| | | | | | Tanya L. Domier, Chair | Glenda G. McNeal | Brad D. Smith | Mark J. Tritton | | | | | | | | | Compensation Committee | Tanya L. Domier, Chair | Glenda G. McNeal | Philip G. Satre | Brad D. Smith | Gordon A. Smith |
41 NORDSTROM, INC. - 2021 Proxy Statement
NORDSTROM, INC. - 2019 Proxy Statement 41
Summary Compensation Table The following table summarizes the total compensation paid or accrued by the Company for services provided by the Named Executive OfficersNEOs for fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019, February 3, 2018 and January 28, 2017.2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Fiscal Year | Salary ($)(a) | Bonus ($)(b) | Stock Awards ($)(c) | Option Awards ($)(d) | Non-Equity Incentive Plan Compensation ($)(e) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(f) | All Other Compensation ($)(g) | Total ($) | Erik B. Nordstrom | 2020 | 367,419 | | — | | 1,592,846 | | 2,654,740 | | — | | 1,010,681 | | 21,984 | | 5,647,670 | | Chief Executive Officer | 2019 | 756,393 | | — | | 1,592,836 | | 1,061,897 | | 708,591 | | 2,700,516 | | 52,070 | | 6,872,303 | | | 2018 | 756,393 | | — | | 2,654,705 | | — | | 963,144 | | — | | 77,504 | | 4,451,746 | | Anne L. Bramman | 2020 | 699,231 | | — | | 1,999,988 | | 1,824,997 | | — | | — | | 14,411 | | 4,538,627 | | Chief Financial Officer | 2019 | 793,750 | | — | | 1,549,974 | | 1,859,994 | | 564,500 | | — | | 39,912 | | 4,808,130 | | 2018 | 768,889 | | 150,000 | | 3,562,483 | | — | | 645,066 | | — | | 38,716 | | 5,165,154 | | Peter E. Nordstrom | 2020 | 367,419 | | — | | 1,592,846 | | 2,654,740 | | — | | 1,055,774 | | 24,849 | | 5,695,628 | | President and Chief Brand Officer | 2019 | 756,393 | | — | | 1,592,836 | | 1,061,897 | | 708,591 | | 2,782,378 | | 77,355 | | 6,979,450 | | 2018 | 756,393 | | — | | 2,654,705 | | — | | 963,144 | | — | | 59,386 | | 4,433,628 | | Kenneth J. Worzel | 2020 | 764,597 | | — | | 2,624,977 | | 2,374,996 | | — | | 864,312 | | 18,367 | | 6,647,249 | | Chief Operating Officer | 2019 | 826,111 | | — | | 1,999,970 | | 2,400,000 | | 645,433 | | 1,589,618 | | 37,080 | | 7,498,212 | | 2018 | 786,875 | | — | | 3,562,483 | | — | | 835,167 | | 754,441 | | 45,813 | | 5,984,779 | | Edmond Mesrobian | 2020 | 677,214 | | — | | 1,549,973 | | 1,374,995 | | — | | — | | 7,917 | | 3,610,099 | | Chief Technology Officer | 2019 | 743,542 | | — | | 2,087,450 | | 1,304,995 | | 420,971 | | — | | 10,225 | | 4,567,183 | | 2018 | — | | — | | — | | — | | — | | — | | — | | — | |
| | | | | | | | | | | | | | | | | | | Name and Principal Position | Fiscal Year | Salary ($)(a) |
| Bonus ($)(b) |
| Stock Awards ($)(c) |
| Option Awards ($)(d) |
| Non-Equity Incentive Plan Compensation ($)(e) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(f) |
| All Other Compensation ($)(g) |
| Total ($) |
| Erik B. Nordstrom | 2018 | 756,393 |
| — |
| 2,654,705 |
| — |
| 963,144 |
| — |
| 77,504 |
| 4,451,746 |
| Co-President | 2017 | 771,142 |
| — |
| 1,760,169 |
| 616,272 |
| 1,431,290 |
| 988,659 |
| 50,395 |
| 5,617,927 |
| | 2016 | 751,152 |
| — |
| 1,630,746 |
| 1,437,210 |
| 1,213,601 |
| 721,831 |
| 46,222 |
| 5,800,762 |
| Anne L. Bramman | 2018 | 768,889 |
| 150,000 |
| 3,562,483 |
| — |
| 645,066 |
| — |
| 38,716 |
| 5,165,154 |
| Chief Financial Officer | 2017 | 504,173 |
| — |
| 749,965 |
| — |
| 430,384 |
| — |
| 316,516 |
| 2,001,038 |
| 2016 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| Peter E. Nordstrom | 2018 | 756,393 |
| — |
| 2,654,705 |
| — |
| 963,144 |
| — |
| 59,386 |
| 4,433,628 |
| Co-President | 2017 | 771,142 |
| — |
| 1,760,169 |
| 616,272 |
| 1,431,290 |
| 1,030,787 |
| 40,774 |
| 5,650,434 |
| | 2016 | 751,152 |
| — |
| 1,630,746 |
| 1,437,210 |
| 1,213,601 |
| 758,249 |
| 47,811 |
| 5,838,769 |
| Kenneth J. Worzel | 2018 | 786,875 |
| — |
| 3,562,483 |
| — |
| 835,167 |
| 754,441 |
| 45,813 |
| 5,984,779 |
| Chief Digital Officer and President, Nordstrom.com | 2017 | 762,500 |
| — |
| 749,703 |
| 262,497 |
| 574,620 |
| 725,676 |
| 32,380 |
| 3,107,376 |
| 2016 | 657,417 |
| — |
| 1,742,820 |
| 907,475 |
| 424,932 |
| 412,356 |
| 35,880 |
| 4,180,880 |
| Christine F. Deputy | 2018 | 604,587 |
| — |
| 2,551,421 |
| — |
| 432,819 |
| — |
| 86,153 |
| 3,674,980 |
| Chief Human Resources Officer | 2017 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 2016 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| Blake W. Nordstrom | 2018 | 791,274 |
| 82,026 |
| 2,654,705 |
| — |
| 881,118 |
| — |
| 66,907 |
| 4,476,030 |
| Former Co-President | 2017 | 771,142 |
| — |
| 1,760,169 |
| 616,272 |
| 1,431,290 |
| 998,647 |
| 57,181 |
| 5,634,701 |
| | 2016 | 751,152 |
| — |
| 1,630,746 |
| 1,437,210 |
| 1,213,601 |
| 748,859 |
| 49,711 |
| 5,831,279 |
|
The amounts shown represent base salary earned during the fiscal year. The numbers shown for all fiscal years vary somewhat from annual base salaries due to the fact that our fiscal year ends on the Saturday nearest to January 31st and salary increases are effective on or about April 1st1st of each year. Also, as a result of our 4-5-4 retail reporting calendar, fiscal year 2017 included an extra week (the “53rd week”). The 20182020 base salaries for the Named Executive Officers were $758,500 each for Erik Nordstrom and Peter Nordstrom, and Blake Nordstrom, $775,000$800,000 for Anne Bramman, $875,000 for Kenneth Worzel and $585,000$775,000 for Christine Deputy. Kenneth Worzel’s base salary increased from $775,000 to $800,000 effective May 14, 2018, when he assumed additional responsibilities as Chief Digital Officer. The amount shown for Blake Nordstrom reflects a prorated amount based on his separation from service on January 2, 2019 and includes the payout of his accrued vacation pay. Christine DeputyEdmond Mesrobian. Edmond Mesrobian was not a Named Executive Officeran NEO in fiscal years 2016 or 2017year 2018, so no amounts are shown for those years.this year. On March 25, 2020, the CPCC took immediate action to support cash preservation goals by reducing the base salaries of the NEOs from March 29, 2020 to October 3, 2020, as follows: Erik Nordstrom and Peter Nordstrom received no base salary, while Anne Bramman, Kenneth Worzel and Christine Deputy elected to defer $25,000 and $30,800, respectively, of theirEdmond Mesrobian received a 25% base salaries earned during calendar year 2018 into the Nordstrom Deferred Compensation Plan (“NDCP”). salary reduction. Anne Bramman and Christine Deputy elected to defer 8% and $32,000, respectively, of theirher base salariessalary earned during each of the calendar years 2020 and 2021 and 10% of her annual performance-based cash award paid in calendar year 20192020 into the NDCP. Kenneth Worzel elected to defer $50,000 of his base salary earned during each of the calendar years 2020 and 2021 into the NDCP. Edmond Mesrobian elected to defer $41,000 of his base salary earned in each of the calendar years 2020 and 2021 into the NDCP. Due to the timing of our fiscal year ends, $2,695, $23,913,$108,183, $49,826 and $30,852,$39,217 were attributed to fiscal year 20182020 deferrals for Anne Bramman, Kenneth Worzel and Christine Deputy,Edmond Mesrobian, respectively, as reported in the Fiscal Year 20182020 Nonqualified Deferred Compensation Plan Table on page 53.52. Each of the Named Executive OfficersNEOs contributed a portion of their base salary earned during fiscal year 20182020 to the 401(k) Plan. (b) Bonus The amountsamount reported reflectfor fiscal year 2018 reflects a discretionary bonusesone-time cash payment, approved by the Compensation Committee. InCPCC in March 2018, the Committee determined to award Anne Bramman a one-time cash payment in recognition of her service since joining the Company in June 2017 as Chief Financial Officer. In February 2019, the Committee approved a discretionary bonus for Blake Nordstrom so that the sum of his performance-based bonus and this discretionary award equaled what his performance-based bonus would have been had he been an active employee on the last day of the fiscal year.
42 NORDSTROM, INC. - 20192021 Proxy Statement 42
(c) Stock Awards The amounts reported reflect the grant date fair value of restricted stock unitsRSUs and performance share unitsPSUs granted during the fiscal year under the 2010 Equity Incentive Plan.and 2019 EIPs. The amounts reported are not the value actually received. The valueShortly after the Named Executive Officers will ultimately receive from their performance share units will dependPSU grant was made on whetherMarch 9, 2020, the performance requirements are metCompany temporarily closed stores in response to the growing COVID-19 pandemic. Sales and operations were meaningfully disrupted. Accordingly, the market price of Common Stock atCPCC determined that the endgoals established with the PSU grant were no longer relevant or functional. On August 18, 2020, each of the performance cycle.NEOs agreed to the cancellation of their PSU award. The PSU grants to Erik Nordstrom and Peter Nordstrom each had a grant date fair value of $1,592,846. The PSU grants to Anne Bramman, Kenneth Worzel and Edmond Mesrobian had a grant date fair value of $1,199,989, $1,574,982 and $929,983, respectively. The amounts reported were calculated in accordance with FASB Accounting Standards Codification 718, Stock Compensation (“ASC 718”) and reflect718. See column (c) of the probable outcome with respect to satisfactionGrants of performance conditions atPlan-Based Awards in Fiscal Year 2020 table on page 45 for the datenumber of grant. The payout could be as low as zero depending on performance over the relevant period, and the value of any payout will depend on stock price at the time of payout.PSUs granted in fiscal year 2020. No amounts are reported for fiscal year 2018 as the Company did not award performance share unitsPSUs during thethat fiscal year.
The value the Named Executive OfficersNEOs may receive from their restricted stock unitsRSUs will depend on whether the time-based vesting requirement is met and the market price of Common Stock on the vesting date. The amounts reported were calculated in accordance with ASC 718. See column (c)(d) of the Grants of Plan-Based Awards in Fiscal Year 20182020 table on page 4645 for the number of restricted stock unitsRSUs granted in fiscal year 2018.2020. (d) Option Awards The amounts reported reflect the grant date fair value of stock options granted during the fiscal year under the 2010 Equity Incentive Plan.and 2019 EIPs. This is not the value received. The Named Executive OfficersNEOs will only realize value from stock options if the market price of Common Stock is higher than the exercise price of the options at the time of exercise. The amounts reported were calculated in accordance with ASC 718. See column (e) of the Grants of Plan-Based Awards in Fiscal Year 2020 table on page 45 for the number of stock options granted in fiscal year 2020. No amounts are reported for fiscal year 2018 as the Company did not grant stock options during thethat fiscal year. Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 2020 Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC.Report. (e) Non-Equity Incentive Plan Compensation The amounts reported reflect the annual performance-based cash awards under the Executive Management Bonus Plan,EMBP, as described beginning on page 35. The amounts of the cash awards for fiscal year 2018, approved by the Compensation Committee on February 26, 2019, were paid in March 2019. Kenneth Worzel elected to defer $50,000 of his cash award for fiscal year 2018 into the NDCP. (f) Change in Pension Value and Nonqualified Deferred Compensation Earnings The amounts reported are the changes in actuarial present value from fiscal year-end 20172019 to fiscal year-end 20182020 for each of the eligible Named Executive Officer’sNEO’s benefit under the Supplemental Executive Retirement Plan (“SERP”).SERP. The present value of the benefit is affected by current earnings, credited years of service, the executive’s age and time until normal retirement eligibility, the age of the executive’s spouse or life partner as the potential beneficiary and economic assumptions (discount rate and mortality table used to determine the present value of the benefit). The present value of Erik Nordstrom’s and Peter Nordstrom’s benefits decreasedincreased from last year by $135,088$1,010,681 and $122,708,$1,055,774, respectively. The decreasesincreases were primarily the result of an increasea decrease in the discount rate used to determine the present value of the benefit. The interest rate used is the same as the discount rate used for financial reporting purposes for the SERP which changed from 3.95%2.97% to 4.27%2.62%. Under SEC rules, decreases are not reportedThe present value of Kenneth Worzel’s benefit increased by $864,312, primarily due to the change in the table so no amounts are shown. No amount is shown for Blake Nordstrom as he passed away before the end of the fiscal year, and accordingly did not have a pension benefit as of the end of the fiscal year.discount rate mentioned above along with an increase to service. Amounts are not reported for Anne Bramman and Christine DeputyEdmond Mesrobian because the SERP was closed to new entrants prior to when they joined the Company. See the Pension Benefits section beginning on page 5150 for more information about the SERP. The amounts were calculated using the same discount rate and mortality table assumptions as those used in the Company’s financial statements to calculate the Company’s obligations under the SERP. Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 2020 Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC.Report. Anne Bramman, Kenneth Worzel and Christine DeputyEdmond Mesrobian had account balances in the Company’s nonqualified deferred compensation planNDCP in fiscal year 2018,2020, as shown on page 53.52. They did not receive above-market-rate or preferential earnings on their deferred compensation, so no amounts for these types of earnings are included in the table. (g) All Other Compensation Each component of all other compensation paid to the Named Executive OfficersNEOs is shown in the table on the following table.page.
43 NORDSTROM, INC. - 20192021 Proxy Statement43
All Other Compensation in Fiscal Year 2018 | | | | All Other Compensation in Fiscal Year 2020 |
The table below shows each component of “All Other Compensation” for fiscal year 2018,2020, reported in column (g) of the Summary Compensation Table on page 42, calculated at the aggregate incremental cost to the Company. | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Merchandise Discount ($)(a) | | 401(k) Plan Company Match ($)(b) | | Premium on Insurance ($)(c) | | | | | Total ($) | Erik B. Nordstrom | 17,602 | | | 2,334 | | | 2,048 | | | | | | 21,984 | | Anne L. Bramman | 10,405 | | | 1,846 | | | 2,160 | | | | | | 14,411 | | Peter E. Nordstrom | 21,168 | | | 1,633 | | | 2,048 | | | | | | 24,849 | | Kenneth J. Worzel | 13,670 | | | 2,334 | | | 2,363 | | | | | | 18,367 | | Edmond Mesrobian | 3,439 | | | 2,385 | | | 2,093 | | | | | | 7,917 | |
| | | | | | | | | | | | | | | | | | | | | Broad-Based Benefit | | Broad-Based Retirement Benefit | | Leadership Benefit | | Other | | | Name | Merchandise Discount ($)(a) |
| | 401(k) Plan Company Match ($)(b) |
| | NDCP Company Match ($)(c) |
| Premium on Insurance ($)(d) |
| SERP ($)(e) |
| | Personal Use of Company Aircraft ($)(f) |
| | Total ($) |
| Erik B. Nordstrom | 58,100 |
| | 15,840 |
| | — |
| 1,939 |
| — |
| | 1,625 |
| | 77,504 |
| Anne L. Bramman | 20,902 |
| | 15,840 |
| | — |
| 1,974 |
| — |
| | — |
| | 38,716 |
| Peter E. Nordstrom | 39,995 |
| | 15,840 |
| | — |
| 1,939 |
| — |
| | 1,612 |
| | 59,386 |
| Kenneth J. Worzel | 27,948 |
| | 15,840 |
| | — |
| 2,025 |
| — |
| | — |
| | 45,813 |
| Christine F. Deputy | 25,661 |
| | 15,840 |
| | 43,156 |
| 1,496 |
| — |
| | — |
| | 86,153 |
| Blake W. Nordstrom | 49,128 |
| | 15,840 |
| | — |
| 1,939 |
| — |
| | — |
| | 66,907 |
|
The Company provides a broad-based merchandise discount for its employees. The Named Executive OfficersNEOs were provided a discount of 33% for purchases at Nordstrom full-line stores and Nordstrom.com and 20% for purchases at Nordstrom Rack stores, Nordstromrack.com/HauteLookNordstromRack.com, HauteLook.com and our restaurants. A 40% discount is available at certain times of the year on specific merchandise. The merchandise discount provided to the Named Executive OfficersNEOs is the same as for all other eligible management and high-performing non-management employees of the Company. The amounts reported are the total discount the Named Executive OfficersNEOs received on their Nordstrom purchases during the fiscal year. The Company provides the same merchandise discount program for its Board, of Directors, as described on page 18.16. | | (b) | (b)401(k) Plan Company Match |
The Company offers a matching contribution on employee 401(k) contributions under the 401(k) Plan to all eligible employees, including the Named Executive Officers.NEOs. The Named Executive OfficersNEOs may defer up to 16% of their eligible pay (i.e., base salary, performance-based bonus and other taxable wages) into the Plan, subject to IRC limits. AlthoughDue to the matching contribution iseconomic impact of the COVID-19 pandemic, the Board made the decision to suspend the discretionary and subjectcompany match (equal to change, the Company currently matches employee contributions for the Plan year, dollar for dollar, up to 4% of eligible pay. The 2018 calendar year compensation limit for eligible pay was $275,000, as set bypay) and the IRS. In 2018, the maximum Company matching contribution for the eligible Named Executive Officers was $11,000 (4% of $275,000).
The Company also offers a discretionaryprofit-based match (equal to up to an additional $0.50 per $1 up to a maximum of 2% of eligible pay, based on Company performance. Basedperformance) under the 401(k) Plan for the 2020 plan year. As a result, neither the NEOs, nor any other Company employees, received a Company matching contribution for the 2020 Plan Year.
Company matching contributions began again for the 2021 plan year for NEOs and all other Company employees under a new Qualified Automatic Contribution Arrangement (QACA) plan design. Beginning January 1, 2021, the NEOs and all other Company employees can contribute up to 50% of eligible pay, subject to IRC limits. Company matching contributions are made each pay period an employee contributes to the 401(k) Plan, equal to a dollar for dollar match up to 1% of eligible pay then $0.50 per dollar on the Company’s performance in 2018, the Board approvednext 6% of eligible pay, up to a discretionary matchmaximum of $0.44 per dollar contributed by the employee, up to 4% of eligible pay. The maximum Company discretionary match for the eligible Named Executive Officers was $4,840(44% of 4% of $275,000)for 2018.pay and IRC limits. The total Company matching contribution each of the eligible Named Executive OfficersNEOs received, in March 2019, for calendaras shown above, reflects this matching formula and was credited between January 1, 2021, the start of the plan year, 2018, was $15,840 as reported above.and January 30, 2021, the end of the Company’s fiscal year. Contributions under the 401(k) Plan may be directed to any of 12 custom target retirement date funds or to any of 9nine individual investment alternatives, including Common Stock. The Plan also offers a self-directed brokerage option. The Company offers a dollar for dollar matching contribution, up to 4% of eligible pay over the 401(k) calendar year compensation limit, on deferrals into the NDCP by eligible participants. The Company may also make a discretionary profit-based match up to an additional 2% of eligible pay over the 401(k) calendar year compensation limit. Christine Deputy received the NDCP Company matching contribution on her 2018 deferrals. Anne Bramman and Kenneth Worzel also made deferrals into the NDCP during fiscal year 2018 but were not eligible for the NDCP Match. Anne Bramman did not defer any pay in calendar year 2018 and Kenneth Worzel is not eligible for the NDCP match as he is a participant in the Company’s SERP, as described beginning on page 51. See the Nonqualified Deferred Compensation section on page 53 for more information.
44 NORDSTROM, INC.(c) - 2019 Proxy Statement
The Company provides life insurance to the Named Executive OfficersNEOs in an amount equal to approximately 1.25 times their base salary and additional disability insurance. The amounts reported are the annual Company-paid premiums. The Company has a SERP, in which certain Named Executive Officers participate. As described in the Pension Benefits section beginning on page 51, the SERP provides an annual benefit, paid upon retirement for the remaining life of the executive with a 50% annuity paid to the surviving spouse after the executive’s death. Although Blake Nordstrom was a SERP participant, he did not receive any SERP payments during the fiscal year and therefore no amount is reported in this table. Upon Blake Nordstrom’s death on January 2, 2019, his surviving spouse began receiving the 50% survivor annuity. For the period from January 2, 2019 to the end of our fiscal year, Blake Nordstrom’s surviving spouse received SERP benefit payments totaling $29,167.
| | (f) | Personal Use of Company Aircraft
|
The Company owns two aircraft which it uses for business purposes. On rare occasions, a Named Executive Officer may have a guest accompany the executive on a business trip on the Company’s aircraft as an additional passenger. Only the direct variable costs (i.e., costs the Company incurs solely as a result of the passenger being on the aircraft) are included in determining the aggregate incremental cost to the Company. When travel does not meet the IRS standard for business travel, the cost of the travel is imputed as income to the executive, which is the Company’s practice to fully disclose. The Company does not reimburse the Named Executive Officers for taxes incurred as a result of the imputed income.
In fiscal year 2018, Erik Nordstrom and Peter Nordstrom were each accompanied by a family member on one business trip. The costs reported are the total direct variable costs associated with the family member’s travel which include the tax deduction the Company was not able to take as a result of the nondeductible portion of the aircraft operating costs.
NORDSTROM, INC. - 20192021 Proxy Statement 4544
Grants of Plan-Based Awards in Fiscal Year 20182020 The following table discloses the potential range of payouts for for: •non-equity incentive plan awards granted in fiscal year 20182020. These awards are performance-based cash bonuses granted under the Executive Management Bonus Plan,EMBP, as described beginning on page 35. 35; and •EIP awards granted in fiscal year 2020. These awards are PSUs granted under the 2019 EIP, as described on pages 36 and 37. The table also discloses discloses: •the grant date fair value of PSUs granted under the 2019 EIP in fiscal year 2020, as described on pages 36 and 37; •the number, price and grant date fair value of stock options granted under the 2019 EIP in fiscal year 2020, as described on pages 36 and 37; and •the number and grant date fair value of restricted stock unitsRSUs granted under the 2010 Equity Incentive Plan2019 EIP in fiscal year 20182020, as described on pagepages 36 and 37. | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (b) | | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(c) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(d) | Name and Award | Grant Date (a) | Approval Date | Threshold ($) |
| Target ($) |
| Maximum ($) |
| | Threshold (#) | Target (#) | Maximum (#) | Erik B. Nordstrom | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 379,250 |
| 1,517,001 |
| 3,792,502 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 54,233 | | | 2,654,705 | Anne L. Bramman | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 174,375 |
| 697,500 |
| 1,743,751 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 72,778 | | | 3,562,483 | Peter E. Nordstrom | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 379,250 |
| 1,517,001 |
| 3,792,502 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 54,233 | | | 2,654,705 | Kenneth J. Worzel | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 247,875 |
| 991,500 |
| 2,478,752 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 72,778 | | | 3,562,483 | Christine F. Deputy | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 117,000 |
| 468,000 |
| 1,170,000 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 52,123 | | | 2,551,421 | Blake W. Nordstrom | | | |
| |
| |
| | | | | | | | | Executive Management Bonus | | | 379,250 |
| 1,517,001 |
| 3,792,502 |
| | | | | | | | | Restricted Stock Unit Award | 3/6/2018 | 3/3/2018 | |
| |
| |
| | | | | 54,233 | | | 2,654,705 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (b) | | Estimated Future Payouts Under Equity Incentive Plan Awards (c) | All Other Stock Awards: Number of Shares of Stock or Units (#)(d) | All Other Option Awards: Number of Securities Underlying Options (#)(e) | Exercise or Base Price of Option Awards ($/Sh)(f) | Grant Date Fair Value of Stock and Option Awards ($)(g) | Name and Award | Grant Date (a) | Approval Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | Erik B. Nordstrom | | | | | | | | | | | | | | EMBP | | | 379,250 | | 1,517,001 | | 3,792,502 | | | | | | | | | | PSU | 3/09/2020 | 2/26/2020 | | | | | 33,393 | 66,786 | 160,286 | | | | 1,592,846 | Stock Option Award | 3/09/2020 | 2/26/2020 | | | | | | | | | 147,407 | 26.79 | 1,061,891 | Stock Option Award | 8/27/2020 | 8/18/2020 | | | | | | | | | 245,829 | 14.79 | 1,592,849 | Anne L. Bramman | | | | | | | | | | | | | | EMBP | | | 200,000 | | 800,000 | | 2,000,000 | | | | | | | | | | PSU | 3/09/2020 | 2/26/2020 | | | | | 25,157 | 50,314 | 120,753 | | | | 1,199,989 | RSU | 3/09/2020 | 2/26/2020 | | | | | | | | 34,647 | | | 799,999 | Stock Option Award | 8/27/2020 | 8/18/2020 | | | | | | | | | 281,657 | 14.79 | 1,824,997 | Peter E. Nordstrom | | | | | | | | | | | | | | EMBP | | | 379,250 | | 1,517,001 | | 3,792,502 | | | | | | | | | | PSU | 3/09/2020 | 2/26/2020 | | | | | 33,393 | 66,786 | 160,286 | | | | 1,592,846 | Stock Option Award | 3/09/2020 | 2/26/2020 | | | | | | | | | 147,407 | 26.79 | 1,061,891 | Stock Option Award | 8/27/2020 | 8/18/2020 | | | | | | | | | 245,829 | 14.79 | 1,592,849 | Kenneth J. Worzel | | | | | | | | | | | | | | EMBP | | | 273,437 | | 1,093,750 | | 2,734,375 | | | | | | | | | | PSU | 3/09/2020 | 2/26/2020 | | | | | 33,018 | 66,037 | 158,488 | | | | 1,574,982 | RSU | 3/09/2020 | 2/26/2020 | | | | | | | | 45,474 | | | 1,049,995 | Stock Option Award | 8/27/2020 | 8/18/2020 | | | | | | | | | 366,540 | 14.79 | 2,374,996 | Edmond Mesrobian | | | | | | | | | | | | | | EMBP | | | 155,000 | | 620,000 | | 1,550,000 | | | | | | | | | | PSU | 3/09/2020 | 2/26/2020 | | | | | 19,496 | 38,993 | 93,583 | | | | 929,983 | RSU | 3/09/2020 | 2/26/2020 | | | | | | | | 26,851 | | | 619,990 | Stock Option Award | 8/27/2020 | 8/18/2020 | | | | | | | | | 212,207 | 14.79 | 1,374,995 |
4645 NORDSTROM, INC. - 20192021 Proxy Statement
(a) Grant Date The grant date is the first business day of the open trading window that falls on or after the Compensation Committee’sCPCC approval of the grant. (b) Estimated Future Payouts Under Non-Equity Incentive PlanNon-EIP Awards The amounts shown report the range of possible cash payouts for fiscal year 20182020 associated with established levels of performance or achievement under the Executive Management Bonus Plan.EMBP. The amounts shown in the “Threshold,” “Target” and “Maximum” columns reflect the payout opportunity associated with established levels of performance or achievement, as discussed beginning on page 35. For there to be any payout, minimum performance milestones or achievement must be met. Although the column heading refers to future payouts, fiscal year 20182020 performance-based bonuses have already been earned and were paidresulted in zero payout to the Named Executive OfficersNEOs in March 2019. These cash payments are2021, as reported in the Summary Compensation Table on page 42, in column (e), “Non-Equity Incentive Plan Compensation.” (c) Estimated Future Payouts Under EIP Awards (c)The numbers shown report the range of potential PSU payout for the 2020 grant. Shortly after the PSU grant was made on March 9, 2020, the Company temporarily closed stores in response to the growing COVID-19 pandemic. Sales and operations were meaningfully disrupted. Accordingly, the CPCC determined that the goals established with the PSU grant were no longer relevant or functional. On August 18, 2020, each of the NEOs agreed to the cancellation of their PSU award. Payouts are shown in units of 50%, 100% and 240% of the number of PSUs granted. No payout will be earned, as the PSUs were cancelled.
