|
|
|
|
|
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,128
|
|
|
|
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,181
|
|
|
|
22,592
|
|
|
|
|
|
|
$
|
20.62
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,753
|
|
|
|
78,798
|
|
|
|
|
|
|
$
|
8.65
|
|
|
|
2/2/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
|
|
|
|
$
|
16.91
|
|
|
|
3/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,351
|
|
|
$
|
310,871
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,499
|
|
|
$
|
633,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis R. Parodi
|
|
|
|
|
|
|
74,014
|
|
|
|
|
|
|
|
|
|
|
$
|
16.45
|
|
|
|
2/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,293
|
|
|
|
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,310
|
|
|
|
22,656
|
|
|
|
|
|
|
$
|
20.62
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,398
|
|
|
|
78,798
|
|
|
|
|
|
|
$
|
8.65
|
|
|
|
2/2/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,761
|
|
|
|
|
|
|
$
|
16.91
|
|
|
|
3/2/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,351
|
|
|
$
|
310,871
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,499
|
|
|
$
|
633,345
|
|
33
|
|
|
(1) |
|
Pursuant to Mr. ODonnells employment agreement
dated January 11, 2010, amount represents a grant of
time-based RSU awards which vest over three years. On
March 1, 2011, one-third of the awards vested. Amount
includes dividend equivalents which were awarded upon vesting. |
|
(2) |
|
For Mr. ODonnell and Mr. Markfield, amount
represents a grant of PS under the Companys 2005 Amended
Plan. The Compensation Committee established performance goals
based on the Companys EPS results by the end of Fiscal
2012. Vesting of the PS ranges from 0% of the shares if
threshold performance is not attained, to 50% of the shares at
threshold performance, to 100% of the shares at target
performance and 150% of the shares at maximum goal achievement. |
|
(3) |
|
Pursuant to Mr. Markfields employment agreement dated
January 13, 2009, amount represents a grant of NSOs with
performance goals for two remaining tranches of
309,684 shares for two fiscal years under the
Companys 2005 Amended Plan which are exercisable at the
fair market value on the grant date. On March 1, 2011, the
Compensation Committee certified that the Company had achieved
the related performance goals resulting in vesting of
309,684 shares. |
|
(4) |
|
Amount represents a grant of shares of time-based RSUs with a
performance acceleration goal under the Companys 2005
Amended Plan. On March 1, 2011, the Compensation Committee
certified that the Company had not achieved the related
performance goals, resulting in vesting of one-third of the RSUs
plus the respective dividends. The remaining of such RSU award
will vest in accordance with its terms on the second and third
anniversary of the grant date. |
|
(5) |
|
Amount represents two grants of PS under the Companys 2005
Amended Plan. The Compensation Committee established performance
goals based on the Companys EPS results by the end of
Fiscal 2011 and Fiscal 2012, respectively. Vesting of the PS
ranges from 0% of the shares if threshold performance is not
attained, to 50% of the shares at threshold performance, to 100%
of the shares at target performance and 150% of the shares at
maximum goal achievement for each year. |
|
(6) |
|
Pursuant to Mr. Kerins Retirement Agreement dated
November 24, 2010, all unvested stock options awarded from
2006 to 2009 vested automatically on November 30, 2010 and
shall remain exercisable through November 30, 2011.
Pursuant to the Retirement Agreement, the stock option grant
awarded on March 2, 2010 shall vest according to the
grants original vesting schedule and shall remain
exercisable for one calendar year from each individual
tranches vesting date. |
|
(7) |
|
Pursuant to his Retirement Agreement, Mr. Kerin is eligible
for a pro-rata portion of the time-based RSU grant based on his
months of service in the three-year vesting period as of his
retirement date. On March 1, 2011, 5,812 shares vested
and the remaining shares were forfeited. |
|
(8) |
|
Pursuant to his Retirement Agreement, Mr. Kerin is eligible
for a pro-rata portion of the two grants of PS based upon his
months of service in each performance period as of his
retirement date. |
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
James V. ODonnell
|
|
|
843,581
|
|
|
$
|
8,258,705
|
|
|
|
886,144
|
|
|
$
|
15,463,213
|
|
Roger S. Markfield
|
|
|
|
|
|
|
|
|
|
|
103,520
|
|
|
$
|
1,806,424
|
|
Joseph E. Kerin
|
|
|
|
|
|
|
|
|
|
|
37,151
|
|
|
$
|
648,287
|
|
Joan Holstein Hilson
|
|
|
|
|
|
|
|
|
|
|
37,151
|
|
|
$
|
