UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
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| þ | Definitive Proxy Statement |
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NORDSTROM, INC.
Nordstrom, Inc.
(Name of Registrant as Specified Inin Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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1617 Sixth Avenue, Seattle, Washington 98101
April 12, 2019
Dear Shareholder,
You are invited to join us online May 23, 2019, at 9 a.m. Pacific Daylight Time for the 2019 Annual Meeting of Shareholders via webcast. We also invite you to attend the meeting in person, which will take place in the John W. Nordstrom Room on the 5th floor of the Downtown Seattle Nordstrom, at 1617 Sixth Avenue.
As a company, we made significant strides throughout 2018. Our generational investments — which include Manhattan, Canada, Nordstromrack.com/Hautelook and Trunk Club — continue to scale and improve in profitability. Our customer base is as strong as ever with more customers shopping across multiple channels, and we are seeing deeper engagement with customers through The Nordy Club loyalty program and our local market strategy. We aim to continue this momentum by focusing on our three strategic pillars: providing a differentiated product offering, delivering exceptional services and experiences, and leveraging the strength of our brand.
We recognize the retail environment is rapidly evolving and we continuously reinvest in our business while solving customer needs in new and relevant ways. Because of this, we have built a business model that is a key point of difference in the market. It enables us to serve customers across multiple touchpoints — through stores, online, Full-Price and Off-Price, all of which increases engagement and spend.
In all that we do, we remain committed to managing the business in the best interest of our customers, employees and shareholders. As a shareholder, one of your rights is to vote, which can be done online, by telephone or by using a printed proxy card as outlined in this document. In addition to this Proxy Statement, we encourage you to view our online Letter to Shareholders at investor.nordstrom.com and read our 2018 Annual Report. There you will find a more complete picture of our performance and how we are working to increase shareholder value by improving the customer experience.
Thank you on behalf of all of us at Nordstrom for your continued support.
Sincerely,
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Brad D. Smith | |
Chairman of the Board | |
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Peter E. Nordstrom | Erik B. Nordstrom |
Co-President | Co-President |
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NORDSTROM, INC. - 2019 Proxy Statement 4
Table of Contents
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1617 Sixth Avenue, Seattle, Washington 98101
April 7, 2022
Dear Shareholder,
When the world came to a halt in 2020, Nordstrom had more than a century’s worth of experience to draw upon. As a company, we had already weathered recessions and economic volatility, periods of social and political turbulence, natural disasters, and armed conflicts. Even as we faced an unprecedented global pandemic, we possessed a depth of experience and an unflagging commitment to our customers that left us well equipped to navigate challenging circumstances.
Two years later, the pandemic has revealed the strength of our company culture and the value of knowing what we stand for. For years, we’ve structured our organization as an inverted pyramid, with the customer at the top, followed by the teams serving those customers, with management supporting their efforts from below. This approach ensures the customer remains at the center of everything we do and encourages our people to support one another in service of a shared goal.
This ethos has always been an important part of our business, and it’s proven especially critical to our ability to navigate and adapt to the complex set of headwinds facing us today. Like others in our industry, we spent much of 2021 addressing and adapting to supply chain pressures, shifting consumer behavior, and the needs of an evolving workforce during a global pandemic. If 2020 showed us what we can achieve when we come together in service of our customers, 2021 challenged us to think creatively about the way we deliver that service in an evolving retail landscape.
While we succeeded in hitting our fiscal 2021 targets and have made good progress towards delivering the goals set forth at our February 2021 Investor Event, we know that there is opportunity to do better. We’re acting with urgency to win in our most important markets, broaden the reach of Nordstrom Rack, and increase our digital velocity, building on our core differentiators – a commitment to customer service, interconnected digital and physical assets and strong partnerships with the world’s best brands – to win customers and serve them on their terms. We recognize that we can and must continue to improve our performance, and we’re motivated to rise to the occasion.
Despite presenting new operational challenges, 2021 has given us much to be optimistic about: we continued to invest in our digital acceleration, grew choice count by 50%, launched more than 300 new brands, expanded customer-facing services like order pickup and in-store fulfillment, and built deeper connections through our customer loyalty programs. We've made an enormous amount of progress on our balance sheet and are in a stronger position now than at any time since the pandemic began.
Our Closer to You strategy, which we first outlined at the beginning of 2021, continues to be a powerful enabler for our business, combining the strength of our Nordstrom and Nordstrom Rack banners with robust digital capabilities to deliver on our reputation for unmatched customer service. At the heart of this strategy is our belief that great service lies at the intersection of convenience and connection. We must continue to provide customers with high-quality products, when and where they want them, and deliver an experience that is relevant and personal.
We’ve seen strong evidence that our strategy is working. For example, the average customer who shops across both banners, in stores and online, spends 12 times more than a customer utilizing a single channel and banner. And during our most recent Anniversary Sale, nearly 40% of our next day Nordstrom online order pickups happened at Rack stores.
We’re also continuing to evolve our approach to merchandising, leveraging our data to create personalized experiences that serve up more of what our customers want, when and where they want it. This analytics work enables us to provide a greater selection of categories and price points where we know there’s demand and do so in a way that feels curated and relevant.
Our brand partners are crucial to these efforts, and we pride ourselves in developing creative, complementary partnerships that expand our selection to engage new customers while growing wallet share with our existing customers. In 2021, we launched innovative new partnerships with brands like Fanatics, finishing the year with a record-high choice count.
As we anticipate and adapt to the needs of our customers, it’s important to note that our values remain unchanged. We’re deeply committed to doing business in ways that make a positive difference in the communities where we operate. That means taking action to protect the environment, giving back to the communities we serve, creating safe and fair workplaces for the people who make our products, and providing our employees with a great place to work. These values have informed a set of five-year goals, first outlined in 2020, that will hold us accountable not only to ourselves, but to our people, our partners, and the industry as a whole. You can learn more about the specific actions we are taking on pages 18 through 20.
This period has also underscored just how essential our people are to our mission. For as long as we’ve operated, it’s been important to us that our corporate teams have the opportunity to serve our customers directly and see firsthand how their work impacts our business. In the second half of 2021, our corporate employees filled over 10,000 shifts in Nordstrom and Nordstrom Rack locations across the U.S. and Canada, working alongside our in-store teams to help move product onto the floor more quickly throughout the holiday season. This kind of large-scale collaboration serves as proof of what we can accomplish when people come together from across our organization in service of our customers. We’re grateful to all of our employees for their hard work, resilience, and determination.
In a year filled with milestones, there’s one that stands out: 2021 marked 120 years since John W. Nordstrom opened the downtown Seattle shoe store that would become Nordstrom as we know it today. While we continue to celebrate with gratitude for the customers, employees, and partners who have made this journey possible, we know that this is just the beginning.
Looking ahead to 2022 and beyond, we have much to be excited about. We’re confident that we have the right strategy in place as we enter the next phase of our evolution and have the tools, determination, and talent we need to thrive for the next century.
Before we sign off, we would be remiss not to acknowledge that one of this letter's authors, Brad Smith, will be stepping down from his role as Board chairman in May and will not be standing for reelection. Having served on our Board since 2013 and as chairman since 2018, Brad's contributions to our business have been invaluable. We’re especially grateful for the leadership he’s demonstrated over the past two years as we’ve navigated the challenges of doing business during a global pandemic. Please join us in thanking him for his service and leadership.
We look forward to what we’ll accomplish in the year to come.
Sincerely,
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Notice | |
| Brad D. Smith | |
Chairman of Annual Meetingthe Board | |
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| of Shareholders |
| Erik B. Nordstrom | Peter E. Nordstrom |
| Chief Executive Officer | President and Chief Brand Officer |
Thursday, May 23, 2019
9:00 a.m. Pacific Daylight Time
John W. Nordstrom Room, 5th floor, Nordstrom Downtown Seattle Store,
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| 3 | 2022 Proxy Statement | NORDSTROM, INC. | |
1617 Sixth Avenue, Seattle, Washington 98101
The 2019 Annual Meeting of Shareholders (the “Annual Meeting”) of Nordstrom, Inc. (the “Company”) will be held for the following purposes:NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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| WHEN | WHERE | RECORD DATE |
| Wednesday, May 18, 2022 | virtualshareholdermeeting.com/JWN2022 | March 9, 2022 |
| 9:00 a.m. Pacific Daylight Time | | |
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| Items of Business |
| To vote on the following proposals: |
| 1 | To elect nine Director nominees named in this Proxy Statement to the Board to serve until the 2023 Annual Meeting of Shareholders |
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1. | To elect 11 Directors to serve until the 2020 Annual Meeting of Shareholders; |
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2.2 | To ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as the Company’sour Independent Registered Public Accounting Firm to serve for the 2019 fiscal year;year ending January 28, 2023 |
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3.3 | To conduct an advisory vote regarding the compensation of our Named Executive Officers;NEOs |
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4. | To approve the Nordstrom, Inc. 2019 Equity Incentive Plan; and |
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5.4 | To transact any other business that may properly come before the Annual Meeting and any adjournment or postponement thereof.thereof |
You are eligible to vote before the Annual Meeting, during the live webcast of the Annual Meeting and any adjournment or postponement thereof, if you were a shareholder of record at the close of business on March 15, 20199, 2022 (the “Record Date”). There were 154,952,755159,398,577 shares of the Company’sour Common Stock issued and outstanding as of March 15, 2019.
Shareholdersthe Record Date. Holders of our Common Stock are invitedentitled to attendcast one vote per share on each proposal. For further information on how to participate in the meeting, please see Frequently Asked Questions and Answers About the Annual Meeting beginning on page 65 in person. Those who are hearing impaired or require other assistance should contact the Company at 206-303-3040 so that we may facilitate your participation at the Annual Meeting.Proxy Statement accompanying this Notice.
YOUR VOTE IS VERY IMPORTANT. Whether or not you intend to be present atparticipate virtually in the Annual Meeting via remote communication, you are encouraged to vote.vote in advance of the meeting. Submitting your proxy now will not prevent you from voting your shares during the meeting, as your proxy is revocable at your option. When you vote, please have available the 16-digit control number found on your Notice of Internet Availability of Proxy Materials or proxy card.
You may vote in advance of the meeting, until 11:59 p.m. Eastern Daylight Time on May 17, 2022 using any of the following methods:
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| | Online At proxyvote.com | | | Toll-free Phone Call 1-800-690-6903 | | | Mail Vote Processing c/o Broadridge 51 Mercedes Way Edgewood, NY 11717 | | | Scanned QR Code Using your mobile device |
Seattle, WashingtonApril 12, 20197, 2022
By order of the Board of Directors,
Robert B. SariAnn Munson Steines
Corporate Secretary
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 20192022 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON May 23, 2019MAY 18, 2022 |
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The accompanying Proxy Statement and the 20182021 Annual Report on Form 10-K are available at investor.nordstrom.comthe Investor Relations Website. |
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. In some cases, forward-looking statements can be identified by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “pursue,” “going forward,” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements are detailed in the Company’s 2021 Annual Report. These forward-looking statements are not guarantees of future performance and speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information or future circumstances.
NORDSTROM, INC. - 2019 Proxy Statement 5
PROXY SUMMARY
You have received these proxy materials because the Board is soliciting your proxy to vote your shares during the 2022 Annual Meeting of Shareholders. This summary highlights information described in more detailcontained elsewhere in this Proxy Statement. ItThis summary does not contain all of the information that you should consider in deciding how to vote your shares, and you should read the entire Proxy Statement carefully before voting. Page references are providedsupplied to help you find further information.
information in this Proxy Statement. Please refer to our 2019Index of Key Terms Annual Meetingon page 7 for the meaning of Shareholderscertain terms used in this summary and the rest of this Proxy Statement. |
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Date and Time: | May 23, 2019 at 9:00 a.m. Pacific Daylight Time | Meeting Webcast: | investor.nordstrom.com, select Events & Presentations and follow the instructions given. The webcast will be archived and available for one year following the Annual Meeting.
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Place: | John W. Nordstrom Room, 5th floor | |
| Nordstrom Downtown Seattle Store | |
| 1617 Sixth Avenue | | |
| Seattle, Washington 98101 | | |
EligibilityThis Proxy Statement and the related proxy materials were first released to Vote
You are eligible to vote if you were a shareholdershareholders and made available on the internet on April 7, 2022. Shareholders who held shares as of record at the close of business on March 15, 2019.the Record Date can attend the virtual meeting at virtualshareholdermeeting.com/JWN2022.
How to Cast Your VoteProposal No. 1 - Election of Directors (page 77)
You can vote by any of the following methods:
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| Internet:Board Engagement | (www.proxyvote.com), until 11:59 p.m. Eastern Daylight Time on May 22, 2019; | | * | Mail: | by completing, signing and returning your proxy or voting instruction card on or before May 22, 2019; orNominee Average Age |
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| Telephone: | if you requested printed materials, by using the toll-free number listed on your proxy card until 11:59 p.m. Eastern Daylight Time on May 22, 2019; | | | In person: | if you are a shareholder of record, by voting your shares at the Annual Meeting. If your shares are held in the name of a broker, nominee or other intermediary, you must obtain a proxy, executed in your favor, to bring to the meeting. |
Voting Matters (page 76)
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| 1. | Election of Directors | FOR each Director Nominee | | 19 |
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| 2. | Ratification of the Appointment of Independent Registered Public Accounting Firm | FOR | | 25 |
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| 3. | Advisory Vote Regarding Executive Compensation | FOR | | |
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| 4. | Approval of the Nordstrom, Inc. 2019 Equity Incentive Plan | FOR | | |
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6 NORDSTROM, INC. - 2019 Proxy Statement
Board of Directors Nominees (page 21)
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| Name | | Age | | Director Since | | Occupation | | Committee Memberships | | Other Public Company Boards |
| Shellye L. Archambeau* | | 56 | | 2015 | | Former Chief Executive Officer of MetricStream, Inc. | | Corporate Governance and Nominating, Technology | | Verizon, Inc., Okta, Roper Technologies, Inc. |
| Stacy Brown-Philpot* | | 43 | | 2017 | | Chief Executive Officer of TaskRabbit, Inc. | | Audit and Finance, Technology | | HP Inc. |
| Tanya L. Domier* | | 53 | | 2015 | | Chief Executive Officer of Advantage Solutions | | Audit and Finance, Compensation (Chair) | | YUM! Brands, Inc. |
| Kirsten A. Green* | | 47 | | 2019 | | Founder and Managing Partner of Forerunner Ventures | | Audit and Finance, Technology | | |
| Glenda G. McNeal* | | 58 | | 2019 | | President Enterprise Strategic Partnerships of American Express | | Compensation, Corporate Governance and Nominating | | RLJ Lodging Trust |
| Erik B. Nordstrom | | 55 | | 2006 | | Co-President of Nordstrom, Inc. | | N/A | | |
| Peter E. Nordstrom | | 57 | | 2006 | | Co-President of Nordstrom, Inc. | | N/A | | |
| Brad D. Smith* | | 55 | | 2013 | | Executive Chairman of Intuit, Inc. | | Compensation, Corporate Governance and Nominating | | Intuit, Inc., SurveyMonkey |
| Gordon A. Smith* | | 60 | | 2015 | | Co-President and Chief Operating Officer of JPMorgan Chase & Co. | | Compensation, Corporate Governance and Nominating (Chair) | | |
| Bradley D. Tilden* | | 58 | | 2016 | | Chairman and Chief Executive Officer of Alaska Air Group, Inc. | | Audit and Finance (Chair) | | Alaska Air Group, Inc. |
| B. Kevin Turner* | | 54 | | 2010 | | President and Chief Executive Officer of Core Scientific | | Corporate Governance and Nominating, Technology (Chair) | | |
Governance of the Company (page 10)
9 of 11 Director nominees are independent.
Independent Directors meet regularly in executive session.
The roles of Co-Presidents and Chairman of the Board are separate.
Only independent Directors are Committee members.
Director elections have a majority voting standard and all Directors are elected annually.
The Board has stock ownership guidelines for Directors and Executive Officers.
Board, Committee and Director performance evaluations are conducted annually.
The Board and its Committees are responsible for risk oversight.
Co-President and management succession planning is one of the Board’s highest priorities.
NORDSTROM, INC. - 2019 Proxy Statement 7
Business Highlights
In fiscal year 2018, net earnings were $564 million, or $3.32 per diluted share, which included a $0.05 favorable income tax benefit related to prior periods and an estimated non-recurring credit-related charge of $0.28 (see page 42 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019). We achieved net sales of $15.5 billion. This compares to $15.1 billion in 2017, which included $220 million for the 53rd week associated with the 4-5-4 retail calendar. We maintained a strong financial position, generating annual operating cash flow of more than $1 billion for the 10th consecutive year and returning nearly $1 billion to shareholders through dividends and share repurchases during the year.
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Achieved $15.5B in sales, reflecting scaling of our generational investments. | 5 | Grew comparable sales 1.7%, reflecting Full-Price increase of 0.9% and Off-Price increase of 3.5%.2022 Proxy Statement | NORDSTROM, INC. | Generated earnings of $564M, reflecting lower income tax expense associated with corporate tax reform. |
Our business modelPROXY SUMMARY
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| Relevant Skills and Experience | |
| The nominees possess a balance of leadership experiences, diverse perspectives, strategic skill sets and professional expertise that are essential in furthering our business strategy and objectives, including: | |
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| Retail Industry | | | | | | | | Business Transformation | | | | |
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| Marketing & Customer Experience | | | | | CEO Experience | | | | | |
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| Online Scale & Growth | | | | | | | Financial Expertise | | | | | |
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| Risk & Crisis Management | | | | | | Technology Expertise | | | | | |
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The Board recommends a vote FOR each Director nominee.
Proposal No. 2 - Ratification of Independent Accountants (page 29)
Qualified and Experienced Independent Auditors
•Deloitte is a key point of difference in serving customers in multiple ways — through stores, online, Full-Pricean independent registered accounting firm that has served Nordstrom for more than 50 years.
•The firm’s expertise and Off-Price — with meaningful synergies across Nordstrom. Wefees are focused on leveraging our digital and physical assets to provide customers with a best-in-class experience. In 2018, we achievedappropriate for the following milestones in executing our customer strategy through our three strategic pillars: providing a compelling product offering, delivering outstanding services and experiences, and leveraging the strengthscope of the Nordstrom brand:Company’s needs.
The Board recommends a vote FOR this proposal.
Proposal No. 3 - Advisory Vote Regarding Executive Compensation (page 59)
Compensation Aligned with Performance
•Our executive compensation program aligns with our strategy and our pay-for-performance philosophy.
•We continued to see positive customer trends. In 2018, over 35 million customers shopped with us, an increasedeliver the majority of 6% from last year. One-thirdcompensation through a pay-for-performance framework where incentives are based on achieving results. Approximately 85% of our customers shopped across our multiple channels, which generally leads to higher customer spend.
Digital sales increased 16% and made up 30% of net sales. Additionally, Nordstrom.com achieved scale, with the profitability of Full-Price digital sales at parity with store sales. We believe our early investments to build a robust digital business have given us a competitive advantage.
Our generational investments continued to scale, contributing approximately $2 billion in sales and an improvement in profitability. Nordstromrack.com/HauteLook became our fastest business to reach $1 billion in sales. Trunk Club delivered sales growth of 35%. We opened our Men’s Store in New York City and furthered our expansion into Canada with the introduction of six Nordstrom Rack stores.
We launched our local market strategy in Los Angeles, which drove outsized market share gains in this market by increasing product selection, delivery speed and convenience for customers.
As we aspire to be the best fashion retailer in a digital world, we believe we are well positioned to deliver a differentiated customer experience and drive increased shareholder value.
Executive Compensation Highlights - Paying For Performance
In accordance with our pay-for-performance philosophy, theCEO’s fiscal 2021 target compensation program for our Named Executive Officers is straightforward in design and includes four primary elements: base salary, performance-based bonus, long-term incentives (“LTI”) and benefits. Within these elements, we emphasizewas variable pay over fixed pay, with at least 70% of each Named Executive Officer’s target compensationor linked to our financial or market results. The program also balances
•Our Incentive Adjusted EBIT achievement exceeded ourtarget of $612 million and Incentive Adjusted ROIC exceeded the importancethreshold of 5.5%, resulting in a 128% bonus payout.
•PSUs for the 2019 - 2021 fiscal year performance cycle did not meet the minimum thresholds for Free Cash Flow Growth and EBIT Margin % required for payout. As a result, none of these executives achieving both critical short-term objectives and strategic long-term priorities. PSUs vested.
Fiscal Year 2021 Target Compensation
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CEO and
President & Chief Brand Officer | Average of all Other NEOs |
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| Performance Based | Performance Based |
The following graphics represent target compensation for the Co-Presidents and the other Named Executive Officers, as shown on page 29.Board recommends a vote FOR this proposal.
8 NORDSTROM, INC. - 2019 Proxy Statement
INDEX OF KEY TERMS
Our Variable Pay Reflects Company Performance
Our pay-for-performance design includes rigorous performance goals and high performance standards. Further, with a substantial portion of pay in the form of Nordstrom stock, pay outcomes align with our shareholders’ experience. This is evidenced by our Named Executive Officers’ recent incentive compensation payouts and grant realizable values as of our 2018 fiscal year end, as shown below.
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| INCENTIVE COMPENSATION PAYOUTS | | 2014 |
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| Incentive Earnings Before Interest and Income Tax Expense (“Incentive EBIT”) | | $1,391M | | $1,246M | | $1,076M | | $952M | | $909M |
Incentive Adjusted Return on Invested Capital
(“Incentive Adjusted ROIC”) | | 13.6 | % | | 11.0 | % | | 12.4 | % | | 10.0 | % | | 12.8 | % |
Annual bonus
(payout as a % of Target*) | | 83 | % | | 0 | % | | 80 | % | | 96 | % | | 89 | % |
| 3-year TSR percentile ranking within comparator group | | 63%ile |
| | 53%ile |
| | 16%ile |
| | 10%ile |
| | 24%ile |
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Performance Share Unit (“PSU”) vesting
(payout as a % of Target) | | 75 | % | | 75 | % | | 0 | % | | 0 | % | | 0 | % |
| PSU comparator group | | Retail |
| | Retail |
| | S&P 500 |
| | S&P 500 |
| | S&P 500 |
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| Term | Definition |
| 2021 Annual Report | Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended January 29, 2022 |
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* | Actual bonus payout for fiscal year 2017 |
| 2025 Corporate Social Responsibility Goals | Review our 2025 Corporate Social Responsibility goals at nordstromcares.com |
| AFC | Audit and Finance Committee of the Board of Directors |
| ASC 718 | Accounting Standards Codification 718, Stock Compensation |
| Board | The Board of Directors |
| Broadridge | Broadridge Investor Communication Services |
| CD&A | Compensation Discussion & Analysis |
| CAO | Chief Accounting Officer |
| CEO | Chief Executive Officer |
| CFO | Chief Financial Officer |
| CGNC | Corporate Governance and Nominating Committee of the Board of Directors |
| Chairman | Our Board Chairman, a non-Executive position |
| Common Stock | Nordstrom common stock |
| CPCC | Compensation, People and Culture Committee of the Board of Directors |
| DDCP | Nordstrom Directors Deferred Compensation Plan |
| Deloitte | Deloitte & Touche LLP |
| Diversity, Inclusion and Belonging Goals | Review our Diversity, Inclusion and Belonging goals at nordstrom.com/diversity |
| EBIT | Earnings (Loss) Before Interest and Taxes |
| EIP | Equity Incentive Plan |
| EMBP | Executive Management Bonus Plan |
| ERG | Employee Resource Group |
| ESG | Environmental, Social and Governance |
| ESPP | Employee Stock Purchase Plan |
| Exchange Act | Securities Exchange Act of 1934 |
| FASB | Financial Accounting Standards Board |
| GAAP | U.S. Generally Accepted Accounting Principles |
| Incentive Adjusted EBIT | Incentive Adjusted Earnings (Loss) Before Interest and Income Tax Expense |
| Incentive Adjusted ROIC | Incentive Adjusted Return on Invested Capital |
| Investor Relations Website | Our investor relations website, found at investor.nordstrom.com |
| IRC | Internal Revenue Code |
| Lease Standard | Accounting Standards Update 2018-11, Leases |
| LTI | Long-Term Incentives |
| NDCP | Nordstrom Deferred Compensation Plan |
| NEO | Named Executive Officer |
| Notice | Notice of Annual Meeting of Shareholders |
| NYSE | New York Stock Exchange |
| PEO | Principal Executive Officer |
| Plan Trustee | Bank of New York Mellon, as a %trustee of Target for the Co-Presidents was 94%. Actual bonus payout for fiscal year 2018 as a %Nordstrom 401(k) Plan |
| PSU | Performance Share Unit |
| Record Date | March 9, 2022 |
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| RSU | Restricted Stock Unit |
| SEC | Securities and Exchange Commission |
| Semler Brossy | Semler Brossy Consulting Group, LLC |
| SERP | Supplemental Executive Retirement Plan |
| TC | Technology Committee of Target for the Co-Presidents was 63%. See pages 35 and 36 for more information.Board of Directors |
| TSR | Total Shareholder Return |
Incentive EBIT and Incentive Adjusted ROIC are not measures of financial performance under Generally Accepted Accounting Principles (“GAAP”) and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures. PSU vesting as shown in the table above corresponds to the performance periods ending in fiscal years 2014 through 2018. Three-year Total Shareholder Return (“TSR”) percentile ranking is based on our TSR performance over three-year rolling periods between fiscal years 2012 and 2018 versus the comparator group. Beginning with the 2014 – 2016 performance period, we changed our comparator group from our retail peer group to the Standard and Poor’s 500. See page 37 to learn more about long-term incentive pay.
|
| | | | | | | | | | | | | | | |
| GRANT REALIZABLE VALUES | | 2014 |
| | 2015 |
| | 2016 |
| | 2017 |
| | 2018 |
|
| PSUs (realizable value as a % of grant value) | | 0 | % | | 0 | % | | 0 | % | | 51 | % | | N/A |
|
| RSUs (realizable value as a % of grant value) | | 94 | % | | 75 | % | | 111 | % | | 111 | % | | 94 | % |
| Stock options (realizable value as a % of grant value) | | 38 | % | | 0 | % | | 6 | % | | 6 | % | | N/A |
|
Realizable values shown above are based on the actual value at time of vest, current unvested values using our
2018 fiscal year end stock price of $45.33and current performance for the outstanding PSUs granted in 2017 (which were tracking at 50% payout as of the end of the fiscal year), shown as a percent of grant value. PSUs, restricted stock units (“RSUs”) and stock options are shown in the column matching the year of grant.
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| | | | | | | | | | | | | |
The Compensation Committee reviews these results and other analyses with the goal of ensuring that the Named Executive Officers’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the Compensation Committee believes that total direct compensation for our Named Executive Officers reflects our pay-for-performance objective and is well aligned with shareholder interests. | 7 | 2022 Proxy Statement | NORDSTROM, INC. | |
For more information on executive compensation, please see the Compensation Discussion and Analysis starting on page 29.
NORDSTROM, INC. - 2019 Proxy Statement 9
TABLE OF CONTENTS
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| 9 | 2022 Proxy Statement | NORDSTROM, INC. | |
CORPORATE GOVERNANCE
Our Corporate Governance Framework
Since its founding, our Company’s leaders and employees have always sought to maintain the highest ethical standards in every aspect of our business. Our corporate governance framework is designed to support this tradition of integrity, trust and unyielding commitment to dodoing the right thing, which has served our customers and shareholders well over the years. Our corporate governance framework, more fully discussed on the following pages, includes the following highlights:
10 NORDSTROM, INC. - 2019 Proxy Statement
Board Responsibilities, Leadership Structure, and Role in Risk Oversight
The Board of Directors (“Board”) oversees, counsels and directs management in promoting the long-term interests of the Company and our shareholders. The Board’s responsibilities include:
•determining the appropriate structure for the senior leadership of the Company;
•selecting and evaluating the performance of the Co-Presidents;CEO and President and Chief Brand Officer;
•planning for succession with respect to the positionsposition of the Co-PresidentsCEO and monitoring management’s succession planning for other senior executives;
•reviewing and approving our major financial objectives, our strategic and operational plans and other significant actions;
•monitoring the conduct of our business and the assessment of our business risks to promote the proper management of the business;
•overseeing the management of cybersecurity, including oversight of appropriate risk mitigation strategies, systems, processes and controls; and
•overseeing the processes for maintaining integrity with regard to our financial statements and other public disclosures, and compliance with laws and our CodeCodes of Business Conduct and Ethics.
At this time, the Board believes different people should hold the positions of Chairman of the Board and Co-Presidents,CEO, as this may strengthen corporate governance and aid in the Board’s oversight of management. Currently, Brad D. Smith serves as Chairman of the Board and Erik Nordstrom and Peter Nordstrom serveserves as Co-Presidents.the CEO. The Co-Presidents areCEO is responsible for day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Co-PresidentsCEO and presides over the full Board. The duties of our Chairman of the Board are more fully described in the Chairman of the Board and Presiding Director section below. The Board believes this leadership structure also aids in the Board’s oversight and management of risk.