(d) All Other Stock Awards: Number of Shares of Stock or Units The numbers shown report the number of restricted stock unitsRSUs granted to the Named Executive OfficersNEOs in fiscal year 20182020 under the 2010 Equity Incentive Plan. The restricted stock units2019 EIP. RSUs were granted on March 6, 20189, 2020 to Anne Bramman, Kenneth Worzel and Edmond Mesrobian and will vest equally over four years, beginning on March 10, 2019. The restricted stock units granted to Blake Nordstrom vested on an accelerated basis as2021. (e) All Other Option Awards: Number of January 2, 2019. Securities Underlying Options The numbers shown for Anne Bramman, Kenneth Worzelreport the number of stock options granted to the NEOs in fiscal year 2020 under the 2019 EIP. The stock option grants to Erik Nordstrom and Christine Deputy includePeter Nordstrom made on March 9, 2020 as part of the annual grant vest and become exercisable in four equal annual installments, beginning on March 10, 2021. The one-time restricted stock unit awards of 45,965, 45,965option grants to the NEOs made on August 27, 2020 vest and 34,749, respectively, asbecome exercisable on September 10, 2022. This one-time stock option award is discussed in the Compensation Discussion and Analysis on page 37.36. (d)(f) Exercise or Base Price of Options Awards
The exercise price of the stock options granted on March 9, 2020 of $26.79 and August 27, 2020 of $14.79 was the closing price of Common Stock on the respective grant dates. (g) Grant Date Fair Value of Stock and Option Awards The grant date fair value of the restrictedPSUs, RSUs and stock unitsoptions was calculated in accordance with ASC 718. The reported value for restricted stock unitsPSUs was calculated by multiplying the number of restricted stock unitsPSUs granted by the fair value of a PSU on the date of grant, which was $23.85 on March 9, 2020. No payout will be earned, as the PSUs were cancelled as described under footnote (c), Estimated Future Payouts Under EIP Awards, The reported value for RSUs was calculated by multiplying the number of RSUs awarded by the fair value of a restricted stock unitRSU on the date of grant. The fair value for the grant, which was $23.09 on March 6, 2018 was $48.95. This is not the value received.9, 2020. The actual value the Named Executive OfficersNEOs may receive will depend on whether the time-based vesting requirement is met and the market price of Common Stock at the time of any vesting. The reported value of stock options was calculated by multiplying the number of options awarded by the fair value of an option on the date of grant. The fair value for the grant on March 9, 2020 to Erik Nordstrom and Peter Nordstrom was $7.20. The fair value for the grant on August 27, 2020 to the NEOs was $6.48. The actual value received by the NEOs will be the number of options exercised multiplied by the difference between the stock price at the future exercise date and the grant price. The grant price on March 9, 2020 was $26.79 and the grant price on August 27, 2020 was $14.79.
NORDSTROM, INC. - 20192021 Proxy Statement 4746
Outstanding Equity Awards at Fiscal Year-End 20182020 The following table provides information on the current holdings of stock options and stock awards by the Named Executive OfficersNEOs as of the fiscal year ended February 2, 2019.January 30, 2021. The table includes vested but unexercised stock options, unvested stock options, unvested restricted stock unitsRSUs and performance share unitsPSUs with time remaining in the three-yearthree- year performance cycle. Because Blake Nordstrom passed away prior to the end of the fiscal year, resulting in the transfer of all outstanding awards to his estate, nothing is reported for Blake Nordstrom in the table below. The vesting schedules for outstanding stock options and restricted stock unitsRSUs are provided on pages 4948 and 50.49. Information about the amount of Common Stock beneficially owned by the Named Executive OfficersNEOs is provided in the Beneficial Ownership Table on page 70.61. | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | | | | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) |
| | | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) |
| Option Expiration Date | | Name | Grant Date | Exer- cisable |
| Unexer- cisable (a) |
| | Erik B. Nordstrom | 2/26/2010 | 77,609 |
| — |
| | 34.50 |
| 2/26/2020 | | | | | | 2/25/2011 | 69,637 |
| — |
| | 42.48 |
| 2/25/2021 | | | | | | | 2/22/2012 | 68,244 |
| — |
| | 49.15 |
| 2/22/2022 | | | | | | | 3/4/2013 | 99,563 |
| — |
| | 50.26 |
| 3/4/2023 | | | | | | | 3/3/2014 | 60,747 |
| — |
| | 57.16 |
| 3/3/2024 | | | | | | | 2/24/2015 | 34,497 |
| 11,499 |
| | 75.23 |
| 2/24/2025 | | | | | | | 2/24/2015 | |
| | | | | | 1,499 | 67,950 | | | | 2/29/2016 | |
| | | | | | 6,348 | 287,755 | | | | 2/29/2016 | 41,070 |
| 41,071 |
| | 51.32 |
| 2/28/2026 | | | | | | | 6/7/2016 | — |
| 10,838 |
| | 40.50 |
| 6/7/2026 | | | | | | | 6/7/2016 | | | | | | | 5,573 | 252,624 | | | | 2/28/2017 | |
| | | | | | | | 13,207 |
| 598,673 |
| | 2/28/2017 | 9,663 |
| 28,990 |
| | 46.66 |
| 2/28/2027 | | | | | | | 2/28/2017 | |
| | | | | | 20,724 | 939,419 | | | | 3/6/2018 | | | | | | | 52,210 | 2,366,679 | | | Anne L. Bramman | 8/21/2017 | |
| | | | | | 12,234 | 554,567 | | | 3/6/2018 | |
| | | | | | 45,965 | 2,083,593 | | | | 3/6/2018 | | | | | | | 26,813 | 1,215,433 | | | Peter E. Nordstrom | 2/26/2010 | 77,609 |
| — |
| | 34.50 |
| 2/26/2020 | | | | | | 2/25/2011 | 69,637 |
| — |
| | 42.48 |
| 2/25/2021 | | | | | | | 2/22/2012 | 68,244 |
| — |
| | 49.15 |
| 2/22/2022 | | | | | | | 3/4/2013 | 99,563 |
| — |
| | 50.26 |
| 3/4/2023 | | | | | | | 3/3/2014 | 60,747 |
| — |
| | 57.16 |
| 3/3/2024 | | | | | | | 2/24/2015 | 34,497 |
| 11,499 |
| | 75.23 |
| 2/24/2025 | | | | | | | 2/24/2015 | | | | | | | 1,497 | 67,859 | | | | 2/29/2016 | |
| | | | | | 6,338 | 287,302 | | | | 2/29/2016 | 41,070 |
| 41,071 |
| | 51.32 |
| 2/28/2026 | | | | | | | 6/7/2016 | — |
| 10,838 |
| | 40.50 |
| 6/7/2026 | | | | | | | 6/7/2016 | | | | | | | 5,573 | 252,624 | | | | 2/28/2017 | |
| | | | | | | | 13,207 |
| 598,673 |
| | 2/28/2017 | 9,663 |
| 28,990 |
| | 46.66 |
| 2/28/2027 | | | | | | | 2/28/2017 | |
| | | | | | 20,691 | 937,923 | | | | 3/6/2018 | | | | | | | 52,210 | 2,366,679 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | EIP Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | | | | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | EIP Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) | EIP Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | | | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | | Name | Grant Date | Exer- cisable | Unexer- cisable (a) | | Erik B. Nordstrom | 2/25/2011 | 69,637 | — | | 42.48 | 2/25/2021 | | | | | | 2/22/2012 | 68,244 | — | | 49.15 | 2/22/2022 | | | | | | | 3/4/2013 | 99,563 | — | | 50.26 | 3/4/2023 | | | | | | | 3/3/2014 | 60,747 | — | | 57.16 | 3/3/2024 | | | | | | | 2/24/2015 | 45,996 | — | | 75.23 | 2/24/2025 | | | | | | | 2/29/2016 | 82,141 | — | | 51.32 | 2/28/2026 | | | | | | | 6/7/2016 | 10,838 | — | | 40.50 | 6/7/2026 | | | | | | | 2/28/2017 | 28,989 | 9,664 | | 46.66 | 2/28/2027 | | | | | | | 2/28/2017 | | | | | | | 6,908 | 244,889 | | | | 3/6/2018 | | | | | | | 26,106 | 925,458 | | | | 3/5/2019 | 18,267 | 54,802 | | 45.33 | 3/5/2029 | | | | | | | 3/5/2019 | | | | | | | | | 12,543 | 444,649 | | 3/9/2020 | — | 147,407 | | 26.79 | 3/9/2030 | | | | | | | 8/27/2020 | — | 245,829 | | 14.79 | 8/27/2030 | | | | | | Anne L. Bramman | 3/6/2018 | | | | | | | 13,407 | 475,278 | | | 3/6/2018 | | | | | | | 22,983 | 814,747 | | | | 3/5/2019 | — | 123,554 | | 45.33 | 3/5/2029 | | | | | | | 3/5/2019 | | | | | | | | | 7,323 | 259,600 | | 3/5/2019 | | | | | | | 11,221 | 397,784 | | | | 3/9/2020 | | | | | | | 34,647 | 1,228,236 | | | | 8/27/2020 | — | 281,657 | | 14.79 | 8/27/2030 | | | | | | Peter E. Nordstrom | 2/25/2011 | 69,637 | — | | 42.48 | 2/25/2021 | | | | | | 2/22/2012 | 68,244 | — | | 49.15 | 2/22/2022 | | | | | | | 3/4/2013 | 99,563 | — | | 50.26 | 3/4/2023 | | | | | | | 3/3/2014 | 60,747 | — | | 57.16 | 3/3/2024 | | | | | | | 2/24/2015 | 45,996 | — | | 75.23 | 2/24/2025 | | | | | | | 2/29/2016 | 82,141 | — | | 51.32 | 2/28/2026 | | | | | | | 6/7/2016 | 10,838 | — | | 40.50 | 6/7/2026 | | | | | | | 2/28/2017 | 28,989 | 9,664 | | 46.66 | 2/28/2027 | | | | | | | 2/28/2017 | | | | | | | 6,897 | 244,499 | | | | 3/6/2018 | | | | | | | 26,106 | 925,458 | | | | 3/5/2019 | 18,267 | 54,802 | | 45.33 | 3/5/2029 | | | | | | | 3/5/2019 | | | | | | | | | 12,543 | 444,649 | | 3/9/2020 | — | 147,407 | | 26.79 | 3/9/2030 | | | | | | | 8/27/2020 | — | 245,829 | | 14.79 | 8/27/2030 | | | | | |
4847 NORDSTROM, INC. - 20192021 Proxy Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | EIP Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | | | | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | EIP Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) | EIP Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | | | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | | Name | Grant Date | Exer- cisable | Unexer- cisable (a) | | Kenneth J. Worzel | 3/4/2013 | 40,536 | — | | 50.26 | 3/4/2023 | | | | | | 3/3/2014 | 26,141 | — | | 57.16 | 3/3/2024 | | | | | | | 2/24/2015 | 20,585 | — | | 75.23 | 2/24/2025 | | | | | | | 2/29/2016 | 38,057 | — | | 51.32 | 2/28/2026 | | | | | | | 6/7/2016 | 23,433 | — | | 40.50 | 6/7/2026 | | | | | | | 2/28/2017 | 12,348 | 4,116 | | 46.66 | 2/28/2027 | | | | | | | 2/28/2017 | | | | | | | 2,942 | 104,294 | | | | 3/6/2018 | | | | | | | 12,906 | 457,518 | | | | 3/6/2018 | | | | | | | 22,983 | 814,747 | | | | 3/5/2019 | — | 159,425 | | 45.33 | 3/5/2029 | | | | | | | 3/5/2019 | | | | | | | | | 9,449 | 334,967 | | 3/5/2019 | | | | | | | 13,938 | 494,102 | | | | 3/9/2020 | | | | | | | 43,777 | 1,551,895 | | | | 8/27/2020 | — | 366,540 | | 14.79 | 8/27/2030 | | | | | | Edmond Mesrobian | 8/27/2018 | | | | | | | 19,052 | 675,393 | | | 3/5/2019 | — | 86,687 | | 45.33 | 3/5/2029 | | | | | | | 3/5/2019 | | | | | | | | | 5,138 | 182,142 | | 3/5/2019 | | | | | | | 7,873 | 279,098 | | | | 8/26/2019 | | | | | | | 25,680 | 910,356 | | | | 3/9/2020 | | | | | | | 26,851 | 951,868 | | | | 8/27/2020 | — | 212,207 | | 14.79 | 8/27/2030 | | | | | |
(a)Number of Securities Underlying Unexercised Options: Unexercisable | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexer- cised Unearned Options (#) | | | | Number of Shares or Units of Stock That Have Not Vested (#)(b) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(c) |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) |
| | | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) |
| Option Expiration Date | | Name | Grant Date | Exer- cisable |
| Unexer- cisable (a) |
| | Kenneth J. Worzel | 3/4/2013 | 40,536 |
| — |
| | 50.26 |
| 3/4/2023 | | | | | | 3/3/2014 | 26,141 |
| — |
| | 57.16 |
| 3/3/2024 | | | | | | | 2/24/2015 | 15,438 |
| 5,147 |
| | 75.23 |
| 2/24/2025 | | | | | | | 2/24/2015 | | | | | | | 697 | 31,595 | | | | 2/29/2016 | | | | | | | 3,056 | 138,528 | | | | 2/29/2016 | 19,028 |
| 19,029 |
| | 51.32 |
| 2/28/2026 | | | | | | | 6/7/2016 | — |
| 23,433 |
| | 40.50 |
| 6/7/2026 | | | | | | | 6/7/2016 | | | | | | | 12,049 | 546,181 | | | | 11/21/2016 | | | | | | | 1,596 | 72,347 | | | | 2/28/2017 | | | | | | | | | 5,625 |
| 254,981 |
| | 2/28/2017 | 4,116 |
| 12,348 |
| | 46.66 |
| 2/28/2027 | | | | | | | 2/28/2017 | | | | | | | 9,170 | 415,676 | | | | 3/6/2018 | | | | | | | 26,813 | 1,215,433 | | | | 3/6/2018 | | | | | | | 45,965 | 2,083,593 | | | Christine F. Deputy | 8/24/2015 | 15,070 |
| 5,024 |
| | 67.34 |
| 8/24/2025 | | | | | | 8/24/2015 | | | | | | | 1,517 | 68,766 | | | | 8/24/2015 | | | | | | | 3,254 | 147,504 | | | | 2/29/2016 | | | | | | | 2,674 | 121,212 | | | | 2/29/2016 | 16,650 |
| 16,650 |
| | 51.32 |
| 2/28/2026 | | | | | | | 6/7/2016 | — |
| 15,432 |
| | 40.50 |
| 6/7/2026 | | | | | | | 6/7/2016 | | | | | | | 7,935 | 359,694 | | | | 2/28/2017 | | | | | | | | | 5,497 |
| 249,179 |
| | 2/28/2017 | 4,021 |
| 12,066 |
| | 46.66 |
| 2/28/2027 | | | | | | | 2/28/2017 | | | | | | | 8,960 | 406,157 | | | | 3/6/2018 | | | | | | | 34,749 | 1,575,172 | | | | 3/6/2018 | | | | | | | 17,374 | 787,563 | | |
| | (a) | Number of Securities Underlying Unexercised Options: Unexercisable |
The following table shows the grant date, vesting schedule and expiration date for all unvested stock options as of the fiscal year ended February 2, 2019. AllJanuary 30, 2021. On March 5, 2019, Erik Nordstrom and Peter Nordstrom received a stock option grants havegrant with a four-year vesting schedule of 25% per year,year. On March 5, 2019, Anne Bramman, Kenneth Worzel and Edmond Mesrobian received a stock option grant with the exceptiona four-year vesting schedule of the grant on June 7, 2016, which vests 100% on June 10, 2019. All grants have a 10-year term.50% after years three and four. | | | | | | | | | Grant Date | Vesting Schedule | Expiration Date | 2/24/201528/2017 | 25% per year with a remaining vesting date of 2/24/20193/10/2021 | 2/24/202528/2027 | 8/24/2015 | 25% per year with a remaining vesting date of 8/24/3/5/2019 | 8/24/2025 | 2/29/2016 | 25% per year with remaining vesting dates of 3/10/20192021, 3/10/2022 and 3/10/20202023 | 2/28/20263/5/2029 | 6/7/2016 | 100% on 6/10/3/5/2019 | 6/7/202650% on 3/10/2022 and 50% on 3/10/2023 | 3/5/2029 | 2/28/20173/9/2020 | 25% per year with remaining vesting dates of 3/10/2019,2021, 3/10/20202022, 3/10/2023 and 3/10/20212024 | 2/28/20273/9/2030 | 8/27/2020 | 100% vest on 9/10/2022 | 8/27/2030 |
NORDSTROM, INC. - 20192021 Proxy Statement 4948
(b)Number of Shares or Units of Stock That Have Not Vested
| | (b) | Number of Shares or Units of Stock That Have Not Vested |
The following table shows the grant date and vesting schedule for all unvested restricted stock unitsRSUs as of the fiscal year ended February 2, 2019. The restricted stock unit grants have a four-year vesting schedule of 25% per year with the following exceptions: Christine Deputy’s grant of 8,135 units on August 24, 2015 vests 20% per year over five years; the grant on June 7, 2016 vests 50% after each of years two and three; Kenneth Worzel’s grant of 4,788 units on November 21, 2016 vests 33% after each of years one and two and 34% after year three; and Anne Bramman’s grant of 18,350 units on August 21, 2017 vests 33% after each of years one and two and 34% after year three. | | | | | | Grant Date | | Vesting Schedule | 2/24/2015 | 28/2017 | 25% per year with a remaining vesting date of 2/24/20193/10/2021 | 8/24/2015 | | 25% per year with a remaining vesting date of 8/24/2019
| 8/24/2015 | | 20% per year with remaining vesting dates of 8/24/2019 and 8/24/2020 | 2/29/2016 | 3/6/2018 | 25% per year with remaining vesting dates of 3/10/20192021 and 3/10/20202022 | 6/7/20168/27/2018 | | 50% in years 2 and 325% per year with a remaining vesting datedates of 6/9/10/20192021 and 9/10/2022 | 11/21/2016 | | 33% in years 1 and 2 and 34% in year 3 with a remaining vesting date of 12/10/3/5/2019 | 2/28/2017 | | 25% per year with remaining vesting dates of 3/10/2019,2021, 3/10/20202022, and 3/10/20212023 | 8/21/2017 | 26/2019 | 33% in years 1one and 2two and 34% in the final year 3 with remaining vesting dates of 9/10/20192021 and 9/10/20202022 | 3/6/2018 | 9/2020 | 25% per year with vesting dates of 3/10/2019,2021, 3/10/2020,2022, 3/10/20212023 and 3/10/20222024 |
| | (c) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested |
(c) EIP Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested The PSUs granted on March 9, 2020 were cancelled on August 18, 2020, as discussed on page 36, and are not reflected in the above table. The numbers reported are the outstanding performance share unitsPSUs granted in fiscal year 2017. The2019. One-third of the PSUs are earned on the last day of the one-year performance sharecycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, February 1, 2020,January 29, 2022, if performance criteria have been met, andmet. The 2019 PSUs vest when the results have been certified by the Compensation Committee. ThisCPCC at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle. If the performance cycle for the remaining two-thirds of the grant had ended as of the close of fiscal year 2018, 50%2020, the performance payout threshold would not have been achieved and 0% of the number of performance share units grantedPSUs outstanding would have been earned. As required to be disclosed by SEC rules, the number of estimated shares reported for the 2017remaining two-thirds of this grant is based on achieving the next higher performance measure, which pays out at 100%50% of the number of units granted,outstanding, as shown in the performance share unitPSU vesting schedule on page 37. | | (d) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
(d) EIP Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested The PSUs granted on March 9, 2020 were cancelled on August 18, 2020, as discussed on page 36, and are not reflected in the above table. The amounts reported relate to the outstanding performance share unitsPSUs granted in fiscal year 2017. This2019. One-third of the PSUs are earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 PSUs vest when the results have been certified by the CPCC at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle. If the performance cycle for thisthe remaining two-thirds of the grant had ended as of the close of fiscal year 2018, 50%2020, the performance payout threshold would not have been achieved and 0% of the number of performance share units grantedPSUs outstanding would have been earned. As required to be disclosed by SEC rules, the payout values for the remaining two-thirds of this grant are reported and are based on achieving the next higher performance measure, which pays out at 100%50% of the number of units granted.outstanding. The value of estimated payouts has been calculated using the closing price of Common Stock on February 1, 2019,January 29, 2021, the last market trading day of the fiscal year, of $45.33.$35.45. The payout does not include estimated dividend amounts as the Company does not pay dividends on unvested performance share units.PSUs.
5049 NORDSTROM, INC. - 20192021 Proxy Statement
Option Exercises and Stock Vested in Fiscal Year 20182020 The following table provides information for the Named Executive Officers on: NEOs on the number of shares of Common Stock acquired and value realized from stock option exercises in fiscal year 2018;PSUs and the number of shares of Common Stock acquired and value realized from performance share units and restricted stock units RSUs that vested with respect to fiscal year 20182020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#)(a) | | Value Realized on Vesting ($)(b) | | | | | | | | | | Erik B. Nordstrom | | — | | | — | | | 23,134 | | | 627,163 | | Anne L. Bramman | | — | | | — | | | 28,051 | | | 686,080 | | Peter E. Nordstrom | | — | | | — | | | 23,118 | | | 626,729 | | Kenneth J. Worzel | | — | | | — | | | 30,458 | | | 830,397 | | Edmond Mesrobian | | — | | | — | | | 24,990 | | | 405,508 | |
(a) Number of Shares Acquired on Vesting | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) |
| | Value Realized on Exercise ($) |
| | Number of Shares Acquired on Vesting (#)(a) |
| | Value Realized on Vesting ($)(b) |
| Erik B. Nordstrom | | 169,717 |
| | 5,646,094 |
| | 22,718 |
| | 1,170,494 |
| Anne L. Bramman | | — |
| | — |
| | 6,116 |
| | 400,537 |
| Peter E. Nordstrom | | 169,717 |
| | 5,557,886 |
| | 21,061 |
| | 1,083,875 |
| Kenneth J. Worzel | | 64,818 |
| | 1,298,088 |
| | 23,618 |
| | 1,260,447 |
| Christine F. Deputy | | — |
| | — |
| | 22,412 |
| | 1,262,623 |
| Blake W. Nordstrom | | 182,773 |
| | 6,914,212 |
| | 21,122 |
| | 1,087,145 |
|
| | (a) | Number of Shares Acquired on Vesting |
The numbers reported are the restricted stock unitsRSUs that vested during the fiscal year. (b) Value Realized on Vesting The numbersamounts reported are the value realized for Erik Nordstrom, Peter Nordstrom and Blake Nordstrom include 3,133, 2,023 and 2,023 shares, respectively, which vested on an accelerated basis in 2018 solely to satisfy Social Security, Medicare or income tax withholding obligations of retirement-eligible employees with respect to their restricted stock unit awards. The numbers reported for Blake Nordstrom include those restricted stock unitsthe RSUs that vested during the fiscal year, prior to his date of death, January 2, 2019. An additional 86,370 units vested on an accelerated basis upon his date of death. | | (b) | Value Realized on Vesting |
The amounts disclosed for Erik Nordstrom, Peter Nordstrom and Blake Nordstrom include the number of shares of Common Stock withheld on vesting of restricted stock units to satisfy tax withholding obligations as described previously, multiplied by $52.99, the closing price of Common Stock on November 27, 2018, the vesting date. The amounts reported for Blake Nordstrom include the value received during the fiscal year, prior to his date of death, January 2, 2019. An additional $4,100,848 was realized from units that vested on an accelerated basis upon his date of death.year.
Pension Benefits The Company’s original Supplemental Executive Retirement Plan (‘SERP”)SERP was introduced in the 1980s. Over the years, the plan design changed to better meet the purpose of encouraging designated executives to stay with Nordstrom throughout their careers and rewarding their significant and sustained contribution to the Company’s success by adding to their financial security upon retirement. TheBeginning in 2012, the SERP was closed to new entrants, beginning in 2012.entrants. The Named Executive Officers,NEOs, except Anne Bramman and Christine Deputy,Edmond Mesrobian, who both joined the Company after the SERP had been closed to new entrants, are or were eligible for the SERP. The eligible Named Executive OfficersNEOs are entitled to receive their full retirement benefit at age 58. Their full benefit is equal to 1.6% multiplied by final average pay, as described in athe following paragraph, and their years of credited service, up to a maximum of 25 years. They may retire early and could receive a reduced benefit if they are between the ages of 53 and 57, inclusive, with at least 10 years of credited service and the Board approves the early retirement. The early retirement benefit is reduced 10% for each year that their retirement age is less than 58. If they retire after age 58, they are entitled to their full retirement benefit, increased with interest of 5% per year, compounded annually, for each full year worked beyond age 58, for a maximum of 10 years. The annual SERP benefit is capped at $700,000.$700,000 after any early retirement reductions are applied. Final average pay is the average base salary and annual performance-based cash bonus of the highest 36 months over the longer of: •the most recent five years of service; or •the entire period of service after the executive’s 53rd birthday.
NORDSTROM, INC. - 2019 Proxy Statement 51
The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% annuity paid to a surviving spouse or life partner after the executive’s death. A surviving spouse or life partner also receives a 50% survivor benefit if the executive dies before retiring. The amount of this survivor benefit depends on the executive’s age and years of credited service at the time of death. Blake Nordstrom was eligible for his full SERP benefit upon his death on January 2, 2019. His benefit will be paid as a 50% survivor benefit to his surviving spouse. The SERP provides that no benefit will be paid to an executive whose employment is terminated for cause, which includes competitive behavior against the Company, as determined by the Compensation CommitteeCPCC in the exercise of its discretion in accordance with the Plan. The Compensation CommitteeCPCC also has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company. Information about payment of the SERP benefit related to change in control is provided on page 5856 in footnote (b) to the Potential Payments Upon Termination or Change in Control at Fiscal Year-End 20182020 table. Because the SERP is a nonqualified deferred compensation plan, the Company is not obligated to fund it. However, the Company does set aside funds to assist in the payment of future benefit obligations. If the Company were to become insolvent, participants would be unsecured general creditors, and there is no guarantee that funds would be available to pay all creditors in full. See the notes to the financial statements contained within the Company’s 2020Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC, for a discussion of the benefit obligation. NORDSTROM, INC. - 2021 Proxy Statement 50
Fiscal Year 20182020 Pension Benefits Table The following table shows the present value of the accumulated SERP benefit payable to each of the Named Executive Officers,NEOs, based on the number of years of service credited under the Plan to each Named Executive OfficerNEO and actuarial assumptions consistent with those used in the Company’s financial statements2020 Annual Report to calculate the Company’s obligations under the Plan. See the notesNote 7: Postretirement Benefits to the financial statements contained within the Company’s 2020Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC, for a discussion of the benefit obligation and assumptions used. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Present Value of Accumulated Benefit | | | Name | | Plan Name | | Age (a) | | Number of Years Credited Service (#)(b) | | Full Retirement Benefit ($)(c) | | Early Retirement Benefit ($)(d) | | Payments During Last Fiscal Year ($) | Erik B. Nordstrom | | SERP | | 57 | | | 25 | | | 14,288,063 | | | 14,933,660 | | | — | | Anne L. Bramman | | — | | | — | | | — | | | — | | | — | | | — | | Peter E. Nordstrom | | SERP | | 58 | | | 25 | | | 15,071,070 | | | — | | | — | | Kenneth J. Worzel | | SERP | | 56 | | | 11 | | | 5,390,814 | | | 4,697,771 | | | — | | Edmond Mesrobian | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | Name | | Plan Name |
| | Age (a) |
| | Number of Years Credited Service (#)(b) |
| | Present Value of Accumulated Benefit ($)(c) |
| | Payments During Last Fiscal Year ($) |
| Erik B. Nordstrom | | SERP |
| | 55 |
| | 25 |
| | 10,576,866 |
| | — |
| Anne L. Bramman | | — |
| | 51 |
| | — |
| | — |
| | — |
| Peter E. Nordstrom | | SERP |
| | 56 |
| | 25 |
| | 11,232,918 |
| | — |
| Kenneth J. Worzel | | SERP |
| | 54 |
| | 9 |
| | 2,936,884 |
| | — |
| Christine F. Deputy | | — |
| | 53 |
| | — |
| | — |
| | — |
| Blake W. Nordstrom | | SERP |
| | — |
| | — |
| | — |
| | — |
|
Age is as of February 2, 2019,January 30, 2021, the last day of the fiscal year. | | (b) | Number of Years Credited Service |
(b) Number of Years Credited Service Although Erik Nordstrom and Peter Nordstrom each have 39 or more than 25 years of service, the number of years of credited service under the SERP is capped at 25. | | (c) | Present Value of Accumulated Benefit |
(c) Present Value of Accumulated Benefit: Full Retirement Benefit The amounts shown are based on the full retirement age of 58. Erik Nordstrom and Peter Nordstrom haveis the only eligible NEO that has met the minimum full retirement age with at least 10 years of credited service and would be eligible to receive the SERP benefit having the present value as shown in the table above. (d) Present Value of Accumulated Benefit: Early Retirement Benefit Erik Nordstrom and Kenneth Worzel have met the minimum early retirement age and would be eligible for early retirement with prior approval from the Board. If the Board approvedThe early retirement present value benefit for Erik Nordstrom and Peter Nordstrom would be entitled to receive a reducedis an increase from his full retirement present value benefit because both benefits are limited by the $700,000 annual SERP benefit having present values as of the end of the fiscal year of $8,730,232 and $10,018,456, respectively. These amounts are reportedcap, which results in the Potential Payments Upon Termination or Change of Control at Fiscal Year-End 2018 table on page 55.same annual SERP benefit for his early retirement as for his full retirement.
