Edgar Filing: Childrens Place, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

Information Required in Proxy Statement

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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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The Children’s Place, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)

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April [____], 2016

Dear Fellow Stockholder:

You are cordially invited to attend our Annual Meeting of Stockholders on Wednesday, May 25, 2016 at 8:30 a.m. at 500 Plaza Drive, Secaucus, New Jersey.

At the Annual Meeting, we will ask you to (i) elect the Class I members of the Board of Directors, (ii) ratify the selection of the independent registered public accounting firm, (iii) re-approve the material terms of the performance criteria set forth in the Company’s 2011 Equity Incentive Plan as required by Section 162(m) of the Internal Revenue Code, (iv) approve an increase in the number of shares of common stock, par value $0.10 per share, available for issuance under the 2011 Equity Incentive Plan, (v) approve separate proposals to amend the Company’s charter intended to further enhance stockholder rights and (vi) hold an advisory vote concerning named executive officer compensation.

This booklet includes the Notice of Annual Meeting and Proxy Statement. The Proxy Statement describes the business we will conduct at the Annual Meeting and provides information about the Company that you should consider when you vote your shares.

It is important that you be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting in person, we hope that you will vote on the matters to be considered. You may vote your proxy via the internet, by telephone, or by mail by signing, dating and returning your proxy card in the envelope provided.



Very truly yours,

Norman Matthews Chairman of the Board

April [_____], 2016

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2016 Annual Meeting of Stockholders of The Children’s Place, Inc. will be held at 500 Plaza Drive, Secaucus, New Jersey on Wednesday, May 25, 2016, at 8:30 a.m., for the following purposes:

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To elect three Class I members of the Board of Directors to serve for one-year terms;

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To ratify the selection of BDO USA, LLP, as the Company’s independent registered public accounting firm for fiscal 2016;

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To re-approve the material terms of the performance criteria set forth in the Company’s 2011 Equity Incentive Plan as required by Section 162(m) of the Internal Revenue Code;

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To approve an increase of 850,000 shares of common stock, par value $0.10 per share (the “Common Stock”) available for issuance under the Company’s 2011 Equity Incentive Plan;

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To approve separate proposals to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to (i) eliminate the prohibition on stockholders’ rights to call a special meeting of stockholders and, if so eliminated, include a provision in the Amended and Restated Bylaws of the Company (the “Bylaws”) permitting stockholders to call a special meeting of stockholders, (ii) eliminate super-majority stockholder voting requirements for the amendment of certain provisions of the Company’s Charter and Bylaws, (iii) remove the advance notice provisions governing the submission of proposals at stockholder meetings and, if so removed, establish more customary advance notice provisions in the Bylaws, (iv) remove the director removal provision and, if so removed, include such provision in the Bylaws and (v) eliminate an uncommon provision related to compromises with creditors;

If the related Charter amendments are approved by stockholders, the Company will amend its Bylaws to:

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Permit stockholders holding not less than 25% of the Company’s Common Stock to call a special meeting of stockholders;

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Lengthen the advance notice window for director nominations and stockholders proposals from fifteen (15) days to thirty (30) days; and

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Include the provision governing the removal of directors in the Bylaws;

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To conduct an advisory vote to approve the compensation of the Company’s named executive officers (“Say on Pay”); and

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To consider and act upon such other business as may properly come before the Annual Meeting.

Stockholders of record at the close of business on April [____], 2016 are entitled to vote at the Annual Meeting.

Your vote is important. We encourage you to vote by proxy, even if you plan to attend the Annual Meeting. You may vote your proxy via the internet or by telephone by following the instructions included on your proxy card. You may also vote by mail by signing, dating and returning your proxy card in the envelope provided. Voting now will not limit your right to change your vote or to attend the Annual Meeting.



By order of the Board of Directors,

Bradley P. Cost Senior Vice President, General Counsel and Secretary The Children’s Place, Inc. 500 Plaza Drive Secaucus, New Jersey 07094

If you have any questions or require any assistance with voting your shares, please contact:

MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com

TABLE OF CONTENTS


GENERAL INFORMATION		1
PROXY SUMMARY		4
CORPORATE GOVERNANCE AT THE CHILDREN’S PLACE		13
Our Corporate Governance Framework		13
Stockholder Engagement		13
Corporate Governance Enhancements in 2015		13
Corporate Governance Principles and Practices		14
Board of Directors and Board Committees		19
Board Nominees and Continuing Directors		21
Board and Committees’ Role in Risk Oversight		27
Audit Committee Report		27
EXECUTIVE OFFICERS		29
EXECUTIVE AND DIRECTOR COMPENSATION		30
Compensation Discussion and Analysis		30
Compensation Committee Report		45
Summary Compensation Table		46
Grants of Plan-Based Awards		48
Outstanding Equity Awards at Fiscal Year-End		50
Stock Vested		54
Deferred Compensation Plan		56
CEO Employment Agreement		56
Other Arrangements		58
Change in Control Agreements		58
Severance Guidelines and Offer Letters		59
Potential Payments Upon Termination or Change in Control		60
Compensation of Directors		61
STOCK OWNERSHIP		63
Stock Ownership of Directors and Executive Officers		63
Stock Ownership of Certain Beneficial Owners		64
Section 16(a) Beneficial Ownership Reporting Compliance		65
Certain Relationships and Related Transactions		65
PROPOSALS REQUIRING YOUR VOTE		67
Proposal 1:	Election of Three Class I Directors	67
Proposal 2:	Ratification of Selection of Independent Registered Public Accounting Firm	68
Proposal 3:	Re-Approval of the Material Terms of the Performance Criteria set forth in Our 2011 Equity Incentive Plan as required by Section 162(m) of the Internal Revenue Code	69

(i)


Proposal 4:	Approval of an Increase in the Number of Shares of Common Stock Available for Issuance Under Our 2011 Equity Incentive Plan	80
Proposal 5:	Approval of an Amendment to Our Charter Regarding the Prohibition on Stockholders’ Ability to Call a Special Meeting of Stockholders	83
Proposal 6:	Approval of an Amendment to Our Charter Regarding the Super-Majority Stockholder Voting Requirements to Amend Certain Provisions of Our Charter	85
Proposal 7:	Approval of an Amendment to Our Charter Regarding the Super-Majority Stockholder Voting Requirements to Amend Certain Provisions of Our Bylaws	85
Proposal 8:	Approval of an Amendment to Our Charter Regarding the Advance Notice Provisions Governing the Submission of Proposals at Stockholder Meetings	87
Proposal 9:	Approval of an Amendment to Our Charter Regarding the Provision Governing Removal of Directors	89
Proposal 10:	Approval of an Amendment to Our Charter Regarding the Provision Governing Compromises with Creditors	91
Proposal 11:	Advisory Vote on Named Executive Officer Compensation (“Say on Pay”)	92
STOCK PRICE PERFORMANCE GRAPH		93
OTHER INFORMATION		94
Additional Voting Information		94
Future Stockholder Proposals		97
Nominations for Director		98
Cost and Methods of Soliciting Proxies		98
Available Information		98
Other Business		99
APPENDICES
Appendix A—First Amended and Restated 2011 Equity Incentive Plan		A-1
Appendix B—Proposed Form of Amended and Restated Certificate of Incorporation		B-1
Appendix C—Proposed Form of Sixth Amended and Restated Bylaws		C-1

(ii)

GENERAL INFORMATION

The Children’s Place, Inc. (referred to in this Proxy Statement as “we,” “The Children’s Place” or the “Company”) is sending you this Proxy Statement in connection with the solicitation by the Board of Directors (the “Board”) of proxies to be voted at the 2016 Annual Meeting of Stockholders (the “Annual Meeting”).

We are mailing a printed copy of this Proxy Statement, a proxy card and the 2015 Annual Report on Form 10-K of the Company (the “Annual Report”) to our stockholders beginning on or about April [___], 2016. The Annual Report mailed with the Proxy Statement is not part of the proxy- soliciting material.

Annual Meeting

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Date: May 25, 2016

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Time: 8:30 a.m. (Eastern)

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Place: 500 Plaza Drive, Secaucus, New Jersey

Matters to be Voted on


Proposal 1	—	Election of Three Class I Directors.

Proposal 2	—	Ratification of Selection of Independent Public Accounting Firm.

Proposal 3	—	Re-Approval of the Material Terms of the Performance Criteria set forth in Our 2011 Equity Incentive Plan as Required by Section 162(m) of the Internal Revenue Code.

Proposal 4	—	Approval of an Increase in the Number of Shares of Common Stock Available for Issuance Under Our 2011 Equity Incentive Plan.

Proposal 5	—	Approval of an Amendment to Our Charter Regarding the Prohibition on Stockholders’ Ability to Call a Special Meeting of Stockholders.

Proposal 6	—	Approval of an Amendment to Our Charter Regarding the Super-Majority Stockholder Voting Requirements to Amend Certain Provisions of Our Charter.

Proposal 7	—	Approval of an Amendment to Our Charter Regarding the Super-Majority Stockholder Voting Requirements to Amend Certain Provisions of Our Bylaws.

Proposal 8	—	Approval of an Amendment to Our Charter Regarding the Advance Notice Provisions Governing the Submission of Proposals at Stockholder Meetings.

Proposal 9	—	Approval of an Amendment to Our Charter Regarding the Provision Governing Removal of Directors.

Proposal 10	—	Approval of an Amendment to Our Charter Regarding the Provision Governing Compromises with Creditors.

Proposal 11	—	Advisory Vote on Named Executive Officer Compensation (“Say-on-Pay”).

Admission

We do not require tickets for admission to the meeting but do limit attendance to stockholders on the record date or their proxy holders. Please bring proof of your Company stock ownership, such as current brokerage statement, and photo identification. Only stockholders or their valid proxy holders may attend the meeting.

Who Can Vote

The Company has one class of voting stock outstanding: common stock, par value $0.10 per share (the “Common Stock”). If you were a record owner of Common Stock on April 1, 2016, the record date for voting at the Annual Meeting, you are entitled to vote at the Annual Meeting. At the close of business on April __, 2016, there were [ ] shares of Common Stock issued and outstanding and entitled to vote. Each share of Common Stock has one vote.

How to Vote

You can vote your shares in two ways: either by proxy or in person at the Annual Meeting by written ballot. If you choose to vote by proxy, you may do so by mail, using the internet or by telephone. Each of these procedures is more fully explained below. Even if you plan to attend the Annual Meeting, the Board recommends that you vote by proxy.

Voting by Proxy

Because many stockholders cannot attend the Annual Meeting in person, it is necessary that a large number of stockholders be represented by proxy. You may vote your proxy by mail, using the internet or by telephone, each as more fully explained below. In each case, we will vote your shares as you direct. When you vote your proxy, you can specify whether you wish to vote for or against or abstain from voting on each nominee for Class I Director, the ratification of the selection of BDO USA, LLP as the Company’s independent registered public accounting firm for fiscal 2016, the re-approval of the material terms of the performance criteria set forth in the Company’s 2011 Equity Incentive Plan (the “2011 Equity Plan”) as required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “IRC”), the approval of an increase of 850,000 shares of Common Stock available for issuance under the Company’s 2011 Equity Plan, the approval of certain amendments to our Charter, and the approval of the compensation for the Company’s named executive officers on an advisory basis (“Say on Pay”).

If any other matters are properly presented for consideration at the Annual Meeting, the persons named on the voting web site and your proxy card as the Proxy Committee (the “Proxy Committee”) will have discretion to vote for you on those matters. At the time this Proxy Statement was printed, we knew of no other matters to be raised at the Annual Meeting. Attending the Annual Meeting alone will not be deemed to revoke your proxy.

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Vote by Mail

You can vote your shares by completing and mailing the enclosed proxy card to us so that we receive it before 11:59 p.m. (Eastern Time) on Tuesday, May 24, 2016. If you sign and return your proxy card but do not specify how to vote, we will vote your shares in favor of the ratification of the selection of the independent registered public accounting firm.

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Vote by Internet

You can vote your shares via the internet on the voting web site, which is www.voteproxy.com. Internet voting is available 24 hours a day, seven days a week, until 11:59 p.m. (Eastern Time) on Tuesday, May 24, 2016. Our internet voting procedures are designed to authenticate stockholders through individual control numbers. If you received a proxy card in the mail and choose to vote via the internet, you do not need to return your proxy card.

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Vote by Telephone

If you reside in the United States, Canada or Puerto Rico, you can also vote your shares by telephone by calling the toll-free number provided on the voting web site (www.voteproxy.com) and on the proxy card. Telephone voting is available 24 hours a day, seven days a week, until 11:59 p.m. (Eastern Time) on Tuesday, May 24, 2016. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate stockholders

through individual control numbers. If you received a proxy card in the mail and choose to vote by telephone, you do not need to return your proxy card.

Voting in Person at the Annual Meeting

If you wish to vote in person at the Annual Meeting, written ballots will be available from the ushers at the Annual Meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. Voting by proxy, whether by mail, using the internet or by telephone, will not limit your right to vote at the Annual Meeting if you decide to attend in person. However, if you vote by proxy and also attend the Annual Meeting, there is no need to vote again at the Annual Meeting unless you wish to change your vote. Attending the Annual Meeting alone will not be deemed to revoke your proxy.

PROXY SUMMARY

The below summary highlights certain information contained in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement and the accompanying Annual Report before you vote.

2015 Performance Highlights

Our Company performed very well in fiscal 2015 across a variety of relevant metrics, including creation of stockholder value, financial results, return of capital to stockholders, and progress on strategic initiatives. We delivered this strong performance against a backdrop of an intensely competitive, highly promotional, and “over-stored” specialty apparel retail industry in which most retailers, including members of our Peer Group, struggled by comparison.

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Stockholder Value. We created significant stockholder value:

Our total stockholder return or “TSR” was in the 85^th percentile of our Peer Group in fiscal 2015. Additionally, our 3-year TSR was in the 87^th percentile of our Peer Group.

We believe that our superior TSR ranking is attributable to the Company’s strong financial performance resulting from our successful execution against our strategic initiatives.

At April 1, 2016, the closing price of our Common Stock was $[____], having reached an all-time high of $[____] on March [__], 2016.

•

Financial Results. We achieved strong financial results:

We recorded positive comparable retail sales for fiscal 2015, including a positive 6.7% comparable retail sales for the fourth fiscal quarter.

Our adjusted EPS increased 18.0% from $3.05 in fiscal 2014 to $3.60 in fiscal 2015. On a constant currency basis, adjusted EPS in fiscal 2015 was $3.74, a 22.6% increase compared to fiscal 2014.

We generated cash from operations of over $180 million and ended fiscal 2015 with no debt on our balance sheet, permitting the Company to return significant capital to our stockholders and to make the capital expenditures necessary to affect our business transformation through technology.

•

Return of Capital. We continued to return significant capital to stockholders:

We repurchased over $119 million of our Common Stock in fiscal 2015, resulting in the purchase of approximately $530 million of our Common Stock over the past five fiscal years and approximately $624 million since we began our capital return program in 2009. Our Board approved an additional $250 million stock buyback program in the fourth quarter of fiscal 2015.

We commenced the payment of quarterly cash dividends in fiscal 2014, paid over $12 million in dividends in fiscal 2015, increased our dividend payment in the first quarter of fiscal 2015 by over 13%, and further increased our dividend in the first quarter of fiscal 2016 by 33¹/₃%.

•

Strategic Initiatives Progress. Our strategic vision, which was set by our CEO in 2010 when she arrived at The Children’s Place, is to effect a company-wide, multi-year transformation to the premier global, omni-channel children’s apparel brand. We have remained singularly focused on our strategy during this time period, and our strong financial results and TSR performance are evidence of the success of our strategic direction. Our strategic initiatives consist of:

Product Focus. In furtherance of our stated objective to have the right merchandise in the right stores at the right time, in fiscal 2015, we successfully deployed state of the art merchandising tools. These new merchandising tools, combined with our highly talented design team, resulted in more frequent deliveries of updated, trend-right

fashion, and increased penetration of wear-now, seasonally appropriate apparel, accessories and footwear.

Business Transformation Through Technology. In fiscal 2015, we made significant on-time and on-budget progress on our technology and systems initiatives. We are transforming our digital capabilities to enhance our interaction with our customers. We are improving the efficiency and productivity of our inventory management through the installation of state of the art inventory planning, allocation and replenishment systems, which also support and accelerate our growth through channel expansion.

Global Growth Through Channel Expansion. We continued to leverage our e-commerce channel to drive e-commerce sales domestically and internationally, enhance the sales and profitability of our store fleet, and enhance our brand recognition throughout the world. Our international operations continued to expand in fiscal 2015 through the addition of a new franchise partner in Mexico, and the successful opening of the first The Children’s Place stores and shop in shops in India, Mexico, Venezuela, Guatemala, the Dominican Republic, Georgia and Kazakhstan resulting in 102 international points of distribution (stores, shop in shops, e-commerce sites) open in 16 countries operated by six franchise partners at fiscal year-end. Since 2012, sales from our wholesale business have increased almost four-fold.

Optimization of Our Store Fleet. In fiscal 2015, we continued to execute on the planned closure of approximately 200 stores through fiscal 2017, including 32 stores closed in fiscal 2015 and a total of 76 stores closed in the prior two fiscal years. Our store fleet optimization initiative has resulted in improved comparative retail store sales and improved profitability in our e-commerce business and neighboring stores.

Board of Director Characteristics

BOARD TENURE AND DIVERSITY

Our Board of Directors is comprised of a mix of relatively new and longer-tenured directors, providing the Board with fresh perspectives and the benefit of experience. Additionally, our Board is well balanced in terms of gender, ending fiscal 2015 at the forefront of U.S. companies in terms of gender diversity on our Board.

BOARD OF DIRECTOR CHARACTERISTICS

BOARD SKILLS AND EXPERIENCE

We believe that our Board is comprised of persons possessing the diverse skills and experience necessary to further our strategy and to address the risks we face in the rapidly changing business environment in which we operate. The Board has been shaped by actions taken over the years based on the Board’s annual self-assessment and director skills and experience mapping activities. These skills and experience are illustrated below.

See “Board Nominees and Continuing Directors—Summary of Director Core Competencies” below for more information about the skills and experience of our individual directors.

Engagement with our Stockholders

Outreach Activities. Our governance framework provides important support for our business and promotes the achievement of our strategic initiatives, all in order to serve the best interests of our stockholders. We understand the importance of assessing our governance practices regularly. In furtherance of that periodic assessment, during fiscal 2015, we spoke with institutional stockholders holding almost 65% of our Common Stock about corporate governance, executive compensation and social matters of importance to our stockholders and to us. This outreach was led by the Chair of our Nominating & Corporate Governance Committee and included our CEO, COO and General Counsel. During this outreach, we asked about a number of different topics. While not every stockholder addressed all of the following topics, our conversations with each stockholder touched on the substantial majority of these topics:


Shareholder Rights

•		Proxy access
•		Elimination of super-majority voting requirements
•		Ability of stockholders to call a special meeting
•		Ability of stockholders to act by written consent
•		Advance notice provision to submit proposals/director nominees for inclusion in the proxy
Board of Director Matters

•		Board composition
		Ø succession planning
		Ø refreshment
		Ø diversity
•		Board of Director term limits
•		Mandatory retirement age for directors
•		“Over-boarding” on public boards


Capital Allocation

•		Stock buybacks, dividends, capital expenditures and other uses of cash


Executive Compensation

•		Appropriate performance metrics for annual and long-term incentive plans


Social Issues

•		Global labor practices/human rights—supply chain issues
•		Disclosure of spending on lobbying activities and political contributions
Environmental Matters

•		Climate change
•		Greenhouse gas emissions
•		Use of renewable energy

Our Board engaged in extensive discussions concerning the input we received from our shareholders and formulated a comprehensive series of steps to further strengthen our governance practices. Later in the fiscal year, we spoke again with our stockholders to share our Board’s determinations and to seek their further input. See “Corporate Governance Highlights—Corporate Governance Enhancements” in this section below for a discussion of our Board’s determinations shared with our stockholders.

Board Functioning Post Proxy Contest. As part of our fiscal 2015 engagement with stockholders, we were asked by a number of stockholders about the impact of the proxy contest in the Spring of 2015 on the Board’s continued commitment to our strategic initiatives and the functioning of the Board. In addressing these questions, the Chair of our Nominating & Corporate Governance Committee stressed two points: (i) our Board’s unwavering and unanimous commitment to the Company’s strategy set by our CEO in 2010 when she arrived at The Children’s Place and (ii) that our Board continues to function constructively and collaboratively to drive progress and deliver value to stockholders. In response to inquiries from stockholders concerning how the new directors who were added in response to the proxy contest were made familiar with the Company and the Board, the Chair explained that they were on-boarded and assimilated in the same fashion as other new directors have been. These on-boarding activities included providing the new directors

with the Company’s comprehensive Board of Directors Handbook, multiple-day meetings at the Company’s headquarters with members of senior management during which in-depth explanations and discussions of the Company’s strategic initiatives took place, and meetings and conversations with incumbent directors intended to provide the new directors with an understanding of the dynamics and functioning of our Board and of each of the Board’s Committees.

Corporate Governance Highlights

Our corporate governance framework is designed to support our brand and to promote the achievement of our strategic initiatives. Set forth below are highlights of our Corporate Governance Foundation and the Corporate Governance Enhancements made in 2015, as well as the corporate governance enhancements that are proposed for stockholder approval at the Annual Meeting. Our Board believes that our proactive approach to governance practices furthers our commitment to our stockholders.

CORPORATE GOVERNANCE FOUNDATION


Board Independence	•	10 out of 11 of our directors are independent.

	•	Our CEO is the only member of management who serves as a director.

Board Composition	•	We seek a Board that, as a whole, possesses a mix of diverse skills, backgrounds and experience which are relevant to our strategy, and an appropriate balance in terms of gender. Four of our Board members are women.

Ø Diversity Ø Short Average Tenure Ø Refreshment	•	We have a mix of relatively new and longer-tenured directors providing our Board with fresh perspectives and the benefit of experience. The average tenure of our independent directors is 3.35 years.

	•	We have added five new directors since 2014, including two women.

Independent Chairman	•	The roles of our Chairman of the Board and Chief Executive Officer are separated.

Ø Regular Executive Sessions	•	In addition to his other duties, our Chairman oversees regular executive sessions of the Board at which our independent directors discuss matters such as strategy, succession planning, risk, senior executive performance and compensation, future agenda items, and Board priorities and effectiveness.

Board Committees	•	We have three Board committees—Audit, Compensation, and Nominating & Corporate Governance.

Ø All Members are Independent	•	All Committees are composed entirely of independent directors.

	•	Board Committee Chairs shape the agenda and information presented to their committees to respond to evolving business and regulatory developments.

Stockholder Engagement	•	We regularly engage with our stockholders to ensure that both our Board and senior management are aware of and can address the issues that matter most to our investors on a timely basis. During fiscal 2015, we spoke on two separate occasions with stockholders holding almost 65% of our Common Stock.

Ø Regular and Extensive Outreach	•	In our engagements, we asked to hear stockholders’ views on governance matters generally and specifically with respect to the Company, including emerging governance developments, executive compensation, social and environmental matters, and our practices in each of these areas.

	•	Stockholders may also contact our directors directly by following the steps set forth in this Proxy Statement.



Annual Evaluation of the Board and each Director Ø Mapping of Directors’ Skills and Background to our Strategy	•	The Nominating & Corporate Governance Committee leads an annual self-evaluation of the functioning and effectiveness of the Board, as a whole, and of each Committee and each director. The centerpiece of this process is the analysis of a comprehensive self-assessment questionnaire completed by each director. The questionnaire’s answers provide a critical evaluation by the directors of the Board’s performance, including assessing its agendas, informational needs, composition, processes, dynamics and effectiveness, as well as a director by director evaluation in terms of skillsets and contribution.

	•	The individual director evaluations not only assesses the performance of current directors, but also identify and map the experience and skills necessary to further our strategy and to address the risks we face in the rapidly changing business environment in which we operate. At the end of the process, opportunities for improvement are identified by the Board. For example, the annual skillset mapping in fiscal 2015 led us to identify an opportunity to strengthen our Board’s skills and experience in areas of particular importance to the success of our strategic initiatives.

Policy of Refreshment and Succession Planning	•	Our Board has a policy of Board refreshment and succession planning. Application of this policy to the Board’s annual director evaluation process has resulted in the appointment of four of the five new directors added to the Board since 2014.

Board Oversight	•	Oversight of business strategy, succession planning for our CEO and other members of senior management, and monitoring enterprise risk are key functions of the Board.

Ø Strategy Ø Succession Ø Risk	•	Our Board oversees and advises management on the development and execution of business strategy, including by conducting an in-depth annual review across all strategic initiatives followed by updates at each Board meeting.

	•	Succession planning for our CEO and other members of senior management is a topic reviewed frequently by our Board.

	•	Enterprise risk management is overseen by our Audit Committee, with ultimate responsibility resting with the Board.

Committee Oversight Ø Financial Reporting	•	Our Audit Committee oversees the integrity of our financial reporting process and financial statements, as well as the Company’s legal compliance and ethics programs.

Ø Responsible Sourcing	•	Our Audit Committee also monitors our responsible sourcing activities in our global sourcing operations.

Ø Compensation Risk	•	Our Compensation Committee reviews compensation policies and practices with its independent compensation consultant with a view to ensuring that the policies and practices do not encourage imprudent risk taking.

Accountability to Stockholders	•	Beginning with the annual meeting in 2017, all directors will be elected annually (declassified Board).

	•	Directors are elected by a majority of votes cast in uncontested director elections.

Director Engagement	•	Our Corporate Governance Guidelines limit to four (including our Company) the number of public boards of directors on which our independent directors may serve.



Director Stock Ownership Guidelines	•	Each independent director is required to acquire (directly and through time-vesting share equivalent units) an amount of Company shares having a value at least equal to five times his or her annual cash retainer within five years of joining our Board.

Director Access to Management	•	Members of senior management present regularly to directors to enable the Board to hear directly from the leaders responsible for particular areas of our business. Also, all directors have access to individual members of management.

In keeping with our commitment to enhance stockholder rights, and informed by our recent stockholder outreach activities, in fiscal 2015 we further improved our strong governance framework and are recommending that, at the Annual Meeting, our stockholders approve certain other proposals to enhance stockholder rights. These actions are described below and will bolster the already comprehensive governance framework, policies and practices described above.

CORPORATE GOVERNANCE ENHANCEMENTS


Actions Taken in Fiscal 2015	•	Our Bylaws have been amended to provide proxy access rights to stockholders. We will include nominees in our proxy materials for up to the greater of 20% of the Board or two directors proposed by a stockholder or a group of up to 20 stockholders who have continuously owned 3% or more of our Common Stock for 3 years or more. See Article I, Section 7 of our Bylaws set forth in Appendix C attached hereto for the complete proxy access bylaw provision (the “Proxy Access Bylaw Amendment”).