The full Board has primary responsibility for oversight of risk management and has assigned to the Board’s standing Committees the task of focusing on the specific risks inherent in their respective areas of oversight. The full Board:
•considers and determines the Company’s risk appetite, which is the amount of risk the organization is willing to accept;
•oversees management’s implementation of an appropriate system to manage risks (i.e., to identify, assess, mitigate, monitor and communicate these risks) and monitors the effectiveness of this process as the business environment changes;
•provides risk oversight through the Board’s committee structure and processes; and
•directly manages directly certain risks, in particular, the risks associated with the Company’s strategic direction, which are reviewed at an annual strategy planning meeting and periodically throughout the year.
The Company has a comprehensive, structured approach to managing risks, which are identified, assessed, prioritized and managed at all levels within the Company through an enterprise risk management process which is aligned with the Company’s strategy. Within this framework, management is responsible for assessing and managing the Company’s exposure to risks. Management regularly reports on risks to the relevant Committee or the Board. The Board and its Committees discuss the various risks confronting the Company throughout the year, particularly when reviewing operating and strategic plans and when considering specific actions for approval. The risks are classified into four major categories: Strategic, Compliance, Operational and Financial, and are mapped for the appropriate management and Board (and Committee) oversight.
Through the risk oversight process, the Board: (i)
•obtains an understanding of the risks inherent in the Company’s strategy and management’s execution of the strategy within the agreed risk appetite; (ii)
•accesses useful information from internal and external sources about the critical assumptions underlying the strategy; (iii)
•is alert for possible dysfunctional behavior within the organization which might lead to excessive risk taking; (iv)
•provides input to executive management regarding critical risk issues on a timely basis; and (v)
•encourages open communication and appropriate escalation of reporting of risk throughout the enterprise, striving to ensure that risk management is part of the corporate culture.
The Board’s leadership structure and the collective knowledge and experience of its members promotes a broad perspective, open dialogue and useful insights regarding risk, thereby increasing the effectiveness of the Board’s role in risk oversight.
Board Oversight of ESG Issues
The Board views effective oversight and management of ESG issues and their associated risks as vital to the Company’s ability to execute its business strategy and achieve sustainable long-term growth. The Board coordinates with its Committees to provide active Board and Committee level oversight of the Company’s ESG risks. Specifically:
| | |
| Our Board views effective oversight and management of ESG issues as vital to the Company’s long-term growth. |
•The Board oversees ESG risks as part of its oversight of the Company’s business, strategy and enterprise risk management. As part of this oversight, the Board and its Committees receive regular reports on ESG-related matters, including but not limited to updates on the Company’s progress towards its sustainability and corporate social responsibility goals, status updates on the Company’s Diversity, Inclusion and Belonging Goals, reports on any ESG-related engagements with shareholders, and information on recent ESG developments, so that the Board can ensure that any material ESG risks and opportunities are appropriately integrated into the Company’s long-term strategy.
NORDSTROM, INC. - 2019 Proxy Statement 11
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| 11 | 2022 Proxy Statement | NORDSTROM, INC. | |
•The CGNC is charged with direct responsibility for oversight of risks relating to corporate governance, shareholder engagement, corporate social responsibility and sustainability. The work of the CGNC reflects the Company’s commitment to improving the sustainability of our operations and supply chains, including finding ways to continue to reduce our carbon emissions, reduce waste through innovative programs like BEAUTYCYCLE and increase the number of sustainably sourced products we make available to our customers. The CGNC also has oversight over Board effectiveness, including identifying and recruiting Board members with the appropriate skills and experience, including experience with ESG initiatives, to lead our Company into the future.
•The CPCC oversees risks that impact our employees, including training, development, benefits, employee health and wellness, and diversity, inclusion, and belonging. The CPCC has been integral in allowing the Company to quickly adapt to the ever-evolving challenges presented by the pandemic, including overseeing our efforts to offer employees flexible work models, new wellness and mental health resources and to ensure our frontline employees feel supported with the safest possible work environments, all of which have allowed our employees to focus on serving the needs of our customers.
To learn more about our ESG initiatives, please refer to our most recent corporate social responsibility report and other information available on our website at nordstrom.com/browse/nordstrom-cares.
Director Independence
A Director is considered independent when our Board affirmatively determines that he or shethe Director has no material relationship with the Company, other than as a Director. Our Board makes this determination in accordance with the standards set forth in our Corporate Governance Guidelines, which are consistent with the listing standards of the New York Stock Exchange (“NYSE”)NYSE and Securities and Exchange Commission (“SEC”)SEC rules. In making this determination, the Board considers existing relationships between the Company and the Director, whether directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. The Board has affirmatively determined that each of the following Director nominees, areexcept Erik Nordstrom and Peter Nordstrom, is independent within the meaning of the listing standards of the NYSE, SEC rules and the Company’s Corporate Governance Guidelines, and none of these Director nominees have a material relationship with the Company other than as a Director:Guidelines.
|
| | |
Shellye L. Archambeau | Kirsten A. Green | Gordon A. Smith |
Stacy Brown-Philpot | Glenda G. McNeal | Bradley D. Tilden |
Tanya L. Domier | Brad D. Smith | B. Kevin Turner |
Chairman of the Board and Presiding Director
The Company has a Chairman of the Board who is also an independent Director and who serves as the Presiding Director within the meaning of the listing standards of the NYSE. Currently, Brad D. Smith serves as the Company’s ChairmanChairman. Brad D. Smith is not seeking re-election and will be retiring from the Board at the end of his current term in May 2022, at which point the Board. will appoint a new Chairman.
The Chairman of the Board is appointed annually by the Board. As described in the Company’s Bylaws, Corporate Governance Guidelines and Charterthe charter of the Corporate Governance and Nominating Committee,CGNC, the Chairman of the Board:Chairman:
•presides at meetings of the Board;
•assists in establishing the agenda for each Board and Board Committee meeting;
•serves as the Presiding Director to lead regular executive sessions at each meeting of the Board in which only independent Directors participate;
•calls special meetings of the Board and/or the shareholders;
•provides input and support to the Chair of the Corporate Governance and Nominating CommitteeCGNC on nominees to fill vacant Board seats and the selection of Committee Chairs and membership on Board Committees;
•advises the Co-PresidentsCEO and other members of the Executive Teamexecutive team on such matters as strategic direction, corporate governance and overall risk assessment; and
•performs such other duties as the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities.
12 NORDSTROM, INC. - 2019 Proxy Statement
Director Elections
The Company’s Bylaws provide that, in an uncontested election, a Director nominee will be elected if the number of votes cast for the nominee’s election exceeds the number of votes cast against the nominee’s election. An incumbent Director nominee who fails to receive the requisite votes for election will continue to serve as a Director until the earlier of: (i) 90 days from the date on which the voting results of the election are determined; or (ii) the date on which an individual is selected by the Board to fill the position held by such Director. In any election which is a contested election (meaning that the number of directorDirector nominees exceeds the number of directorsDirectors to be elected), the standard for election of directorsDirectors is a plurality of the votes cast by holders of shares entitled to vote in the election at a meeting.
Management Succession Planning
The Board and management believe that one of their primary responsibilities is to ensure the Company has the appropriate leadership capability to effectively deliver upon its business commitments. The Company’s management is actively engaged and involved in leadership development, having regular discussions of the leadership capabilities of the organization and the attraction, development and retention of critical talent to promote future success. In addition to the Company’s regular review of leadership capabilities, the Board annually conducts a detailed review of the talent strategies for the entire organization and reviews succession plans for senior leadership positions, including thosethat of the Co-Presidents.CEO. The Board reviews high-potential employees, evaluates plans to develop their management and
leadership capabilities and sanctions the strategies used to deploy these individuals most effectively. In addition to the annual review, succession is regularly discussed in executive sessions of the Board and in Board Committee meetings, as applicable. Directors become familiar with potential successors for key leadership positions through various means, including the comprehensive annual talent and succession review, Board meeting presentations and less formal interactions throughout the course of the year.
Our entire Board with the oversight of our Corporate Governance and Nominating Committee, is responsible for implementing succession procedures for the Co-Presidents.CEO. We believe the Board, led by our Chairman, should collaborate with the Co-PresidentsCEO on the critical aspects of the succession planning process, including establishing selection criteria, identifying and evaluating candidates and making management succession decisions. The Board has procedures in place to respond to an unexpected vacancy in one or more of the Co-Presidents’ positions,CEO position, including a detailed review of the succession plan annually by the Board. It is the Board’s practice to be prepared for a planned or unplanned change in leadership in order to ensure the stability of the Company.
Communications with Directors
ShareholdersBoard Committees and other interested parties may communicate with Directors by contacting the Corporate Secretary’s Office at:
|
| |
| Telephone: 206-303-2541
|
| |
7 | Email:board@nordstrom.com
|
| |
* | Mail: Nordstrom, Inc.
1700 Seventh Avenue, Suite 1500
Seattle, Washington 98101-4407
Attn: Corporate Secretary
|
Charters The Corporate Secretary will relay the question 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 of the Board. Certain items that are unrelated to the duties and responsibilities of the Board such as business solicitations, advertisements, junk mail and other mass mailings will not be relayed to Directors.
Thehas four standing Committees: Audit and Finance Committee has established procedures to respond to possible concerns about ethics(“AFC”); Compensation, People 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 Audit and Finance Committee, as necessary.
NORDSTROM, INC. - 2019 Proxy Statement 13
Board Committees and Charters
The Board has a standing Audit and Finance Committee, Compensation Committee,Culture (“CPCC”); Corporate Governance and Nominating Committee,(“CGNC”); and Technology Committee.(“TC”). Each Committee has a Board-approved Chartercharter which is reviewed annually by the respective Committee. Recommended changes to the charter, if any, are submitted to the Corporate Governance and Nominating CommitteeCGNC and the Board for approval. The Board makes Committee and Committee Chair assignments annually at itsthe Board meeting immediately followingheld in tandem with the Annual Meeting, although further changes to Committee assignments may be made from time to time as deemed appropriate by the Board. The Board has determined that the Chairs and all Committee members are independent under the applicable NYSE rules. Committee Charterscharters and current Committee membership are posted on our website at investor.nordstrom.com and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu. The ChairsWebsite.
In addition to the responsibilities described below and members of the Committees as of the date of this Proxy Statement are identified inon the following table.pages, the Board and its Committees also have oversight over ESG issues. For additional information on how risk oversight over ESG issues is allocated between the Board and its Committees, please see Board Oversight of ESG Issues beginning on page 11.
|
| | | | | | | |
Director | Audit and Finance Committee | | Compensation Committee | | Corporate Governance and Nominating Committee | | Technology Committee |
Shellye L. Archambeau | | | | | ü
| | ü |
Stacy Brown-Philpot | ü
| | | | | | ü |
Tanya L. Domier | ü | | | | | | |
Kirsten A. Green | ü | | | | | | ü |
Glenda G. McNeal | | | ü | | ü | | |
Philip G. Satre* | ü | | ü | | | | |
Brad D. Smith | | | ü | | ü
| | |
Gordon A. Smith | | | ü | | | | |
Bradley D. Tilden | | | | | | | |
B. Kevin Turner | | | | | ü
| | |
| |
* | Mr. Satre is not seeking re-election and will be retiring from the Board at the end of his current term in May 2019. |
|
|
| Audit and Finance Committee |
This committee was formed from the merger of the Audit Committee and Finance Committee in May 2018. As more fully described in its Charter,charter, the primary responsibilityresponsibilities of the Audit and Finance Committee isAFC are to assist the Board in fulfilling its oversight responsibility by by:
•reviewing the Company’s financial statements and discussing:
ensuring the integrity of the Company’s financialthose statements;
•evaluating the accounting, auditing and financial reporting processes of the Company;
the management of•managing business and financial risk and the internal controls environment;
•assessing the Company’s compliance with legal and regulatory requirements and ethics programs as established by management and the Board, in conjunction with any recommendations by the Corporate Governance and Nominating CommitteeCGNC with respect to corporate governance standards; and
•reviewing the reports resulting from the performance of audits by the independent auditor and the internal audit team;team.
In addition, the AFC provides financial oversight by:
•evaluating the qualifications, independence and performance of the Company’s independent auditors; and
the•assessing performance of the Company’s internal audit team.team;
In addition, the Audit and Finance Committee provides financial oversight, including:
assisting the Board in fulfilling its oversight responsibilities with respect to•advising on the Company’s capital structure, financial policies, capital investments, business and financial planning and related matters;
•reviewing and discussing the Company’s tax strategies and the implications of actual or proposed tax law changes;
reviewing and discussing•overseeing the Company’s dividend payment and share repurchase strategies, banking relationships, borrowing facilities and cash management; and
•monitoring the ratings assigned by rating agencies to the Company’s long-term debt.compliance with covenants under its outstanding indebtedness and borrowing facilities.
| | | | | |
| The Audit and Finance Committee provides financial oversight of the Company's management, internal audit function and independent auditors. |
The AFC regularly reviews accounting, auditing and financial reporting processes,cybersecurity matters, enterprise risk management, and compliance with laws and regulations.regulations, and audit results for corporate social responsibility metrics. The Audit and Finance CommitteeAFC also meets privately and separately with the independent registered public accounting firm, the Chief Financial OfficerCFO and the Vice President, Internal Audit.
14 NORDSTROM, INC. - 2019 Proxy Statement
In addition to meeting the independence requirement for audit committee members, the Board has determined that each current member of the Audit and Finance CommitteeAFC also meets the financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE. The Board has determined that all Audit and Finance Committee members qualify as “audit committee financial experts” underWhile the regulations of the SEC. Although all members of the Audit and Finance Committee meet the current regulatory requirements for accounting or related financial management expertise and the Board has determined that each of them qualifies as an “audit committee financial expert,” members of the Audit and Finance CommitteeAFC are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting.accounting, the Board has determined that all AFC members qualify as “audit committee financial experts” under the regulations of the SEC.
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| 13 | 2022 Proxy Statement | NORDSTROM, INC. | |
|
| |
| Compensation, People and Culture Committee |
As more fully described in its Charter,charter, the primary responsibilities of the Compensation Committee are:CPCC are to assist the Board in fulfilling its oversight responsibility by:
approving an•developing the overall compensation philosophy for the Company’s Executive Officers in light of the Company’s goals and objectives. The Executive Officers are referenced on pages 2730 and 2831 and include the Named Executive OfficersNEOs shown in the Compensation Discussion and AnalysisCD&A on page 2932 and other business unit presidents and Company executives overwith responsibility for major organizational functions reportingwho report to the Co-PresidentsCEO or other senior executives;
•selecting performance measures aligned with the Company’s business strategy;
reviewing and approving•administering the Company’s cash and equity-based compensation plans for executives;
recommending to•performing the Boardannual review of the formoverall performance of the CEO and amount of Director compensation;President and Chief Brand Officer;
reviewing and approving any
| | |
|
| Our Compensation, People and Culture Committee oversees our strategies and goals relating to the development of our employees throughout the organization. |
|
•administering benefit plans, retirement and deferred compensation or other perquisites offered to the Executive Officers and other eligible employees;
•assessing risk relating to compensation; and
reviewing the Company’s compensation practices so that they do not encourage imprudent risk taking.•overseeing key talent initiatives such as diversity, inclusion and belonging.
The CommitteeCPCC has the sole authority to retain such consultants and advisors as it may deem appropriate and to approve related fees and other retention terms. The CommitteeCPCC has retained Semler Brossy, Consulting Group, LLC (“Semler Brossy”), an independent compensation consulting firm, to advise the CommitteeCPCC on executive compensation and benefit matters. Semler Brossy provides services only as directed by the Committee.CPCC. During fiscal year 2018,2021, Semler Brossy’s services included a review of executive and Director pay programs, performance goal-setting, alignmenta review of pay and performancethe compensation peer group, and other pay-related matters specific to the Compensation Committee’s Charter. The Compensation Committee has assessed the independence ofCPCC’s charter. With respect to Director pay, Semler Brossy pursuantprovides its services to NYSE rules andthe CGNC. The CPCC has determined that Semler Brossy is independent under the rules of the NYSE and that its work for the Compensation CommitteeCPCC does not raise any conflict of interest.
A consultant from Semler Brossy attends CommitteeCPCC meetings in person or by phone and supports the CommitteeCPCC by providing independent expertise on market practices and trends in executive compensation within the general industry and the peer group defined for such purposes. Additionally, the consultant provides advice regarding the composition of the Company’s peer group and analysis of peer group practices for base salary, performance-based bonus, long-term incentivesLTIs and other compensation elements, and advice on management’s proposed levels of executive compensation. Semler Brossy also advises the CommitteeCPCC on compensation program design, including incentive structure, stock ownership guidelines, regulatory requirements related to executive compensation, plans submitted to shareholders for approval, governance responsibilities, and such other matters as assigned by the CommitteeCPCC from time to time as necessary to carry out its responsibilities under its Charter.charter.
|
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| Corporate Governance and Nominating Committee |
As more fully described in its Charter,charter, the primary responsibilities of the Corporate Governance and Nominating Committee are:CGNC are to assist the Board in fulfilling its oversight responsibility by:
reviewing and recommending individuals•evaluating potential nominees for election to the Board for nomination as membersand determining the composition of the Board and its Committees;
reviewing | | |
|
| Our Corporate Governance and Nominating Committee regularly reviews best practices to ensure the proper functioning of the Board and its Committees. |
|
•evaluating possible conflicts of interest of Board members and the Company’s Executive Officers;
developing and reviewing•approving the Company’s Corporate Governance Guidelines;
reviewing and considering revisions to•establishing the corporate governance standards contained in the Company’s Codes of Business Conduct and Ethics;
reviewing and recommending approval of the•advising on policies and practices of the Company in the area of corporate governance;
producing•evaluating and providingrecommending to the Board anthe form and amount of Director compensation;
•performing the annual performance evaluation of the Board, the Directors and each Committee of the Board; and
establishing•overseeing succession procedures to be followed in the case of an emergency or the retirement of one or both Co-Presidents; and
reviewing the overall performance of the Co-Presidents on an annual basis.CEO.
NORDSTROM, INC. - 2019 Proxy Statement 15
As more fully described in its Charter,charter, the primary responsibilities of the Technology Committee are:
assistingTC are to assist the Board in fulfilling its oversight with respectresponsibility by:
| | |
| Our Technology Committee meets quarterly to oversee risks related to cybersecurity, technology, and data governance. |
•advising on the Company’s technology strategy;
reviewing and discussing•overseeing the Company’s technology acquisition and development process to assureensure ongoing business growth;
reviewing and discussing•evaluating the Company’s data management and automation processes and measurement and tracking systems;
•reviewing and discussingthe Company’s technology risk management, including but not limited to the Company’s policies and safeguards for information technology, cybersecurity, data security and privacy, as well as risks and incidents with respect to information technology and data security; and
making recommendations•overseeing material technology investments.
With the oversight of the TC:
•the Company’s information security program has been assessed by a third-party advisor three of the last four years to evaluate team maturity and to evaluate any improvements or opportunities; and
•the BoardCompany delivers information security and privacy awareness training annually, with respectadditional technical security training provided to investments in technology.engineers, and also performs quarterly phishing exercises and security awareness campaigns.
The TC also regularly reviews any information technology and data security incidents as a standing agenda item each time the TC meets. Board Meetings and Attendance
The Board held 9six formal meetings during fiscal year 2018,2021, one of which was devoted principally to Company strategy. During the past fiscal year, the Audit CommitteeAFC held 5nine formal meetings, the Finance CommitteeCPCC held 2four formal meetings, the combined Audit and Finance CommitteeCGNC held 8 meetings after merging in May 2018, the Compensation Committee held 6 meetings, the Corporate Governance and Nominating Committee held 5six formal meetings, and the Technology CommitteeTC held 4four formal meetings. Each Director attended at least 75% of the aggregate of all formal meetings of the Board and the Committees on which he or shethey served during the year, and overall attendance at theformal meetings, on a combined basis, was 94%97%. Independent members of the Board met at each regularformal meeting of the Board in executive session without management present. Directors are expected to attend the Annual Meeting of Shareholders, if practicable. All Directors attended the 2021 Annual Meeting of Shareholders.
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| 15 | 2022 Proxy Statement | NORDSTROM, INC. | |
Director Compensation and Stock Ownership Guidelines
The Company’s pay-for-performance philosophy for Director compensation reflects the Board’s belief that payment of a majority of the Director fees in the form of Nordstrom common stock (“Common Stock”)Stock aligns the interests of Directors with the interests of the Company’s shareholders and enhances Director compensation when the Company performs well. The Board believes that the Director fees paid by the Company should be competitive with other companies ofhaving similar characteristics.
Employee Directors of the Company are not paid any fees for serving as members of the Board. NonemployeeNon-employee Director compensation consists ofis discussed below and on the following elements:
|
| | | | |
Annual Compensation Elements for 20182021 | Amount ($)* |
|
| Director Retainer | 85,000 |
|
Audit and Finance CommitteeAFC Chair Retainer | 20,00030,000 |
|
Compensation CommitteeCPCC Chair Retainer | 20,000 |
|
Corporate Governance and Nominating CommitteeCGNC Chair Retainer | 15,000 |
|
Technology CommitteeTC Chair Retainer | 15,000 |
|
Special Committee Member Retainer** | 20,000 |
|
Special Committee Working Member Retainer** | 35,000 |
|
Special Committee Chair Retainer** | 100,000 |
|
| Director Equity Grant of Common Stock having a grant date value of | 140,000150,000 |
|
| Chairman of the Board Equity Grant of Common Stock having a grant date value of | 200,000 |
|
* Directors may elect to take some or all of their cash retainer fees in Common Stock.
| | |
* | Directors may elect to take some or all of their cash retainer fees in Common Stock. |
| |
** | In additionOur Directors are required to hold stock having a value of at least $450,000, in excess of 5x the standing board committees identified above,annual Board retainer, by their fifth anniversary of joining the Board formed a special committee, consisting of: Ms. Archambeau, Ms. Brown-Philpot, Mr. Satre, Mr. Brad Smith, Mr. Gordon Smith, Mr. Tilden, and Mr. Turner, in connection with the announcement in June 2017 by the Nordstrom family that it was exploring the potential of a going-private transaction. This special committee was disbanded in March 2018, following the conclusion of that process.Board. |
|
Under the Director Stock Ownership Guidelines, Directors are currently required to own Common Stock having a value of at least $425,000$450,000, in excess of five times the annual Director cash retainer, by their fifth anniversary of joining the Board. As of March 15, 2019,the Record Date, each nominee for election at the Annual Meeting had either satisfied this obligation or had time remaining to do so. Under the Company’s policy, a Director is deemed to be in compliance with the Stock Ownership Guidelines once their holdings of Common Stock meet or exceed the threshold, and will remain in compliance, notwithstanding any decline in the value of Common Stock, unless and until the Director sells shares.
16 NORDSTROM, INC. - 2019 Proxy Statement
No changes were made to Director Compensation for fiscal year 2022.
| | |
| Director Summary Compensation Table |
During the fiscal year ended February 2, 2019, nonemployeeJanuary 29, 2022, non-employee Directors of the Company received the following compensation for their services: | | | | | | | | | | | | | | |
| Name | Fees Earned
or Paid in Cash
($)(a)(b) | Stock
Awards
($)(b)(c) | All Other
Compensation
($)(d) | Total
($) |
| Shellye L. Archambeau | 100,000 | | 149,994 | | 2,049 | | 252,043 |
| Stacy Brown-Philpot | 100,000 | | 149,994 | | 8,545 | | 258,539 |
| Tanya L. Domier* | — | | — | | 18,175 | | 18,175 |
| James L. Donald | 85,000 | | 149,994 | | 9,924 | | 244,918 |
| Kirsten A. Green | 85,000 | | 149,994 | | 581 | | 235,575 |
| Glenda G. McNeal | 85,000 | | 149,994 | | 27,052 | | 262,046 |
| Brad D. Smith | 85,000 | | 349,997 | | 6,110 | | 441,107 |
| Bradley D. Tilden | 115,000 | | 149,994 | | 4,934 | | 269,928 |
| Mark J. Tritton | 105,000 | | 149,994 | | 12,282 | | 267,276 |
* Tanya Domier retired from the Board at the end of her term in May 2021 and did not receive director fees during the fiscal year ended January 29, 2022.
|
| | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash ($)(a)(b) |
| | Stock Awards ($)(b)(c) |
| | All Other Compensation ($)(d) |
| | Total ($) |
|
| Shellye L. Archambeau | 105,000 |
| | 139,977 |
| | 10,395 |
| | 255,372 |
|
| Stacy Brown-Philpot | 105,000 |
| | 139,977 |
| | 4,804 |
| | 249,781 |
|
| Tanya L. Domier | 105,000 |
| | 139,977 |
| | 17,722 |
| | 262,699 |
|
| Kirsten A. Green* | — |
| | — |
| | — |
| | — |
|
| Glenda G. McNeal* | — |
| | — |
| | — |
| | — |
|
| Philip G. Satre | 185,000 |
| | 339,929 |
| | 2,068 |
| | 526,997 |
|
| Brad D. Smith | 105,000 |
| | 239,968 |
| | 3,228 |
| | 348,196 |
|
| Gordon A. Smith | 120,000 |
| | 139,977 |
| | 13,937 |
| | 273,914 |
|
| Bradley D. Tilden | 125,000 |
| | 139,977 |
| | 4,237 |
| | 269,214 |
|
| B. Kevin Turner | 135,000 |
| | 139,977 |
| | 27,186 |
| | 302,163 |
|
| |
* | Kirsten Green and Glenda McNeal were appointed on February 26, 2019, and received no compensation in fiscal year 2018. |
(a) Fees Earned or Paid in Cash
The amounts reported reflect the cash fees paid to each nonemployeenon-employee Director, whether or not such fees were deferred or taken as Common Stock. Ms.deferred. Shellye Archambeau and Ms. Brown-Philpot received $20,000$15,000 in cash for their services as Special Committee Members and elected to take their retainers in Common Stock. Ms. Domier received $20,000 for service as the Compensation Committee Chair. Mr. Satre received $100,000 for his service as Chair of the Special Committee. Mr. Brad Smith received $20,000 for his service as a Special Committee Member. Mr. Gordon Smith received $20,000 in cash for his service as a Special Committee Member and elected to take his retainer and $15,000 for service as Chair of the Corporate Governance and Nominating CommitteeCGNC. Stacy Brown-Philpot received $15,000 in Common Stock. Mr. Tilden received $20,000cash for service as Chair of the Audit and Finance Committee and $20,000 as a Special Committee Member. Mr. TurnerTC. Bradley Tilden received $35,000$30,000 in cash for service as a Special Committee Working Member and elected to receive his retainer and $15,000 as Chair of the Technology CommitteeAFC. Mark Tritton received $20,000 in Common Stock.cash for service as Chair of the CPCC.
(b) Deferred Compensation Program
NonemployeeNon-employee Directors may elect to defer all or a part of their cash retainers and stock awards under the Nordstrom Directors Deferred Compensation Plan (“Directors Plan”).DDCP. Directors are required to make advance elections to defer the receipt of fees or stock awards, and all deferral elections generally are irrevocable. Directors are also required to make advance elections about the form and timing of distribution of their deferred cash fees or stock awards.
In 2018,2021, cash deferrals could be directed among 189 deemed investment alternatives and gains and losses for cash deferrals were posted to the Director’s account daily based on their investment elections. In addition, plan participants were offered a fixed rate option of 4.4%4.31% in 2018,2021, which was not subsidized by the Company, but rather was a rate based on guaranteed contractual returns from a third-party insurance company provider. Deferred stock awards are credited to the Director’s account as units. Each unit in the Directors PlanDDCP is equal in value to the price of one share of Common Stock. Each deferred unit is credited with dividends, in the form of additional units, to the same extent as a share of Common Stock.
During the fiscal year which ended February 2, 2019, Ms. Archambeau andJanuary 29, 2022, Ms. Brown-Philpot deferred 100% of theirher stock awardsaward into the Directors Plan.DDCP.
(c) Stock Awards
The amounts reported reflect the grant date fair value associated with each Director’s stock awards. Fractional shares are not awarded or paid in cash. In recognition of the significant time and attention in performing the duties required of the position, our Chairman of the Board is annually awarded, on the date offirst open trading day following the Company’s Annual Meeting, an additional stock award having a grant date fair value of $200,000. On November 20, 2018, Brad D. Smith received an additional pro-rated stock award having a value of $99,991, after assuming the position of Chairman of the Board on November 1, 2018.
NORDSTROM, INC. - 2019 Proxy Statement 17
(d) All Other Compensation
All Directors, their spouses and eligible children may participate in the Company’s employee merchandise discount program. The program provides discounts ranging froma discount of 33% for purchases at Nordstrom stores, Nordstrom.com, Trunk Club and TrunkClub.com and 20% for eligible nonmanagement employees up to 33% for eligible managementpurchases at Nordstrom Rack stores, NordstromRack.com and high-performing nonmanagement employees and Directors.our restaurants. A 40% discount is available at certain times of the year on specifiedspecific merchandise. These discounts vary somewhat by sourceThe merchandise discount provided to the Directors is the same as for all other eligible management and type of merchandise or service.high-performing non-management employees. During the fiscal year ended February 2, 2019, allJanuary 29, 2022, All Other Compensation consisted only of merchandise discounts for all Directors.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended February 2, 2019,January 29, 2022, no member of the Compensation CommitteeCPCC was an employee officer or former officer of the Company or any of its subsidiaries, and no Executive Officer of thewas formerly a Company served on the board of directorsofficer, or compensation committee ofhad any entity that has one or more directors, or compensation committee of any entity that has one or more Executive Officers, serving as a member of the Company’s Board or Compensation Committee.relationship otherwise requiring disclosure.