52 NORDSTROM, INC. - 2019 Proxy Statement
Nonqualified Deferred Compensation The Company offers participation in the Nordstrom Deferred Compensation Plan (“NDCP”)NDCP to employees, including the Named Executive Officers,NEOs, who meet a minimum compensation threshold. Under this Plan, a participant may defer up to 80% of base salary, up to 100% of an annual performance-based bonus and up to 100% of any vested performance share units,PSUs, less applicable payroll taxes. Deferral elections are irrevocable and are made in compliance with Section 409A of the IRC. If a participant’s NDCP deferrals cause a reduction in the Company’s 401(k) match contribution, the Company may deposit a make-up contribution into the participant’s NDCP account. The Company may also providesprovide a dollar for dollar matching contribution, up to 4% of eligible pay over the 401(k) calendar year compensation limit, on deferrals into the NDCP by eligible participants. The Company may also makeparticipants and a discretionary profit-based match up to an additional 2% of eligible pay over the 401(k) calendar year compensation limit. Participants in the Company’s SERP are not eligible for this matching contribution. Christine Deputy is not a participant inThe discretionary 401(k) match was suspended for the SERP and was eligible for and received a NDCP match for deferrals made in calendar2020 plan year 2018.as discussed on page 38. Plan participants may direct their cash deferrals to deemed investment alternatives, priced and valued similar to retail mutual funds. As of the end of the fiscal year, the Company offered 18 deemed investment alternatives. In addition, Plan participants are offered a fixed rate option, which was 4.4%4.31% for calendar year 2018years 2020 and is 4.5% for calendar year 2019,2021, which is not subsidized by the Company but rather is a rate based on guaranteed contractual returns from a third-party insurance company provider. With the exception of the fixed rate fund, participants may change their investment allocations among these investment alternatives daily. Gains and losses for cash deferrals are credited to participant accounts daily, based on their investment elections. The deemed investment alternatives for cash do not include Common Stock. Vested performance share unitsPSUs that are deferred into the NDCP remain as stock units until distribution. 51 NORDSTROM, INC. - 2021 Proxy Statement
Fiscal Year 20182020 Nonqualified Deferred Compensation Table The following table discloses information on nonqualified deferred compensation for the Named Executive OfficersNEOs under the Company’s NDCP for the fiscal year ended February 2, 2019.January 30, 2021. The Company’s SERP is also a nonqualified plan. Information regarding benefits payable to Named Executive OfficersNEOs under the SERP is provided on pages 5150 and 52.51. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in Last Fiscal Year ($)(a) | | Registrant Contributions in Last Fiscal Year ($) | | Aggregate Earnings in Last Fiscal Year ($)(b) | | Aggregate Withdrawals/Distributions ($) | | Aggregate Balance at Last Fiscal Year-End ($)(c) | Erik B. Nordstrom | | — | | | — | | | — | | | — | | | — | | Anne L. Bramman | | 108,183 | | | — | | | 7,813 | | | — | | | 238,673 | | Peter E. Nordstrom | | — | | | — | | | — | | | — | | | — | | Kenneth J. Worzel | | 49,826 | | | — | | | 46,588 | | | — | | | 853,403 | | Edmond Mesrobian | | 39,217 | | | — | | | 53,564 | | | — | | | 189,152 | |
(a) Executive Contributions in Last Fiscal Year | | | | | | | | | | | | | | | | | Name | | Executive Contributions in Last Fiscal Year ($)(a) |
| | Registrant Contributions in Last Fiscal Year ($)(b) |
| | Aggregate Earnings in Last Fiscal Year ($)(c) |
| | Aggregate Withdrawals/Distributions ($) |
| | Aggregate Balance at Last Fiscal Year-End ($)(d) |
| Erik B. Nordstrom | | — |
| | — |
| | — |
| | — |
| | — |
| Anne L. Bramman | | 2,695 |
| | — |
| | 5 |
| | — |
| | 2,700 |
| Peter E. Nordstrom | | — |
| | — |
| | — |
| | — |
| | — |
| Kenneth J. Worzel | | 23,913 |
| | — |
| | (21,675 | ) | | — |
| | 669,043 |
| Christine F. Deputy | | 30,852 |
| | 43,156 |
| | 4,674 |
| | — |
| | 137,300 |
| Blake W. Nordstrom | | — |
| | — |
| | — |
| | — |
| | — |
|
| | (a) | Executive Contributions in Last Fiscal Year |
The amounts reported are the deferrals made during the fiscal year. | | (b) | Registrant Contributions in Last Fiscal Year |
The amount reported for Christine Deputy is the Company matching contribution on her deferrals during calendar year 2018 as described above.(b) Aggregate Earnings in Last Fiscal Year
| | (c) | Aggregate Earnings in Last Fiscal Year |
The amounts include the total interest or other earnings (loss) accrued in fiscal year 20182020 on the entire NDCP account balance, including deferred performance share units.PSUs. | | (d) | Aggregate Balance at Last Fiscal Year-End |
(c) Aggregate Balance at Last Fiscal Year-End The amounts shown are the total NDCP balances, including earnings on deferrals, as of February 2, 2019.January 30, 2021.
NORDSTROM, INC. - 2019 Proxy Statement 53
Potential Payments Upon Termination or Change in Control The information on the following pages describes and quantifies certain amounts that would become payable under existing compensation plans if the Named Executive Officers’NEOs’ employment had terminated on February 2, 2019,January 30, 2021, the last day of the fiscal year. The amounts are based on each executive’s compensation and years of service as of that date and, if applicable, based on the closing price of Common Stock on February 1, 2019,January 29, 2021, the last market trading day of the fiscal year, of $45.33.$35.45. The estimates are based on all relevant plans effective at the end of the fiscal year and information available at that time. Actual values would reflect specific circumstances at the time of any termination, the plans and provisions effective if and when a termination event occurs and any other applicable factors. The Company does not have employment agreements with any Nordstrom employees, including the Named Executive Officers.NEOs. The Company maintains a leadership separationan executive severance plan to provide a broad group of leadership employeescertain NEOs an appropriate level of severance benefits in the event of involuntary separation of service, due to job elimination.not for cause. Except as described on the following pages, there are no agreements, arrangements or plans that entitle the Named Executive OfficersNEOs to enhanced benefits upon termination of their employment.
54 NORDSTROM, INC. - 20192021 Proxy Statement 52
Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2018 | | | Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2020 |
The following table shows various termination scenarios and payments that would be triggered under the Company’s compensation plans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Potential Payment | | Death ($) | | Disability ($) | | Retirement ($) | | Termination without Cause ($) | | Qualifying Termination Following a Change in Control ($) | Erik B. Nordstrom | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,211,794 | | | 4,211,794 | | | 2,446,891 | | | 2,446,891 | | | 7,525,718 | | Vested SERP Benefit(b) | | 7,154,525 | | | — | | | 14,933,660 | | | 14,933,660 | | | 14,933,660 | | Life Insurance Proceeds(c) | | 948,125 | | | — | | | — | | | — | | | — | | Retiree Health Care Benefit(d) | | 223,861 | | | 474,261 | | | 474,261 | | | 474,261 | | | 474,261 | | Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | | Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | | Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | | Total Value of Incremental Benefits | | 12,538,305 | | | 4,721,055 | | | 17,854,812 | | | 17,854,812 | | | 22,933,639 | | Anne L. Bramman | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,605,057 | | | 4,605,057 | | | — | | | — | | | 8,735,080 | | Vested SERP Benefit(b) | | — | | | — | | | — | | | — | | | — | | Life Insurance Proceeds(c) | | 1,000,000 | | | — | | | — | | | — | | | — | | Retiree Health Care Benefit(d) | | — | | | — | | | — | | | — | | | — | | Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | | Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | | Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | | Total Value of Incremental Benefits | | 5,605,057 | | | 4,640,057 | | | — | | | — | | | 8,735,080 | | Peter E. Nordstrom | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,211,404 | | | 4,211,404 | | | 2,446,501 | | | 2,446,501 | | | 7,525,328 | | Vested SERP Benefit(b) | | 7,741,440 | | | 15,071,070 | | | 15,071,070 | | | 15,071,070 | | | 15,071,070 | | Life Insurance Proceeds(c) | | 948,125 | | | — | | | — | | | — | | | — | | Retiree Health Care Benefit(d) | | 206,127 | | | 427,636 | | | 427,636 | | | 427,636 | | | 427,636 | | Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | | Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | | Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | | Total Value of Incremental Benefits | | 13,107,096 | | | 19,745,110 | | | 17,945,207 | | | 17,945,207 | | | 23,024,034 | | Kenneth J. Worzel | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 5,616,752 | | | 5,616,752 | | | 2,607,808 | | | 2,607,808 | | | 10,995,272 | | Vested SERP Benefit(b) | | 2,409,514 | | | — | | | 4,697,771 | | | 4,697,771 | | | 4,697,771 | | Life Insurance Proceeds(c) | | 1,093,750 | | | — | | | — | | | — | | | — | | Retiree Health Care Benefit(d) | | 232,281 | | | 496,762 | | | 496,762 | | | 496,762 | | | 496,762 | | Separation Benefit(e) | | — | | | — | | | — | | | 1,334,809 | | | — | | Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | | Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | | Total Value of Incremental Benefits | | 9,352,297 | | | 6,148,514 | | | 7,802,341 | | | 9,137,150 | | | 16,189,805 | | Edmond Mesrobian | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 3,592,174 | | | 3,592,174 | | | — | | | — | | | 7,200,912 | | Vested SERP Benefit(b) | | — | | | — | | | — | | | — | | | — | | Life Insurance Proceeds(c) | | 968,750 | | | — | | | — | | | — | | | — | | Retiree Health Care Benefit(d) | | — | | | — | | | — | | | — | | | — | | Separation Benefit(e) | | — | | | — | | | — | | | 1,554,200 | | | — | | Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | | Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | | Total Value of Incremental Benefits | | 4,560,924 | | | 3,627,174 | | | — | | | 1,554,200 | | | 7,200,912 | |
| | | | | | | | | | | | | | | | | Name and Potential Payment | | Death ($) |
| | Disability ($) |
| | Retirement ($) |
| | Termination without Cause ($) |
| | Qualifying Termination Following a Change in Control ($) |
| Erik B. Nordstrom | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,166,952 |
| | 4,166,952 |
| | 3,861,980 |
| | 3,861,980 |
| | 4,266,134 |
| Vested SERP Benefit(b) | | 4,220,346 |
| | — |
| | 8,730,232 |
| | 8,730,232 |
| | 8,730,232 |
| Life Insurance Proceeds(c) | | 948,125 |
| | — |
| | — |
| | — |
| | — |
| Retiree Health Care Benefit(d) | | 159,465 |
| | 362,387 |
| | 362,387 |
| | 362,387 |
| | 362,387 |
| Separation Benefit(e) | | — |
| | — |
| | — |
| | — |
| | — |
| Disability Insurance Benefit(f) | | — |
| | 35,000 |
| | — |
| | — |
| | — |
| Executive Management Bonus(g) | | — |
| | — |
| | — |
| | — |
| | — |
| Total Value of Incremental Benefits | | 9,494,888 |
| | 4,564,339 |
| | 12,954,599 |
| | 12,954,599 |
| | 13,358,753 |
| Anne L. Bramman | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 3,853,594 |
| | 3,853,594 |
| | — |
| | — |
| | 3,853,594 |
| Vested SERP Benefit(b) | | — |
| | — |
| | — |
| | — |
| | — |
| Life Insurance Proceeds(c) | | 968,750 |
| | — |
| | — |
| | — |
| | — |
| Retiree Health Care Benefit(d) | | — |
| | — |
| | — |
| | — |
| | — |
| Separation Benefit(e) | | — |
| | — |
| | — |
| | 400,564 |
| | 400,564 |
| Disability Insurance Benefit(f) | | — |
| | 35,000 |
| | — |
| | — |
| | — |
| Executive Management Bonus(g) | | — |
| | — |
| | — |
| | — |
| | — |
| Total Value of Incremental Benefits | | 4,822,344 |
| | 3,888,594 |
| | — |
| | 400,564 |
| | 4,254,158 |
| Peter E. Nordstrom | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,164,912 |
| | 4,164,912 |
| | 3,859,940 |
| | 3,859,940 |
| | 4,264,094 |
| Vested SERP Benefit(b) | | 5,090,904 |
| | — |
| | 10,018,456 |
| | 10,018,456 |
| | 10,018,456 |
| Life Insurance Proceeds(c) | | 948,125 |
| | — |
| | — |
| | — |
| | — |
| Retiree Health Care Benefit(d) | | 150,366 |
| | 333,284 |
| | 333,284 |
| | 333,284 |
| | 333,284 |
| Separation Benefit(e) | | — |
| | — |
| | — |
| | — |
| | — |
| Disability Insurance Benefit(f) | | — |
| | 35,000 |
| | — |
| | — |
| | — |
| Executive Management Bonus(g) | | — |
| | — |
| | — |
| | — |
| | — |
| Total Value of Incremental Benefits | | 10,354,307 |
| | 4,533,196 |
| | 14,211,680 |
| | 14,211,680 |
| | 14,615,834 |
| Kenneth J. Worzel | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 4,701,801 |
| | 4,701,801 |
| | — |
| | — |
| | 4,744,049 |
| Vested SERP Benefit(b) | | 1,494,790 |
| | — |
| | — |
| | — |
| | — |
| Life Insurance Proceeds(c) | | 1,000,000 |
| | — |
| | — |
| | — |
| | — |
| Retiree Health Care Benefit(d) | | — |
| | — |
| | — |
| | — |
| | — |
| Separation Benefit(e) | | — |
| | — |
| | — |
| | 549,455 |
| | 549,455 |
| Disability Insurance Benefit(f) | | — |
| | 35,000 |
| | — |
| | — |
| | — |
| Executive Management Bonus(g) | | — |
| | — |
| | — |
| | — |
| | — |
| Total Value of Incremental Benefits | | 7,196,591 |
| | 4,736,801 |
| | — |
| | 549,455 |
| | 5,293,504 |
| Christine F. Deputy | | | | | | | | | | | Continued or Accelerated Vesting of Equity Awards(a) | | 3,623,921 |
| | 3,623,921 |
| | — |
| | — |
| | 3,665,217 |
| Vested SERP Benefit(b) | | — |
| | — |
| | — |
| | — |
| | — |
| Life Insurance Proceeds(c) | | 731,250 |
| | — |
| | — |
| | — |
| | — |
| Retiree Health Care Benefit(d) | | — |
| | — |
| | — |
| | — |
| | — |
| Separation Benefit(e) | | — |
| | — |
| | — |
| | 308,622 |
| | 308,622 |
| Disability Insurance Benefit(f) | | — |
| | 35,000 |
| | — |
| | — |
| | — |
| Executive Management Bonus(g) | | — |
| | — |
| | — |
| | — |
| | — |
| Total Value of Incremental Benefits | | 4,355,171 |
| | 3,658,921 |
| | — |
| | 308,622 |
| | 3,973,839 |
|
53 NORDSTROM, INC. - 20192021 Proxy Statement55
(a) Continued or Accelerated Vesting of Equity Awards | | (a) | Continued or Accelerated Vesting of Equity Awards
|
As of the end of fiscal year 2018,2020, the Named Executive OfficersNEOs had outstanding equity awards under our 20042010 and 2010 Equity Incentive Plans.2019 EIPs. Treatment of the awards under various termination scenarios is described below. Stock Options Death or Disability The stock option agreements under the Company’s 2004 and 2010 Equity Incentive PlanEIP, with the exception of the 2019 stock option agreement, provide that if a participant’s employment is terminated by reason of death or disability, stock options granted more than six months prior to the termination event will immediately vest. The stock option agreements provide that if a participant’s employment is terminated by reason of death or disability, vested stock options may be exercised by the participant or participant’s beneficiary during the period ending four years after termination, provided the 10-year term of the grant has not expired. The Company’s 2019 and 2020 stock option agreement for annual awards provides that if a participant’s employments is terminated by reason of death or disability, the stock option grants will immediately vest. The 2019 and 2020 annual stock option agreement provides that if a participant’s employment is terminated by reason of death or disability, vested stock options may be exercised by the participant or participant’s beneficiary during the period ending four years after termination, provided the 10-year term of the grant has not expired. The Company’s 2019 and 2020 stock option agreement for one-time awards provides that if a participant’s employment is terminated by reason of death or disability, a prorated number of the stock options granted will immediately vest based on the number of full months employed. The 2019 and 2020 one-time stock option agreement provides that if a participant’s employment is terminated by reason of death or disability, vested stock options may be exercised by the participant or participant’s beneficiary during the period ending four years after termination, provided the 10-year term of the grant has not expired. The amounts shown in the table include the unvested values, as of the end of fiscal year 2018, of unvested stock options2020, that would immediately vest and be exercisable during the period endingearlier of four years after termination.termination or the 10-year term date of the grant. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then the post-separation vesting and exercise rights will cease immediately and all outstanding vested and unvested options and any shares of Common Stock deliveredunder such grants will be automatically forfeited. Retirement or Termination without Cause The stock option agreements under the 2004Company’s 2010 and 2010 Equity Incentive Plans2019 EIPs for annual awards generally provide that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by reason of retirement or termination without cause, stock options granted more than six months prior to termination will continue to vest and may be exercised during the period ending four years after termination, provided the 10-year term of the grant has not expired. Erik Nordstrom, and Peter Nordstrom and Kenneth Worzel qualify for this continued vesting as they have reached the minimum retirement age of 55 with at least 10 years of service. The stock option grant on June 7, 2016, under which Erik Nordstrom and Peter Nordstrom each received options to purchase 10,838 shares, does not provide for this continued vesting upon retirement or termination. The closing price of Common Stockamounts shown in the table include the unvested values, as of the end of the fiscal year 2018 was lower than the exercise prices of the unvested stock options2020, that would continue to vest and be exercisable during the earlier of four years after termination or the 10-year term date of the grant. Therefore, no amounts are included in the table for Erik Nordstrom and Peter Nordstrom. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then the post-separation vesting and exercise rights will cease immediately and all outstanding vested and unvested options and any shares of Common Stock deliveredunder such grants will be automatically forfeited. Qualifying Termination Following a Change in Control The Named Executive OfficersNEOs are not entitled to any payment or accelerated benefit upon a change in control with respect to their awards. However, under the 2010 Equity Incentive Plan,and 2019 EIPs, a Named Executive OfficerNEO will generally be entitled to accelerated vesting if the executive experiences a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in controlcontrol of the Company, unless the Compensation Committee actsCPCC has acted to prevent accelerationcause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction, or the award is of a type which would continue in effect notwithstanding the occurrence of the change in control. Generally, a change in control occurs upon:upon: •the merger or consolidation of the Company with or into another entity; •the sale, transfer or other disposition of all or substantially all the Company’s assets; •a change in composition of 50% or more of the Board; or •any transaction as a result of which any person is the “beneficial owner” of securities of the Company representing at least 30% of the total voting power of the Company’s outstanding voting securities. The amounts shown in the table include the unvested values, as of the end of fiscal year 2018, of unvested stock options2020, that would immediately vest and be exercisable if the Named Executive OfficersNEOs experienced a qualifying termination within 12 months following a change in control of the Company and the CommitteeCPCC did not act to prevent accelerationcause the NEOs to receive, on account of the awards.
56 NORDSTROM, INC. - 2019 Proxy Statement award, cash or other property being paid to shareholders in the change in control transaction.
Performance Share Units Death or Disability The performance share unit2019 PSU award agreement under the 2010 Equity Incentive PlanEIP provides that if a participant’s employment is terminated before the end of a performance cycle by reason of death or disability, the participant, or participant’s beneficiary, will be entitled to a prorated payment,number of PSUs will immediately vest based on target performance and the periodnumber of time the participant worked during the performance cycle, with respect to any performance share units granted more than sixfull months prior to termination that were earnedemployed during the performance cycle. NORDSTROM, INC. - 2021 Proxy Statement 54
The 20172019 grant has time remaining in its three-year performance cycle. IfOne-third of the PSUs are earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 PSUs vest when the results have been certified by the CPCC at the end of the three-year performance cycle, January 29, 2022. For the performance cycle forthat ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant had ended as of the close of fiscal year 2018, 50% of the number granted would have been earned. Therefore, thehas time remaining in its three-year performance cycle. The amounts included in the table are based on the remaining outstanding 2019 PSUs and a payout at 50%100% (target) of the prorated number.number based on termination on the last day of the fiscal year. If, during the term of any outstanding performance cycle, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company's confidential or proprietary information, of the Company, then all outstanding vested but not settledunvested and unsettled PSUs and any unvested portions of the performance share unit awardsCommon Stock delivered on vesting under such grants will be automatically forfeited. Retirement or Termination without Cause The performance share unit2019 PSU award agreement under the 2010 Equity Incentive PlanEIP provides that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated before the end of the performance cycle by reason of retirement or termination without cause, the participant will be entitled to a prorated payment,number of PSUs based on the periodnumber of time the participant workedfull months employed during the performance cycle, with respect to any performance share unitsPSUs granted more than six months prior to termination that were earned during the performance cycle. Both Erik Nordstrom, and Peter Nordstrom and Kenneth Worzel qualify for this prorated payment upon retirement as of the end of the fiscal year. The 20172019 grant has time remaining in its three-year performance cycle. One-third of the PSUs are earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 PSUs vest when the results have been certified by the CPCC at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle.If the performance cycle for thisthe remaining two-thirds of the grant had ended as of the close of fiscal year 2018, 50%2020, the performance payout threshold would not have been achieved and 0% of the number grantedof PSUs outstanding would have been earned. Therefore, no amounts for the amounts includedPSUs are reported in the table for Erik Nordstrom and Peter Nordstrom are based on a payout at 50% of the prorated number.table. If, during the term of any outstanding performance cycle, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company's confidential or proprietary information, of the Company, then all outstanding vested but not settledunvested and unsettled PSUs and any unvested portions of the performance share unit awardsCommon Stock delivered on vesting under such grants will be automatically forfeited. Qualifying Termination Following a Change in Control The Named Executive OfficersNEOs are not entitled to any payment or accelerated benefit upon a change in control with respect to their performance share units.PSUs. However, a Named Executive OfficerNEO will generally be entitled to accelerated vesting based on the target number of outstanding PSUs if the actual performance cannot be determined, if the executive experiences a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control of the Company, unless the Compensation Committee actsCPCC has acted to prevent accelerationcause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction, or the award is of a type which would continue in effect notwithstanding the occurrence of the change in control. See the Change in ControlControl paragraph under Stock Options on page 5654 for information about when a change in control occurs. The 20172019 grant has time remaining in its three-year performance cycle. One-third of the PSUs are earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria have been met, and two-thirds of the units are earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria have been met. The 2019 PSUs vest when the results have been certified by the CPCC at the end of the three-year performance cycle, January 29, 2022. For the performance cycle that ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle. If the performance cycle for thisthe remaining two-thirds of the grant had ended as of the close of fiscal year 2018, 50%2020, the performance payout threshold would not have been achieved and 0% of the number grantedof PSUs outstanding would have been earned. Therefore, no amounts for the amounts includedPSUs are reported in the table are based on a payout at 50% of the number granted.table. Restricted Stock Units Death or Disability The restricted stock unit awardRSU agreements under the 2010 Equity Incentive PlanEIP, with the exception of the 2019 RSU agreement, provide that if a participant’s employment is terminated by reason of death or disability, restricted stock unitsRSUs granted more than six months prior to the termination event will immediately vest. The Company’s 2019 and 2020 RSU agreement for annual awards provides that if a participant’s employment is terminated by reason of death or disability, RSUs will immediately vest. The 2019 and 2020 RSU agreement for one-time awards provides that if a participant’s employment is terminated by reason of death or disability, a prorated number of RSUs granted will immediately based on the number of full months employed. The amounts shown in the table include the values, as of the end of fiscal year 20182020, of unvested restricted stock unitsRSUs that would immediately vest. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then any unvested unitsRSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. 55 NORDSTROM, INC. - 2021 Proxy Statement
Retirement or Termination without Cause The restricted stock unit awardRSU agreements for annual grants under the 2010 Equity Incentive Planand 2019 EIPs generally provide that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by reason of retirement or termination without cause, restricted stock unitsRSUs granted more than six months prior to termination will continue to vest. The restricted stock unit grant on June 7, 2016, under which Erik Nordstrom and Peter Nordstrom each were awarded 11,145 units, does not provide for this continued vesting upon retirement or termination.
NORDSTROM, INC. - 2019 Proxy Statement 57
The amounts shown in the table for Erik Nordstrom, and Peter Nordstrom and Kenneth Worzel include the values, as of the end of fiscal year 2018,2020, of unvested restricted stock unitsRSUs that would continue to vest after termination. These executives qualify for this continued vesting as of the end of the fiscal year since they had each reached the minimum retirement age of 55 with at least 10 years of service. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, of the Company, then any unvested unitsRSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. Qualifying Termination Following a Change in Control Under the 2010 Equity Incentive Plan,and 2019 EIPs, the Named Executive OfficersNEOs are not entitled to any payment or accelerated benefit upon a change in control with respect to their restricted stock units.RSUs. However, a Named Executive OfficerNEO will generally be entitled to accelerated vesting if the executive experiences a qualifying termination (termination(termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control of the Company, unless the Compensation Committee actsCPCC has acted to prevent accelerationcause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction, or the award is of a type which would continue in effect notwithstanding the occurrence of the change in control. See the Change in Control paragraph under Stock Options on page 5654 for information about when a change in control occurs. The amounts shown include the values, as of the end of fiscal year 2018,2020, of unvested restricted stock unitsRSUs that would vest if the Named Executive OfficersNEOs experienced a qualifying termination within 12 months following a change in control of the Company and the CommitteeCPCC did not act to prevent accelerationcause the NEO to receive, on account of the awards.award, cash or other property being paid to shareholders in the change in control transaction. (b) Vested SERP Benefit The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% survivor annuity paid to the surviving spouse or life partner for the remainder of their life after the executive’s death, as described in the Pension Benefits section beginning on page 51.50. Death The amounts shown are the present values of the 50% survivor annuity, payable in semi-monthlyequal installments on the Company’s regular payroll dates to the spouse or life partner of the executive, assuming the payments would begin on the date on which the executive would have attained minimum retirement age of 53, or the executive’s actual age, if older, and would continue for the remaining lifetime of the spouse or life partner. There Disability The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be no immediateeligible for his full retirement benefit under the SERP. The amount shown would be paid in equal installments on the Company’s regular payroll dates, assuming the payment would begin as of the benefit if the datelast day of death preceded the executive’s earliest retirement age of 53. Disability
fiscal year 2020. No amounts are shown for Erik Nordstrom or Kenneth Worzel, the other eligible NEOs, as none ofthey have not reached the eligible Named Executive Officers have reached normal retirement age of 58, which is the earliest eligibility for the SERP disability benefit. Retirement or Termination without Cause The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown in the table for Erik Nordstrom and Peter NordstromKenneth Worzel are the present values of their SERP benefits reduced for early commencement, payable in semi-monthly installments, assuming the payments would beginretirement, as of the last day of fiscal year 2018. These Named Executive Officersthey have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement with prior approval from the Board. If the Board approved early retirement, theyThe amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be entitled to a reduced SERP benefit,paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as described inof the Pension Benefits section on page 51.last day of fiscal year 2020. Qualifying Termination Following a Change in Control No benefits are paid solely due to a change in control, although a change in control triggers immediate vesting and an obligation for the Company to fully fund accrued benefits through a trust. If an executive was separated from the Company after a change in control, a deferred annuity would be payable upon the executive reaching retirement age. If the separation occurred before the executive’s retirement age of 58, the benefit would be paid as a reducedan early retirement benefit at age 53, or the executive’s actual age, if older. In this case, the requirement for Board approval of the early retirement is waived. The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown in the table for Erik Nordstrom and Peter NordstromKenneth Worzel are the present values of their SERP benefits reduced for early commencement, payable in semi-monthly installments, assuming the payments would beginretirement, as of the last day of fiscal year 2018. These Named Executive Officersthey have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement. The amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2020. The Compensation CommitteeCPCC has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company. (c) Life Insurance Proceeds
58 NORDSTROM, INC. - 2019 Proxy Statement
| | (c) | Life Insurance Proceeds |
The Company provides life insurance for the Named Executive OfficersNEOs of approximately 1.25 times annual base salary. The amounts reported in the table represent the life insurance proceeds that would be payable if the Named Executive OfficersNEOs had died as of the last day of the fiscal year. The premiums paid for the Company-provided life insurance are included in column (d)(c) in the All Other Compensation in Fiscal Year 20182020 table on page 44. NORDSTROM, INC. - 2021 Proxy Statement 56 | | (d) | Retiree Health Care Benefit |
(d) Retiree Health Care Benefit The Company provides continued health care coverage for the eligible Named Executive OfficersNEOs if they separate from the Company after age 55 with at least 10 profit sharing years of service. These benefits include medical, behavioral health/substance abuse, vision, prescription drug and dental coverage. The Named Executive OfficersNEOs and their spouses or liferegistered domestic partners and eligible dependents would be covered under the retiree health plan, and the executive and the Company would continue to share in the cost of the insurance premium. Coverage and cost sharing would continue for the surviving spouse or liferegistered domestic partner and eligible dependents after the executive’s death. Effective November 1, 2013, the retiree health plan was closed to new entrants. The amounts in the table for Erik Nordstrom and Peter Nordstromthe eligible NEOs are the present values of the health care cost that would be payable by the Company if they had separated on the last day of the fiscal year. Erik Nordstrom, and Peter Nordstrom and Kenneth Worzel have met the minimum retirement age of 55 with at least 10 profit sharing years of service and would be eligible for retirement. Assumptions used in determining these amounts include a discount rate of 4.33%2.73% and the RP2014PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2018.MP2020. An executive who is terminated for cause, as determined by the Company in the exercise of its discretion in accordance with the Plan, is not eligible to receive the retiree health care benefit. (e) Separation Benefit Under the Leadership SeparationNordstrom, Inc. Executive Severance Plan, Anne Bramman, Kenneth Worzel and Christine DeputyEdmond Mesrobian are eligible to receive benefits upon involuntary termination of employment by the Company, duenot for cause. To be eligible to job elimination. participate in the Plan upon involuntary termination, the eligible NEO must have signed a non-competition and non-solicitation agreement. Erik Nordstrom and Peter Nordstrom are not eligible for separation benefits under the Plan. Anne Bramman has elected not to participate in the Plan. The benefits for eligible employees are based on leadership level and years of service, andparticipating employees include: •lump sum cash payment for severance: one month18 or 24 months of base salary per year of service, with a minimum of 6 months up to a maximum of 12 months.for Executive Officers, depending on their roles. This is reduced by an amount equal to the participant’s gross monthly SERP benefit multiplied by the number of months used to calculate the severance payment, if applicable; •lump sum cash payment for health coverage: the cost of the Company-paid portion of the employee’s currently elected health coverage for 12 months, unless the employee is eligible for and elects the retiree health care benefit, as described in footnote (d) above;, “Retiree Health Care Benefit”; and •six months of outplacement services. The potentialKenneth Worzel’s estimated separation payment shown below is reduced by an amount equal to his estimated gross monthly SERP benefit multiplied by the number of months used to calculate his separation payment. No amount is included for the Company-paid portion of medical benefits as he qualifies for retiree health care benefits. No amount is included for the Company-paid portion of medical benefits for the Named Executive Officers are shown below.
| | | | | | | | | | | | | | Name | | Separation Payment ($) |
| | Company-Paid Portion of Medical Benefits ($) |
| | Cost of Outplacement Services ($) |
| | Total Separation Benefit ($) |
| Erik B. Nordstrom | | — |
| | — |
| | — |
| | — |
| Anne L. Bramman | | 387,500 |
| | 8,864 |
| | 4,200 |
| | 400,564 |
| Peter E. Nordstrom | | — |
| | — |
| | — |
| | — |
| Kenneth J. Worzel | | 533,333 |
| | 11,922 |
| | 4,200 |
| | 549,455 |
| Christine F. Deputy | | 292,500 |
| | 11,922 |
| | 4,200 |
| | 308,622 |
|
Under the Leadership Separation Plan, the Company may provide the executive with additional separation benefits, in cash or in kind, to assist the executiveEdmond Mesrobian as he is not participating in the transition from active employee status. Company’s medical benefit plans.