	•	We have added new performance metrics (adjusted operating margin expansion and adjusted return on invested capital, or ROIC) to the existing metric of adjusted earnings per share, or EPS, for purposes of our long-term incentive plan (the “LTIP”) in order to more directly measure the progress made in achieving our strategic initiatives and to hold management accountable for financial results over which they have a greater direct influence. Our Compensation Committee also believes these metrics are key drivers of TSR.

	•	We have limited to four (including our Company) the number of public boards of directors on which our independent directors may serve.

Recommended Actions	•	At the Annual Meeting, our Board is recommending that our stockholders approve proposals further enhancing the rights of our stockholders that will:

		Ø	Permit stockholders holding 25% or more of our Common Stock to call special meetings of stockholders.

		Ø	Eliminate super-majority stockholder voting requirements.

		Ø	Update our advance notice provision governing the submission of proposals at stockholder meetings to lengthen the notice window and to provide stockholders with a greater deal of certainty as to when proposals must be submitted.

		See “Proposals Requiring Your Vote”: Proposals 5, 6, 7 and 8 below.

Executive Compensation Highlights

Our executive compensation program is designed to reward our management for delivering results and building sustainable stockholder value. We regularly review our compensation programs and policies, including to reflect feedback from our stockholders from the regular stockholder outreach activities undertaken in prior years by the Chair of our Compensation Committee and the outreach activities conducted by the Chair of our Nominating & Corporate Governance Committee in fiscal 2015.

We have made a number of important enhancements in fiscal 2015 and over the past few years. Important features of our executive compensation program include:

•

CEO Compensation

86%, 84% and 82% of our CEO’s total target compensation in fiscal 2015, 2014 and 2013, respectively, was performance-based.

Our CEO’s total target compensation in fiscal 2015 was in-line with that of our Peer Group’s CEOs, ranking in the 67^th percentile when compared to fiscal 2014 Peer Group CEO total target compensation (the most recent fiscal year for which this data was publicly available). For fiscal 2015, our TSR was in the 85^th percentile of our Peer Group and our 3-year TSR was in the 87^th percentile of our Peer Group.

•

LTIP Design and Metrics

Important changes to our LTIP to further strengthen the link between pay and performance:

•

In fiscal 2015, redesigned our LTIP to add performance metrics for the fiscal 2016 performance-based equity awards: adjusted operating margin expansion and adjusted ROIC have been added to a metric used in prior years, i.e., adjusted EPS. We believe that the use of adjusted operating margin expansion and adjusted ROIC will more directly measure progress made in achieving our strategic objectives and will hold management accountable for financial results over which they have more direct control. We also believe these metrics are important drivers of TSR.

•

We continue to believe that adjusted EPS is an important indicator of the creation of stockholder value. In setting adjusted EPS targets, it is important to note that we take into account our stock buy-back program as set forth in our annual operating plans for the applicable performance periods.

•

In response to feedback we received from several of our stockholders, for fiscal 2016 and fiscal years thereafter, we eliminated a TSR modifier as a component of our LTIP performance metrics. A number of our stockholders told us that they were not in favor of TSR as a performance metric despite its use by a number of companies. Drawbacks with the use of TSR cited by these stockholders included: (i) results can be influenced by short-lived price swings; (ii) point to point measurements ignore stock price movements experienced by stockholders during a measurement period; (iii) the achievement of a relatively higher (or lower) level of TSR in any one performance period can be influenced by a company’s starting stock price relative to the starting stock prices in the company’s peer group (i.e., at or near a high or at or near a low); and (iv) a company’s comparator peer group of companies often changes during a performance period due to changes in market capitalization, acquisitions and going private transactions. Following a detailed assessment of the reasons cited by stockholders, and recognizing that the Company has adopted and continues to use LTIP performance metrics which are important drivers of TSR (adjusted operating margin expansion, adjusted ROIC and adjusted EPS), following consultation with its independent compensation consultant, our Compensation Committee eliminated the use of a TSR modifier as a performance metric in our LTIP going forward.

•

Redesigned our LTIP in fiscal 2014 to provide for a three-year performance period and to utilize different performance metrics for our annual bonus plan and LTIP.

•

Annual Peer Group Reviews

In fiscal 2015, we reviewed our Peer Group to address industry consolidation and changes in market capitalization.

•

Other Important Actions and Policies

Elimination of “single trigger” vesting of equity awards upon a change in control and replacement thereof with “double trigger” vesting (i.e., after both a change in control and an involuntary termination of employment); effective in 2015 and going forward.

Elimination of “golden parachute” excise tax gross-ups and tax gross-ups on executive perquisites and benefits, other than in connection with standard relocation expenses.

Provide for the “clawback” of incentive compensation in the event of certain occurrences, including restatement of financial statements.

Prohibit hedging and pledging activities in our Common Stock.

Require meaningful equity ownership by our CEO, other senior executives and directors.

CORPORATE GOVERNANCE AT THE CHILDREN’S PLACE

Our Corporate Governance Framework

The Company’s Board strongly believes that good corporate governance accompanies and greatly aids our long-term business success. Key governance policies and processes include our Corporate Governance Guidelines, Code of Business Conduct, Anti-Corruption Policy, the Charters of our Board Committees, our enterprise risk management program, our commitment to transparent reporting, and our system of internal checks and balances. Comprehensive management policies, many of which are approved at the Board level, guide our Company’s operations. Reflecting its commitment to continuous improvement, the Board reviews its policies and governance practices on an ongoing basis to ensure that they are appropriate, reflect best practices and promote stockholder value.

Stockholders may view the following documents on the Company’s website http://www.childrensplace.com under the “Corporate Governance” tab in the section entitled “Investor Relations”: Corporate Governance Guidelines, Code of Business Conduct, Anti-Corruption Policy, and Charters for each of our Board Committees.

Stockholder Engagement

We have a history of regular engagement with our stockholders. This regular engagement keeps us abreast of developments affecting governance policies and practices and provides us with a view as to what is important to our stockholders in the context of our Company.

During fiscal 2015, led by our Nominating & Corporate Governance Committee Chair, we spoke with institutional stockholders on two separate occasions; the first time to listen to our stockholders’ views about governance matters, including executive compensation, which are of particular importance to our stockholders, and a second time to report on the determinations made by the Nominating & Corporate Governance Committee, the Compensation Committee and, ultimately, the Board, including based on the input received from our stockholders. These outreach activities resulted in conversations among the Chair of our Nominating & Corporate Governance Committee, our CEO, COO and General Counsel, and stockholders holding almost 65% of our Common Stock.

Corporate Governance Enhancements in 2015

Following the stockholder engagement described above, in fiscal 2015, we made certain corporate governance enhancements and we are recommending that our stockholders approve further enhancements of stockholder rights at the Annual Meeting.


Actions Taken in Fiscal 2015	•	Our Bylaws were amended to provide proxy access rights to our stockholders. These rights provide that we will include nominees in our proxy materials for up to the greater of 20% of the Board or two directors proposed by a stockholder or a group of up to 20 stockholders who have continuously owned 3% or more of our Common Stock for 3 years or more (see Article I, Section 7 of our Bylaws set forth in Appendix C attached hereto for the complete Proxy Access Bylaw Amendment).

	•	We added new performance metrics (adjusted operating margin expansion and adjusted ROIC) to the existing metric of adjusted EPS for purposes of our LTIP. These additions were made in order to more directly measure the progress made in achieving our strategic initiatives and to hold management accountable for financial results over which they have more direct control. We also believe that these metrics are important drivers of TSR.

	•	Our Corporate Governance Guidelines were amended to limit to four (including our Company) the number of public boards of directors on which our independent directors may serve.

Recommended Actions	•	At the Annual Meeting, our Board is recommending that our stockholders approve proposals further enhancing the rights of our stockholders that will:

		Ø	Permit stockholders holding 25% or more of our Common Stock to call special meetings of stockholders.

		Ø	Eliminate super-majority stockholder voting requirements.

		Ø	Update our advance notice provisions governing the submission of proposals at stockholder meetings to lengthen the notice window and to provide stockholders with a greater deal of certainty as to when proposals must be submitted.

		See “Proposals Requiring Your Vote”: Proposals 5, 6, 7 and 8 below.

Corporate Governance Principles and Practices

Board Independence

•

Strict Director Independence Standards. The Board believes that in order to maintain its objective oversight of Company management, the Board must consist of a substantial majority of independent directors. The Board makes an annual independence determination concerning its members against guidelines established to assist the Board in making these determinations. These guidelines are contained in our Corporate Governance Guidelines and in our Related Person Transactions Policy and cover, among other things, employment, family, compensatory and business relationships, and relationships with our auditors. With the exception of Jane Elfers, our President and Chief Executive Officer, all of our directors are non-management directors who meet the criteria for independence under our guidelines and the listing standards of The Nasdaq Stock Market. In addition, because Ms. Elfers does not serve on the Audit Committee, the Compensation Committee or the Nominating & Corporate Governance Committee, all members of all of our Board Committees are independent directors.

With the assistance of the Nominating & Corporate Governance Committee, our Board also makes an annual determination that (i) the members of the Audit Committee are independent within the meaning of applicable provisions of SEC rules and regulations and (ii) the members of the Compensation Committee are “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act, “outside directors” within the meaning of regulations

promulgated under Section 162(m) of the IRC, and independent within the meaning of applicable SEC rules and regulations.

•

Executive Sessions of Independent Directors. Executive sessions are an important governance practice because they enable our independent directors to discuss matters such as strategy, succession planning, risk, senior executive performance and compensation, future agenda items, and Board priorities and effectiveness without management present. Led by the Chairman of the Board, the independent directors of the Board meet in executive session, without the CEO or other members of management present, at every regularly scheduled Board meeting.

Board Composition and Continuous Evaluation

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Board Skills and Experience. An important function of our Nominating & Corporate Governance Committee is to evaluate whether the members of our Board, as a whole, possess a mix of the diverse skills, backgrounds and experience that are necessary to further the Company’s strategy and that address the risks we face in the rapidly changing business environment in which we operate.

Our strategic initiatives consist of a focus on product, business transformation through technology, global growth through channel expansion, and optimization of our store fleet. The skills and experience of our directors that complement these strategic initiatives include strategy development and oversight, product development, brand management and marketing, digital and mobile experience, technology implementation, and global business and international operations. These skills, together with a background in such areas as public company board of director experience, C-suite and other senior leadership experience, finance, risk management, accounting, talent and performance management, and executive compensation enable our Board to effectively further the strategic objectives of our Company and monitor and assess the operational, financial and compliance risks faced by our Company.

•

Board and Director Evaluation Process. Annually, the Nominating & Corporate Governance Committee engages in an important process to evaluate the relevance and the breadth of our directors’ skills, backgrounds and experience. The Committee conducts a formal evaluation of how well the Board functions and performs, the membership, leadership, roles and performance of each of the Board’s Committees, and the skillsets and contribution of individual directors. The centerpiece of this process is the analysis of a comprehensive self-assessment questionnaire completed by each director. The questionnaire is updated annually as appropriate. It uses criteria that the Board and its outside advisors have determined to be important to the success of the Board and the Company following a review of our Board’s activities and external best practices.

Board as a Whole. The questionnaire is designed to elicit a critical evaluation by the directors of the performance of the Board and its Committees, including assessing agendas, informational needs, composition, processes, dynamics and effectiveness. The Nominating & Corporate Governance Committee shares its findings and recommendations with the full Board. The Board then considers the results of the evaluation and recommendations and, as necessary, identifies and authorizes steps to be taken to enhance Board and Committee performance.

Individual Directors. The questionnaire is also designed to elicit a critical evaluation by the directors of their peers. Directors evaluate their peers on the basis of effectiveness and various attribute criteria. In addition, directors evaluate and grade each of their peer’s contribution to the Board, and each director rates his or her skillsets against an extensive list of skillsets, experiences and attributes important to the Company. The resulting feedback is shared with the individual directors. The Nominating & Corporate Governance Committee utilizes the feedback to inform its succession planning. The Committee also utilizes the skillset inventory to identify any gaps in relevant knowledge and experience not covered by existing members of our Board. This process results in a thorough discussion on how our Board is

constituted currently and how our Board should be constituted in the future to align with our strategic objectives.

•

Refreshment and Succession Planning. By annually identifying and mapping individual skillsets, backgrounds and experiences against those required to further the interests of the Company and its stockholders, the Board naturally engages in refreshment and succession planning for the Board. Following these annual evaluations, in 2014 and again in 2015, we engaged a professional director search firm to conduct searches which resulted in the appointment of three new directors, including two women. In addition, the annual skillset mapping in fiscal 2015 led us to identify an opportunity to strengthen our Board’s skills and experience in areas of particular importance to the success of our strategic initiatives.

•

Diversity and Tenure. Our Board believes that the diversity in gender, thinking, experience, background and approach resulting from its policy of refreshment and succession planning enhances Board leadership, deliberations and decision making, and are critical to the Board’s acting as a creative and problem solving body. A goal of our refreshment and succession planning activities is also to have our directors be representative of our customers; over 90% of our customers are women and four of our Board members are women. We also have a mix of relatively new and longer-tenured directors providing the Board with fresh perspectives and the benefit of experience. The average tenure of our independent directors is 3.35 years.

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Board Membership Criteria. Our Corporate Governance Guidelines identify the characteristics expected of all directors. These include independence, integrity, high personal and professional ethics, sound business judgment, and the ability and willingness to commit sufficient time to the Board. In evaluating the suitability of individual Board members, the Board takes into account many factors, including the disciplines relevant to the success of a publicly traded apparel specialty retail company in today’s business environment, understanding of the Company’s strategy and business, educational and professional background, personal accomplishment, and gender, age, and diversity. The Board evaluates each director in the context of the Board as a whole, with the objective of assembling a group of directors that can best contribute to the success of the Company and represent stockholder interests through the exercise of sound judgment, using its diversity of skills and experience.

Board Engagement

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Limit the Number of Public Company Boards. Following our stockholder outreach activities in fiscal 2015, the Board amended our Corporate Governance Guidelines to limit to four (including our Company) the number of public company boards of directors on which our independent directors may serve.

Board Practices Promote Effective Oversight

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Oversight Role of Board. The Board plays a fundamental role in overseeing the Company’s business strategy, succession planning and enterprise risk management.

•

Strategy. The Board reviews and evaluates the Company’s strategic initiatives, engages in in-depth reviews with senior management, conducts separate independent director sessions during which the Company’s strategy is evaluated and discussed, and receives detailed presentations throughout the year on critical aspects of the implementation of these initiatives. These periodic presentations include a review of performance, presentations regarding the progress on initiatives, and reports from specific departments such as finance, merchandising, store operations, planning and allocation, supply chain, real estate, information technology, human resources and legal.

•

Succession Planning and Emergency Plans. CEO succession planning is a topic reviewed frequently by our Board. In addition to conducting an annual review and evaluation of the skills and competencies possessed by potential CEO successors, our Board also has established a CEO Emergency Succession Plan to prepare for unanticipated circumstances. The Board has a similar plan in place for the Chairman of the Board. On an annual basis, the Board also

engages in an in-depth review of the “bench strength” behind senior leaders of the Company. The Board reviews management strengths and development plans to prepare management for more senior leadership roles.

•

Risk Management. Our Board and Audit Committee regularly review the annual enterprise risk assessment conducted by management. This assessment identifies and prioritizes the major strategic, operational, financial and compliance risks to the Company, and identifies mitigation strategies to address the identified risks. The Board and Audit Committee evaluate and advise on the adequacy of the Company’s risk management processes and mitigation strategies.

Ensuring Board Accountability

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Stockholder Oversight. The Company’s governance practices provide for Board accountability to stockholders through (i) majority voting for directors in uncontested elections, (ii) declassification of the Board providing for the annual election of the entire Board commencing in 2017, and (iii) if approved by the stockholders at the Annual Meeting, the calling of special meetings by stockholders and the elimination of super-majority voting requirements to amend our Charter and Bylaw provisions.

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Proxy Access. Following our stockholder outreach activities in fiscal 2015, the Board amended our Bylaws to provide proxy access rights to our stockholders pursuant to which the Company will include nominees in our proxy materials for up to the greater of 20% of the Board or two directors proposed by a stockholder or a group of up to 20 stockholders who have continuously owned 3% or more of our Common Stock for 3 years or more.

Ensuring Management Accountability

•

Performance-Based Compensation. The Company has linked a substantial portion of the pay of its executives directly to the Company’s performance. As described in greater detail under the heading “Executive and Director Compensation—Compensation Discussion and Analysis” below, the Compensation Committee adheres to this pay-for-performance philosophy, and performance-based short-term and long-term incentives (cash and equity) comprise a significant component of our executive’s overall compensation.

•

Effective Performance Metrics. An important Board function is to help set and oversee strategy, to measure progress in achieving strategic initiatives in an objective and quantitative manner, and to hold management accountable and reward success. Our Compensation Committee gives effect to this function through the use of performance metrics for the Company’s annual bonus plan and long-term incentive plan which they believe have a high degree of correlation with measuring the success or failure in achieving our strategic initiatives.

Annual Bonus. The Compensation Committee has selected adjusted operating income as the performance metric for our annual bonus plan because it believes that financial measure to be an important driver of our stock price and therefore TSR.

LTIP. Following our stockholder outreach activities in fiscal 2015, the Compensation Committee added adjusted operating margin expansion and adjusted ROIC to adjusted EPS as the performance metrics for our long-term incentive plan. We believe that the use of adjusted operating margin expansion and adjusted ROIC will more directly measure progress made in achieving our strategic objectives and will hold management accountable for financial results over which they have more direct control. We will continue to utilize adjusted EPS as an LTIP performance metric, including because we believe that this metric, together with adjusted operating margin expansion and adjusted ROIC, are important drivers of TSR. Importantly, in setting adjusted EPS targets, we take into account our stock buy-back program as set forth in our annual operating plans for the applicable performance periods.

Board Leadership Structure

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Separate Chairman and CEO. The Board selects the Company’s CEO and Chairman of the Board in the manner that it determines to be in the best interests of the Company’s stockholders. The Board has determined that having an independent director serve as Chairman of the Board is in the best interest of the Company’s stockholders at this time. Our Board believes that this structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting Board and Committee agendas and establishing priorities and procedures. Further, this structure permits the Chief Executive Officer to focus on strategic matters and the management of the Company’s day-to-day operations.

•

Committee Chairs. Our Board’s leadership structure also includes independent, experienced and involved Board Committee Chairs.

Established Policies Guide Governance and Business Integrity

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Charters for Board Committees. Each of the Audit Committee, the Compensation Committee and the Nominating & Corporate Governance Committee has a Charter developed under the leadership of its Committee Chair. The Charters for each committee are available on our website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations.” The Committee Charters describe the purpose, responsibilities, structure and operations of each Committee. The Audit Committee Charter and the Compensation Committee Charter reflect the authority and responsibilities of each Committee under the applicable rules and regulations of the SEC and The Nasdaq Stock Market.

•

Corporate Governance Guidelines. The Company’s Corporate Governance Guidelines reflect the Board’s views and Company policy regarding significant corporate governance issues. As part of its ongoing review of best practices in corporate governance, the Board periodically updates these guidelines.

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Code of Business Conduct. The Company’s Code of Business Conduct is designed to promote the highest ethical standards in all of the Company’s business dealings. The Code of Business Conduct applies to the Company’s directors, officers (including its principal executive officer, principal financial officer and principal accounting officer) and employees.

Director Access to Management

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Management Participation at Board Meetings. Topics are presented to the Board by members of management in an environment that encourages dialogue to develop between Directors and management. The Board’s direct access to management continues outside the boardroom during discussions with our executives.

Director Attendance

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Board and Committee Meetings. Our Board held 18 in-person and telephonic meetings in fiscal 2015. All directors attended over 90% of all meetings of the Board during fiscal 2015.

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Annual Meetings. It is the Company’s policy that all members of the Board should attend the Company’s annual meeting of stockholders, unless circumstances prevent a director’s attendance. All directors of the Company attended the 2015 annual meeting of stockholders other than Mr. Reynolds.

Stockholder Access to the Board of Directors

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Communications to the Board of Directors. Stockholders may communicate directly with the Company’s independent directors concerning proper and relevant topics by sending an e-mail to childrensplaceboard@childrensplace.com or by writing to Board of Directors, c/o Secretary, The Children’s Place, Inc., 500 Plaza Drive, Secaucus, New Jersey 07094.

Consideration of Board Nominees

•

Nomination by Stockholders. The Nominating & Corporate Governance Committee acts on behalf of the Board to recruit, consider the qualifications of and recommend to the Board nominees for election as directors by our stockholders and candidates to be appointed by the Board to fill vacancies on the Board. Our Corporate Governance Guidelines provide that the Nominating & Corporate Governance Committee will consider candidates recommended by stockholders and that there will be no differences in the manner in which it evaluates nominees recommended by stockholders and nominees recommended by the Nominating & Corporate Governance Committee or Company management.

Board of Directors and Board Committees

Board of Directors. The Board oversees the business, assets, affairs and performance of the Company. At the end of fiscal 2015, the Board had ten directors, with nine independent directors and one employee director, our CEO.

During fiscal 2015, the Board met in person or telephonically 18 times, and the independent directors met regularly in executive session without Ms. Elfers present. All members of the Board attended over 90% of all meetings of the Board held in fiscal 2015.

At the Company’s annual meeting of stockholders held in 2014, our stockholders adopted and approved an amendment to our Charter to declassify our Board of Directors. The declassification of our Board will result in the Board being fully declassified (and all Board members standing for annual elections) commencing with the 2017 annual meeting of stockholders. The table below summarizes the implementation of the declassification of our Board pursuant to the amendment:


Annual Meeting Year	Length of Term for Directors Elected	Year that Term Will Expire
2016	One year	2017
2017 and thereafter	Annual election	One year later

Committees of the Board of Directors. The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating & Corporate Governance Committee. The Charters for each committee are available on our website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations.”

The members of the Board’s Committees and a summary of the responsibilities of these Committees are set forth below.


Audit Committee	Compensation Committee	Nominating & Corporate Governance Committee
Kenneth Reiss⁽¹⁾	Joseph Gromek⁽¹⁾	Joseph Alutto⁽¹⁾
Marla Malcolm Beck	Susan Patricia Griffith	Susan Patricia Griffith
Stanley W. Reynolds	Norman Matthews	Norman Matthews
	Robert L. Mettler	Susan Sobbott

(1)

Chair during fiscal 2015.

Audit Committee

The Audit Committee monitors the preparation and integrity of our financial statements, our overall disclosure practices, the soundness of our system of internal financial controls and our compliance with good accounting practices. The Audit Committee is responsible for the appointment of our independent registered public accounting firm. In discharging this responsibility, the Audit Committee considers a number of factors, including the auditing firm’s industry knowledge and experience, and the quality of the engagement partner and the other professionals on the audit team. The Audit Committee also has oversight responsibility for the performance of our internal audit function and the Company’s legal compliance and ethics programs. Finally, the Audit Committee plays a primary role in risk oversight, including reviews of our enterprise risk

management program, cybersecurity efforts, business continuity and disaster recovery program, and responsible sourcing activities.

The Board has determined that all members of the Audit Committee are “independent,” as required by the Exchange Act and the listing standards of The Nasdaq Stock Market and meet the “financial sophistication” requirement within the meaning of The Nasdaq Stock Market rules, and has also determined that Messrs. Reiss and Reynolds qualify as “audit committee financial experts” as defined in Item 407(d)(5) of Regulation S-K.

The Audit Committee met nine times in fiscal 2015, and each member of the Committee attended all of its meetings, except two members did not attend one meeting each. Eight of the Committee’s meetings were focused primarily on our annual and quarterly financial reports, including our Form 10-K, Form 10-Qs and our related earnings releases. At each of these meetings, the Committee reviewed the applicable documents and also received reports from our management, internal audit department and independent outside audit firm, BDO USA, LLP. The Audit Committee regularly meets in executive sessions with BDO USA, LLP outside the presence of management, and also meets in those executive sessions with members of management and, separately, with the head of our internal audit department.

Compensation Committee

The Compensation Committee has been charged with the responsibilities of our Board relating to compensation of our executive officers. The Compensation Committee reviews and recommends to the Board our CEO’s compensation, and with the input from senior management, reviews and approves the compensation of our executive officers. In addition, the Compensation Committee makes recommendations to the Board regarding the compensation of directors.

The Compensation Committee establishes our management compensation policies, reviews and recommends to the Board the terms of the Company’s incentive compensation plans and programs, and oversees the implementation and operation of these plans and programs. The Compensation Committee is also responsible for reviewing and assessing potential risk arising from the Company’s compensation policies and practices. In fiscal 2015, a risk assessment of the Company’s compensation policies and practices was performed to ascertain any potential material risks that may be created by the programs. The Compensation Committee considered the findings of the assessment and concluded that the Company’s compensation programs and practices are aligned with the interests of our stockholders, appropriately reward pay for performance, and do not promote excessive or imprudent risk- taking.

For more information on the role played by the Compensation Committee, see the Compensation Committee’s written charter, a copy of which is available on the Company’s website, http://www.childrensplace.com under the “Corporate Governance” tab in the section entitled “Investor Relations,” and “Executive Compensation - Compensation Discussion and Analysis” below. The Compensation Committee met five times during fiscal 2015, and meets in executive session with its independent compensation consultants at each regularly scheduled in-person meeting. All members of the Compensation Committee attended all meetings of the Committee in fiscal 2015.

All members of the Compensation Committee are independent under the Company’s standards. In arriving at this conclusion, the Board considered, among other factors, the listing rules of The Nasdaq Stock Market, the fact that the Company does not pay any compensatory consideration to Compensation Committee members other than fees in their capacities as directors and committee members, and that Compensation Committee members are not affiliated with the Company or members of its management in any way other than membership on the Compensation Committee. The Board has also determined that such directors are “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act, “outside directors” within the meaning of regulations promulgated under Section 162(m) of the IRC and “independent” within the meaning of other SEC rules and regulations applicable to members of the Compensation Committee.

The Compensation Committee has the authority to retain the services of compensation consultants to provide it with recommendations and advice on the appropriateness of the Company’s

compensation of the CEO and the Company’s other executive officers and directors. The Compensation Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”) to advise it with respect to such matters, the design and implementation of executive compensation plans and programs, and such other matters as the Compensation Committee may direct. At the Compensation Committee’s request, Semler Brossy also provides the Compensation Committee with benchmarking data concerning the compensation paid to officers and directors by companies in the Company’s Peer Group and the retail industry. Semler Brossy works directly with the Compensation Committee and its Chair, and meets with the Committee in executive session. Semler Brossy does not provide any services to the Company. The Compensation Committee has determined that Semler Brossy is independent and does not have any conflict of interest in its dealings with the Compensation Committee. The Compensation Committee made this determination, in part, by reviewing and considering the factors set out by the applicable rules and regulations of the SEC and The Nasdaq Stock Market covering independence, conflicts of interest and compensation advisors.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee is or has been an officer of the Company, none was an employee of the Company during fiscal 2015, and none had any relationship with the Company or any of its subsidiaries during fiscal 2015 that would be required to be disclosed as a transaction with a related person. None of the executive officers of the Company has served on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on the Company’s Board or the Compensation Committee.