648,287
|
|
LeAnn Nealz
|
|
|
107,529
|
|
|
$
|
743,766
|
|
|
|
37,151
|
|
|
$
|
648,287
|
|
Fredrick W. Grover
|
|
|
20,645
|
|
|
$
|
183,923
|
|
|
|
37,151
|
|
|
$
|
648,287
|
|
Dennis R. Parodi
|
|
|
|
|
|
|
|
|
|
|
37,151
|
|
|
$
|
648,287
|
|
34
Nonqualified
Deferred Compensation
The Company has a nonqualified deferred compensation program
which allows eligible participants to defer a portion of their
salary
and/or bonus
on an annual basis into the plan. Participants can defer up to
90% of their annual salary (with a minimum annual deferral of
$2,000) and up to 100% of their annual performance-based bonus
into the plan. Distributions from the plan automatically occur
upon retirement, termination of employment, disability or death
during employment. Participants may also choose to receive a
scheduled distribution payment while they are still employed
with the Company. The following table summarizes the activity in
each of the NEOs nonqualified deferred compensation
accounts during Fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contribution
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
James V. ODonnell (1)
|
|
$
|
703,168
|
|
|
|
|
|
|
$
|
227,298
|
|
|
|
|
|
|
$
|
2,404,525
|
|
Roger S. Markfield (2)
|
|
|
|
|
|
|
|
|
|
$
|
423,839
|
|
|
|
|
|
|
$
|
2,419,225
|
|
Joseph E. Kerin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan Holstein Hilson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LeAnn Nealz (2)
|
|
|
|
|
|
|
|
|
|
$
|
8,804
|
|
|
|
|
|
|
$
|
58,742
|
|
Fredrick W. Grover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis R. Parodi
|
|
$
|
30,348
|
|
|
|
|
|
|
$
|
109,650
|
|
|
|
|
|
|
$
|
590,923
|
|
|
|
|
(1) |
|
Mr. ODonnell will defer a total of $700,000 in
calendar 2011 pursuant to the terms of his employment agreement.
His Fiscal 2010 contribution of $703,168 is reported in the
Summary Compensation Table as Base Salary. |
|
(2) |
|
Mr. Markfield and Ms. Nealz elected not to participate
in the Companys deferred compensation program during
Fiscal 2010. The Fiscal 2010 earnings relate to contributions
made in prior years. |
Post-Employment
Compensation
Mr. ODonnell was employed during Fiscal 2010 pursuant
to an employment agreement dated January 11, 2010 (the
ODonnell Agreement). Pursuant to the
ODonnell Agreement, Mr. ODonnell will continue
to serve as the Companys Chief Executive Officer through
the fiscal year ending February 2, 2013 (Fiscal
2012). The ODonnell Agreement provides for a
retirement benefit upon termination of
Mr. ODonnells employment with the Company for
any reason, other than for cause, equal to the
greater of (a) an amount equal to
Mr. ODonnells total cash compensation (base
salary plus any annual cash incentive bonus) for the highest
compensated fiscal year of the prior seven fiscal years, or
(b) $3,419,231 (the Retirement Benefit). If
Mr. ODonnell retires on or after February 1,
2013, then the retirement benefit is payable by the Company over
five years. If Mr. ODonnell retires prior to
February 1, 2013, then the retirement benefit is payable in
a lump sum within 30 days of termination. Additionally, in
the event of a termination by the Company other than for
cause, the ODonnell Agreement provides for
(1) severance payments equal to one year of base salary
payable in a lump sum within 30 days of termination;
(2) the Retirement Benefit, payable in a lump sum within
30 days of termination; (3) any incentive bonus that
would have been paid to the extent that the performance goals
established at the time of grant are met for the fiscal year
during which termination occurred, even though he was not
employed for the entire fiscal year; (4) outstanding stock
options shall remain exercisable until the earlier of
(a) the expiration date set forth in the stock option award
agreement, or (b) (i) for options that are vested as of the
termination of Mr. ODonnells employment, for
one year after the termination of employment and (ii) for
options that are not vested as of the termination of
Mr. ODonnells employment, the options shall
continue to vest and shall be exercisable for one year after the
vesting date when such options first become exercisable;
(5) restricted stock unit awards and long-term performance
restricted stock unit awards outstanding at the time of the
termination and not previously forfeited shall vest to the
extent that the performance goals established at the time of
grant are met
35
for the fiscal year during which termination occurred, even
though he was not employed for the entire fiscal year; and
(6) payment of his LTICP account in a lump sum payment
within 30 days of the date of termination.