To be eligible to receive any benefits under the Leadership SeparationNordstrom, Inc. Executive Severance Plan, the Named Executive OfficerNEO must sign a release in which the executive agrees, among other things, not to disclose to anyone at any time any confidential information acquired during employment with the Company, and not to publish any statement, or instigate, assist or participate in the making or publication of any statement which is disparaging or detrimental in any way to the Company, except in each case as required by applicable law. | | (f) | Disability Insurance Benefit |
The potential separation benefits for the NEOs are shown below. | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Separation Payment ($) | | Company-Paid Portion of Medical Benefits ($) | | Cost of Outplacement Services ($) | | Total Separation Benefit ($) | Erik B. Nordstrom | | — | | | — | | | — | | | — | | Anne L. Bramman | | — | | | — | | | — | | | — | | Peter E. Nordstrom | | — | | | — | | | — | | | — | | Kenneth J. Worzel | | 1,330,609 | | | — | | | 4,200 | | | 1,334,809 | | Edmond Mesrobian | | 1,550,000 | | | — | | | 4,200 | | | 1,554,200 | |
(f) Disability Insurance Benefit The Company provides long-term disability insurance for the Named Executive Officers.NEOs. The amount reported in the table for each Named Executive OfficerNEO is the long-term disability benefit provided of up to $35,000 per month. The premiums for the Company-provided disability insurance are included in column (d)(c) in the All Other Compensation in Fiscal Year 20182020 table on page 44.44.
(g) Executive Management Bonus
NORDSTROM, INC. - 2019 Proxy Statement 59
| | (g) | Executive Management Bonus |
The performance period under the Executive Management Bonus PlanEMBP is the fiscal year. Therefore, a termination event that occurred on the last day of the fiscal year would not result in any additional or accelerated benefits under this Plan. However, if an employee died, became disabled or retired (after having met certain age and years of service requirements) during the fiscal year, the Compensation CommitteeCPCC would have the sole discretion to determine what amounts, if any, an executive would remain eligible to receive as a performance-based bonus award. Any bonus award would be prorated to reflect the period of service during the fiscal year. 57 NORDSTROM, INC. - 2021 Proxy Statement
Pay Ratio Disclosure In August 2015, the SEC issued final rules implementing the provision of the Dodd-Frank Actrequire that requires U.S. publicly traded companies to disclose the ratio of their Principal Executive Officer’s (“PEO”) compensation to that of their median employee. For this required disclosure,Our PEO is our CEO, Erik Nordstrom, Co-President, is considered to be our Principal Executive Officer (“PEO”).Nordstrom. For fiscal year 2018:2020: •the annual total compensation of Erik Nordstrom was $4,451,746;$5,647,670, which includes PSUs granted then subsequently cancelled as discussed on page 36 with a grant date fair value of $1,592,846; and •the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom, was $34,454.$26,803. Based on this information, for 20182020 the ratio of the annual total compensation of Erik Nordstrom, our Co-PresidentChief Executive Officer and PEO, to the median of the annual compensation of all employeesemployees was 129211 to 1. The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio that we have reported. To identify the median employee, we used the total compensation as reported on the 20182020 W-2 for all of our U.S. employees, excluding our PEO, and the Canadian equivalent T4 for all of our Canadian employees, who were employed by us on February 2, 2019,January 30, 2021, the last day of our fiscal year. We included full-time, part-time, seasonal and temporary employees and did not annualize the compensation for our permanent full-time and part-time employees who were not employed with us for the entire fiscal year. We applied a Canadian to U.S. dollar exchange rate to the compensation elements paid in Canadian currency. Similar to other large retail companies, a significant portion of our workforce is employed on a part-time and seasonal basis. As of the end of fiscal year 2018,2020, approximately 38,00029,000 of our 67,000 55,000 employees – or 57%53% of our workforce – were either part-time or seasonal. After identifying the median employee, we calculated annual total compensation for the median employee using the same methodology we used for determining total compensation for our Named Executive OfficersNEOs as shown in the 20182020 Summary Compensation Table on page 42.
60 NORDSTROM, INC. - 20192021 Proxy Statement 58
| | | | | | PROPOSAL 3 | ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION |
The Board recommends a vote FOR this proposal. The Company is providing shareholders with an advisory (nonbinding) vote on the compensation program of our Named Executive OfficersNEOs as disclosed in this Proxy Statement. At the 2017 Annual Meeting of Shareholders, over 95% of the votes cast approved our Board’s recommendation to hold advisory votes on an annual basis. At the 20182020 Annual Meeting of Shareholders, over 90% of the votes cast were supportive of our compensation program. The Compensation Committee recognizesIn light of this support of the compensation program for our Named Executive Officers andNEOs, the CPCC continues to apply the same pay and benefits philosophy which underlies our pay-for-performance philosophy. | | | Compensation Program Highlights |
As described in the Compensation Discussion and AnalysisCD&A beginning on page 29, our Named Executive OfficersNEOs are rewarded when defined performance milestones are achieved and when value is created for our shareholders. Our Compensation CommitteeCPCC and Board believe that our compensation program is effective in implementing our executive compensation philosophy and establishing a solid link between compensation and shareholder interests. Highlights of our compensation program include the following: •We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. At least Approximately 70% of the value of the targeted compensation package for each of our Named Executive OfficersNEOs is weighted toward pay-for-performance and variable compensation to reinforce our philosophy of compensating our executives when they and the Company are successful in ways that support shareholder interests. •Each year, the Compensation CommitteeCPCC establishes the performance-based bonus measures that focus executives on the most important Company objectives. In 20182020, Named Executive OfficersNEOs had the following measures: | | – | Incentive Adjusted Return on Invested Capital (“Incentive Adjusted ROIC”)–Incentive Adjusted ROIC to ensure our overall performance aligns directly with shareholder returns over the long term. The measure is expressed as a threshold that must be met before any payout can be made on Incentive EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders; |
| | – | Incentive Earnings Before Interest and Income Tax Expense (“Incentive EBIT”) to emphasize the importance of earnings and its role in driving shareholder value. Erik Nordstrom, Peter Nordstrom and Blake Nordstrom each had this performance measure weighed at 100%, subject to the achievement of the Incentive Adjusted ROIC threshold. Anne Bramman, Kenneth Worzel and Christine Deputy each had this performance measure weighed at 67%, again subject to the achievement of the Incentive Adjusted ROIC threshold; and
|
| | – | Individual Measure to enable differentiation in bonus payout opportunity based on individual contributions and execution against goals. This measure was added for fiscal year 2018 for Anne Bramman, Kenneth Worzel and Christine Deputy. The individual bonus measure accounted for 33% of the total bonus opportunity for these Named Executive Officers.
|
The Committee referencesmeasure is expressed as a threshold that must be met before any payout can be made on Incentive Adjusted EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders; –Incentive Adjusted EBIT to emphasize the importance of earnings and its role in driving shareholder value. Erik Nordstrom and Peter Nordstrom each had this performance measure weighed at 100%, subject to the achievement of the Incentive Adjusted ROIC threshold. Anne Bramman, Kenneth Worzel and Edmond Mesrobian each had this performance measure weighed at 67%, again subject to the achievement of the Incentive Adjusted ROIC threshold; and –Individual Measure to enable differentiation in bonus payout opportunity based on individual contributions and execution against goals for Anne Bramman, Kenneth Worzel and Edmond Mesrobian. The individual bonus measure accounted for 33% of the total bonus opportunity for these NEOs. •While the CPCC considers the 50th percentile (median) of our retail peer group when assessing the Named Executive Officers’ targeted levelas a reference, there is no specific percentage of target total direct compensation (base salary + performance-based bonus + long-term incentives). The market information is considered a reference point rathertargeted by the CPCC other than policyto remain generally competitive with similarly situated peer companies. Target opportunities for reviewing competitiveness.individual pay elements vary by executive role based on scope of responsibilities and expected contributions. •We maintain meaningful executive stock ownership guidelines so that our executives’ interests, as shareholders, are aligned with our broader shareholder base. •We have an executive compensation clawback policy that applies to performance-based compensation. Our Compensation Committee•The CPCC has retained and directs an independent compensation consultant.
•We do not have employment agreements with our executives. •We do not provide tax gross-ups, except those related to relocation expenses when an executive must move to assume Company responsibilities. •We do not allow stock option grant repricing or backdating, nor do we grant options below 100% of fair market value. •We have a derivative and hedging policy that prohibits Directors and Executive Officers (as well as other key insiders and their immediate families) from engaging in hedging transactions with respect to any equity securities of the Company held by them. •We have restrictions on pledging of Common Stock. On March 25, 2020, the CPCC took immediate action to support cash preservation goals by reducing the base salaries of the NEOs from March 29, 2020 to October 3, 2020, as follows: Erik Nordstrom and Peter Nordstrom received no base salary, while Anne Bramman, Kenneth Worzel and Edmond Mesrobian received a 25% base salary reduction. Similarly, the salaries of all other executives at the Company were reduced by 10% to 25%, depending on role.
59 NORDSTROM, INC. - 20192021 Proxy Statement61
Shortly after the PSU grant was made on March 9, 2020, the Company temporarily closed stores in response to the growing COVID-19 pandemic, which meaningfully disrupted sales and operations. There was also significant uncertainty and disruption to our inventory flow, merchandising, and supply chain. Accordingly, the CPCC determined that the financial and market share goals established in February of 2020 for the PSU grant were no longer relevant or functional, and determined not to revise the goals for the 2020 PSUs. Accordingly, each of the NEOs agreed to the cancellation of their PSU award on August 18, 2020, as disclosed in the Form 8-K filed August 20, 2020. As required, the grant date fair values of the PSU grants are included in the Summary Compensation Table, on page 42. On August 18, 2020, the CPCC determined to award stock option grants in light of continued economic uncertainty, along with a desire to incentivize executives towards optimal shareholder outcomes and recognize the executives’ critical roles in supporting the Company’s key strategies and long-term success to each of the NEOs, effective August 27, 2020, the first open trading window date after CPCC approval. Stock options reward executives for the creation of long-term shareholder value, thereby aligning the executives’ interests with those of our Company’s shareholders. Erik Nordstrom and Peter Nordstrom each received an option to purchase 245,829 shares, and Anne Bramman, Kenneth Worzel and Edmond Mesrobian received an option to purchase 281,657, 366,540 and 212,207 shares, respectively. The stock options granted on August 27, 2020 have a grant price of $14.79, the closing stock price on August 27, 2020 and vest in full on September 10, 2022.
We are asking our shareholders to indicate their support for our Named Executive Officers’NEOs’ compensation as described in this Proxy Statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our Named Executive Officers.NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive OfficersNEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 20192021 Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers,NEOs, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure in this Proxy Statement.” Our Board has adopted a policy of annual executive compensation advisory votes. As an advisory vote, this proposal is not binding on the Company. However, our Compensation CommitteeCPCC and Board value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions regarding the Company’s Named Executive Officers.NEOs.
62 NORDSTROM, INC. - 2019 Proxy Statement
EQUITY COMPENSATION PLANSRestricted Stock Units
Death or Disability The followingRSU agreements under the 2010 EIP, with the exception of the 2019 RSU agreement, provide that if a participant’s employment is terminated by reason of death or disability, RSUs granted more than six months prior to the termination event will immediately vest. The Company’s 2019 and 2020 RSU agreement for annual awards provides that if a participant’s employment is terminated by reason of death or disability, RSUs will immediately vest. The 2019 and 2020 RSU agreement for one-time awards provides that if a participant’s employment is terminated by reason of death or disability, a prorated number of RSUs granted will immediately based on the number of full months employed. The amounts shown in the table providesinclude the values, as of the end of fiscal year 2020, of unvested RSUs that would immediately vest. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. 55 NORDSTROM, INC. - 2021 Proxy Statement
Retirement or Termination without Cause The RSU agreements for annual grants under the 2010 and 2019 EIPs generally provide that if a participant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by reason of retirement or termination without cause, RSUs granted more than six months prior to termination will continue to vest. The amounts shown in the table for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel include the values, as of the end of fiscal year 2020, of unvested RSUs that would continue to vest after termination. These executives qualify for this continued vesting as of the end of the fiscal year ended February 2, 2019 about Common Stock that may be issued uponsince they had each reached the exerciseminimum retirement age of options and rights that have been55 with at least 10 years of service. If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or may be granted to employees and members of the Board under alldivulges or improperly uses any of the Company’s existing equity compensation plans.confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. Qualifying Termination Following a Change in Control Under the 2010 and 2019 EIPs, the NEOs are not entitled to any payment or accelerated benefit upon a change in control with respect to their RSUs. However, a NEO will generally be entitled to accelerated vesting if the executive experiences a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control of the Company, unless the CPCC has acted to cause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction, or the award is of a type which would continue in effect notwithstanding the occurrence of the change in control. See the Change in Control paragraph under Stock Options on page 54 for information about when a change in control occurs. The amounts shown include the values, as of the end of fiscal year 2020, of unvested RSUs that would vest if the NEOs experienced a qualifying termination within 12 months following a change in control of the Company and the CPCC did not act to cause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction. (b) Vested SERP Benefit The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% survivor annuity paid to the surviving spouse or life partner for the remainder of their life after the executive’s death, as described in the Pension Benefits section beginning on page 50. Death The amounts shown are the present values of the 50% survivor annuity, payable in equal installments on the Company’s regular payroll dates to the spouse or life partner of the executive, and would continue for the remaining lifetime of the spouse or life partner. Disability The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amount shown would be paid in equal installments on the Company’s regular payroll dates, assuming the payment would begin as of the last day of fiscal year 2020. No amounts are shown for Erik Nordstrom or Kenneth Worzel, the other eligible NEOs, as they have not reached the normal retirement age of 58, which is the earliest eligibility for the SERP disability benefit. Retirement or Termination without Cause The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown for Erik Nordstrom and Kenneth Worzel are the present values of their SERP benefits for early retirement, as they have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement with prior approval from the Board. The amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2020. Qualifying Termination Following a Change in Control No benefits are paid solely due to a change in control, although a change in control triggers immediate vesting and an obligation for the Company to fully fund accrued benefits through a trust. If an executive was separated from the Company after a change in control, a deferred annuity would be payable upon the executive reaching retirement age. If the separation occurred before the executive’s retirement age of 58, the benefit would be paid as an early retirement benefit at age 53, or the executive’s actual age, if older. In this case, the requirement for Board approval of the early retirement is waived. The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown for Erik Nordstrom and Kenneth Worzel are the present values of their SERP benefits for early retirement, as they have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement. The amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2020. The CPCC has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company. (c) Life Insurance Proceeds The Company provides life insurance for the NEOs of approximately 1.25 times annual base salary. The amounts reported in the table represent the life insurance proceeds that would be payable if the NEOs had died as of the last day of the fiscal year. The premiums paid for the Company-provided life insurance are included in column (c) in the All Other Compensation in Fiscal Year 2020 table on page 44. | | | | | | | | | | | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) (#)
|
| | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) ($) |
| | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities to be issued as reflected in column (1)) (3) (#)
|
| | Equity compensation plans approved by the Company’s shareholders (a) | 12,581,984 |
| (b) | 53 |
| | 14,615,907 |
| (c) | Equity compensation plans not approved by the Company’s shareholders (d) | 8,092 |
| | 5 |
| | — |
| | TOTAL | 12,590,076 |
| | 53 |
| | 14,615,907 |
| |
| | (a) | Consist of the 2004 and 2010 Equity Incentive Plans, the Employee Stock Purchase Plan and the 2002 Nonemployee Director Stock Incentive Plan. Performance share units and restricted stock units do not have an exercise price and therefore have been excluded from the weighted average exercise price calculation in column (2). |
| | (b) | Includes 43,910 of deferred Director awards and 110,631 related to deferred performance share units. |
| | (c) | Includes 12,541,502 shares from the 2010 Equity Incentive Plan, 1,814,978 shares from the Employee Stock Purchase Plan and 259,427 shares from the 2002 Nonemployee Director Stock Incentive Plan. |
| | (d) | Consist of plans created in connection with our subsidiaries. |
NORDSTROM, INC. - 20192021 Proxy Statement 6356
(d) Retiree Health Care Benefit The Company provides continued health care coverage for the eligible NEOs if they separate from the Company after age 55 with at least 10 profit sharing years of service. These benefits include medical, behavioral health/substance abuse, vision, prescription drug and dental coverage. The NEOs and their spouses or registered domestic partners and eligible dependents would be covered under the retiree health plan, and the executive and the Company would continue to share in the cost of the insurance premium. Coverage and cost sharing would continue for the surviving spouse or registered domestic partner and eligible dependents after the executive’s death. Effective November 1, 2013, the retiree health plan was closed to new entrants. The amounts in the table for the eligible NEOs are the present values of the health care cost that would be payable by the Company if they had separated on the last day of the fiscal year. Erik Nordstrom, Peter Nordstrom and Kenneth Worzel have met the minimum retirement age of 55 with at least 10 profit sharing years of service and would be eligible for retirement. Assumptions used in determining these amounts include a discount rate of 2.73% and the PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2020. An executive who is terminated for cause, as determined by the Company in the exercise of its discretion in accordance with the Plan, is not eligible to receive the retiree health care benefit. (e) Separation Benefit Under the Nordstrom, Inc. Executive Severance Plan, Kenneth Worzel and Edmond Mesrobian are eligible to receive benefits upon involuntary termination of employment by the Company, not for cause. To be eligible to participate in the Plan upon involuntary termination, the eligible NEO must have signed a non-competition and non-solicitation agreement. Erik Nordstrom and Peter Nordstrom are not eligible under the Plan. Anne Bramman has elected not to participate in the Plan. The benefits for eligible and participating employees include: •lump sum cash payment for severance: 18 or 24 months of base salary for Executive Officers, depending on their roles. This is reduced by an amount equal to the participant’s gross monthly SERP benefit multiplied by the number of months used to calculate the severance payment, if applicable; •lump sum cash payment for health coverage: the cost of the Company-paid portion of the employee’s currently elected health coverage for 12 months, unless the employee is eligible for the retiree health care benefit, as described in footnote (d), “Retiree Health Care Benefit”; and •six months of outplacement services. Kenneth Worzel’s estimated separation payment shown below is reduced by an amount equal to his estimated gross monthly SERP benefit multiplied by the number of months used to calculate his separation payment. No amount is included for the Company-paid portion of medical benefits as he qualifies for retiree health care benefits. No amount is included for the Company-paid portion of medical benefits for Edmond Mesrobian as he is not participating in the Company’s medical benefit plans. To be eligible to receive any benefits under the Nordstrom, Inc. Executive Severance Plan, the NEO must sign a release in which the executive agrees, among other things, not to disclose to anyone at any time any confidential information acquired during employment with the Company, and not to publish any statement, or instigate, assist or participate in the making or publication of any statement which is disparaging or detrimental in any way to the Company, except in each case as required by applicable law. The potential separation benefits for the NEOs are shown below. | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Separation Payment ($) | | Company-Paid Portion of Medical Benefits ($) | | Cost of Outplacement Services ($) | | Total Separation Benefit ($) | Erik B. Nordstrom | | — | | | — | | | — | | | — | | Anne L. Bramman | | — | | | — | | | — | | | — | | Peter E. Nordstrom | | — | | | — | | | — | | | — | | Kenneth J. Worzel | | 1,330,609 | | | — | | | 4,200 | | | 1,334,809 | | Edmond Mesrobian | | 1,550,000 | | | — | | | 4,200 | | | 1,554,200 | |
(f) Disability Insurance Benefit The Company provides long-term disability insurance for the NEOs. The amount reported in the table for each NEO is the long-term disability benefit provided of up to $35,000 per month. The premiums for the Company-provided disability insurance are included in column (c) in the All Other Compensation in Fiscal Year 2020 table on page 44.
(g) Executive Management Bonus The performance period under the EMBP is the fiscal year. Therefore, a termination event that occurred on the last day of the fiscal year would not result in any additional or accelerated benefits under this Plan. However, if an employee died, became disabled or retired (after having met certain age and years of service requirements) during the fiscal year, the CPCC would have the sole discretion to determine what amounts, if any, an executive would remain eligible to receive as a performance-based bonus award. Any bonus award would be prorated to reflect the period of service during the fiscal year. 57 NORDSTROM, INC. - 2021 Proxy Statement
Pay Ratio Disclosure SEC rules require that U.S. publicly traded companies disclose the ratio of their Principal Executive Officer’s (“PEO”) compensation to that of their median employee. Our PEO is our CEO, Erik Nordstrom. For fiscal year 2020: •the annual total compensation of Erik Nordstrom was $5,647,670, which includes PSUs granted then subsequently cancelled as discussed on page 36 with a grant date fair value of $1,592,846; and •the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom, was $26,803. Based on this information, for 2020 the ratio of the annual total compensation of Erik Nordstrom, our Chief Executive Officer and PEO, to the median of the annual compensation of all employees was 211 to 1. The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio that we have reported. To identify the median employee, we used the total compensation as reported on the 2020 W-2 for all of our U.S. employees, excluding our PEO, and the Canadian equivalent T4 for all of our Canadian employees, who were employed by us on January 30, 2021, the last day of our fiscal year. We included full-time, part-time, seasonal and temporary employees and did not annualize the compensation for our permanent full-time and part-time employees who were not employed with us for the entire fiscal year. We applied a Canadian to U.S. dollar exchange rate to the compensation elements paid in Canadian currency. Similar to other large retail companies, a significant portion of our workforce is employed on a part-time and seasonal basis. As of the end of fiscal year 2020, approximately 29,000 of our 55,000 employees – or 53% of our workforce – were either part-time or seasonal. After identifying the median employee, we calculated annual total compensation for the median employee using the same methodology we used for determining total compensation for our NEOs as shown in the 2020 Summary Compensation Table on page 42. NORDSTROM, INC. - 2021 Proxy Statement 58
| | | | | | PROPOSAL 43 | APPROVAL OF THE NORDSTROM, INC. 2019 EQUITY INCENTIVE PLAN ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION |
The Board recommends a vote FOR this proposal. The Company is providing shareholders with an advisory (nonbinding) vote on the compensation program of our NEOs as disclosed in this Proxy Statement. At the 2017 Annual Meeting of Shareholders, over 95% of the votes cast approved our Board’s recommendation to hold advisory votes on an annual basis. At the 2020 Annual Meeting of Shareholders, over 90% of the votes cast were supportive of our compensation program. In light of this support of the compensation program for our NEOs, the CPCC continues to apply the same pay and benefits philosophy which underlies our pay-for-performance philosophy. | | | Compensation Program Highlights |
As described in the CD&A beginning on page 29, our NEOs are being askedrewarded when defined performance milestones are achieved and when value is created for our shareholders. Our CPCC and Board believe that our compensation program is effective in implementing our executive compensation philosophy and establishing a solid link between compensation and shareholder interests. Highlights of our compensation program include the following: •We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. Approximately 70% of the value of the targeted compensation package for each of our NEOs is weighted toward pay-for-performance and variable compensation to reinforce our philosophy of compensating our executives when they and the Company are successful in ways that support shareholder interests. •Each year, the CPCC establishes the performance-based bonus measures that focus executives on the most important Company objectives. In 2020, NEOs had the following measures: –Incentive Adjusted ROIC to ensure our overall performance aligns directly with shareholder returns over the long term. The measure is expressed as a threshold that must be met before any payout can be made on Incentive Adjusted EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders; –Incentive Adjusted EBIT to emphasize the importance of earnings and its role in driving shareholder value. Erik Nordstrom and Peter Nordstrom each had this performance measure weighed at 100%, subject to the achievement of the Incentive Adjusted ROIC threshold. Anne Bramman, Kenneth Worzel and Edmond Mesrobian each had this performance measure weighed at 67%, again subject to the achievement of the Incentive Adjusted ROIC threshold; and –Individual Measure to enable differentiation in bonus payout opportunity based on individual contributions and execution against goals for Anne Bramman, Kenneth Worzel and Edmond Mesrobian. The individual bonus measure accounted for 33% of the total bonus opportunity for these NEOs. •While the CPCC considers the 50th percentile (median) of our peer group as a reference, there is no specific percentage of target total direct compensation targeted by the CPCC other than to remain generally competitive with similarly situated peer companies. Target opportunities for individual pay elements vary by executive role based on scope of responsibilities and expected contributions. •We maintain meaningful executive stock ownership guidelines so that our executives’ interests, as shareholders, are aligned with our broader shareholder base. •We have an executive compensation clawback policy that applies to performance-based compensation. •The CPCC has retained and directs an independent compensation consultant. •We do not have employment agreements with our executives. •We do not provide tax gross-ups, except those related to relocation expenses when an executive must move to assume Company responsibilities. •We do not allow stock option grant repricing or backdating, nor do we grant options below 100% of fair market value. •We have a derivative and hedging policy that prohibits Directors and Executive Officers (as well as other key insiders and their immediate families) from engaging in hedging transactions with respect to any equity securities of the Company held by them. •We have restrictions on pledging of Common Stock. On March 25, 2020, the CPCC took immediate action to support cash preservation goals by reducing the base salaries of the NEOs from March 29, 2020 to October 3, 2020, as follows: Erik Nordstrom and Peter Nordstrom received no base salary, while Anne Bramman, Kenneth Worzel and Edmond Mesrobian received a 25% base salary reduction. Similarly, the salaries of all other executives at the Company were reduced by 10% to 25%, depending on role. 59 NORDSTROM, INC. - 2021 Proxy Statement
Shortly after the PSU grant was made on March 9, 2020, the Company temporarily closed stores in response to the growing COVID-19 pandemic, which meaningfully disrupted sales and operations. There was also significant uncertainty and disruption to our inventory flow, merchandising, and supply chain. Accordingly, the CPCC determined that the financial and market share goals established in February of 2020 for the PSU grant were no longer relevant or functional, and determined not to revise the goals for the 2020 PSUs. Accordingly, each of the NEOs agreed to the cancellation of their PSU award on August 18, 2020, as disclosed in the Form 8-K filed August 20, 2020. As required, the grant date fair values of the PSU grants are included in the Summary Compensation Table, on page 42. On August 18, 2020, the CPCC determined to award stock option grants in light of continued economic uncertainty, along with a desire to incentivize executives towards optimal shareholder outcomes and recognize the executives’ critical roles in supporting the Company’s key strategies and long-term success to each of the NEOs, effective August 27, 2020, the first open trading window date after CPCC approval. Stock options reward executives for the creation of long-term shareholder value, thereby aligning the executives’ interests with those of our Company’s shareholders. Erik Nordstrom and Peter Nordstrom each received an option to purchase 245,829 shares, and Anne Bramman, Kenneth Worzel and Edmond Mesrobian received an option to purchase 281,657, 366,540 and 212,207 shares, respectively. The stock options granted on August 27, 2020 have a grant price of $14.79, the closing stock price on August 27, 2020 and vest in full on September 10, 2022.