Codes of Business Conduct and Ethics and Other Policies
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our Principal Executive Officer, Principal Financial Officer, Principal Accounting OfficerCEO, CFO, CAO and persons performing similar functions. We have also adopted a Directors’ Code of Business Conduct and Ethics that applies to all of our Directors. Copies of each of these Codes are posted on our Investor Relations Website. A grant of a waiver from a provision of the codes requiring disclosure under applicable SEC rules, if any, will be disclosed on our website at investor.nordstrom.com and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu.Website.
We have a policy that prohibits
Hedging and Pledging Policies
Our policies prohibit Directors and Executive Officers (as well as other key insiders and their immediate family members) from engaging in hedging or short sale transactions with respect to the Company’s Common Stock. We also have a policy with respect to pledging of Common Stock, which subjects Directors and Executive Officers to a preclearancepre-clearance requirement and restrictions, including that pledged shares may not be counted toward the Company’s stock ownership guidelines. Employees who are not Executive Officers or certain other key insiders are not covered by these policies. Our Executive Officers, in the aggregate, have less than 0.5% of the Company’s outstanding shares pledged to third partiesparties.
Shareholder Engagement
Nordstrom recognizes the value of, and is committed to engaging with, our shareholders, as our relationship with the investment community is an important part of our success. Our engagement efforts allow us to better understand our shareholders’ priorities and provide us with critical input about the issues that matter most to them. These conversations provide invaluable insight into our shareholders’ perspectives, and the Board and its Committees take into account shareholder views and ideas, among other considerations, when making decisions relating to the Company’s business and long-term strategy.
In February of 2021, the Company hosted an Investor Event featuring members of management, the Chairman of the Board, and select supplier partners. At the Investor Event, the Company discussed its long-term strategy and financial outlook and also took questions from the investment community.
In addition, we conduct outreach throughout the year to ensure we understand and are in compliance withaware of the issues of importance to our policy.
Corporate Social Responsibility
Our goal isshareholders and are able to operate our businessaddress them appropriately. Throughout this past year, the Company interacted with the utmost integrityinvestment community and serve our customers, employees and shareholdersprovided access to select members of management through its participation in a way that is deservingseries of their supportinvestor conferences, meetings hosted by sell-side investment analysts, and trust. Social responsibility is one waymanagement-hosted store tours.
We plan to continue increasing engagement and outreach with the investment community as we striveseek to follow through with this commitment. We actively pursue solutionsfurther enhance our understanding of shareholder priorities.
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| 17 | 2022 Proxy Statement | NORDSTROM, INC. | |
CORPORATE GOVERNANCE
Website Access to Corporate Governance Documents
The Charterscharters for each of the standing Committees of the Board, the Company’s Corporate Governance Guidelines, the Employee Code of Business Conduct and Ethics, and the Director Code of Business Conduct and Ethics, as well as all Company filings made with the SEC, may be accessed on our Investor Relations Website.
ESG ISSUES
Corporate Social Responsibility
We believe the impact we have on our employees, customers and communities extends well beyond our operations. When we think about the value we offer to the world, we know it's critical to protect the environment, give back to the communities we serve, create safe and fair workplaces for the people who make our products, and provide our employees with a great place to work.
In 2020, we updated our Corporate Social Responsibility strategy with a new set of five-year goals focused on environmental sustainability, human rights and corporate philanthropy. Within these three categories, we've identified specific impact areas and set measurable goals that are integrated into the work of teams across our business. These goals guide us as we work to address areas where our company and industry have the most impact and create positive change.
| | |
We believe the impact we have on our employees, customers and communities extends well beyond
our operations. |
Taking Care of the Planet
We are committed to improving the sustainability of our operations and product value chains. To that end, we aim to set science-based targets to reduce our contribution to global climate change and are working to minimize plastic and packaging waste in our supply chain, while improving the circularity of our products.
As we work toward our 2025 Corporate Social Responsibility Goals, we continue to invest in partnerships and new initiatives that invite our customers, our industry peers and our employees to join in our efforts.
•BEAUTYCYCLE: In 2021, we expanded BEAUTYCYCLE, our in-store beauty take-back and recycling program, to our Canadian stores. This program allows us to accept all brands of beauty packaging waste materials that typically can't be placed in curbside recycling bins. Through the BEAUTYCYCLE program, we aim to take back 100 tons of beauty packaging by 2025.
•Sustainable Style: Our customers have told us how much they value sustainable products, and we recognize their associated benefit to the environment. First introduced in 2019, our Sustainable Style category makes it easy for customers to find consciously manufactured products that align with their values. In 2021, approximately 1% of our total assortment was comprised of products that qualify for our Sustainable Style category. Our goal is to bring that number to 15% by 2025.
Respecting Human Rights
We have rigorous standards in place to protect human rights throughout our value chain and seek to partner with suppliers that share our commitment to producing quality products through ethical business practices. Every supplier we work with must adhere to our Partner Code of Conduct, which outlines the requirements we have for suppliers around worker, animal, and environmental rights, and requires our suppliers to adhere to local and international standards. In addition, we regularly retain third parties to conduct audits of our Nordstrom Made factories to confirm they meet our ethical standards, including our zero-tolerance policy regarding the use of slave, bonded, or forced labor, child labor, physical and sexual harassment and abuse, bribery, home workers, critical health and safety violations, and egregious violations of freedom of association.
In 2021, we hit an important milestone on our journey to invest in women’s empowerment throughout our value chain: nearly 45% of Nordstrom Made products were produced in factories that offer women’s empowerment training, bringing us closer to our goal of producing 90% of Nordstrom Made products in factories that invest in women's empowerment by 2025.
Investing in Our Communities
One of our central values in corporate philanthropy is providing basic needs for youth and families in the communities where we're located. In 2021, we donated nearly $11 million to over 320 organizations located in many of the communities where we operate. We provided grants to over 250 local and regional nonprofits through our website at investor.nordstrom.com,community grants program and may be viewed by selectingmade corporate donations to over 60 nonprofit organizations. In addition, our employees gave donations and volunteered their time to over 2,700 qualifying nonprofits and other organizations, many of which were supported with Company matching. Together with our customers and our employees, we used our platform to drive more than $14 million in nonprofit donations across the Corporate Governance item in the Investor Relations drop-down menuU.S. and SEC Filings.
18 NORDSTROM, INC. - 2019 Proxy Statement
Canada.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES
Diversity, Inclusion, and Belonging
We believe that creating an outstanding customer experience begins with creating an environment that celebrates and supports all employees. As we strive to attract and retain the best talent in the industry, we are committed to cultivating a workplace culture in which each of our employees is supported and feels confident bringing their full self to work.
Our Diversity, Inclusion and Belonging Goals focus on four pillars:
•Talent — increasing demographic diversity among our employees
•Culture — cultivating a greater sense of belonging throughout our organization
•Marketplace — consistently serving our customers through a lens of anti-racism and equity
•Leadership — setting consistent, future-oriented expectations for our leaders
We monitor and track progress against our strategy. Leading this work and driving accountability is our Diversity, Inclusion and Belonging Action Council, co-chaired by Erik Nordstrom, Chief Executive Officer, Peter Nordstrom, President and Chief Brand Officer, and Farrell Redwine, Chief Human Resources Officer. The Council brings together a diverse mix of leaders from across our Company and an independent Director from our Board to monitor, assess and measure outcomes on Company-wide programs that drive our strategy forward.
Our Talent
Historically, representation in our stores has been rich with ethnic and gender diversity, however this has not always been the case for our corporate population. To learn more about statistics relating to the diversity of our leadership and employees, please refer to our most recent corporate social responsibility report and other information available on our website at nordstrom.com/browse/nordstrom-cares. The contents of our corporate social responsibility report are not incorporated by reference into this Proxy Statement.
We are working to increase demographic diversity in all corporate and leadership positions to better reflect the North American population. By the end of 2025, we have committed to increasing representation of Black and Latinx populations in people-manager roles by at least 50%. We’ve also begun leveraging our internship program and other initiatives to help us reach qualified candidates early in their careers, with the goal of increasing the number of participants from underrepresented backgrounds to 50%. In addition, we have updated the training resources we offer for all customer-facing roles to ensure they include anti-racism and anti-bias content.
Our Culture
We recognize the need for employees to not just feel included, but to feel they truly belong. One way we've sought to nurture a sense of belonging is with our ERGs. These are employee-led, Nordstrom-sponsored groups that represent a variety of seen and unseen identities that exist across our organization. In 2021, the eight ERGs listed below served and were led by our employees.
•AsPIRE (Asian Pacific-Islander Resources for Employees)
•Black Employee Network
•¡Hola! (Latinx)
•NordstromPLUS (LGBTQIA+)
•Nordstrom Veterans Group
•Parents@Nordstrom
•Thrive (Diverse Ability)
•Women in Nordstrom
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| We are committed to making a positive difference in the world, and that starts with creating an outstanding workplace experience for our employees. |
Formed to offer community, connection and shared experience to their members, ERG participation is driven by our employees’ passion and dedication. While membership was initially concentrated among corporate employees in the Seattle area, in 2021, ERG membership was made easily accessible to thousands of employees across the U.S. and Canada.
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| 19 | 2022 Proxy Statement | NORDSTROM, INC. | |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES
Marketplace
As a leader in our industry, we have a responsibility to welcome a broader base of customers to our stores and find creative ways to serve them on their terms. We've committed to delivering $500 million in retail sales from brands owned, operated or designed by Black and Latinx individuals by 2025. In doing so, our intent isn’t simply to provide a more diverse product offering to a wider swath of consumers, but to consciously collaborate with and support emerging brands, finding creative ways to highlight their products in pop-up shops and providing increased digital presence.
In 2021, we signed the 15 Percent Pledge, underscoring our commitment to growing our purchases from businesses owned or founded by Black individuals by 10 times by the end of 2030, and added over 140 new Black- and Latinx- owned, operated, and designed brands to our assortment. Customers can easily discover and shop these brands on Nordstrom.com through our Black-founded, Latinx-founded and Inclusive Beauty categories.
Leadership
Our leaders play an essential part in bringing an inclusive culture to life, and we strive to build diversity, inclusion, and belonging competencies into our leadership expectations. We evaluate our leaders on their performance in this area through our Inclusion and Belonging Index, as measured by our Voice of the Employee Survey. In addition, our open door policy encourages continuous feedback from our leaders’ teams and coworkers. As we continue our work in this area, we will also provide training, tools and resources to help employees have inclusive conversations and lead through complex issues.
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PROPOSAL 11: | ELECTION OF DIRECTORS |
The Board recommends a vote FOR each Director nominee.
ElevenNine nominees, recommended by the Company’s Board, will be elected at the Annual Meeting, each to hold office until the 20202023 Annual Meeting of Shareholders and until their successors have been duly elected and qualified. Brad Smith and Shellye Archambeau are not seeking re-election and will be retiring from the Board at the end of their respective terms in May 2022. All of the nominees listed in this Proposal 1 are currently Directors of the Company.
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| |
Director Qualifications, Experience, and Experience |
The Board, acting through the Corporate Governance and Nominating Committee, seeks a Board that, as a whole, possesses the experience, skills, backgrounds and qualifications appropriate to function effectively in light of the Company’s current and evolving business circumstances. The Committee reviews the size of the Board, the tenure of our Directors and their skills, backgrounds and experiences in determining the slate of nominees and whether to seek one or more new candidates. The Committee seeks directors with established records of significant accomplishments in businesses and areas relevant to our strategies. With respect to the nomination of continuing Directors for re-election, the individual’s prior contributions to the Board are also considered.
All of our Directors bring to our Board a wealth of executive leadership experience derived from their service as senior executives of complex corporations. As a group, they also bring extensive board experience. The process undertaken by the Committee in recommending qualified director candidates is described in the Director Nominating Process below.
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|
Director Nominating Process |
The Corporate Governance and Nominating CommitteeCGNC is responsible for identifying and recommending to the Board the nominees to stand for election as directorsDirectors at each Annual Meeting of Shareholders or, if applicable, at a special meeting of shareholders.
In nominating directorDirector candidates, the CommitteeCGNC considers such factors as it deems appropriate, including whether there are any evolving needs of the Board with respect to a particular field, skill or experience.experience, with the goal of assisting the Board in providing oversight of and strategic advice to Company management. These factors may include judgment, skill, experience with businesses and other organizations, the candidate’s experience and skill set relative to those of other members of the Board and the extent to which the candidate would be a desirable addition to the Board and any Committees of the Board. In particular, the Board considers the following important in evaluating candidates for Directors:
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| DESIRED SKILL | NORDSTROM BUSINESS CHARACTERISTICS | | WHAT THE SKILL REPRESENTS |
| | | | |
| Retail Industry | We are a leading fashion retailer devoted to helping customers feel good and look their best. | | Large national-scale retail company experience. |
| Marketing & Customer Experience | As customer expectations change, we must evolve our core value of providing excellent customer service to meet customers on their terms. | | Expertise in customer service and background in marketing leadership. |
| Online Scale & Growth | Over the past several years, we have made investments to transform into a digital-first business to meet shifting customer expectations. | | Experience leveraging online platforms to grow and scale business. |
| Risk & Crisis Management | With a large workforce and operations across the United States and Canada, we are subjected to frequent emerging risks and crises. We are committed to accurate and disciplined management of those risks and crises, legal and regulatory compliance, and accurate disclosure. | | Experience helping organizations navigate fast-paced and dynamic situations involving emerging risks and crises. |
| Business Transformation | In our effort to give customers the most relevant products, we are changing the way we’ve historically thought about our business model – developing and entering into novel arrangements with brands around the world to give our customers more choices than ever before. | | Expertise in overseeing the transformation of business in a dynamic, ever-changing industry. |
| CEO Experience | With more than 350 retail locations across the United States and in Canada, as well as multiple supply chain facilities and a robust digital presence, we are a large and complex organization. | | Experience as a Chief Executive Officer. |
| Financial Expertise | We are a large public company requiring complex financial forecasts, reporting and other business considerations. | | Ability to understand financial data and use that data to make decisions around business strategy. |
| Technology Expertise | We are continually investing in technology to enhance the customer experience. | | Demonstrated leadership and expertise relating to digital platforms, information technology, data security, and/or data analytics. |
| | | | |
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| 21 | 2022 Proxy Statement | NORDSTROM, INC. | |
PROPOSAL 1 ELECTION OF DIRECTORS
In addition to these factors, the Committee may also considerconsiders a directorDirector candidate’s diversity of background during the evaluation and selection process of director candidates.nominees. In this context, diversity is broadly construed to mean varied skills, backgrounds and experiences, which include gender and ethnicity, as well as other differentiating characteristics, all in the context of the requirements and needs of the Board at that point in time. The Committee however, does not have a formal policy regarding how diversity of background should be applied in identifying or evaluating directorDirector candidates, and, depending on the current needs of the Board, the Committee may weigh certain factors more or less heavily. The goal of the Committee is to assist the Board in attracting competent individuals with the requisite management, financial and other expertise who will act as directors in the best interests of the Company and its shareholders.
The Committee will consider the qualifications of directorDirector candidates recommended by shareholders, and evaluate each of them using the same criteria the Committee uses for incumbent candidates. Shareholders who wish to submit nominees for election as directorsDirectors should follow the procedures described on page 75.
64. No Director candidates were recommended by our shareholders for election at the Annual Meeting.
NORDSTROM, INC. - 2019 Proxy Statement 19
BackCollectively, our Directors bring to Contentsour Board a wealth of executive leadership experience derived from their service as senior executives of complex corporations. As a group, they also bring extensive Board experience and a diversity of perspectives on the challenges facing the Company and the retail industry at this time.
The following table summarizes keychart below outlines some of the qualifications skills or attributes most relevanteach Director candidate brings to the decision to nominate an individual to serve onBoard. However, the Board. A mark indicates an area of focus or expertise on which the Board relies. The lack of a mark however,in any specific box does not mean that the Directorcandidate does not possess that qualification or skill.qualification. Instead, the skills and qualifications noted below are those reviewed by the CGNC and the Board in making nomination decisions and as part of the Board succession planning process. We believe the combination of the skills and qualifications shown below demonstrates how our Board is well positioned to provide strategic advice and effective oversight to Company management.
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| | Shellye L. Archambeau | Director Nominees | |
| | | Stacy Brown-Philpot | TanyaJames L. DomierDonald | Kirsten A. Green | Glenda G. McNeal | Erik B. Nordstrom | Peter E. Nordstrom | Brad D. Smith | Gordon A. SmithAmie Thuener O'Toole | Bradley D. Tilden | B. Kevin TurnerMark J. Tritton | Totals |
|
| Global/International Commerce | ü | ü | ü | ü
| ü
| ü
| ü | ü | ü | ü | ü |
| Retail Industry | | l | ül | l | l | ü
l | ü | ü | ül | | ü6/9 |
| eCommerce/Technology | ü | ü | ü | ü | | ü | Marketing & Customer Experience | ül | l | l | ül | l | l | | l | l | 8/9 |
| Finance/Accounting | ü | ü | ü | üOnline Scale & Growth | ül | l | l | ü | l | ül | ü
l | l | l | 8/9 |
| Senior Executive | Risk & Crisis Management | ü | ül | ü | ü
| ül | ü
l | ül | ül | ül | ü
| ü
6/9 |
| Legal | Business Transformation | l | l | | l | l | l | l | l | l | 8/9 |
| Customer-Focused Business | ü | ü | ü | ü
CEO Experience | ül | ü
l | ü | ü | ül | ü
| ü
| l | l | 5/9 |
| General Business Management | ü | ü | ü | ü | ü | ü | üFinancial Expertise | ül | ül | ül | ül | l | | l | l | l | 8/9 |
| Communications/Marketing | ü | ü | ü | ü | | ü | üTechnology Expertise | ül | ü | l | ü | l | | | | l | 4/9 |
| GovernanceGender | üFemale | Male | Female | Female | Male | Male | Female | üMale | ü
Male | ü | 4/9
Female |
| Public Company BoardRacially/Ethnically Diverse | üBlack | üWhite | üWhite | Black | White | White | White | üWhite | üWhite | ü
| |
| Loyalty/Rewards Program | | | | | | | | | ü | ü | ü2/9
Diverse |
No director candidates were recommended by our shareholders for election at the Annual Meeting.
20 NORDSTROM, INC. - 2019 Proxy Statement
PROPOSAL 1 ELECTION OF DIRECTORS
Information related to the Director nominees is set forth below and on the following pages, including age, and the particular experience, qualifications, attributes or skills that led the Board to conclude that the person should serve as a Director for the Company.
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| |
| Shellye L. Archambeau |
Director since 2015 |
Age 56 |
Former Chief Executive Officer of MetricStream, Inc., a global provider of governance, risk, compliance and quality management solutions to corporations across diverse industries from 2002 to January 2018. Prior to joining MetricStream, Ms. Archambeau was Chief Marketing Officer and Executive Vice President of Sales for Loudcloud, Inc., a provider of Internet infrastructure services, from 2001 to 2002; Chief Marketing Officer of NorthPoint Communications from 2000 to 2001; and President of Blockbuster Inc.’s ecommerce division from 1999 to 2000. Before joining Blockbuster, Ms. Archambeau held domestic and international executive positions during a 15-year career at IBM. Ms. Archambeau has been a director of Verizon, Inc. since December 2013, a director at Roper Technologies, Inc. since April 2018, and a director at Okta since December 2018. She served as a director of Arbitron, Inc. from 2005 to 2013.
Ms. Archambeau brings to the Board, among other skills and qualifications, leadership experience in technology, ecommerce, digital media and communications. Her technology and international experience position her to advise the Board and senior management on global operations and on technology innovations to elevate the customer experience.
|
|
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| Stacy Brown-Philpot |
Director since 2017 |
Age 43 |
Chief Executive Officer of TaskRabbit, Inc., a digital home services labor platform company, since April 2016. Previously, Ms. Brown-Philpot served as the company’s Chief Operating Officer from January 2013 to April 2016. From May 2012 to December 2012, Ms. Brown-Philpot was an Entrepreneur-in-Residence at Google Ventures, the venture capital investment arm of Alphabet, Inc. Prior to that, she spent nearly a decade, from 2003 to 2012, in various directorial positions at Google, including two years as the company’s senior director of global consumer operations. Ms. Brown-Philpot also has a background in finance where she served as a senior analyst at Goldman Sachs
Skills and senior associate at PricewaterhouseCoopers. She has been a director of HP Inc. since 2015.Qualifications
Ms. Brown-Philpot brings to the Board innovation, operational and entrepreneurial experience, digital, branding and marketing expertise, as well as financial and accounting skills. She provides unique insights to elevate the consumer experience in a global digital economy.economy as well as needed insights into the attraction and retention of technology talent, with a particular emphasis on technology talent from underrepresented communities. Her service on the board of HP, Inc. provides her with experience in corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management. |
Independent Director Joined the Board: 2017 | |
| Age 46 | Career Highlights
•2016 to 2020: Chief Executive Officer of TaskRabbit, Inc., a digital home services labor platform company •2013 to 2016: Chief Operating Officer of TaskRabbit, Inc. •2012: Entrepreneur-in-Residence at Google Ventures, the venture capital investment arm of Alphabet, Inc. •Prior to 2012: various directorial positions at Google, including two years as the company’s Senior Director of Global Consumer Operations; Senior Analyst at Goldman Sachs; Senior Associate at PricewaterhouseCoopers |
|
Nordstrom Board
Committee Memberships |
| AFC |
| TC (Chair) |
| | |
| Other Current Public Boards | |
| HP, Inc. | |
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| | | |
| TanyaJames L. DomierDonald
Skills and Qualifications
Mr. Donald brings to the board 45 years of experience in leadership roles at consumer-facing businesses ranging from hospitality to retail. Mr. Donald has a wealth of knowledge and expertise in navigating the fast-paced and dynamic environment facing the Company today. |
Independent Director since 2015 Joined the Board: 2020 | |
Age 5368 |
Career Highlights
•2019 to present: Co-Chairman of the Board for Albertsons Companies, one of the largest food and drug retailers in the United States •2019: Chief Executive Officer of Advantage Solutions,Albertsons • a global business solutions services firm, since 2013 and has served on Advantage Solutions’ board of directors since 2008. Ms. Domier was 2018: President and Chief Operating Officer from 2010 of Albertsons •2013 to 2012 and President 2015: Chief Executive Officer of Marketing Services Division and Integrated Marketing Services from 2000 to 2010. Before joining Advantage Solutions (formerly known as Advantage Sales & Marketing)Extended Stay America, Inc., one of the largest integrated hotel owner/operators in 1990, Ms. Domier held management positions with the J.M. Smucker Company. She has been a director of Yum! Brands, Inc. since January 2018.United States. Ms. Domier brings•Prior to the2013: Chief Executive Officer of Haggen, Inc.; Chief Executive Officer of Starbucks Corporation
|
|
Nordstrom Board extensive experience in global sales and marketing focused on the customer, successful strategic planning expertise and senior leadership skills. Further, Ms. Domier possesses financial and accounting skills, and knowledge of and experience with executive compensation programs.
Committee Memberships |
| AFC |
| TC |
| | |
| Other Current Public Boards | |
| Albertsons Companies, Inc. | |
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| 23 | 2022 Proxy Statement | NORDSTROM, INC. | |
PROPOSAL 1 ELECTION OF DIRECTORS
| | | | | | | | | | | |
| | | |
| Kirsten A. Green |
Director since 2019 |
Age 47 |
Founder
Skills and Managing Partner of Forerunner Ventures,Qualifications a venture capital firm, since 2010. Prior to founding Forerunner, Ms. Green was an equity research analyst and investor at Banc of America Securities, formerly Montgomery Securities. Ms. Green began her career at Deloitte & Touche LLP where she earned her CPA license. Ms. Green has served as a member of the board of directors of numerous private companies since 2013.
Ms. Green brings to the Board extensive experience in consumer and commerce focusedcommerce-focused businesses and provides unique insights with respect to the challenges and opportunities of today’s rapidly evolving digital commerce landscape. Ms. Green has deep domain expertise and an understanding of consumer behaviors, brand building and products. |
Independent Director Joined the Board: 2019 | |
| Age 50 | Career Highlights
•2010 to present: Founder and Managing Partner of Forerunner Ventures, a venture capital firm. In her role with Forerunner Ventures, Ms. Green has served on the boards of directors of numerous private companies since 2013 •Prior to 2010: Equity Research Analyst at Banc of America Securities; Senior Associate at Deloitte & Touche LLP |
|
Nordstrom Board
Committee Memberships |
| AFC |
| TC |
| | |
| Other Current Public Boards | |
| Hims and Hers Health, Inc.
Northern Star Investment Corp. II | |
NORDSTROM, INC. - 2019 Proxy Statement 21
| | | | | | | | | | | |
| |
| Glenda G. McNeal |
Director since 2019 |
Age 58 |
President Enterprise Strategic Partnerships of American Express
| Glenda G. McNeal ,
since 2017. Prior to that role, from 2011 to March 2017, Ms. McNeal served as Executive Vice President
Skills and General Manager of the Global Client Group of American Express. Ms. McNeal has held positions of increasing responsibility at American Express since 1989 when she first joined the company. Before joining American Express, Ms. McNeal worked with the accounting firm of Arthur Andersen, LLP and with the investment banking firm of Salomon Brothers, Inc. Ms. McNeal has been a director of RLJ Lodging Trust since 2011. Ms. McNeal served on the board of directors of United States Steel Corporation from 2007 to 2018.Qualifications
Ms. McNeal brings to the Board extensive experience in business development, innovation and customer relationship management, as well as financial, accounting and senior leadership skills. Ms. McNeal provides unique insights on strategic planning, risk oversight and operational matters. Ms. McNeal’s service on public company boards provides her with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, and assessing risk and overseeing management. |
Independent Director Joined the Board: 2019 | |
| Age 61 | Career Highlights
•2017 to present: President Enterprise Strategic Partnerships of American Express, a globally integrated payments company •2011 to 2017: Executive Vice President and General Manager of the Global Client Group of American Express •1989 to 2011:positions of increasing responsibility at American Express •Prior to 1989: Arthur Andersen, LLP; the investment banking firm of Salomon Brothers, Inc. |
|
Nordstrom Board
Committee Memberships |
| CPCC | Other Current Public Boards | |
| CGNC | RLJ Lodging Trust | |
PROPOSAL 1 ELECTION OF DIRECTORS
| | | | | | | | | | | |
| |
| Erik B. Nordstrom |
Director since 2006* |
Age 55 |
Co-President of
| Erik B. Nordstrom Inc.
since May 2015. Mr. Nordstrom served as Executive Vice President
Skills and President, Nordstrom.com from May 2014 to May 2015. From February 2006 to May 2014, Mr. Nordstrom was Executive Vice President and President, Stores for the Company. From August 2000 to February 2006, he served as Executive Vice President, Full-Line Stores. Mr. Nordstrom previously served as Executive Vice President and Northwest General Manager from February 2000 to August 2000, and as Co-President of the Company from 1995 to February 2000. He has held various other management and sales positions of increasing responsibility since joining the Company in 1979.Qualifications
Mr. Nordstrom’s positions of increasing responsibility with the Company over more than 3540 years, including executive roles related to digital and operational roles,store operations, give him a customer-centric perspective in retailing and supporting the business of the Company. |
|
| |
 Joined the Board: 2006 | Peter E. Nordstrom |
Director since 2006* |
Age 5758 |
Career Highlights Co-President
•2020 to present: Chief Executive Officer of Nordstrom, Inc. •2015 to 2020: Co-President since May 2015. Mr.of Nordstrom, served as Inc. •2014 to 2015: Executive Vice President and President, Merchandising for the Company from February Nordstrom.com of Nordstrom, Inc. •2006 to May 2015. From September 2000 to February 2006, he served as 2014: Executive Vice President and President, Stores of Nordstrom, Inc. •2000 to 2006: Executive Vice President, Full-Line Stores. Mr.Stores of Nordstrom, previously served as Inc. •2000: Executive Vice President and DirectorNorthwest General Manager of Full-Line Store Merchandise Strategy from February 2000 to September 2000, and as Co-President of the Company from Nordstrom, Inc. •1995 to February 2000. He has held2000: Co-President of Nordstrom, Inc. •1979 to 1995: various other management and sales positions of increasing responsibility since joining |
|
Nordstrom Board
Committee Memberships |
| None |
| Other Current Public Boards | |
| None | |
| | | |
Erik Nordstrom and Peter Nordstrom are brothers, great-grandsons of the Company in 1978.Company’s founder and the second cousins of James Nordstrom, Jr., Chief Stores Officer for the Company. |
| | | | | | | | | | | |
| | | |
| Peter E. Nordstrom
Skills and Qualifications
Mr. Nordstrom’s positions of increasing responsibility with the Company over more than 3540 years, including executive roles related to merchandising and operational roles,brand-building, give him a customer-centric perspective in retailing and supporting the business of the Company. |
Director Joined the Board: 2006 | | Age 60 | Career Highlights
•2020 to present: President and Chief Brand Officer of Nordstrom, Inc. •2015 to 2020: Co-President of Nordstrom, Inc. •2006 to 2015: Executive Vice President and President, Merchandising of Nordstrom, Inc. •2000 to 2006: Executive Vice President, Full-Line Stores of Nordstrom, Inc. •2000: Executive Vice President and Director of Full-Line Store Merchandise Strategy of Nordstrom, Inc. •1995 to 2000: Co-President of Nordstrom, Inc. •1978 to 1995: various other management and sales positions of increasing responsibility | | Nordstrom Board
Committee Memberships | | None | | | | | Brad D. Smith | Director since 2013 | Age 55 | Executive Chairman and former Chief Executive Officer of Intuit, Inc., a global provider of business and financial management solutions since 2016 and President and Chief Executive Officer from 2008 to 2019. Mr. Smith has served on Intuit’s board of directors since 2008. Mr. Smith joined Intuit in 2003 and served as Senior Vice President and General Manager, Small Business division from 2006 to 2007, Senior Vice President and General Manager, QuickBooks from 2005 to 2006, Senior Vice President and General Manager, Consumer Tax Group from 2004 to 2005 and as Vice President and General Manager of Intuit’s Accountant Central and Developer Network from 2003 to 2004. Before joining Intuit, Mr. Smith was Senior Vice President of Marketing and Business Development of ADP, where he held several executive positions from 1996 to 2003. Mr. Smith has served on the board of directors of SurveyMonkey since 2017, and served on the board of directors of Yahoo! Inc. from 2010 until 2013.