Mr. Markfield is employed pursuant to an employment
agreement dated January 13, 2009 (the Markfield
Agreement). Pursuant to the Markfield Agreement,
Mr. Markfield will serve as a full-time employee until
January 28, 2012 (the Active Term) and as a
non-executive officer for a term of three years (the
Renewal Term) following any termination of service
during the Active Term. The Markfield Agreement provides for
Renewal Term compensation of $1,343,000 per year. In the event
of a termination by the Company for any reason other than
for cause during the Active Term, the Markfield
Agreement provides for (1) payment of a prorated portion of
any incentive bonus and any long term incentive payment to the
extent that the performance goals established at the time of
grant are met for the fiscal year during which termination
occurred; (2) vesting of a prorated number of restricted
shares and option shares to the extent that the performance
goals established at the time of grant are met for the fiscal
year during which termination occurred; (3) full Renewal
Term compensation payable over three years; and (4) payment
of his LTICP account.
On November 24, 2010, the Company entered into a Retirement
Agreement with Mr. Kerin, the Companys Executive Vice
President of Supply Chain and Real Estate (the Retirement
Agreement) related to his retirement from employment with
the Company. Pursuant to the Retirement Agreement,
Mr. Kerin voluntarily resigned on November 30, 2010
(the Retirement Date). In exchange for a general
release of any claims against the Company, Mr. Kerin
received the following pursuant to the Agreement:
(1) severance pay in a gross amount equal to $666,281
payable in a lump-sum payment; (2) reimbursement of COBRA
payments for up to fifteen months; (3) continued use of a
Company-leased automobile through February 29, 2012;
(4) one year from the Retirement Date to exercise stock
option grants awarded in 2006, 2007, 2008 and 2009; (5) one
year from the original vesting dates to exercise a stock option
grant awarded in 2010; (6) a pro-rata portion of his
time-based restricted stock unit award granted on March 2,
2010; and (7) a pro-rata portion of two performance-based
restricted stock unit awards granted on March 3, 2009 and
March 2, 2010 if the Company achieves the respective
performance goals established by the plan.
Ms. Nealz resigned from the Company effective
October 27, 2010. Upon her separation, Ms. Nealz
received the balance in her deferred compensation account in a
lump sum six months following her resignation. Her outstanding
vested stock option awards as of October 27, 2010 were
exercisable for thirty days from her separation date and all
unvested stock option, restricted stock and performance share
awards were forfeited.
Ms. Hilson is employed pursuant to an employment letter
dated July 18, 2005. It provides for severance payments
equal to up to one year of base salary in the form of salary
continuation during a non-compete period.
For a description of the Companys change in control
benefits, please refer to the section above entitled
Severance and Change of Control Payments.
The following tables set forth the expected benefit to be
received by each of the respective NEOs, except for
Mr. Kerin and Ms. Nealz, who are no longer with the
Company, in the event of his or her termination resulting from
various scenarios, assuming a termination date of
January 29, 2011 and a stock price of $14.56, our closing
stock price on January 28, 2011. The tables do not include
the payment of the aggregate balance
36
of the NEOs nonqualified deferred compensation that is
disclosed in the Nonqualified Deferred Compensation table above.
James V.
ODonnell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Retirement
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,700,000
|
|
|
$
|
|
|
|
$
|
7,820,000
|
|
Retirement (2)
|
|
|
3,600,000
|
|
|
|
3,600,000
|
|
|
|
3,600,000
|
|
|
|
|
|
|
|
3,600,000
|
|
Bonus (3)
|
|
|
552,500
|
|
|
|
552,500
|
|
|
|
552,500
|
|
|
|
|
|
|
|
2,210,000
|
|
LTICP (4)
|
|
|
1,200,949
|
|
|
|
1,200,949
|
|
|
|
1,200,949
|
|
|
|
1,200,949
|
|
|
|
1,200,949
|
|
Stock Option Vesting Acceleration (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU Vesting Acceleration (6)
|
|
|
3,543,948
|
|
|
|
3,543,948
|
|
|
|
3,543,948
|
|
|
|
|
|
|
|
3,543,948
|
|
PS Vesting Acceleration (7)
|
|
|
2,531,402
|
|
|
|
2,531,402
|
|
|
|
2,531,402
|
|
|
|
|
|
|
|
2,531,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,428,799
|
|
|
$
|
11,428,799
|
|
|
$
|
13,128,799
|
|
|
$
|
1,200,949
|
|
|
$
|
20,906,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Mr. ODonnells employment agreement,
in the event of a termination without cause, amount includes
severance in an amount equal to one year of
Mr. ODonnells base salary. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents two times the sum of
Mr. ODonnells base salary and annual incentive
bonus at Target. |
|
(2) |
|
Pursuant to Mr. ODonnells employment agreement,
amount represents a retirement benefit equal to
Mr. ODonnells total cash compensation (base
salary plus annual incentive bonus) for the highest compensated
fiscal year of the prior seven fiscal years with certain
limitations. |
|
(3) |
|
Pursuant to Mr. ODonnells employment agreement,
the Company is obligated to pay the annual incentive bonus to
the extent the performance goals were met. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents
Mr. ODonnells annual incentive bonus at Target. |
|
(4) |
|
Pursuant to Mr. ODonnells employment agreement,
the Company is obligated to pay the LTICP account balance. |
|
(5) |
|
Based upon the stock price as of January 28, 2011, the
value of Mr. ODonnells unvested portions of
stock option awards that are outstanding is zero. |
|
(6) |
|
Pursuant to Mr. ODonnells employment agreement,
the Company is obligated to vest any restricted stock awards
outstanding to the extent the performance goals were met. |
|
(7) |
|
Pursuant to Mr. ODonnells employment agreement,
the Company is obligated to vest any PS outstanding to the
extent the performance goals were met. Amount represents the PS
awarded in March 2010 at Target which is based upon achievement
of earnings per share results by the end of Fiscal 2012. |
Roger S.