We are asking our shareholders to indicate their support for our NEOs’ compensation as described in this Proxy Statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 2021 Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on a proposal to approvean advisory basis, the adoptioncompensation of the Nordstrom, Inc. 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan is intended to be a successor to the existing 2010 plan (the “2010 Equity Incentive Plan”) for employees, which expires in 2020, and the existing 2002 Nonemployee Director Stock Incentive Plan for directors (“2002 Director Plan” and together with the 2010 Equity Incentive Plan, “Prior Plans”). If the 2019 Plan is approved by the shareholders, no future grants will be made under the Prior Plans. The Company has granted equity awards to its employees and directors under Nordstrom equity compensation plans since 1977. All of these plans, with the exception of the Prior Plans, have expired. The Company wishes to replace the Prior Plans to ensure that the Company has sufficient shares available to continue its long-held approach to pay for performance through granting equity to its employees and nonemployee directors, and to incorporate terms for future grants that reflect current best practices in executive compensation. The Company’s pay for performance philosophy is describedNEOs, as disclosed in the Compensation Discussion and Analysis, beginningthe compensation tables and the related narrative disclosure in this Proxy Statement.”
Our Board has adopted a policy of annual executive compensation advisory votes. As an advisory vote, this proposal is not binding on page 29. The 2019 Plan was approved by the Company. However, our CPCC and Board on February 27, 2019value the opinions of our shareholders and will become effective upon its adoption byconsider the shareholders.
The termsoutcome of the 2019 Plan will:
reserve for issuance by the Company 9,500,000 shares;
require each share issued as part of a full-value award, such as a grant of unrestricted shares, restricted shares, restricted stock units or performance share units, and dividend equivalents to count as 1.6 shares for purposes of determining shares remaining available for grant. Under the 2010 Equity Incentive Plan, full-value awards were counted as 1.6 shares, while under the 2002 Director Plan such awards were counted as 1 share;
prohibit liberal share recycling as shares not issued as a result of the net settlement of an outstanding stock appreciation right or stock option; shares used to pay the exercise price or withholding taxes related to an outstanding award; or shares repurchased on the open market with the proceeds of a stock option exercise price will not be returned to the 2019 Plan;
provide for “double trigger” rather than “single trigger” accelerated vesting, meaning awards will be accelerated as the result of a change in control where the participant’s employment is involuntarily terminated or the participant terminates for “good reason” within 12 months following a change of control and with respect to performance-based awards allow for acceleration of vesting at target if actual performance cannot be determined upon a qualifying termination;
establish one year as the minimum period for vesting of all awards, provided that the Compensation Committee (“Committee”) may grant awards that vest in less than one year if the total number of such shares does not exceed 5% of the available shares authorized for issuance under the 2019 Plan. Under the 2010 Equity Incentive Plan, this 5% limit applied only to grants of Unrestricted Shares;
prohibit the issuance of dividends or dividend equivalents on stock options and stock appreciation rights and prohibit delivery of dividends or dividend equivalents on all other types of awards unless such awards are earned and vested;
subject all awards tovote when making future compensation decisions regarding the Company’s clawback policy as described on page 40; andNEOs.
prohibit the transfer of awards, except in the context of death or otherwise required by law, or as approved by the Committee.
| | Shares Available under Plans |
We currently have shares available for grant under two existing equity incentive plans:
2002 Nonemployee Director Stock Incentive Plan with 257,883 shares available as of our record date, March 15, 2019. Once the 2019 Plan is approved by the shareholders, the 2002 Director Plan will be terminated, and therefore no additional shares will be granted from it.
2010 Equity Incentive Plan with 9,103,009 shares available as of March 15, 2019. Once the 2019 Plan is approved by the shareholders, the 2010 Equity Incentive Plan will be terminated, and therefore no additional shares will be granted from it.
2019 Equity Incentive Plan Upon approval by the shareholders, the 2019 Plan will have 9,500,000 shares available for grant, plus the additional shares that may become available if outstanding awards are forfeited under the 2010 Equity Incentive Plan and the expired 2004 Equity Incentive Plan.
64 NORDSTROM, INC. - 2019 Proxy Statement
The following table shows information regarding outstanding options and full-value awards as of March 15, 2019 under the Company’s 2002 Nonemployee Director Stock Incentive Plan, 2004 Equity Incentive Plan and the 2010 Equity Incentive Plan.
| | | | | | | | | Outstanding Options (#) |
| Weighted Average Exercise Price ($) |
| Weighted Average Remaining Years of Contractual Life (#) |
| | Unvested Full Value Awards (#) | 9,245,495 |
| 52.34 |
| 4.93 |
| | 4,606,812* |
| | * | Includes restricted stock units and performance share units granted at maximum. Each outstanding full value award reduces the shares available for grant under the 2010 Equity Incentive Plan by 1.6 shares. |
| | Summary of 2019 Plan Terms |
The following is a summary of the 2019 Plan, a complete copy of which has been filed with the Securities and Exchange Commission as Appendix B to this Proxy Statement and is also available on the SEC’s website at www.sec.gov. This summary is qualified in its entirety by the actual terms of the 2019 Plan, which are incorporated herein by this reference.
Participants
Eligible participants include the Company’s and its subsidiaries’:
employees; and
nonemployee directors
The 2019 Plan is broad enough to cover all of the Company’s and its subsidiaries’ approximately 67,000 full- or part-time employees and nonemployee directors. The Company currently grants equity to approximately 650 eligible employees, approximately 480 of our highest-performing sales people and its nonemployee directors.
Purpose
The purpose of the 2019 Plan is to promote the long-term success of the Company and its subsidiaries and the creation of shareholder value by:
motivating participants to focus on the Company’s critical long-range objectives;
encouraging the attraction and retention of employees and nonemployee directors; and
aligning participant and shareholder interests through stock ownership.
Administration
The Committee will administer the 2019 Plan, except that it may also appoint a secondary Board committee or one or more senior executive officers to administer the 2019 Plan with respect to employees who are not considered executive officers under Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). The Committee may delegate certain day-to-day administrative duties under the 2019 Plan to the Company’s Compensation department (or similar department).
Awards
The types of awards that may be made under the 2019 Plan are:
options to purchase shares of Common Stock;
stock appreciation rights;
unrestricted shares of Common Stock;
restricted shares of Common Stock;
restricted stock units; and
performance share units.
Share Limits and Vesting Requirements
The limit on the number of shares of Common Stock that may be delivered under the Plan through the issuance of any type of award may not exceed (i) 9,500,000 plus (ii) any shares currently underlying awards outstanding under the 2010 Equity Incentive Plan and 2004 Equity Incentive Plan but which are forfeited or which expire without exercise during the term of the 2019 Plan.
NORDSTROM, INC. - 2019 Proxy Statement 65
The maximum number of shares that will be available for grant under the 2019 Plan is subject to reduction by 1.6 shares for each share that is delivered in settlement of an award of unrestricted shares, restricted shares, restricted stock units, performance share units, dividends and dividend equivalents. When a share is delivered in settlement of one of the foregoing types of awards, the maximum is reduced by 1.6 shares and when a share is delivered in settlement of an option or a stock appreciation right, the maximum is reduced by one share.
All awards granted under the Plan shall vest no earlier than the first anniversary of the date of grant provided that up to 5% of the authorized shares under the Plan (including all unrestricted shares of Common Stock) may be granted without this limit.
The 2019 Plan sets forth limits on the number of shares of Common Stock that may be granted pursuant to an award to any participant in a single fiscal year, as follows. No participant may receive:
options to purchase more than 500,000 shares of Common Stock;
more than 500,000 stock appreciation rights;
more than 100,000 unrestricted shares of Common Stock;
more than 500,000 restricted shares of Common Stock;
more than 500,000 restricted stock units; or
more than 500,000 performance share units.
Options
Options may be incentive stock options that qualify for favorable tax treatment for the optionee under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or nonqualified stock options not designed to qualify for favorable tax treatment. Incentive stock options may only be granted to employees. Each option agreement will specify the type of option and the date or event when all or any installment of the option is to become exercisable. The Company has historically granted nonqualified options with a four-year vesting period. The option agreement will also specify the term of the option, provided, however, that the term of an option will in no event exceed 10 years from the date of grant. An option agreement may provide for accelerated exercisability in the event of the optionee’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the optionee’s service.
The exercise price of an option may not be less than 100% of the fair market value of Common Stock on the date of grant. Options may not be repriced.
At the Committee’s discretion, the exercise price of an option may be paid with:
cash;
cash equivalents;
the delivery of outstanding shares of Common Stock;
the cashless exercise method through a broker;
a net exercise method through a broker; or
a combination of these methods.
No dividend or dividend equivalent rights shall accrue or be paid with respect to options.
Stock Appreciation Rights
Stock appreciation rights may be granted with such terms and conditions as may be determined by the Committee provided, however, that the term of a stock appreciation right may not exceed 10 years from the date of grant. Each grant will be evidenced by a stock appreciation rights agreement, which will specify the number of shares of Common Stock to which the right pertains. The agreement will also specify the exercise price, the date when all or any installment is to become exercisable and the term of the stock appreciation right. The agreement may provide for accelerated exercisability in the event of the optionee’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the optionee’s service. Stock appreciation rights may be awarded in combination with options, and such an award may provide that the stock appreciation rights will not be exercisable unless the related options are forfeited.
At the Committee’s discretion, upon exercise of a stock appreciation right, the participant (or person having the right to exercise the right after his or her death) will receive:
cash;
shares of Common Stock; or
any combination of both.
66 NORDSTROM, INC. - 2019 Proxy Statement
The exercise price of a stock appreciation right may not be less than 100% of the fair market value of Common Stock on the date of grant. Stock appreciation rights may not be repriced.
No dividend or dividend equivalent rights shall accrue or be paid with respect to stock appreciation rights.
Unrestricted Shares
Shares not subject to vesting may be awarded for such consideration, consisting of any tangible or intangible property or benefit to the Company, including services performed and contracts for services, as the Committee may determine.
Restricted Shares
Restricted shares may be granted with such terms and conditions as the Committee may determine. These restricted shares may be awarded for such consideration, consisting of any tangible or intangible property or benefit to the Company, including services performed and contracts for services, as the Committee may determine.
Each award of restricted shares will be subject to vesting. Vesting will occur, in full or in installments, upon satisfaction of the conditions specified in the restricted share agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company equal or exceed a target determined in advance by the Committee. A restricted share agreement may provide for accelerated vesting in the event of the recipient’s death, disability or retirement and may provide for expiration prior to the end of its term in the event of the termination of the recipient’s service.
The holders of restricted shares will have the voting, dividend and other rights as set forth in their restricted share agreement, and may have the same voting, dividend or other rights as the Company’s other shareholders provided that any dividends accrued on restricted shares shall be held in escrow by the Company and shall only be paid if and when restricted shares vest, in cash or in shares of unrestricted Common Stock having a fair market value equal to the amount of such dividends. Common Stock distributed to the holder of restricted shares on account of a stock split or stock dividend will be subject to restrictions and risk of forfeiture to the same extent as the restricted shares with respect to which such Common Stock has been distributed.
Restricted Stock Units Death or Disability Restricted stock units may be grantedThe RSU agreements under the 2010 EIP, with such terms and conditions as the Committee may determine. Each award of restricted stock units will be subject to vesting. Vesting will occur, in full or in installments, upon satisfactionexception of the conditions specified2019 RSU agreement, provide that if a participant’s employment is terminated by reason of death or disability, RSUs granted more than six months prior to the termination event will immediately vest.
The Company’s 2019 and 2020 RSU agreement for annual awards provides that if a participant’s employment is terminated by reason of death or disability, RSUs will immediately vest. The 2019 and 2020 RSU agreement for one-time awards provides that if a participant’s employment is terminated by reason of death or disability, a prorated number of RSUs granted will immediately based on the number of full months employed. The amounts shown in the restricted stock unit agreement. The Committee maytable include among such conditions the requirementvalues, as of the end of fiscal year 2020, of unvested RSUs that would immediately vest. If, during the performanceterm of any outstanding grant, the executive engages in any business competitive with the Company or a business unitdivulges or improperly uses any of the Company exceedCompany’s confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. 55 NORDSTROM, INC. - 2021 Proxy Statement
Retirement or Termination without Cause The RSU agreements for annual grants under the 2010 and 2019 EIPs generally provide that if a target determined in advanceparticipant satisfies a minimum age and years of service requirement and the participant’s employment is terminated by the Committee. A restricted stock unit agreement may provide for accelerated vestingreason of retirement or termination without cause, RSUs granted more than six months prior to termination will continue to vest. The amounts shown in the eventtable for Erik Nordstrom, Peter Nordstrom and Kenneth Worzel include the values, as of the recipient’s death, disability or retirement and may provide for expiration prior to the end of its term in the eventfiscal year 2020, of the termination of the recipient’s service. The holders of restricted stock units will not have voting or dividend rights. Prior to settlement or forfeiture, any restricted stock unit may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right will entitle the holder to be paid an amount in cash or stock equal to the dividendsunvested RSUs that would have been paid if the restricted stock units had been issued and outstanding shares of Common Stockcontinue to vest after termination. These executives qualify for this continued vesting as of the record date for the payment of dividends, subject to applicable withholding taxes, if and when the restricted stock units vest.
At the discretion of the Committee, settlement of vested units may be made in the form of:
cash;
shares of Common Stock (unrestricted or restricted shares); or
any combination of both.
Performance Share Units
Performance share units may be granted with such terms and conditions as the Committee may determine. Performance share units are designated in shares of Common Stock.
Each award of performance share units will be subject to vesting. Vesting will occur, in full or in installments, upon satisfaction of the conditions specified in the performance share unit agreement. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company exceed a target determined in advance by the Committee. A performance share unit agreement may provide for accelerated vesting in the event of the recipient’s death, disability or retirement and may provide for expiration prior to the end of the performance periodfiscal year since they had each reached the minimum retirement age of 55 with at least 10 years of service.
If, during the term of any outstanding grant, the executive engages in any business competitive with the Company or divulges or improperly uses any of the Company’s confidential or proprietary information, then any unvested RSUs and any Common Stock delivered on vesting under such grants will be automatically forfeited. Qualifying Termination Following a Change in Control Under the 2010 and 2019 EIPs, the NEOs are not entitled to any payment or accelerated benefit upon a change in control with respect to their RSUs. However, a NEO will generally be entitled to accelerated vesting if the executive experiences a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control of the Company, unless the CPCC has acted to cause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the eventchange in control transaction, or the award is of a type which would continue in effect notwithstanding the occurrence of the terminationchange in control. See the Change in Control paragraph under Stock Options on page 54 for information about when a change in control occurs. The amounts shown include the values, as of the recipient’s service.end of fiscal year 2020, of unvested RSUs that would vest if the NEOs experienced a qualifying termination within 12 months following a change in control of the Company and the CPCC did not act to cause the NEO to receive, on account of the award, cash or other property being paid to shareholders in the change in control transaction. (b) Vested SERP Benefit The annual SERP benefit is paid upon retirement for the remaining life of the executive with a 50% survivor annuity paid to the surviving spouse or life partner for the remainder of their life after the executive’s death, as described in the Pension Benefits section beginning on page 50. Death The amounts shown are the present values of the 50% survivor annuity, payable in equal installments on the Company’s regular payroll dates to the spouse or life partner of the executive, and would continue for the remaining lifetime of the spouse or life partner. Disability The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full
retirement benefit under the SERP. The amount shown would be paid in equal installments on the Company’s regular payroll dates, assuming the payment would begin as of the last day of fiscal year 2020. No amounts are shown for Erik Nordstrom or Kenneth Worzel, the other eligible NEOs, as they have not reached the normal retirement age of 58, which is the earliest eligibility for the SERP disability benefit.
Retirement or Termination without Cause The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown for Erik Nordstrom and Kenneth Worzel are the present values of their SERP benefits for early retirement, as they have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement with prior approval from the Board. The amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2020. Qualifying Termination Following a Change in Control No benefits are paid solely due to a change in control, although a change in control triggers immediate vesting and an obligation for the Company to fully fund accrued benefits through a trust. If an executive was separated from the Company after a change in control, a deferred annuity would be payable upon the executive reaching retirement age. If the separation occurred before the executive’s retirement age of 58, the benefit would be paid as an early retirement benefit at age 53, or the executive’s actual age, if older. In this case, the requirement for Board approval of the early retirement is waived. The amount shown for Peter Nordstrom is the present value of his SERP benefit as he has met the minimum age of 58 with at least 10 years of service and would be eligible for his full retirement benefit under the SERP. The amounts shown for Erik Nordstrom and Kenneth Worzel are the present values of their SERP benefits for early retirement, as they have met the minimum early retirement age of 53 with at least 10 years of service and would be eligible for early retirement. The amounts payable to Peter Nordstrom, Erik Nordstrom and Kenneth Worzel would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2020. The CPCC has discretion to discontinue payment of benefits under the SERP if the retired executive is found to have engaged in misconduct or in competitive behavior against the Company. (c) Life Insurance Proceeds The Company provides life insurance for the NEOs of approximately 1.25 times annual base salary. The amounts reported in the table represent the life insurance proceeds that would be payable if the NEOs had died as of the last day of the fiscal year. The premiums paid for the Company-provided life insurance are included in column (c) in the All Other Compensation in Fiscal Year 2020 table on page 44. NORDSTROM, INC. - 20192021 Proxy Statement 6756
(d) Retiree Health Care Benefit A holderThe Company provides continued health care coverage for the eligible NEOs if they separate from the Company after age 55 with at least 10 profit sharing years of performanceservice. These benefits include medical, behavioral health/substance abuse, vision, prescription drug and dental coverage. The NEOs and their spouses or registered domestic partners and eligible dependents would be covered under the retiree health plan, and the executive and the Company would continue to share units willin the cost of the insurance premium. Coverage and cost sharing would continue for the surviving spouse or registered domestic partner and eligible dependents after the executive’s death. Effective November 1, 2013, the retiree health plan was closed to new entrants.
The amounts in the table for the eligible NEOs are the present values of the health care cost that would be payable by the Company if they had separated on the last day of the fiscal year. Erik Nordstrom, Peter Nordstrom and Kenneth Worzel have no rights to dividendsmet the minimum retirement age of 55 with at least 10 profit sharing years of service and willwould be eligible for retirement. Assumptions used in determining these amounts include a discount rate of 2.73% and the PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2020. An executive who is terminated for cause, as determined by the Company in the exercise of its discretion in accordance with the Plan, is not be entitled to vote such units. Prior to settlement or forfeiture, any performance share unit may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right will entitle the holdereligible to receive ifthe retiree health care benefit. (e) Separation Benefit Under the Nordstrom, Inc. Executive Severance Plan, Kenneth Worzel and whenEdmond Mesrobian are eligible to receive benefits upon involuntary termination of employment by the applicable performance share units vest,Company, not for cause. To be eligible to participate in the Plan upon involuntary termination, the eligible NEO must have signed a non-competition and non-solicitation agreement. Erik Nordstrom and Peter Nordstrom are not eligible under the Plan. Anne Bramman has elected not to participate in the Plan. The benefits for eligible and participating employees include: •lump sum cash payment for severance: 18 or 24 months of base salary for Executive Officers, depending on their roles. This is reduced by an amount in cash or stock equal to the dividendsparticipant’s gross monthly SERP benefit multiplied by the number of months used to calculate the severance payment, if applicable; •lump sum cash payment for health coverage: the cost of the Company-paid portion of the employee’s currently elected health coverage for 12 months, unless the employee is eligible for the retiree health care benefit, as described in footnote (d), “Retiree Health Care Benefit”; and •six months of outplacement services. Kenneth Worzel’s estimated separation payment shown below is reduced by an amount equal to his estimated gross monthly SERP benefit multiplied by the number of months used to calculate his separation payment. No amount is included for the Company-paid portion of medical benefits as he qualifies for retiree health care benefits. No amount is included for the Company-paid portion of medical benefits for Edmond Mesrobian as he is not participating in the Company’s medical benefit plans. To be eligible to receive any benefits under the Nordstrom, Inc. Executive Severance Plan, the NEO must sign a release in which the executive agrees, among other things, not to disclose to anyone at any time any confidential information acquired during employment with the Company, and not to publish any statement, or instigate, assist or participate in the making or publication of any statement which is disparaging or detrimental in any way to the Company, except in each case as required by applicable law. The potential separation benefits for the NEOs are shown below. | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Separation Payment ($) | | Company-Paid Portion of Medical Benefits ($) | | Cost of Outplacement Services ($) | | Total Separation Benefit ($) | Erik B. Nordstrom | | — | | | — | | | — | | | — | | Anne L. Bramman | | — | | | — | | | — | | | — | | Peter E. Nordstrom | | — | | | — | | | — | | | — | | Kenneth J. Worzel | | 1,330,609 | | | — | | | 4,200 | | | 1,334,809 | | Edmond Mesrobian | | 1,550,000 | | | — | | | 4,200 | | | 1,554,200 | |
(f) Disability Insurance Benefit The Company provides long-term disability insurance for the NEOs. The amount reported in the table for each NEO is the long-term disability benefit provided of up to $35,000 per month. The premiums for the Company-provided disability insurance are included in column (c) in the All Other Compensation in Fiscal Year 2020 table on page 44.
(g) Executive Management Bonus The performance period under the EMBP is the fiscal year. Therefore, a termination event that would have been paid if the performance share units had been settled in shares of Common Stock on or before the record date for any dividends declaredoccurred on the Company’s Common Stock, subject to applicable withholding taxes.
At the discretionlast day of the Committee, settlement of vested performance share units may be made in the form of:
cash;
shares of Common Stock; or
any combination of both.
Change in Control
Under the 2019 Plan the vesting and exercisability of the awards will accelerate, in whole or in part, upon (i) a “qualifying termination” within 12 months following (ii) a change in control. A “qualifying termination” means an involuntary, employer-initiated termination without cause or a voluntary termination for good reason. Upon a change in control, the Committee may also allow for a cash payment or for the assumption, substitution or exchange of any or all outstanding awards.
Federal Income Tax Consequences
The tax consequences of the 2019 Plan are complex, and the following discussion deals only with general tax principles applicable to the 2019 Plan under federal law.
Incentive stock options are options which under certain circumstances and subject to certain tax restrictions, have special tax benefits for employees under the Internal Revenue Code. Nonqualified stock options are options which do not receive such special tax treatment.
When the Committee grants an incentive stock option and when the participant exercises an incentive stock option and acquires Common Stock, the participant realizes no taxable income and the Company can claim no deduction. (However, the differences between the fair market value of the shares upon exercise and the exercise price is an item of tax preference subject to the possible application of the alternative minimum tax.) If the participant disposes of the stock before two years from grant or onefiscal year from exercise of the incentive stock option (a disqualifying disposition), any gain will be deemed compensation and taxed as ordinary income to the extent of the lesser of:
the spread between the option price and the fair market value of the stock at exercise; or
the difference between the sale price and the exercise price.
If a disqualifying disposition occurs, the Company can claim a deduction equal to the amount treated as compensation. If one- and two-year holding periods are satisfied, any gain realized when the shares are sold will be treated as capital gain, and the Company will receive no corresponding tax deduction.
When the Committee grants a nonqualified stock option, the participant realizes no taxable income and the Company can claim no deduction. On exercise of a nonqualified stock option, the participant realizes ordinary income to the extent of the spread and the Company can claim a tax deduction for the same amount.
When the Committee grants a stock appreciation right, the participant realizes no taxable income and the Company can claim no deduction. The cash or fair market value of stock received on a stock appreciation right exercise is taxed to the participant at ordinary income rates. The Company can claim a tax deduction in the same amount at such time.
Upon grant of unrestricted shares, the participant realizes ordinary income equal to the fair market value of the Common Stock on the date of grant and the Company can generally claim a tax deduction for the same amount.
Grants of restricted shares are generally not taxable to participants at the time of grant and the Company generally claims no deduction at that time. The Company receives a deduction and the participant recognizes taxable income equal to the fair market value of the stock at the time the restrictions lapse (i.e., at the time the restricted shares vest), unless the participant elects, within thirty days of notification of the award, to recognize the income on the award date, in accordance with Code Section 83(b) (an “83(b) election”). If the participant makes an 83(b) election, the Company receives a corresponding deduction at the time of grant. Any dividends received on restricted shares prior to the date the participant recognizes income on the stock are taxable compensation income when received and the Company is entitled to a corresponding tax deduction at such time.
The grant of restricted stock units and performance share units generally doeswould not result in taxable incomeany additional or accelerated benefits under this Plan. However, if an employee died, became disabled or retired (after having met certain age and years of service requirements) during the fiscal year, the CPCC would have the sole discretion to determine what amounts, if any, an executive would remain eligible to receive as a performance-based bonus award. Any bonus award would be prorated to reflect the participant. Upon vesting,period of service during the number of shares issued or cash paid is treated as ordinary income, and the Company is entitled to a corresponding tax deduction at such time.fiscal year.
6857 NORDSTROM, INC. - 20192021 Proxy Statement
Pay Ratio Disclosure
New Plan BenefitsSEC rules require that U.S. publicly traded companies disclose the ratio of their Principal Executive Officer’s (“PEO”) compensation to that of their median employee. Our PEO is our CEO, Erik Nordstrom. For fiscal year 2020: •the annual total compensation of Erik Nordstrom was $5,647,670, which includes PSUs granted then subsequently cancelled as discussed on page 36 with a grant date fair value of $1,592,846; and •the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom, was $26,803. Based on this information, for 2020 the ratio of the annual total compensation of Erik Nordstrom, our Chief Executive Officer and PEO, to the median of the annual compensation of all employees was 211 to 1. The Committee has full discretionSEC rules for identifying the median employee and calculating the pay ratio permit companies to determineuse various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the number and amount of options, stock appreciation rights, unrestricted and restricted shares, and restricted share units and performance share units topay ratio reported by other companies may not be granted to participants, subjectcomparable to the pay ratio that we have reported. To identify the median employee, we used the total compensation as reported on the 2020 W-2 for all of our U.S. employees, excluding our PEO, and the Canadian equivalent T4 for all of our Canadian employees, who were employed by us on January 30, 2021, the last day of our fiscal year. We included full-time, part-time, seasonal and temporary employees and did not annualize the compensation for our permanent full-time and part-time employees who were not employed with us for the entire fiscal year. We applied a Canadian to U.S. dollar exchange rate to the compensation elements paid in Canadian currency. Similar to other large retail companies, a significant portion of our workforce is employed on a part-time and seasonal basis. As of the end of fiscal year 2020, approximately 29,000 of our 55,000 employees – or 53% of our workforce – were either part-time or seasonal. After identifying the median employee, we calculated annual limitations describedtotal compensation for the median employee using the same methodology we used for determining total compensation for our NEOs as shown in the 2020 Summary Compensation Table on page 66. Therefore, the benefits and amounts that will be received by each of the Named Executive Officers, the executive officers as a group, nonemployee directors and all other employees under the 2019 Plan are not presently determinable. The fair market value as of the close of trading on March 15, 2019 was $43.74 per share.42. Term, Termination and Amendment
The 2019 Plan will remain in effect for a period of 10 years unless earlier terminated by the Board. The Board may, at any time and for any reason, amend the 2019 Plan. An amendment of the Plan will be subject to the approval of the Company’s shareholders to the extent required by applicable laws, regulations or rules.