Mr. Smith brings to the Board digital expertise, brand marketing, innovation and entrepreneurial experience, as well as financial and accounting skills, from his position at Intuit. He provides unique insights related to technology innovation and marketing of products and services to broad audiences throughout the world. Mr. Smith’s service on the boards of Yahoo!, SurveyMonkey, and Intuit provide him with experience in corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management.
| | Other Current Public Boards | | * | None | | Erik Nordstrom and Peter Nordstrom are brothers, great grandsonsgreat-grandsons of the Company’s founder and the second cousins of James F. Nordstrom, Jr., President,Chief Stores Officer for the Company. |
22 NORDSTROM, INC.
- 2019 Proxy Statement
| | | | | | | | | | | | | | | | 25 | 2022 Proxy Statement | NORDSTROM, INC. | |
PROPOSAL 1 ELECTION OF DIRECTORS
| | | | | | | | | | | | | | | |  Amie Thuener O'Toole
Skills and Qualifications
Ms. Thuener O’Toole brings to the Board more than 25 years of finance and accounting experience. Her experience in a variety of senior leadership roles at some of the world’s most innovative companies brings valuable perspectives in finance and accounting matters, including financial planning and reporting, risk assessment, incentive compensation plans and finance advice and support for all mergers and acquisitions activities. She brings to the Board a wealth of knowledge and expertise regarding strategic finance in the context of a rapidly growing and quickly-changing business. | Independent Director Joined the Board: 2022 | | | Age 47 | Career Highlights
•2018 to present: Vice President and Chief Accounting Officer of Alphabet Inc., one of the world’s leading technology conglomerate holding companies •2013 to 2018: Vice President and Chief Accountant of Alphabet Inc. •1996 to 2012: Managing Director, Transaction Services of PricewaterhouseCoopers | | Nordstrom Board
Committee Memberships | | None | | | | | Gordon A. Smith | Director since 2015 | Other Current Public Boards | | Age 60 | Co-President and Chief Operating Officer of JP Morgan Chase & Co., a global financial services firm since January 2018. Mr. Smith was Chief Executive Officer, Consumer and Community Banking, JP Morgan Chase & Co. from 2007 to January 2018. He previously was President, Global Commercial Card Group for American Express Travel Related Services, Inc., from 2005 to 2007, President of Consumer Card Services Group for American Express Travel Related Services, Inc., from September 2001 to 2005 and Executive Vice President of U.S. Service Delivery from March 2000 to September 2001. Mr. Smith joined American Express in 1978 and held positions of increasing responsibility within the company. Mr. Smith served on the board of directors of Choice Hotels International from 2004 until 2017.
Mr. Smith brings to the Board his extensive experience in customer-focused businesses in a highly competitive industry. He provides unique insights with respect to customer rewards programs in the consumer services industry. Further, Mr. Smith’s service on a public company board provides him with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management.
None | |
| | | | | | | | | | | | | | | Bradley D. Tilden | Director since 2016 | Age 58 | Chairman
| Bradley D. Tilden
Skills and Chief Executive Officer of Alaska Air Group, Inc.,Qualifications an airline holding company, since January 2014. In May 2012, Mr. Tilden was named President and Chief Executive Officer of Alaska Air Group. He served as Executive Vice President of Finance and Planning from 2002 to 2008 and as Chief Financial Officer from 2000 to 2008 for Alaska Air Group, and prior to 2000, was Vice President of Finance at Alaska Air Group. Before joining Alaska Airlines, Mr. Tilden worked for the accounting firm PricewaterhouseCoopers. He serves on the board of Alaska Air Group.
Mr. Tilden brings to the Board executive, operational, strategic planning and financial experience, as well as insights with respect to customer rewards programs in the consumer services industry. Mr. Tilden’s service on a public company board service provides him with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management. |
Independent DirectorJoined the Board: 2016 | | Age 61 | Career Highlights
•2021 to present: Chairman of Alaska Air Group, Inc., an airline holding company comprised of Alaska Airlines, Inc., and Horizon Air, Inc. •2014 to 2021: Chairman and Chief Executive Officer of Alaska Air Group, Inc. •2012 to 2014: President and Chief Executive Officer of Alaska Air Group, Inc. •2002 to 2008: Executive Vice President of Finance and Planning of Alaska Air Group, Inc. •2000 to 2008: Chief Financial Officer of Alaska Air Group, Inc. •Prior to 2000: Vice President of Finance at Alaska Air Group, Inc.; PricewaterhouseCoopers | | Nordstrom Board
Committee Memberships | | AFC (Chair) | | | | | | Other Current Public Boards | | | Alaska Air Group, Inc. | |
PROPOSAL 1 ELECTION OF DIRECTORS | | | | | | | | | | | | | | | | | B. Kevin TurnerMark J. Tritton
Skills and Qualifications
Mr. Tritton brings to the Board over 30 years of experience in retail and apparel businesses, providing him deep insights into consumer behavior, brand building and operational matters which are key to the Company’s business. In addition, as the sitting CEO of a public company retailer, Mr. Tritton has unique insights into the challenges facing our Company and our industry. | Independent Director since 2010 Joined the Board: 2020 | | Age 5458 | Career Highlights
•2019 to present: President and Chief Executive Officer of Core Scientific, Bed Bath & Beyond Inc., an omnichannel retailer selling a wide assortment of domestic merchandise and home furnishings online and through several brand retail storefronts •a company focused on Blockchain and Artificial Intelligence infrastructure. Mr. Turner was previously Chief Executive Officer of Citadel Securities, a global market maker, and Vice Chairman of Citadel LLC, a global financial institution, from August 2016 to January 2017. He served as Chief Operating Officer of Microsoft Corporation from 2005 to 2016, and as Chief Executive Officer and President of Sam’s Club, a Wal-Mart subsidiary corporation from 2002 to 2005. Between 1985 and 2002, Mr. Turner held a number of positions of increasing responsibility with Wal-Mart Stores, Inc., including 2019: Executive Vice President and Global Chief InformationMerchandising Officer from 2001 to 2002. of Target Corporation, an omnichannel retailer selling everyday essentials and fashionable, differentiated merchandise at discounted prices online and through several brand retail storefronts Mr. Turner’s experience at Core Scientific, Microsoft•2009 to 2016: Executive Vice President and Walmart have provided him extensive experience in highly competitive and customer centric businesses. He provides insight and expertise in strategy, digital, global operations, supply chain, merchandising, branding, marketing and technology. Further, Mr. Turner’s deep experience in both technology and retail uniquely positions him to adviseDivision President of the Board and senior management on the intersectionNordstrom Product Group of digital technology and retail.Nordstrom, Inc.
| | Nordstrom Board
Committee Memberships | | CPCC (Chair) | | CGNC | | | | | Other Current Public Boards | | | Bed Bath & Beyond, Inc. | |
| | | | | | | | | | | | | | | | 27 | 2022 Proxy Statement | NORDSTROM, INC. | |
NORDSTROM, INC. - 2019 Proxy Statement 23
AUDIT AND FINANCE COMMITTEE REPORT The following Report of the Company’s Audit and Finance Committee of the Board (the “Audit and Finance Committee”) does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference. The Audit and Finance CommitteeAFC operates under a written Chartercharter adopted by the Board. The Chartercharter contains a detailed description of the scope of the Audit and Finance Committee’sAFC’s responsibilities and how they will be carried out. The Audit and Finance Committee’s CharterAFC’s charter is available on our website at investor.nordstrom.com, and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu.Website.
The AFC currently consists of four Directors, each of whom has been determined by the Board to meet the heightened independence requirements under SEC and NYSE Listed Company Rules. In addition, the Board has determined that each member of the Audit and Finance CommitteeAFC is independent from the Company as such term is defined in Sections 303.01(B)(2)(a) and (3) of the NYSE’s listing standards at all times during the fiscal year and that each member was an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K under the Securities Exchange Act of 1934.SEC rules. The Audit and Finance CommitteeAFC serves in an oversight capacity and is not part of the Company’s managerial or operational decision-making process. As part of its responsibilities for oversight of the Company’s Enterprise Risk Management process, the Audit and Finance CommitteeAFC reviews and discusses Company policies and processes with respect to risk assessment and risk management, including discussions of individual risk areas. Management is responsible for the Company’s internal controls and the financial reporting process. Deloitte, the Company’s independent registered public accounting firm, reports to the Company’s Audit and Finance Committee,AFC, and is responsible for performing an integrated audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with auditing standards generally accepted in the United States of America. Deloitte and the Company’s internal auditors have full access to the Audit and Finance Committee.AFC. The auditors meet with the Audit and Finance CommitteeAFC at each of the Audit and Finance Committee’sAFC’s regularly scheduled meetings, with and without management being present, to discuss appropriate matters. The Audit and Finance CommitteeAFC has the sole authority to engage, evaluate and terminate the Company’s independent auditors. The Audit and Finance CommitteeAFC also pre-approves all auditing services, internal control-related services and permitted nonaudit services to be performed by the Company’s independent auditors, and periodically reviews whether to request proposals for the engagement of the independent audit firm. The Audit and Finance CommitteeAFC recommended to the Board that the audited consolidated financial statements for the fiscal year ended February 2, 2019January 29, 2022 be included in the Company’s 2021Annual Report on Form 10-K for such fiscal year, based on the following actions by the Committee:•review of the Company’s audited consolidated financial statements with management; •review of the unaudited interim financial statements and Forms 10-Q prepared each quarter by the Company; •review of the Company’s Disclosure Committee practices and the certifications prepared each quarter in accordance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; •review with management regardingof the critical accounting estimates on which the financial statements are based, as well as its evaluation of alternative accounting treatments; •receipt of management representations that the Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States of America;GAAP; •review, with management, the internal auditors and Deloitte, regardingof management’s assessment of the effectiveness of the Company’s internal control over financial reporting and Deloitte’s evaluation of the Company’s internal control over financial reporting; •review, with legal counsel and management, regardingof contingent liabilities; •receipt of the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communication with Audit and Finance CommitteesAFCs Concerning Independence; and •review, with Deloitte, regarding theirof Deloitte’s independence, the audited consolidated financial statements, the matters required to be discussed by Auditing Standard No. 16 Communications with Audit and Finance CommitteesAFCs, as amended, and other matters, including Rule 2-07 of SEC Regulation S-X. | | | | | | | | | | | | | Audit and Finance Committee | | | | | | Bradley D. Tilden, Chair | | Stacy Brown-Philpot | TanyaJames L. DomierDonald | | Kirsten A. Green | Philip G. Satre |
24 NORDSTROM, INC. - 2019 Proxy Statement
| | | | | | PROPOSAL 22: | RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Board recommends a vote FOR this proposal. The Audit and Finance Committee,AFC, consistent with NYSE and SEC rules, has appointed Deloitte to be the Company’s independent registered public accounting firm for the fiscal year ending February 1, 2020.January 28, 2023. Deloitte and its predecessors have served as the Company’s independent registered public accounting firm for over 4550 years, including the fiscal year ended February 2, 2019. January 29, 2022. As a matter of good corporate practice to provide shareholders an avenue to express their views on this matter, the Board has determined to seek shareholder ratification of Deloitte’s appointment at this time. If the shareholders do not ratify the appointment of Deloitte, the Board will reconsider the appointment. A representative of Deloitte will be present atattend the Annual Meeting to respond to questions and to make a statement if he or she so desires. The following table summarizes fees billed or expected to be billed to the Company by Deloitte in connection with services for the fiscal years ended February 2, 2019January 29, 2022 and February 3, 2018:January 30, 2021. | | | | | | | | | | | | | | | | | | | | | | | | | | Fiscal Year Ended
January 29, 2022 | | Fiscal Year Ended
January 30, 2021 | | Type of Fee | ($) | | (%) | | ($) | | (%) | Audit Fees(a) | 3,411,000 | | | 86 | | | 3,332,000 | | | 86 | | Audit-Related Fees(b) | 465,000 | | | 12 | | | 467,000 | | | 12 | | Other Fees(c) | 68,000 | | | 2 | | | 68,000 | | | 2 | | | TOTAL | 3,944,000 | | | 100 | | | 3,867,000 | | | 100 | |
| | | | | | | | | | | | | | | | | Fiscal Year Ended
February 2, 2019 | | Fiscal Year Ended
February 3, 2018 | | Type of Fee | | ($) |
| | (%) |
| | ($) |
| | (%) |
| Audit Fees(a) | | 3,657,000 |
| | 83 |
| | 2,924,000 |
| | 55 |
| Audit-Related Fees(b) | | 581,000 |
| | 13 |
| | 683,000 |
| | 13 |
| Other Fees(c) | | 152,000 |
| | 4 |
| | 1,680,000 |
| | 32 |
| | TOTAL | | 4,390,000 |
| | 100 |
| | 5,287,000 |
| | 100 |
|
(a) Audit Fees Audit Fees primarily relate to fees for services for: (i) auditing the consolidated financial statements of the Company; (ii) reviewing the interim financial information of the Company included in its Form 10-Qs; and (iii) auditing the Company’s internal control over financial reporting. Substantially all of Deloitte’s work on these audits was performed by full-time, regular employees and partners of Deloitte and its affiliates. (b) Audit-Related Fees Audit-Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and internal control over financial reporting. reporting, services related to the issuance of the Company’s securities and accounting research tool subscription fees. This amount does not reflect reimbursementadditional amounts of $274,000$364,500 for fiscal year ended February 2, 2019January 29, 2022 and $254,000$364,000 for fiscal year ended February 3, 2018. This amount includes accounting research tool subscription fees of $6,000January 30, 2021 which were reimbursed to the Company by its banking partner in connection with the System and Organization Controls report related to the Company’s credit card servicing activities. (c)Other Fees for the fiscal year ended February 2, 2019January 29, 2022 and $6,000 for fiscal year ended February 3, 2018. (c) Other Fees
Other Fees for fiscal years ended February 2, 2019 and February 3, 2018 primarilyJanuary 30, 2021 related to fees for advice and recommendations on supply chain strategy.human resources benchmarking services.
Consistent with SEC policies regarding auditor independence, the services performed by Deloitte for the fiscal years ended February 2, 2019January 29, 2022 and February 3, 2018January 30, 2021 were pre-approved in accordance with the policies and procedures adopted by the Audit and Finance Committee.AFC. The pre-approval policy is periodically reviewed and updated. It describes the permitted audit, audit-related, tax and other services that Deloitte may perform. Normally, pre-approval is provided at regularly scheduled Audit and Finance CommitteeAFC meetings. However, the authority to grant specific pre-approval between meetings, as necessary, has been assigned to the Chair of the Audit and Finance Committee.
NORDSTROM, INC. - 2019 Proxy Statement 25
AFC. The Chair is responsible for updating the Audit and Finance CommitteeAFC at the next regularly scheduled meeting of any services that were pre-approved between meetings. The Audit and Finance CommitteeAFC approves proposed services, which incorporates appropriate oversight and control of the Deloitte relationship, while permitting the Company to receive immediate assistance from Deloitte when time is of the essence. The Committee also reviews on a regular basis: •a listing of approved services since its last review; •a report summarizing the year-to-date services provided by Deloitte, including fees paid for those services; and •a projection for the current fiscal year of estimated fees. The policy prohibits the Company from engaging the independent registered public accountants for services billed on a contingent fee basis and from hiring current or former employees of the independent auditor who have not satisfied the statutory cooling-off period for certain positions.
26 NORDSTROM, INC. - 2019 Proxy Statement
| | | | | | | | | | | | | | | | 29 | 2022 Proxy Statement | NORDSTROM, INC. | |
EXECUTIVE OFFICERS The Executive Officers of the Company are appointed annually by the Board following each year’s annual meeting and serve at the discretion of the Board. In addition to Erik Nordstrom and Peter Nordstrom, whose biographical information is provided under Election of Directors on page 22, page 25, the following are the other Executive Officers of the Company on the date of filing of this Proxy Statement. | | | | | | | Teri J. Bariquit | | Employee since 1986 | | Age 56 | Chief Merchandising Officer, since August 2019. From 2004 to 2019, Ms. Bariquit served as Vice President and then Executive Vice President, Nordstrom Merchandising Group, where she was responsible for Inventory, Planning, Solutions and Business Integration. In her prior role, she led inventory planning, merchandising strategy, brand programs and business transformation initiatives for both Nordstrom and Nordstrom Rack. Prior to 2004, she held various management roles in Merchandising, including Business Integration Director, Business Information & Technology Director and Inventory Audit Manager. | | | | Anne L. Bramman | | Employee since 2017 | Age 5154 | Chief Financial Officer, since June 2017, when she joined the Company. From March 2015 to March 2017, Ms. Bramman served as Senior Vice President and Chief Financial Officer of Avery Dennison Corporation. She previously served as Chief Financial Officer of Carnival Cruise Line from December 2010 to March 2015. She was employed by L Brands in various finance leadership positions from July 2004 to December 2010, including Senior Vice President, Chief Financial Officer of Henri Bendel from 2008 to 2010. | | | | Christine F. DeputyAlexis DePree | Employee since 20152020 | Age 5343 | Chief Human ResourcesSupply Chain Officer, since June 2015,January 2020, when she joined the Company. Ms. DeputyDePree previously served as Group Human Resources DirectorVice President of Americas sort centers & planning at Aviva plcAmazon.com, Inc. from March 20132018 to June 2015.2020, and as Amazon’s Vice President of global supply chain operations from 2016 to 2018. From February 20122007 to March 2013,2016, she was Human Resources Director — Global Retail Banking for Barclays Bank. From July 2009held executive positions with increasing responsibility at Target Corporation, prior to February 2012,which she was Chief Human Resource Officer at Dunkin’ Brands. She was employed at Starbucks Corporation from March 1998 to June 2009, serving as Vice President, Human Resources Asia Pacific from November 2007 to June 2009, Vice President, Global Staffing from September 2005 to January 2008, as well as other executiveDell Technologies Inc. in various leadership positions from 19982001 to 2005. | | | | Kelley K. HallMichael W. Maher | Employee since 20172009 | Age 4648 | Senior Vice President, Chief Accounting Officer, since January 2020. Mr. Maher previously served as Senior Vice President, Finance since May 2017. From October 2011 to April 2017, he held various leadership finance roles for the Company’s Full-Line stores and Treasurer since August 2017,Full-Price business. He previously served as the Company’s Controller from November 2009, when Ms. Hallhe joined the Company. From October 2008Company, until September 2011. Prior to August 2017, she held various senior finance leadership positions at NIKE, Inc. most recentlyjoining Nordstrom, Mr. Maher served as the Vice President, Retail Division Controller for Longs Drug Stores Corporation, the Assistant Corporate Controller at 24 Hour Fitness, and Chief Financial Officer for NIKE, Inc.’s Enterprise Operations. Prior to NIKE, she spent 14 yearsas a Manager of Assurance and Advisory Services and a Certified Public Accountant with Starbucks Corporation in a variety of finance leadership roles, including several roles as vice president supporting U.S. retail and corporate finance.Deloitte & Touche LLP. | | | | Scott A. Meden | | Employee since 1985 | Age 5659 | Chief Marketing Officer, since August 2016. From February 2010 to August 2016, Mr. Meden served as Executive Vice President and General Merchandise Manager, Shoe Division. He previously served as Executive Vice President and President, Nordstrom Rack from February 2006 to February 2010, as Divisional Merchandise Manager from September 2002 to January 2006, as Director of Business Planning and Analysis from 2001 to September 2002, and as Financial Manager, Shoes from 1999 to 2001. | | |
| | | | | | | Edmond Mesrobian | | Employee since 2018 | Age 5861 | Chief Technology Officer, since August 2018, when he joined the Company. Previously he was Chief Technology Officer for multi-national grocery retailer Tesco PLC from 2015 to July 2018. From 2011 to 2014, he served as Chief Technology Officer for global travel company Expedia Group, Inc., which includes online travel brands Expedia.com,Expedia, Hotels.com and Hotwire.com.Hotwire. Prior to joining Expedia Group, Inc., he held the role of Chief Technology Officer at RealNetworks, Inc. from 2003 to 2010, where he led development across multiple digital media services and software. | | | | James F. Nordstrom, Jr. | | Employee since 1986 | Age 4649 | Chief Stores Officer since April 2022. Previously, he served as President, Stores sincefrom May 2014.2014 to April 2022. From 2005 to 2014, Mr. Nordstrom served as Executive Vice President and President, Nordstrom.com. He previously served as Corporate Merchandise Manager, Children’s Shoes, from May 2002 to February 2005, and as a project manager for the design and implementation of the Company’s inventory management system from 1999 to May 2002. Mr. Nordstrom is a great-grandson of the Company’s founder. | | |
NORDSTROM, INC. - 2019 Proxy Statement 27
 Farrell B. Redwine | | Employee since 2016 | | Age 50 | Chief Human Resources Officer, since July 2021. In addition, Ms. Redwine has responsibility for the Company’s Diversity, Inclusion and Belonging strategy and co-chairs the Nordstrom Diversity Action Council. Ms. Redwine joined Nordstrom in 2016 as Vice President - Human Resources supporting eCommerce, call centers and stores, and subsequently served as Senior Vice President - Human Resources, overseeing the talent, culture, diversity and total rewards functions for the Company. From 2014 to 2016, Ms. Redwine was a change management consultant and leadership coach. From 2008 to 2013, she was Global Head of Diversity & Talent Management for Barclays Capital. Prior to 2008, Ms. Redwine held various global HR leadership positions with increasing responsibility at several large corporations, including Lehman Brothers, ExxonMobil and Time Inc. | | | | | | Robert B. SariAnn Munson Steines | Employee since 20092019 | Age 6356 | Chief Legal Officer, General Counsel and Corporate Secretary, since April 2022. Ms. Steines joined the Company as General Counsel and Corporate Secretary since April 2009, when he joined the Company. Mr. Sari previously served as Executive Vice President, General Counsel, and Secretary of Rite Aid Corporation since October 2005. Mr. Sari also served as Rite Aid’s Senior Vice President, General Counsel and Secretary from 2002 to 2005 and as ain July 2019. Previously, she was Senior Vice President, Deputy General Counsel and Assistant Secretary from 2000for Macy’s, Inc. for approximately ten years. Ms. Steines joined Macy’s, Inc. in 1998 as Assistant Counsel, Employment Law, and rose through positions of increasing responsibility until her appointment as Deputy General Counsel and Assistant Secretary. Prior to 2002. He servedMacy’s, Ms. Steines was a Senior Attorney with the Overnite Transportation Company, a subsidiary of Union Pacific Corporation. Ms. Steines began her legal career with Dinsmore & Shohl in other roles for Rite Aid beginningCincinnati, Ohio in 1997.1990 and then practiced law with the law firm of Michael Best & Friedrich in Milwaukee, Wisconsin. | | | | | | Geevy S.K. Thomas | Employee since 1983 | Age 54 | President, Nordstrom Rack since January 2018. Mr. Thomas previously served as Chief Innovation Officer since January 2017. From 2010 to 2017, he served as Executive Vice President and President, Nordstrom Rack. He previously served as Executive Vice President and South Regional Manager from November 2001 to February 2010, as Executive Vice President and General Merchandise Manager, Full-Line Stores from February 2001 to November 2001, and as Executive Vice President, Full-Line Stores and Director of Merchandising Strategy from February 2000 to February 2001. Prior to February 2000, he held various merchandise strategy, store and regional management positions with the Company. | | | | Kenneth J. Worzel | | Employee since 2010 | Age 5457 | Chief Customer Officer, since April 2022. Previously, he served as Chief Operating Officer from August 2019 to April 2022. From 2018 to August 2019, Mr. Worzel served as Chief Digital Officer, since May 2018 andfrom 2016 to 2019 as President of Nordstrom.com, since 2016. Fromand from 2010 to 2016, Mr. Worzelhe served as Executive Vice President, Strategy and Development. Prior to joining the Company, he was a partner with McKinsey & Company, a global management consulting firm, from 2009 to 2010. While at McKinsey, he provided the Company and other clients with management strategy and organizational services. Prior to joining McKinsey, he was a managing partner at Marakon Associates, an international strategy consulting firm, from 1992 to 2008. As a partner at Marakon Associates, he provided consulting services to the Company from 1997 to 2008. |
28 NORDSTROM, INC. - 2019 Proxy Statement
| | | | | | | | | | | | | | | | 31 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS | | | | | | | | | | | | | | | | | | | | | | | | Compensation, People and Culture Committee Report The CPCC has reviewed and discussed with management the CD&A included in this Proxy Statement. The CPCC believes the CD&A represents the intent and actions of the CPCC with regard to executive compensation and has recommended to the Board that it be included in this Proxy Statement for filing with the SEC. | | | Compensation, People and Culture Committee | | | | | | | | | | Mark J. Tritton, Chair | Glenda G. McNeal | Brad D. Smith | | | | | | | | |
Compensation Discussion and Analysis Table of Contents This section describes our executive compensation program and the compensation decisions made for our fiscal year 2018 Named Executive Officers. Our Named Executive Officers include Blake Nordstrom, our former Co-President, who passed away unexpectedly on January 2, 2019. | | | | | | | | | | Erik B. Nordstrom | | Co-PresidentChief Executive Officer | | Anne L. Bramman | | Chief Financial Officer | | Peter E. Nordstrom | | Co-PresidentPresident and Chief Brand Officer | | Kenneth J. Worzel | | Chief Digital Officer and President, Nordstrom.com | Christine F. Deputy | | Chief Human ResourcesCustomer Officer | Blake W. NordstromEdmond Mesrobian | | Former Co-PresidentChief Technology Officer |
For purposes of our filings with the SEC, including this annual Proxy Statement, Erik Nordstrom is considered our Principal Executive Officer and Anne Bramman is considered our Principal Financial Officer.
| | | | 2018 SnapshotExecutive Summary |
Increased Customer Engagement Driving Continued GrowthWe made progress this year on our strategic initiatives and met our 2021 financial targets, giving us line of sight to achieving our February 2021 Investor Event targets in the near term. We continue to work with urgency to build additional capabilities to better serve customers, expand market share and deliver greater profitability.
We ended the year laser focused on three key areas: improving Nordstrom Rack performance, increasing profitability and optimizing our supply chain and inventory flow. We also continue to make progress in the key strategic growth priorities we laid out at our Investor Event: winning in our most important markets, broadening the reach of Nordstrom Rack and increasing our digital velocity. In fiscal year 2018, net earnings were $564 million, or $3.32 per diluted share, which includedWinning in our most important markets: We continue to scale the enhanced options we launched in 2020, like the expansion of order pickup and ship-to-store to all Nordstrom Rack stores. Additionally, one-third of fourth quarter next-day Nordstrom.com demand was picked up at Nordstrom Rack stores, demonstrating the power of integrating capabilities across our two brands and across our digital and physical platforms.
Broadening the reach of Nordstrom Rack: As we improve our supply of premium brands and fine tune our assortment to better align with customer needs, we expect to achieve a $0.05 favorable income tax benefit relatedbetter balance of price points at Nordstrom Rack. Through this set of actions, as well as strengthening Nordstrom Rack brand awareness and driving traffic, we seek to prior periods and an estimated non-recurring credit-related charge of $0.28 (see page 42 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019). We achieved net sales of $15.5 billion. This compares to $15.1 billiondrive continued improvement in 2017, which included $220 million for the 53rd week associated with the 4-5-4 retail calendar. We maintained a strong financial position, generating annual operating cash flow of more than $1 billion for the 10th consecutive year and returning nearly $1 billion to shareholders through dividends and share repurchases during the year.Nordstrom Rack performance throughout 2022.    | | | | | | | | | | | | | | | Achieved $15.5B in sales, reflecting scaling of our generational investments. | | Grew comparable sales 1.7%, reflecting Full-Price increase of 0.9% and Off-Price increase of 3.5%.2022 Proxy Statement | 32 | Generated earnings of $564M, reflecting lower income tax expense associated with corporate tax reform. |
NORDSTROM, INC. - 2019 Proxy Statement 29
COMPENSATION OF EXECUTIVE OFFICERS
Increasing our digital velocity: We maintained strong growth at Nordstrom.com and NordstromRack.com in 2021, with digital sales increasing 24% compared with 2019. With continued growth in digital, our total penetration has increased by 10 percentage points over the past two years to 42% in 2021. In the fourth quarter, we also saw record high mobile app usage, with mobile users representing approximately 70% of total digital traffic.