Nominating & Corporate Governance Committee

The Nominating & Corporate Governance Committee recommends nominees for the Board and develops and implements formal Board and individual director self-evaluation procedures. It also makes recommendations to the Board regarding corporate governance and Board and Committee structure. In the event of an uncontested election, the Nominating & Corporate Governance Committee must assess the appropriateness of accepting the resignation of a Board nominee who is in office as a director and does not receive a majority of the votes cast by the stockholders. All members of the Nominating & Corporate Governance Committee are independent directors. The Nominating & Corporate Committee met four times during fiscal 2015. All members of the Nominating & Corporate Governance Committee attended all meetings of the Committee.

Board Nominees and Continuing Directors

In evaluating individual Board members, the Nominating & Corporate Governance Committee seeks directors with strong reputations and experience in areas relevant to the strategy and operations of our business and takes into account many factors, including educational and professional background, personal accomplishment, gender, age and ethnic diversity. The Nominating and Corporate Governance Committee, however, does not base its nomination of a candidate solely on these factors.

The Nominating & Corporate Governance Committee also strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company’s business and strategic initiatives. Each nominee and continuing director of the Company has served in a senior executive position in a large, complex organization and has gained extensive experience in core management skills, such as strategic and financial planning, financial reporting, corporate governance, risk management and leadership development. This variety and depth of experience enables the nominees to make significant contributions to the deliberations of the Board.

Summary of Director Core Competencies. The following table summarizes the experience and attributes currently represented on our Board. The director biographies below also describe each director’s qualifications and experience.

Experience/Attribute

Alutto

Beck

Elfers

Griffith

Gromek

Matthews

Mettler

Reiss

Reynolds

Sobbott

Leadership/Strategy

General Management/ C-Suite Experience

Governance/PublicBoard Service

Retail/Specialty Retail

Digital/Omni-Channel/ Marketing

Global Business/ International Operations

Technology Implementation

Financial

Additional Information

Age

Tenure

Ethnic, gender, national or other diversity

Other Current Public Company Boards

Board Nominees

Biographical information for each director nominated for election at the Annual Meeting are set forth below.


Jane Elfers, 55 Class I Director since 2010		Ms. Elfers has served as our President and Chief Executive Officer since January 2010. Ms. Elfers has over 30 years of experience as a retail executive, having begun her career with Macy’s.

		Ms. Elfers formerly served as President and Chief Executive Officer of Lord & Taylor from May 2000 to September 2008. She is a graduate of Bucknell University where she received a degree in Business Administration and where she serves on the Board of Trustees.

		Ms. Elfers brings to the Company significant leadership skills, depth of experience as a Chief Executive Officer, and a talent for assembling best in class management teams. Ms. Elfers has deep turnaround experience and her vision for The Children’s Place is to become the leading global children’s omni-channel brand. Her strategic growth plan focuses on talent, product, business transformation through technology, growth through expanded channels of distribution and store fleet optimization, all with an underlying core of operational excellence.

Susan Patricia Griffith, 51 Independent Class I Director since 2012		Ms. Griffith currently serves as a member of our Nominating & Corporate Governance Committee and Compensation Committee. She is the Personal Lines Chief Operating Officer for The Progressive Corporation where Ms. Griffith has responsibility for the direct management of the insurance Claims, Personal Lines and Customer Relationship Management organizations, overseeing over 19,000 employees across the United States. Ms. Griffith joined Progressive in 1988 and has held positions of increasing responsibility, including serving as President of Customer Operations from 2014 to 2015, Claims Group President from 2008 to 2014 and as Chief Human Resources Officer from 2002 to 2008.

		Ms. Griffith provides the Company with years of experience in areas that are particularly relevant to the retail industry, including senior management roles in a leading consumer-facing company. Ms. Griffith is skilled in the management of a large, complex organization, customer service, and human resource and performance management.

Joseph Gromek, 69 Independent Class I Director since 2011		Mr. Gromek currently serves as the Chair of our Compensation Committee. Until his retirement in February 2012, Mr. Gromek served as President and Chief Executive Officer of The Warnaco Group, Inc. since April 2003 and as a member of that company’s Board of Directors. From 1996 to 2002, Mr. Gromek served as President and Chief Executive Officer of Brooks Brothers, Inc. For over 30 years, Mr. Gromek has held senior management positions with Saks Fifth Avenue, Limited Brands, Inc. and Ann Taylor Stores, Inc. Mr. Gromek is the Chair of the Board of Trustees of The New School, serves on the Boards of Directors of Ronald McDonald House


		and Stanley M. Proctor Company, as a member of the Board of Governors of Parsons The New School for Design, and as a member of the Board of Trustees of St. Peter’s University.

		Mr. Gromek provides the Company with his significant experience as a Chief Executive Officer and a senior executive in the apparel and retail industries, where he has created significant value for stockholders as an expert in the growth, management and operation of global businesses. Mr. Gromek also has extensive public company board experience, including as a Chairman of the Board and as the Chairman of board committees.

		Other Public Company Directorships: Wolverine World Wide, Inc. (since 2008), Tumi Holdings, Inc. (since 2012) (Chairman of the Board since December 2013) and Guess, Inc. (since 2014).

Continuing Directors

The following table sets forth certain information with respect to the Class II and Class III Directors, whose term of office continues until the Company’s 2017 annual meeting of stockholders.


Joseph Alutto, 74 Independent Class II Director since 2008		Dr. Alutto currently serves as the Chair of our Nominating & Corporate Governance Committee. From June 2014 to present, Dr. Alutto has served as the Distinguished Professor of Organizational Behavior at The Ohio State University. From July 2013 to June 2014, Dr. Alutto served as Interim President of The Ohio State University. Prior to that, from October 2007 to July 2013, Dr. Alutto served as Executive Vice President and Provost of The Ohio State University. Dr. Alutto also served as the institution’s Interim President and Provost from July 2007 to October 2007. Prior to these positions, Dr. Alutto served as the Dean of the Max M. Fischer College of Business at The Ohio State University for 16 years.

		Dr. Alutto’s experience in senior leadership positions with an institution such as The Ohio State University brings to the Company an in-depth understanding of organizational behavior, operations, processes, strategy, risk management and talent management.

Marla Malcolm Beck, 46 Independent Class II Director since 2015		Ms. Beck currently services as a member of our Audit Committee. She is the Chief Executive Officer of Bluemercury, a retailer and online seller of upscale beauty products and spa services founded in 1999 by Ms. Beck. Bluemercury was acquired by Macy’s, Inc. in 2015 and operates as a stand-alone business with Ms. Beck as its CEO reporting directly to the Chairman and Chief Executive Officer of Macy’s, Inc. Prior to 1999, Ms. Beck was a consultant for Consolidated Capital Partners LLC and McKinsey & Company, Inc. She holds an MBA and MPA from Harvard University.

		Ms. Beck’s experience as Chief Executive Officer of Bluemercury brings to the Board of Directors a valuable perspective and experience with respect to brand management,


		brand marketing, digital, including e-commerce, and the management of a national retailer.

Norman Matthews, 83 Independent Class III Director since 2009		Mr. Matthews currently serves as our Chairman of the Board and as a member of our Compensation Committee and Nominating & Corporate Governance Committee. Mr. Matthews served as President of Federated Department Stores until his retirement in 1988. He joined Federated Department Stores in 1978 as Chairman—Gold Circle Stores Division. He was promoted to Executive Vice President of Federated Department Stores in 1982, to Vice Chairman in 1984 and to President in 1987. Prior to joining Federated Department Stores, Mr. Matthews served as Senior Vice President, General Merchandise Manager for E.J. Korvette, and as Senior Vice President, Marketing and Corporate Development for Broyhill Furniture Industries. In 2005, Mr. Matthews was named as one of eight outstanding directors by the Outstanding Directors Exchange. Mr. Matthews received an MBA from the Harvard University Graduate Business School.

		Mr. Matthews possesses an extensive knowledge of the apparel and retail industries and corporate governance practices from his years as a senior executive and a member of the boards of directors of several public companies. Mr. Matthews’ experience provides him with a deep understanding of corporate governance processes and trends, and the complex strategic, risk and other oversight responsibilities associated with the role of the chairman of a public company.

		Other Public Company Directorships: Henry Schein, Inc. (since 2002), Spectrum Brands (since 2010) and Party City Inc. (since 2014).

Robert L. Mettler, 75 Independent Class II Director since 2015		Mr. Mettler currently serves as a member of our Compensation Committee. He was President of Special Projects at Macy’s from February 2008 until his retirement in January 2009. Mr. Mettler previously served as President and Chief Operating Officer of Macy’s West from 2000 to 2002 and as its Chairman and Chief Executive Officer from 2002 to 2008. Prior to joining Macy’s, Mr. Mettler held various executive positions in the retail industry, including President of Merchandising—Full Line Stores of Sears, Roebuck and Co. from 1996 to 2000, President of Apparel and Home Fashions of Sears from 1993 to 1996, and President and Chief Executive Officer of Robinson’s May Company from 1987 to 1993.

		Mr. Mettler possesses significant experience as a Chief Executive Officer and a senior executive in the apparel and retail industries. He brings to the Board of Directors a valuable perspective and insight with respect to retailing, executive compensation and management.

		Other Public Company Directorships: Barington/Hilco Acquisition Corp. (since 2014).



Kenneth Reiss, 73 Independent Class III Director since 2012		Mr. Reiss currently serves as the Chair of our Audit Committee. Prior to his retirement in June 2003, Mr. Reiss was a partner at the accounting firm of Ernst & Young, L.L.P. since 1977, where he served as the lead external auditor for several publicly traded companies, including Toys “R” Us, Inc., Staples, Inc., Phillips-Van Heusen, Inc. and Kenneth Cole Productions, Inc. At Ernst & Young, L.L.P., Mr. Reiss served as the Managing Partner of Audit for the New York office, the Director of the Audit Practice for the Retail and Consumer Products Industry, and the Chair of the Audit Practice Service Delivery Committee. As noted below, Mr. Reiss serves on the Board of Directors of Harman International Industries, Inc., and serves as the Chairman of the Audit Committee at that company. Mr. Reiss received an MBA from the Rutgers University School of Business.

		Mr. Reiss provides significant experience and expertise in accounting, auditing and risk management in the retail and apparel industries. Mr. Reiss qualifies as an “audit committee financial expert” under applicable SEC rules.

		Other Public Company Directorships: Harman International Industries, Inc. (since 2008).

Stanley W. Reynolds, 51 Independent Class III Director since 2014		Mr. Reynolds currently serves as a member of our Audit Committee. He is the Executive Vice President, Chief Financial Officer and Chief Administrative Officer of 7-Eleven, Inc. Mr. Reynolds joined 7-Eleven, Inc. in 1997 and held positions of increasing responsibility prior to his appointment in 2005 as Chief Financial Officer.

		Mr. Reynolds provides the Company with years of senior level executive experience in global retail operations with a focus on financial management and accounting, international operations and global supply chain management and distribution. Mr. Reynolds has a track record of successfully developing, implementing and overseeing long-term strategic business plans that encompass and balance global operations and growth with efficient and effective capital allocation. Mr. Reynolds qualifies as an “audit committee financial expert” under applicable SEC rules.

Susan Sobbott, 50 Independent Class II Director since 2014		Ms. Sobbott currently serves as a member of our Nominating & Corporate Governance Committee. She is the President of Global Corporate Payments, a multi- billion dollar global division of the American Express Company serving the payment needs of mid-sized and large companies. From 2004 to early 2014, she was President and General Manager of American Express OPEN, a multi-billion dollar business unit within American Express Company serving small businesses. Since 2009, Ms. Sobbott has also served as a member of the Business Operating Committee, a group of senior leaders at American Express Company working with the Chief Executive Officer to develop strategic direction. Ms. Sobbott has held various executive positions of increasing responsibility since joining American Express Company in 1990. Ms. Sobbott


		received an MBA from The Darden School of Business, University of Virginia.

		Ms. Sobbott brings to the Company leadership experience in developing and executing business strategies in such areas as new product innovation, business development, and relationship management. In these roles, Ms. Sobbott has developed and overseen growth strategies at a global company focused on superior customer service, compelling product offerings, technology and digital initiatives, and sophisticated advertising and promotion campaigns.

Board and Committees’ Role in Risk Oversight

The Company faces a variety of risks, including strategic, operational, financial and compliance risks. The Board believes an effective enterprise risk management system will (i) timely identify the material risks that the Company faces, (ii) communicate necessary information with respect to material risks to senior executives and, as appropriate, to the Board or relevant committee, (iii) implement appropriate and responsive risk management strategies consistent with the Company’s risk profile, and (iv) integrate risk management into Company decision-making.

Management performs an annual risk assessment to identify and prioritize the major risks to the Company and to ensure that mitigation strategies are in place to address identified risks, and periodically reports to the Board and to the Audit Committee on status. The Board reaches conclusions regarding the adequacy of the Company’s enterprise risk management processes based upon the briefings provided by management and advisors, as well as upon periodic reports the Board receives from the Audit Committee regarding the Audit Committee’s assessment of the processes, procedures and capabilities of the Company’s enterprise risk management program, financial statement and financial reporting risk and risks related to the Company’s global sourcing activities. The Board also receives periodic reports from the Compensation Committee regarding the Compensation Committee’s assessment of the risk, if any, arising from the Company’s compensation policies and practices. In addition to the formal compliance program, the Board encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations.

Audit Committee Report

The Audit Committee reviews the Company’s financial reporting process on behalf of the Board. The Audit Committee has authority to appoint, discharge and replace our independent registered public accounting firm, and is directly responsible for the oversight of the scope of its audit work and the determination of its compensation.

As stated in the Audit Committee’s written charter, a copy of which is available on the Company’s website, http://www.childrensplace.com, under the “Corporate Governance” tab in the section entitled “Investor Relations,” the Audit Committee’s responsibility is one of oversight. It is the responsibility of our management to establish and maintain a system of internal control over financial reporting, to prepare financial statements of the Company and its subsidiaries in accordance with generally accepted accounting principles, and to prepare other financial reports and disclosures. Our independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and to issue a report thereon. The Audit Committee does not provide any expert or other special assurance as to our financial statements or any expert or professional certification as to the work of our independent registered public accounting firm.

In fulfilling its oversight responsibilities, the Audit Committee has, among other things, reviewed and discussed with management our audited consolidated financial statements for fiscal 2015, met and held discussions with management, our independent registered public accounting firm and the head of our internal audit function (both with and without management present) regarding the fair

and complete presentation of our financial results and discussed the significant accounting policies applied in our financial statements as well as alternative treatments. The Audit Committee also reviewed and discussed with management, the head of our internal audit function and our independent registered public accounting firm the reports required by Section 404 of the Sarbanes Oxley Act of 2002, namely, management’s annual assessment of our internal control over financial reporting and our independent registered public accounting firm’s attestation report thereon. The Audit Committee has discussed with our independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board, or PCAOB. In addition, the Audit Committee has received the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm such firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to our Board that our audited consolidated financial statements for fiscal 2015 be included in our Annual Report on Form 10-K for such fiscal year for filing with the SEC.

The foregoing Audit Committee report has been submitted by the following members of the Audit Committee: Kenneth Reiss (Chair), Marla Malcolm Beck and Stanley W. Reynolds.

EXECUTIVE OFFICERS

Set forth below are the names, ages and titles of our executive officers as of April 15, 2016:


Name	Age	Position

Jane Elfers	55	Chief Executive Officer and President, Director

Michael Scarpa	60	Chief Operating Officer

Anurup Pruthi	47	Senior Vice President, Chief Financial Officer

Bradley Cost	62	Senior Vice President, General Counsel, and Secretary

Kevin Low	44	Senior Vice President, Store Operations

Gregory Poole	54	Senior Vice President, Global Sourcing

The biography of Ms. Elfers is set forth above under the heading “Governance at The Children’s Place—Board Nominees and Continuing Directors.”

Michael Scarpa joined the Company in November 2012. Mr. Scarpa has more than 30 years of financial and operational management experience. Most recently, he was Chief Operating Officer and Chief Financial Officer of The Talbots, Inc. with responsibility for finance, treasury, planning and allocation, supply chain, information technology and corporate strategy. Previously, Mr. Scarpa spent 25 years with Liz Claiborne, Inc. where he held positions of increasing responsibility, culminating in his appointment as Chief Operating Officer. He began his career in financial positions with Maidenform, Inc. and Krementz and Company. Mr. Scarpa earned his BS and MBA degrees from Rutgers University, and is a CPA.

Anurup Pruthi joined the Company in December 2014. Mr. Pruthi has more than 23 years of global financial and operational management experience. Most recently, he was the Chief Financial Officer of the largest retailer in India, Reliance Retail Limited in Mumbai, India, where he was responsible for the financial management of a $2.5 billion retail business. Prior to that position, Mr. Pruthi served as the Chief Executive Officer for a Future Group business consulting and services company in Mumbai, India, Chief Financial Officer of Global Merchandising and Supply Chain at Burberry PLC, based in London, England, Chief Operating Officer and Chief Financial Officer for Mexx Europe Holding, a subsidiary of Liz Claiborne, Inc., and Group Finance Director for Liz Claiborne, Inc. Mr. Pruthi holds a Master’s Degree in Finance and a BS in Finance from Bentley College.

Bradley Cost joined the Company in December 2010. Prior to joining us, Mr. Cost had been a partner with Bachelder Law LLP since September 2006, where he specialized in corporate governance, securities and senior executive compensation matters. Prior to that, Mr. Cost was a partner in law firms in private practice in New York City for over 20 years representing numerous public and private companies in securities, mergers & acquisitions and corporate matters. He earned his undergraduate degree from Georgetown University, and law and graduate business degrees from Northwestern University.

Kevin Low joined the Company in September 2011. Mr. Low has more than 20 years of retail field operations experience. Prior to joining us, Mr. Low spent 15 years with Gap, Inc. culminating in his appointment as Vice President of U.S. stores where he was responsible for in-store operations for seven U.S. regions. During his tenure at GAP, Inc., Mr. Low held positions of increasing responsibility as a manager of stores, District Manager, Regional Manager and Zone Vice President.

Gregory Poole joined the Company in September 2012. Mr. Poole has more than 25 years of global sourcing and supply chain leadership experience. Most recently, he spent four years with The Talbots, Inc. where he served as Executive Vice President, Chief Supply Chain Officer, and was responsible for product development, global sourcing, global logistics, distribution, quality assurances, social compliance and technical design, and prior to that, Ann Taylor Stores, where he served as Senior Vice President, Chief Procurement Officer. Mr. Poole spent over 12 years with Gap Inc., where he held several senior level sourcing positions, culminating in his role as Senior Vice President, Sourcing & Vendor Development. Prior to Gap Inc., Mr. Poole served in sourcing and

manufacturing roles of increasing responsibility for Esprit de Corp., The North Face, Inc., American Marketing Works, Inc., and Body Glove, Inc. He has a degree in Engineering from the Auckland Technical Institute, New Zealand.

EXECUTIVE AND DIRECTOR COMPENSATION

COMPENSATION DISCUSSION & ANALYSIS

INTRODUCTION

Our governance framework provides important support for our business and promotes the achievement of our strategic initiatives, all in order to serve the best interests of our stockholders. This Compensation Discussion and Analysis describes the executive compensation component of governance applicable to our named executive officers, or NEO’s:

•

Jane Elfers, President and Chief Executive Officer

•

Michael Scarpa, Chief Operating Officer

•

Anurup Pruthi, Chief Financial Officer

•

Gregory Poole, Senior Vice President, Global Sourcing

•

Kevin Low, Senior Vice President, Stores

EXECUTIVE SUMMARY

95% Say-On-Pay Vote in 2015

At our 2015 Annual Meeting, stockholders holding over 95% of our shares of Common Stock voted for the Company’s “say-on-pay” resolution.

2015 Stockholder Outreach Activities Reached Holders of Almost 65% of Our Stock

We understand the importance of assessing our governance practices regularly. In furtherance of that periodic assessment, during fiscal 2015, we spoke with institutional stockholders holding almost 65% of our Common Stock about corporate governance, executive compensation and social matters of importance to our stockholders and to us. This outreach was led by the Chair of our Nominating & Corporate Governance Committee and included our CEO, COO and General Counsel. Following these conversations, the input we received was discussed extensively by our Board, resulting in the formulation of a comprehensive series of steps to further strengthen our governance practices. Later in the fiscal year, we spoke again with our stockholders to share our Board’s determinations and to again seek their input. See “Proxy Summary—Engagement with our Stockholders”.

In 2015, We Addressed an Important Incentive Plan Design Matter Identified by Our Stockholders

As part of our 2015 outreach, we heard from many stockholders about the importance of performance metrics for performance-based incentive compensation that can measure the progress made on our strategic initiatives and over which management has more direct control.

As a result, for fiscal 2016, we added performance metrics to our performance-based equity awards which measure adjusted operating margin expansion and adjusted ROIC.

As part of this redesign, we retained the use of adjusted earnings EPS as an LTIP performance metric since we believe that adjusted EPS, together with adjusted operating margin expansion and adjusted ROIC, are important drivers of TSR. Importantly, during our discussions with our stockholders, we pointed out that, when setting adjusted EPS performance targets, we take into

account planned repurchases of Common Stock as set forth in our annual operating plans for the applicable performance periods.

Also in response to feedback we received from several of our stockholders, for fiscal 2016 and going forward, we eliminated the use of a TSR modifier as a component of our LTIP performance metrics. A number of stockholders told us that they were not in favor of TSR as a performance metric despite its use by a number of companies. Drawbacks with the use of TSR cited by these stockholders included: (i) results can be influenced by short-lived price swings; (ii) point to point measurements ignore stock price movements experienced by stockholders during a measurement period; (iii) the achievement of a relatively higher (or lower) level of TSR in any one performance period can be influenced by a company’s starting stock price relative to the starting stock prices in the company’s peer group (i.e., at or near a high or at or near a low); and (iv) a company’s comparator peer group of companies often changes during a performance period due to changes in market capitalization, acquisitions and going private transactions. Following a detailed assessment of the reasons cited by stockholders and recognizing that the Company has adopted and continues to use LTIP performance metrics which are important drivers of TSR (adjusted operating margin expansion, adjusted ROIC and adjusted EPS), following consultation with its independent compensation consultant, our Compensation Committee eliminated the use of a TSR modifier as a performance metric in our LTIP going forward.

The 2015 LTIP Design Change Adds to a Number of Executive Compensation Enhancements Made in Prior Years

We continually evaluate our executive compensation policies and programs, including in response to our stockholder outreach efforts. In recent years, we have made the following changes concerning executive compensation:

•

Redesigned our LTIP to use performance metrics for equity awards made to all members of management, including our CEO, which differ from the metric used for our annual bonus plan.

•

Redesigned our LTIP to use a three-year cliff vesting performance period for performance-based equity awards made to all members of management, including our CEO.

•

Eliminated “single trigger” vesting of equity awards upon a change in control and replaced that with “double trigger” vesting (i.e., after both a change in control and an involuntary termination of employment); effective in 2015 and going forward.

•

Adopted enhanced stock ownership guidelines for our CEO (5x salary), our other senior executives (3x salary) and independent directors (5x annual cash retainer).

•

Eliminated all excise tax and other tax gross-ups, other than in connection with standard relocation expenses.

•

Required the “clawback” of incentive compensation in certain circumstances, including the restatement of financial statements.

•

Prohibited hedging and pledging activities involving our Common Stock.

•

Instituted an annual peer group review.

See also “Corporate Governance at The Children’s Place” above for a discussion of our corporate governance framework and enhancements made in fiscal 2015 and additional enhancements proposed for approval at the Annual Meeting.

CEO Compensation is in Alignment

Type of compensation—The majority of our CEO’s compensation has been performance-based as the Company moved through a critical period of implementing its strategic initiatives in fiscal 2013-2015:

•

86% of our CEO’s total compensation, at target, was performance-based in fiscal 2015, 84% in fiscal 2014 and 82% in fiscal 2013.

•

100% of our CEO’s equity opportunity was performance-based in fiscal 2015, 2014 and 2013.

Alignment of compensation and performance—Our CEO’s compensation in fiscal 2015 was aligned with our TSR performance:

•

In fiscal 2015, our 1-year TSR was in the 85^th percentile of our Peer Group and our 3-year TSR was in the 87^th percentile of our Peer Group. We believe that our superior TSR ranking is attributable to the Company’s strong financial performance resulting from our successful execution of our long-standing strategic growth plan.

(1)

Total Stockholder Return, or TSR, is the price per share of our Common Stock plus cumulative dividends per share for the applicable period.

•

Our stock price increased 8.6% in fiscal 2015 and has increased 54.0% over the past five fiscal years. At April 1, 2016, our stock price was $[__________].

Absolute level of compensation—Our CEO’s total compensation, at target, in fiscal 2015 remained at a level comparable to fiscal 2014:


	(1)		Total compensation, at target, consists of annual base salary, annual bonus opportunity, at target, and the value of equity awards on the award date, in the case of performance based equity awards, at target.

	(2)		Consists of salary ($1.1 million), target bonus ($1.32 million) and a three-year performance-based equity award having a market value of $6.0 million on the award date.

Relative level of compensation—Our CEO’s total compensation, at target, in fiscal 2015 was in-line with the CEOs of our Peer Group and our next highest paid NEO:


Fiscal Year		Our CEO’s 2015 target total compensation compared to 2014 median CEO target total compensation of our Peer Group

2015		1.28x (67^th percentile⁽¹⁾)

(1)

Based on 2014 Peer Group CEO compensation data. See “Peer Group” below.


Fiscal Year		Our CEO’s target total compensation compared to our next highest NEO target total compensation

2015		2.51x

Fiscal 2015 Performance—Measured by Creation of Stockholder Value, Return of Capital, Financial Results, and Progress on Strategic Initiatives

In fiscal 2015, we created significant stockholder value, achieved strong financial results, returned a significant amount of capital to our stockholders, and made substantial progress on our strategic initiatives, all in the face of an intensely competitive, highly promotional, and “over-stored” specialty retail industry in which most retailers, including members of our Peer Group, struggled by comparison. We successfully managed in this difficult environment by a strong focus on our strategic initiatives, diligent expense control and disciplined inventory management.

Creation of Significant Stockholder Value

Our stock price has performed well over the past 5 fiscal years, increasing 54.0% over that period, including an 8.6% increase in fiscal 2015. For fiscal 2015, our TSR was in the 85^th percentile of our Peer Group and our 3-year TSR was in the 87^th percentile of our Peer Group.