Markfield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Retirement
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,850,000
|
|
Renewal term compensation (2)
|
|
|
4,029,000
|
|
|
|
4,029,000
|
|
|
|
4,029,000
|
|
|
|
|
|
|
|
4,029,000
|
|
Bonus (3)
|
|
|
237,500
|
|
|
|
237,500
|
|
|
|
237,500
|
|
|
|
|
|
|
|
950,000
|
|
LTICP (4)
|
|
|
587,951
|
|
|
|
587,951
|
|
|
|
587,951
|
|
|
|
|
|
|
|
587,951
|
|
Stock Option Vesting Acceleration (5)
|
|
|
1,830,232
|
|
|
|
1,830,232
|
|
|
|
1,830,232
|
|
|
|
|
|
|
|
3,660,465
|
|
Stock Award Vesting Acceleration (6)
|
|
|
590,660
|
|
|
|
590,660
|
|
|
|
590,660
|
|
|
|
|
|
|
|
1,771,981
|
|
PS Vesting Acceleration (7)
|
|
|
421,900
|
|
|
|
421,900
|
|
|
|
421,900
|
|
|
|
|
|
|
|
1,265,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,697,243
|
|
|
$
|
7,697,243
|
|
|
$
|
7,697,243
|
|
|
$
|
|
|
|
$
|
15,115,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
(1) |
|
In the event of a termination following a change in control
(i.e., double-trigger), amount represents one and one half times
the sum of Mr. Markfields base salary and annual
incentive bonus at Target. |
|
(2) |
|
Pursuant to Mr. Markfields employment agreement,
amount represents Renewal Term compensation of $1,343,000 for
three years. |
|
(3) |
|
Pursuant to Mr. Markfields employment agreement, the
Company is obligated to pay the annual incentive bonus to the
extent the performance goals were met. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents Mr. Markfields
annual incentive bonus at Target. |
|
(4) |
|
Pursuant to Mr. Markfields employment agreement, the
Company is obligated to pay the LTICP account balance. |
|
(5) |
|
Amount represents the in the money value of
Mr. Markfields unvested portions of stock option
awards that are outstanding based upon the stock price as of
January 28, 2011. |
|
(6) |
|
Amount assumes that the Compensation Committee vested the
outstanding time based RSU stock awards to the extent the
service requirements were met. In the event of a change in
control, the Company is obligated to vest any restricted stock
awards outstanding. |
|
(7) |
|
Amount assumes that the Compensation Committee vested the
outstanding PS awarded in March 2010 at Target based upon
achievement of earnings per share results by the end of Fiscal
2012. Amount is prorated based on Mr. Markfields
service during the performance period. In the event of a change
in control, the Company is obligated to vest any PS outstanding
without proration. |
Joan
Holstein Hilson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Resignation
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
571,650
|
|
|
$
|
|
|
|
$
|
1,457,708
|
|
Bonus (2)
|
|
|
100,039
|
|
|
|
|
|
|
|
100,039
|
|
|
|
|
|
|
|
400,155
|
|
Stock Option Vesting Acceleration (3)
|
|
|
465,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
465,696
|
|
RSU Vesting Acceleration (4)
|
|
|
103,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,871
|
|
PS Vesting Acceleration (5)
|
|
|
348,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,017,576
|
|
|
$
|
|
|
|
$
|
671,689
|
|
|
$
|
|
|
|
$
|
3,267,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Ms. Hilsons employment letter, amount
represents one year of base salary. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents one and one half times the
sum of Ms. Hilsons base salary and annual incentive
bonus at Target. |
|
(2) |
|
Amount assumes that the Compensation Committee paid the annual
incentive bonus to the extent the performance goals were met. In
the event of a termination following a change in control (i.e.,
double-trigger), amount represents Ms. Hilsons annual
incentive bonus at Target. |
|
(3) |
|
Amount represents the in the money value of
Ms. Hilsons unvested portions of stock option awards
that are outstanding based upon the stock price as of
January 28, 2011. |
|
(4) |
|
Amount assumes that the Compensation Committee vested the
outstanding time based RSU stock awards to the extent the
service requirements were met. In the event of a change in
control, the Company is obligated to vest any restricted stock
awards outstanding. |
|
(5) |
|
Amount assumes that the Compensation Committee vested the
outstanding PS awarded both in March 2009 and March 2010 at
Target based upon achievement of earnings per share results by
the end of Fiscal 2011 and Fiscal 2012, respectively. Amount is
prorated based on Ms. Hilsons service during the
performance period. In the event of a change in control, the
Company is obligated to vest any PS outstanding without
proration. |
38
Fredrick
W. Grover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Retirement
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
540,750
|
|
|
$
|
|
|
|
$
|
1,378,913
|
|
Bonus (2)
|
|
|
94,631
|
|
|
|
94,631
|
|
|
|
94,631
|
|
|
|
|
|
|
|
378,525
|
|
Stock Option Vesting Acceleration (3)
|
|
|
465,696
|
|
|
|
465,696
|
|
|
|
|
|
|
|
|
|
|
|
465,696