OurThough we still have work to do on our transformation, the progress we have made gives us confidence in our strategic plans and business modeloutlook for 2022. We believe there is a key point of difference in servingmeaningful opportunity ahead for us to better serve customers in multiple ways — through stores, online, Full-Price and Off-Price — with meaningful synergies across Nordstrom. We are focused on leveraging our digital and physical assets to provide customers with a best-in-class experience. In 2018, we achieved the following milestones in executing our customer strategy through our three strategic pillars: providing a compelling product offering, delivering outstanding services and experiences, and leveraging the strength of the Nordstrom brand:
We continued to see positive customer trends. In 2018, over 35 million customers shopped with us, an increase of 6% from last year. One-third of our customers shopped across our multiple channels, which generally leads to higher customer spend.
Digital sales increased 16% and made up 30% of net sales. Additionally, Nordstrom.com achieved scale, with the profitability of Full-Price digital sales at parity with store sales. We believe our early investments to build a robust digital business have given us a competitive advantage.
Our generational investments continued to scale, contributing approximately $2 billion in sales and an improvement in profitability. Nordstromrack.com/HauteLook became our fastest business to reach $1 billion in sales. Trunk Club delivered sales growth of 35%. We opened our Men’s Store in New York City and furthered our expansion into Canada with the introduction of sixby improving Nordstrom Rack stores.
performance and transforming our supply chain, leading to increased profitability and shareholder value creation. We launchedhave line of sight to achieving the financial targets outlined at our local market strategy in Los Angeles, which drove outsizedInvestor Event while building the capabilities to profitably grow market share gains in this market by increasing product selection, delivery speed and convenience for customers. As we aspire to be the best fashion retailer in a digital world, we believe we are well positioned to deliver a differentiated customer experience and drive increased shareholder value.beyond that.
Shareholders Support our Compensation Program Our shareholders approved our Board’s recommendation to hold executive compensation advisory votes on an annual basis so that they may frequently and openly express their views about the compensation of our Named Executive Officers.NEOs. Each year since 2011, more than 90% of the votes cast have been supportive of our compensation programs. Based on the majority of shareholders voting in favor of our executive compensation program last year, weThe CPCC took investors’ sustained support into account as it continued to implement similar compensation policies and programs in fiscal year 2018, with the exception of a change in the mix of the form of equity-based incentive awards for fiscal year 2018, only, as discussed on page 37, and continued to apply the following pay and benefits philosophy. Our Pay and Benefits Philosophy:
We believe that if our customers win, our employees and shareholders win – our interests are aligned.
We pay for performance by investing in talent that delivers results and demonstrates the behaviors that drive our success, while not encouraging excessive risk taking.
We deliver competitive pay and benefits for all jobs and differentiate pay for critical jobs that directly impact our ability to deliver on our strategy.
We use objective market data to design flexible pay and benefits programs to help attract, retain, motivate and reward our employees and meet the needs of specific talent groups.
We provide equal pay and promotion opportunities for all employees and give them the information they need to clearly understand their pay and effectively manage their careers.
2021.We Emphasize Variable Pay and Balance Short- and Long-Term Incentives as Well as Incentive Values In accordance with our pay-for-performance philosophy, the compensation program for our Named Executive OfficersNEOs is straightforward in design and includes four primary elements: base salary, performance-based bonus, long-term incentives (“LTI”)LTIs and benefits. Within these pay elements, we emphasize variable pay over fixed pay, with at least 70% of each Named Executive Officer’sNEO’s target compensation linked to our financial or market results. The program also balances the importance of these executives achieving both critical short-term objectives and strategic long-term priorities. The following graphics represent fiscal year 2021 target direct compensation (excluding benefits) for the Co-PresidentsCEO and the President and Chief Brand Officer and for the other Named Executive Officers. NEOs. | | | | | | CEO and
President & Chief Brand Officer | Average of All Other NEOs | | | | | | 85% | 75% | | Performance Based | Performance Based |
30 NORDSTROM, INC. - 2019 Proxy Statement
Our Variable Pay Reflects Company Performance Our pay-for-performance design includes rigorous performance goals and high performance standards. Further, with a substantial portion of pay in the form of Nordstrom stock,Common Stock, pay outcomes align with our shareholders’ experience.interests. This is evidenced by our Named Executive Officers’NEOs’ recent incentive compensation payouts and actual and grant realizable values as of our 20182021 fiscal year end,year-end, as shown below.in the tables on the following page.
| | | | | | | | | | | | | | | | | | | | | | | INCENTIVE COMPENSATION PAYOUTS | | 2014 |
| | 2015 |
| | 2016 |
| | 2017 |
| | 2018 |
| | Incentive Earnings Before Interest and Income Tax Expense (“Incentive EBIT”) | |
| $1,391 | M | |
| $1,246 | M | |
| $1,076 | M | |
| $952 | M | |
| $909 | M | Incentive Adjusted Return on Invested Capital
(“Incentive Adjusted ROIC”) | | 13.6 | % | | 11.0 | % | | 12.4 | % | | 10.0 | % | | 12.8 | % | Annual bonus
(payout as a % of Target*) | | 83 | % | | 0 | % | | 80 | % | | 96 | % | | 89 | % | | 3-year TSR percentile ranking within comparator group | | 63%ile |
| | 53%ile |
| | 16%ile |
| | 10%ile |
| | 24%ile |
| Performance Share Unit (“PSU”) vesting
(payout as a % of Target) | | 75 | % | | 75 | % | | 0 | % | | 0 | % | | 0 | % | | PSU comparator group | | Retail |
| | Retail |
| | S&P 500 |
| | S&P 500 |
| | S&P 500 |
|
| | | | | | | | | | | | | | | * | Actual bonus payout for fiscal year 2017 as a % of Target for the Co-Presidents was 94%. Actual bonus payout for fiscal year 2018 as a % of Target for the Co-Presidents was 63%. See pages 35 and 36 for more information.
33 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | FINANCIAL RESULTS | | | | | | | | | | | | Net Earnings (Loss) | | $437 | M | | $564 | M | | $496 | M | | ($690 | M) | | $178 | M | | EBIT | | $926 | M | | $837 | M | | $784 | M | | ($1,047 | M) | | $492 | M | | Return on Assets | | 5.4 | % | | 6.8 | % | | 5.1 | % | | (7.1 | %) | | 1.9 | % | | | | | | | | | | | | | INCENTIVE COMPENSATION PAYOUTS | | | | | | | | | | | Incentive Adjusted EBIT(a) | | $952 | M | | $909 | M | | $808 | M | | ($1,047 | M) | | $666 | M | | Incentive Adjusted ROIC | | 10.0 | % | | 12.8 | % | | 11.2 | % | | (8.5 | %) | | 7.0 | % | Annual bonus payout as a % of Target on Incentive Adjusted EBIT measure(b) | | 96 | % | | 89 | % | | 44 | % | | 0 | % | | 128 | % | 3-year TSR percentile ranking within the S&P 500(c) | | 10%ile | | 24%ile | | 20%ile | | N/A | | N/A | | PSU vesting (payout as a % of Target) | | 0 | % | | 0 | % | | 0 | % | | N/A (d) | | 0 | % |
(a) In fiscal year 2021, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to be more reflective of business performance. (b) For the CEO and the President and Chief Brand Officer, actual bonus payouts as a percent of target for fiscal years 2017, 2018, 2019, 2020 and 2021 were 94%, 63%, 47%, 0% and 128%, respectively. (c) 2019 PSU grant results are based on internal measures. (d) No PSU performance cycles ended in fiscal year 2020. Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under Generally Accepted Accounting Principles (“GAAP”)GAAP and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other GAAP financial measures prepared in accordance with GAAP.measures. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures. In fiscal year 2021, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to be more reflective of business performance. PSU vesting as shown in the table above correspondscorresponds to the performance periods ending in fiscal years 20142017 through 2018.2021. Three-year Total Shareholder Return (“TSR”)TSR percentile ranking is based on our relative TSR performance over three-year rolling periods between fiscal years 20122015 and 20182019 versus the comparator group. BeginningS&P 500, with the 2014 – 2016 performance period,exception of the 2019 PSU grant. For the 2019 PSU grant, we changed our comparator groupperformance measure from relative TSR to internal measures, structured with two performance periods. Two-thirds of the PSUs granted in 2019 had a three-year performance period which ended January 29, 2022. At the end of the performance cycle, our retail peer group toFree Cash Flow Growth and EBIT Margin % did not meet the Standardminimum thresholds, required for payout. As a result, none of these PSUs vested. One-third of the PSUs granted in 2019 had a one-year performance period which ended February 1, 2020. As disclosed in our 2020 Proxy Statement, none of these PSUs vested as our Free Cash Flow Growth and Poor’s 500. See page 37 to learn more about long-term incentive pay. EBIT Margin % did not meet the minimum thresholds required for payout. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | GRANT REALIZABLE VALUES | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | PSUs (realizable value as a % of grant value) | | 0 | % | | N/A | | 0 | % | | N/A | | N/A | | RSUs (realizable value as a % of grant value) | | 93 | % | | 64 | % | | 71 | % | | 112 | % | | 66 | % | | Stock options (realizable value as a % of grant value) | | 5 | % | | N/A | | 0 | % | | 95 | % | | 0 | % |
| | | | | | | | | | | | | | | | | | GRANT REALIZABLE VALUES | | 2014 |
| | 2015 |
| | 2016 |
| | 2017 |
| | 2018 |
| | PSUs (realizable value as a % of grant value) | | 0 | % | | 0 | % | | 0 | % | | 51 | % | | N/A |
| | RSUs (realizable value as a % of grant value) | | 94 | % | | 75 | % | | 111 | % | | 111 | % | | 94 | % | | Stock options (realizable value as a % of grant value) | | 38 | % | | 0 | % | | 6 | % | | 6 | % | | N/A |
|
Realizable values, shownreflected above, are based on the actual valuevalues at time of vest and current unvested values using our 20182021 fiscal year end stock price of $45.33 and current performance for the outstanding PSUs granted in 2017 (which were tracking at 50% payout as of the end of the fiscal year),$21.85, shown as a percent of grant value. PSUs, restricted stock units (“RSUs”)RSUs and stock options are shown in the column matching the year of grant. The PSUs granted on March 9, 2020 were cancelled on August 18, 2020, as discussed on page 43, and are not reflected in the above table. The CPCC reviews these results and other analyses with the goal of ensuring that the NEOs’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the CPCC believes that total direct compensation for our NEOs reflects our pay-for-performance philosophy and is well aligned with shareholder interests. | | | | | | | | | | | | | | | The Compensation Committee reviews these results and other analyses with the goal of ensuring that the Named Executive Officers’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the Compensation Committee believes that total direct compensation for our Named Executive Officers reflects our pay-for-performance objective and is well aligned with shareholder interests. | | 2022 Proxy Statement | 34 | |
NORDSTROM, INC. - 2019 Proxy Statement 31
COMPENSATION OF EXECUTIVE OFFICERS
Effective Corporate Governance Reinforces Our Compensation Program Our compensation philosophy for our executive team, including our Named Executive Officers,NEOs, is reflected in governance practices that support the needs of our business, drive performance and align with our shareholders’ long-term interests. Below is a summary of what we do and don’t do in that regard. | | | | | | | | | | | | | | | | WHAT WE DO | | WHAT WE DON’T DO | þü | Pay for performance: Our compensation program for Named Executive OfficersNEOs emphasizes variable pay over fixed pay, with at least 70% of each Named Executive Officer’sNEO’s target compensation linked to our financial or market results. | | Ø | Provide employment agreements. | þü | Retain meaningful stock ownership guidelines:Our expectations for ownership align executives’ interests with those of our shareholders, and all Named Executive OfficersNEOs have exceeded their targets. | | Ø | Offer separation benefits to Named Executive OfficersNEOs who are Nordstrom family members. | þü | Mitigate undue risk: We have caps on potential performance-based bonus payments, a clawback policy on performance-based compensation and active and engaged oversight and risk management systems, including those related to compensation-related risk. | | Ø | Offer special perquisites to our Named Executive Officers.NEOs. | | Ø | | Maintain separate change in control agreements. | þü | Engage an independent compensation consulting firm:The Compensation Committee’sCPCC’s consultant does not provide any other services to the Company. | | Ø | Gross up taxes, except in the case of selected relocation expenses. | þü | Apply conservative post-employment and change in control provisions: Executive Officers are subject to provisions in the same manner as those for our broader employee population. provisions. | | Ø | Reprice underwater stock options. | þü | Limit accelerated vesting:Our equity plan provides for accelerated vesting of equity awards after a change in control only if an executive is involuntarily terminated by the Company or resigns for good reason, a provision referred to as a “double trigger.” | | Ø | Issue grants below 100% fair market value. | | Ø | | Pay dividends on any unearned or unvested equity awards. | þü | Restrict pledging activity: All Executive Officers are subject to pre-clearance requirements and restrictions. | | Ø | Permit hedging or short-sale transactions. | þü | Receive strong shareholder support: Each year since 2011, more than 90% of the votes cast on the matter have been in favorsupportive of our compensation programs. | | Ø | Count pledged shares towardstoward stock ownership targets. |
| | Context for Understanding Our Compensation Program and Decisions |
This section provides background on the roles involved in determining compensation for our Named Executive Officers, our use of market data and the companies selected for our peer group.
Our Roles in Determining Compensation are Well Defined
Compensation Committee
Our Compensation Committee (“Committee”) oversees the development and delivery of our pay and benefits philosophy and compensation plans for the Named Executive Officers and other executives as described in the Committee Charter on our website at investor.nordstrom.com.
As part of that oversight, the Committee ensures the Named Executive Officers’ aggregate compensation aligns with shareholder interests by reviewing analyses that include:
Cash alignment to evaluate the short-term incentive payouts relative to our financial performance.
Relative pay and performance to compare the percentile rankings of our total direct compensation (base salary + performance-based bonus + long-term incentives) with financial performance metrics of our peer group.
32 NORDSTROM, INC. - 2019 Proxy Statement
Compensation Committee Consultant
The Committee’s independent executive compensation consulting firm, Semler Brossy Consulting Group, LLC (“Semler Brossy”), is retained by, and reports directly to, the Committee. A consultant from that firm attends the Committee meetings in person or by phone, and in support of the Committee’s role, provides independent expertise on market practices, compensation program design and related subjects as described on page 15. Semler Brossy provides services only as directed by the Committee. During fiscal year 2018, Semler Brossy’s services included review of pay programs, performance goal-setting, alignment of pay and performance and other pay-related matters specific to the Committee’s Charter.
Management
Our Co-Presidents provide input to the Committee on the level and design of compensation elements for the Named Executive Officers and other Executive Officers, excluding themselves. Our Chief Human Resources Officer joins the Co-President(s) in Committee meetings to provide perspective and expertise relevant to the agenda. Management supports the Committee’s activity by providing analyses and recommendations developed internally or occasionally with the assistance of external consulting firms other than the Committee’s consulting firm.
Market Data Provides a Reference Point for Compensation
The Committee believes that knowledge of market practices, particularly those of our peers listed below, is helpful in assessing the design and targeted level of our executive compensation package. In reviewing peer group information, the Committee uses survey data provided by external consultants, monitors general market movement for executive pay and references proxy statements for specific roles.
When the Committee reviews market data, they consider the 50th percentile (median) of our peer group as a reference point, rather than a policy, for positioning target total direct compensation. Target opportunities for individual pay elements vary by executive role based on scope of responsibilities and expected contributions.
Erik Nordstrom, Peter Nordstrom and Blake Nordstrom’s target total direct compensation for 2018 was below our peer group median, as it has been in previous years. Based on the Committee’s review of relevant market data and internal pay equity, the Committee believes the target total direct compensation for Anne Bramman, Kenneth Worzel, and Christine Deputy was within a competitive range of the peer group median. Actual pay for the Named Executive Officers can exceed our established targets or peer group actual pay through the variable compensation elements when pre-determined performance milestones are achieved. Due to challenging business circumstances, actual or realizable pay for the past few years has been below target, as shown on page 31.
Peer Group Companies Represent Our Business
Each year, the Committee reviews the appropriateness of our peer group for comparison on pay and related practices. While the companies represent prominent brands and specialty retailers that are relevant to Nordstrom, they may not always have a direct match to our product offerings or annual revenue. However, the peer group companies generally meet the following selection criteria:
collective representation of our primary business areas including our Full-Price, Off-Price, in store, and online business and private label products;
some overlap with our industry group as defined by institutional shareholders and shareholder service organizations;
general compatibility with our compensation strategy through a competitive offering of the primary pay elements of base salary, performance-based bonus and long-term incentives; and
public company subject to similar market pressures with a track record of sustainability.
Our peer group used for evaluating compensation for fiscal year 2018 was comprised of the following retail companies:
| | | | Bed Bath & Beyond, Inc. | J. C. Penney Company, Inc. | Tapestry, Inc. | Capri Holdings Limited* | Kohl’s Corporation | Tiffany & Co. | Dillard’s, Inc. | L Brands, Inc. | The TJX Companies, Inc. | Estée Lauder Companies Inc. | Macy’s, Inc. | Urban Outfitters, Inc. | Foot Locker, Inc. | Neiman Marcus Group LTD LLC | VF Corporation | Gap, Inc. | Ralph Lauren Corporation | Williams-Sonoma, Inc. | Hudson’s Bay Company | Ross Stores, Inc. | Framework for Executive Compensation |
Our Pay and Benefits Philosophy *•We believe that if our customers win, our employees and shareholders win Formerly known as Michael Kors Holding Limited.– our interests are aligned.
During 2018, as part•We pay for performance by investing in talent that delivers results and demonstrates the behaviors that drive our success, while not encouraging excessive risk taking.
•We deliver competitive pay and benefits for all jobs and differentiate pay for critical jobs that directly impact our ability to deliver on our strategy. •We use objective market data to design flexible pay and benefits programs to help attract, retain, motivate and reward our employees and meet the needs of its annual review of peer companiesspecific talent groups. •We provide equal pay and promotion opportunities for all employees and give them the information they need to be used for compensation comparison purposes, the Committee determined that no changes to the peer group would be made for fiscal year 2019.
NORDSTROM, INC. - 2019 Proxy Statement 33clearly understand their pay and effectively manage their careers.
Each Element of Compensation Has itsIts Own Purpose Our compensation program for Named Executive OfficersNEOs is made up of four primary elements outlined below.on the following table. Each element has its own purpose based on our fundamental premise of pay for performance and our pay and benefits philosophy, described on page 30.above. Additional information is provided below inon the “About Our Compensation Elements: What We Paid in 2018 and Why” section.following pages.
| | | | | | | | | | | | | | | | 35 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS | | | | | | | | | | Compensation Element | | Purpose | Base Salary (See below)Page 36) | | Reflect scope of the role and individual performance through base-line cash compensation. | Performance-Based Annual Cash Bonus (Pages 35 and 36)Page 37) | | Motivate and reward contributions to annual operating performance and long-term business strategy with cash that varies based on results. | Long-Term IncentivesLTIs
(Page 37)Pages 38-39) | | Promote alignment of executive decisions with Company goals and shareholder interests through restricted stock units where value varies with Company stock performance. | Benefits (Page 38)39) | | Provide meaningful and competitive broad-based, leadership and retirement benefits that support healthy lifestyles and contribute to financial security. |
Pay Changes for 20182021 On an annual basis, the CommitteeCPCC reviews base salary, performance-based bonus target opportunity and long-term incentiveLTI target grant value for each of the Named Executive OfficersNEOs in consideration of the upcoming fiscal year. Committee decisions for fiscal year 20182021 are summarized below and shown as a comparisonyear over year comparison. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary
($) | | Performance-Based
Annual Cash Bonus
(Target Opportunity
as a % of Base Salary) | | LTI
Annual Grant
(Target Grant Value
as a % of Base Salary) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 | | Erik B. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | | | Anne L. Bramman | | 800,000 | | | 815,000 | | | 100 | | | 100 | | | 200 | | | 200 | | | Peter E. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | | | Kenneth J. Worzel | | 875,000 | | | 895,000 | | | 125 | | | 125 | | | 250 | | | 250 | | | Edmond Mesrobian | | 775,000 | | | 800,000 | | | 80 | | | 80 | | | 150 | | | 150 | |
In 2021, the CPCC approved modest increases to base salary for Anne Bramman, Kenneth Worzel and Edmond Mesrobian, as shown above, to maintain their relative market competitiveness. These increases were effective March 28, 2021. Erik Nordstrom and Peter Nordstrom’s base salaries remained unchanged. In addition, the CPCC made no changes to target bonus opportunities or to target LTI grant values for any of 2017the NEOs. LTI annual grant in the table above reflects target grant value as a percent of base salary. The CPCC retains discretion to approve grants above and 2018 fiscalbelow targets in any given year end (“FYE”) amounts.to reflect an individual’s contributions to delivering shareholder value. In 2021, the CPCC used its discretion to increase the LTI annual grant for the NEOs to recognize the criticality of their roles in continuing to deliver on strategic objectives that position the company for future growth. •Erik Nordstrom’s LTI annual grant was 488% of base salary to recognize his critical role in delivering results to shareholders over the next few years. The Committee believes these elementsincrease in Erik Nordstrom’s LTI grant value continues to result in competitive pay positioning below median of CEO roles within our peer group. •Peter Nordstrom’s LTI annual grant was 488% of base salary, to recognize the importance of his role in transforming our merchandising capabilities, optimizing inventory flow and expanding our supplier partnership models. •Anne Bramman’s LTI annual grant was 275% of base salary to recognize her role in ensuring the overall compensation program are meetinglong-term sustainability of the expectations fororganization and leading critical initiatives to maintain our pay-for-performancefinancial disciplines. •Kenneth Worzel’s LTI annual grant was 275% of base salary to recognize his leadership on our growing local market strategy and payon the ongoing integration of customer touchpoints that will deliver key customer outcomes and benefits philosophies.capture market share. | | | | | | | | | | | | | | | | | | | | | | | Base Salary ($) | | Performance-Based Annual Cash Bonus (Target Opportunity as a % of Base Salary) | | Long-Term Incentives Annual Grant Target (Grant Value as a % of Base Salary)* | | Name | | FYE 2017 |
| | FYE 2018 |
| | FYE 2017 |
| | FYE 2018 |
| | FYE 2017 |
| | FYE 2018 |
| | Erik B. Nordstrom | | 758,500 |
| | same |
| | 200 |
| | same |
| | 350 |
| | same |
| | Anne L. Bramman | | 750,000 |
| | 775,000 |
| | 90 |
| | same |
| | 175 |
| | same |
| | Peter E. Nordstrom | | 758,500 |
| | same |
| | 200 |
| | same |
| | 350 |
| | same |
| | Kenneth J. Worzel | | 750,000 |
| | 800,000 |
| | 80 |
| | 125 |
| | 150 |
| | 250 |
| | Christine F. Deputy | | 567,000 |
| | 585,000 |
| | 80 |
| | same |
| | 150 |
| | same |
| | Blake W. Nordstrom | | 758,500 |
| | — |
| | 200 |
| | — |
| | 350 |
| | — |
|
| | * | In 2017, actual annual long-term incentive grant values varied from target grant values for certain Named Executive Officers. See page 37 to learn more about the long-term incentive pay elements for 2018.•Edmond Mesrobian’s LTI annual grant was 300% of base salary to recognize his role in delivering significant technology innovation that will be critical to the achievement of our business strategy in years to come.
|
| | About Our Compensation Elements: What We Paid in 2018 and Why |
Base Salary The CommitteeCPCC begins its annual review of base salary for the Named Executive OfficersNEOs through discussion with the Co-PresidentsCEO and the President and Chief Brand Officer on the expectations and achievements of each executive during the previous year, as well as their pay history and pay equity with other internal roles. The CommitteeCPCC then references our pay levels to similar roles in peer companies to ensure they are within a competitive range of the peer group median. Named Executive OfficersNEOs do not necessarily receive increases in base salary every year. When they do, the changes are effective on or about April 1st following their annual performance review, which includes a discussion about individual results against defined expectations. For 2018, Anne Bramman, Kenneth Worzel and Christine Deputy each received increases in base salary of approximately 3% to acknowledge performance and maintain relative market competitiveness. In addition, Kenneth Worzel received a base salary increase in May 2018 from $775,000 to $800,000 when he assumed additional responsibilities as Chief Digital Officer.
34 NORDSTROM, INC. - 2019 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
| | Reflect scope of the role and individual performance through base-line cash compensation. | Performance-Based Annual Cash Bonus The opportunity for annual performance-based cash awards under our shareholder-approved Nordstrom, Inc. Executive Management Bonus Plan (“Executive Management Bonus Plan”) is designed(Page 37)
| | Motivate and reward contributions to focus the Named Executive Officers on the alignment between annual operating performance and long-term business strategy. The Committee establishes the following criteria in developing the annual bonus arrangements:Target bonus opportunity: In determining the target percentage of base salary, the Committee takes into account the mix of pay elements, market pay information for similar roles within our peer group and the internal relationship between roles within the Company.
In support of our pay-for-performance philosophy, the maximum bonus payout, which is associatedstrategy with superior performance, is 2.5 times an executive’s target bonus opportunity. This maximum is higher than is common among our retail peers because we believe it is important to continue encouraging and paying rewards when we achieve truly superior results. Under our approach, truly superior results are rarely achieved. In the past nine years, we have not paid out bonuses in excess of 150% of target except for fiscal year 2010, when the payout was 200% of target.
In November 2017, the Committee approved an increase in Kenneth Worzel’s target bonus opportunity from 80% to 90% of base salary, effective at the beginning of fiscal year 2018. In May 2018, the Committee approved increasing his target bonus opportunity to 125%, effective as of the beginning of fiscal year 2018, to recognize his additional responsibilities as Chief Digital Officer.
Performance measures: The Committee establishes the performance measures to focus executives on the most important annual and long-term strategic goals. For fiscal year 2018, the Named Executive Officers 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 EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders.
|
| | – | Incentive EBITto 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.
|
| | – | Individual Measureto 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 following charts show the mix of financial and individual components of the bonus opportunity for the Co-Presidents and other Named Executive Officers for fiscal year 2018.
* Incentive EBIT measure is subject to the Incentive Adjusted ROIC threshold.
Performance measure milestones: The Committee defines financial milestones for Incentive Adjusted ROIC (as a threshold) and Incentive EBIT (as a range)cash that relate to varying percentages of bonus payout. The difficulty level in achieving the milestones reflects the Committee’s belief that there should be a balance between executive pay opportunity, reinvestment in the Company and return to shareholders. Quantitative and qualitative goals were established for the individual bonus measures.
NORDSTROM, INC. - 2019 Proxy Statement 35
In accordance with our bonus plan, Incentive Adjusted ROIC and Incentive EBIT achievement used to determine bonus payout may differ from ROIC and EBIT, as reported in our Form 10-K filed with the SEC, due to the exclusion of certain one-time gains or losses. This is the case for 2018 where achievements reflect a non-operating related adjustment not included in the financial plan. Incentive Adjusted ROIC and Incentive EBIT are not measures of financial performance under GAAP and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures.
| | – | Our Incentive Adjusted ROIC for our Named Executive Officers other than the Co-Presidents was 12.8% for fiscal 2018, exceeding our threshold goal of 9.5%. This result reflects an adjustment that the Committee approved to remove the impact of an estimated $72 million non-operating credit-related charge (see page 42 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019). The Committee did not approve this adjustment to Incentive Adjusted ROIC for the Co-Presidents. For that reason, their Incentive Adjusted ROIC result was 12.0%, which also exceeded the threshold goal of 9.5%.
|
| | – | Our Incentive EBIT achievement fell below our target goal of $941 million, warranting a payout level of less than 100%. As shown in the table below, the Incentive EBIT achievement for the Co-Presidents was 63%, and was 89% for the other Named Executive Officers. This achievement includes the above-noted adjustment to remove the impact of an estimated $72 million non-operating credit-related charge for the Named Executive Officers, excluding the Co-Presidents. |
Achievement results on the individual bonus measures varied. Performance against the quantitative and qualitative goals was evaluated by the Co-Presidents and the payout results were approved by the Committee.
| | – | After reviewing the Company’s Full-Price sales, Off-Price sales, selling, general and administrative expenses and free cash flow results for the fiscal year, the Committee determined that Anne Bramman achieved 100% of her target performance with respect to the aggregate individual performance measures.
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| | – | After reviewing the Company’s Full-Price sales, Full-Price EBIT and total sales, and the Company’s market share results for the Los Angeles market, the Committee determined that Kenneth Worzel achieved 75% of his target performance with respect to the aggregate individual performance measures. |
| | – | After reviewing the Company’s Full-Price sales, Off-Price sales, selling, general and administrative expenses and progress on organizational capabilities and effectiveness, the Committee determined that Christine Deputy achieved 100% of her target performance with respect to the aggregate individual performance measures. |
The performance-based annual cash bonus results are summarized in the following table.