NORDSTROM, INC. - 20192021 Proxy Statement 6958
| | | | | | PROPOSAL 3 | ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION |
The Board recommends a vote FOR this proposal. The Company is providing shareholders with an advisory (nonbinding) vote on the compensation program of our NEOs as disclosed in this Proxy Statement. At the 2017 Annual Meeting of Shareholders, over 95% of the votes cast approved our Board’s recommendation to hold advisory votes on an annual basis. At the 2020 Annual Meeting of Shareholders, over 90% of the votes cast were supportive of our compensation program. In light of this support of the compensation program for our NEOs, the CPCC continues to apply the same pay and benefits philosophy which underlies our pay-for-performance philosophy. | | | Compensation Program Highlights |
As described in the CD&A beginning on page 29, our NEOs are rewarded when defined performance milestones are achieved and when value is created for our shareholders. Our CPCC and Board believe that our compensation program is effective in implementing our executive compensation philosophy and establishing a solid link between compensation and shareholder interests. Highlights of our compensation program include the following: •We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. Approximately 70% of the value of the targeted compensation package for each of our NEOs is weighted toward pay-for-performance and variable compensation to reinforce our philosophy of compensating our executives when they and the Company are successful in ways that support shareholder interests. •Each year, the CPCC establishes the performance-based bonus measures that focus executives on the most important Company objectives. In 2020, NEOs had the following measures: –Incentive Adjusted ROIC to ensure our overall performance aligns directly with shareholder returns over the long term. The measure is expressed as a threshold that must be met before any payout can be made on Incentive Adjusted EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders; –Incentive Adjusted EBIT to emphasize the importance of earnings and its role in driving shareholder value. Erik Nordstrom and Peter Nordstrom each had this performance measure weighed at 100%, subject to the achievement of the Incentive Adjusted ROIC threshold. Anne Bramman, Kenneth Worzel and Edmond Mesrobian each had this performance measure weighed at 67%, again subject to the achievement of the Incentive Adjusted ROIC threshold; and –Individual Measure to enable differentiation in bonus payout opportunity based on individual contributions and execution against goals for Anne Bramman, Kenneth Worzel and Edmond Mesrobian. The individual bonus measure accounted for 33% of the total bonus opportunity for these NEOs. •While the CPCC considers the 50th percentile (median) of our peer group as a reference, there is no specific percentage of target total direct compensation targeted by the CPCC other than to remain generally competitive with similarly situated peer companies. Target opportunities for individual pay elements vary by executive role based on scope of responsibilities and expected contributions. •We maintain meaningful executive stock ownership guidelines so that our executives’ interests, as shareholders, are aligned with our broader shareholder base. •We have an executive compensation clawback policy that applies to performance-based compensation. •The CPCC has retained and directs an independent compensation consultant. •We do not have employment agreements with our executives. •We do not provide tax gross-ups, except those related to relocation expenses when an executive must move to assume Company responsibilities. •We do not allow stock option grant repricing or backdating, nor do we grant options below 100% of fair market value. •We have a derivative and hedging policy that prohibits Directors and Executive Officers (as well as other key insiders and their immediate families) from engaging in hedging transactions with respect to any equity securities of the Company held by them. •We have restrictions on pledging of Common Stock. On March 25, 2020, the CPCC took immediate action to support cash preservation goals by reducing the base salaries of the NEOs from March 29, 2020 to October 3, 2020, as follows: Erik Nordstrom and Peter Nordstrom received no base salary, while Anne Bramman, Kenneth Worzel and Edmond Mesrobian received a 25% base salary reduction. Similarly, the salaries of all other executives at the Company were reduced by 10% to 25%, depending on role. 59 NORDSTROM, INC. - 2021 Proxy Statement
Shortly after the PSU grant was made on March 9, 2020, the Company temporarily closed stores in response to the growing COVID-19 pandemic, which meaningfully disrupted sales and operations. There was also significant uncertainty and disruption to our inventory flow, merchandising, and supply chain. Accordingly, the CPCC determined that the financial and market share goals established in February of 2020 for the PSU grant were no longer relevant or functional, and determined not to revise the goals for the 2020 PSUs. Accordingly, each of the NEOs agreed to the cancellation of their PSU award on August 18, 2020, as disclosed in the Form 8-K filed August 20, 2020. As required, the grant date fair values of the PSU grants are included in the Summary Compensation Table, on page 42. On August 18, 2020, the CPCC determined to award stock option grants in light of continued economic uncertainty, along with a desire to incentivize executives towards optimal shareholder outcomes and recognize the executives’ critical roles in supporting the Company’s key strategies and long-term success to each of the NEOs, effective August 27, 2020, the first open trading window date after CPCC approval. Stock options reward executives for the creation of long-term shareholder value, thereby aligning the executives’ interests with those of our Company’s shareholders. Erik Nordstrom and Peter Nordstrom each received an option to purchase 245,829 shares, and Anne Bramman, Kenneth Worzel and Edmond Mesrobian received an option to purchase 281,657, 366,540 and 212,207 shares, respectively. The stock options granted on August 27, 2020 have a grant price of $14.79, the closing stock price on August 27, 2020 and vest in full on September 10, 2022.
We are asking our shareholders to indicate their support for our NEOs’ compensation as described in this Proxy Statement. This proposal gives our shareholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 2021 Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Company’s NEOs, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosure in this Proxy Statement.” Our Board has adopted a policy of annual executive compensation advisory votes. As an advisory vote, this proposal is not binding on the Company. However, our CPCC and Board value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions regarding the Company’s NEOs. EQUITY COMPENSATION PLANS The following table provides information as of the fiscal year ended January 30, 2021 about Common Stock that may be issued upon the exercise of options and rights that have been or may be granted to employees and members of the Board under all of the Company’s existing equity compensation plans. | | | | | | | | | | | | | | | | | | | | | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) (#) | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) ($) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities to be issued as reflected in column (1)) (3) (#) | | Equity compensation plans approved by the Company’s shareholders (a) | 16,255,730 | | (b) | 40 | | | 22,101,260 | | (c) | Equity compensation plans not approved by the Company’s shareholders (d) | 1,029 | | | 6 | | | — | | | TOTAL | 16,256,759 | | | 40 | | | 22,101,260 | | |
(a)Consist of the 2010 and 2019 EIP and the ESPP. PSUs and RSUs do not have an exercise price and therefore have been excluded from the weighted average exercise price calculation in column (2). (b)Includes 42,030 of deferred Director awards and 79,490 related to deferred PSUs. (c)Includes 18,326,125 shares from the 2019 EIP, and 3,775,135 shares from the ESPP. (d)Consist of plans created in connection with our subsidiaries. NORDSTROM, INC. - 2021 Proxy Statement 60
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Beneficial Ownership Table The following table shows the amount of Common Stock beneficially owned (unless otherwise indicated) by holders of more than 5% of the outstanding shares of Common Stock, by our Directors, by the Named Executive Officers,NEOs, and by all Directors and Executive Officers of the Company as a group. Except as otherwise noted, all information is as of March 15, 2019.10, 2021. | | | | | | | | | | | | | | | | | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership (#) | | Percent of Ownership (%) | (a) | Peter E. Nordstrom | | 3,384,102 | | 2.14 | % | (b) | Erik B. Nordstrom | | 3,375,994 | | 2.13 | % | (c) | Kenneth J. Worzel | | 233,254 | | * | (d) | Edmond Mesrobian | | 33,195 | | * | (e) | Anne L. Bramman | | 44,648 | | * | (f) | Brad D. Smith | | 50,169 | | * | (g) | Shellye L. Archambeau | | 31,451 | | * | (h) | Bradley D. Tilden | | 26,142 | | * | (i) | Tanya L. Domier | | 25,421 | | * | (j) | Stacy Brown-Philpot | | 21,973 | | * | (k) | Kirsten A. Green | | 14,131 | | * | (l) | Glenda G. McNeal | | 14,131 | | * | (m) | James L. Donald | | 9,041 | | * | (n) | Mark J. Tritton | | 9,041 | | * | (o) | Directors and Executive Officers as a group (22 persons) | | 8,852,839 | | 5.55 | % | | | | | | | | Greater than 5% Security Holders | | | | | (p) | Bruce A. Nordstrom 1617 Sixth Avenue Seattle, Washington 98101 | | 25,241,423 | | 16.00 | % | (q) | Anne E. Gittinger 1617 Sixth Avenue Seattle, Washington 98101 | | 15,404,246 | | 9.76 | % | (r) | FMR, LLC 245 Summer Street Boston, Massachusetts 02210 | | 13,656,832 | | 8.66 | % | (s) | Blackrock, Inc. 55 East 52nd Street New York, New York 10055 | | 10,402,108 | | 6.59 | % | (t) | The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | 9,665,883 | | 6.13 | % |
| | | | | | | | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership (#) |
| | Percent of Ownership (%) |
| (a) | Bruce A. Nordstrom 1617 Sixth Avenue Seattle, Washington 98101-1707 | | 25,241,278 |
| | 16.29 |
| (b) | Anne E. Gittinger 1617 Sixth Avenue Seattle, Washington 98101-1707 | | 15,403,689 |
| | 9.94 |
| (c) | Peter E. Nordstrom | | 3,389,278 |
| | 2.18 |
| (d) | Erik B. Nordstrom | | 3,177,793 |
| | 2.04 |
| (e) | Kenneth J. Worzel | | 153,852 |
| | * |
| (f) | Anne L. Bramman | | 18,396 | | * |
| (g) | Christine F. Deputy | | 61,212 |
| | * |
| (h) | Philip G. Satre | | 87,196 | | * |
| (i) | B. Kevin Turner | | 36,720 | | * |
| (j) | Brad D. Smith | | 18,585 | | * |
| (k) | Gordon A. Smith | | 17,779 | | * |
| (l) | Shellye L. Archambeau | | 17,175 |
| | * |
| (m) | Bradley D. Tilden | | 12,783 | | * |
| (n) | Tanya L. Domier | | 12,062 |
| | * |
| (o) | Stacy Brown-Philpot | | 8,100 | | * |
| (p) | Kirsten A. Green | | 772 | | * |
| (q) | Glenda G. McNeal | | 772 | | * |
| (r) | Directors and Executive Officers as a group (21 persons) | | 8,164,921 |
| | 5.21 |
| | Other >5% Security Holders | | |
| | |
| (s) | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | 13,686,020 |
| | 8.83 |
|
| | * | * Does not exceed 1% of the Company’s outstanding Common Stock. |
70 NORDSTROM, INC. - 2019 Proxy Statement
Amount and nature of beneficial ownership includes:
10,243,647 shares owned by him directly;
355 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events;
261,776 shares owned by his wife individually;
8,490,560 shares held by trusts of which he is a trustee and beneficiary; and
6,244,940 shares held by trusts of which he is a co-trustee and for which he has shared voting and dispositive power. Mr. Nordstrom is a contingent remainderman with respect to these trusts, but disclaims any beneficial ownership with respect to the shares of Common Stock held in the trusts.
Amount and nature of beneficial ownership includes:
13,844,023 shares owned by her directly;
4,466 shares held by her in the Company’s 401(k) Plan; andoutstanding Common Stock.
1,555,200 shares held by a trust of which she is a trustee and beneficiary.
Does not include:
5,501,520 shares held by a trust of which she is the beneficiary, but over which she holds no voting or investment power and which are reported as beneficially owned by her brother, Bruce A. Nordstrom.
(c)(a) Peter E. Nordstrom
Amount and nature of beneficial ownership includes: •2,471,488 shares owned by him directly, of which 230,000 shares are pledged as collateral for loans and are in compliance with the Company’s policy regarding pledging; 32,330•34,727 shares held by him in the Company’s 401(k) Plan;
502,727•479,567 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019;10, 2021;
•15,560 shares, net of tax withholding, to be acquired through the vesting of RSUs within 60 days of March 10, 2021: •175,533 shares owned by his wife individually; 445•472 shares held by his wife in the Company’s 401(k) Plan;
•49,060 shares held by trusts of which he is the trustee; and •157,695 shares held by trusts of which he is the trustee, for which he has sole voting and dispositive power and for which he disclaims beneficial ownership. (d)61 NORDSTROM, INC. - 2021 Proxy Statement
(b) Erik B. Nordstrom Amount and nature of beneficial ownership includes: 2,583,088•2,587,380 shares owned by him directly, of which 457,582 shares are pledged as collateral for loans and are in compliance with the Company’s policy regarding pledging;
24,802•26,708 shares held by him in the Company’s 401(k) Plan;
502,727•479,567 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019;10, 2021;
•15,568 shares, net of tax withholding, to be acquired through the vesting of RSUs within 60 days of March 10, 2021: •42,646 shares owned by his wife individually; and 24,530•224,125 shares held by a trust of which he is the trustee.
(e)(c) Kenneth J. Worzel
Amount and nature of beneficial ownership includes: 19,923•30,264 shares owned by him directly;
5,671•6,021 nonvoting stock units held under the Company’s Executive Deferred Compensation Plan;NDCP;
4,222•5,061 shares held by him in the Company’s 401(k) Plan; and
124,036•165,216 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019.
10, 2021; and
NORDSTROM, INC.• - 2019 Proxy Statement 7126,692 shares, net of tax withholding, to be acquired through the vesting of RSUs within 60 days of March 10, 2021.
(d) Edmond Mesrobian
Amount and nature of beneficial ownership includes:
•26,122 shares owned by him directly; and be acquired through the vesting of RSUs within 60 days of March 10, 2021.
(f)(e) Anne L. Bramman
Amount and nature of beneficial ownership includes: 18,396•22,105 shares owned by her directly.directly; and
(g) Christine F. Deputy•22,543 shares, net of tax withholding, to be acquired through the vesting of RSUs within 60 days of March 10, 2021.
(f) Brad D. Smith Amount and nature of beneficial ownership includes: 13,124 shares owned by her directly; and
48,088 shares that may be acquired by her through stock options exercisable within 60 days after March 15, 2019.
(h) Philip G. Satre
Amount and nature of beneficial ownership includes:
20,366 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events, including his retirement from the Board; and
66,830•50,169 shares held by a family trust, of which he is a trustee and beneficiary.
(i) B. Kevin Turner
Amount and nature of beneficial ownership includes:
36,720 shares owned by him directly.
(j) Brad D. Smith
Amount and nature of beneficial ownership includes:
18,585 shares held by a family trust, of which he is a trustee and beneficiary.
(k) Gordon A. Smith
Amount and nature of beneficial ownership includes:
17,779 shares owned by him directly.
(l)(g) Shellye L. Archambeau
Amount and nature of beneficial ownership includes: 2,296•6,614 shares owned by her directly;
•9,041 shares held by a limited liability company of which she has control; and 14,879•15,796 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events, including her retirement from the Board.
(m)(h) Bradley D. Tilden
Amount and nature of beneficial ownership includes: 12,783•26,142 shares held by a family trust, of which he is a trustee and beneficiary.
(n)
(i) Tanya L. Domier Amount and nature of beneficial ownership includes: 12,062•25,421 shares owned by her directly.
(o)(j) Stacy Brown-Philpot
Amount and nature of beneficial ownership includes: •3,444 shares owned by her directly; and 4,656•18,529 nonvoting deferred stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events, including her retirement from the Board.
(p)(k) Kirsten A. Green
Amount and nature of beneficial ownership includes: 772•14,131 shares owned by her directly.
(q)(l) Glenda M.G. McNeal
Amount and nature of beneficial ownership includes: 772•14,131 shares owned by her directly.
(m) James L. Donald
Amount and nature of beneficial ownership includes: 72 NORDSTROM, INC.• - 9,041 shares held in a trust of which he is a trustee beneficiary.
(n) Mark J. Tritton Amount and nature of beneficial ownership includes: •2019 Proxy Statement 9,041 shares owned by him directly.
(r)(o) Directors and executive officersExecutive Officers as a group (21(22 persons)
Collectively, the combined amount and nature of beneficial ownership for the Directors and all executive officersExecutive Officers include: 5,698,405•5,976,828 shares owned directly, of which 705,977687,582 shares are pledged as collateral for third party obligations;
730,713•824,958 shares owned by spouses and trusts of which the respective Director or executive officerExecutive Officer is a trustee, or a trustee and beneficiary;
39,902•34,325 nonvoting stock units held by participating Directors under the Directors Deferred Compensation Plan;DDCP;
5,671•6,021 nonvoting stock units held by participating executive officersExecutive Officers under the Nordstrom Deferred Compensation Plan;NDCP;
81,410•96,564 shares held by participating executive officersExecutive Officers and their eligible spouses in the Company’s 401(k) Plan; and
1,608,820•1,738,618 shares that may be acquired by the executive officersExecutive Officers as a group through stock options exercisable within 60 days after March 15, 2019.10, 2021; and
•175,525 shares, net of tax withholding, to be acquired through the vesting of RSUs within 60 days of March 10, 2021. NORDSTROM, INC. - 2021 Proxy Statement 62
(p) Bruce A. Nordstrom Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2020, the aggregate amount beneficially owned by Mr. Nordstrom includes: •24,236,227 shares for which he has sole power to vote or to dispose or to direct disposition; and •1,005,196 shares for which he has shared power to vote or to dispose or to direct disposition. (q) Anne E. Gittinger Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2020, the aggregate amount beneficially owned by Ms. Gittinger includes: •15,404,246 shares for which she has sole power to vote or to dispose or to direct disposition. (r) FMR, LLC Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2020, the aggregate amount beneficially owned by FMR, LLC includes: •589,028 shares for which it has sole power to vote or to direct the vote; and •13,656,832 shares for which it has sole power to dispose or to direct disposition. (s) Blackrock, Inc. Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2020, the aggregate amount beneficially owned by Blackrock, Inc. includes: •9,617,472 shares for which it has the sole power to vote or to direct the vote; and •10,402,108 shares for which it has sole power to dispose or to direct disposition. (t) The Vanguard Group Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2018,2020, the aggregate amount beneficially owned by The Vanguard Group includes: 13,502,343•73,218 shares for which it has soleshared power to vote or to dispose or to direct disposition; andthe vote;
183,677•160,802 shares for which it has shared power to dispose or to direct disposition.disposition; and
•9,505,081 shares for which it has sole power to dispose or to direct disposition.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports Based upon a review of reports filed with the SEC and written representations that no other reports were required, the Company believes that during the fiscal year ended February 2, 2019January 30, 2021 all of our Directors, Executive Officers and owners of in excess of 10% of Common Stock complied with the filing requirements of Section 16(a) of the Exchange Act, except that Bruce Nordstrom filed one report on Form 4 was filed late on behalf of Teri Bariquit relating to the distributiona purchase of shares frompursuant to the Directors Deferred Compensation Plan.ESPP. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Review and Approval Process We maintain policies and procedures regarding the identification, review and approval of related party transactions. In compliance with SEC rules, the Corporate Governance and Nominating CommitteeCGNC reviews and approves or disapproves any transaction or series of related transactions in which: (1) the amount involved exceeds $120,000, (2) the Company or any of its subsidiaries is a participant, and (3) a related party (a Director or Executive Officer of the Company, any nominee for director, any greater than 5% shareholders and any immediate family member of such persons) has a direct or indirect material interest. When considering a transaction, the CommitteeCPCC will review all relevant factors, including the Company’s rationale for entering into a related party transaction, alternatives to the transaction, whether the transaction is on terms at least as fair to the Company as would be the case if the transaction were entered with a third party, and the potential of an actual or apparent conflict of interest. After reviewing the information, the CommitteeCPCC will approve or ratify the transaction or transactions only if the CommitteeCPCC determines that the transaction is reasonable and fair to the Company. Related Party Transactions Property Sublease. The Company leases a parcel of land from King County, Washington at the King County International Airport and operates its flight department from that location. The size of the Company’s flight department is such that the Company does not require access to or use of the entire parcel, and is able to sublease a portion of the property to Hangar Three LLC (“LLC”) without affecting the Company’s flight operations. LLC is owned by James F. Nordstrom, Jr., John N. Nordstrom and the estate of Blake W. Nordstrom, James F. Nordstrom, Jr. and John N. Nordstrom. LLC constructed a hangar for storage of the owners’ personal aircraft on the subleased property. All architectural, project management and construction costs for the hangar, utilities and landscaping improvements were borne by LLC and not by the Company. Upon expiration or termination of the sublease, the hangar 63 NORDSTROM, INC. - 2021 Proxy Statement
improvements will be surrendered to the Company. The material terms of the sublease are as follows: •The current sublease carries a month-to-month term, through July 2020, with the Company having the right to terminate it at any time upon 9030 days’ notice to LLC, and payment to LLC of the unamortized portion of the construction cost of the hangar.LLC. •LLC pays the Company a monthly base rent and estimated real estate tax in the form of reimbursement to the Company of its pro ratapro-rata share of ground rent paid by the Company under the primary lease with King County, currently $11,082 per month. •LLC also pays the Company additional rent in the form of $1,035 per month for reimbursement to the Company of its pro ratapro-rata share of maintenance costs of the common areas, currently $900 per month, plus a monthly management fee of $135.
costs.
NORDSTROM, INC.• - 2019 Proxy Statement 73
LLC paid a one-time security deposit in August 2007 in the amount of $10,463, plus an additional sum of $6,069 was paid in August 2009, $3,141 was paid in August 2015, and $491 was paid in August 2018 to increase the security deposit amount to the required two times the current base rent of $10,082.
In total, LLC paid the Company rent of $143,685$145,530 during the fiscal year ended February 2, 2019 (total rent is inclusive of the month of February). Venture Investment. On February 26, 2019, Kirsten Green was appointed to serve as a member of the Company’s Board of Directors. Ms. Green is the Founder and Managing Partner of Forerunner Ventures Management, LLC (“Forerunner”), a venture capital firm. During the fiscal year ended February 2, 2019, the Company made aggregate investments of $1,800,276 in Forerunner limited partnerships for which Ms. Green, or certain of her affiliates, served as the general partner and in which Ms. Green may be deemed to have a pecuniary interest. On January 30, 2019, prior to Ms. Green’s appointment to the Board of Directors, the Company divested itself of all of its Forerunner Ventures investments.2021.
OTHER MATTERS The Board knows of no other matters that will be presented at the Annual Meeting. However, if any other matters are properly presented at the Annual Meeting or any convening or reconvening of the Annual Meeting upon an adjournment or postponement of the Annual Meeting, it is the intention of the persons named as proxies to vote in accordance with their best judgment.
74 NORDSTROM, INC. - 2019 Proxy Statement
20202022 ANNUAL MEETING OF SHAREHOLDERS INFORMATION
Requirements and Deadlines for Submission of Proxy Proposals, Nomination of Directors, and Other Business of Shareholders If a shareholder wants the Company to include a shareholder proposal in our Proxy Statement for the 20202022 Annual Meeting of Shareholders pursuant to SEC Rule 14a-8 promulgated under the Securities Exchange Act, of 1934, (“Exchange Act”) our Corporate Secretary must receive the proposal at our principal executive offices no later than December 11, 2019.8, 2021. Any such proposal must comply with all the requirements of Rule 14a-8. Under our Bylaws, shareholders must follow certain procedures to nominate a person for election as a director at an annual or special meeting, or to introduce an item of business at an annual meeting. Under these advance-notice procedures, shareholders must submit the proposed nominee or item of business by delivering a notice to the Corporate Secretary of the Company at our principal executive offices. We must receive notice as follows: •We must receive notice of a shareholder’s intention to introduce a nomination or proposed item of business for an annual meeting not less than 90 days nor more than 120 days before the first anniversary of the prior year’s meeting. Assuming that the Annual Meeting is held on schedule, we must receive notice pertaining to the 20202022 Annual Meeting of Shareholders no earlier than January 24, 202019, 2022 and no later than February 23, 2020.18, 2022. •However, if we hold the 20202022 Annual Meeting of Shareholders on a date that is not within 30 days before or after such anniversary date, we must receive the notice no later than ten days after the earlier of the date we first provide notice of the meeting to shareholders or announce it publicly. •If we hold a special meeting to elect directors, we must receive a shareholder’s notice of intention to introduce a nomination no later than ten days following the day on which notice of the annual meeting was mailed to shareholders. Our Bylaws provide that notice of a proposed nomination must include certain information about the shareholder and the nominee, as well as a written consent of the proposed nominee to serve if elected. A notice of a proposed item of business must include a description of and the reasons for bringing the proposed business to the meeting, any material interest of the shareholder in the business and certain other information about the shareholder. Any notice (other than a proposal pursuant to Rule 14a-8) that is received after the times specified herein for proposed items of business will be considered untimely under Rule 14a-4c under the Exchange Act. The persons named in the proxy for the meeting may exercise their discretionary voting power with respect to all such matters, including voting against them. All director nominations and shareholder proposals, other than shareholder proposals made pursuant to Rule 14a-8 under the Exchange Act, must comply with the requirements of the Company’s Bylaws. You may obtain a copy of the Company’s Bylaws at no cost from the Company’s Corporate Secretary or online at investor.nordstrom.comby selectingon the Corporate Governance item in theCompany’s Investor Relations drop-down menu.Website. The contact information for the Company’s Corporate Secretary is on page 79.69.
NORDSTROM, INC. - 20192021 Proxy Statement 7564
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING | | | | | | 1. | Why am I receiving these materials? |
The Company hasWe have made these materials available to you on the Internetinternet or, upon your request, delivered printed versions of these materials to you by mail, because you were a shareholder of Nordstrom, Inc.the Company as of March 15, 2019,10, 2021, the Record Date, and were entitled to receive notice of the 20192021 Annual Meeting of Shareholders and to vote on matters that will be presented at the Annual Meeting. | | | | | | 2. | What items will be voted on at the Annual Meeting? |
| | | | | | | | | | | | Shareholders will vote on the following matters at the Annual Meeting: | Board Recommendation: | Page Reference (for more detail): | | | | | Proposal 1 | To elect the 1110 Director nominees to the Board named in this Proxy Statement to the Board to serve until the 2022 Annual Meeting of Shareholders | FOR each Director Nominee | | Proposal 2 | To ratify the appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm to serve for the 2022 fiscal year | FOR | | Proposal 3 | To conduct an advisory vote regarding the compensation of our Named Executive OfficersNEOs | FOR | | Proposal 4 | To approve the Nordstrom, Inc. 2019 Equity Incentive Plan | FOR | 64 | Other | Such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof | | |
| | | | | | 3. | How can I view the webcast? WhereWhat is the date and time of the Annual Meeting being held?Meeting? |
| | | | | | | | | | | | Date & Time: | May 19, 2021 at 9:00 a.m. Pacific Daylight Time | Virtual Meeting Access: | virtualshareholdermeeting.com/JWN2021 | | | | | | | | | | | | | | | | | | | | |
This Proxy Statement was first mailed to shareholders on or about April 8, 2021. It is furnished in connection with the solicitation of proxies by the Board to be voted during the Annual Meeting for the purposes set forth in the accompanying Notice of Annual Meeting. Shareholders who execute proxies retain the right to revoke them at any time before the shares are voted by proxy during the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary prior to or during the Annual Meeting or by timely executing and delivering, by internet, telephone, or mail, another proxy dated as of a later date. | | | | | | 4. | How do I participate in the Meeting? |
This year’s Annual Meeting will be accessible through the internet. We have adopted a virtual format for our Annual Meeting to make participation accessible for shareholders from any geographic location with internet connectivity. We have worked to offer the same participation opportunities as were provided at the in-person portion of our past meetings while further enhancing the online experience available to all shareholders regardless of their location. The accompanying proxy materials include instructions on how to participate in the meeting and how you may vote your shares of Company stock. You can vieware entitled to participate in the live webcastAnnual Meeting if you were a shareholder as of the close of business on March 10, 2021, the record date, or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at investor.nordstrom.comvirtualshareholdermeeting.com/JWN2021. Select Events, and follow, you must enter the instructions given. If16-digit control number found next to the label “Control Number” for postal mail recipients or within the body of the email sending you would like to attendthe Proxy Statement. Whether or not you participate in the Annual Meeting, in person, it is being heldimportant that your shares be part of the voting process. You may log on to proxyvote.com and enter your Control Number. This year’s shareholder question and answer session will include questions submitted in advance of, and questions submitted live during, the John W. Nordstrom Room, 5th floor, locatedAnnual Meeting. You may submit a question in advance of the meeting at proxyvote.com after logging in with your Control Number. Questions may be submitted during the Annual Meeting through virtualshareholdermeeting.com/JWN2021. We will post questions and answers if applicable to Nordstrom’s business on the Nordstrom Downtown Seattle Store, 1617 Sixth Avenue, Seattle, Washington 98101.Investor Relations website shortly after the meeting. We encourage you to access the Annual Meeting before it begins. Online check-in will start shortly before the meeting on May 19, 2021. If you have difficulty accessing the meeting, please call (844) 986-0822 (toll free) or (303) 562-9302 (international). We will have technicians available to assist you. 65 NORDSTROM, INC. - 2021 Proxy Statement
| | | | | | 4.5. | Why did I receive a Notice instead of a full set of proxy materials? How can I access the proxy materials online? |
We are furnishing proxy materials to our shareholders primarily via the Internetinternet as manythe holders of a majority of our shareholdersshares prefer that method. By doing so, we increase the convenience of our proxy materials, reduce the environmental impact of our Annual Meeting, and save costs. On or about April 12, 2019,8, 2021, we mailed a Notice of Internetinternet Availability of Proxy Materials (the “Notice”) to our shareholders who had not previously requested printed materials. The Notice contains instructions about how to access our proxy materials and vote online. If you would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you have previously chosen to receive our proxy materials electronically, you will receive access to these materials via email unless you elect otherwise. | | | | | | 5.6. | What is a proxy statement, and what is the purpose of this Proxy Statement?a proxy? |
IfA proxy statement is a document that SEC rules require us to provide you designatewhen we ask you to vote on certain matters at a meeting of our shareholders or when we ask you to sign a proxy designating certain individuals to vote on those matters on your behalf. A proxy is your legal designation of another person to vote yourthe shares that other person is calledyou own at a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. If you vote online or completemeeting of our shareholders. By signing the proxy card enclosed with the materials sent by mailwe provide to give us your proxy,you, you will have designateddesignate Anne L. Bramman, our Chief Financial Officer, and Kelley Hall,Ann Munson Steines, our Chief Accounting Officer,General Counsel and Corporate Secretary, as your proxies to vote your shares as you have directed. This Proxy Statement provides information aboutdirected during the mattersAnnual Meeting. Our Board is soliciting your proxy to be voted on by shareholders atvote your shares during the Annual Meeting along with other information regarding the governanceand any adjournment or postponement of the Company, including our Board Committee structuremeeting. Nordstrom pays the cost of soliciting your proxy and executive compensation.reimburses brokers and others for forwarding you the proxy statement, proxy card or voting instruction form, Annual Report and Notice.