|
|
RSU Vesting Acceleration (4)
|
|
|
103,624
|
|
|
|
103,624
|
|
|
|
|
|
|
|
|
|
|
|
310,871
|
|
PS Vesting Acceleration (5)
|
|
|
348,217
|
|
|
|
348,217
|
|
|
|
|
|
|
|
|
|
|
|
633,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,012,168
|
|
|
$
|
1,012,168
|
|
|
$
|
635,381
|
|
|
$
|
|
|
|
$
|
3,167,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount represents one year of base salary. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents one and one half times the
sum of Mr. Grovers base salary and annual incentive
bonus at Target. |
|
(2) |
|
Amount assumes that the Compensation Committee paid the annual
incentive bonus to the extent the performance goals were met. In
the event of a termination following a change in control (i.e.,
double-trigger), amount represents Ms. Grovers annual
incentive bonus at Target. |
|
(3) |
|
Amount represents the in the money value of
Mr. Grovers unvested portions of stock option awards
that are outstanding based upon the stock price as of
January 28, 2011. |
|
(4) |
|
Amount assumes that the Compensation Committee vested the
outstanding time based RSU stock awards to the extent the
service requirements were met. In the event of a change in
control, the Company is obligated to vest any restricted stock
awards outstanding. |
|
(5) |
|
Amount assumes that the Compensation Committee vested the
outstanding PS awarded both in March 2009 and March 2010 at
Target based upon achievement of earnings per share results by
the end of Fiscal 2011 and Fiscal 2012, respectively. Amount is
prorated based on Mr. Grovers service during the
performance period. In the event of a change in control, the
Company is obligated to vest any PS outstanding without
proration. |
Dennis R.
Parodi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Resignation
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
506,374
|
|
|
$
|
|
|
|
$
|
1,215,297
|
|
Bonus (2)
|
|
|
75,956
|
|
|
|
|
|
|
|
75,956
|
|
|
|
|
|
|
|
303,824
|
|
Stock Option Vesting Acceleration (3)
|
|
|
465,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
465,696
|
|
RSU Vesting Acceleration (4)
|
|
|
103,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,871
|
|
PS Vesting Acceleration (5)
|
|
|
348,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
993,493
|
|
|
$
|
|
|
|
$
|
582,330
|
|
|
$
|
|
|
|
$
|
2,929,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) |
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Amount represents one year of base salary. In the event of a
termination following a change in control (i.e.,
double-trigger), amount represents one and one half times the
sum of Mr. Parodis base salary and annual incentive
bonus at Target. |
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(2) |
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Amount assumes that the Compensation Committee paid the annual
incentive bonus to the extent the performance goals were met. In
the event of a termination following a change in control (i.e.,
double-trigger), amount represents Ms. Parodis annual
incentive bonus at Target. |
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Amount represents the in the money value of
Mr. Parodis unvested portions of stock option awards
that are outstanding based upon the stock price as of
January 28, 2011. |
39
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Amount assumes that the Compensation Committee vested the
outstanding time based RSU stock awards to the extent the
service requirements were met. In the event of a change in
control, the Company is obligated to vest any restricted stock
awards outstanding. |
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Amount assumes that the Compensation Committee vested the
outstanding PS awarded both in March 2009 and March 2010 at
Target based upon achievement of earnings per share results by
the end of Fiscal 2011 and Fiscal 2012, respectively. Amount is
prorated based on Mr. Parodis service during the
performance period. In the event of a change in control, the
Company is obligated to vest any PS outstanding without
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Compensation
Risks
The Companys Internal Audit department, in partnership
with outside advisors from PricewaterhouseCoopers LLP, completed
an independent risk assessment of the current compensation and
incentive plans in place across the Company. Internal Audit
reviewed all applicable plan documentation and conducted
interviews with key stakeholders to determine the level of risk
created by plan design, maintenance, changes and execution, as
well as, mitigating controls in place. Based upon their review,
the Internal Audit department determined that the compensation
programs, as designed and executed, appear to be low risk and
not reasonably likely to have a material adverse effect on the
Company. Their findings were presented to the Compensation
Committee during the March 2011 meeting.