2018 Bonus Measures, Incentive EBIT Milestones, Individual Measure Achievement and Total Bonus Payout
| | | | | | | | | | | | | | | | | | | | Milestones | | Total Bonus Payout (as a % of Target) |
| | Named Executive Officer | Bonus Measures | Weight |
| Threshold (25%) |
| Target (100%) |
| Superior (250%) | Result / Payout % |
| | Co-Presidents | Incentive EBIT | 100 | % |
| $728 | M |
| $941 | M | ≥$1,153M | $837M/ 63% |
| 63 | % | | Subject to Incentive Adjusted ROIC threshold | | 9.5 | % | | | 12.0 | % | | Anne L. Bramman | Incentive EBIT | 67 | % |
| $728 | M |
| $941 | M | ≥$1,153M | $909M/ 89% |
| 93 | % | | Subject to Incentive Adjusted ROIC threshold | | 9.5 | % | | | 12.8 | % | | Individual Measure | 33 | % | | | | 100 | % | | Kenneth J. Worzel | Incentive EBIT | 67 | % |
| $728 | M |
| $941 | M | ≥$1,153M | $909M/ 89% |
| 84 | % | | Subject to Incentive Adjusted ROIC threshold | | 9.5 | % | | | 12.8 | % | | Individual Measure | 33 | % | | | | 75 | % | | Christine F. Deputy | Incentive EBIT | 67 | % |
| $728 | M |
| $941 | M | ≥$1,153M | $909M/ 89% |
| 93 | % | | Subject to Incentive Adjusted ROIC threshold | | 9.5 | % | | | 12.8 | % | | Individual Measure | 33 | % | | | | 100 | % |
| | * | The Incentive EBIT achievement for the Co-Presidents was less than that for the other Named Executive Officers as the Committee determined that the adjustment they approved to remove the impact of an estimated $72 million non-operating credit-related charge described above would not apply for the Co-Presidents. Also, the Committee approved a discretionary bonus for Blake Nordstrom in the amount of $82,026 so that the sum of his performance-based bonus and the 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. |
36 NORDSTROM, INC. - 2019 Proxy Statement
Long-Term Incentives
Annual grants of equity under our shareholder-approved equity incentive plan are intended to provide the Named Executive Officers with additional incentive to create shareholder value and receive financial rewards. The long-term incentive value that determines the size of the annual grant to Named Executive Officers is expressed as a percentage of base salary as shown on page 34.
In establishing the long-term incentive value at grant for each Named Executive Officer, the Committee considers the mix of pay elements, market pay information for similar roles within our peer group, our annual share usage and dilution, performance and internal equity of grant size by role. The Committee typically approves annual grants of equity awards during the February Committee meeting, which is scheduled at least a year in advance. The February meeting occurs after performance results for the prior year are known, which allows the Committee to align compensation elements with our performance and business goals.
For fiscal year 2018 only, the grant for all of the Company’s Executive Officers, including the Named Executive Officers, was changed from a mix of restricted stock units, performance share units and stock options to 100% restricted stock units, vesting equally over four years, which is consistent with the mix for all other eligible employees. This change resulted, in part, from the Committee’s deliberations following the announcement by the Nordstrom family group that it was exploring a potential going private transaction and the Committee’s determination to make awards which would remain relevant to executives and have some retention effect in the context of the uncertainty surrounding any potential transaction. The 2018 grant mix was a one-time response to a special circumstance and was not indicative of the Company’s pay strategy going forward. As described in the “Changes for 2019” section on page 39, the long-term incentive mix for 2019 is composed of performance-based equity and stock options for Erik Nordstrom and Peter Nordstrom and performance-based equity and restricted stock units for the other Named Executive Officers.
In November 2017, the Committee approved an increase in Kenneth Worzel’s target equity grant value from 150% to 175% of base salary, effective at the beginning of fiscal year 2018. In May 2018, the Committee approved increasing his target equity grant value to 250%, effective with the 2019 annual equity grant, to recognize his additional responsibilities as Chief Digital Officer.
One-Time Equity Awards
In March 2018, the Committee determined to award Anne Bramman, Kenneth Worzel and Christine Deputy restricted stock unit grants, equal to 300% of their respective base salaries, to mitigate retention risk and to recognize their critical roles in their respective functions and in supporting the Company’s key strategies over the next few years. The grants were made on March 6, 2018, the first day of the open trading window following Committee approval, and vest in four equal annual installments.
2016 Performance Share Units Did Not Pay Out
Performance share units for the 2016 – 2018 fiscal year performance cycle were grantedvaries based on the vesting schedule below. At the end of the performance cycle, our TSR did not meet the minimum threshold of greater than the 50th percentile of the Standard & Poor’s 500, which is required for payout. As a result, none of these performance share units vested.results.
| LTIs | | | | Required Percentile Rank for Vesting | % of Granted Performance Share Units Paid Out at Vesting |
| >90th | 175 |
| >80th | 150 |
| >75th | 125 |
| >65th | 100 |
| >50th | 75 |
| ≤50th | — |
|
2017 Performance Share Units are Still in Process
The 3-year performance cycle for the 2017 performance share units runs from January 29, 2017 through February 1, 2020. The vesting schedule for the 2017 performance share unit grant is shown below. The peer group for this grant consists of companies in the Standard & Poor’s 500 as of the first day of the performance cycle.
| | | | Required Percentile Rank for Vesting | % of Granted Performance Share Units Paid Out at Vesting |
| >85th | 175 |
| >75th | 150 |
| >65th | 125 |
| >55th | 100 |
| >40th | 50 |
| ≤40th | — |
|
NORDSTROM, INC. - 2019 Proxy Statement 37
Stock Ownership Guidelines Align Executives and Shareholders
Ownership of Common Stock by our Named Executive Officers and other executive officers is encouraged by management and the Board and our stock ownership guidelines were formally established in 2004. Ownership shares are made up of all forms of Common Stock, as well as vested performance share units that are deferred and unvested restricted stock units. Ownership shares do not include unvested or vested stock options, unvested performance share units or pledged shares.
The Named Executive Officers and other Executive Officers have an annual share target defined as base salary on each April 1st multiplied by their ownership multiple of base salary divided by a 52-week average closing stock price. The ownership multiples of base salary depend on the executive’s role in the Company and are as shown in the following table for the Named Executive Officers. The Committee has assigned these particular multiples to match or exceed market practice, and to represent a significant portion of the overall compensation package to reinforce the
| | Promote alignment of management’s decision-makingexecutive decisions with Company goals and shareholder interests. Executives new to theinterests where value varies with Company have five years to achieve their ownership target.| stock performance. | | | Position | Multiple of Base Salary Used to Establish Ownership Target | Co-President | 10x | Chief Financial Officer | 4x | Chief Digital Officer and President, Nordstrom.com | 3x | Chief Human Resources Officer | 3x |
Under our guidelines, Named Executive Officers and other Executive Officers are required to conduct any open market transactions in Common Stock only in accordance with an SEC Rule 10b5-1 trading plan. These plans predetermine the timing, number of shares and price at which an Executive Officer may buy or sell Company shares. The Executive Officers must also achieve and retain a minimum holding of 100% of their ownership targets before they may sell Company shares in the market.
The Committee regularly reviews stock ownership status for the Named Executive Officers. All of the Named Executive Officers have exceeded their ownership targets.
Benefits The Company offers the Named Executive Officers a comprehensive program of(Page 39)
| | Provide meaningful and competitive broad-based, leadership and retirement benefits. Their purpose varies by benefit, but in general enhances total compensation with meaningful and competitive offeringsbenefits that support healthy lifestyles and contribute to financial security. These benefits are regularly reviewed for consistency with our pay and benefits philosophy, organizational culture and market practices. Additional information on 2018 benefits is provided as noted below. | | |
Pay Changes for 2021 On an annual basis, the CPCC reviews base salary, performance-based bonus target opportunity and LTI target grant value for each of the NEOs in consideration of the upcoming fiscal year. Committee decisions for fiscal year 2021 are summarized below and shown as a year over year comparison. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary
($) | | Performance-Based
Annual Cash Bonus
(Target Opportunity
as a % of Base Salary) | | LTI
Annual Grant
(Target Grant Value
as a % of Base Salary) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 | | Erik B. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | | | Anne L. Bramman | | 800,000 | | | 815,000 | | | 100 | | | 100 | | | 200 | | | 200 | | | Peter E. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | | | Kenneth J. Worzel | | 875,000 | | | 895,000 | | | 125 | | | 125 | | | 250 | | | 250 | | | Edmond Mesrobian | | 775,000 | | | 800,000 | | | 80 | | | 80 | | | 150 | | | 150 | |
In 2021, the CPCC approved modest increases to base salary for Anne Bramman, Kenneth Worzel and Edmond Mesrobian, as shown above, to maintain their relative market competitiveness. These increases were effective March 28, 2021. Erik Nordstrom and Peter Nordstrom’s base salaries remained unchanged. In addition, the CPCC made no changes to target bonus opportunities or to target LTI grant values for any of the NEOs. LTI annual grant in the table above reflects target grant value as a percent of base salary. The CPCC retains discretion to approve grants above and below targets in any given year to reflect an individual’s contributions to delivering shareholder value. In 2021, the CPCC used its discretion to increase the LTI annual grant for the NEOs to recognize the criticality of their roles in continuing to deliver on strategic objectives that position the company for future growth. •Erik Nordstrom’s LTI annual grant was 488% of base salary to recognize his critical role in delivering results to shareholders over the next few years. The increase in Erik Nordstrom’s LTI grant value continues to result in competitive pay positioning below median of CEO roles within our peer group. •Peter Nordstrom’s LTI annual grant was 488% of base salary, to recognize the importance of his role in transforming our merchandising capabilities, optimizing inventory flow and expanding our supplier partnership models. •Anne Bramman’s LTI annual grant was 275% of base salary to recognize her role in ensuring the long-term sustainability of the organization and leading critical initiatives to maintain our financial disciplines. •Kenneth Worzel’s LTI annual grant was 275% of base salary to recognize his leadership on our growing local market strategy and on the ongoing integration of customer touchpoints that will deliver key customer outcomes and capture market share. •Edmond Mesrobian’s LTI annual grant was 300% of base salary to recognize his role in delivering significant technology innovation that will be critical to the achievement of our business strategy in years to come. Base Salary The CPCC begins its annual review of base salary for the NEOs through discussion with the CEO and the President and Chief Brand Officer on the expectations and achievements of each executive during the previous year, as well as their pay history and pay equity with other internal roles. The CPCC then references similar roles in peer companies to ensure they are within a competitive range of the peer group median. NEOs do not necessarily receive increases in base salary every year. When they do, the changes are effective on or about April 1st following their annual performance review, which includes a discussion about individual results against defined expectations. | | | | | | | | | | | | | | | | | | 2022 Proxy Statement | 36 | | | | Benefit | | Where to Learn More | Broad-Based | ● | Company contribution to medical, dental and vision coverage; short- and long-term disability; life insurance; adoption assistance; and employee referral assistance. Employee access to accident insurance; health savings account and flexible spending accounts. Employee Stock Purchase Plan. Merchandise discount. Paid time off. | ● | For merchandise discount, see All Other Compensation in Fiscal Year 2018, footnote (a) on page 44. | Leadership | ● | Salary continuance; long-term disability coverage; life insurance
| ● | For long-term disability and life insurance, see All Other Compensation in Fiscal Year 2018, footnote (d) on page 45. | | ● | Deferred Compensation Plan; Company match and discretionary profit-based match for eligible participants | ● | See Nonqualified Deferred Compensation beginning on page 53 and All Other Compensation in Fiscal Year 2018, footnote (c) on page 44. | | ● | Leadership Separation Plan | ● | See Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2018, footnote (e) on page 59. | Retirement | ●
| 401(k) match and discretionary profit-based match | ● | See All Other Compensation in Fiscal Year 2018, footnote (b) on page 44. | ● | Retiree health care (closed to new entrants in 2013)
| ● | See Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2018, footnote (d) on page 59. | ● | Supplemental Executive Retirement Plan (closed to new entrants in 2012; annual benefit capped for current participants) | ● | See Pension Benefits beginning on page 51. |
38 NORDSTROM, INC. - 2019 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
Changes for 2019
Each year, the Committee reviews the design of our total compensation elements and makes changes as needed to improve alignment with our pay and benefits philosophy. In consideration of recommendations made by the Committee’s compensation consultant, the following changes were made for fiscal year 2019:
Base Salary Anne Bramman(Page 36)
| | Reflect scope of the role and Christine Deputy each received increases of approximately 3%, effective April 1, 2019, to maintain their relative market competitiveness.Erik Nordstrom, Peter Nordstrom and Kenneth Worzel’s base salaries remained unchanged.
individual performance through base-line cash compensation. |
Performance-Based Annual Cash Bonus Anne Bramman’s target bonus opportunity as a percent(Page 37)
| | Motivate and reward contributions to annual operating performance and long-term business strategy with cash that varies based on results. |
LTIs (Pages 38-39) | | Promote alignment of base salary increased from 90%executive decisions with Company goals and shareholder interests where value varies with Company stock performance. |
Benefits (Page 39) | | Provide meaningful and competitive broad-based, leadership and retirement benefits that support healthy lifestyles and contribute to 100% to maintain relative market competitivenessfinancial security. |
Pay Changes for 2021
On an annual basis, the CPCC reviews base salary, performance-based bonus target opportunity and LTI target grant value for each of the NEOs in consideration of the upcoming fiscal year. Committee decisions for fiscal year 2021 are summarized below and shown as a year over year comparison.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Base Salary
($) | | Performance-Based
Annual Cash Bonus
(Target Opportunity
as a % of Base Salary) | | LTI
Annual Grant
(Target Grant Value
as a % of Base Salary) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Name | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 | | FYE 2020 | | FYE 2021 |
| Erik B. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | |
| Anne L. Bramman | | 800,000 | | | 815,000 | | | 100 | | | 100 | | | 200 | | | 200 | |
| Peter E. Nordstrom | | 758,500 | | | 758,500 | | | 200 | | | 200 | | | 350 | | | 350 | |
| Kenneth J. Worzel | | 875,000 | | | 895,000 | | | 125 | | | 125 | | | 250 | | | 250 | |
| Edmond Mesrobian | | 775,000 | | | 800,000 | | | 80 | | | 80 | | | 150 | | | 150 | |
In 2021, the CPCC approved modest increases to base salary for Anne Bramman, Kenneth Worzel and Edmond Mesrobian, as shown above, to maintain their relative market competitiveness. These increases were effective March 28, 2021. Erik Nordstrom and Peter Nordstrom’s base salaries remained unchanged.
In addition, the CPCC made no changes to target bonus opportunities or to target LTI grant values for any of the NEOs.
LTI annual grant in the table above reflects target grant value as a percent of base salary. The CPCC retains discretion to approve grants above and below targets in any given year to reflect an individual’s contributions to delivering shareholder value. In 2021, the CPCC used its discretion to increase the LTI annual grant for the NEOs to recognize the criticality of their roles in continuing to deliver on strategic objectives that position the company for future growth.
•Erik Nordstrom’s LTI annual grant was 488% of base salary to recognize his critical role in delivering results to shareholders over the next few years. The increase in Erik Nordstrom’s LTI grant value continues to result in competitive pay positioning below median of CEO roles within our peer group.
•Peter Nordstrom’s LTI annual grant was 488% of base salary, to recognize the importance of his role in transforming our merchandising capabilities, optimizing inventory flow and expanding our supplier partnership models.
•Anne Bramman’s LTI annual grant was 275% of base salary to recognize her role in ensuring the long-term sustainability of the organization and leading critical initiatives to maintain our financial disciplines.
•Kenneth Worzel’s LTI annual grant was 275% of base salary to recognize his leadership on our growing local market strategy and on the ongoing integration of customer touchpoints that will deliver key customer outcomes and capture market share.
•Edmond Mesrobian’s LTI annual grant was 300% of base salary to recognize his role in delivering significant technology innovation that will be critical to the achievement of our business strategy in years to come.
Base Salary
The CPCC begins its annual review of base salary for the NEOs through discussion with the CEO and the President and Chief Brand Officer on the expectations and achievements of each executive during the previous year, as well as their pay history and pay equity with other internal roles. The CPCC then references similar roles in peer companies to ensure they are within a competitive range of the peer group median. NEOs do not necessarily receive increases in base salary every year. When they do, the changes are effective on or about April 1st following their annual performance review, which includes a discussion about individual results against defined expectations.
COMPENSATION OF EXECUTIVE OFFICERS
Performance-Based Annual Cash Bonus
The opportunity for annual performance-based cash awards under our shareholder-approved Nordstrom, Inc. EMBP is designed to focus the NEOs on the alignment between annual operating performance and long-term business strategy.
In determining the target bonus opportunities, the CPCC takes into account the mix of pay elements, market pay information for similar roles within our peer group and the internal relationship between roles within the Company.
In support of our pay-for-performance philosophy, the maximum bonus payout, which is associated with superior performance, is 2.5 times an executive’s target bonus opportunity. This maximum is higher than is common among our retail peers because we believe it is important to continue encouraging and paying rewards when we achieve truly superior results. Under our approach, truly superior results are rarely achieved. In the past 10 years, we have not paid out bonuses in excess of 150% of target.
The following table shows the measures, weighting and opportunity for individual differentiation for the bonus opportunity for the CEO and President and Chief Brand Officer, and for the other NEOs for fiscal year 2021. The CPCC maintained the same financial performance measures of Incentive Adjusted EBIT, which emphasizes the importance of earnings and its role in driving shareholder value, and Incentive Adjusted ROIC, which ensures our overall performance aligns directly with shareholder returns over the long term.
In 2021, the bonus opportunity for the NEOs, excluding the CEO and President and Chief Brand Officer, was modified to place even greater emphasis on delivering profitable results by eliminating individual performance as a separate weighted metric. The CPCC retained the ability to differentiate payouts based on individual contributions and execution against goals. Any individual bonus differentiation is applied after the calculation of outcomes on the financial performance measures described below.
| | | | | | | | |
| Measure and Weighting | Opportunity for Individual Bonus Differentiation |
| |
| CEO and President and Chief Brand Officer | 100% Incentive Adjusted EBIT subject to achievement of the Incentive Adjusted ROIC threshold | No |
| Other NEOs | 100% Incentive Adjusted EBIT subject to achievement of the Incentive Adjusted ROIC threshold | Yes |
The CPCC defines financial milestones for Incentive Adjusted ROIC (as a threshold) and Incentive Adjusted EBIT (as a range) that relate to varying percentages of bonus payout. The difficulty level in achieving the milestones reflects the CPCC’s belief that there should be a balance between executive pay opportunity, reinvestment in the Company and return to shareholders.
In accordance with our EMBP, Incentive Adjusted EBIT and Incentive Adjusted ROIC achievement used to determine bonus payout may differ from EBIT and ROIC, as reported in our 2021 Annual Report, due to the exclusion of certain one-time gains or losses. In fiscal year 2021, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to be more reflective of business performance. Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under GAAP and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures.
2021 Bonus Measure Outcomes and Payouts
Our Incentive Adjusted EBIT achievement exceeded the threshold milestone of $612 million and Incentive Adjusted ROIC exceeded the threshold of 5.5%, resulting in a 128% payout. In fiscal year 2021, our Incentive Adjusted EBIT measure excluded certain performance-based compensation elements in order to be more reflective of business performance.
The bonus payouts for Anne Bramman, Kenneth Worzel and Edmond Mesrobian were not differentiated for individual performance. Each individual’s performance against strategic priorities was evaluated by the CEO and the President and Chief Brand Officer and the payout results were approved by the CPCC.
The performance-based annual cash bonus results are summarized in the following table.
| | | | | | | | | | | | | | | | | |
| | Milestones | |
| Name | Bonus Measures | Threshold | Target | Superior | Actual |
| All NEOs | Incentive Adjusted EBIT | $375 | M | $612 | M | $900 | M | $666M |
| % of Payout | 25 | % | 100 | % | 250 | % | 128 | % |
| Subject to Incentive Adjusted ROIC threshold | 5.5% | 7.0 | % |
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| 37 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
LTIs
Annual grants of LTI under our shareholder-approved EIP are intended to provide the NEOs with additional incentive to create shareholder value and receive financial rewards. In establishing the LTI annual grant value for each NEO, the CPCC considers the mix of pay elements, market pay information for similar roles within our peer group, our annual share usage and dilution, performance and internal equity of grant size by role. The CPCC typically approves LTI annual grants during the February CPCC meeting, which is scheduled at least a year in advance. The February meeting occurs after performance results for the prior year are known, which allows the CPCC to align compensation elements with our performance and business goals.
Due to the challenges of setting goals for PSUs in a highly variable environment, the CPCC approved changes in both the mix and vesting of LTI grants for the NEOs for fiscal year 2021.
•Erik Nordstrom and Peter Nordstrom’s target LTI mix changed from 40% stock options and 60% PSUs to 100% price-vested stock options. Stock option vesting changed from 25% each year over four years to 50% on March 10, 2024 and 50% on March 10, 2025, to account for the elimination of PSUs, which typically had a three-year cliff vest, and to emphasize the long-term nature of the award. Vesting is subject to the condition that the average daily closing price of our Common Stock meets or exceeds $45 per share for any twenty consecutive trading day period prior to March 10, 2025. For reference, our average closing price in fiscal year 2019 (pre-COVID) was $37.
•Anne Bramman, Kenneth Worzel and Edmond Mesrobian’s target LTI mix changed from 40% RSUs and 60% PSUs to 60% RSUs and 40% stock options. The CPCC made no change to RSU vesting, which vest 25% each year over four years. Stock option vesting changed from 25% each year over four years to 50% on March 10, 2024 and 50% on March 10, 2025, to account for the elimination of PSUs, which typically had a three-year cliff vest, and to emphasize the long-term nature of the award.
2019 PSUs Did Not Pay Out
Two-thirds of the PSUs granted in 2019 had a three-year performance period which ended January 29, 2022. At the end of the performance cycle, our Free Cash Flow Growth and EBIT Margin % did not meet the minimum thresholds, as shown below, required for payout. As a result, none of these PSUs vested. One-third of the PSUs granted in 2019 had a one-year performance period which ended February 1, 2020. As disclosed in our 2020 Proxy Statement, none of these PSUs vested as our Free Cash Flow Growth and EBIT Margin % did not meet the minimum thresholds required for payout.
| | | | | | | | |
Performance Measures for Performance Period: February 3, 2019 – January 29, 2022 |
| Free Cash Flow Growth | EBIT Margin % | Percentage of Units that will Vest |
| ≥31.4% | ≥7.1% | 200% |
| 28.9% | 6.8% | 100% |
| 26.3% | 6.5% | 50% |
| <26.3% | <6.5% | 0% |
Stock Ownership Guidelines Align Executives and Shareholders
Ownership of Common Stock by our NEOs and other Executive Officers is encouraged by management and the Board, and our stock ownership guidelines were formally established in 2004. Ownership shares are made up of all forms of Common Stock, as well as vested PSUs that are deferred and unvested RSUs. Ownership shares do not include unvested or vested stock options, unvested PSUs or pledged shares.
The NEOs and other Executive Officers have an annual share target defined as base salary on each April 1st multiplied by their ownership multiple of base salary divided by a 52-week average closing stock price. The ownership multiples of base salary depend on the executive’s role in the Company and are as shown in the following table for the NEOs. The CPCC has assigned these particular multiples to match or exceed market practice, and to represent a significant portion of the overall compensation package to reinforce the alignment of management’s decision-making with shareholder interests. Executives will be deemed to be in compliance with the Stock Ownership Guidelines once their holdings of Common Stock meet or exceed the threshold, and will remain in compliance, notwithstanding any decline in the value of Common Stock, unless and until the executive sells shares. However, a new target will be determined at the time an executive receives a promotion that results in an increased multiple of base salary or in the case of a one-time base salary increase greater than 20%, at which point the executive will have five years to achieve the new target.
| | | | | |
| Position | Multiple of Base Salary Used to Establish Ownership Target |
| Chief Executive Officer | 10x |
Chief Financial Officer role.Long-Term Incentives
The 2019 annual equity grant mix for the Co-Presidents was changed to 60% performance-based equity
| 4x |
President and 40% stock options. This mix is closely aligned with the Company’s pay for performance philosophy. The 2019 annual grant mix for the other Named Executive Officers was changed to 60% performance-based equity and 40% restricted stock units. This mix provides a balance of the key retention and performance objectives of the long-term incentive plan. Performance-based equity was reintroduced into the annual grant mix to support the Company’s communicated forward-looking strategy. Free cash flow growth and EBIT margin percent are the core measures for the performance-based equity with market share serving as a payout modifier. The Committee believes that these measures reflect the Company’s key areas of strategic focus over the next three years. Two-thirds of the performance-based equity grant for 2019 has a three-year performance period. The remaining one-third of the performance-based equity grant for 2019 has a one-year performance period for the core measures and a three-year performance period for the market share modifier.Anne Bramman’s target equity grant value as a percent of base salary increased from 175% to 200% to maintain relative market competitiveness for the Chief FinancialBrand Officer role.
One-Time Option Grant
In February 2019, the Committee approved a one-time stock option award to key leadership to recognize the critical and important role that the executives will play in executing the Company’s communicated forward-looking strategy and delivering results to shareholders over the next few years. Anne Bramman, Kenneth Worzel and Christine Deputy received this award, representing options to purchase 123,554, 159,425 and 69,947 shares, respectively. The stock option award was granted on March 5, 2019, the first business day of the open trading window following the Committee’s approval of the grant. The stock options will vest over four years, with 50% vesting at the end of year three and 50% vesting at the end of year four.
| 10x |
| Chief Customer Officer | 4x |
| Chief Technology Officer | 3x |
COMPENSATION OF EXECUTIVE OFFICERS
Under our guidelines, NEOs and other Executive Officers are required to conduct any open market transactions in Common Stock only in accordance with an SEC Rule 10b5-1 trading plan. These plans predetermine the timing, number of shares and price at which an Executive Officer may buy or sell Company shares. The Executive Officers must also achieve and retain a minimum holding of 100% of their ownership targets before they may sell or otherwise dispose of Company shares.
The CPCC regularly reviews stock ownership status for the NEOs. All of the NEOs have exceeded their ownership targets.
Benefits
The Company offers the NEOs a comprehensive program of broad-based, leadership and retirement benefits. Their purpose varies by benefit, but in general they enhance total compensation with meaningful and competitive offerings that support healthy lifestyles and contribute to financial security. These benefits are regularly reviewed for consistency with our pay and benefits philosophy, organizational culture and market practices.
Additional information on 2021 benefits is provided in the table below.
Compensation Risk Assessment Supports Integrity of the Pay Program
The Committee oversees an extensive review of the Company’s pay-for-performance philosophy, the composition | | Benefit | | Where to Learn More |
Broad-
Based | ● | Company contribution to medical, dental and balance of elements in the compensation package and the alignment of plans with shareholder interests to ensure these practices do not pose a material adverse risk to the organization. The review is conducted every other year as underlying programs and practices are generally consistent over time. The last review, for fiscal year 2018, concluded with the following perspectives:The goals of the Company’s compensation programs are to attract and retain the best talent and to motivate and reward our people in ways that are aligned with the long-term interests of our shareholders. This has been a long-standing objective of our pay-for-performance philosophy. We believe that the strong alignment of our employee compensation plans with performance has served our stakeholders, and in particular, our shareholders, well. The strength of this alignment is regularly reviewed and monitored by the Committee.
As a leading fashion retailer, the Company’s compensation-related risks are generally more straightforward than some other business sectors. We have systems in place to identify, monitor and control risks, making it difficult for a single individual or a group of individuals to expose the Company to material compensation risk.
Our compensation program rewards bothvision coverage; short- and long-term performance. Performance measures are predominantly team-oriented rather than individually focuseddisability; life insurance; adoption assistance; and tiedemployee referral assistance. Employee access to measurable factors that are both transparent to shareholdersaccident insurance; health savings account and drivers of their shareholder return.
The compensation program balances the importance of achieving critical short-term objectives with a focusflexible spending accounts; ESPP and merchandise discount. Paid time off (or Self-Managed Time Away for executives)
| ● | For merchandise discount, see All Other Compensation in Fiscal Year 2021, footnote (a) on realizing strategicpage 44. |
| Leadership | ● | Long-term disability coverage; life insurance
| ● | For long-term priorities. Strong stock ownership guidelines aredisability and life insurance, see All Other Compensation in placeFiscal Year 2021, footnote (c) on page 45. |
| ● | NDCP; including Company match for Company leaders, and mechanisms, such as an executive clawback policy, exist to address inappropriate rewards.
NORDSTROM, INC. - 2019 Proxy Statement 39
The Committee is actively engaged in establishing compensation plans, monitoring these plans during the year and using discretion in making rewards, as necessary.
The Company has active and engaged oversight systems in place. The Audit and Finance Committee and the full Board closely monitor and certify the performance that drives employee rewards through detailed and transparent financial reporting, which is in place to provide strong, timely insight into the performance of the Company.