Achievement of Strong Financial Results

We again recorded positive comparable retail sales in fiscal 2015, including a positive 6.7% comparable retail sales for the fourth fiscal quarter.

Our adjusted EPS increased 18.0% from $3.05 in fiscal 2014 to $3.60 in fiscal 2015. On a constant currency basis, adjusted EPS in fiscal 2015 was $3.74, a 22.6% increase compared to fiscal 2014.

Return of Significant Capital

We repurchased over $119 million of shares of our Common Stock in fiscal 2015, resulting in the Company’s purchase of approximately $530 million of our Common Stock during the past five fiscal years and approximately $624 million since we began our capital return program in 2009. Our Board approved an additional $250 million stock buyback program in the fourth quarter of fiscal 2015.

We paid quarterly cash dividends of over $12 million in fiscal 2015. We increased our dividend in the first fiscal quarter of 2015 by over 13%, and again in the first fiscal quarter of 2016 by 33¹/₃%.

Substantial Progress on Strategic Initiatives

The Company’s strategic vision, which was set by our CEO in 2010 when she arrived at The Children’s Place, is to effect a company-wide, multi-year transformation to the premier global, omni-channel children’s apparel brand. We have remained singularly focused on our strategy during this time period, and our strong financial results and TSR performance are evidence of the success of our strategic direction.

Significant progress was made in fiscal 2015 toward the Company’s goals through strong execution on our four key strategic initiatives:

•

Product focus

•

Business transformation through technology

•

Global growth through channel expansion

•

Optimization of our store fleet

Product Focus

Product is and will always be our number one focus. Our goal is to provide the highest quality and competitively priced product for all channels of global distribution.

In furtherance of our stated objective to have the right merchandise in the right stores at the right time, in fiscal 2015, we successfully deployed state of the art merchandising tools. These new merchandising tools, combined with our highly talented design team, resulted in more frequent deliveries of assortments of updated, trend-right fashion, and increased penetration of wear-now, seasonally appropriate apparel, accessories and footwear. Our customer has responded very positively to these offerings, resulting in strong sales, as well as lower levels of inventory.

Business Transformation Through Technology

We made significant on-time and on-budget progress on our technology and systems initiatives in fiscal 2015. We are transforming our digital capabilities to enhance our interaction with our customers. We are improving the efficiency and productivity of our inventory management through the installation of state of the art inventory planning, allocation and replenishment systems, which also support and accelerate our growth through channel expansion.

Specific milestones achieved in fiscal 2015 include:

Continued development of our digital capabilities, including: organic search enhancements, dynamic lifecycle email campaigns triggered by individual behaviors, and addition of a wish list feature.

Launched eReceipts to enable additional customer contact opportunities.

Implemented an inventory allocation and replenishment tool to improve inventory productivity.

Began implementation of a markdown optimization tool.

Implemented a distributed order management system to enable cross channel fulfillment capabilities.

Enhancements in technology to further channel expansion through our international, wholesale and e-commerce channels.

Global Growth Through Channel Expansion

E-commerce Growth: E-commerce is at the center of our digital initiative. We believe we have significant opportunity to leverage this channel to not only drive e-commerce sales domestically and internationally, but to enhance the sales and profitability of our store fleet, while enhancing our brand recognition throughout the world.

International Expansion: Launched in 2012, we expanded our international franchise operations in fiscal 2015:

•

Added an international franchise partner in Mexico.

•

Successfully opened the first The Children’s Place stores and shop in shops in India, Mexico, Venezuela, Guatemala, the Dominican Republic, Georgia and Kazakhstan.

•

At fiscal 2015 year end, 102 international points of distribution (stores, shop in shops, e-commerce sites) were open in 16 countries outside of the U.S. and Canada operated by six franchise partners, with additional points of distribution planned in fiscal 2016.

•

Discussions are underway for expansion in other countries, including China through e-commerce.

Wholesale Business:

•

Since 2012, sales from our wholesale business have increased almost four-fold.

Optimization of Our Store Fleet

We continually evaluate each channel within our portfolio given the rapidly evolving dynamics of the retail industry. In fiscal 2015, we continued to optimize our store fleet:

Identified profitability enhancement opportunities resulting in the planned closure of approximately 200 underperforming stores through fiscal 2017, including 41 stores closed in fiscal 2013, 35 stores closed in fiscal 2014 and 32 stores closed in fiscal 2015.

Our store fleet optimization initiative has resulted in improved comparative retail store sales and improved profitability in our e-commerce business and neighboring stores.

Effective Corporate Governance Reinforces Our Compensation Plans and Policies

We regularly review our corporate governance to ensure our approach reflects “best practices” and input from our stockholders. We have made a number of enhancements over the last few years. Highlights of our governance features include:

WHAT WE DO


ü			Proxy access—Following our 2015 stockholder outreach activities, we amended our Bylaws to provide our stockholders with proxy access rights. The amendment provides that the Company is to include nominees in its proxy materials for up to the greater of 20% or two directors proposed by a stockholder, or a group of up to 20 stockholders, who have continuously owned 3% or more of the Company’s Common Stock for 3 years or more.

ü			Conduct annual Board and independent director self-evaluations, and mapping of director skill sets to strategic objectives—Our Board conducts detailed annual evaluations and scoring of the performance and effectiveness of the Board as a whole, and of each Board Committee and each director. In addition, we evaluate and map the skill sets of our directors to our strategic goals and initiatives.

ü			Director engagement—Our Corporate Governance Guidelines limit the number of public company Boards on which each independent director may serve to four, inclusive of their service on our Board of Directors.

ü			Pay for performance—A significant percentage of our management’s total compensation is “at risk”, connected to actual performance. For example, in fiscal 2015, 86% of our CEO’s total compensation, at target, was performance-based.

ü			Link incentive compensation to key drivers of stockholder value—Our Compensation Committee believes that adjusted operating income, adjusted EPS, adjusted operating margin expansion and adjusted ROIC are important drivers of TSR.

ü			Require meaningful stock ownership—We maintain stock ownership guidelines for our CEO at 5x annual base salary, for our other senior executives, including our other NEO’s, at 3x annual base salary, and for our independent directors at 5x annual cash Board retainer fees.

ü			Provide for the “clawback” of incentive compensation—Both our annual bonus plan and long-term incentive plan provide for the recovery of incentive compensation in the event of certain occurrences, including the restatement of financial statements.

ü			Offer limited perquisites—We provide modest perquisites to our executives, including our CEO and our other NEOs.

ü			Mitigate undue risk—We have caps on potential bonus payments and on the number of performance shares which may be earned, and have active oversight and risk management systems, including related to compensation risk.

ü			Engage an independent compensation consulting firm—The Compensation Committee retains Semler Brossy as its compensation consultant to provide independent, third-party advice on executive compensation, including advice on the design of our executive compensation programs. Semler Brossy does not provide any other services to the Company.

ü			Conduct an annual peer group review—The Compensation Committee, with the advice of its independent compensation consultant, reviews and reconstitutes, as necessary, our Peer Group on an annual basis.

WHAT WE PROPOSE TO DO, SUBJECT TO STOCKHOLDER APPROVAL
(See Proposals 5 to 8 to be voted on at the Annual Meeting below)


ü			Permit the calling of special stockholder meetings—Permit stockholders holding not less than 25% of our Common Stock to call a special meeting of stockholders.

ü			Elimination of super-majority voting provisions—Eliminate the current 75% super-majority stockholder voting requirement for certain actions.

ü			Update advance notice provisions—Provide for an increased notice period (30 days) for submission of stockholder proposals at annual stockholder meetings, which notice window would key off of the date of the prior year’s annual meeting providing stockholders with a greater deal of certainty as to when proposals must be submitted.

WHAT WE DO NOT DO


X			Have a classified Board of Directors (starting in 2017).

X			Combine the roles of Chief Executive Officer and Chairman of the Board.

X			Provide for “single trigger” equity vesting on a change in control.

X			Gross up “golden parachute” excise taxes upon a change in control.

X			Gross up taxes on perquisites or benefits, except standard relocation expenses.

X			Permit hedging or pledging of our Common Stock.

X			Provide special or supplemental retirement benefits to any executive.

X			Allow repricing of equity awards without stockholder approval.

PEER GROUP

The Company uses comparative executive compensation data from a group of other leading specialty retail companies within a range of approximately 0.5x to 2.0x of our annual revenue. These companies are used as a point of reference in designing our compensation programs and in setting compensation levels. This group of companies is referred to in this Compensation Discussion and Analysis as our “Peer Group.” We do not use this data as a single determinative factor, but rather as an external check to verify that our executive compensation programs are reasonable and competitive.

In early fiscal 2015, the Compensation Committee reviewed the members of our Peer Group with the assistance of its independent compensation consultants. As part of this process, the Compensation Committee reaffirmed the following 14 companies as the members of our Peer Group for fiscal 2015:


Aeropostale		DSW

American Eagle Outfitters		Express

ANN⁽¹⁾		Finish Line

Ascena Retail Group		Kate Spade & Company

Buckle		G-III Apparel Group

Carter’s		Men’s Wearhouse⁽²⁾

Chico’s FAS		Stage Stores


	(1)		Acquired by Ascena Retail Group in August, 2015.

	(2)		Name changed to Tailored Brands, Inc. in February, 2016.

ELEMENTS OF COMPENSATION PROGRAM

Compensation Philosophy

The Company is committed to achieving long-term, sustainable growth and increasing stockholder value. Our compensation philosophy is to set our NEO’s total direct compensation at levels that will attract, motivate, and retain superior executive talent in a highly competitive environment. The Company’s compensation program for our NEOs is designed to support these objectives and encourage strong financial performance on an annual and long-term basis, without encouraging excessive risks, by linking a significant portion of our NEO’s total compensation to Company performance in the form of incentive compensation and long-term performance stock.

In setting the level of executive compensation, our Compensation Committee annually reviews with its independent compensation consultant compensation levels of management at companies in our Peer Group and industry-wide retail surveys with a view to monitoring the level of compensation of our management team, including our NEOs, compared to that of our Peer Group and our industry. Additionally, the Compensation Committee ensures that the level of NEO target compensation takes into account the progress being made on the Company’s strategic growth initiatives of product focus, business transformation through technology, global growth though channel expansion and optimization of our store fleet.

Setting Compensation

In setting compensation of all NEOs, our Compensation Committee takes into account multiple objective and position-specific factors, including:

•

the nature and scope of each executive’s responsibilities;

•

each executive’s experience, performance, and contribution to the Company;

•

comparative compensation data for executives in similar positions at companies participating in retail surveys conducted by independent consulting firms, as described below, and of companies in our Peer Group;

•

the Company’s performance;

•

prior equity awards and potential future earnings from equity awards;

•

retention needs; and

•

other factors the Committee deems relevant.

The Compensation Committee reviews total compensation, and its individual components, at the 25^th, 50^th, and 75^th percentile levels paid to executives in similar positions at specialty retailers (including companies in our Peer Group) by reference to industry-wide retail surveys prepared by independent third party consulting firms to understand where the compensation our Compensation Committee sets falls relative to the market practices. The Compensation Committee utilizes this data as a reference point in determining whether an executive’s total compensation opportunity is likely to provide sufficient motivation and retention. The Compensation Committee also uses this data to determine whether an executive’s total compensation opportunity properly reflects the executive’s role and scope of responsibilities relative to similarly situated executives of companies in the retail surveys and our Peer Group. The Compensation Committee chooses the actual amount of

compensation opportunity of each executive based, in part, on its review of data for the companies in the retail surveys and our Peer Group and in part on the other factors discussed above.

(1)

All CEO equity is performance-based.

Components of Compensation

Our executive compensation program consists of four basic elements:

†

Base salary;

†

Annual performance-based bonus opportunity;

†

Long-term equity awards (time and performance-based); and

†

Employee benefits and perquisites.

Base Salary

Purpose. The Compensation Committee intends that base salary provide a reasonable, competitive level of fixed compensation based on responsibilities, skills and experience.

The base salaries of our NEOs are, on average, at approximately the median of our Peer Group. We believe that setting salaries in the median range mitigates the incentive that might otherwise exist for an executive to support short-term focused or higher-risk business strategies if fixed compensation was set below the median.

For fiscal 2015, the annual salaries of each of our NEOs (other than our CEO, who did not receive a salary increase) increased by less than 3% in keeping with market trends surveyed by our Compensation Committee’s independent compensation consultant.

Annual Incentives—Cash Bonuses

Purpose. The Compensation Committee provides an annual bonus in order to reward performance over a one-year period against a financial performance measure pre-established by the Compensation Committee. As in the past, this measure for fiscal 2015 was adjusted operating income. The Compensation Committee believes that operating income is an important driver of stockholder value, and accordingly, is an appropriate performance measure for purposes of our annual bonus plan.

Terms and 2015 Results. Our executives, including the NEOs, are each assigned a bonus target by the Compensation Committee expressed as a percentage of base salary (for our senior

management in fiscal 2015, ranging from 50% of base salary to 100% of base salary, or 120% of base salary in the case of our CEO). For fiscal 2015, these formula-driven cash payouts could have ranged from zero, if performance fell below an adjusted operating income threshold, to 100% of bonus opportunity if the adjusted operating income target was met, and up to a maximum of 200% of the target bonus opportunity (240% in the case of our CEO) if performance exceeded target. Based on market trends surveyed by our Compensation Committee’s independent compensation consultant and reviewed with the Compensation Committee on an annual basis, we believe that our management’s bonus opportunities as a percentage of base salaries are in-line with those of our Peer Group. Our annual bonus plan provides the Compensation Committee with “negative discretion”, that is, the authority to reduce the amount of bonus paid to a participant or to some or all participants if the Compensation Committee determines in its sole discretion that such reduction is appropriate.

As a result of the Company’s adjusted operating income for fiscal 2015 of approximately $110.8 million, our NEOs received an incentive cash bonus for fiscal 2015 at 140% of their respective target bonus opportunities.

2015 Annual Incentive Compensation Goals. Set forth below are the adjusted operating income goals which were applicable under our annual bonus plan in fiscal 2015:


Performance Measure	Threshold (0%)			Target (100%)			Maximum (200%)

Adjusted Operating Income Goals for Fiscal 2015 (millions)		$	93.2		$	105.8		$	118.4

Increase (Decrease) Over Fiscal 2014 Actual Adjusted Operating Income ($99.1 million)			(6%)			7%			19%

To determine achievement of the goal, the adjusted operating income goals set by the Compensation Committee are compared to the actual operating income set forth in the Company’s audited 2015 consolidated statement of operations, adjusted to exclude the effects of any change in accounting principles and any one-time or unusual items eliminated and disclosed by the Company in its quarterly earnings press releases filed with the SEC as exhibits to the Company’s Current Reports on Form 8-K.

Long-Term Incentives—Equity Awards

Purpose. The Compensation Committee uses performance-based equity as a reward for the contribution of our management to our performance, including the achievement of our strategic goals, and to align the interests of our management with those of our stockholders. The purpose of time-based equity is to provide for retention and motivation.

Types of Awards. During fiscal 2015, we granted time and performance-based awards to eligible associates under our 2011 Equity Plan. These awards consisted of time vested restricted stock units (“TRSUs”) and performance-based restricted stock units (“PRSUs”). Our Compensation Committee determines whether the TRSUs and/or PRSUs are settled in shares of common stock, in cash equal to the fair market value of such shares at the time of delivery, or in part shares of common stock and in part cash. All awards under the 2011 Equity Plan have been settled in shares of Common Stock to date. We typically award equity once a year in the first or second quarter of our fiscal year, although we also award equity as part of certain new-hire awards and in connection with promotions. At January 30, 2016 (the end of fiscal 2015), there were 605,499 shares available for grant under our 2011 Equity Plan.

Time Vested Stock Awards. TRSUs are subject to annual vesting, generally in three equal annual installments beginning on the first anniversary of the date of the award. Generally, the recipient must be employed by the Company on the applicable vesting dates in order to receive the vesting shares. The three-year vesting period underscores the long-term focus of this award program.

Fiscal 2015. During fiscal 2015, TRSU awards were made to our NEOs, other than our CEO, as part of our annual long-term incentive award grants to eligible employees. Ms. Elfers did not receive any TRSU awards for fiscal 2015 (or for fiscal 2013 or 2014).

Performance-Based Stock Awards. Our PRSUs tie payouts directly to pre-established performance measures over time which the Compensation Committee believes drive TSR.

LTIP Design in 2015. To address issues concerning our long-term incentive plan design identified during our prior stockholder outreach activities, our Compensation Committee adopted a new PRSU design during fiscal 2014. The new design was applicable to all members of management, including our CEO, in fiscal 2015. The new PRSU design is summarized below:

†

Performance metrics consist of adjusted EPS and a TSR modifier, which performance metrics are different from the performance metric for our annual bonus plan.

†

Performance is measured over a three-year period, with cliff vesting at the end of the period.

Performance Metrics. The three-year adjusted EPS target is first compared to actual adjusted EPS for the three-year performance period. Then, our three-year TSR relative to the three-year TSRs of our Peer Group will be used to modify, up, down or not at all, the number of PRSUs earned by participants. This is illustrated below:


Company 3-Year TSR Ranking Compared to Peer Group⁽¹⁾	A Participant will Receive the Following Percentage of PRSUs Otherwise Earned Based on the Adjusted EPS Achieved

13^th–15^th		50%

10^th–12^th		75%

7^th–9^th		100%

4^th–6^th		125%

1^st–3^rd		150%

(1)

The Company’s Peer Group in fiscal 2015 consisted of the 14 companies identified in “Peer Group” above. This sets forth the Company’s three-year TSR ranking in that group of companies.

The adjusted EPS measure was selected to create a strong focus on our overall profit goal and the underlying drivers of revenue growth, cost control, cash flow, and ultimately TSR. Through the relative TSR metric, the Compensation Committee intended to gauge the Company’s performance against that of our Peer Group.

Based on the input from several of our stockholders received during our 2015 outreach activities, for fiscal 2016, our Compensation Committee based PRSUs on the achievement of adjusted EPS (50%), adjusted operating margin expansion (25%) and adjusted ROIC (25%) over a three-year period.

Adjusted operating margin expansion and adjusted ROIC were added to our performance-based equity awards based on feedback from our stockholders because these metrics are particularly well-suited to directly measuring the progress we are making toward the achievement of our strategic initiatives and are measures that management can more directly control. The intent of these metrics is to measure, and reward our NEOs for, the achievement of important strategic initiatives that strengthen the Company’s competitive position and drive TSR.

We believe that adjusted EPS, together with adjusted operating margin expansion and adjusted ROIC, are important drivers of TSR. In setting adjusted EPS targets, it is important to note that we take into account our planned stock repurchases as set forth in our annual operating plan for the applicable performance period.

In response to feedback we received from several of our stockholders, for fiscal 2016 and going forward, we eliminated the TSR modifier as a component of our LTIP performance metrics. A number of our stockholders told us that they were not in favor of TSR as a performance metric

despite its use by a number of companies. Drawbacks with the use of TSR cited by these stockholders included: (i) results can be influenced by short-lived price swings; (ii) point to point stock price measurements ignore stock price movements experienced by stockholders during a measurement period; (iii) the achievement of a relatively higher (or lower) level of TSR in any one performance period can be influenced by a company’s starting stock price relative to the starting stock prices in a company’s peer group (i.e., at or near a high or at or near a low); and (iv) a company’s comparator peer group of companies often changes due to changes in market capitalization, acquisitions and going private transactions. Following a detailed assessment of the reasons cited by stockholders and recognizing that the Company has adopted and continues to use LTIP performance metrics which are important drivers of TSR (adjusted operating margin expansion, adjusted ROIC and adjusted EPS), following consultation with its independent compensation consultant, our Compensation Committee eliminated the use of a TSR modifier as a performance metric in our LTIP going forward.

Employee Benefits and Perquisites

The Company provides its management (including the NEOs) with the same employee benefits other employees receive, including health insurance coverage. In addition, Company management also receives an opportunity to participate in our voluntary deferred compensation plan, an opportunity to purchase group long-term disability coverage and supplemental disability coverage, and certain modest perquisites. In the case of our CEO, prerequisites were agreed to as a result of the arms-length negotiation of her employment agreement and were determined by the Compensation Committee to be important for retaining an executive of her talent. Any personal income taxes due as a result of these perquisites are the responsibility of the NEOs—we do not provide tax gross-ups to our executives, including the NEOs (other than in connection with certain standard relocation expenses).

The Company uses severance guidelines. Subject to their terms, these guidelines are designed to offer our employees fair and adequate replacement income based upon market practice. In general, all of our executives (other than our CEO) participate under the same severance guidelines that are applied to other employees. Our CEO’s severance arrangements are as provided in her employment agreement, which is described below.

OTHER COMPENSATION CONSIDERATONS

Stock Ownership Guidelines

In order to ensure that the interests of our senior management team and the Board are properly aligned with those of our stockholders, on the recommendation of the Compensation Committee, the Board has adopted stock ownership guidelines for Board members and our senior management team, which includes our NEOs. Our Compensation Committee periodically reviews the equity ownership of our NEOs and other members of senior management, and our Board reviews the equity ownership of our non-management directors, in each case, to determine compliance with the Company’s stock ownership guidelines. Under these guidelines, the ownership multiples are as follows:


		Multiple
Chief Executive Officer		5x Base Salary
COO, CFO and Senior Vice Presidents		3x Base Salary
Independent Directors		5x Annual Cash Retainer

During fiscal 2015, each of our executives and independent directors was in compliance with his or her applicable ownership guideline.

Prohibition on Hedging/Pledging

Hedging and pledging of our Common Stock is prohibited under the Company’s policies to ensure that the interests of management are aligned with those of our stockholders. During fiscal 2015, no member of management hedged or pledged any shares of Company stock.

Taxation

We endeavor to pay compensation to the NEOs that is tax deductible to the Company under Section 162(m) of the Code, however, we may forgo any or all of the tax deduction if we believe it to be in our best interests and that of our stockholders. The Company believes that all annual bonuses and performance-based equity awards granted to NEOs qualify as performance-based compensation under Section 162(m), and that time-vested long-term incentives granted to them do not.

Section 409A of the Code, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% penalty and an interest penalty, on the recipient of deferred compensation that does not comply with Section 409A. The Compensation Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to executives.

The Compensation Committee also takes into account the potential implications of Sections 280G and 4999 of the Code in determining potential payments to be made to executives in connection with a change in control. Nevertheless, to the extent that certain payments upon a change in control are classified as excess parachute payments, the Company may not be able to deduct such payments pursuant to Section 280G and the recipient of such payments may be subject to the excise tax under Section 4999.

No “golden parachute” tax gross-ups. The Company does not provide tax gross-ups for any “golden parachute” excise tax payable by the recipient under Section 4999 of the Code. Rather, upon a termination of employment in connection with a change in control that gives rise to the payment of severance, the NEOs and other executives party to the Company’s change in control severance agreements (and Ms. Elfers pursuant to her employment agreement) will receive the greater of (i) the largest portion of the payment that is not subject to a “golden parachute” excise tax under Section 4999 of the Code or (ii) the full amount of the payment if the net-after-excise tax amount retained by the executive would exceed the amount in clause (i).

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, recommended to our Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for fiscal 2015 and in this Proxy Statement.

The foregoing Compensation Committee report has been submitted by the members of the Compensation Committee: Joseph Gromek (Chair), Susan Patricia Griffith, Norman Matthews and Robert L. Mettler.

Summary Compensation Table

The following table shows the compensation of the Company’s President and Chief Executive Officer (our principal executive officer), the Company’s Chief Financial Officer (our principal financial officer), and the three other most highly compensated executive officers of the Company (collectively, the “NEOs”) for fiscal 2015 and, to the extent any of these officers was an NEO in the prior years, for fiscal 2013 and fiscal 2014.


Name and Principal Position	Year		Salary⁽¹⁾			Bonus			Stock Awards⁽²⁾			Non-Equity Incentive Plan Compensation⁽³⁾			All Other Compensation				Total

Jane Elfers		2015		$	1,100,000		$	–		$	6,726,551		$	1,848,000		$	119,264	⁽⁴⁾		$	9,793,815
President and Chief		2014			1,100,000			–			4,740,306			1,491,600			116,817	⁽⁵⁾			7,448,723
Executive Officer		2013			1,100,000			–			4,222,130			1,399,200			114,642	⁽⁶⁾			6,835,972

Michael Scarpa		2015		$	775,000			–		$	1,930,169		$	1,085,000		$	10,620	⁽⁸⁾		$	3,800,789
Chief Operating Officer⁽⁷⁾		2014			768,269			–			2,473,000			875,750			11,244	⁽⁹⁾			4,128,263
		2013			723,077			–			1,823,260			795,000			157,149	⁽¹⁰⁾			3,498,486

Anurup Pruthi		2015		$	510,962			–		$	885,284		$	432,600		$	113,795	⁽¹²⁾		$	1,942,641
Senior Vice President,		2014			67,308			–			281,800			–			82,285	⁽¹³⁾			431,393
Chief Financial Officer⁽¹¹⁾

Gregory Poole		2015		$	610,962			–		$	772,096		$	645,700		$	26,011	⁽¹⁴⁾		$	2,054,819
Senior Vice President,		2014			590,981			–			989,200			508,500			25,003	⁽¹⁵⁾			2,113,684
Global Sourcing		2013			562,058			–			2,594,902			450,765			167,346	⁽¹⁶⁾			3,775,071

Kevin Low		2015		$	410,962			–		$	643,522		$	390,600		$	5,798	⁽¹⁷⁾		$	1,499,882
Senior Vice President, Stores		2014			443,097			–			741,900			305,000			5,741	⁽¹⁸⁾			1,495,838
		2013			421,032			–			1,606,363			270,000			5,514	⁽¹⁹⁾			2,302,909

Notes to the Summary Compensation Table


	(1)		Includes amounts deferred under our Deferred Compensation Plan and 401(k) Plan.