Upon review and analysis of the information provided by
management, the Compensation Committee determined that the
compensation policies and practices are not reasonably likely to
have a material adverse effect on the Company. The Committee
considers the business and financial risk implications of all
plan design recommendations during their review and discussion
of overall compensation initiatives, including the annual
compensation approval process.
40
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have a Related Party Transaction Policy (the
Policy) to allow the Company to identify, document
and properly disclose related party transactions. The Policy
applies to all associates who have authority to enter into
commitments on behalf of the Company. Under the Policy, a
related party transaction is any transaction to which the
Company or any of its subsidiaries is a participant and in which
a related party has a direct or indirect material interest.
Examples of transactions include, without limitation, those for
the purchase or sale of goods, the provision of services, the
rental of property, or the licensing of intellectual property
rights. Additionally, if an associate or a member of an
associates immediate family is a supplier of goods or
services or owns or is employed by a business that supplies the
Company, or if a member of an associates immediate family
is employed by the Company, it is a related party transaction.
All related party transactions must be approved in advance by
the Audit Committee if they involve a significant stockholder,
Director or executive officer. All other related party
transactions must be disclosed in writing to, and approved in
advance by, the Companys General Counsel and the Chief
Financial Officer. Each quarter, the Companys Directors
and associates who have authority to enter into commitments on
behalf of the Company are required to provide a certification
regarding the existence of any related party transactions that
they have knowledge of and which have not been fully and
accurately disclosed in the Companys filings with the
Securities and Exchange Commission.
The Company has an employment agreement with Charles Chupein,
son-in-law
of James V. ODonnell. Mr. Chupein has served the
Company as Senior Vice President and Chief Operating Officer
since April 2011. Prior thereto, Mr. Chupein served as
Senior Vice President, Operations and Planning from October 2010
to April 2011, as Senior Vice President, Outlet Division from
August 2010 to October 2010, and as Senior Vice President and
Chief Operating Officer of MARTIN+OSA from February 2005 to
August 2010.
Mr. Chupein received the following compensation during
Fiscal 2010:
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Annual Cash Compensation: $375,950;
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Annual Incentive Bonus: $37,595;
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A grant of 6,418 shares of time-based restricted stock
units which one third vested on March 1, 2011;
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A grant of 33,048 NSOs with an exercise price of $16.91;
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A grant of 6,017 long-term RSU performance shares with the
amount realized contingent on performance goals by the end of
Fiscal 2012; and
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Commuting and lodging benefits of $36,664.
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For Fiscal 2011, Mr. Chupein will receive an annual salary
of $450,000. Additionally, he will be eligible to receive an
annual cash bonus at target of $225,000 and a long-term
incentive award of 14,171 restricted stock units with the
amounts realized contingent on performance goals.
Mr. Chupein was also granted 11,595 shares of time
based restricted stock units which vest over three years in
equal annual increments but may fully vest in one year if
certain performance goals for Fiscal 2011 are met.
Mr. Chupein also participates in various compensation and
employee benefits plans or arrangements on the same basis as
other employees in comparable positions.
41
PROPOSAL TWO:
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending January 28,
2012. In the event the stockholders do not ratify the
appointment of Ernst & Young LLP, the Audit Committee
will reconsider its appointment. In addition, even if the
stockholders ratify the appointment of Ernst & Young
LLP, the Audit Committee may in its discretion appoint a
different independent registered public accounting firm at any
time during the year if the Audit Committee determines that a
change is in the best interest of the Company.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting to respond to appropriate
questions and to make a statement if such representatives so
desire.
The Board of Directors recommends that the stockholders vote
FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending January 28,
2012.
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed the audited financial statements in the
Annual Report for the year ended January 29, 2011 with
management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments, and the clarity of disclosures in the
financial statements.