Basedeligible participants
| ● | See Nonqualified Deferred Compensation beginning on this review, the Committee believes that the Company’s compensation plans do not encourage risk taking that is reasonably likely to have a material adverse effect on the Company.page 52. |
| ● | Executive Compensation Clawback Policy Applies to Performance-Based PayIn February 2008, the Board adopted a formal executive compensation clawback policy that applies to any performance-based bonus, equity, equity equivalent or other incentive compensation awarded to an Executive Officer, beginning in that fiscal year. Under that policy, in the event of a material restatement of the Company’s financial results, the Board will review the circumstances that caused the restatement and consider accountability to determine whether an Executive Officer was negligent or engaged in misconduct. If so, and if the amount or vesting of an award would have been less had the financial statements been correct, the Board will seek to recover compensation from the Executive Officer as it deems appropriate. This policy is in addition to any requirements which might be imposed pursuant to applicable law.
Termination and Change in Control Provisions are Committee-Directed
Under our Leadership SeparationSeverance Plan eligible Company leaders, including certain Named Executive Officers, are entitled to receive severance benefits upon involuntary termination of employment by the Company, due to job elimination, to assist in the transition from active employment. Erik Nordstrom and Peter Nordstrom are not eligible for separation benefits under the Plan. Separation benefits are described in the
| ● | See Potential Payments Upon Termination or Change in Control sectionat Fiscal Year-End 2021, footnote (e) on pages 57 and 58. |
| Retirement | ●
| 401(k) match; 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 next 6% of eligible pay, up to a maximum of 4% of eligible pay and IRC limits | ● | See All Other Compensation in Fiscal Year 2021, footnote (b) on page 59.As described45.
|
| ● | Retiree health care (closed to new entrants in the same section, the Named Executive Officers2013; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are generally not entitled to any payment or accelerated benefit in connection with a change in control of the Company. However, the Named Executive Officers are entitled to accelerated vesting of equity ifparticipants as they experience 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, unless the Committee acts to prevent such acceleration.Tax and Accounting Considerations Underlie the Compensation Elements
The Committee recognizes the tax and regulatory factors that can influence the structure of executive compensation programs, including:
Section 162(m) of the Internal Revenue Code (“IRC”), which generally disallows a tax deduction to public companies for annual compensation over $1 million paid to their Named Executive Officers. Priorwere eligible prior to the enactment of corporate tax reformclosure to new entrants)
| ● | See Potential Payments Upon Termination or Change in 2017 (the “Tax Act”), the IRC generally excluded from the calculation of the $1 million limit compensation that was basedControl at Fiscal Year-End 2021, footnote (d) on the attainment of pre-established, objective performance goals established under a shareholder-approved plan. The exclusionpage 57. |
| ● | SERP (annual benefit capped for performance-based compensation was repealed by the Tax Act, effective for taxable years beginning after December 31, 2017, such that compensation paidcurrent participants; closed to our Named Executive Officersnew entrants in excess of $1 million is not deductible unless it qualifies for transition relief applicable to certain arrangements in place2012; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are participants as of November 2, 2017. The Tax Act also expanded the category of covered officers for purposes of the limitations of Section 162(m). Following passage of the Tax Act, the Committee anticipates that compensation paidthey were eligible prior to the Company’s Named Executive Officers in excess of $1 million will not be deductibleclosure to new entrants) | ● | See Pension Benefits beginning on page 51. |
| | | | | | | | | | | | | | |
| 39 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Changes for 2022
Each year, the CPCC reviews the design of our total compensation elements and makes changes as needed to improve alignment with our pay and benefits philosophy. At the February 2022 meeting, the CPCC approved the following changes for fiscal year 2022:
Base Salary
Anne Bramman’s base salary was increased by 4% effective March 27, 2022, to maintain her relative market competitiveness. The base salaries of all other NEOs remained unchanged.
Performance-Based Annual Cash Bonus
The CPCC determined that the target bonus opportunity as a percent of base salary for the NEOs will remain unchanged for 2022.
LTIs
•Performance-based equity was reintroduced into the LTI annual grant mix. The 2022 target annual grant mix for all NEOs was changed to 60% PSUs and 40% stock options. The PSUs will pay out based on the cumulative sales and EBIT margin % over a three-year performance period. Goals for the PSUs are aligned with the Company’s forward-looking strategy communicated at the February 2021 Investor Event. The CPCC believes that these measures reflect the Company’s key areas of strategic focus over the next three years. The minimum percentage of PSUs that can be earned at the end of the three-year performance cycle is 75% and the maximum is 150%. To emphasize the long-term nature of the award, the stock options will continue to vest 50% at the end of year 3 and 50% at the end of year 4.
•Anne Bramman’s target LTI grant value as a percent of base salary increased from 200% to 250% to maintain her relative market competitiveness for the Chief Financial Officer role. The target LTI grant as a percent of base salary of all other NEOs remained unchanged. The CPCC did not use its discretion to modify any NEO target LTI grants for 2022.
Our Roles in Determining Compensation Are Well-Defined
Compensation, People and Culture Committee
Our CPCC oversees the development and delivery of our pay and benefits philosophy and compensation plans for the NEOs and other executives as described in the CPCC charter on our Investor Relations Website.
As part of that oversight, the CPCC ensures the NEOs’ aggregate compensation aligns with shareholder interests by reviewing analyses that include:
•Cash alignment to evaluate the short-term incentive payouts relative to our financial performance.
•Relative pay and performance to compare the percentile rankings of our total direct compensation (base salary + performance-based bonus + LTIs) with financial performance metrics of our peer group.
CPCC Consultant
The CPCC has retained Semler Brossy. A consultant from the firm attends CPCC meetings and in support of the CPCC’s role, provides independent expertise on market practices, compensation program design and related subjects as described on page 14. Semler Brossy provides services only as directed by the CPCC. During fiscal year 2021, Semler Brossy’s services included a review of executive and Director pay programs, a review of the compensation peer group, and other pay-related matters specific to the CPCC’s charter. With respect to Director pay, Semler Brossy provides its services to the CGNC.
Management
Our CEO and the President and Chief Brand Officer provide input to the CPCC on the level and design of compensation elements for the NEOs and other Executive Officers, excluding themselves. Our Chief Human Resources Officer attends CPCC meetings to provide perspective and expertise relevant to the agenda. Management supports the CPCC’s activity by providing analyses and recommendations developed internally, or occasionally, with the assistance of external consulting firms other than the CPCC’s independent consultant.
Market Data Provides a Reference Point for Compensation
The CPCC believes that knowledge of market practices, particularly those of our peers listed on the following page, is helpful in assessing the design and targeted level of our executive compensation package. In reviewing peer group information, the CPCC uses survey data provided by external consultants, monitors general market movement for executive pay and references proxy statements for specific roles.
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.
COMPENSATION OF EXECUTIVE OFFICERS
Target total direct compensation for 2021 for Erik Nordstrom and Peter Nordstrom was below our peer group median, as it has been in previous years. Based on the CPCC’s review of relevant market data and internal pay equity, the CPCC believes the target total direct compensation for Anne Bramman, Kenneth Worzel and Edmond Mesrobian was within a competitive range of the peer group median. Actual pay for the NEOs can exceed our established targets or peer group actual pay through the variable compensation elements when pre-determined performance milestones established by the CPCC are achieved.
Peer Group Companies Represent Our Business
Each year, the CPCC reviews the appropriateness of our peer group for comparison on pay and related practices. Collectively, the peer group companies represent our primary business areas, including our Nordstrom, Nordstrom Rack, in-store and online businesses and private label products. The peer group companies generally meet the following selection criteria:
•fall within the Consumer Discretionary and Staples sectors;
•fall within a reasonable range of our size, defined as one-fourth to four times our revenue and one-fifth to five times our market capitalization;
•share similar talent, operational and/or business characteristics, including a retail-focused business model;
•have a similar or related product focus and place a high value on customer experience;
•are part of our industry group as defined by institutional shareholders and shareholder service organizations; and
•are a public company subject to similar market pressures.
Our peer group used for evaluating compensation for fiscal year 2021 was comprised of the following retail companies:
| | | | | | | | |
| Bed Bath & Beyond Inc. | Kohl’s Corporation | Tapestry, Inc. |
| Capri Holdings Limited | Bath & Body Works, Inc.* | The TJX Companies, Inc. |
| Dillard’s, Inc. | Macy’s, Inc. | Urban Outfitters, Inc. |
| The Estée Lauder Companies Inc. | Ralph Lauren Corporation | V.F. Corporation |
| Foot Locker, Inc. | Ross Stores, Inc. | Williams-Sonoma, Inc. |
| The Gap, Inc. | | |
*In July 2021, L Brands announced separation of the Victoria’s Secret business into an independent, publicly traded company and made a name change from L Brands, Inc. to Bath & Body Works, Inc.
During 2021, as part of its annual review of peer companies to be used for compensation comparison purposes, the CPCC determined that J.C. Penney Company, Inc. and Tiffany & Co. should be removed due to the unavailability of publicly disclosed pay data going forward.
Compensation Risk Assessment Supports Integrity of Our Pay Practices
The CPCC oversees an extensive review of the Company’s pay-for-performance philosophy, the composition and balance of elements in the compensation package and the alignment of plans with shareholder interests to ensure these practices do not pose a material adverse risk to the organization. The review is conducted every other year as underlying programs and practices are generally consistent over time. The last review, for fiscal year 2020, concluded with the following perspectives:
•The goals of the Company’s compensation programs are to attract and retain the best talent and to motivate and reward our people in ways that are aligned with the long-term interests of our shareholders. This has been a long-standing objective of our pay-for-performance philosophy. We believe that the strong alignment of our employee compensation plans with performance has well-served our stakeholders, and our shareholders in particular. The strength of this alignment is regularly reviewed and monitored by the CPCC.
•We have systems in place to identify, monitor and control risks, making it difficult for a single individual or a group of individuals to expose the Company to material compensation risk.
•Our compensation program rewards both short- and long-term performance. Performance measures for Company leaders are predominantly team-oriented rather than individually focused and tied to measurable factors that are both transparent to shareholders and drivers of their shareholder return.
•The compensation program balances the importance of achieving critical short-term objectives with a focus on realizing strategic long-term priorities. Strong stock ownership guidelines are in place for Company leaders, and mechanisms, such as an executive clawback policy, exist to address inappropriate rewards.
•The CPCC is actively engaged in establishing compensation plans, monitoring these plans during the year and using discretion in making rewards, as necessary.
•The Company has active and engaged oversight systems in place. The AFC and the full Board closely monitor and certify the performance that drives employee rewards through detailed and transparent financial reporting, which is in place to provide strong, timely insight into the performance of the Company.
| | | | | | | | | | | | | | |
| 41 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Based on this review, the CPCC believes the Company’s compensation plans do not encourage risk taking that is reasonably likely to have a material adverse effect on the Company.
Executive Compensation Clawback Policy Applies to Performance-Based Pay
In February 2008, the Board adopted a formal executive compensation clawback policy that applies to any performance-based bonus, equity, equity equivalent or other incentive compensation awarded to an Executive Officer, beginning in that fiscal year. Under that policy, in the event of a material restatement of the Company’s financial results, the Board will review the circumstances that caused the restatement and consider accountability to determine whether an Executive Officer was negligent or engaged in misconduct. If so, and if the amount or vesting of an award would have been less had the financial statements been correct, the Board will seek to recover compensation from the Executive Officer as it deems appropriate. This policy is in addition to any requirements which might be imposed pursuant to applicable law.
LTI Grants Are Effective On the First Day of the Open Trading Window
The CPCC approves annual equity-based awards at its annual February meeting, which is typically held approximately three weeks after fiscal year end. Annual grants are customarily effective on the first day of the Company’s next open trading window following CPCC approval. The CPCC may approve one-time equity-based grants to executives on other dates for reasons such as newly hired executives or for retention purposes. Such grants are generally effective on the first day of the Company’s next open trading window following approval by the CPCC.
Termination and Change in Control Provisions are CPCC-Directed
Under our Nordstrom, Inc. Executive Severance Plan, eligible Executive Officers, including certain NEOs, are entitled to receive severance benefits upon involuntary termination of employment by the Company to assist in the transition from active employment. To be eligible to participate in the Plan upon involuntary termination, the 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, and Anne Bramman has elected not to participate in the Plan. Separation benefits are described in the Potential Payments Upon Termination or Change in Control section beginning on page 53.
As described in the same section, the NEOs are generally not entitled to any payment or accelerated benefit in connection with a change in control of the Company. However, the NEOs are entitled to accelerated vesting of equity if they experience 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, unless the Company and the CPCC does not act to cause the NEOs to receive, on account of the equity award, cash or other property being paid to shareholders in the change in control transaction.
Tax and Accounting Considerations Underlie the Compensation Elements
The CPCC recognizes the tax and regulatory factors that can influence the structure of executive compensation programs, including:
•Section 162(m) of the IRC, which disallows a tax deduction to public companies for annual compensation over $1 million paid to “covered employees” which generally includes NEOs. Certain performance-based compensation under arrangements in place as of November 2, 2017 are not subject to the limitation. Therefore, compensation in excess of $1 million paid to our NEOs is generally expected to be nondeductible by the Company.
•FASB ASC 718, where stock options, PSUs and RSUs are accounted for based on their grant date fair value (see the notes to the financial statements contained within the Company’s 2021 Annual Report). The CPCC regularly considers the accounting implications of our equity-based awards.
•Section 409A of the IRC, the limitations of which primarily relate to the deferral and payment of benefits under the NDCP and SERP. The CPCC continues to consider the impact of Section 409A and in general, the evolving tax and regulatory landscape in which its compensation decisions are made.
COMPENSATION OF EXECUTIVE OFFICERS
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 718, Stock Compensation (“ASC 718”), where stock options, performance share units and restricted stock units are accounted for based on their grant date fair value (see the notes to the financial statements contained within the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC). The Committee regularly considers the accounting implications of our equity-based awards.
Section 409A of the IRC, the limitations of which primarily relate to the deferral and payment of benefits under the Nordstrom Deferred Compensation Plan and Supplemental Executive Retirement Plan. The Committee continues to consider the impact of Section 409A and in general, the evolving tax and regulatory landscape in which its compensation decisions are made.
40 NORDSTROM, INC. - 2019 Proxy Statement
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. The Committee believes the Compensation Discussion and Analysis represents the intent and actions of the Committee with regard to executive compensation and has recommended to the Board that it be included in this Proxy Statement for filing with the SEC.
|
|
Compensation Committee |
Tanya L. Domier, Chair |
Glenda G. McNeal |
Philip G. Satre |
Brad D. Smith |
Gordon A. Smith |
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 29, 2022, January 30, 2021 and February 2, 2019, February 3, 2018 and January 28, 2017.1, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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
($) |
| Erik B. Nordstrom | 2021 | | 758,700 | | — | | — | | 3,699,999 | | 1,941,761 | | (692,013) | | 44,686 | | 5,753,133 | |
| Chief Executive Officer | 2020 | | 367,419 | | — | | 1,592,846 | | 2,654,740 | | — | | 1,010,681 | | 21,984 | | 5,647,670 | |
| | 2019 | | 756,393 | | — | | 1,592,836 | | 1,061,897 | | 708,591 | | 2,700,516 | | 52,070 | | 6,872,303 | |
| Anne L. Bramman | 2021 | | 812,892 | | — | | 1,319,977 | | 879,995 | | 1,040,246 | | — | | 24,679 | | 4,077,789 | |
| Chief Financial Officer | 2020 | | 699,231 | | — | | 1,999,988 | | 1,824,997 | | — | | — | | 14,411 | | 4,538,627 | |
| 2019 | | 793,750 | | — | | 1,549,974 | | 1,859,994 | | 564,500 | | — | | 39,912 | | 4,808,130 | |
| Peter E. Nordstrom | 2021 | | 758,700 | | — | | — | | 3,699,999 | | 1,941,761 | | (1,364,580) | | 56,475 | | 5,092,355 | |
| President and Chief Brand Officer | 2020 | | 367,419 | | — | | 1,592,846 | | 2,654,740 | | — | | 1,055,774 | | 24,849 | | 5,695,628 | |
| 2019 | | 756,393 | | — | | 1,592,836 | | 1,061,897 | | 708,591 | | 2,782,378 | | 77,355 | | 6,979,450 | |
| Kenneth J. Worzel | 2021 | | 892,123 | | — | | 1,443,737 | | 962,494 | | 1,427,077 | | 1,389,900 | | 32,195 | | 6,147,526 | |
| Chief Customer Officer | 2020 | | 764,597 | | — | | 2,624,977 | | 2,374,996 | | — | | 864,312 | | 18,367 | | 6,647,249 | |
| 2019 | | 826,111 | | — | | 1,999,970 | | 2,400,000 | | 645,433 | | 1,589,618 | | 37,080 | | 7,498,212 | |
| Edmond Mesrobian | 2021 | | 827,123 | | — | | 1,394,971 | | 929,995 | | 815,262 | | — | | 12,158 | | 3,979,509 | |
| Chief Technology Officer | 2020 | | 677,214 | | — | | 1,549,973 | | 1,374,995 | | — | | — | | 7,917 | | 3,610,099 | |
| 2019 | | 743,542 | | — | | 2,087,450 | | 1,304,995 | | 420,971 | | — | | 10,225 | | 4,567,183 | |
|
| | | | | | | | | | | | | | | | | |
| Name and Principal Position | Fiscal Year | Salary ($)(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 1st 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 20182021 base salaries for the Named Executive Officers were $758,500 each for Erik Nordstrom and Peter Nordstrom, and Blake Nordstrom, $775,000$815,000 for Anne Bramman, and $585,000$895,000 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 Deputy was not a Named Executive Officer in fiscal years 2016 or 2017 so no amounts are shown for those years.
Kenneth Worzel and Christine Deputy$800,000 for Edmond Mesrobian.
Anne Bramman elected to defer $25,000 and $30,800, respectively,10% of theirher base salariessalary earned during calendar year 20182022 into the Nordstrom Deferred Compensation Plan (“NDCP”). Anne Bramman and Christine DeputyNDCP. Kenneth Worzel elected to defer 8% and $32,000, respectively,$50,000 of theirhis base salariessalary earned during calendar year 20192021 and 10% of his base earned during calendar year 2022 into the NDCP. Due to the timing of our fiscal year ends, $2,695, $23,913,$3,135 and $30,852,$51,442 were attributed to fiscal year 20182021 deferrals for Anne Bramman and Kenneth Worzel, and Christine Deputy, respectively, as reported in the Fiscal Year 20182021 Nonqualified Deferred Compensation Plan Table on page 53.
Each of the Named Executive OfficersNEOs contributed a portion of their base salary earned during fiscal year 20182021 to the 401(k) Plan.
(b) Bonus
The amounts reported for fiscal year 2020 reflect discretionary bonuses approved by the Compensation Committee. Inreduced base salaries of the NEOs, as part of the Company’s response to business impacts from the COVID-19 pandemic. Base salaries were reduced from March 2018, the Committee determined29, 2020 to awardOctober 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.
(b) Bonus
This column refers to one-time cash payment in recognition of her service since joiningpayments not made under 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.
EMBP. No amounts were paid to NEOs.
42 NORDSTROM, INC. - 2019 Proxy Statement
(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 value the Named Executive Officers will ultimately receive from their performance share units will depend on whether the performance requirements are met and the market price of Common Stock at the end of the performance cycle. The amounts reported were calculated in accordance with FASB Accounting Standards Codification 718, Stock Compensation (“ASC 718”) and reflect the probable outcome with respect to satisfaction of performance conditions at the date 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. No amounts are reported for fiscal year 2018 as the Company did not award performance share units during the 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) of the Grants of Plan-Based Awards in Fiscal Year 20182021 table on page 46 for the number of restricted stock unitsRSUs granted in fiscal year 2018.2021.
No PSU amounts are reported for fiscal year 2021 as the Company did not award PSUs during the fiscal year. The PSU amounts reported in fiscal year 2020 reflects grants of PSUs that were subsequently cancelled 6 months later as part of the Company’s response to COVID. The cancelled PSU grants to Erik Nordstrom and Peter Nordstrom each had a grant date fair value of $1,592,846. The cancelled 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. As discussed on page 38, the 2019 PSUs did not meet the performance thresholds required for payout. As a result, none of the 2019 PSUs vested. The amounts reported were calculated in accordance with ASC 718.
| | | | | | | | | | | | | | |
| 43 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
(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. No amounts are reportedSee column (d) of the Grants of Plan-Based Awards in Fiscal Year 2021 table on page 46 for the number of stock options granted in fiscal year 2018 as the Company did not grant stock options during the fiscal year.2021.
Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 2021 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.37.
(f) Change in Pension Value and Nonqualified Deferred Compensation Earnings
The amounts reported are the changes in actuarial present value from 2020 fiscal year-end 2017 to 2021 fiscal year-end 2018 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 decreased from last year2020 fiscal year-end by $135,088$692,013 and $122,708,$1,364,580, respectively. The decreases were primarily the result of an increase in the discount rate used to determine the present value of the benefit.benefits. The interest rate used is the same as the discount rate used for financial reporting purposes for the SERP which changed from 3.95%2.62% to 4.27%3.19%. Under SEC rules, decreases are not reportedThe present value of Kenneth Worzel’s benefit increased by $1,389,900, primarily due to an increase to service and pay, which more than offset any decrease due to the change in the table so no amounts are shown. No amount is shown for Blake Nordstromdiscount rate, 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.mentioned above. 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 51 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 2021 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 2018,2021, as shown on page 53.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 following table.
table below.
NORDSTROM, INC. - 2019 Proxy Statement 43
All Other Compensation in Fiscal Year 2018 | | |
|
| All Other Compensation in Fiscal Year 2021 |
The table below shows each component of “All Other Compensation” for fiscal year 2018,2021, reported in column (g) of the Summary Compensation Table on page 42,43, calculated at the aggregate incremental cost to the Company.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Merchandise Discount
($)(a) | | 401(k) Plan Company Match
($)(b) | | Premium on Insurance
($)(c) | | Personal Use of Company Aircraft
($)(d) | | | | Total
($) |
| Erik B. Nordstrom | 36,826 | | | 5,812 | | | 2,048 | | | — | | | | | 44,686 | |
| Anne L. Bramman | 10,659 | | | 11,833 | | | 2,187 | | | — | | | | | 24,679 | |
| Peter E. Nordstrom | 34,977 | | | 8,145 | | | 2,048 | | | 11,305 | | | | | 56,475 | |
| Kenneth J. Worzel | 17,214 | | | 12,583 | | | 2,398 | | | — | | | | | 32,195 | |
| Edmond Mesrobian | 1,835 | | | 8,187 | | | 2,136 | | | — | | | | | 12,158 | |
|
| | | | | | | | | | | | | | | | | | |
| | 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, their spouses and eligible children, were provided a discount of 33% for purchases at Nordstrom full-line stores, Nordstrom.com, Trunk Club and Nordstrom.comTrunkClub.com and 20% for purchases at Nordstrom Rack stores, Nordstromrack.com/HauteLookNordstromRack.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.Company, and its Board, as described on page 17. 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.year 2021.
| | | | | | | | | | | | | | |
(b) | | 2022 Proxy Statement | 44 | |
COMPENSATION OF EXECUTIVE OFFICERS
(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 and all other Company employees, may defer up to 16%50% of their eligible pay (i.e., base salary, performance-based bonus and other taxable wages) into the 401(k) Plan, subject to IRC limits.
AlthoughCompany matching contributions are made each pay period an employee contributes to the matching contribution is discretionary and subject401(k) Plan, equal to change, the Company currently matches employee contributions for the Plan year,a dollar for dollar match up to 1% of eligible pay then $0.50 per dollar on the next 6% of eligible pay, up to a maximum of 4% of eligible pay. The 2018 calendar year compensation limit for eligible pay was $275,000, as set by 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 discretionary match up to an additional 2% of eligible pay, based on Company performance. Based on the Company’s performance in 2018, the Board approved a discretionary match 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.and IRC limits. The total Company matching contribution each of the eligible Named Executive OfficersNEOs received, in March 2019,as shown on the previous page, reflects this matching formula for calendarfiscal year 2018, was $15,840 as reported above.2021.
Contributions under the 401(k) Plan may be directed to any of 12 custom target retirement date funds or to any of 9 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.
| |
(e) | SERP(d) Personal Use of Company Aircraft |
The Company has a SERP,fractional ownership interest 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 aircraftaircraft which it usescharters for business purposes. On rare occasions, a Named Executive OfficerNEO may have a guest accompany the executivethem 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 OfficersNEOs for taxes incurred as a result of the imputed income.
In fiscal year 2018, Erik Nordstrom and2021, Peter Nordstrom were eachwas 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.
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| 45 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
NORDSTROM, INC. - 2019 Proxy Statement 45
Grants of Plan-Based Awards in Fiscal Year 20182021
The following table discloses the potential range of payouts for for:
•non-equity incentive plan awards granted in fiscal year 2018.2021. These awards are performance-based cash bonuses granted under the Executive Management Bonus Plan,EMBP, as described beginning on page 35. T37;
•he table also discloses the number, price and grant date fair value of stock options granted under the 2019 EIP in fiscal year 2021, as described on page 38; and
•the number and grant date fair value of restricted stock unitsRSUs granted under the 2010 Equity Incentive Plan2019 EIP in fiscal year 2018,2021, as described on page 37.38.
|
| | | | | | | | | | | | | | | | |
| | | | 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 | All Other
Stock
Awards:
Number of Shares
of Stock or Units (#)(c) | All Other
Option
Awards:
Number of Securities
Underlying Options
(#)(d) | Exercise
or Base Price of
Option Awards
($/Sh)(e) | Grant
Date Fair
Value of
Stock and Option Awards ($)(f) |
| 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 | | | | | | | | | |
| Stock Option | 3/4/2021 | 2/23/2021 | | | | | | | | | 297,619 | | 35.52 | | 3,699,999 | |
| Anne L. Bramman | | | | | | | | | | | | | |
| EMBP | | | 203,173 | | 812,692 | | 2,031,730 | | | | | | | | | |
| RSU | 3/4/2021 | 2/23/2021 | | | | | | | | 40,060 | | | 1,319,977 | |
| Stock Option | 3/4/2021 | 2/23/2021 | | | | | | | | | 63,008 | | 35.52 | | 879,995 | |
| Peter E. Nordstrom | | | | | | | | | | | | | |
| EMBP | | | 379,250 | | 1,517,001 | | 3,792,502 | | | | | | | | | |
| Stock Option | 3/4/2021 | 2/23/2021 | | | | | | | | | 297,619 | | 35.52 | | 3,699,999 | |
| Kenneth J. Worzel | | | | | | | | | | | | | |
| EMBP | | | 278,726 | | 1,114,904 | | 2,787,260 | | | | | | | | | |
| RSU | 3/4/2021 | 2/23/2021 | | | | | | | | 43,816 | | | 1,443,737 | |
| Stock Option | 3/4/2021 | 2/23/2021 | | | | | | | | | 68,915 | | 35.52 | | 962,494 | |
| Edmond Mesrobian | | | | | | | | | | | | | |
| EMBP | | | 159,231 | | 636,923 | | 1,592,307 | | | | | | | | | |
| RSU | 3/4/2021 | 2/23/2021 | | | | | | | | 42,336 | | | 1,394,971 | |
| Stock Option | 3/4/2021 | 2/23/2021 | | | | | | | | | 66,588 | | 35.52 | | 929,995 | |
46 NORDSTROM, INC. - 2019 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 Plan Awards
The amounts shown report the range of possible cash payouts for fiscal year 20182021 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 35.37. For there to be any payout, minimum performance milestones or achievement must be met.
Although the column heading refers to future payouts, fiscal year 20182021 performance-based bonuses have already been earned and were paid to the Named Executive OfficersNEOs in March 2019. These cash payments are2022, as reported in the Summary Compensation Table on page 42,43, in column (e), “Non-Equity Incentive Plan Compensation.”
(c) 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 20182021 under the 2010 Equity Incentive Plan. The restricted stock units2019 EIP. RSUs were granted on March 6, 20184, 2021 to Anne Bramman, Kenneth Worzel and Edmond Mesrobian and will vest equally over four years, beginning on March 10, 2019. The restricted stock units granted2022.
COMPENSATION OF EXECUTIVE OFFICERS
(d) 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 2021 under the 2019 EIP. Stock options were granted on March 4, 2021 and Christine Deputy includebecome exercisable on March 10, 2024 and March 10, 2025.
(e) Exercise or Base Price of Options Awards
The exercise price of the one-time restricted stock unit awardsoptions granted on March 4, 2021 of 45,965, 45,965 and 34,749, respectively, as discussed in$35.52 was the Compensation Discussion and Analysisclosing price of Common Stock on page 37.the grant date.
(d) (f) Grant Date Fair Value of Stock and Option Awards
The grant date fair value of the restrictedRSUs and stock unitsoptions was calculated in accordance with ASC 718.
The reported value for restricted stock unitsRSUs was calculated by multiplying the number of restricted stock unitsRSUs awarded by the fair value of a restricted stock unitRSU on the date of grant. The fair value for the grant, which was $32.95 on March 6, 2018 was $48.95. This is not the value received.4, 2021. 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. After taking into account the vesting price hurdle relevant to their awards, the fair value for the stock option grant on March 4, 2021 to Erik Nordstrom and Peter Nordstrom was $12.43. The fair value for the stock option grants on March 4, 2021 to Anne Bramman, Kenneth Worzel and Edmond Mesrobian was $13.96. 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 4, 2021 was $35.52.