76 NORDSTROM, INC. - 2019 Proxy Statement
| | | | | | 6.7. | What is the difference between a shareholder of record and a street name shareholder? |
Many Company shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held as a shareholder of record and those held in street name. •Shareholders of record: If your shares are registered directly in your name with the Company’s transfer agent, Computershare, you are considered the “shareholder of record” or a “registered shareholder,” and the Notice or proxy materials are being sent directly to you by the Company. As the shareholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the Annual Meeting. •Street name shareholders: If your shares are held in a stock brokerage account or by a bank, trustee or nominee, you are considered the beneficial owner of shares held in “street name,” and the Notice or proxy materials are being forwarded to you by your broker, bank or other holder of record who is considered the shareholder of record. As the street name shareholder you have the right to direct your broker, bank or other holder of record on how to vote your shares and you are invited to attend the Annual Meeting. Your broker, bank, trustee or nominee is obligated to provide you with a voting instruction form for you to use. | | | | | | 7.8. | How do I cast my vote? |
We encourage you to vote in advance of the meeting on the Internetinternet or by telephone. It is convenient, and it saves us significant postage and processing costs. In addition, when you vote on the Internetinternet or by telephone, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. The method by which you vote your proxy will not limit your right to vote at the Annual Meeting if you decide to attend in person. Shareholders of record: The Internetinternet and telephone voting procedures are designed to verify that you are a shareholder of record by using a control number and allowing you to confirm that your voting instructions have been properly recorded. Internet and telephone voting for shareholders of record are available 24 hours a day and will close at 11:59 p.m. Eastern Daylight Time on May 22, 2019.day. You can vote by any of the following methods: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voting on the Internet.You may vote In advance of the meeting, until 11:59 p.m. Eastern Daylight Time on May 18, 2021 using any of the Internet by using the voting portal found at www.proxyvote.com. You can then confirm that your instructions have been properly recorded. following methods: | | | | | | | | | | | | | | | | Voting by Telephone. If you request printed materials, you may vote by telephone using the toll-free number listed on your proxy card. Voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded.Online
At proxyvote.com | | | * | Voting by Mail. If you request printed materials, you may vote by signing, dating and returning your proxy card.
| | | | Voting in Person. You may voteToll-free Phone
Call 1-800-690-6903 | | | Mail Vote Processing c/o Broadridge 51 Mercedes Way Edgewood, NY 11717 | | | Scanned QR Code Using your shares at the Annual Meeting.mobile device |
Street name shareholders: You may vote by the method explained on the proxy card or the information you receive from the bank, broker or other record holder. If you are a street name shareholder, you must obtain a proxy, executed in your favor, from the bank, broker or other holder of record to be able to vote in person at the Annual Meeting. NORDSTROM, INC. - 2021 Proxy Statement 66
Shareholders holding shares invested in the Company’s 401(k) Plan: If you participate in the Company’s 401(k) Plan, the number of shares of Common Stock in your account as of the Record Date are reflected on your proxy notice and may be voted as described above for shareholders of record. However, if your vote on those shares is not received by 11:59 p.m. Eastern Daylight Time on May 19, 2019,15, 2021, then the Company’s Retirement CommitteePlan Trustee will vote those shares in the same proportion as all other 401(k) Plan shares that have been voted. Shareholders holding shares purchased through the Company’s Employee Stock Purchase PlanESPP: If you hold Common Stock that you acquired through the Company’s Employee Stock Purchase Plan,ESPP, you are the beneficial owner of those shares and your shares may be voted as described above for street name shareholders.
NORDSTROM, INC. - 2019 Proxy Statement 77
| | | | | | 8.9. | What does it mean if I receive more than one Notice or package of proxy materials? |
This means that you have multiple accounts holding Nordstrom shares. These may include: accounts with our transfer agent, Computershare; shares held in the Nordstrom 401(k) Plan or purchased through the Employee Stock Purchase Plan;ESPP; and accounts with a broker, bank or other holder of record. Please vote all Notices, voting instruction forms and proxy cards that you receive to ensure that all of your shares are voted. | | | | | | 9.10. | Why did multiple shareholders at my address only receive one Notice or package of proxy materials? |
SEC rules allow us to use a procedure called “householding” to deliver only en copy of our Notice, and for those shareholders that received a paper copy of proxy materials in the mail, one copy of our Annual Report, to multiple shareholders who share the same address (if they appear to be members of the same family) unless we have received contrary instructions from an affected shareholder. Shareholders who participate in householding will continue to receive proxy cards if they received a paper copy of proxy materials in the mail. By using the householding process, we reduce our printing costs, mailing costs and fees, and reduce the environmental impact of our annual meeting. If you are a shareholder, share an address and last name with one or more other shareholders, and would like to revoke your householding consent, or you are a shareholder eligible for householding and would like to participate, please contact Broadridge, either by calling toll free at (866) 540-7095 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of receipt of the revocation of your consent. A number of brokerage firms have also instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information about householding. | | | | | | 11. | What is a quorum and what is the voting requirement to approve each of the proposals? |
We will have a quorum and will be able to conduct the business of the Annual Meeting if at least 77,476,37878,885,190 shares, a majority of the outstanding shares of Common Stock as of the Record Date, are present at the Annual Meeting, either in person or by proxy. Your shares will be counted toward the number needed for a quorum if you: (i) vote on the Internetinternet or by telephone; (ii) submit a valid proxy card or voting instruction form; or (iii) in the case of a shareholder of record, attend the Annual Meeting and vote your shares in person. To elect directors and adopt the other proposals, the following votes are required: | | | | | | | | Discretionary | | | | | Proposal | Vote Required | | Discretionary Voting Allowed? | Election of ten Directors to serve until the 2022 Annual Meeting of Shareholders | Majority of Votes Cast | | No | Ratification of the Appointmentappointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm to serve for the 2022 fiscal year | Majority of Votes Cast | | Yes | Advisory Vote Regarding Executive CompensationTo conduct an advisory vote regarding the compensation of our NEOs | Majority of Votes Cast | | No | Approval of the Nordstrom, Inc. 2019 Equity Incentive Plan | Majority of Votes Cast | | No |
67 NORDSTROM, INC. - 2021 Proxy Statement
Under Washington corporation law and our Articles of Incorporation and Bylaws, the approval of any corporate action taken at a shareholder meeting is based on votes cast. “Votes cast” means votes actually cast “for” or “against” a particular proposal, whether by proxy or in person. Broker nonvotes (broker nonvotes and discretionary voting are explained in the answer to Question 12)14.) and abstentions are not considered “votes cast” and have no effect on the proposals. •Election of TenDirectors; Majority Vote Policy: In the election of Directors, the Company has adopted a majority voting standard as described in more detail on page 1312 under Director Elections. Because this is an uncontested election, an incumbent directorDirector nominee will be elected if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee. If a directorDirector nominee does not receive the requisite votes, that Director’s term will end on the date on which an individual is selected by the Board to fill the position held by such Director or 90 days after the date the election results are determined, whichever occurs first. You may vote “for,” “against” or “abstain” with respect to the election of each nominee. •Ratification of the Appointment of Independent Registered Public Accounting Firm: Under the Company’s Bylaws, the votes cast “for” must exceed the votes cast “against” to ratify the appointment of Deloitte as the Company’s independent registered public accounting firm for the fiscal year ending February 2, 2019.January 29, 2022. You may vote “for,” “against” or “abstain” on this proposal. •Advisory Vote Regarding Executive Compensation: The votes cast “for” must exceed the votes cast “against” to approve, on an advisory basis, the Company’s executive compensation program. You may vote “for,” “against” or “abstain” on this proposal. ApprovalThe Board recommends a vote FOR each of the Nordstrom, Inc. 2019 Equity Incentive Plan: Under the Company’s Bylaws, the votes cast “for” must exceed the votes cast “against” to ratify the Nordstrom, Inc. 2019 Equity Incentive Plan. You may vote “for,” “against” or “abstain” on this proposal.foregoing proposals.
| | | | | | 10.12. | Can I change my mind after I vote? |
Yes, if you vote by proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. You may do this by: •voting again on the Internetinternet or by telephone prior to the Annual Meeting; or •signing another proxy card with a later date and mailing it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, prior to the Annual Meeting; or attending the Annual Meeting in person and •delivering your proxy or casting a ballot.
78 NORDSTROM, INC. - 2019 Proxy Statement ballot during the meeting.
| | | | | | 11.13. | What if I do not return my proxy card or voting instruction form or do not provide voting instructions? |
•Shareholders of record: If you are a registered shareholder and do not vote by Internetinternet or phone or return your voted proxy card, your shares will not be voted. If you submit your proxy card with an unclear voting designation or no voting designation at all, your shares will be voted for the ratification of Deloitte, but not on any of the other proposals. •Street name shareholders: If you are a beneficial owner whose shares are held by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares for the ratification of Deloitte even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors, the advisory vote regarding executive compensation or on any shareholder proposal without instructions from you, in which case a broker nonvote will occur. Since shares that constitute broker nonvotes will not be included in vote totals and have no effect on the outcome of the election of Directors, the advisory vote regarding executive compensation or any other matters properly brought before the meeting, it is important that you instruct your broker on how to vote your shares. •Shareholders with shares invested in the Company’s 401(k) Plan: If your vote of shares held through the Company’s 401(k) Plan is not received by 11:59 p.m. Eastern Daylight Time on May 19, 2019,15, 2021, then the Company’s Retirement CommitteePlan Trustee will vote your shares in the same proportion as shares that have been voted in the 401(k) Plan. If you submit your proxy card with an unclear voting designation or no voting designation at all, your shares will be voted by the Retirement CommitteePlan Trustee “for” all proposals. If any additional proposals are properly presented at the Annual Meeting and any adjournment thereof, the Retirement CommitteePlan Trustee will vote on the additional proposals in accordance with its discretion.
| | | | | | 12.14. | Will abstentions or broker nonvotes affect the voting results? |
If you abstain from voting on a proposal, or if a broker or bank indicates it does not have discretionary authority to vote on a proposal, the shares will be counted for the purpose of determining if a quorum is present, but will have no effect on the other proposals to be considered at the Annual Meeting since these actions do not represent votes cast by shareholders. NORDSTROM, INC. - 2021 Proxy Statement 68
| | | | | | 13.15. | Who will count the vote? |
Broadridge Investor Communication Services (“Broadridge”) was appointed by the Board to tabulate the vote and act as Inspector of Election. Information about Broadridge is available at broadridge.com.broadridge.com. Proxies and ballots that identify the votes of individual shareholders are kept confidential from the Company’s management and Directors. Only Broadridge, as the proxy tabulator and the Inspector of Election, has access to the ballots, proxy forms and voting instructions. Broadridge will disclose information taken from the ballots, proxy forms and voting instructions only in the event of a proxy contest or as otherwise required by law. | | | | | | 14.16. | Where can I find the voting results of the Annual Meeting? |
We intend to announce preliminary voting results at the Annual Meeting and publish final results on a current report on Form 8-K within four business days of the Annual Meeting. The Form 8-K will be available online under the “SEC Filings” tab at investor.nordstrom.com.the Investor Relations Website. | | | | | | 15.17. | Who will bearHow can I communicate with the costBoard of this proxy solicitation?Directors? |
Shareholders and other interested parties may communicate with Directors by contacting the Corporate Secretary’s Office at: | | | | | | | | | | Telephone: 206-303-2541 | | | | | E-mail: board@nordstrom.com | | | | | Mail: Nordstrom, Inc. 1617 Sixth Avenue Seattle, Washington 98101 Attn: Corporate Secretary |
The CompanyCorporate Secretary will bearrelay the costquestion or message to the specific Director with whom the shareholder or interested party wishes to communicate. If no specific Director is requested, the Corporate Secretary will relay the question or message to the Chairman. Certain items that are unrelated to the duties and responsibilities of this proxy solicitation, including reimbursing banksthe Board, such as business solicitations, advertisements, junk mail and brokers for reasonable expenses of sending out proxy materialsother mass mailings, will not be relayed to street name shareholders.Directors. The AFC has established procedures to respond to possible concerns about ethics and accounting-related practices. To report your concerns, you may use the Company’s confidential Whistleblower Hotline at: | | | | | | | | | | Telephone: 1-888-832-8358 | | | | | Internet: ethicspoint.com |
Your concerns will be investigated and communicated to the AFC, as necessary. | | | | | | 16.18. | What if I have additional questions that are not addressed here? |
You may call Nordstrom Investor Relations at 206-303-3200, e-mail Investor Relations at invrelations@nordstrom.com,Invrelations@Nordstrom.com, or call the Corporate Secretary’s Office at 206-303-2541.
69 NORDSTROM, INC. - 20192021 Proxy Statement79
| | | | | | Appendix A | Reconciliation of GAAP and Non-GAAP Financial Measures |
| | Incentive Earnings Before Interest and Income Tax Expense (“Incentive EBIT”) and Incentive Adjusted Return on Invested Capital (“Incentive Adjusted ROIC”) | Incentive Adjusted EBIT and Incentive Adjusted ROICWe believe that Incentive Adjusted ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the capital we have invested in our business to generate returns. Incentive Adjusted ROIC adjustsreturns over time. In addition, we have incorporated it in our executive incentive measures and we believe it is an important indicator of shareholders’ return over the long term. For 2020 and 2019, income statement activity for adjusted net operating profit and balance sheet amounts for average invested capital are measured under the Lease Standard and the remaining years disclosed are under the previous lease standard. Under the previous lease standard, we estimated the value of our operating leases as if they met the criteria for capital leases or we had purchased the properties. This providesprovided additional supplemental information that reflectsestimated the investment in our off-balance sheetoperating leases. Estimated depreciation on capitalized operating leases controlsand average estimated asset base of capitalized operating leases are not calculated in accordance with, nor an alternative for, differencesGAAP and should not be considered in capital structure between us andisolation or as a substitute for our competitors and provides investors and credit agencies with another way to comparably evaluate the efficiency and effectiveness of our capital investments over time. In addition, we incorporate results as reported under GAAP. Incentive Adjusted ROIC into our executive incentive measures and it is an important indicator of shareholders’ return over the long term. Incentive EBIT represents net earnings before income tax expense, interest expense and interest income, and contemplates non-operating related adjustments. We define Incentive Adjusted ROIC as our adjusted net operating profit after tax divided by our average invested capital using the trailing 12-month average.capital. These metrics are not measures of financial performance under generally accepted accounting principles (“GAAP”)GAAP and should be considered in addition to, and not as a substitute for, net earnings, return on assets, net earnings, total assets or other GAAP financial measures prepared in accordance with GAAP.measures. Our method of determiningcalculating non-GAAP financial measures may differ from other companies’ methods and therefore may not be comparable to those used by other companies. Estimated depreciation on capitalized operating leases and average estimated asset base of capitalized operating leases are not calculated in accordance with, or an alternative for, GAAP and should not be considered in isolation or as a substitution of our results as reported under GAAP. The financial measures calculated under GAAP which are most directly comparable to Incentive Adjusted EBIT and Incentive Adjusted ROIC are net earnings and return on assets which are reconciled below.assets. The following isis a reconciliation of the components ofreturn on assets to Incentive Adjusted ROIC and return on assets:ROIC:
| | | | | | | | | | | | | | | | | | | | | | 12 Fiscal Months Ended | ($ in millions) | February 2, 2019 |
| | February 3, 2018 |
| | January 28, 2017 |
| | January 30, 2016 |
| | January 31, 2015 |
| Net earnings | $ | 564 |
| | $ | 437 |
| | $ | 354 |
| | $ | 600 |
| | $ | 720 |
| Add: income tax expense | 169 |
| | 353 |
| | 330 |
| | 376 |
| | 465 |
| Add: interest expense, net | 104 |
| | 136 |
| | 121 |
| | 125 |
| | 138 |
| Earnings before interest and income tax expense | 837 |
| | 926 |
| | 805 |
| | 1,101 |
| | 1,323 |
| Add: non-operating related adjustments | 72 |
| | 26 |
| | 271 |
| | 145 |
| | 68 |
| Incentive EBIT | 909 |
| | 952 |
| | 1,076 |
| | 1,246 |
| | 1,391 |
| Add: interest income | 15 |
| | 5 |
| | 1 |
| | — |
| | 1 |
| Incentive Adjusted ROIC earnings before interest and income tax expense | 924 |
| | 957 |
| | 1,077 |
| | 1,246 |
| | 1,392 |
| Add: rent expense | 251 |
| | 250 |
| | 202 |
| | 176 |
| | 137 |
| Less: estimated depreciation on capitalized operating leases* | (134 | ) | | (133 | ) | | (108 | ) | | (94 | ) | | (74 | ) | Net operating profit | 1,041 |
| | 1,074 |
| | 1,171 |
| | 1,328 |
| | 1,455 |
| Less: estimated income tax expense | (248 | ) | | (480 | ) | | (444 | ) | | (512 | ) | | (561 | ) | Net operating profit after tax | $ | 793 |
| | $ | 594 |
| | $ | 727 |
| | $ | 816 |
| | $ | 894 |
| Average total assets | $ | 8,282 |
| | $ | 8,055 |
| | $ | 7,917 |
| | $ | 9,076 |
| | $ | 8,860 |
| Less: average non-interest-bearing current liabilities** | (3,479 | ) | | (3,261 | ) | | (3,012 | ) | | (2,993 | ) | | (2,730 | ) | Less: average deferred property incentives and deferred rent liability(b) | (616 | ) | | (644 | ) | | (644 | ) | | (548 | ) | | (502 | ) | Add: average estimated asset base of capitalized operating leases(a) | 2,018 |
| | 1,805 |
| | 1,512 |
| | 1,236 |
| | 1,058 |
| Add (Less): non-operating related adjustments | 4 |
| | 3 |
| | 90 |
| | 623 |
| | (100 | ) | Average invested capital | $ | 6,209 |
| | $ | 5,958 |
| | $ | 5,863 |
| | $ | 7,394 |
| | $ | 6,586 |
| Return on assets | 6.8 | % | | 5.4 | % | | 4.5 | % | | 6.6 | % | | 8.1 | % | Incentive Adjusted ROIC | 12.8 | % | | 10.0 | % | | 12.4 | % | | 11.0 | % | | 13.6 | % |
| | *
| Capitalized operating leases is our best estimate of the asset base we would record for our leases that are classified as operating if they had met the criteria for a capital lease or we had purchased the property. The asset base is calculated based upon the trailing 12-month average of the monthly asset base. The asset base for each month is calculated as the trailing 12 months of rent expense multiplied by eight. The multiple of eight times rent expense is a commonly used method of estimating the asset base we would record for our capitalized operating leases. We do not expect the adoption of the new Lease Standard to have a material impact on our Incentive Adjusted ROIC. |
| | ** | Balances associated with our deferred rent liability have been classified as long-term liabilities as of January 28, 2017. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12 Fiscal Months Ended | ($ in millions) | January 30, 2021 | | February 1, 2020 | | February 2, 2019 | | February 3, 2018 | | January 28, 2017 | Net (loss) earnings | $ | (690) | | $ | 496 | | $ | 564 | | $ | 437 | | $ | 354 | Add: income tax (benefit) expense | (538) | | 186 | | 169 | | 353 | | 330 | Add: interest expense, net | 181 | | 102 | | 104 | | 136 | | 121 | EBIT | (1,047) | | 784 | | 837 | | 926 | | 805 | Add: non-operating related adjustments | — | | 24 | | 72 | | 26 | | 271 | Incentive Adjusted EBIT | (1,047) | | 808 | | 909 | | 952 | | 1,076 | Add: interest income | 3 | | 10 | | 15 | | 5 | | 1 | Incentive Adjusted ROIC EBIT | (1,044) | | 818 | | 924 | | 957 | | 1,077 | Add: operating lease interest(a) | 95 | | 101 | | — | | — | | — | Add: rent expense, net | — | | — | | 251 | | 250 | | 202 | Less: estimated depreciation on capitalized operating leases(b) | — | | — | | (134) | | (133) | | (108) | Adjusted net operating (loss) profit | (949) | | 919 | | 1,041 | | 1,074 | | 1,171 | Less: estimated income tax benefit (expense) | 416 | | (244) | | (248) | | (480) | | (444) | Adjusted net operating (loss) profit after tax | $ | (533) | | $ | 675 | | $ | 793 | | $ | 594 | | $ | 727 | Average total assets | $ | 9,718 | | $ | 9,765 | | $ | 8,282 | | $ | 8,055 | | $ | 7,917 | Add: average estimated asset base of capitalized operating leases(b) | — | | — | | 2,018 | | 1,805 | | 1,512 | Less: average deferred property incentives and deferred rent liability | — | | — | | (616) | | (644) | | (644) | Less: average deferred property incentives in excess of right-of-use assets(c) | (276) | | (307) | | — | | — | | — | Less: average non-interest-bearing current liabilities | (3,138) | | (3,439) | | (3,479) | | (3,261) | | (3,012) | Add: non-operating related adjustments | — | | — | | 4 | | 3 | | 90 | Average invested capital | $ | 6,304 | | $ | 6,019 | | $ | 6,209 | | $ | 5,958 | | $ | 5,863 | Return on assets | (7.1 | %) | | 5.1 | % | | 6.8 | % | | 5.4 | % | | 4.5 | % | Incentive Adjusted ROIC | (8.5 | %) | | 11.2 | % | | 12.8 | % | | 10.0 | % | | 12.4 | % |
A-1 NORDSTROM, INC.(a) - 2019 Proxy Statement
| | | Appendix B | Nordstrom, Inc. 2019 Equity Incentive Plan |
The purposeAs a result of the Plan is to promote the long-term successadoption of the CompanyLease Standard, we add back the operating lease interest to reflect how we manage our business. Operating lease interest is a component of operating lease cost recorded in occupancy costs and its Subsidiaries. Specific objectives are intended to encourageis calculated in accordance with the attraction and retention of Employees and Nonemployee Directors, focus such individuals’ results on the Company’s critical, long-range goals and align such individuals’ interests with thoseLease Standard.
(b)Capitalized operating leases is our best estimate of the Company’s shareholders. asset base we would record for our leases that are classified as operating under the previous lease standard if they had met the criteria for a finance lease or we had purchased the property. The Plan seeksasset base for each quarter is calculated as the trailing four quarters of rent expense multiplied by eight, a commonly used method to achieve this purpose by providingestimate the asset base we would record for Awards in the form of Options (which may constitute incentive stock options (ISOs), for Employees only, or nonqualified stock options (NSOs)), stock appreciation rights (SARs), Unrestricted Shares, Restricted Shares, Restricted Stock Units and Performance Share Units. The Plan replaces the Nordstrom, Inc. 2010 Equity Incentive Plan (as amended and restated February 16, 2017) and the Nordstrom, Inc. 2002 Nonemployee Director Stock Incentive Plan (as amended on November 14, 2007).
2.1Committee Composition. our capitalized operating leasesThe Compensation Committee shall administer the Plan..
2.2Committee Responsibilities.(c) The Committee, in its absolute and sole discretion, shall (a) selectFor leases with property incentives that exceed the Employees and Nonemployee Directors who areright-of-use assets, we reclassify the amount from assets to receive Awards under the Plan, (b) determine the type, number, vesting requirementsother current liabilities and other features and conditions of such Awards, (c) interpret the Plan and (d) make all other decisions relating to the operationliabilities. As a result of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee may delegate its authority hereunder to one or more Subcommittees or Company officers, to the extent permitted under the Code, applicable laws and regulations and any applicable exchange rules; actions taken by any Subcommittee or officers shall be subject to review by the full Committee. The Committee’s determinations under the Plan shall be final and binding on all persons.
2.3Committee for Non-Officer/Non-Director Awards. The Board may also appoint a secondary committeeadoption of the Board or one or more senior executive officers of the Company to administer the Plan with respect to Employees who are not considered officers or Directors of the Company under Section 16 of the Exchange Act. That committee or senior executive officer may grant Awards under the Plan to such Employees and may determine all features and conditions of such Awards. Within the limitations ofLease Standard, we reduce average total assets, as this Section 2.3, any reference in the Plan to the Committee shall include such secondary committee or senior executive officer, as the case may be.better reflects how we manage our business.
2.4Compensation Department Powers and Duties. Until such time as the Committee shall modify, revoke or rescind such authority, the Company’s Compensation department, or any successor department within the Company, regardless of name, has the powers and duties set forth below. Determinations made by the Compensation department (or other department) under this Section 2.4 shall be final and binding on all persons, but may, in the Committee’s absolute and sole discretion, be reviewed by the Committee. The powers and duties delegated by the Committee hereunder are to:
(a) work with Plan service providers to ensure the effective administration of the Plan;
(b) determine whether a Participant’s disability, as defined by a qualified medical professional acceptable to the Company’s Compensation department (or other department), qualifies as Disability as defined under the Plan; and
(c) perform any and all tasks, duties, and responsibilities delegated by the Company or the Committee.
The Company’s Compensation department has authority to interpret the terms of the Plan and any Award in carrying out the powers and duties as set forth above.
| | | ARTICLE 3 | Shares Available for Awards and General Vesting Requirements |
3.1Basic Limitation. Shares issued pursuant to the Plan shall be authorized but unissued shares. The aggregate number of Shares available for Awards of Options, SARs, Unrestricted Shares, Restricted Shares, Restricted Stock Units or Performance Share Units granted under the Plan shall not exceed (a) 9,500,000 Shares plus (b) the additional shares of Common Stock described in Section 3.3. The limitations of this Section 3.1 and Sections 3.2 and 3.3 shall be subject to adjustment pursuant to Article 12. The aggregate number of Shares available for issuance as Plan Awards shall be reduced by 1.6 (one point six) Shares for each Share delivered in settlement of any Award of Unrestricted Shares, Restricted Shares, Restricted Stock Units, Performance Share Units, dividends, or dividend equivalents, and by 1 (one) Share for each Share delivered in settlement of any Option Award or SAR. Awards that are required to be settled in cash will not reduce the number of Shares available for delivery under the Plan.
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3.2Additional Shares. If any Shares covered by an Award of Options, SARs, Restricted Shares, Restricted Stock Units or Performance Share Units terminate, lapse or are forfeited or cancelled, or such Award is otherwise settled without the delivery of the full number of Shares underlying the Award, then the Shares covered by such Award, or to which such Award relates, to the extent of any such forfeiture, termination, lapse, cancellation, etc., shall again be, or shall become, available for issuance under the Plan; provided, however, that Shares (a) delivered in payment of the exercise price of an Award, (b) not issued upon the net settlement or net exercise of SARs, (c) delivered to or withheld by the Company to pay withholding taxes related to an Award, or (d) purchased in the open market using option proceeds, shall not become available again for issuance under this Plan. Shares that again become available for issuance under the Plan pursuant to this Section 3.2 shall be added to the number of Shares available under Section 3.1 in the same ratios as applied to them at the time they were originally granted (e.g., 1.6 (one point six) Shares for each Share attributable to previously granted Awards of Restricted Shares, Restricted Stock Units or Performance Share Units and 1 (one) Share for each Share attributable to previously granted Option Awards or SARs).
3.3Additional Shares from Prior Plan. Shares available for issuance under the Plan shall be increased by any shares of Common Stock subject to outstanding Awards under the Prior Plans on the effective date of the Plan, May 23, 2019, that later cease to be subject to such Awards for any reason other than the exercise, or vesting of such Awards (as the case may be), or any amounts withheld from such Awards by the Company for taxes on the Awards, which Shares shall, as of the date such Shares cease to be subject to such Awards, cease to be available for grant and issuance under the Prior Plans, but shall be available for issuance under the Plan under Section 3.1. Shares that become available for issuance under the Plan pursuant to this Section 3.3, shall become available for issuance under the Plan in such amount as they previously reduced the number of Shares available for issuance under the Prior Plans.
3.4General Vesting Requirements. Awards granted under the Plan shall vest no earlier than the first anniversary of the date of grant. Notwithstanding the previous sentence, the Committee may grant Awards representing up to an aggregate maximum of five percent (5%) of the available Share reserve authorized for issuance under the Plan pursuant to Section 3.1 (subject to adjustment under Section 3.3) without regard to the foregoing minimum vesting requirement.
4.1Awards. Employees and Nonemployee Directors shall be eligible for the grant of Awards of NSOs, SARs, Unrestricted Shares, Restricted Shares, Restricted Stock Units or Performance Share Units.
4.2Incentive Stock Options. Only Employees who are common-law employees of the Company or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any of its Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(6) of the Code are satisfied.
Options granted under the Plan are subject to the following terms and conditions:
5.1Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an NSO or an ISO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.
5.2Number of Shares. Each Stock Option Agreement shall specify the number of shares of Common Stock subject to the Option, which shall be subject to adjustment in accordance with Article 12. Options granted to any Employee in a single fiscal year of the Company shall not cover more than 500,000 shares of Common Stock. Holders of Options shall have no right to dividend equivalents and prior to exercise, no rights to dividends. The limitation set forth in the preceding sentence shall be subject to adjustment in accordance with Article 12.
5.3Exercise Price. Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an Option shall in no event be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.
5.4Exercisability and Term. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable, subject to Section 3.4. The Stock Option Agreement shall also specify the term of the Option; provided that the term shall in no event exceed ten (10) years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s Disability, death or Retirement and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be granted in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.
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5.5Effect of Change in Control. In the event that the Optionee experiences a Qualifying Termination within twelve (12) months following a Change in Control then, unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Option for the cash, securities or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control, or (ii) the Option would otherwise continue in accordance with its terms notwithstanding the occurrence of the Change in Control, such Option shall automatically become fully vested and exercisable. However, in the case of an ISO, the acceleration of exercisability shall not occur without the Optionee’s written consent. In addition, acceleration of exercisability may be required pursuant to Article 12.
5.6Dividend Rights. No dividends or dividend equivalent rights shall be paid or accrued with respect to Options.
| | | ARTICLE 6 | Payments For Option Shares |
6.1General Rule. The entire Exercise Price of shares of Common Stock issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such shares of Common Stock are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall be made only pursuant to the express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may specify that payment may be made in any form(s) described in this Article 6.
(b) In the case of an NSO, the Committee may at any time accept payment in any form(s) described in this Article 6.