The Audit Committee reviewed with the independent registered
public accounting firm, who is responsible for expressing an
opinion on the conformity of those audited financial statements
with generally accepted accounting principles, its judgments as
to the quality, not just acceptability, of the Companys
accounting principles and such other matters as are required to
be discussed with the Audit Committee by Statement on
Auditing Standards No. 61, as amended by Statement on
Auditing Standards No. 90 (Communications with Audit
Committees). In addition, the Audit Committee has discussed
with the independent registered public accounting firm, its
independence from management and the Company, including the
matters in the written disclosures required by Rule 3526 of
the Public Company Accounting Oversight Board, Communication
with Audit Committees Concerning Independence and considered
the compatibility of nonaudit services with the firms
independence.
The Audit Committee discussed with the Companys internal
auditors and its independent registered public accounting firm
the overall scope and plans for their respective audits. The
Audit Committee meets with the internal auditors and the
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, and the overall quality of the Companys
financial reporting. The Audit Committee also carried out the
additional responsibilities and duties as outlined in its
charter.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board that the audited
financial statements be included in the Annual Report on
Form 10-K
for the year ended January 29, 2011 for filing with the
Securities and Exchange Commission.
Cary D. McMillan, Audit Committee Chair
Michael G. Jesselson, Audit Committee Member
Thomas R. Ketteler, Audit Committee Member
Janice E. Page, Audit Committee Member
Gerald E. Wedren, Audit Committee Member
42
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
During Fiscal 2010, Ernst & Young LLP served as our
independent registered public accounting firm and in that
capacity rendered an unqualified opinion on our consolidated
financial statements as of and for the year ended
January 29, 2011.
The following table sets forth the aggregate fees billed to us
by our independent registered public accounting firm in each of
the last two fiscal years:
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Fiscal
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Fiscal
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Description of Fees
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2010
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2009
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Audit Fees
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$
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1,090,000
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$
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1,086,800
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Audit-Related Fees
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1,995
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1,995
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Tax Fees
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271,080
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All Other Fees
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Total Fees
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$
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1,363,075
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$
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1,088,795
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Audit Fees include fees billed for professional
services rendered in connection with the audit of our
consolidated financial statements, including the audit of our
internal control over financial reporting, and the review of our
interim consolidated financial statements included in quarterly
reports as well as fees for services that generally only the
independent registered public accounting firm can reasonably be
expected to provide, including comfort letters, consents,
assistance with the review of registration statements filed with
the SEC and consultation regarding financial accounting
and/or
reporting standards. Audit-Related Fees include fees
billed for accounting research software. Tax Fees
primarily include fees billed related to federal and state tax
compliance and consulting.
The Audit Committee has adopted a policy that requires
pre-approval of all auditing services and permitted non-audit
services to be performed by the independent registered public
accounting firm, subject to the de minimis exceptions for
non-audit services as described in SEC Exchange Act
Section 10A(i)(1)(B) which are approved by the Audit
Committee prior to the completion of the audit. The Audit
Committee may form and delegate the authority to grant
pre-approvals of audit and permitted non-audit services to
subcommittees consisting of one or more members when it deems
appropriate, provided that decisions of such subcommittee shall
be presented to the full Audit Committee at its next scheduled
meeting.
PROPOSAL THREE:
ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the Dodd-Frank Act), we are
providing stockholders with an advisory or non-binding vote on
the overall compensation of our named executive officers.
Accordingly, the following resolution will be submitted for a
stockholder vote at the 2011 Annual Meeting:
RESOLVED, that the Companys stockholders approve, on
an advisory basis, the compensation of the named executive
officers, as disclosed pursuant to Item 402 of
Regulation S-K,
including the Compensation Discussion and Analysis, compensation
tables and narrative discussion, as set forth in the Proxy
Statement for the Annual Meeting.
The Companys Board of Directors and Compensation Committee
will consider the outcome of the advisory or non-binding vote
when considering future executive compensation arrangements.
As described above in the section entitled Compensation
Discussion and Analysis, the overall objective of our
executive compensation program is to attract highly skilled,
performance oriented executives and to motivate them to achieve
outstanding results through appropriate means. We focus on four
core principles in structuring an effective compensation program
that meets our stated objective: performance; competitiveness;
affordability; and simplicity. We strategically allocate
compensation between short-term and long- term
43
components and between cash and equity in order to maximize
executive performance and retention. This philosophy is designed
to closely align executive compensation with changes in
stockholder value and achievement of performance objectives
while also holding executives accountable for results.
The Board of Directors recommends that the stockholders vote
FOR the approval of the compensation of our named
executive officers as set forth in the Proxy Statement for the
Annual Meeting.
PROPOSAL FOUR:
ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER ADVISORY
VOTES
ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Pursuant to the Dodd-Frank Act, we are providing stockholders
with an advisory or non-binding vote on the frequency of future
stockholder advisory votes on the overall compensation of our
named executive officers. By voting on this proposal,
stockholders may indicate whether they would prefer an advisory
vote on named executive officer compensation once every one, two
or three years. Stockholders may also abstain from voting.