	(2)		The stock award grant date fair value for both time-vested and performance-based stock awards is determined in accordance with FASB ASC Topic 718, in the case of performance-based stock awards, based on the number of shares probable of vesting as determined by those rules, multiplied by the fair market value of one share of our Common Stock on the grant date. For fiscal 2015, at the maximum possible vesting values, the performance-based stock awards set forth in this column, computed on the basis of the fair value price of one share of our Common Stock on the grant date, were $20,179,653, $3,090,472, $1,935,718, $1,236,235 and $1,030,311 for Ms. Elfers, Mr. Scarpa, Mr. Pruthi, Mr. Poole and Mr. Low, respectively. For fiscal 2014, at the maximum possible vesting values, the performance-based stock awards set forth in this column, computed on the basis of the fair value price of one share of our Common Stock on the grant date, were $9,999,989, $3,596,250, $1,438,500 and $1,146,825 for Ms. Elfers, Mr. Scarpa, Mr. Poole, and Mr. Low, respectively. For fiscal 2013, at the maximum possible vesting values, the performance-based stock awards set forth in this column, computed on the basis of the closing sales price of our Common Stock on the grant date, were $9,382,460, $926,800, $593,152 and $593,152 for Ms. Elfers, Mr. Scarpa, Mr. Poole and Mr. Low, respectively. During our first fiscal quarter in 2013, our Board and Compensation Committee revised the fiscal 2013 operating plan and performance targets under our annual and long-term incentive plans. The incremental fair values of the modified 2013 performance-based stock awards, computed as of the modification date in accordance with FASB ASC Topic 718, were $972,132, $120,920, $77,388 and $77,388 for Ms. Elfers, Mr. Scarpa, Mr. Poole and Mr. Low, respectively. The original grant date values of these fiscal 2013 performance-based stock awards, at target, for Ms. Elfers, Mr. Scarpa, Mr. Poole and Mr. Low were $4,999,996, $455,600, $291,584 and $291,584, respectively. For more information concerning the assumptions used in determining the portion of the performance-based awards that are probable of vesting, see Note 3–Stock-Based Compensation in the accompanying Notes to Consolidated Financial Statements filed in our Annual Report on Form 10-K for our 2015 fiscal year and the Grants of Plan-Based Awards Table below.


	(3)		The amounts shown are incentives earned in accordance with the annual incentive arrangements described in the Compensation Discussion and Analysis above, and which are payable pursuant to the management incentive plan approved by the Compensation Committee at the beginning of each respective fiscal year. Amounts shown are for services performed during the fiscal year and paid during the subsequent fiscal year.

	(4)		The amount shown includes $61,488 for a driver, $16,400 for driver reimbursements, $28,075 for a leased vehicle, $3,230 for tax preparation services, $749 for life insurance premiums and $9,322 for executive long term disability premiums.

	(5)		The amount shown includes $60,879 for a driver, $16,124 for driver reimbursements, $26,451 for a leased vehicle, $3,275 for tax preparation services, $766 for life insurance premiums and $9,332 for executive long term disability premiums.

	(6)		The amount shown includes $59,730 for a driver, $15,236 for driver reimbursements, $23,294 for a leased vehicle, $2,200 for tax preparation services, $9,251 for life insurance premiums and $4,930 for executive long term disability premiums.

	(7)		Mr. Scarpa commenced serving as our Executive Vice President, Chief Financial Officer on December 3, 2012. On April 16, 2013, Mr. Scarpa became our Chief Operating Officer and Chief Financial Officer. On December 8, 2014, with the hiring of Mr. Pruthi as our Chief Financial Officer, Mr. Scarpa ceased acting as our principal financial officer.

	(8)		The amount shown includes $528 for life insurance premiums and $10,092 for executive long term disability premiums.

	(9)		The amount shown includes $578 for life insurance premiums and $10,666 for executive long term disability premiums.

	(10)		The amount shown includes $3,294 for life insurance premiums, $4,529 for executive long-term disability premiums and $95,934 for relocation expenses and relocation tax gross-ups.

	(11)		Mr. Pruthi commenced serving as our principal financial officer on December 8, 2014.

	(12)		The amount shown includes $341 for life insurance premiums, $6,841 for executive long term disability premiums and $106,614 for relocation expenses and relocation tax gross-ups.

	(13)		The amount shown includes $33 for life insurance premiums, $439 for executive long-term disability premiums and $81,813 for relocation expenses and relocation tax gross-ups.

	(14)		The amount shown includes $409 for life insurance premiums, $10,005 for executive long term disability premiums and $15,597 for 401(k) plan matching contributions.

	(15)		The amount shown includes $445 for life insurance premiums, $9,431 for executive long term disability premiums and $15,127 for 401(k) plan matching contributions.

	(16)		The amount shown includes $1,398 for life insurance premiums, $4,750 for executive long-term disability premiums, $4,902 for the 401(k) plan matching contributions and $156,296 for relocation expenses and relocation tax gross-ups.

	(17)		The amount shown includes $307 for life insurance premiums and $5,491 for executive long term disability premiums.

	(18)		The amount shown includes $250 for life insurance premiums and $5,491 for executive long term disability premiums.

	(19)		The amount shown includes $181 for life insurance premiums and $5,333 for executive long term disability premiums.

Grants of Plan-Based Awards

The following table shows information about the non-equity incentive awards, equity incentive awards and other stock awards reflected in the Summary Compensation Table for fiscal 2015 and that were granted to the NEOs who received such awards during fiscal 2015.


Name	Grant Date			Estimated Future Payouts Under Non-equity Incentive Plan Awards								Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)		Grant Date Fair Value of Stock and Option Awards⁽²⁾
				Threshold ($)⁽¹⁾		Target ($)⁽¹⁾			Maximum ($)⁽¹⁾			Threshold (#)		Target (#)		Maximum (#)
Jane Elfers					0		$	1,320,000		$	2,640,000
President and		2/13/15	⁽³⁾										0		101,334		304,002				$	6,726,551
Chief Executive Officer

Michael Scarpa					0		$	775,000		$	1,550,000
Chief Operating Officer		5/6/15	⁽⁴⁾										0		13,417		40,251				$	1,030,157
		5/6/15	⁽⁵⁾																13,417			900,012

Anurup Pruthi					0		$	309,000		$	618,000
Senior Vice President,		4/28/15	⁽⁶⁾										0		5,000		15,000				$	431,901
Chief Financial Officer		8/7/15	⁽⁷⁾										0		4,081		12,243					240,044
		8/7/15	⁽⁸⁾																4,081			213,339

Gregory Poole					0		$	461,250		$	922,500
Senior Vice President,		5/6/15	⁽⁹⁾										0		5,367		16,101				$	412,078
Global Sourcing		5/6/15	⁽¹⁰⁾																5,367			360,018

Kevin Low					0		$	279,000		$	558,000
Senior Vice President,		5/6/15	⁽¹¹⁾										0		4,473		13,419				$	343,473
Stores		5/6/15	⁽¹²⁾																4,473			300,049

Notes to the Grants of Plan-Based Awards Table


	(1)		Amounts reflect bonuses available to be earned in accordance with our management incentive plan approved by the Compensation Committee at the beginning of fiscal 2015.

	(2)		Reflects the aggregate grant date fair value of the awards, computed in accordance with “Compensation—Stock Compensation” topic of the Financial Accounting Standards Board’s Accounting Standards Codification based on the fair value of our Common Stock on the date of grant. The estimated fair value of the performance-based awards is based upon the probable outcome of the performance conditions on the date that each award was communicated to each of our NEOs for the performance period and the fair market value of our Common Stock on that date. For more information, see Note 3—Stock-Based Compensation in the accompanying Notes to Consolidated Financial Statements filed in our Annual Report on Form 10-K for our 2015 fiscal year.

	(3)		Awarded pursuant to the terms of PRSUs granted on February 13, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Ms. Elfers based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in 2018 following a determination by the Compensation Committee that the perfomance targets have been achieved, provided Ms. Elfers is employed on February 3, 2018.

	(4)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Scarpa based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Scarpa is employed on that date.


	(5)		Awarded pursuant to the terms of TRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. Of the TRSUs awarded, one-third vest on the first, second and third anniversaries of the award date, provided Mr. Scarpa is employed by the Company on the respective vesting dates.

	(6)		Awarded pursuant to the terms of PRSUs deemed granted on April 28, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Pruthi based upon the achievement of the performance targets of the fiscal years 2015- 2017. Earned performance shares will vest in April 2018, provided Mr. Pruthi is employed on that date.

	(7)		Awarded pursuant to the terms of PRSUs granted on August 7, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Pruthi based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Pruthi is employed on that date.

	(8)		Awarded pursuant to the terms of TRSUs granted on August 7, 2015 under the Company’s 2011 Equity Plan. Of the TRSUs awarded, one-third vest on the first, second and third anniversaries of the award date, provided Mr. Pruthi is employed by the Company on the respective vesting dates.

	(9)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Poole based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Poole is employed on that date.

	(10)		Awarded pursuant to the terms of a TRSU granted on May 6, 2015 under the Company’s 2011 Equity Plan. Of the TRSUs awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Poole is employed by the Company on the respective vesting dates.

	(11)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Low based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Low is employed on that date.

	(12)		Awarded pursuant to the terms of a TRSU granted on May 6, 2015 under the Company’s 2011 Equity Plan. Of the TRSUs awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Low is employed by the Company on the respective vesting dates.

Outstanding Equity Awards at Fiscal Year-End

The following table contains information about equity awards held by the NEOs as of January 30, 2016 (the end of our 2015 fiscal year).


Name	Stock Awards
	Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)⁽¹⁾			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽¹⁾
Jane Elfers		111,155	⁽²⁾		$	7,236,191
President and Chief
Executive Officer								101,334	⁽³⁾		$	6,596,843

Michael Scarpa		3,334	⁽⁴⁾		$	217,043
Chief Operating Officer		6,667	⁽⁵⁾			434,022
		16,666	⁽⁶⁾			1,084,957
		13,417	⁽⁷⁾			873,447
								10,000	⁽⁸⁾		$	651,000
								25,000	⁽⁹⁾			1,627,500
								13,417	⁽¹⁰⁾			873,447

Anurup Pruthi		3,334	⁽¹¹⁾		$	217,043
Senior Vice President,		4,081	⁽¹²⁾			265,673		5,000	⁽¹³⁾		$	325,500
Chief Financial Officer								4,081	⁽¹⁴⁾			265,673

Gregory Poole		40,000	⁽¹⁵⁾		$	2,604,000
Senior Vice President,		2,134	⁽¹⁶⁾			138,923
Global Sourcing		6,667	⁽¹⁷⁾			434,022
		5,367	⁽¹⁸⁾			349,392
								6,400	⁽¹⁹⁾		$	416,640
								10,000	⁽²⁰⁾			651,000
								5,367	⁽²¹⁾			349,392

Kevin Low		20,000	⁽²²⁾		$	1,302,000
Senior Vice President,		2,134	⁽²³⁾			138,923
Stores		5,000	⁽²⁴⁾			325,500
		4,473	⁽²⁵⁾			291,192
								6,400	⁽²⁶⁾		$	416,640
								7,500	⁽²⁷⁾			488,250
								4,473	⁽²⁸⁾			291,192

Notes to the Outstanding Equity Awards at Fiscal Year-End Table


	(1)		Calculated based on $65.10 per share, which was the closing market price per share of the Company’s Common Stock as reported on the Nasdaq Stock Market on January 29, 2016.

	(2)		The amount shown reflects the number of shares of Common Stock to be delivered to Ms. Elfers pursuant to PRSUs granted to her on February 3, 2014 and earned by Ms. Elfers based on the achievement of a performance target for fiscal 2014. These shares are vested and will be delivered to Ms. Elfers in April 2017. However, if Ms. Elfers were to voluntarily terminate her employment for other than good reason, she would forfeit these shares.

	(3)		Awarded pursuant to the terms of PRSUs granted on February 13, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Ms. Elfers at target based upon the achievement of the performance targets for fiscal years 2015- 2017. Earned performance shares will vest in 2018 following a determination


			by the Compensation Committee that the performance targets have been achieved, provided Ms. Elfers is employed on February 3, 2018, subject to the terms and conditions of the 2011 Equity Plan.

	(4)		Represents unvested TSRUs representing 10,000 shares of Common Stock awarded to Mr. Scarpa on April 19, 2013. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Scarpa is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. The shares reflected in the table will vest on April 19, 2016.

	(5)		Represents unvested TRSUs representing 20,000 shares of Common Stock awarded to Mr. Scarpa on May 1, 2013. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Scarpa is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. The shares reflected in the table will vest on May 1, 2016.

	(6)		Represents unvested TRSUs representing 25,000 shares of Common Stock awarded to Mr. Scarpa on May 5, 2014. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Scarpa is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 8,333 of the shares reflected in the table will vest on May 5, 2016.

	(7)		Represents unvested TRSUs representing 13,417 shares of Common Stock awarded to Mr. Scarpa on May 6, 2015. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Scarpa is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 4,472 of the shares reflected in the table will vest on May 6, 2016.

	(8)		Awarded pursuant to the terms of PRSUs granted on April 19, 2013 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Scarpa at target based upon the achievement of the performance targets for fiscal years 2013- 2015. The PRSUs also provide for limited one-year “banking” opportunities in the event that the performance target for a fiscal year(s) in the three-year performance period is met. For fiscal 2013, Mr. Scarpa “banked” 25% of this PRSU award (2,500 shares), and for fiscal 2014, Mr. Scarpa did not “bank” any additional shares under this PRSU award. Earned performance shares will vest following the third anniversary of the award date, provided Mr. Scarpa is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(9)		Awarded pursuant to the terms of PRSUs granted on May 5, 2014 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Scarpa at target based upon the achievement of the performance targets for fiscal years 2014-2016. Earned performance shares will vest following the third anniversary of the award date, provided that Mr. Scarpa is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(10)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Scarpa at target based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Scarpa is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(11)		Represents unvested TRSUs representing 5,000 shares of Common Stock awarded to Mr. Pruthi on January 5, 2015. Of the shares awarded, one-third vests on each of the first, second and third anniversaries of the award date, provided Mr. Pruthi is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan.

	(12)		Represents unvested TRSUs representing 4,081 shares of Common Stock awarded to Mr. Pruthi on August 7, 2015. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Pruthi is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 1,360 of the shares reflected in the table will vest on August 7, 2016.


	(13)		Awarded pursuant to the terms of PRSUs granted on January 5, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Pruthi at target based upon the achievement of the performance targets for fiscal years 2015- 2017. Earned performance shares will vest in April 2018, provided Mr. Pruthi is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(14)		Awarded pursuant to the terms of PRSUs granted on August 7, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Pruthi at target based upon the achievement of the performance targets for fiscal years 2015- 2017. Earned performance shares will vest in April 2018, provided Mr. Pruthi is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(15)		Represents unvested TRSUs representing 40,000 shares of Common Stock awarded to Mr. Poole on February 15, 2013. Such shares vest in five equal annual installments beginning on April 1, 2014, but delivery of all vested shares is deferred until April 2018, provided Mr. Poole is employed by the Company on the delivery date, subject to the terms and conditions of the 2011 Equity Plan. Vested shares are also deliverable upon the sooner to occur of the awardee’s death or termination by the Company without cause.

	(16)		Represents unvested TRSUs representing 6,400 shares of Common Stock awarded to Mr. Poole on April 19, 2013. Of the shares awarded, one-third vest on the first, second and third anniversaries of the award date, provided Mr. Poole is employed by the Company on the respective vesting dates, subject to the term and conditions of the 2011 Equity Plan. The shares reflected in the table will vest on April 19, 2016.

	(17)		Represents unvested TRSUs representing 10,000 shares of Common Stock awarded to Mr. Poole on May 5, 2014. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Poole is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 3,333 of the shares reflected in the table will vest on May 5, 2016.

	(18)		Represents unvested TRSUs representing 5,367 shares of Common Stock awarded to Mr. Poole on May 6, 2015. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Poole is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 1,789 of the shares reflected in the table will vest on May 6, 2016.

	(19)		Awarded pursuant to the terms of PRSUs granted on April 19, 2013 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Poole at target based upon the achievement of the performance targets for fiscal years 2013- 2015. The PRSUs also provide for limited one-year “banking” opportunities in the event that the performance target for a fiscal year(s) in the three-year performance period is met. As a result of the Company’s results for fiscal 2013, Mr. Poole “banked” 25% of this PRSU award (1,600 shares) and for fiscal 2014, Mr. Poole did not “bank” any additional shares under this PRSU award. Earned performance shares will vest following the third anniversary of the award date, provided Mr. Poole is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(20)		Awarded pursuant to the terms of PRSUs granted on May 5, 2014 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Poole at target based upon the achievement of the performance targets for fiscal years 2014-2016. Earned performance shares will vest following the third anniversary of the award date, provided that Mr. Poole is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(21)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Poole at target based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Poole is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.


	(22)		Represents unvested TRSUs representing 20,000 shares of Common Stock awarded to Mr. Low on February 15, 2013. Such shares vest in five equal annual installments beginning on April 1, 2014, but delivery of all vested shares is deferred until April 2018, provided Mr. Low is employed by the Company on the delivery date, subject to the terms and conditions of the 2011 Equity Plan. Vested shares are also deliverable upon the sooner to occur of the awardee’s death or termination by the Company without cause.

	(23)		Represents unvested TRSUs representing 6,400 shares of Common Stock awarded to Mr. Low on April 19, 2013. Of the shares awarded, one-third vest on the first, second and third anniversaries of the award date, provided Mr. Low is employed by the Company on the respective vesting dates, subject to the term and conditions of the 2011 Equity Plan. The shares reflected in the table will vest on April 19, 2016.

	(24)		Represents unvested TRSUs representing 7,500 shares of Common Stock awarded to Mr. Low on May 5, 2014. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Low is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 2,500 of the shares reflected in the table will vest on May 5, 2016.

	(25)		Represents unvested TRSUs representing 4,473 shares of Common Stock awarded to Mr. Low on May 6, 2015. Of the shares awarded, one-third vest on each of the first, second and third anniversaries of the award date, provided Mr. Low is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan. 1,789 of the shares reflected in the table will vest on May 6, 2016.

	(26)		Awarded pursuant to the terms of PRSUs granted on April 19, 2013 under the Company’s 2011 Equity Plan. The amounts shown reflect the number of shares of Common Stock able to be earned by Mr. Low at target based upon the achievement of the performance targets for fiscal years 2013-2015. The PRSUs also provide for limited one-year “banking” opportunities in the event that the performance target for a fiscal year(s) in the three-year performance period is met. As a result of the Company’s results for fiscal 2013, Mr. Low “banked” 25% of this PRSU award (1,600 shares) and for fiscal 2014, Mr. Low did not “bank” any additional shares under this PRSU award. Earned performance shares will vest following the third anniversary of the award date, provided Mr. Low is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(27)		Awarded pursuant to the terms of PRSUs granted on May 5, 2014 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Low at target based upon the achievement of the performance targets for fiscal years 2014-2016. Earned performance shares will vest following the third anniversary of the award date, provided that Mr. Low is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

	(28)		Awarded pursuant to the terms of PRSUs granted on May 6, 2015 under the Company’s 2011 Equity Plan. The amount shown reflects the number of shares of Common Stock able to be earned by Mr. Low at target based upon the achievement of the performance targets for fiscal years 2015-2017. Earned performance shares will vest in April 2018, provided Mr. Low is employed on that date, subject to the terms and conditions of the 2011 Equity Plan.

Stock Vested

The following table contains information about the number of shares acquired and value realized during fiscal 2015 upon the vesting of equity awards previously granted to each of the NEOs who vested in equity awards during fiscal 2015.


Name*	Stock Awards
Name*	Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)⁽¹⁾
Jane Elfers		48,384	⁽²⁾		$	3,103,350
President and Chief		33,333	⁽³⁾			2,096,646
Executive Officer		111,155	⁽⁴⁾			6,932,737

Michael Scarpa		3,333	⁽⁵⁾		$	206,946
Chief Operating Officer		6,666	⁽⁶⁾			414,159
		8,333	⁽⁷⁾			518,646
		6,821	⁽⁸⁾			337,912

Anurup Pruthi		1,667	⁽⁹⁾		$	98,390
Senior Vice President,
Chief Financial Officer

Gregory Poole		2,133	⁽¹⁰⁾		$	132,438
Senior Vice President,		3,333	⁽¹¹⁾			207,446
Global Sourcing		3,334	⁽¹²⁾			186,671

Kevin Low		1,668	⁽¹³⁾		$	104,917
Senior Vice President,		2,133	⁽¹⁴⁾			132,438
Stores		2,500	⁽¹⁵⁾			155,600
		7,440	⁽¹⁶⁾			467,976

No NEOs held options to acquire Common Stock during fiscal 2015.

Notes to the Stock Vested Table


	(1)		Represents the aggregate dollar amount realized based upon the fair market value of the Company’s Common Stock on the vesting date of each award.

	(2)		Represents the final partial vesting of 96,768 shares of Common Stock granted to Ms. Elfers pursuant to TRSUs awarded on March 30, 2012, 25%, 25% and 50% of which vested and were delivered on each of the first, second and third anniversaries of the date of grant, respectively.

	(3)		Represents the final partial vesting of 100,000 shares of Common Stock granted to Ms. Elfers pursuant to TRSUs awarded on April 20, 2012, one-third of which vested and were delivered on each of the first, second and third anniversaries of the date of grant, respectively.

	(4)		Represents the vesting of 111,155 shares of Common Stock granted to Ms. Elfers pursuant to PRSUs awarded on February 3, 2014 and which were earned by Ms. Elfers at 113% of target based on the achievement of a performance target for fiscal 2014. These shares are vested and will be delivered to Ms. Elfers in April 2017 in accordance with their terms. However, if Ms. Elfers were to voluntarily terminate her employment for other than good reason, she would forfeit these shares.

	(5)		Represents the second partial vesting of 10,000 shares of Common Stock granted to Mr. Scarpa pursuant to TRSUs awarded on April 19, 2013, one-third of which vested and were delivered on the first and second anniversaries of the date of grant and one-third of which are deliverable to Mr. Scarpa on the third anniversary of the date of grant, provided Mr. Scarpa is


			employed by the Company on the vesting date, subject to the terms and conditions of the 2011 Equity Plan.

	(6)		Represents the second partial vesting of 20,000 shares of Common Stock granted to Mr. Scarpa pursuant to TRSUs awarded on May 1, 2013, one-third of which vested and were delivered on the first and second anniversaries of the date of grant and one-third of which are deliverable to Mr. Scarpa on the third anniversary of the date of grant, provided Mr. Scarpa is employed by the Company on the vesting date, subject to the terms and conditions of the 2011 Equity Plan.

	(7)		Represents the first partial vesting of 25,000 shares of Common Stock granted to Mr. Scarpa pursuant to TRSUs awarded on May 5, 2014, one-third of which vested and were delivered on the first anniversary of the date of grant and one-third of which are deliverable to Mr. Scarpa on each of the second and third anniversaries of the date of grant, provided Mr. Scarpa is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan.

	(8)		Represents the final partial vesting of 20,463 shares of Common Stock granted to Mr. Scarpa pursuant to TRSUs awarded on December 3, 2012, one-third of which vested and were delivered on each of the first, second and third anniversaries of the date of grant, respectively.

	(9)		Represents the first partial vesting of 5,000 shares of Common Stock granted to Mr. Prulhi pursuant to TRSUs awarded on January 5, 2015, one-third of which vested and was delivered on the first anniversary of the date of grant and one-third of which are deliverable to Mr. Pruthi on each of the second and third anniversaries of the date of grant, provided Mr. Prulhi is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan.

	(10)		Represents the second partial vesting of 6,400 shares of Common Stock granted to Mr. Poole pursuant to TRSUs awarded on April 19, 2013, one-third of which vested and were delivered on the first and second anniversaries of the date of grant and one-third of which are deliverable to Mr. Poole on the third anniversary of the date of grant, provided Mr. Poole is employed by the Company on the vesting date, subject to the terms and conditions of the 2011 Equity Plan.

	(11)		Represents the first partial vesting of 10,000 shares of Common Stock granted to Mr. Poole pursuant to TRSUs awarded on May 5, 2014, one-third of which vested and were delivered on the first anniversary of the date of grant and one-third of which are deliverable to Mr. Poole on each of the second and third anniversaries of the date of grant, provided Mr. Poole is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan.

	(12)		Represents the final partial vesting of 10,000 shares of Common Stock granted to Mr. Poole pursuant to TRSUs awarded on October 1, 2012, one-third of which vested and were delivered on each of the first, second and third anniversaries of the date of grant, respectively.

	(13)		Represents the final partial vesting of 5,000 shares of Common Stock granted to Mr. Low pursuant to TRSUs awarded on May 1, 2012, one-third of which vested and were delivered on each of the first, second and third anniversaries of the date of grant, respectively.

	(14)		Represents the second partial vesting of 6,400 shares of Common Stock granted to Mr. Low pursuant to TRSUs awarded on April 19, 2013, one-third of which vested and were delivered on the first and second anniversaries of the date of grant and one-third of which are deliverable to Mr. Low on the third anniversary of the date of grant, provided Mr. Low is employed by the Company on the vesting date, subject to the terms and conditions of the 2011 Equity Plan.

	(15)		Represents the first partial vesting of 7,500 shares of Common Stock granted to Mr. Low pursuant to TRSUs awarded on May 5, 2014, one-third of which vested and were delivered on the first anniversary of the date of grant and one-third of which are deliverable to Mr. Low on each of the second and third anniversaries of the date of grant, provided Mr. Low is employed by the Company on the respective vesting dates, subject to the terms and conditions of the 2011 Equity Plan.

(16)

Represents the vesting of 7,440 shares of Common Stock granted to Mr. Low pursuant to PRSUs awarded on May 1, 2012 and which were earned by Mr. Low at 93% of target based on the achievement of a performance target for fiscal 2012.

Deferred Compensation Plan

Eligible employees, including our NEOs, and our directors may elect annually to defer a portion of their salary, cash bonus, director fees and stock awards under The Children’s Place, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). Under this plan, participants can defer up to 80% of their salary, 100% of their cash bonus, 100% of their director fees and/or 100% of their stock awards payable in the following calendar year. At the option of the participant, these amounts may be deferred to a specific date at least two years from the last day of the year in which deferrals are credited into the participant’s account. Interest on deferred amounts is credited to the participant’s account based upon the earnings and losses of one or more of the investments selected by the participant from the various investment alternatives available under the Deferred Compensation Plan, as determined by the Compensation Committee. Directors may elect to invest cash fees in Company stock. All stock awards are distributed in the form of shares of Company stock.

At the time of deferral, a participant must indicate whether he or she wishes to receive the amount deferred in either a lump sum or in substantially equal annual installments over a period of up to five years. If a participant who is an employee of the Company separates from service prior to the elected commencement date for distributions and has not attained a combination of age and years of service to the Company equal to 55, then the deferred amounts will be distributed immediately in a lump sum, regardless of the method of distribution originally elected by the participant. If the participant in question has attained a combination of age and years of service to the Company equal to 55 and has previously elected to do so on a timely basis, then the participant may receive the amounts in substantially equal annual installments over a period of up to fifteen years. If the participant is a director and separates from service prior to the elected commencement date for distributions, then the deferred amounts will be distributed immediately in a lump sum unless the recipient has elected on a timely basis to receive the amounts in substantially equal installments over a period of up to fifteen years. If the participant in question is a “specified employee” under the Code, there may be a six-month delay in the commencement of distributions, if triggered by the participant’s termination or retirement. Changes to deferral elections with respect to previously deferred amounts are permitted only under the limited terms and conditions specified in the Code and early withdrawals from deferred accounts are permitted only in extreme cases, such as unforeseen financial hardship resulting from an illness or accident of the participant which is demonstrated to the Compensation Committee.

CEO Employment Agreement

The Company and Jane Elfers, our President and Chief Executive Officer, are parties to an employment agreement dated December 2009, as amended (the “employment agreement”).