6.2Stock Swap. To the extent specifically provided in an Option Agreement, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, shares of Common Stock that are already owned by the Optionee. Such shares of Common Stock shall be valued at their Fair Market Value on the date when the new shares of Common Stock are purchased under the Plan.
6.3Exercise/Sale. To the extent that this Section 6.3 is applicable and to the extent so provided in the Stock Option Agreement, all or any part of the Exercise Price and any withholding taxes may be paid by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise program established with a broker; (iii) Net Exercise; (iv) by any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee.
| | | ARTICLE 7 | Stock Appreciation Rights |
SARs granted under the Plan are subject to the following terms and conditions:
7.1SAR Agreement. Each SAR granted under the Plan shall be evidenced by an SAR Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical.
7.2Number of Shares. Each SAR Agreement shall specify the number of shares of Common Stock to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 12. SARs granted to any Participant in a single calendar year shall in no event pertain to more than 500,000 shares of Common Stock. The limitation set forth in the preceding sentence shall be subject to adjustment in accordance with Article 12.
7.3Exercise Price. Each SAR Agreement shall specify the Exercise Price; provided that the Exercise Price under an SAR shall in no event be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.
7.4Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable, subject to Section 3.4. The SAR Agreement shall also specify the term of the SAR; provided, however, that the term shall in no event exceed ten (10) years from the date of grant. A SAR Agreement may provide for accelerated exercisability in the event of the Participant’s Disability, death or Retirement and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. SARs may be granted in combination with Options, and such an SAR Agreement may provide that the SARs will not be exercisable unless the related Options are forfeited.
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7.5Effect of Change in Control. In the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control then, unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such SAR for the cash, securities or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control, or (ii) the SAR would otherwise continue in accordance with its terms notwithstanding the occurrence of the Change in Control, such SAR shall automatically become fully vested and exercisable. In addition, acceleration of exercisability may be required pursuant to Article 12.
7.6Exercise of SARs. Upon exercise of an SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) shares of Common Stock, (b) cash or (c) a combination of shares of Common Stock and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of shares of Common Stock received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the shares of Common Stock subject to the SARs exceeds the Exercise Price.
7.7Dividend Rights. No dividends or dividend equivalent rights shall be paid or accrued with respect to SARS.
| | | ARTICLE 8 | Unrestricted Shares |
Unrestricted Shares granted under the Plan are subject to the following terms and conditions:
8.1Unrestricted Shares. Unrestricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. In no event shall the number of Unrestricted Shares that are granted to any Participant in a single fiscal year exceed 100,000 shares of Common Stock, subject to adjustment in accordance with Article 12 or together with all other Awards the limits set forth in Section 3.4.
8.2Payment for Awards. Unrestricted Shares may be granted under the Plan for such consideration consisting of any tangible or intangible property or benefit to the Company as the Committee may determine, including cash, services performed and contracts for services to be performed.
| | | ARTICLE 9 | Restricted Shares |
Restricted Shares granted under the Plan are subject to the following terms and conditions:
9.1Restricted Share Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Agreements entered into under the Plan need not be identical. In no event shall the number of Restricted Shares which are granted to any Participant in a single fiscal year exceed 500,000 shares of Common Stock, subject to adjustment in accordance with Article 12.
9.2Payment for Awards. Restricted Shares may be granted under the Plan for such consideration consisting of any tangible or intangible property or benefit to the Company as the Committee may determine, including cash, services performed and contracts for services to be performed.
9.3Vesting Conditions. Each Award of Restricted Shares shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.
If the Participant’s employment with the Company or Subsidiary is terminated before the end of a Performance Cycle for any reason other than Disability, death or Retirement, the Participant shall forfeit all rights with respect to any Restricted Shares that were being earned during the Performance Cycle. The Committee, in its absolute and sole discretion, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any Restricted Shares that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Restricted Share Agreement may provide for accelerated service-based vesting in the event of the Participant’s Disability, death or Retirement (provided that, with respect to accelerated vesting in the event of Retirement, such Restricted Share Agreement shall comply with the requirements of Code Section 409A and include specific provisions regarding any tax withholding requirements, as required). Notwithstanding the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control, then unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Restricted Shares for the cash, securities, or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control; or (ii) the Restricted Share Agreement would otherwise continue in accordance with its terms notwithstanding the occurrence
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of the Change in Control, such Restricted Shares shall automatically vest upon the date of such Qualifying Termination at such amount as would have been earned if the original payment date(s) of the Restricted Shares had been the date of the Qualifying Termination, or if such payment is indeterminable then one hundred percent (100%) of such Restricted Shares will vest and any restrictions thereon shall lapse at the time of such Change in Control.
9.4Voting and Dividend Rights. The holders of Restricted Shares granted under the Plan shall have the voting, dividend and other rights as set forth in their Restricted Share Agreement, and may have the same voting, dividend and other rights as the Company’s other shareholders. Any dividends paid on Restricted Shares shall not be paid at the dividend payment date and shall only be paid if and when Restricted Shares vest, in cash or in shares of unrestricted Common Stock having a Fair Market Value equal to the amount of such dividends. Common Stock distributed in connection with a stock split or stock dividend, and distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Common Stock has been distributed.
| | | ARTICLE 10 | Restricted Stock Units |
Restricted Stock Units granted under the Plan are subject to the following terms and conditions:
10.1Restricted Stock Units. Restricted Stock Units are designated in shares of Common Stock.
10.2Restricted Stock Unit Agreement. Each grant of Restricted Stock Units under the Plan shall be evidenced by a Restricted Stock Unit Agreement between the recipient and the Company. Such Restricted Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms of the applicable Restricted Stock Unit Agreement that are not inconsistent with the Plan. The provisions of the various Restricted Stock Unit Agreements entered into under the Plan need not be identical. In no event shall the number of Restricted Stock Units which are granted to any Participant in a single fiscal year pertain to more than 500,000 shares of Common Stock, subject to adjustment in accordance with Article 12.
10.3Payment for Awards. To the extent that an Award is granted in the form of Restricted Stock Units, no cash consideration shall be required of the Award recipients.
10.4Vesting Conditions. Each Award of Restricted Stock Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Unit Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.
If the Participant’s employment with the Company or Subsidiary is terminated before the end of a Performance Cycle for any reason other than Disability, death or Retirement, the Participant shall forfeit all rights with respect to any Restricted Stock Units that were being earned during that Performance Cycle. The Committee, in its absolute and sole discretion, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any shares of Restricted Stock Units that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Restricted Stock Unit Agreement may provide for accelerated service-based vesting in the event of the Participant’s Disability, death or Retirement (provided that, with respect to accelerated vesting in the event of Retirement, such Restricted Stock Unit Agreement’s accelerated vesting provisions shall comply with the requirements of Code Section 409A). Notwithstanding anything to the contrary contained in the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control then unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Restricted Stock Units for the cash, securities, or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control; or (ii) the award of Restricted Stock Units would otherwise continue in accordance with its terms notwithstanding the occurrence of the Change in Control, such Restricted Stock Units shall automatically vest upon the date of such Qualifying Termination at such amount as would have been earned if the original payment date(s) of the Restricted Stock Units had been the date of the Qualifying Termination, or if such payment is indeterminable then one hundred percent (100%) of such Restricted Stock Units will vest and any restrictions thereon shall lapse at the time of such Change in Control.
10.5Dividend Rights. Shares underlying an Award of Restricted Stock Units shall not be entitled to dividends and shall be entitled to dividend equivalents with respect to such Restricted Stock Units only as set forth under a Restricted Stock Unit Agreement and in compliance with this Section 10.5. If a Restricted Stock Unit Agreement includes rights to dividend equivalents, an amount equal to the dividends that would have been paid if the Restricted Stock Units had been issued and outstanding shares of Common Stock on or before the record date for any declared dividend shall be paid to the holder of such Restricted Stock Units, in cash or stock, subject to applicable withholding taxes, only if and when the Restricted Stock Units vest. Any dividend equivalents payable pursuant to this Section 10.5 shall be paid no later than March 1 of the calendar year after the calendar year in which the underlying Restricted Stock Units vest as provided in the applicable Restricted Stock Unit Agreement.
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10.6Form and Time of Settlement of Restricted Stock Unit Awards. Settlement of vested Restricted Stock Units may be made in the form of (a) cash, (b) shares of Common Stock or (c) any combination of both, as determined by the Committee. For the avoidance of doubt, settlement of vested Restricted Stock Units in shares of Common Stock shall not be considered an Award of Unrestricted Shares under Article 8. Methods of converting Restricted Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of shares of Common Stock over a series of trading days. Vested Restricted Stock Units shall be settled in a lump sum before the later of (i) two and one half (21/2) months after the end of the Company’s fiscal year during which all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed or (ii) March 15 following the calendar year in which all vesting conditions applicable to the Restricted Stock Units have been satisfied or have lapsed. Until an Award of Restricted Stock Units is settled, the number of such Restricted Stock Units shall be subject to adjustment pursuant to Article 12.
10.7Creditors’ Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.
| | | ARTICLE 11 | Performance Share Units |
Performance Share Units granted under the Plan are subject to the following terms and conditions:
11.1Performance Share Units. Performance Share Units are designated in shares of Common Stock.
11.2Agreement. Each grant of Performance Share Units under the Plan shall be evidenced by an Agreement between the recipient and the Company, shall be subject to all applicable terms of the Plan, and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Performance Share Unit Agreements entered into under the Plan need not be identical. Performance Share Units may be granted in consideration of a reduction in the recipient’s other compensation.
11.3Payment for Awards. To the extent that an Award is granted in the form of Performance Share Units, no cash consideration shall be required of the Award recipients.
11.4Vesting Conditions. Each Award of Performance Share Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Performance Share Unit Agreement, subject to Section 3.4. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a Performance Cycle equal or exceed a target determined in advance by the Committee. Such target shall be based on any one or combination of the Performance Criteria.
In no event shall the number of Performance Share Units which are subject to performance-based vesting conditions and which are granted to any Participant in a single fiscal year exceed 500,000, subject to adjustment in accordance with Article 12.
If the Participant’s employment with the Company or Subsidiary is terminated before the date that Performance Share Units vest, the Participant shall forfeit all rights with respect to any unvested Performance Share Units. However, with respect to Performance Share Units subject to performance-based vesting conditions, the Committee, in its absolute and sole discretion at the time an Award of Performance Share Units is made, may establish guidelines providing that if a Participant’s employment is terminated before the end of a Performance Cycle by reason of Disability, death or Retirement, the Participant shall be entitled to a prorated payment with respect to any Performance Share Units that were being earned during the Performance Cycle, as determined at the end of such Performance Cycle. A Performance Share Unit Agreement may provide for accelerated service-based vesting in the event of a Participant’s Disability, death or Retirement (provided, in the case of Retirement, that such Performance Share Unit Agreement’s accelerated vesting provisions shall comply with the requirements of Code Section 409A). Notwithstanding anything to the contrary contained in the foregoing, in the event that the Participant experiences a Qualifying Termination within twelve (12) months following a Change in Control then unless (i) the Committee shall have previously made provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all of such Performance Share Units for the cash, securities, or property deliverable to the holder of any or all outstanding share-based Awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Company’s Common Stock in connection with the Change in Control; or (ii) the award of Performance Share Units would otherwise continue in accordance with its terms notwithstanding the occurrence of the Change in Control, such Performance Share Units shall automatically vest upon the date of such Qualifying Termination at such amount as would have been earned if the original payment date of the Performance Shares Units had been the date of the Qualifying Termination, or if such payment is indeterminable then one hundred percent (100%) of such Performance Share Units will vest and any restrictions thereon shall lapse at the time of such Change in Control. In addition, acceleration of vesting may be required pursuant to Article 12.
11.5Dividend Rights. Shares underlying an Award of Performance Share Units shall not be entitled to dividends and shall be entitled to dividend equivalents with respect to such Performance Share Units only as set forth under a Performance Share Unit Agreement and in compliance with this Section 11.5. If a Performance Share Unit Agreement includes rights to dividend equivalents, an amount equal to the dividends that would have been paid if the Performance Share Units had been settled shares of Common Stock on or before the record date for any declared dividend shall be paid to the holder of such Performance Share Units, in cash or stock, subject to applicable withholding taxes, only if and when such Performance Share Units actually vest and are settled in shares of Common Stock. Any dividend equivalents payable pursuant to this Section 11.5 shall be paid no later than March 1 of the calendar year after the calendar year in which the underlying Performance Share Units vest as provided in the applicable Performance Share Unit Agreement.
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11.6Form and Time of Settlement of Units. Settlement of vested Performance Share Units may be made in the form of (a) cash, (b) shares of Common Stock or (c) any combination of both, as determined by the Committee. For the avoidance of doubt, settlement of vested Performance Share Units in shares of Common Stock shall not be considered an Award of Unrestricted Shares under Article 8. Methods of converting Performance Share Units into cash may include (without limitation) a method based on the average Fair Market Value of shares of Common Stock over a series of trading days. Vested Performance Share Units shall be settled in a lump sum by the last day of the calendar year in which all vesting conditions applicable to the Performance Share Units have been satisfied or have lapsed. Until an Award of Performance Share Units is settled, the number of such Share Units shall be subject to adjustment pursuant to Article 12.
11.7Creditors’ Rights. A holder of Performance Share Units shall have no rights other than those of a general creditor of the Company. Performance Share Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Performance Share Unit Agreement.
| | | ARTICLE 12 | Protection Against Dilution |
12.1Modification or Assumption of Awards. Except in connection with a corporate transaction involving the Company (a “Strategic Transaction” which shall include, without limitation any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares or the sale of all or substantially all of the Company’s assets), the terms of outstanding Awards may not be amended to reduce any exercise price associated with such Awards or to cancel any outstanding Awards in exchange for cash, other Awards or other securities with an exercise price that is less than the exercise price of the original Awards without shareholder approval. The foregoing and the provisions of this Article 12 notwithstanding, no modification of an Award shall, without the consent of the Award recipient, alter or impair his or her rights or obligations under such Award.
12.2Adjustments. Upon or in contemplation of any Strategic Transaction, the Committee shall, in such manner, to such extent (if any) and at such time as it deems appropriate and equitable in the circumstances:
(a) proportionately adjust any or all of (i) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of Awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (ii) the number, amount and type of shares of Common Stock (or other securities or property) subject to any or all outstanding Awards, (iii) the grant, purchase, or exercise price of any or all outstanding Awards, (iv) the securities, cash or other property deliverable upon exercise of any or all outstanding Awards, or (v) the performance standards appropriate to any or all outstanding Awards, or
(b) make provision for a cash payment or for the assumption, substitution or exchange of any or all outstanding share-based Awards or the cash, securities or property deliverable to the holder of any or all outstanding share-based Awards, based upon the distribution or consideration payable to holders of the outstanding shares of Common Stock upon or in respect of such event.
For the avoidance of doubt, this Article 12 does not apply to normal cash dividends with respect to Company Stock other than extraordinary dividends or to stock issued in lieu of such dividends. The Committee may adopt such valuation methodologies for outstanding Awards as it deems reasonable in the event of a cash or property settlement and, in the case of Options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess, if any, of the per share amount payable upon or in respect of such event over the grant price of the Award, unless otherwise provided in, or by authorized amendment to, the Award or provided in another applicable agreement with the Participant. With respect to any ISO, in the absolute and sole discretion of the Committee, the adjustment may be made in a manner that would cause the Option to cease to qualify as an ISO.
12.3Dissolution or Liquidation. To the extent not previously exercised, settled or assumed, Options, SARs, and Performance Share Units shall terminate immediately prior to the dissolution or liquidation of the Company.
| | | ARTICLE 13 | Awards Under Other Plans |
The Company may grant Awards under other equity plans or programs. Such Awards may be settled in the form of shares of Common Stock issued under this Plan.
| | | ARTICLE 14 | Limitation on Rights |
14.1Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee or Nonemployee Director. The Company and its Subsidiaries reserve the right to terminate the Service of any Employee or Nonemployee Director at any time, with or without cause, subject to applicable laws, the Company’s Restated Articles of Incorporation and Bylaws and a written employment agreement (if any).
NORDSTROM, INC. - 2019 Proxy Statement B-7
14.2Shareholders’ Rights. Unless otherwise provided in this Plan or in any Award, a Participant shall have no dividend rights, voting rights or other rights as a shareholder with respect to any shares of Common Stock covered by his or her Award prior to the time when a stock certificate for such shares of Common Stock is issued or, if applicable, the time when he or she becomes entitled to receive such shares of Common Stock by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for normal cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.
14.3Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue shares of Common Stock under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of shares of Common Stock pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such shares of Common Stock related to their registration, qualification or listing or to an exemption from registration, qualification or listing.
14.4Compliance with Code Section 409A. Awards under the Plan are intended to comply with Code Section 409A and all Awards shall be interpreted in a manner that results in compliance with Section 409A, Department of Treasury regulations, and other interpretive guidance under Section 409A. Notwithstanding any provision of the Plan or an Award to the contrary, if the Committee determines that any Award does not comply with Code Section 409A, the Company may adopt such amendments to the Plan and the affected Award (without consent of the Participant) or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary and appropriate to (a) exempt the Plan and the Award from application of Code Section 409A and/or preserve the intended tax treatment of amounts payable with respect to the Award, or (b) comply with the requirements of Code Section 409A.
14.5Clawback Policy. Each award issued under the Plan is subject to the Company’s clawback policy, which is amended from time to time.
14.6Transferability. Except in the context of death of a Participant, or as otherwise required by law, or as approved by the Committee for no consideration, Awards issued under the Plan may not be transferred to any third party.
14.7Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Washington, without giving effect to any conflicts of laws principles.
| | | ARTICLE 15 | Withholding Taxes |
15.1General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any shares of Common Stock or make any cash payment under the Plan until such obligations are satisfied.
15.2Share Withholding. To the extent that applicable law subjects a Participant to tax withholding obligations, the Committee may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any shares of Common Stock that otherwise would be issued to him or her or by surrendering all or a portion of any shares of Common Stock that he or she previously acquired. Such shares of Common Stock shall be valued at their Fair Market Value on the date when they are withheld or surrendered, and shall be deemed to have been issued for purposes of identifying any shares which may become available for grant pursuant to Section 3.3 above.
| | | ARTICLE 16 | Future of the Plan |
16.1Term of the Plan. The Plan, as set forth herein, became effective on the date of shareholder approval, May 23, 2019, and shall remain in effect for a period of ten (10) years unless earlier terminated under Section 16.2.
16.2Amendment or Termination. The Board may, at any time and for any reason, amend, alter or terminate the Plan. Notwithstanding the foregoing and except as provided in Section 14.4, no amendment, alteration or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s express written consent. An amendment of the Plan shall be subject to the approval of the Company’s shareholders for any amendment that would (a) require shareholder approval in order to satisfy the applicable requirements of Code section 422, or other applicable laws, regulations or rules, including but not limited to any stock exchange rules; (b) increase amounts payable under the Plan to Participants (provided that shareholder approval shall not be required for increases that are not material and do not require such approval under applicable law or stock exchange rules); (c) increase the number of shares of Common Stock authorized to be issued under the Plan; (d) permit the repurchase by the Company of any outstanding Awards with an Exercise Price greater than the then-current Fair Market Value of Common Stock; or (e) modify the Plan’s eligibility provisions. No Awards shall be granted under the Plan after the termination thereof.
B-8 NORDSTROM, INC. - 2019 Proxy Statement
17.1 “Award” means any grant of an Option, an SAR, an Unrestricted Share, a Restricted Share, a Restricted Stock Unit or a Performance Share Unit under the Plan.
17.2 “Award Agreement” means the written agreement between the Company and the recipient that contains the terms, conditions and restrictions pertaining to a particular Award.
17.3 “Board” means the Company’s Board of Directors, as constituted from time to time.
17.4 “Cause” means (a) the unauthorized use or disclosure of the confidential information or trade secrets of the Company, which use or disclosure causes material harm to the Company, (b) conviction of, or a plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State thereof, (c) gross negligence, (d) willful misconduct or (e) a failure to perform assigned duties that continues after the Participant has received written notice of such failure. The foregoing, however, shall not be deemed an exclusive list of all acts or omissions that the Company (or the Parent or Subsidiary employing the Participant) may consider as grounds for the discharge of the Participant without Cause.
17.5 “Change in Control” means the happening of any of the following:
(a) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization in excess of fifty percent (50%) of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of such continuing or surviving entity;
(b) the sale, transfer or other disposition of all or substantially all of the Company’s assets;
(c) a change in the composition of the Board as a result of which fewer than fifty percent (50%) of the incumbent Directors are Directors who either (i) had been Directors of the Company on the date twenty-four (24) months prior to the date of the event that may constitute a Change in Control (the “original Directors”) or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original Directors who were still in office at the time of the election or nomination and the Directors whose election or nomination was previously so approved, but excluding, for this purpose, any such Director whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation; or
(d) any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least thirty percent (30%) of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this Paragraph (d), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary and (ii) a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
17.6 “Code” means the Internal Revenue Code of 1986, as amended.
17.7 “Committee” means the Compensation Committee of the Company’s Board.
17.8 “Common Stock” means shares of the common stock of the Company.
17.9 “Company” means Nordstrom, Inc., a Washington corporation.
17.10 “Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
17.11 “Employee” means a common-law employee of the Company, a Parent or a Subsidiary.
17.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended.
17.13 “Exercise Price,” in the case of an Option, means the amount for which one share of Common Stock may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of an SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one share of Common Stock in determining the amount payable upon exercise of such SAR.
NORDSTROM, INC. - 2019 Proxy Statement B-9
17.14 “Fair Market Value” means the market price of a share of Common Stock, determined by the Committee in good faith on such basis as it deems appropriate. Whenever possible, the determination of Fair Market Value by the Committee shall be based on the closing price on the date of the Award as reported by the New York Stock Exchange, or the primary exchange or quotation system on which the Common Stock is then trading. Such determination shall be conclusive and binding on all persons.
17.15 “Good Reason” means the occurrence of one or more of the following without the Participant’s express written consent and within twelve (12) months following a Change in Control:
(a) a material diminution in the Participant’s base salary;
(b) a material diminution in the Participant’s authority, duties, or responsibilities;
(c) a material change in the geographic location at which the Participant must perform his or her services to a place that is more than fifty (50) miles from where the Participant was based immediately prior to the Change in Control; and
(d) any other action or inaction that constitutes a material breach by the Company of this Plan with respect to a Participant’s Award.
The event or events described above shall constitute Good Reason only if the Company (or the Parent or Subsidiary employing the Participant) fails to cure such event or events within ninety (90) days after receipt from the Participant of written notice of the event or events which constitutes Good Reason. Such notice must be provided to the Company (or the Parent or Subsidiary employing the Participant) and must provide a reasonably detailed description of the facts that the Participant believes constitute a Good Reason event. Good Reason shall cease to exist for an event on the ninetieth (90th) day following the later of its occurrence or the Participant’s knowledge thereof, unless the Participant has given written notice to the Company thereof prior to such date.
17.16 “ISO” means an incentive stock option described in Section 422(b) of the Code.
17.17 “Net Exercise” means in lieu of exercising an Option for cash, the Optionee may elect to receive shares equal to the value of the Option (or the portion thereof being exercised) by surrender of the Option. The Company shall issue to such Optionee a number of shares of Common Stock computed using the following formula:
X = Y (A - B)
A
Where
X = The number of shares to be issued to the Optionee pursuant to the Net Exercise.
Y = The number of shares purchasable under this Option or, if only a portion of the Option is being exercised, the portion of the Option being cancelled (at the date of such calculation).
A = The fair market value of one (1) share (at the date of such calculation).
B = The Exercise Price (as adjusted to the date of such calculations).
17.18 “NSO” means a stock option not described in Sections 422 or 423 of the Code.
17.19 “Nonemployee Director” means a member of the Company’s Board or the Board of Directors of a Subsidiary who is not an Employee. Service as a Nonemployee Director shall be considered employment for all purposes of the Plan, except as provided in Section 4.2.
17.20 “Option” means an NSO or an ISO granted under Article 5 of the Plan and entitling the holder to purchase shares of Common Stock pursuant to an Award.
17.21 “Optionee” means an individual or estate who holds an Option.
17.22 “Participant” means an individual or estate who holds an Award.
17.23 “Performance Criteria” shall mean a specified percentage or quantitative level in one or more of the following performance measures:
(a) the Company’s shareholder return as compared with any designated industry or other comparator group;
(b) the trading price of the Company’s common stock;
(c) the results of operations, such as sales, earnings, net income (before or after taxes), cash flow, return on assets, same-store sales, economic profit, or return on investment (including return on equity, return on capital employed, or return on assets);
B-10 NORDSTROM, INC. - 2019 Proxy Statement
(d) earnings before or after taxes, interest, depreciation and/or amortization, and including /excluding capital gains and losses;
(e) other financial results, such as profit margins, operational efficiency, expense reduction, or asset management goals; and
(f) the internal or external market share of a product or line of products.
Each of the foregoing performance measures may be based on the performance of the Company generally, in the absolute or in relation to its peers, or the performance of a particular Participant, department, business unit, subsidiary, or other segment to which a particular Participant is assigned. The Committee may establish different performance measures and milestones for individual Participants or groups of Participants. For each Participant, each performance measure will be weighted to reflect its relative significance to the Company for the Performance Cycle.
Except as otherwise specified in an individual Award, applicable performance measures shall be adjusted to exclude the following items that occur during a given Performance Cycle:
(i) Extraordinary, unusual or non-recurring items of gain or loss;
(ii) Gains or losses on the disposition of a business, a segment of a business, or significant assets outside the ordinary course of business;
(iii) Changes in tax or accounting standards, principles, regulations or laws;
(iv) The effect of a merger or acquisition, including all financial results derived therefrom during the period from the merger or acquisition date through the end of the Performance Cycle in which the merger or acquisition occurred;
(v) Gains or losses due to non-cash adjustments which relate to the valuation of long-term assets rather than current-year performance (including but not necessarily limited to gain or loss recognized for store closures, lease terminations, pension adjustments and mark to market adjustments); and
(vi) The impact of other similar occurrences outside of the Company’s core, on-going business activities (including but not necessarily limited to litigation or tax reserves, financing activities, foreign exchange rate fluctuations and restructuring charges).
In all other respects, performance measures comprising Performance Criteria for an Award shall be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles (GAAP), or under a non-GAAP methodology established by the Committee prior to the issuance of an Award. The method of calculating performance measurements shall be consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report.
17.24 “Performance Cycle” means a predetermined period of time, not less than one year, over which Performance Criteria will be measured with respect to an Award
17.25 “Performance Share Unit” means a bookkeeping entry representing the equivalent of one (1) share of Common Stock, as granted under the Plan pursuant to an Award.
17.26 “Performance Share Unit Agreement” means the written agreement between the Company and the recipient of a Performance Share Unit that contains the terms, conditions and restrictions pertaining to such Performance Share Unit.
17.27 “Plan” means this Nordstrom, Inc. 2019 Equity Incentive Plan, as amended from time to time.
17.28 “Prior Plans” mean the Nordstrom 2010 Equity Incentive Plan and 2004 Equity Incentive Plan, as subsequently amended in 2007 and 2008.
17.29 “Qualifying Termination” means (a) the Participant’s employment is involuntarily terminated by the Company (or the Parent or Subsidiary employing the Participant) without Cause, or (b) the Participant terminates employment from the Company (or the Parent or Subsidiary employing the Participant) for Good Reason. The twelve-month period will be extended by one (1) additional month if the thirty-day cure period in Section 17.15 is triggered in the eleventh or twelfth month following a Change in Control. It is intended that any Qualifying Termination shall be an “involuntary Separation from Service,” as that term is defined in Treasury Regulation Section 1.409A-1(n).
17.30 “Restricted Share” means a share of Common Stock granted under Article 9 pursuant to an Award, with such restrictions as set forth in the applicable Restricted Share Agreement.
17.31 “Restricted Stock Unit” means a right granted under Article 10 to receive Common Stock or cash at the end of a specified deferral period pursuant to an Award, which right may be conditioned on the satisfaction of certain requirements (including the satisfaction of certain performance goals).
17.32 “Restricted Share Agreement” means the written agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
NORDSTROM, INC. - 2019 Proxy Statement B-11
17.33 “Restricted Stock Unit Agreement” means the written agreement between the Company and the recipient of a Restricted Stock Unit that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.
17.34 “Retirement” means Participant’s termination from Service on or after his or her Retirement Date.
17.35 “Retirement Date” shall have the meaning as set forth in a particular Award Agreement.
17.36 “SAR” means a stock appreciation right granted under Article 7 of the Plan pursuant to an Award.
17.37 “SAR Agreement” means the written agreement between the Company and a Participant that contains the terms, conditions and restrictions pertaining to his or her SAR.
17.38 “Service” means service as an Employee or Nonemployee Director.
17.39 “Stock Option Agreement” means the written agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option.
17.40 “Subcommittee” means a separate committee established by and consisting of members of the Committee.
17.41 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
17.42 “Unrestricted Share” means a share of Common Stock granted under Article 8 of the Plan pursuant to an Award.
IN WITNESS WHEREOF, this instrument setting forth the terms and conditions of this NORDSTROM, INC. 2019 EQUITY INCENTIVE PLAN is executed this _________ day of June 2019.
| | | NORDSTROM, INC. | By: | | | Christine Deputy | Title: | Chief Human Resources Officer |
B-12 NORDSTROM, INC. - 2019 Proxy Statement
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