The stockholder vote on the frequency for the advisory vote on
the overall compensation of our named executive officers is
advisory and non-binding. The Company currently expects to hold
this vote in accordance with the option of one, two or three
years that receives the highest number of votes cast by
stockholders. However, the Board of Directors may decide in the
future that it is in the Companys best interests and in
the best interests of our stockholders to hold an advisory vote
on executive compensation more or less frequently, as
applicable, than the option approved by our stockholders.
The Board of Directors recommends a vote for a frequency of
once every ONE year.
OTHER
MATTERS
The only business which the management intends to present at the
meeting consists of the matters set forth in this statement. The
management knows of no other matters to be brought before the
meeting by any other person or group. If any other matter should
properly come before the meeting, the proxy enclosed confers
upon the persons designated herein authority to vote thereon in
their discretion.
HOUSEHOLDING
In order to reduce expenses, we are taking advantage of certain
SEC rules, commonly known as householding, that
permit us to deliver, in certain cases, only one Notice, Annual
Report or Proxy Statement, as applicable, to multiple
stockholders sharing the same address, unless we have received
contrary instructions from one or more of the stockholders. If
you received a householded mailing this year and would like to
have additional copies of the Notice, Annual Report, Proxy
Statement or other proxy materials sent to you, please submit
your request directed to the Corporate Secretary of the Company,
at 77 Hot Metal Street, Pittsburgh, Pennsylvania 15203,
(412) 432-3300.
If you hold your stock in street name, you may revoke your
consent to householding at any time by notifying your broker.
If you are currently a stockholder sharing an address with
another Company stockholder and wish to have your future proxy
statements and annual reports householded, please contact the
Corporate Secretary of the Company at the above address or
telephone number.
44
ADDITIONAL
INFORMATION
We will furnish without charge to each person whose proxy is
being solicited, upon request of any such person, a copy of the
Fiscal 2010
Form 10-K
as filed with the SEC, including the financial statements and
schedules thereto. In addition, such report is available, free
of charge, through the investor relations section of our
Internet website at
http://www.ae.com
under the links About AEO Inc., AE Investment Info,
Historical Annual Reports. A request for a copy of such
report should be directed to Judy Meehan, Vice President of
Investor Relations of the Company, at 77 Hot Metal Street,
Pittsburgh, Pennsylvania 15203,
(412) 432-3300.
45
AMERICAN EAGLE OUTFITTERS, INC.
The undersigned Stockholder of American Eagle Outfitters, Inc. hereby appoints Joan Holstein Hilson
and Cornelius Bulman, Jr., or either of them individually, as attorneys and proxies with full power
of substitution to vote all of the shares of Common Stock of American Eagle Outfitters, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Stockholders of American Eagle
Outfitters, Inc. to be held at the Companys offices located at 77 Hot Metal Street, Pittsburgh,
Pennsylvania on Tuesday, June 21, 2011 at 11:00 a.m., local time, and at any adjournment or
adjournments thereof as follows:
This proxy is solicited on behalf of the Board of Directors.
(Continued, and to be dated and signed, on the other side)
▲
PLEASE
DETACH PROXY CARD HERE ▲
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be held June 21, 2011. The Proxy Statement and our Fiscal 2010 Annual Report on
Form 10-K are available at: www.proxyease.com/ae/2011
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PLEASE MARK YOUR VOTE IN BLUE |
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OR BLACK INK AS SHOWN HERE |
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FOR
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AGAINST
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ABSTAIN |
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Proposal One. Election of Directors. |
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MICHAEL G. JESSELSON
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ROGER S. MARKFIELD
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JAY L. SCHOTTENSTEIN
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Proposal Two. Ratify the appointment of
Ernst & Young LLP as the Companys
independent registered public accounting
firm for the fiscal year ending January 28, 2012.
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FOR
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AGAINST
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3.
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Proposal Three. Hold an advisory vote on
the compensation of our named executive
officers.
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1 YR
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2 YRS
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3 YRS
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Proposal Four. Hold an advisory
vote on the frequency of future
stockholder advisory votes on the
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compensation of our named executive officers.
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5.
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In their discretion to vote upon such other matters as may properly come
before the meeting.
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IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, AND
FOR THE OPTION OF EVERY ONE YEAR ON PROPOSAL 4.
Please sign and date this Proxy
below
and return in the
enclosed envelope.
Signature(s) must agree with the name(s) printed on this
proxy. If signing as attorney, executor, administrator,
trustee or guardian, please give your full title as such.
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Date
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2011 |
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(Signature) |
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(Signature of joint owner)
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▲
PLEASE DETACH PROXY CARD HERE
▲
PROXY VOTING INSTRUCTIONS