The following table summarizes the compensation paid to Ms. Elfers under her employment agreement in respect of fiscal 2015. The employment agreement requires Ms. Elfers’ continued employment for the payment of compensation and vesting of equity, and bases the performance-based annual cash bonuses and performance-based stock awards on pre-set financial criteria to be established by our Compensation Committee.


Item of Compensation For Fiscal 2015	Amount	Vesting Date for Equity Award

Base Salary	$1,100,000 paid

Performance-Based Cash Bonus	$1,848,000 paid⁽¹⁾

PRSUs granted on February 13, 2015 with a three-year performance period	101,334 shares awarded ($6,000,000 grant date value)	Earned shares, if any, will vest in 2018 following a determination by the Compensation Committee of the achievement of performance targets, provided Ms. Elfers is employed on February 3, 2018

(1)

Under the employment agreement, Ms. Elfers is eligible to receive an annual performance-based cash bonus award pursuant to the Company’s annual bonus plan. The threshold, target and maximum amounts of each annual bonus are equal to 50%, 120% and 240%, respectively, of Ms. Elfers’ base salary. The actual annual bonus is to be paid upon the achievement of a performance measure established by the Compensation Committee. As a result of the Company’s actual adjusted operating income performance in fiscal 2015 (approximately $110.8 million), like our other NEOs, Ms. Elfers received her cash bonus in respect of fiscal 2015 at 140% of target.

Set forth below is a summary of certain other terms contained in Ms. Elfers’ employment agreement.

Board of Directors. Ms. Elfers is to be nominated for election to our Board of Directors pursuant to her employment agreement.

Benefits and Perquisites. During the term of her employment agreement, Ms. Elfers will be entitled to the perquisites described under the heading “Compensation Discussion and Analysis—Employee Benefits and Perquisites” above and to participate in all employee benefit and perquisite plans, programs and arrangements offered by the Company as the Company generally makes available to senior executives of the Company from time to time (other than any severance plan or program).

Awards and Benefits. The bonus awards, equity awards, benefits and perquisites provided to Ms. Elfers under the employment agreement are to be on a basis which is no less favorable to Ms. Elfers than the most favorable basis on which such awards, benefits or perquisites are granted to any other senior executive officer of the Company, except for such awards, benefits or perquisites granted to any senior executive officer in connection with an initial hire or promotion or other grants not in the regular course.

Severance. Certain severance benefits are provided in the event of a termination of Ms. Elfers’ employment by the Company other than for cause (other than in the case of disability), by Ms. Elfers for good reason or at the expiration of the term of her employment agreement due to the Company’s issuance of a non-renewal notice. In the event of such termination and subject to a release of claims against the Company by Ms. Elfers, Ms. Elfers will be entitled to receive (i) earned, but unpaid, base salary and unpaid expense reimbursement through the date of termination; (ii) a lump sum cash payment of any annual bonus and other incentive compensation earned, but unpaid, for the most recent fiscal year ended prior to the date of termination; (iii) an amount equal to the sum of (a) two times her then current base salary and (b) two times the greater of (x) her target bonus or (y) the average of the immediately preceding two year’s annual bonuses earned by her (the greater of clause (x) or (y), the “bonus amount”), payable in cash in equal installments (the “severance payments”) over a period of 24 months following the date of termination (the “severance period”); (iv) a lump sum cash payment of a pro-rata portion of $1.2 million for the fiscal year in which her employment terminates; and (v) continued healthcare

coverage under the Company’s group health plan, at the Company’s expense, and continued provision of certain benefits and perquisites, for a period not to exceed the expiration of the severance period.

Change in Control. In the event of a termination of Ms. Elfers’ employment by the Company other than for cause (other than in the case of disability), by Ms. Elfers for good reason or at the expiration of the term of her employment agreement due to the Company’s issuance of a non-renewal notice that occurs, in any case, within two years following the occurrence of a change in control which constitutes a “change in control event” within the meaning of Treasury Regulation §1.409A-3(i)(5)(i), in addition to the amounts and benefits described in clauses (i), (ii) and (iv) of the immediately preceding paragraph, but in lieu of the severance payments and the benefits described in clauses (iii) and (v) of the immediately preceding paragraph, Ms. Elfers will be entitled to a lump sum cash severance payment in an amount equal to three times the sum of her base salary and the bonus amount, and continued healthcare coverage under the Company’s group health plan, at the Company’s expense, and continued provision of certain benefits and perquisites, for a period of 36 months. If such a termination occurs within two years following the occurrence of a change in control which does not constitute a “change in control event” within the meaning of Treas. Reg. §1.409A-3(i)(5)(i), Ms. Elfers will receive the same benefits and amounts described above, but a portion of the change in control severance will be paid over the severance period rather than in a lump sum.

In the event that the “golden parachute” excise tax provisions of the Code (Sections 280G and 4999) are implicated because of the foregoing payments and benefits, the Company will not provide any tax gross-up to Ms. Elfers. Rather, Ms. Elfers will receive the greater of (i) the largest portion of the payments and benefits that are not subject to a “golden parachute” excise tax under Sections 280G and 4999 of the Code or (ii) the full amount of the payments and benefits, up to and including the total, if the net-after-excise tax amount retained by her would exceed the amount in clause (i) above.

Restrictions and Indemnification. During the term of her employment agreement and for a period of 12 months following the date of termination, Ms. Elfers will be subject to restrictions on competition with the Company. During the term of her employment agreement and for a period of 18 months following the date of termination, Ms. Elfers will be subject to restrictions on the solicitation of the Company’s employees, and of the Company’s vendors, distributors, manufacturers, lessors, independent contractors or agents for and on behalf of a competitive business. For all periods during and after the term of her employment agreement, Ms. Elfers will be subject to nondisclosure and confidentiality restrictions relating to the Company’s confidential information and trade secrets. Ms. Elfers’ employment agreement also contains indemnification provisions for claims that may arise in connection with Ms. Elfers’ service as President and Chief Executive Officer or as a director of the Company.

Other Arrangements

The Company does not have any employment agreements with any of its NEOs (other than Ms. Elfers) or any other member of management. As is its practice, the Company and each of the NEOs (other than Ms. Elfers) and certain other members of management are parties to offer letters which establish certain terms of employment, including base salary, target bonus as a percentage of base salary, initial equity awards, and paid time off and other benefits. The compensation and benefits paid and provided to the applicable NEOs described in this Proxy Statement are as set forth in the applicable offer letter.

Change in Control Agreements

We have entered into change in control severance agreements with our NEOs (other than Ms. Elfers), certain other executives and other key employees that require us to make payments and provide benefits in the event of the termination of his or her employment without cause or for good reason occurring in connection with a change in control of the Company. We utilize these provisions in order to recruit and retain, including to obtain a long-term commitment to employment from, executives and key employees. We believe that appropriate severance arrangements will provide our executives with important incentives to remain employed with us and to concentrate on the

Company’s business objectives in circumstances where a change in control of the Company becomes imminent.

Each of Messrs. Scarpa, Pruthi, Poole and Low (as well as other executives and certain other key employees) has entered into separate change in control severance agreements, pursuant to which they are provided severance benefits upon a termination of employment in connection with a change in control. Pursuant to their change in control severance agreements, each of Messrs. Scarpa, Poole, Pruthi and Low will receive severance benefits upon a termination of his employment by the Company without cause or by the executive for "good reason" within two years following a change in control.

The change in control severance agreement is for two years and then automatically renews for one year terms thereafter, unless the Company provides 90 days notice of its intent to terminate the agreement. Upon a termination of employment in connection with a change in control entitling them to benefits under the agreement, Messrs. Scarpa, Pruthi, Poole and Low are to receive a lump sum severance payment equal to the sum of their respective base salaries and the average of their respective actual bonuses payable for each of the previous three years, multiplied by, in the case of Mr. Scarpa, 2, and in the case of Messrs. Pruthi, Poole and Low, 1.5.

In the event that the “golden parachute” excise tax provisions of the Code (Sections 280G and 4999) are implicated because of any payments and benefits to be made and provided to an executive under the change in control severance agreements, the Company will not provide any tax gross-ups. Rather, the change in control severance agreements provide for the executives to receive the greater of (i) the largest portion of the payments and benefits that would result in no parachute excise tax under Sections 280G and 4999 of the Code, or (ii) the largest portion of the payments and benefits, up to and including the total, if the net after-excise-tax amount retained by the executive would exceed the amount in clause (i) above.

For purposes of the change in control severance agreements, the term “change in control” is defined as (i) the sale to any purchaser of (a) all or substantially all of the assets of the Company or (b) capital stock representing more than 50% of the stock of the Company entitled to vote generally in the election of directors, (ii) a merger or consolidation of the Company with another corporation if, immediately after such merger or consolidation, less than a majority of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the surviving corporation is held by those who held such securities immediately prior to the transaction, (iii) if any person becomes the beneficial owners of securities representing more than 50% of the combined voting power of voting stock of the Company (or the subsidiary employing the executive) entitled to vote generally in the election of directors, or (iv) if the individuals (a) who, as of the date of the applicable agreement, constitute the Board and (b) who thereafter are elected to the Board and whose election or nomination was approved by a majority of the original directors then still in office (the “Additional Original Directors”) and (c) who thereafter are elected to the Board and whose election or nomination was approved by a majority of the original directors and Additional Original Directors then still in office, cease for any reason to constitute a majority of the members of the Board.

Severance Guidelines and Offer Letters

Under the Company’s severance guidelines and its offer letters with Messrs. Scarpa, Pruthi, Poole and Low, upon a termination of employment (other than in connection with a change in control) of any of these NEOs by the Company without cause, the affected NEO(s) will receive severance in the form of salary continuation payments for a period which is the greater of the period provided under the Company’s severance guidelines in effect at the time of termination or 18 months, in the case of Mr. Scarpa, or 12 months, in the case of Messrs. Pruthi, Poole and Low, provided that, in any event, the Company’s severance obligations will be automatically reduced by the amount of salary and other like annual remuneration received from employment or engagement as an independent contractor during the severance period. Receipt of severance payments is conditioned upon the execution and delivery by the affected NEO of an agreement containing a release of claims, a confidentiality agreement, and a non-solicitation and non-competition agreement for a period of time following termination equal to the severance period.

Potential Payments Upon Termination or Change in Control

The following table sets forth the estimated incremental payments and benefits that would be payable to each NEO upon termination of the NEO’s employment in certain circumstances, including in connection with a change in control of the Company, assuming that the triggering event occurred at year-end fiscal 2015 (January 30, 2016).


Executive Officer	Termination Reason	Severance ($)				FY 2015 Bonus ($)		Payment of Time-Based RSUs ($)(a)			Payment of Performance Shares ($)(a)				Health & Welfare Benefits ($)			Total ($)
Jane Elfers	By Company without cause		$	6,290,800	^(b)		—			—		$	7,236,191	^(c)		$	64,538		$	13,591,529
President and	By Executive for Good Reason			6,290,800	^(b)		—			—			7,236,191	^(c)			64,538			13,591,529
Chief Executive Officer	Following Change in Control			8,836,200	^(c)		—			—			13,833,034				96,807			22,766,041
	Death			—			—			—			10,534,613				18,968			10,553,581
	Disability			—			—			—			10,534,613				18,968			10,553,581

Michael Scarpa	By Company without cause		$	1,162,500	^(b)		—			—			—			$	28,452		$	1,190,952
Chief Operating Officer	By Executive for Good Reason			—			—			—			—				—			—
	Following Change in Control			3,387,166	^(c)		—		$	2,609,468		$	2,715,256				37,936			8,749,826
	Death			—			—			2,609,468			2,715,256				—			5,324,724
	Disability			—			—			2,609,468			2,715,256				—			5,324,724

Anurup Pruthi	By Company without cause		$	510,962	^(b)		—			—			—			$	18,968		$	529,930
Senior Vice President,	By Executive for Good Reason			—			—			—			—				—			—
Chief Financial Officer	Following Change in Control			1,226,309	^(c)		—		$	482,717		$	295,619				28,452			2,004,645
	Death			—			—			482,717			295,619				—			778,336
	Disability			—			—			482,717			295,619				—			778,336

Gregory Poole	By Company without cause		$	610,962	^(b)		—			—			—			$	18,968		$	629,930
Senior Vice President,	By Executive for Good Reason			—			—			—			—				—			—
Global Sourcing	Following Change in Control			1,718,951	^(c)		—		$	3,526,337		$	1,242,368				28,452			6,516,108
	Death			—			—			1,963,737			1,242,368				—			3,206,305
	Disability			—			—			1,963,737			1,242,368				—			3,206,305

Kevin Low	By Company without cause		$	460,962	^(b)		—			—			—			$	18,968		$	479,930
Senior Vice President,	By Executive for Good Reason			—			—			—			—				—			—
Stores	Following Change in Control			1,174,244	^(c)		—		$	2,057,616		$	1,050,519				28,452			4,310,831
	Death			—			—			1,276,416			1,050,519				—			2,326,935
	Disability			—			—			1,276,416			1,050,519				—			2,326,935

(a)

Calculated based on $65.10 per share, which was the closing market price per share of the Company’s Common Stock as reported on the Nasdaq Stock Market on January 29, 2016.

(b)

Paid by way of salary continuation.

(c)

Does not include amounts payable pursuant to the terms of PRSUs granted on February 13, 2015 under the Company’s 2011 Equity Plan, which provide that Ms. Elfers would be entitled to the number of Performance Shares which would have been earned if she had remained in the employ of the Company, such shares to be issued and delivered in 2018 within ten days following a determination of the achievement of the performance targets for fiscal years 2015-2017. The grant date fair value of the award, computed in accordance with the “Compensation—Stock Compensation” topic of the Financial Accounting Standards Board’s Accounting Standards Codification based on the fair value of our Common Stock on the date of grant, was $6,726,551.

(d)

Paid in a lump sum.

Compensation of Directors

Compensation for the non-employee directors is set by the Board on the recommendation of the Compensation Committee. Compensation paid to the non-employee directors is in the form of cash retainer payments and a time-vested equity award pursuant to our 2011 Equity Plan that provides for fixed annual grants.

In fiscal 2015, non-employee director compensation consisted of the following, as applicable:


Annual Retainer

Cash			$60,000

Equity Grant⁽¹⁾			A TRSU award having a fair market value of $100,000 ($140,000 in the case of the Company’s Chairman) on the first business day of the Company’s fiscal year

Additional Annual Retainer for the Chairman of the Board and Committee Chairs

Chairman			$100,000

Audit Committee Chair			$25,000

Compensation Committee Chair			$20,000

Nominating & Corporate Governance Committee Chair			$15,000

Additional Annual Retainer for the Members of Committees

Audit Committee			$13,500

Compensation Committee			$7,500

Nominating & Corporate Governance Committee			$3,000

(1)

The 2011 Equity Plan caps at $250,000 the aggregate fair market value of equity awards made to any non-employee director in any calendar year.

The Company also pays or reimburses directors for travel expenses relating to attending meetings of our Board, its committees and annual meetings of stockholders, and reimburses directors in an amount not to exceed $6,000 per year for attendance at director educational seminars. In addition, all directors are eligible to receive 15 discount cards for our merchandise in accordance with our employee merchandise discount policy, which they may distribute to their friends and family at their discretion.

Employee directors are paid for their services to the Company as employees and do not receive any additional compensation for serving on the Company’s Board. Accordingly, employee directors are not eligible for the annual retainer or other director fees.

Under the Company’s stock ownership guidelines, non-employee directors are required to acquire shares of Common Stock (directly or through share equivalent units) with a value of at least five times their annual cash retainer within five years of joining the Board. Each of our non-employee directors is in compliance with these stock ownership guidelines.

The following table shows the compensation earned by each non-employee director in fiscal 2015.

Directors’ Compensation


	Fees Earned or Paid in Cash ($)⁽¹⁾			Stock Awards ($)⁽²⁾				Total ($)
Norman Matthews		$	170,500		$	140,037	⁽³⁾		$	310,537
Joseph Alutto			83,063			100,043	⁽⁴⁾			183,106
Marla Malcolm Beck			30,625			40,810	⁽⁵⁾			71,435
Susan Patricia Griffith			70,500			100,043	⁽⁴⁾			170,543
Joseph Gromek			87,500			100,043	⁽⁴⁾			187,543
Robert L. Mettler			45,288			68,532	⁽⁶⁾			113,820
Kenneth Reiss			98,500			100,043	⁽⁴⁾			198,543
Stanley W. Reynolds			73,500			100,043	⁽⁴⁾			173,543
Susan Sobbott			63,188			100,043	⁽⁴⁾			163,231

Notes to the Directors’ Compensation Table


	(1)		Represents the aggregate dollar amount of all fees earned in cash for services as a director.

	(2)		Represents the stock award grant date fair value recognized for financial statement reporting purposes in accordance with the “Compensation—Stock Compensation” topic of the Financial Accounting Standards Board’s Accounting Standards Codification. For more information see Note 3—Stock-Based Compensation in the accompanying Notes to Consolidated Financial Statements filed in our Annual Report on Form 10-K. The fair value of TRSUs is defined as the closing price of the Company’s Common Stock on the grant date. Stock awards to those who have attained the age of retirement are subject to accelerated expensing for financial reporting purposes. Each of Dr. Alutto, and Messrs. Gromek, Matthews, Mettler and Reiss has reached retirement age, and consequently each stock award received by him is subject to accelerated vesting upon retirement from the Board.

	(3)		On February 2, 2015, this director was granted TRSUs representing 2,332 shares of Common Stock, which fully vested on February 2, 2016. See “Stock Ownership”—Stock Ownership of Directors and Executive Officers” below for information concerning the beneficial ownership of our Common Stock by our directors.

	(4)		On February 2, 2015, this director was granted TRSUs representing 1,666 shares of Common Stock, which fully vested on February 2, 2016. See “Stock Ownership”—Stock Ownership of Directors and Executive Officers” below for information concerning the beneficial ownership of our Common Stock by our directors.

	(5)		On September 1, 2015, this director was granted TRSUs representing 695 shares of Common Stock, which will fully vest on September 1, 2016. See “Stock Ownership”—Stock Ownership of Directors and Executive Officers” below for information concerning the beneficial ownership of our Common Stock by our directors.

	(6)		On May 26, 2015, this director was granted TRSUs representing 1,039 shares of Common Stock, which will fully vest on May 26, 2016. See “Stock Ownership”—Stock Ownership of Directors and Executive Officers” below for information concerning the beneficial ownership of our Common Stock by our directors.

Deferral of Fees

Under the Company’s Deferred Compensation Plan discussed above, directors may elect to defer all or a part of their director fees and stock awards. The Deferred Compensation Plan permits members of the Board to invest deferred cash fees in the Company’s Common Stock. A director who elects to invest deferred cash fees in Common Stock will receive shares upon completion of the deferral period.

STOCK OWNERSHIP

Stock Ownership of Directors and Executive Officers

The following table shows the beneficial ownership of Common Stock of each director, each director nominee, each of the NEOs appearing in the Summary Compensation Table, and the directors and executive officers (including the NEOs) as a group. “Beneficial ownership” as used here means more than “ownership” as that term is commonly used. For example, a person “beneficially” owns Company stock not only if he or she holds it directly, but also if he or she has (or shares) the power to vote or sell the stock indirectly (for example, through a relationship, a position as a director or trustee, or a contract or understanding). Beneficial ownership also includes shares a person has the right to acquire within 60 days, for example, through the scheduled vesting of an equity award or the exercise of a stock option.


Name of Benefical Owner⁽¹⁾	Shares Beneficially Owned⁽²⁾

Norman Matthews⁽³⁾		86,822
Joseph Alutto⁽⁴⁾		44,354
Marla Malcolm Beck⁽⁵⁾		0
Jane Elfers⁽⁶⁾		115,155
Susan Patricia Griffith⁽⁷⁾		6,552
Joseph Gromek⁽⁸⁾		15,539
Robert L. Mettler⁽⁹⁾		1,039
Kenneth Reiss⁽¹⁰⁾		7,141
Stanley W. Reynolds⁽¹¹⁾		2,167
Susan Sobbott⁽¹²⁾		3,040
Michael Scarpa⁽¹³⁾		50,901
Anurup Pruthi⁽¹⁴⁾		629
Gregory Poole⁽¹⁵⁾		10,775
Kevin Low⁽¹⁶⁾		10,499

All directors and executive officers as a group (15 persons)		367,853

Notes to the Stock Ownership Table


	(1)		Information about Common Stock holdings in the above table and in these footnotes is as of April 1, 2016. Unless stated otherwise in these notes, each person named in the table owns his or her shares directly and has sole voting and investment power over such shares.

	(2)		At March 24, 2016, each person named in the table beneficially owned less than 1.0% of the outstanding Common Stock. The directors and executive officers as a group beneficially owned approximately 1.9% of the outstanding Common Stock.

	(3)		Does not include 2,159 shares of Common Stock granted on February 1, 2016, pursuant to TRSUs not yet vested. Does include 31,688 shares of Common Stock credited to Mr. Matthews’ deferral account under the Company’s Nonqualified Deferred Compensation Plan. Mr. Matthews has no voting or dispositive power over shares credited to his deferral account under the Company’s Nonqualified Deferred Compensation Plan.

	(4)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested. Does include 15,000 shares of Common Stock issuable to Dr. Alutto upon exercise of outstanding fully exercisable stock options and 10,913 shares of Common Stock credited to Dr. Alutto’s deferral account under the Company’s Nonqualified Deferred Compensation Plan. Dr. Alutto has no voting or dispositive power over shares of Common Stock credited to his deferral account under the Company’s Nonqualified Deferred Compensation Plan.

	(5)		Does not include 695 shares of Common Stock granted on September 1, 2015 pursuant to TRSUs not yet vested and 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested.


	(6)		Includes 111,155 shares of Common Stock granted pursuant to PRSUs which have been earned and are vested, but which are not to be delivered until April 2017, in accordance with their terms. If Ms. Elfers were to voluntarily terminate her employment for other than good reason, she would forfeit these shares.

	(7)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested. Includes 3,634 shares of Common Stock credited to Ms. Griffith’s deferred account under the Company’s Nonqualified Deferred Compensation Plan. Ms. Griffith has no voting or dispositive power over shares of Common Stock credited to her deferral account under the Company’s Nonqualified Deferred Compensation Plan.

	(8)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested.

	(9)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested.

	(10)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested. Includes 7,141 shares of Common Stock credited to Mr. Reiss’s deferral account under the Company’s Nonqualified Deferred Compensation Plan. Mr. Reiss has no voting or dispositive power over shares of Common Stock credited to his deferral account under the Company’s Nonqualified Deferred Compensation Plan.

	(11)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested.

	(12)		Does not include 1,542 shares of Common Stock granted on February 1, 2016 pursuant to TRSUs not yet vested.

	(13)		Does not include 8,334 shares of Common Stock granted on May 5, 2014 to Mr. Scarpa pursuant to TRSUs not yet vested and 8,945 shares of Common Stock granted on May 6, 2015 pursuant to TRSUs not yet vested.

	(14)		Does not include 3,334 shares of Common Stock granted on January 5, 2015 to Mr. Pruthi pursuant to TRSUs not yet vested and 4,081 shares of Common Stock granted on August 7, 2015 pursuant to TRSUs not yet vested.

	(15)		Does not include 40,000 shares of Common Stock granted on February 15, 2013, to Mr. Poole pursuant to TRSUs not yet vested, 3,334 shares of Common Stock granted on May 5, 2014 pursuant to TRSU’s not yet vested and 3,578 shares of Common Stock granted on May 6, 2015 pursuant to TRSU’s not yet vested.

	(16)		Does not include 20,000 shares of Common Stock granted on February 15, 2013 to Mr. Low not yet vested, 2,500 shares of Common Stock granted on May 5, 2014 to Mr. Low pursuant to TRSUs not yet vested and 2,982 shares of Common Stock granted on May 6, 2015 to Mr. Low pursuant to TRSU’s not yet vested.

Stock Ownership of Certain Beneficial Owners

The following table sets forth information regarding persons or groups known to the Company to be beneficial owners of more than 5% of the Company’s Common Stock as of March 22, 2016.


Name and Address of Beneficial Owner	Shares Beneficially Owned		Percent of Class
BlackRock, Inc.⁽¹⁾		1,964,914		10.25	%
Royce & Associates, LLC⁽²⁾		1,840,243		9.60	%
AllianceBernstein LP⁽³⁾		1,763,134		9.20	%
The Vanuard Group, Inc.⁽⁴⁾		1,615,888		8.43	%
Dimensional Fund Advisors LP⁽⁵⁾		1,406,204		7.34	%
JPMorgan Chase & Co.⁽⁶⁾		1,147,350		5.99	%
Balyasny Asset Management L.P.⁽⁷⁾		999,915		5.22	%

Notes to the Stock Ownership of Certain Beneficial Owners Table


	(1)		According to a Statement on Schedule 13G filed with the SEC on January 26, 2016, as of December 31, 2015, BlackRock, Inc., a Delaware corporation with an address of 55 East 52^nd Street, New York, New York 10055, had sole voting power with respect to 1,914,851 shares and sole dispositive power with respect to 1,964,914 shares. According to the Schedule 13G, various persons have the right to receive or the power to direct the receipt of the proceeds from the sale of the shares, but no such person’s interest in the shares is in excess of five percent of the total shares outstanding.

	(2)		According to a Statement on Schedule 13G filed with the SEC on January 12, 2016, as of December 31, 2015, Royce & Associates, LLC, a New York limited liability company with an address of 745 Fifth Avenue, New York, New York, 10151, had sole voting power and dispositive power with respect to 1,840,243 shares. According to the Schedule 13G, various accounts managed by Royce & Associates, LLC, have the right to receive or the power to direct the receipt of the proceeds from the sale of the shares.

	(3)		According to a Statement on Schedule 13G filed with the SEC on February 16, 2016, as of December 31, 2015, AllianceBernstein L.P., a Delaware limited partnership with an address of 1345 Avenue of the Americas, New York, New York 10105, had sole voting power with respect to 1,540,081 shares and sole dispositive power with respect to 1,763,134 shares.

	(4)		According to a Statement on Schedule 13G filed with the SEC on February 11, 2016, as of December 31, 2015, The Vanguard Group, Inc., a Pennsylvania corporation with an address of 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, had sole voting power with respect to 30,876 shares, shared voting power with respect to 1,600 shares, sole dispositive power with respect to 1,584,712 shares, and shared dispositive power with respect to 31,176 shares.

	(5)		According to a Statement on Schedule 13G filed with the SEC on February 9, 2016, as of December 31, 2015, Dimensional Fund Advisors LP, a Delaware limited partnership with an address of 6300 Bee Cave Road, Building One, Austin, Texas 78746, had sole voting power with respect to 1,348,432 shares and sole dispositive power with respect to 1,406,204 shares.

	(6)		According to a Statement on Schedule 13G filed with the SEC on January 26, 2016, as of December 31, 2015, JPMorgan Chase & Co., a Delaware corporation with an address of 270 Park Avenue, New York, New York 10017, had sole voting power with respect to 1,032,865 shares and sole dispositive power with respect to 1,141,850 shares.

	(7)		According to a Statement on Schedule 13G filed with the SEC on January 27, 2016, as of December 31, 2015, Balyasny Asset Management L.P., a Delaware limited partnership with an address of 181 West Madison Avenue, Suite 3600, Chicago, Illinois 60602, had sole voting power with respect to 999,915 shares and sole dispositive power with respect to 999,915 shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and any persons owning more than 10% of a class of the Company’s stock to file reports with the SEC and the NASDAQ Stock Market regarding their ownership of the Company’s stock and any changes in such ownership. The Company undertakes to file such reports on behalf of its directors and executive officers pursuant to a power of attorney given to certain attorneys-in-fact. Based on the Company’s review of copies of these reports and executive officer and director certifications, the Company believes that all Section 16(a) filing requirements applicable to its directors and executive officers were complied with during fiscal 2015.

Certain Relationships and Related Transactions

The Company has a long-standing policy prohibiting its directors, officers and employees from entering into transactions that present actual or potential conflicts of interest. This policy is reflected in the Company’s Code of Business Conduct, which is in writing and has been adopted by the Board.

The Nominating & Corporate Governance Committee approves all related person transactions, including related person compensation arrangements. Pursuant to the Company’s Related Person Transactions Policy, each related person is responsible for notifying the Company’s legal department of any potential related party transaction in which such person, or any member of his or her immediate family, may be directly or indirectly involved as soon as he or she becomes aware of such a transaction. The Nominating & Corporate Governance Committee is provided the details of the transaction and will determine whether to approve the transaction taking into consideration, among other things, (i) whether the terms of the transaction are fair to the Company and are comparable to the terms that would exist in a similar transaction with an unaffiliated third party, (ii) whether there are business reasons for the Company to enter into the transaction, (iii) whether the transaction would impair the independence of a non-management director and (iv) whether the transaction would present or create the appearance of an improper conflict of interest for any related person, taking into account the size of the transaction and the direct or indirect nature of the interest of the related person in the transaction. In addition, the Nominating & Corporate Governance Committee reviews all on-going related person transactions on at least an annual basis to ensure that such transactions are being pursued in accordance with the understandings made at the time such transactions were originally approved and if any changes should be pursued.

Based on the Company’s review of its transactions, there were no transactions considered to be a related person transaction during fiscal 2015.

PROPOSALS REQUIRING YOUR VOTE

The following 11 proposals will be presented at the Annual Meeting for your vote. When voting by internet or telephone, you will be instructed how to vote for or against or abstain from voting on these proposals. If you received a printed copy of your proxy materials, space is provided on the proxy card to vote for or against or abstain from voting on each of the proposals.

The Board of Directors recommends a vote FOR Proposals 1 through 11.

PROPOSAL 1: ELECTION OF THREE CLASS I DIRECTORS.

The table below summarizes the implementation of the declassification of our Board pursuant to the amendment:


Annual Meeting Year	Length of Term for Directors Elected	Year that Term Would Expire
2016	One year	2017
2017 and thereafter	Annual election	One year later

The Board has nominated Jane Elfers, Susan Patricia Griffith and Joseph Gromek for election as Class I directors at the Annual Meeting, each of which currently serves as a Class I director of the Company. If you elect these four nominees, they will hold office until the annual meeting of stockholders to be held in the Spring of 2017 or until their successors have been elected and qualified.

Biographical information regarding the nominees and information regarding the qualifications of the nominees appears under the heading “Corporate Governance at The Children’s Place—Board Nominees and Continuing Directors” in this Proxy Statement.

Each of the three nominees for Class I Director who receives at least a majority of the votes cast at the Annual Meeting, either in person or by proxy, will be elected. Votes cast include votes for or against each nominee and exclude abstentions and withheld authority. This means that if you abstain from voting or withhold authority to vote for a particular nominee, your vote will not count for or against the nominee. Any nominee in this election who does not receive a majority of the votes cast must promptly offer to tender his or her resignation to the Board. The Nominating & Corporate Governance Committee will then consider the resignation and make a recommendation to the Board. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will not vote your shares on this proposal. Also, as discussed below, if your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instructions.

The Board of Directors recommends a vote FOR the three nominees for Class I director listed above.

PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

We are asking you to ratify the Audit Committee’s selection of BDO USA, LLP (“BDO”) as our independent registered public accounting firm for fiscal 2015. BDO has audited the accounts of the Company since October 2007. The Board considers it desirable to continue the services of BDO.

The fees billed or expected to be billed by BDO for professional services rendered to the Company during fiscal 2015 and 2014 are set forth below.


	Fiscal 2015			Fiscal 2014
	(in thousands)
Audit Fees		$	1,160		$	1,161
Audit-Related Fees			—			—
Tax Fees			—			—
All Other Fees			—			—

Total		$	1,160		$	1,161

Audit Fees

These amounts represent fees billed or expected to be billed by BDO for professional services rendered for the audits of the Company’s annual financial statements for fiscal 2014 and fiscal 2015 and the effectiveness of its internal controls over financial reporting as of January 31, 2015 and January 30, 2016, the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, and services related to statutory and regulatory filings and engagements for such fiscal years.

Audit-Related, Tax or Other Fees

None.

Audit Committee Pre-Approval Policy

The Audit Committee has adopted a policy for the pre-approval of all audit and permitted non-audit services that may be performed by the Company’s independent registered public accounting firm. Under this policy, each year, at the time it engages the independent registered public accounting firm, the Audit Committee pre-approves the audit engagement terms and fees and also pre-approves detailed types of audit-related tax services, subject to certain dollar limits, to be performed during the year. All other non-audit services are required to be pre-approved by the Audit Committee on an engagement-by-engagement basis. During fiscal 2014 and fiscal 2015, all audit-related fees were pre-approved by the Audit Committee.

Representatives of BDO are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

If the stockholders should fail to ratify the selection of the independent registered public accounting firm, the Audit Committee will designate an independent registered public accounting firm as required under the rules of the Exchange Act and in accordance with its charter.

The affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, is required to ratify the selection of the independent registered public accounting firm. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will vote your shares in favor of this proposal. Also, as discussed below, if your broker holds your shares, your broker is entitled to vote your shares in favor of this proposal.

The Board of Directors recommends a vote FOR the ratification of the selection of BDO as the Company’s independent registered public accounting firm for fiscal 2016.

PROPOSAL 3: RE-APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE CRITERIA SET FORTH IN THE COMPANY’S 2011 EQUITY INCENTIVE PLAN AS REQUIRED BY SECTION 162(m) OF THE INTERNAL REVENUE CODE.

Background

We are asking stockholders to re-approve the material terms of the performance criteria set forth in our 2011 Equity Plan pursuant to Section 162(m) of the IRC. The 2011 Equity Plan is the only compensation plan under which we grant restricted stock units and other equity-based awards to our employees and directors. These awards have enabled and will continue to enable us to attract and retain key employees and enable those employees to acquire and/or increase their ownership interest in the Company, thereby aligning their interests with the interests of our stockholders. Approval of this proposal will continue to allow the Company the flexibility to make awards under the 2011 Equity Plan that may be tax deductible in accordance with the performance-based compensation exception to Section 162(m) of the IRC, as described more fully below.

IRC §162(m)

Section 162(m) of the IRC places a limit of $1,000,000 on the amount that we may deduct in any one taxable year for compensation paid to each of our “covered employees.” Our covered employees consist of our Chief Executive Officer and our other three most highly-paid executive officers, other than our Chief Financial Officer. However, the limitation on deductibility does not apply to compensation earned pursuant to certain performance-based awards, provided certain requirements are met. One of these requirements is that our stockholders must approve (and in certain cases, re-approve) the material terms of the performance criteria underlying performance-based awards. Section 162(m) of the IRC requires re-approval of those performance criteria after five years if a company’s compensation committee has retained discretion to vary the targets under the performance goals from year to year. Our Compensation Committee has retained discretion to vary the targets under the performance goals from year to year. Accordingly, we are seeking re-approval of the material terms of the performance criteria included in the 2011 Equity Plan in order to preserve our ability to deduct compensation earned by certain executives pursuant to any performance-based award that may be made in the future under the 2011 Equity Plan. These material terms are:

•

The class of persons eligible to receive awards under the 2011 Equity Plan: Our Compensation Committee can designate any of our current or prospective employees, directors, officers, consultants or advisors as eligible to receive awards under the 2011 Equity Plan.

•

The maximum number of shares and the maximum amount of cash for which awards can be made to any person during a specified period: No individual can receive awards covering more than 750,000 shares of our Common Stock for any calendar year (provided that, such limit as it applies to each non-employee director is a number of shares of Common Stock having a fair market value not in excess of $250,000 in any calendar year, inclusive of the automatic annual grant of TRSUs under the 2011 Equity Plan having a fair market value on the date of grant of $100,000), and no individual can receive awards that are to be paid in cash in respect of any single performance period in an amount greater than the fair market value of 750,000 shares of our Common Stock as of the last day of the applicable performance period. Also, the maximum amount that can be paid to any individual for a single fiscal year (or with respect to each single fiscal year in a multiple year performance period) pursuant to a performance-based awarded denominated in cash is $10 million.

•

The formula by which the exercise price of stock options and stock appreciation rights is set: The exercise price for stock options and stock appreciation rights cannot be less than the fair market value of our Common Stock on the date of grant.

•

The business criteria upon which performance goals can be based: The business criteria are listed below under “Performance Goals”.

Performance Goals

In the case of performance awards intended to meet the requirements of Section 162(m) of the IRC, the business criteria used must be one of those specified in the 2011 Equity Plan, although for other participants the Committee may specify other criteria. The business criteria specified in the 2011 Equity Plan are:

•

net earnings or net income (before or after taxes);

•

basic or diluted earnings per share (before or after taxes);

•

net revenue or net revenue growth;

•

gross revenue or gross revenue growth, gross profit or gross profit growth;

•

net operating profit (before or after taxes);

•

return measures (including, but not limited to, return on investment, assets, capital, gross revenue or gross revenue growth, invested capital, equity or sales);

•

cash flow measures (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), which may but are not required to be measured on a per-share basis;

•

earnings before or after taxes, interest, depreciation, and amortization (including EBIT and EBITDA);

•

gross or net operating margins;

•

productivity ratios;

•

share price (including, but not limited to, growth measures and total shareholder return);

•

expense targets or cost reduction goals, general and administrative expense savings;

•

margins;

•

operating efficiency;

•

objective measures of customer satisfaction;

•

working capital targets;

•

measures of economic value added or other “value creation” metrics;

•

inventory control;

•

enterprise value;

•

sales;

•

stockholder return;

•

client retention;

•

competitive market metrics;

•

employee retention;

•

timely completion of new product rollouts;

•

timely launch of new facilities;

•

objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional project budgets);

•

system-wide revenues;

•

royalty income;

•

cost of capital, debt leverage year-end cash position or book value;

•

strategic objectives, development of new product lines and related revenue, sales and margin targets, or international operations; or

•

any combination of the foregoing.

Any one or more of the performance criteria may be stated as a percentage of another performance criteria, or a percentage of a prior period’s performance criteria, or used on an absolute, relative or adjusted basis to measure the performance of the Company and/or one or more Affiliates as a whole or any divisions or operational and/or business units, product lines, brands, business segments, administrative departments of the Company and/or one or more of its affiliates or

any combination thereof, as the Committee may deem appropriate, or any of the above performance criteria may be compared to the performance of a group of comparator companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices.

Summary of the 2011 Equity Plan Features

The following is a summary of certain of the terms and conditions of the 2011 Equity Plan. This summary is qualified in its entirety by reference to the 2011 Equity Plan attached as Appendix A to this proxy statement. You are encouraged to read the 2011 Equity Plan in its entirety.

Administration. The Compensation Committee (or subcommittee thereof, if necessary for Section 162(m) of the Code) will administer the 2011 Equity Plan. The Compensation Committee will have the authority to determine the terms and conditions of any agreements evidencing any awards granted under the 2011 Equity Plan and to adopt, alter and repeal rules, guidelines and practices relating to the 2011 Equity Plan. The Compensation Committee will have full discretion to administer and interpret the 2011 Equity Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Eligibility. Any current or prospective employees, directors, officers, consultants or advisors of the Company or its affiliates who are selected by the Compensation Committee will be eligible for awards under the 2011 Equity Plan.

Number of Shares Authorized. The 2011 Equity Plan currently provides for an aggregate of 2,000,000 shares of our Common Stock to be available for awards under the 2011 Equity Plan. At the Annual Meeting, the Company is seeking stockholder approval of an additional 850,000 shares of Common Stock available for issuance under the 2011 Equity Plan. See Proposal 4 set forth below. No more than 750,000 shares of our Common Stock may be issued with respect to incentive stock options under the 2011 Equity Plan. No participant may be granted awards of options and stock appreciation rights with respect to more than 750,000 shares of our Common Stock in any one year. No more than 750,000 shares of our Common Stock may be granted under the 2011 Equity Plan to any participant during any single fiscal year with respect to performance compensation awards in any one performance period. The maximum amount payable to an individual employee or officer under the 2011 Equity Plan for any single year during a performance period for an award denominated in cash is $10,000,000 (with respect to each year if the performance period is more than one year). Shares of our Common Stock subject to awards are generally unavailable for future grant; however, if any shares are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, such shares will again be available for grant under the 2011 Equity Plan, provided that in no event shall such shares increase the number of shares that may be delivered pursuant to incentive stock options granted under the 2011 Equity Plan. If any award granted under the 2011 Equity Plan expires, terminates, is canceled or forfeited without being settled or exercised, shares of our Common Stock subject to such award will again be made available for future grant.

Change in Capitalization. If there is a change in the Company’s corporate capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split up, split-off, spin-off, consolidation or other relevant change in capitalization or applicable law or circumstances, such that the Compensation Committee determines that an adjustment is necessary or appropriate, then the Compensation Committee can make adjustments in a manner that it deems equitable, including by making substitutions or adjustments to the number of shares reserved for issuance under the 2011 Equity Plan, the number of shares covered by awards then outstanding under the 2011 Equity Plan, the limitations on awards under the 2011 Equity Plan, the exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.

Awards Available for Grant. The Compensation Committee may grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock units, other stock-based awards, performance compensation awards (including cash bonus awards), other cash-based awards or any combination of the foregoing.

Awards may be granted under the 2011 Equity Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (which are referred to herein as Substitute Awards).

Stock Options. The Compensation Committee is authorized to grant options to purchase shares of our Common Stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or “non-qualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the 2011 Equity Plan shall be non-qualified unless the applicable award agreement expressly states that the option is intended to be an “incentive stock option.” Options granted under the 2011 Equity Plan will be subject to the terms and conditions established by the Compensation Committee in an award agreement. Unless otherwise provided by the Compensation Committee in an award agreement, the unvested portion of an option shall immediately vest and become exercisable upon participant’s termination of employment or service with the Company and its affiliates due to death, disability or retirement. Under any other circumstance, the unvested portion of an option will expire upon termination of employment or service of the participant. The vested portion of any option will remain exercisable for (i) one year following termination of employment or service with the Company and its affiliates by reason of such participant’s death or disability, but not later than the expiration of the option period, (ii) three years following retirement, but not later than the expiration of the option period, or (iii) 90 days following termination of employment or service with the Company and its affiliates for any reason other than such participant’s death, disability or retirement, and other than such participant’s termination of employment or service with the Company and its affiliates for “cause,” as such term is defined in the 2011 Equity Plan, but not later than the expiration of the option period, and both the unvested and the vested portion of an option will expire upon termination of the participant’s employment or service with the Company and its affiliates by the Company for “cause.” Under the terms of the 2011 Equity Plan, the exercise price of the options will not be less than the fair market value of our Common Stock at the time of grant (except with respect to Substitute Awards). Options granted under the 2011 Equity Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the 2011 Equity Plan will be ten years from the date of grant (or five years in the case of a qualified option granted to a 10% shareholder), provided, that, if the term of a non-qualified option would expire at a time when trading in the shares of our Common Stock is prohibited by the Company’s insider trading policy, the option’s term shall be automatically extended until the 30th day following the expiration of such prohibition. Payment in respect of the exercise of an option may be made in cash, by check, by cash equivalent and/or shares of our Common Stock valued at the fair market value at the time the option is exercised (provided that such shares are not subject to any pledge or other security interest), or by such other method as the Compensation Committee may permit in its sole discretion, including: (i) by surrendering the minimum number of shares of our Common Stock otherwise deliverable in respect of an option that are needed to pay the exercise price and all applicable required withholding taxes; (ii) if there is a public market for the shares of our Common Stock at such time, by means of a broker-assisted cashless exercise mechanism; or (iii) by means of a “net exercise” procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price and all applicable required withholding taxes.

Stock Appreciation Rights. The Compensation Committee is authorized to award SARs under the 2011 Equity Plan. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, either in the form of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2011 Equity Plan may include SARs and SARs may also be awarded to a participant independent of the grant of an option and SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs. Each SAR granted under the 2011 Equity Plan will be evidenced by an award agreement providing the terms and conditions of the award, including with respect to vesting and expiration. Unless otherwise specified by the Compensation Committee in an

award agreement, a SAR award will be subject to the same default vesting and exercisability provisions as described above under “Stock Options.” Except as otherwise provided by the Compensation Committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share of our Common Stock for each SAR shall not be less than 100% of the fair market value of such share, determined as of the date of grant. A SAR granted independent of an option will have a maximum term of ten years from the date of grant. The remaining terms of the SARs shall be established by the Compensation Committee and reflected in the award agreement.

Restricted Stock and Restricted Stock Unit Awards. The Compensation Committee is authorized to grant restricted stock under the 2011 Equity Plan. Awards of restricted stock will be subject to the terms and conditions established by the Compensation Committee. Restricted stock is Common Stock that generally is non-transferable and is subject to other restrictions determined by the Compensation Committee for a specified period.

The Compensation Committee is authorized to award restricted stock unit awards. Restricted stock unit awards will be subject to the terms and conditions established by the Compensation Committee. Unless the Compensation Committee determines otherwise, or specifies otherwise in an award agreement, if the participant terminates employment or services during the period of time over which all or a portion of the units are to be earned, then any unvested units will be forfeited. At the election of the Compensation Committee, the participant will receive a number of shares of Common Stock equal to the number of units earned or an amount in cash equal to the fair market value of that number of shares at the expiration of the period over which the units are to be earned or at a later date selected by the Compensation Committee or a combination of shares of Common Stock and cash, less an amount equal to any taxes required to be withheld. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on shares of our Common Stock, either in cash or (at the sole discretion of the Compensation Committee) in shares of our Common Stock having a fair market value equal to the amount of such dividends, and interest may, at the sole discretion of the Compensation Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Compensation Committee, which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time as the underlying restricted stock units are settled.

Each grant of restricted stock and restricted units shall be evidenced by an award agreement. Unless otherwise provided by the Compensation Committee in an award agreement, any unvested restricted stock or restricted units shall immediately vest and any restrictions will lapse upon participant’s termination of employment or service with the Company and its affiliates due to death, disability or retirement (unless waived by the participant prior to the date of grant of the applicable award). Subject to the provisions described below under “Effect of a Change in Control,” under any other circumstance, the unvested portion of restricted stock and restricted stock unit awards will terminate and be forfeited upon a termination of employment or service of the participant granted the applicable award.

On the first business day of each fiscal year of the Company, each non-employee director will automatically, without any further action from Compensation Committee, be granted a number of restricted stock units determined by dividing $100,000 by the fair market value of a share on such date. Any non-employee director who was initially elected or appointed to the Board during the fiscal year will be granted a pro rata award. Non-employee directors are eligible to receive additional awards under the 2011 Equity Plan, provided that no non-employee director shall be granted equity awards under the 2011 Equity Plan in any one fiscal year have an aggregate fair market value (measured on the date(s) of grant) in such fiscal year in excess of $250,000 in the aggregate (inclusive of the annual $100,000 award described above).

Other Stock-Based Awards. The Compensation Committee is authorized to grant awards of unrestricted shares of our Common Stock, rights to receive grants of awards at a future date, or other awards denominated in shares of our Common Stock under such terms and conditions as the Compensation Committee may determine and as set forth in the applicable award agreement.

Performance Compensation Awards. The Compensation Committee may grant any award under the 2011 Equity Plan in the form of a “Performance Compensation Award” by conditioning the number of shares earned or vested (or cash payable) under the award on the satisfaction of certain “Performance Goals.” In addition, the Compensation Committee may award a performance-based cash bonus to any participant and designate such award as a Performance Compensation Award intended to qualify as “performance based compensation” under Section 162(m) of the Code. The Compensation Committee may establish Performance Goals with reference to one or more of the following:

•

net earnings or net income (before or after taxes);

•

basic or diluted earnings per share (before or after taxes);

•

net revenue or net revenue growth;

•

gross revenue or gross revenue growth, gross profit or gross profit growth;

•

net operating profit (before or after taxes);

•

return measures (including, but not limited to, return on investment, assets, capital, gross revenue or gross revenue growth, invested capital, equity or sales);

•

cash flow measures (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), which may but are not required to be measured on a per-share basis;

•

earnings before or after taxes, interest, depreciation, and amortization (including EBIT and EBITDA);

•

gross or net operating margins;

•

productivity ratios;

•

share price (including, but not limited to, growth measures and total shareholder return);

•

expense targets or cost reduction goals, general and administrative expense savings;

•

margins;

•

operating efficiency;

•

objective measures of customer satisfaction;

•

working capital targets;

•

measures of economic value added or other “value creation” metrics;

•

inventory control;

•

enterprise value;

•

sales;

•

stockholder return;

•

client retention;

•

competitive market metrics;

•

employee retention;

•

timely completion of new product rollouts;

•

timely launch of new facilities;

•

system-wide revenues;

•

royalty income;

•

cost of capital, debt leverage year-end cash position or book value;

•

strategic objectives, development of new product lines and related revenue, sales and margin targets, or international operations; or

•

any combination of the foregoing.

Any of the above Performance Goal criteria can be stated as a percentage of another Performance Goal, or a percentage of a prior period’s Performance Goal, or used on an absolute,

relative or adjusted basis to measure the performance of the Company and/or its affiliates or any divisions, operation, or business units, product lines, brands, business segment, administrative departments or combination thereof, as the Compensation Committee deems appropriate. Performance Goals may be compared to the performance of a group of comparator companies or a published or special index that the Compensation Committee deems appropriate or stock market indices. The Compensation Committee also may provide for accelerated vesting of any award based on the achievement of Performance Goals. Any award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will be granted, and Performance Goals for such an award will be established, by the Compensation Committee in writing not later than 90 days after the commencement of the performance period to which the Performance Goals relate, or such other period required under Section 162(m) of the Code; and provided further that in no event will a Performance Goal be considered to be pre-established if it is established after 25% of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed. Before any payment is made in connection with any award intended to qualify as performance-based compensation under Section 162(m) of the Code, the Compensation Committee must certify in writing that the Performance Goals established with respect to such award have been achieved. In determining the actual amount of an individual participant’s Performance Compensation Award for a performance period, the Compensation Committee may reduce or eliminate the amount of the Performance Compensation Award earned through the use of negative discretion consistent with Section 162(m) of the Code, if, in its sole judgment, such reduction or elimination is appropriate.

Awards whose vesting is subject to the satisfaction of Performance Goals over a performance period established by the Compensation Committee shall be subject to a performance period and a vesting period of not less than one year. This minimum performance period and vesting period does not apply (i) to awards made in payment of or exchange for other earned compensation, (ii) upon the occurrence of both a change in control and an involuntary termination of service of a Participant by the Company (other than for cause), (iii) upon termination of service of a Participant due to death, disability or retirement, (iv) to a substitute award that does not reduce the vesting period of the award being replaced, or (v) to one or more awards covering an aggregate number of shares of Common Stock not in excess of five percent (5%) of the aggregate number of shares of Common Stock available for awards under the 2011 Equity Plan.

The Compensation Committee may also specify adjustments or modifications (to the extent it would not result in adverse results under Section 162(m) of the Code) to be made to the calculation of a Performance Goal for such performance period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) nonrecurring items and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in the Company’s fiscal year.

Unless otherwise provided in the applicable award agreement or any employment, consulting, change in control, severance or other agreement, a participant will be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Goals for such period are achieved; and all or some of the portion of such participant’s Performance Compensation Award has been earned for the performance period based on the application of the “Performance Formula” (as defined in the 2011 Equity Plan) to such Performance Goals.

Effect of a Change in Control. In the event of a change in control, then in the case of each outstanding award which is subject to the achievement of performance goals, such award shall be automatically and immediately converted into a time-based award (and the performance condition(s) shall be terminated) covering the target number of shares of Common Stock under such award which will vest on the vesting date otherwise provided in such award. In the event there occurs a “double trigger”, that is, in the event the participant’s employment with the Company or an affiliate

is terminated by (x) the Company or an affiliate without cause (and other than due to death or disability) or (y) the participant for “good reason” (as defined in the 2011 Equity Plan), in either case, on or within 6 months prior to a change in control (in the case of senior executives of the Company designated by the Compensation Committee) or on or within 12 months following a change in control (in the case of all participants), (i) in the case of options and SARs, all options and SARs held by such participant shall become immediately exercisable with respect to 100% of the shares subject to such options and SARs and (ii) in the case of awards of restricted stock or restricted stock units and any other awards, the restricted period (and any other conditions) applicable to such awards held by such participant shall expire immediately with respect to 100% of the shares of restricted stock and restricted stock units and any other awards held by such Participant; provided, that in the event the vesting or exercisability of any award would otherwise be subject to the achievement of performance goals, in the case of the occurrence of a change in control and an “involuntary termination” (as defined in the 2011 Equity Plan) (A) after the Compensation Committee has made a determination (a “Determination”) that the performance goals had been achieved for the applicable performance period, such award shall immediately become vested and exercisable as to the number of shares of Common Stock determined to have been earned or (B) prior to a Determination, such award shall immediately become vested and exercisable as to the target number of shares of Common Stock subject to such award.

Transferability. Each award may be exercised during the participant’s lifetime by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative. Awards may not be transferred or encumbered by a participant other than by will or by the laws of descent and distribution.

Amendment. The Compensation Committee may amend, suspend or terminate the 2011 Equity Plan at any time; however, stockholder approval to amend the 2011 Equity Plan may be necessary if the law or NASDAQ rules so require. No amendment, suspension or termination will materially and adversely affect the rights of any participant or recipient of any award without the consent of the participant or recipient.

Clawback/Forfeiture. Under the 2011 Equity Plan, in the Compensation Committee’s discretion, an award agreement may provide for the cancellation of an award if the participant, while employed by or providing services to the Company or after termination of such employment or service, violates a non-competition, non-solicitation, non-disparagement or non-disclosure agreement or otherwise engages in activity that is in conflict with or adverse to the interests of the Company, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Compensation Committee in its sole discretion. The Compensation Committee may also provide in an award agreement that if the participant otherwise engages in any such activity, the participant will forfeit any compensation, gain or other value realized thereafter on the vesting, exercise or settlement of an award, the sale or other transfer of an award, or the sale of shares of Common Stock acquired in respect of an award, and must promptly repay such amounts to the Company. The Compensation Committee may also provide in an award agreement that if the participant receives any amount in excess of what the participant should have received under the terms of the award for any reason (including by reason of a financial restatement, mistake in calculation or other administrative error), then the participant will be required to promptly repay any excess amount to the Company. To the extent required by applicable law (including Section 302 of Sarbanes-Oxley and Section 954 of Dodd-Frank), the rules and regulations of The Nasdaq Stock Market, and/or a written policy adopted by the Company, awards will be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements.

The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award theretofore granted or the associated award agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any option theretofore granted shall not to that extent be effective without the consent of the affected participant, holder or beneficiary; and provided further that, without stockholder approval, (i) no amendment or modification may reduce

the option price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option and replace it with a new option (with a lower option price) or cancel any SAR and replace it with a new SAR (with a lower strike price), and (iii) no option or SAR may be exchanged for cash or another award. However, shareholder approval is not required with respect to clauses (i), (ii), and (iii) above for any action specifically permitted in connection with certain changes in capitalization of the Company. In addition, none of the requirements described in the preceding clauses (i), (ii), and (iii) can be amended without the approval of our stockholders.

Summary of U.S. Federal Income Tax Consequences

The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the 2011 Equity Plan and the disposition of shares acquired pursuant to the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.

Stock Options. The Code requires that, for treatment of an option as an incentive stock option, shares of our Common Stock acquired through the exercise of an incentive stock option cannot be disposed of before the later of (i) two years from the date of grant of the option, or (ii) one year from the date of exercise. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon exercise of those options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by us for federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non- qualified stock option for federal income tax purposes. No income will be realized by a participant upon grant of an option that does not qualify as an incentive stock option (“a non-qualified stock option”). Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise and the participant’s tax basis will equal the sum of the compensation income recognized and the exercise price. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections. In the event of a sale of shares received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term gain or loss if the holding period for such shares is more than one year.

SARs. No income will be realized by a participant upon grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair

market value of the payment received in respect of the SAR. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock. A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture, the participant will have taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b), the participant will have taxable compensation at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to the Company. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended.) The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock Units. A participant will not be subject to tax upon the grant of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award. The Company will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Section 162(m). In general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per year per person to its chief executive officer and the three other officers whose compensation is required to be disclosed in its proxy statement (excluding the chief financial officer), subject to certain exceptions. The 2011 Equity Plan is intended to satisfy an exception with respect to grants of options and SARs to covered employees. In addition, the 2011 Equity Plan is designed to permit certain awards of restricted stock, restricted stock units and other awards (including cash bonus awards) to be awarded as performance compensation awards intended to qualify under the “performance-based compensation” exception to Section 162(m) of the Code.

New Plan Benefits

With the exception of automatic grants to our non-employee directors, it is not possible to determine the benefits or amounts that will be received by or allocated to participants under the 2011 Equity Plan because awards under the 2011 Equity Plan will be made at the discretion of the Compensation Committee (or subcommittee thereof, if necessary for Section 162(m) of the Code). In the case of non-employee directors, the 2011 Equity Plan provides for the automatic annual grant to each non-employee director of a number of shares of Common Stock having a fair market value on the date of grant of $100,000.

Outstanding Options

The only options granted under the 2011 Equity Plan that are outstanding as of April 1, 2016 are options to purchase 15,000 shares of Common Stock at an exercise price of $29.05. These options expire in 2018 and are held by a non-employee director of the Company. At April 1, 2016, the closing price of the Common Stock as reported on The Nasdaq Stock Market was $[________].

The affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, is required to re-approve the material terms of the performance criteria set forth in the Company’s 2011 Equity Plan. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will vote your shares in favor of this proposal. Also, as discussed below, if your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instructions.

The Board of Directors recommends a vote FOR the re-approval of the material terms of the performance criteria set forth in the Company’s 2011 Equity Incentive Plan.

PROPOSAL 4: APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER THE COMPANY’S 2011 EQUITY INCENTIVE PLAN

At the Annual Meeting, the Company’s stockholders are being asked to approve an increase in the number of shares of Common Stock available for issuance under the 2011 Equity Plan of 850,000 shares. The 2011 Equity Plan is the only compensation plan under which we grant restricted stock units and other equity-based awards to our employees and directors. These awards have enabled and will continue to enable us to attract and retain key employees and enable those employees to acquire and/or increase their ownership interest in the Company, thereby aligning their interests with the interests of our stockholders.

The below table provides information concerning outstanding awards under the 2011 Equity Plan, future issuance under the 2011 Equity Plan and the number of issued and outstanding shares of Common Stock, all as of March 24, 2016.


Equity Information

Outstanding unvested TRSUs		472,517

Outstanding unvested PRSUs		471,113

Outstanding options		15,000

Exercise price		$29.05

Remaining term		2.2 years

Number of shares of Common Stock available for future issuance under the 2011 Equity Plan		494,819

Number of shares of Common Stock issued and outstanding		19,164,313

Reasons Why You Should Vote in Favor of the Approval of an Increase in the Number of Shares of Common Stock Available for Issuance under the 2011 Equity Plan

The Board recommends a vote for the approval of additional shares of Common Stock available for issuance under the 2011 Equity Plan because it believes the plan is in the best interests of the Company and its stockholders for the following reasons:

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Permits continued awards under the 2011 Equity Plan. The approval of additional shares of Common Stock available for issuance under the 2011 Equity Plan by our stockholders is critical because it will enable us to continue to provide multiple types of equity-based awards to key personnel at the Company and its affiliates.

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Performance based. The 2011 Equity Plan is generally intended to provide incentive compensation and performance compensation awards that qualify as performance-based compensation within the meaning of Section 162(m) of the Code.

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Attracts and retains talent. Talented executives and employees are essential to executing our business strategies. The purpose of the 2011 Equity Plan is to promote the success of the Company by giving the Company a competitive edge in attracting, retaining and motivating key personnel and providing participants with a plan that provides incentives directly related to increases in the value of the Company.

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Aligns director, employee and stockholder interests. We currently provide long-term incentives primarily by (i) compensating participants with equity awards, including incentive compensation awards measured by reference to the Company’s performance, (ii) rewarding such participants for the achievement of performance targets with respect to a specified performance period and (iii) motivating such participants by giving them opportunities to receive awards directly related to such performance. If the additional shares of Common Stock available for issuance under 2011 Equity Plan are approved, we will be able to maintain our means of aligning the interests of key personnel with the interests of our stockholders.

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2011 Equity Plan Contains Sound Governance Features. Described below are a number of provisions contained in the 2011 Equity Plan which exhibit the Company’s commitment to sound corporate governance practices.

Summary of Sound Governance Features of the 2011 Equity Plan

The Board and the Compensation Committee of the Board believe the 2011 Equity Plan contains several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

Contained in the 2011 Equity Plan as Originally Approved by Stockholders in May 2011.

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No “evergreen” provision. The number of shares of our Common Stock available for issuance under the 2011 Equity Plan is fixed and will not adjust based upon the number of shares outstanding. Following the increase in the number of authorized shares being requested, we currently expect that the number of shares authorized for issuance under the 2011 Equity Plan will be sufficient to provide for future awards for approximately two years at which time we expect to ask our stockholders to approve an additional share authorization.

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Stock option exercise prices and SAR strike prices will not be lower than the fair market value on the grant date. The 2011 Equity Plan prohibits granting stock options with exercise prices and SARs with strike prices lower than the fair market value of a share of our Common Stock on the grant date, subject to potential adjustments in connection with the issuance or assumption of awards in connection with certain mergers, consolidations, acquisitions of property or stock or reorganizations.

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No repricing or exchange without stockholder approval. The 2011 Equity Plan prohibits the repricing of outstanding stock options or SARs without stockholder approval.

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“Clawback” provisions. The 2011 Equity Plan contains “clawback” provisions which provide that if a participant is determined by the Compensation Committee to have violated a noncompete, nonsolicit, nondisparagement or nondisclosure agreement or engaged in activity that is in conflict with or adverse to the interest of Company or any affiliate, including fraud or conduct contributing to any financial restatements or irregularities, as determined by the Compensation Committee, all rights of the participant under the 2011 Equity Plan and any agreements evidencing an award then held by the participant will terminate and be forfeited and the Compensation Committee may require the participant to surrender and return to the Company any shares received, and/or to repay any profits or any other economic value made or realized by the participant. To the extent required by applicable law (including without limitation Section 304 of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd Frank Wall Street Reform and Consumer Protection Act), Company policy and/or the rules and regulations of The Nasdaq Stock Market or other securities exchange or inter- dealer quotation system on which our Common Stock is listed or quoted, awards shall be subject to clawback, forfeiture or similar requirement.

Contained in Amendments to the 2011 Equity Plan Made Subsequent to May 2011.

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“Double trigger” acceleration of vesting of equity awards upon a change in control and an involuntary termination by the Company. The Compensation Committee eliminated “single trigger” acceleration vesting of equity upon the occurrence of a change in control for equity awards under the 2011 Equity Plan granted from and after 2015.

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Minimum one year vesting period for performance-based equity awards. The 2011 Equity Plan provides that awards whose vesting is subject to the satisfaction of performance goals over a performance period are to be subject to a performance period and a vesting period of not less than one year, provided that such minimum performance period and vesting period will not apply (i) to awards made in payment of or exchange for other earned compensation, (ii) upon a change in control and an involuntary termination by the Company (other than for cause), (iii) upon a termination of service due to death, disability or retirement, (iv) to a substitute

award that does not reduce the vesting period of the award being replaced, and (v) to one or more awards covering an aggregate number of shares of Common Stock not in excess of five percent (5%) of the aggregate number of shares of Common Stock available for awards under the 2011 Equity Plan over the term of the 2011 Equity Plan.

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Limit on equity awards to non-employee directors. The 2011 Equity Plan provides that no non-employee director may be granted equity awards under the 2011 Equity Plan in any one calendar year having an aggregate fair market value (on the date(s) of grant) in such calendar year in excess of $250,000 in the aggregate (including the automatic annual $100,000 grant to non-employee directors provided for in the 2011 Equity Plan as originally approved by our stockholders).

Summary of the 2011 Equity Plan Features and Summary of U.S. Federal Income Tax Consequences

Please see “Summary of the 2011 Equity Plan Features” and “Summary of U.S. Federal Income Tax Consequences” set forth above under Proposal 3. These sections contain summaries, including summaries of certain terms and conditions of the 2011 Equity Plan. The summary of the terms and conditions of the 2011 Equity Plan is qualified in its entirety by reference to the 2011 Equity Plan attached as Appendix A to this proxy statement. You are encouraged to read the 2011 Equity Plan in its entirety.

New Plan Benefits

Please see “New Plan Benefits” set forth above under Proposal 3.

Outstanding Options

Please see “Outstanding Options” set forth above under Proposal 3.

The affirmative vote of a majority of the votes cast at the Annual Meeting, either in person or by proxy, is required to the increase in the number of shares of Common Stock available for issuance under the Company’s 2011 Equity Plan. This means that if you abstain from voting on this proposal, your vote will not count for or against this proposal. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will vote your shares in favor of this proposal. Also, as discussed below, if your broker holds your shares, your broker is not entitled to vote your shares on this proposal without your instructions.

The Board of Directors recommends a vote FOR an increase in the number of shares of Common Stock available for issuance under the Company’s 2011 Equity Incentive Plan.

PROPOSAL 5: APPROVAL OF AN AMENDMENT TO OUR CHARTER REGARDING THE PROHIBITION ON STOCKHOLDERS’ ABILITY TO CALL A SPECIAL MEETING OF STOCKHOLDERS.

Our Current Special Meeting Provisions

Our Charter and Bylaws currently provide that a special meeting of stockholders may only be called by the Chairman of the Board or the Secretary of the Company upon a request from a majority of directors. As a result, stockholders do not presently have the right or ability to call a special meeting of stockholders.

As part of the Board’s ongoing review of corporate governance practices, the Board has carefully reviewed the advantages and disadvantages of giving stockholders the opportunity to call special meetings. Our Board believes that special meetings should only be called to consider extraordinary events that are of interest to a broad base of stockholders and that cannot be delayed until the next annual meeting. Organizing and preparing for a special meeting involves significant management commitments and imposes substantial legal, administrative and distribution costs on the Company. However, our Board understands that allowing stockholders the right to call special meetings is consistent with evolving corporate governance practices and recognizes that this practice can enhance stockholder rights and Board accountability.

After careful consideration, the Board determined that holders of record of at least twenty-five percent (25%) of the voting power of all outstanding shares of Common Stock of the Company should be permitted to require the Company to call a special meeting of stockholders. The Board believes that establishing a 25% ownership threshold, together with certain procedural requirements and limitations that have been adopted by our Board for inclusion in our Bylaws, strikes a reasonable balance between enhancing stockholder rights and protecting against the risk that a small minority of stockholders could request one or more special meetings that could result in unnecessary financial expense and disruption to the Company’s business.

The Board has unanimously adopted and is submitting for stockholder approval an amendment to our Charter that would remove Article Seven, which prohibits stockholders from calling special meetings, from the Charter. Subject to stockholder approval of Proposal 5, promptly following the Annual Meeting, the Charter will be amended to remove Article Seven. Our Board has approved, subject to stockholder approval of Proposal 5, changes to our Bylaws to establish the procedures that permit stockholders to call a special meeting of stockholders (the “Special Meeting Bylaw Amendment”). The Special Meeting Bylaw Amendment does not require any separate stockholder action, but will become effective only if Proposal 5 is approved by stockholders. If, however, our stockholders do not approve Proposal 5, the Special Meeting Bylaw Amendment will not take effect.

Amendment to Charter

If Proposal 5 is approved, Article Seven of the Charter (which limits the calling of special meetings of stockholders to (1) the Chairman of the Board or (2) the Secretary of the Company upon request from a majority of directors) will be removed. If Proposal 5 is approved, the Special Meeting Bylaw Amendment will become effective which will permit the holders of not less than 25% of the Company’s Common Stock to call special meetings in the manner set forth below.

A copy of the proposed Charter marked to show all changes proposed under this Proposal 5 (the removal of Article Seven) against the current Charter is attached as Appendix B to this Proxy Statement, with deletions indicated by strikeout and additions indicated by underline. The current provisions of the Charter and the proposed amendment to the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix B.

Amendments to Bylaws

The Special Meeting Bylaw Amendment will revise Article I, Section 6 of the Company’s Bylaws to permit stockholders holding 25% or more of our Common Stock to call a special meeting of stockholders. The 25% threshold will be calculated and determined in accordance with the Special Meeting Bylaw Amendment and will determine voting power by reference to record ownership. In addition, the Special Meeting Bylaw Amendment will establish the procedures that stockholders must comply with to require the Secretary to call a special meeting. The Special Meeting Bylaw Amendment imposes certain procedural requirements on stockholders requesting such a meeting (including the provision of the same information required for stockholder proposals and board nominees at annual meetings under the Company’s proposed advance notice bylaw provisions discussed below in Proposal 8). The Special Meeting Bylaw Amendment would also impose qualifications designed to prevent duplicative and unnecessary meetings by eliminating proposals that, among other things:

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are not proper subjects for stockholder action under applicable law;

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are received during the period beginning 90 days prior to the first anniversary of the prior annual meeting of stockholders and ending on the date of the next annual meeting of stockholders;

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are substantially similar to another item, other than the election or removal of directors, that was presented at a meeting of stockholders held within the prior 12 months;

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are for the election or removal of directors and the election or removal of directors was presented at an annual meeting of stockholders or a special meeting of stockholders held not more than 90 days before the receipt of the request; or

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are substantially similar to another item that is included in our notice as an item of business to be brought before a stockholder meeting that has been called but not yet held or that is called for a date within 120 days of the receipt of the request.

A copy of the proposed Bylaws marked to show all changes proposed above against the current Bylaws is attached as Appendix C to this Proxy Statement, with deletions indicated by strikeout and additions indicated by underline. The current provisions of the Bylaws and the proposed amendment to the Bylaws described above are qualified in their entirety by reference to the actual text as set forth in Appendix C.

The affirmative vote of at least seventy-five percent (75%) of the outstanding shares of stock entitled to vote in the election of directors, voting as a single class, either in person or by proxy, is required to approve this Proposal 5. This means that if you abstain from voting on this proposal, your vote will count against this proposal. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will not vote your shares on this proposal. Also, as discussed below, if your broker holds your shares, the broker is not entitled to vote your shares on this proposal without your instructions.

If this Proposal 5 is approved by the requisite stockholder vote, then the proposed amendment to the Charter will be adopted and the Special Meeting Bylaw Amendment will automatically become effective.

The Board of Directors recommends a vote FOR Proposal 5, the amendment to the Charter to eliminate the prohibition on stockholders’ ability to call special meetings in Article Seven of the Charter.

PROPOSAL 6: APPROVAL OF AN AMENDMENT TO OUR CHARTER REGARDING THE SUPER-MAJORITY STOCKHOLDER VOTING REQUIREMENTS TO AMEND CERTAIN PROVISIONS OF OUR CHARTER

PROPOSAL 7: APPROVAL OF AN AMENDMENT TO OUR CHARTER REGARDING THE SUPER-MAJORITY STOCKHOLDER VOTING REQUIREMENTS TO AMEND CERTAIN PROVISIONS OF OUR BYLAWS

Our Current Supermajority Voting Provisions

Our Board is committed to good corporate governance and has carefully considered the advantages and disadvantages of supermajority voting provisions. Currently, our Charter requires the affirmative vote of the holders of at least 75% of the voting power of the outstanding shares of stock entitled to vote in the election of directors, voting as a single class of shares, to amend certain provisions of our Charter and Bylaws as described below (the “Supermajority Voting Provisions”).

Supermajority voting requirements are intended to facilitate corporate governance stability by requiring broad stockholder consensus to effect certain changes. However, evolving corporate governance practices have come to view supermajority voting provisions as conflicting with principles of good corporate governance and that the elimination of supermajority voting provisions in a company’s constituent documents increases a board’s accountability to stockholders and provides stockholders with greater ability to participate in the corporate governance of a company.

After careful deliberation, the Board has determined that the elimination of the Supermajority Voting Provisions from our Charter is in the best interests of the Company and its stockholders. The Board has determined that, unless otherwise required by Delaware law or as provided in the Bylaws, the appropriate voting standard to replace all Supermajority Voting Provisions is a majority of the votes cast, which provides that any action is authorized by a majority of the votes cast by the shares of Common Stock present at a meeting of stockholders, either in person or by proxy. Our Board believes that adopting this standard in place of the Supermajority Voting Provisions balances the opportunity for stockholders to participate meaningfully in the corporate governance of the Company with the desire to protect the interest of all stockholders from action that may only be in the interest of a small percentage of stockholders.

The Board has unanimously adopted and is submitting for stockholder approval two amendments to our Charter that would eliminate the Supermajority Voting Provisions contained therein. Each of the proposed amendments will be voted on separately and the effectiveness of any proposed amendment is not conditioned on the approval of any other proposed amendment. Proposal 6 relates to an amendment to Article Fifteen of our Charter and Proposal 7 relates to an amendment to Article Ten of our Charter.

Proposal 6

If Proposal 6 is approved, Article Fifteen of the Charter, which requires the affirmative vote of the holders of at least 75% of the shares outstanding to adopt, amend, alter, change or repeal the following sections of the Company’s Charter: (i) the second paragraph of Article Five (Declassification of the Board); and (ii) Articles Six (Board Vacancies), Seven (Special Meetings), Eight (No Written Consent), Nine (Advance Notice), Ten (Bylaw Amendments), Article Thirteen (Removal of Directors) and Fifteen (Charter Amendments), will be eliminated.

A copy of the proposed Charter marked to show all changes proposed under this Proposal 6 (the elimination of Article Fifteen) against the current Charter is attached as Appendix A to this Proxy Statement, with deletions indicated by strikeout and additions indicated by underline. The current provisions of the Charter described above and the proposed amendment to the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix B.

The affirmative vote of at least seventy-five percent (75%) of the outstanding shares of stock entitled to vote in the election of directors, voting as a single class, either in person or by proxy, is required to approve this Proposal 6. This means that if you abstain from voting on this proposal, your vote will count against this proposal. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will not vote your shares on this proposal. Also, as discussed below, if your broker holds your shares, the broker is not entitled to vote your shares on this proposal without your instructions.

If this Proposal 6 is approved by the requisite stockholder vote, then the proposed amendment to the Charter will be adopted.

The Board of Directors recommends a vote FOR Proposal 6, the amendment to the Charter to eliminate the Supermajority Voting Provisions in Article Fifteen of the Charter.

Proposal 7

If Proposal 7 is approved, the second paragraph of Article Ten of the Charter, which requires the affirmative vote of the holders of at least 75% of shares outstanding to adopt, amend, alter, change or repeal the following sections of the Bylaws: (i) Sections 6(b) (Special Meetings), 6(j) (Notice of Nomination) and 6(l) (Proxy Representation) of Article I; (ii) Sections 2(b) (Number of Directors), 2(c) (Board Vacancies) and 2(d) (Election of Directors) of Article II; and (iii) Article VI (Indemnity) of the Bylaws, will be eliminated.

A copy of the proposed Charter marked to show all changes proposed under this Proposal 7 (the elimination of the second paragraph of Article Ten) against the current Charter is attached as Appendix B to this Proxy Statement, with deletions indicated by strikeout and additions indicated by underline. The current provisions of the Charter described above and the proposed amendment to the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix B.

The affirmative vote of at least seventy-five percent (75%) of the outstanding shares of stock entitled to vote in the election of directors, voting as a single class, either in person or by proxy, is required to approve this Proposal 7. This means that if you abstain from voting on this proposal, your vote will count against this proposal. As discussed below, if you hold your shares in your name and you submit your proxy card with an unclear voting designation or no voting designation at all, the Proxy Committee will not vote your shares on this proposal. Also, as discussed below, if your broker holds your shares, the broker is not entitled to vote your shares on this proposal without your instructions.

If this Proposal 7 is approved by the requisite stockholder vote, then the proposed amendment to the Charter will be adopted.

The Board of Directors recommends a vote FOR Proposal 7, the amendment to the Charter to eliminate the Supermajority Voting Provisions in the Second Paragraph of Article Ten of the Charter.

PROPOSAL 8: APPROVAL OF AN AMENDMENT TO OUR CHARTER REGARDING THE ADVANCE NOTICE PROVISIONS GOVERNING THE SUBMISSION OF PROPOSALS AT STOCKHOLDER MEETINGS.

Our Current Advance Notice Provisions

The Company’s Charter currently contains provisions governing the ability of stockholders to bring business before an annual meeting of the Company, including, among other provisions, a narrow fifteen (15) day window for stockholders to submit proposals.

As part of the Board’s ongoing review of corporate governance practices, the Board has adopted, subject to approval by stockholders, a proposed amendment to remove Article Nine of the Charter, which, along with Article I, Section 6(j) of the Bylaws, contains the Company’s advance notice provisions. The Board considered the need to modernize the Company’s advance notice provisions. In doing so, the Board has concluded that, if Proposal 8 is approved, moving the advance notice provisions to the Bylaws would provide significantly greater flexibility for the Company than can be provided by having such provisions in the Charter. Historically, advance notice bylaws have evolved to, among other things, take into account changes in the securities laws and, recently, require disclosure of derivative securities held by a stockholder. As the Board is permitted to amend the Bylaws without stockholder approval, having advance notice provisions in the Bylaws would allow the Board to more rapidly respond to changes in law or other circumstances requiring prompt action. Additionally, if Proposal 8 is approved, the Bylaws will be amended to include a longer window for stockholders to bring business before an annual meeting. Currently, stockholders have a narrow fifteen (15) day window within which to submit proposals or nominations and notice must be given based on the date of the current year’s annual meeting date. The removal of Article Nine of the Charter, together with the proposed corresponding changes to the Bylaws, would lengthen the advance notice window to a customary thirty (30) day period. Furthermore, the proposed changes to the Bylaws would enable stockholders to plan their proposals and nominations with certainty as to when such proposals must be submitted because the window will be based on the anniversary of the prior year’s annual meeting date as is customary. The Board believes that these changes benefit stockholders by providing them with greater flexibility to make proposals as well as enhancing disclosure requirements to ensure all stockholders have sufficient information to vote on proposals by other stockholders.

The Board has unanimously adopted and is submitting for stockholder approval an amendment to our Charter that would remove Article Nine from the Charter. Subject to stockholder approval of Proposal 8, promptly following the Annual Meeting, the Charter will be amended to remove Article Nine. Our Board has approved, subject to stockholder approval of Proposal 8, corresponding changes to Article I, Section 6(j) of our Bylaws to establish the procedures that stockholders must comply with in order to require the Secretary of the Company to bring business before an annual meeting of stockholders (the “Advance Notice Bylaw Amendment”). The Advance Notice Bylaw Amendment does not require any separate stockholder action, and will become effective only if Proposal 8 is approved by the stockholders. If, however, our stockholders do not approve Proposal 8, the Advance Notice Bylaw Amendment will not take effect.

Amendment to Charter

If Proposal 8 is approved, Article Nine of the Charter will be removed and the Advance Notice Bylaw Amendment will govern the submission of proposals at meetings of stockholders.

A copy of the proposed Charter marked to show all changes proposed under this Proposal 8 against the current Charter is attached as Appendix B to this Proxy Statement, with deletions indicated by strikeout and additions indicated by underline. The current provisions of the Charter described above and the proposed amendment to the Charter described above are qualified in their entirety by reference to the actual text as set forth in Appendix B.

Amendments to Bylaws

The following is a brief description of the proposed Advance Notice Bylaw Amendment.

In order to bring business before an annual meeting of stockholders, a stockholder must be a stockholder of record on the record date for the determination of stockholders entitled to notice of, and to vote at such annual meeting. A stockholder must also give timely notice, which must be delivered to the Corporation not less than ninety (90) nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders. To be in proper form, such notice must set forth each item of business that such stockholder proposes to bring before the meeting and such other information as set forth in in the Advance Notice Bylaw Amendment. Additionally, a stockholder submitting business to the Company will be required to disclose any of their derivative positions in the Company. No business may be brought before an annual meeting except in accordance with the provisions of the Advance Notice Bylaw Amendment.

A copy of the proposed Bylaws marked to show all changes proposed under this Proposal 8 against the current Bylaws is attached as Appendix C to this Proxy Statement, with del