NORDSTROM, INC. - 2019 Proxy Statement 47
| | | | | | | | | | | | | | |
| 47 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Outstanding Equity Awards at Fiscal Year-End 20182021
The following table provides information on the current holdings of stock options and stock awards by the Named Executive OfficersNEOs as of the fiscal year ended February 2, 2019.January 29, 2022. The table includes vested but unexercised stock options, unvested stock options, and unvested restricted stock units and performance share units with time remaining in the three-year performance cycle. Because Blake Nordstrom passed away prior to the end of the fiscal year, resulting in the transfer of all outstanding awards to his estate, nothing is reported for Blake Nordstrom in the table below.RSUs. The vestingvesting schedules for outstanding stock options and restricted stock unitsRSUs are provided on pages 49 and 50.50, respectively. Information about the amount of Common Stock beneficially owned by the Named Executive OfficersNEOs is provided in the Beneficial Ownership Table on page 70.61.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
| | | | Equity Incentive Plan Awards:
Number of Securities Underlying Unexer-
cised Unearned Options
(#) | | | | Number of Shares or Units of Stock That Have Not Vested
(#)(b) | Market Value of Shares or Units of Stock That Have Not Vested
($) | 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 | 2/22/2012 | 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 | 38,653 | | — | | | 46.66 | | 2/28/2027 | | | | | |
| 3/6/2018 | | | | | | | 13,053 | | 285,208 | | | |
| 3/5/2019 | 36,534 | | 36,535 | | | 45.33 | | 3/5/2029 | | | | | |
| 3/9/2020 | 36,851 | | 110,556 | | | 26.79 | | 3/9/2030 | | | | | |
| 8/27/2020 | — | | 245,829 | | | 14.79 | | 8/27/2030 | | | | | |
| 3/4/2021 | — | | 297,619 | | | 35.52 | | 3/4/2031 | | | | | |
| Anne L. Bramman | 3/6/2018 | | | | | | | 11,492 | 251,100 | | |
| 3/6/2018 | | | | | | | 6,704 | 146,482 | | |
| 3/5/2019 | — | 123,554 | | 45.33 | 3/5/2029 | | | | | |
| 3/5/2019 | | | | | | | 7,481 | 163,460 | | |
| 3/9/2020 | | | | | | | 25,986 | 567,794 | | |
| 8/27/2020 | — | 281,657 | | 14.79 | 8/27/2030 | | | | | |
| 3/4/2021 | — | 63,008 | | 35.52 | 3/4/2031 | | | | | |
| 3/4/2021 | | | | | | | 40,060 | 875,311 | | |
| Peter E. Nordstrom | 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 | 38,653 | — | | 46.66 | 2/28/2027 | | | | | |
| 3/6/2018 | | | | | | | 13,053 | 285,208 | | |
| 3/5/2019 | 36,534 | 36,535 | | 45.33 | 3/5/2029 | | | | | |
| 3/9/2020 | 36,851 | 110,556 | | 26.79 | 3/9/2030 | | | | | |
| 8/27/2020 | — | 245,829 | | 14.79 | 8/27/2030 | | | | | |
| 3/4/2021 | — | 297,619 | | 35.52 | 3/4/2031 | | | | | |
| 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 | | | | | |
|
| | | | | | | | | | | | | | | | |
| | 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 | | |
48 NORDSTROM, INC. - 2019 Proxy Statement
COMPENSATION OF EXECUTIVE OFFICERS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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) | |
| 2/29/2016 | 38,057 | — | | 51.32 | 2/28/2026 | | | | | |
| 6/7/2016 | 23,433 | — | | 40.50 | 6/7/2026 | | | | | |
| 2/28/2017 | 16,464 | — | | 46.66 | 2/28/2027 | | | | | |
| 3/6/2018 | | | | | | | 6,453 | 140,998 | | |
| 3/6/2018 | | | | | | | 11,492 | 251,100 | | |
| 3/5/2019 | — | 159,425 | | 45.33 | 3/5/2029 | | | | | |
| 3/5/2019 | | | | | | | 9,292 | 203,030 | | |
| 3/9/2020 | | | | | | | 32,833 | 717,401 | | |
| 8/27/2020 | — | 366,540 | | 14.79 | 8/27/2030 | | | | | |
| 3/4/2021 | — | 68,915 | | 35.52 | 3/4/2031 | | | | | |
| 3/4/2021 | | | | | | | 42,181 | 921,655 | | |
| Edmond Mesrobian | 8/27/2018 | | | | | | | 9,526 | 208,143 | | |
| 3/5/2019 | — | 86,687 | | 45.33 | 3/5/2029 | | | | | |
| | 3/5/2019 | | | | | | | 5,249 | 114,691 | | |
| | 8/26/2019 | | | | | | | 12,840 | 280,554 | | |
| | 3/9/2020 | | | | | | | 20,139 | 440,037 | | |
| 8/27/2020 | — | 212,207 | | 14.79 | 8/27/2030 | | | | | |
| 3/4/2021 | — | 66,588 | | 35.52 | 3/4/2031 | | | | | |
| 3/4/2021 | | | | | | | 42,336 | 925,042 | | |
|
| | | | | | | | | | | | | | | | |
| | 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 29, 2022. 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 a four-year vesting schedule of 50% on March 10, 2022 and 50% March 10, 2023. On March 4, 2021, Erik Nordstrom and Peter Nordstrom received a stock option grant that vests 50% on March 10, 2024 and 50% March 10, 2025 subject to the exceptioncondition that the average daily closing price of theour Common Stock meets or exceeds $45 per share for any twenty consecutive trading day period prior to March 10, 2025. On March 4, 2021, Anne Bramman, Kenneth Worzel and Edmond Mesrobian also received a stock option grant that vests 50% on June 7, 2016, which vests 100% on JuneMarch 10, 2019. All grants have2024 and 50% March 10, 2025, and is not subject to a 10-year term.price condition for vesting.
|
| | | | | | | |
| Grant Date | Vesting Schedule | Expiration Date |
2/24/2015 | 25% per year with a remaining vesting date of 2/24/3/5/2019 | 2/24/2025 |
8/24/2015 | 25% per year with a remaining vesting date of 8/24/2019 | 8/24/2025 |
2/29/2016 | 25% per year with remaining vesting dates of 3/10/20192022 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 3/10/2019,2022, 3/10/20202023 and 3/10/2024 | 3/9/2030 |
| 8/27/2020 | 100% vest on 9/10/2022 | 8/27/2030 |
| 3/4/2021 | 2/28/202750% on 3/10/2024 and 50% on 3/10/2025 | 3/4/2031 |
NORDSTROM, INC.
- 2019 Proxy Statement 49
| | | | | | | | | | | | | | |
(b) | Number of Shares or Units of Stock That Have Not Vested49 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
(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 | 3/6/2018 | 25% per year with a remaining vesting date of 2/24/20193/10/2022 |
8/24/2015 | 27/2018 | 25% per year with a remaining vesting date of 8/24/2019
9/10/2022 |
8/24/2015 | | 20% per year with remaining vesting dates of 8/24/3/5/2019 and 8/24/2020 |
2/29/2016 | | 25% per year with remaining vesting dates of 3/10/20192022 and 3/10/20202023 |
6/7/20168/26/2019 | | 50%33% in years 2one and 3two and 34% in the final year with a remaining vesting date of 6/9/10/20192022 |
11/21/2016 | | 33% in years 1 and 2 and 34% in year 3 with a remaining vesting date of 12/10/2019 |
2/28/2017 | 3/9/2020 | 25% per year with remaining vesting dates of 3/10/2019,2022, 3/10/20202023 and 3/10/2021 |
8/21/2017 | | 33% in years 1 and 2 and 34% in year 3 with remaining vesting dates of 9/10/2019 and 9/10/20202024 |
3/6/2018 | 4/2021 | 25% per year with vesting dates of 3/10/2019,2022, 3/10/2020,2023, 3/10/20212024 and 3/10/20222025 |
(c) Equity Incentive Plan 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 43, and are not reflected in the table beginning on page 48.
(d) Equity Incentive Plan 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 43, and are not reflected in the table beginning on page 48.
| | | | | | | | | | | | | | |
(c) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested |
The numbers reported are the outstanding performance share units granted in fiscal year 2017. The performance share units are earned on the last day of the three-year performance cycle, February 1, 2020, if performance criteria have been met, and vest when the results have been certified by the Compensation Committee. This grant has time remaining in its three-year performance cycle. If the performance cycle had ended as of the close of fiscal year 2018, 50% of the number of performance share units granted would have been earned.
As required to be disclosed, the number of estimated shares reported for the 2017 grant is based on achieving the next higher performance measure, which pays out at 100% of the number of units granted, as shown in the performance share unit vesting schedule on page 37.
| 2022 Proxy Statement | 50 | |
(d) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
The amounts reported relate to the outstanding performance share units granted in fiscal year 2017. This grant has time remaining in its three-year performance cycle. If the performance cycle for this grant had ended as of the close of fiscal year 2018, 50% of the number of performance share units granted would have been earned.
As required to be disclosed, the payout values reported are based on achieving the next higher performance measure, which pays out at 100% of the number of units granted. The value of estimated payouts has been calculated using the closing price of Common Stock on February 1, 2019, the last market trading day of the fiscal year, of $45.33. The payout does not include estimated dividend amounts as the Company does not pay dividends on unvested performance share units.
COMPENSATION OF EXECUTIVE OFFICERS
50 NORDSTROM, INC. - 2019 Proxy Statement
Option Exercises and Stock Vested in Fiscal Year 20182021
The following table provides information for the Named Executive Officers on:
NEOs on the number of shares of Common Stock acquired and value realized from stock option exercises in fiscal year 2018; and
the number of shares of Common Stock acquired and value realized from performance share units and restricted stock unitsRSUs that vested with respect to fiscal year 2018.
2021. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($) | | Number of Shares Acquired on Vesting
(#)(a) | | Value Realized on Vesting
($)(b) |
| | | | | | | | |
| Erik B. Nordstrom | | — | | | — | | | 19,961 | | | 752,729 | |
| Anne L. Bramman | | — | | | — | | | 30,595 | | | 1,153,737 | |
| Peter E. Nordstrom | | — | | | — | | | 19,950 | | | 752,315 | |
| Kenneth J. Worzel | | — | | | — | | | 38,111 | | | 1,410,499 | |
| Edmond Mesrobian | | — | | | — | | | 31,702 | | | 945,207 | |
|
| | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) |
| | Value Realized on Exercise ($) |
| | 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 58pages 56 and 57 in footnote (b) to the Potential Payments Upon Termination or Change in Control at Fiscal Year-End 20182021 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 2021 Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC, for a discussion of the benefit obligation.
| | | | | | | | | | | | | | |
| 51 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Fiscal Year 20182021 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 statements2021 Annual Report to calculate the Company’s obligations under the Plan. See the notesNote 8: Supplemental Executive Retirement Plan to the financial statements contained within the Company’s 2021 Annual 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 | | 58 | | | 25 | | | 13,595,960 | | | — | | | — | |
| Anne L. Bramman | | — | | | — | | | — | | | — | | | — | | | — | |
| Peter E. Nordstrom | | SERP | | 59 | | | 25 | | | 13,706,490 | | | — | | | — | |
| Kenneth J. Worzel | | SERP | | 57 | | | 12 | | | 6,780,714 | | | 6,395,816 | | | — | |
| 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 29, 2022, 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 have 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 values as shown in the table above. Kenneth Worzel will be eligible for full retirement on his 58th birthday, and his present value for full retirement is shown in the table above.
(d) Present Value of Accumulated Benefit: Early Retirement Benefit
Kenneth Worzel has met the minimum early retirement age with at least 10 years of credited service and would be eligible for early retirement with prior approval from the Board. IfThe present value of his early retirement benefit is shown in the Board approved earlytable above. Early retirement benefits are not applicable for Erik Nordstrom and Peter Nordstrom, would be entitled to receive a reduced SERP benefit having present values as they have both met the minimum full retirement age of the end of the fiscal year of $8,730,232 and $10,018,456, respectively. These amounts are reported in the Potential Payments Upon Termination or Change of Control at Fiscal Year-End 2018 table on page 55.
58.
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 earned under the Company’s bonus plan 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 provides provide 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.Participants in the Company’s SERP are not eligible for this matching contribution. Christine Deputy is not a participant in the SERP and was eligible for and received a NDCP match for deferrals made in calendar year 2018.
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 189 deemed investment alternatives. In addition, Plan participants are offered a fixed rate option, which was 4.4%4.31% for calendar year 20182021 and is 4.5%4.36% for calendar year 2019,2022, 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.
COMPENSATION OF EXECUTIVE OFFICERS
Fiscal Year 20182021 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 29, 2022. The Company’s SERP is also a nonqualified plan. Information regarding benefits payable to Named Executive OfficersNEOs under the SERP is provided on pages 51 and 52.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | 3,135 | | | — | | | 10,273 | | | — | | | 252,080 | |
| Peter E. Nordstrom | | — | | | — | | | — | | | — | | | — | |
| Kenneth J. Worzel | | 51,442 | | | — | | | (16,408) | | | — | | | 888,438 | |
| Edmond Mesrobian | | — | | | — | | | 11,381 | | | — | | | 200,533 | |
|
| | | | | | | | | | | | | | | |
| 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 20182021 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 29, 2022.
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 29, 2022, 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 28, 2022, the last market trading day of the fiscal year, of $45.33.$21.85. The estimates are based on all relevant plans effective at the end of the fiscal year and information available at that time. Actual values would reflect specific circumstances at the time of any termination, the plans and provisions effective if and when a termination event occurs and any other applicable factors.
The Company does not have employment agreements with any Nordstrom employees, including the Named Executive Officers.NEOs. The Company maintains a leadership separationan executive severance plan to provide a broad group of leadership employeescertain NEOs an appropriate level of severance benefits in the event of involuntary separation of service, due to job elimination.not for cause. Except as described on the following pages, there are no agreements, arrangements or plans that entitle the Named Executive OfficersNEOs to enhanced benefits upon termination of their employment.
54 NORDSTROM, INC.
- 2019 Proxy Statement
| | | | | | | | | | | | | | |
| 53 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2018 | | |
| Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2021 |
The following table shows various termination scenarios and payments that would be triggered under the Company’s compensation plans.
|
| | | | | | | | | | | | | | | |
| Name and Potential Payment | | Death ($) |
| | Disability ($) |
| | Retirement ($) |
| | Termination without Cause ($) |
| | Qualifying Termination Following a Change in Control ($) |
|
| Erik B. Nordstrom | | | | | | | | | | |
Continued or Accelerated Vesting of Equity Awards(a) | | 4,166,952 |
| | 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 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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) | | 1,486,745 | | | 1,486,745 | | | 285,208 | | | 285,208 | | | 2,020,761 | |
Vested SERP Benefit(b) | | 6,525,225 | | | 13,595,960 | | | 13,595,960 | | | 13,595,960 | | | 13,595,960 | |
Life Insurance Proceeds(c) | | 948,125 | | | — | | | — | | | — | | | — | |
Retiree Health Care Benefit(d) | | 196,102 | | | 412,427 | | | 412,427 | | | 412,427 | | | 412,427 | |
Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | |
Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | |
Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | |
| Total Value of Incremental Benefits | | 9,156,197 | | | 15,530,132 | | | 14,293,595 | | | 14,293,595 | | | 16,029,148 | |
| Anne L. Bramman | | | | | | | | | | |
Continued or Accelerated Vesting of Equity Awards(a) | | 3,380,800 | | | 3,380,800 | | | — | | | — | | | 3,992,646 | |
Vested SERP Benefit(b) | | — | | | — | | | — | | | — | | | — | |
Life Insurance Proceeds(c) | | 1,018,750 | | | — | | | — | | | — | | | — | |
Retiree Health Care Benefit(d) | | — | | | — | | | — | | | — | | | — | |
Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | |
Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | |
Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | |
| Total Value of Incremental Benefits | | 4,399,550 | | | 3,415,800 | | | — | | | — | | | 3,992,646 | |
| Peter E. Nordstrom | | | | | | | | | | |
Continued or Accelerated Vesting of Equity Awards(a) | | 1,486,745 | | | 1,486,745 | | | 285,208 | | | 285,208 | | | 2,020,761 | |
Vested SERP Benefit(b) | | 7,028,770 | | | 13,706,490 | | | 13,706,490 | | | 13,706,490 | | | 13,706,490 | |
Life Insurance Proceeds(c) | | 948,125 | | | — | | | — | | | — | | | — | |
Retiree Health Care Benefit(d) | | 180,909 | | | 372,074 | | | 372,074 | | | 372,074 | | | 372,074 | |
Separation Benefit(e) | | — | | | — | | | — | | | — | | | — | |
Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | |
Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | |
| Total Value of Incremental Benefits | | 9,644,549 | | | 15,600,309 | | | 14,363,772 | | | 14,363,772 | | | 16,099,325 | |
| Kenneth J. Worzel | | | | | | | | | | |
Continued or Accelerated Vesting of Equity Awards(a) | | 4,025,719 | | | 4,025,719 | | | 1,983,084 | | | 1,983,084 | | | 4,821,957 | |
Vested SERP Benefit(b) | | 3,275,006 | | | — | | | 6,395,816 | | | 6,395,816 | | | 6,395,816 | |
Life Insurance Proceeds(c) | | 1,118,750 | | | — | | | — | | | — | | | — | |
Retiree Health Care Benefit(d) | | 203,177 | | | 431,582 | | | 431,582 | | | 431,582 | | | 431,582 | |
Separation Benefit(e) | | — | | | — | | | — | | | 1,164,498 | | | — | |
Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | |
Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | |
| Total Value of Incremental Benefits | | 8,622,652 | | | 4,492,301 | | | 8,810,482 | | | 9,974,980 | | | 11,649,355 | |
| Edmond Mesrobian | | | | | | | | | | |
Continued or Accelerated Vesting of Equity Awards(a) | | 2,946,605 | | | 2,946,605 | | | — | | | — | | | 3,466,648 | |
Vested SERP Benefit(b) | | — | | | — | | | — | | | — | | | — | |
Life Insurance Proceeds(c) | | 1,000,000 | | | — | | | — | | | — | | | — | |
Retiree Health Care Benefit(d) | | — | | | — | | | — | | | — | | | — | |
Separation Benefit(e) | | — | | | — | | | — | | | 1,604,200 | | | — | |
Disability Insurance Benefit(f) | | — | | | 35,000 | | | — | | | — | | | — | |
Executive Management Bonus(g) | | — | | | — | | | — | | | — | | | — | |
| Total Value of Incremental Benefits | | 3,946,605 | | | 2,981,605 | | | — | | | 1,604,200 | | | 3,466,648 | |
NORDSTROM, INC. - 2019 Proxy Statement 55
COMPENSATION OF EXECUTIVE OFFICERS
(a) Continued or Accelerated Vesting of Equity Awards
| |
(a) | Continued or Accelerated Vesting of Equity Awards
|
As of the end of fiscal year 2018,2021, 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 20042010 and 2010 Equity Incentive Plan2019 EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, all unvested stock options will immediately vest, with the exception of one-time stock option grants. The one-time stock option grant made on August 27, 2020 to each of the NEOs, as well as other one-time stock option grants which are not reflected in the table on page 54 because they carry exercise prices in excess of the value of our Common Stock as of end of fiscal year 2021, provides that if a participant’s employment is terminated by reason of death or disability, a prorated number of the stock options granted more than six months prior to the termination event will immediately vest. Thevest based on the number of full months employed. All outstanding 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 amounts shown in the table include the unvested values, as of the end of fiscal year 2018, of unvested stock options2021, 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. Outstanding stock option grants that carry exercise prices in excess of the value of our Common Stock as of end of fiscal year 2021 are not reflected in the table.
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 delivered under 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 grants 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 for their annual stock option grants as they have reached the minimum retirement age of 55 with at least 10 years of service. The one-time stock option grant made on June 7, 2016, under which Erik Nordstrom and Peter NordstromAugust 27, 2020 to each received options to purchase 10,838 shares,of the NEOs does not provide for this continued vesting upon retirement or termination.termination without cause, so no amounts are shown for this grant.
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 options2021, 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 amountsOutstanding stock option grants that carry exercise prices in excess of the value of our Common Stock as of end of fiscal year 2021 are includednot reflected in the table for Erik Nordstrom and Peter Nordstrom.table.
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 delivered 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 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 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. Generally, a change in control occurs 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 options2021, 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.
award, cash or other property being paid to shareholders in the change in control transaction. Outstanding stock option grants that carry exercise prices in excess of the value of our Common Stock as of end of fiscal year 2021 are not reflected in the table.
56 NORDSTROM, INC.
- 2019 Proxy Statement
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| 55 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
Performance Share Units
Death or Disability
The performance share unit award agreement under the 2010 Equity Incentive Plan 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, based on the period of time the participant worked during the performance cycle, with respect to any performance share units granted more than six months prior to termination that were earned during the performance cycle.
The 2017 grant has time remaining in its three-year performance cycle. If the performance cycle for this grant had ended as of the close of fiscal year 2018, 50% of the number granted would have been earned. Therefore, the amounts included in the table are based on a payout at 50% of the prorated number.
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 confidential or proprietary information of the Company, then all outstanding vested but not settled and any unvested portions of the performance share unit awards will be automatically forfeited.
Retirement or Termination without Cause
The performance share unit award agreement under the 2010 Equity Incentive Plan 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, based on the period of time the participant worked during the performance cycle, with respect to any performance share units granted more than six months prior to termination that were earned during the performance cycle. Both Erik Nordstrom and Peter Nordstrom qualify for this prorated payment upon retirement as of the end of the fiscal year.
The 2017 grant has time remaining in its three-year performance cycle. If the performance cycle for this grant had ended as of the close of fiscal year 2018, 50% of the number granted would have been earned. Therefore, the amounts included in the table for Erik Nordstrom and Peter Nordstrom are based on a payout at 50% of the prorated number.
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 confidential or proprietary information of the Company, then all outstanding vested but not settled and any unvested portions of the performance share unit awards will be automatically forfeited.
Qualifying Termination Following a Change in Control
The Named Executive Officers are not entitled to any payment or accelerated benefit upon a change in control with respect to their performance share units. However, a Named Executive Officer 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 Compensation Committee acts to prevent acceleration 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 56 for information about when a change in control occurs.
The 2017 grant has time remaining in its three-year performance cycle. If the performance cycle for this grant had ended as of the close of fiscal year 2018, 50% of the number granted would have been earned. Therefore, the amounts included in the table are based on a payout at 50% of the number granted.
Restricted Stock Units
Death or Disability
The restricted stock unit awardRSU agreements under the 2010 Equity Incentive Planand 2019 EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, restricted stock units granted more than six months prior to the termination eventall unvested RSUs will immediately vest.vest, with the exception of the one-time RSU grant made on August 26, 2019. The one-time RSU grant made on August 26, 2019 to Edmond Mesrobian provides that if his employment is terminated by reason of death or disability, a prorated number of the RSUs will immediately vest based on the number of full months employed.
The amounts shown in the table include the values, as of the end of fiscal year 2018,2021, 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.
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 2018,2021, of unvested restricted stock unitsRSUs for their annual grants that would continue to vest after termination. These executives qualify for this continued vesting as of the end of the fiscal year since they hadhave each reached the minimum retirement age of 55 with at least 10 years of service. The one-time RSU grant made on March 6, 2018 to Kenneth Worzel does not provide for continued vesting for termination by reason of retirement or without cause, so no amounts are shown for this 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 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 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 5655 for information about when a change in control occurs.
The amounts shown include the values, as of the end of fiscal year 2018,2021, 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.pages 51 and 52.
Death
The amounts shown are the present values of the 50% survivor annuity, payable in semi-monthlyequal installments 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 amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be no immediate paymenteligible for their full retirement benefits under the SERP. The amounts shown would be paid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the benefit iflast day of fiscal year 2021. No amount is shown for Kenneth Worzel, the date of death precededother eligible NEO, as he has not reached the executive’s earliest retirement age of 53.
Disability
No amounts are shown as none of 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 amounts shown in the table for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits reduced for early commencement, payable in semi-monthly installments, assuming the payments would begin as of the last day of fiscal year 2018. These Named Executive Officersthey have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter Nordstrom and Kenneth Worzel would be entitledpaid in equal installments on the Company’s regular payroll dates, assuming the payments would begin as of the last day of fiscal year 2021.
COMPENSATION OF EXECUTIVE OFFICERS
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 amounts shown in the table for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits reduced for early commencement, payable in semi-monthly installments, assuming the payments would begin as of the last day of fiscal year 2018. These Named Executive Officersthey have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter 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 2021.
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
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(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 20182021 table on page 44.
| |
(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%3.23% and the RP2014PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2018.MP2021.
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 on the following page 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 ($) |
|
| Erik B. Nordstrom | | — |
| | — |
| | — |
| | — |
|
| Anne L. Bramman | | 387,500 |
| | 8,864 |
| | 4,200 |
| | 400,564 |
|
| Peter E. Nordstrom | | — |
| | — |
| | — |
| | — |
|
| Kenneth J. Worzel | | 533,333 |
| | 11,922 |
| | 4,200 |
| | 549,455 |
|
| Christine F. Deputy | | 292,500 |
| | 11,922 |
| | 4,200 |
| | 308,622 |
|
Under the Leadership Separation Plan, the Company may provide the executive with additional separation benefits, in cash or in kind, to assist the executiveEdmond Mesrobian as he is not participating in the transition from active employee status. Company’s medical benefit plans.
To be eligible to receive any benefits under the Leadership SeparationNordstrom, Inc. Executive Severance Plan, the Named Executive OfficerNEO must sign a release in which the executive agrees, among other things, not to disclose to anyone at any time any confidential information acquired during employment with the Company, and not to publish any statement, or instigate, assist or participate in the making or publication of any statement which is disparaging or detrimental in any way to the Company, except in each case as required by applicable law.
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(f) | Disability Insurance Benefit57 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
The potential separation benefits for the NEOs are shown below.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Separation
Payment
($) | | 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 | | 1,160,298 | | | — | | | 4,200 | | | 1,164,498 | |
| Edmond Mesrobian | | 1,600,000 | | | — | | | 4,200 | | | 1,604,200 | |
(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$35,000 per month.month. The premiums for the Company-provided disability insurance are included in column (d)(c) in the All Other Compensation in Fiscal Year 20182021 table on page 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.
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’sPEO’s 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 2018:2021:
•the annual total compensation of Erik Nordstrom was $4,451,746;$5,753,133; and
•the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom,, was $34,454.$26,479.
Based on this information, for 20182021 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 employees was 129217 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 20182021 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 29, 2022, 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 2018,2021, approximately 38,00037,000 of our 67,000 employees – or 57%55% 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 20182021 Summary Compensation Table on page 42.
60 NORDSTROM, INC. - 2019 Proxy Statement
43.
| | | | | |
PROPOSAL 33: | 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 20182021 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 29,32, 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 70% of the value of the targeted compensation package for each of our Named Executive OfficersNEOs is weighted toward pay-for-performancepay 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 2021, the CPCC maintained the same financial performance measures of Incentive Adjusted EBIT, which emphasizes the importance of earnings and its role in driving shareholder value, and Incentive Adjusted ROIC, which ensures our overall performance aligns directly with shareholder returns over the long term. For additional detail on our performance-based annual bonus program, see page 37.
•2018, Named Executive Officers hadWhile the following measures:
| |
– | Incentive Adjusted Return on Invested Capital (“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 referencesCPCC 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.
NORDSTROM, INC. - 2019 Proxy Statement 61
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 20192022 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,CD&A, 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.
| | | | | | | | | | | | | | |
| 59 | 2022 Proxy Statement | NORDSTROM, INC. | |
62 NORDSTROM, INC. - 2019 Proxy Statement
EQUITY COMPENSATION PLANSRestricted Stock Units
Death or Disability
The followingRSU agreements under the 2010 and 2019 EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, all unvested RSUs will immediately vest, with the exception of the one-time RSU grant made on August 26, 2019. The one-time RSU grant made on August 26, 2019 to Edmond Mesrobian provides that if his employment is terminated by reason of death or disability, a prorated number of the RSUs will immediately vest based on the number of full months employed.
The amounts shown in the table providesinclude the values, as of the end of fiscal year 2021, 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.
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 2021, of unvested RSUs for their annual grants 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 have each reached the exerciseminimum retirement age of options and rights that have been55 with at least 10 years of service. The one-time RSU grant made on March 6, 2018 to Kenneth Worzel does not provide for continued vesting for termination by reason of retirement or may be granted to employees and memberswithout cause, so no amounts are shown for this grant.
If, during the term of any outstanding grant, the Board under allexecutive engages in any business competitive with the Company or divulges 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 |
| | | | | | | | | |
| 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. |
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 55 for information about when a change in control occurs.
The amounts shown include the values, as of the end of fiscal year 2021, 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
NORDSTROM, INC. - 2019 Proxy Statement 63The 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 on pages 51 and 52.
the spouse or life partner of the executive, and would continue for the remaining lifetime of the spouse or life partner.
Disability
The amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amounts shown 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 2021. No amount is shown for Kenneth Worzel, the other eligible NEO, as he has not reached the normal retirement age of 58, which is the earliest eligibility for the SERP disability benefit.
Retirement or Termination without Cause
The amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter 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 2021.
COMPENSATION OF EXECUTIVE OFFICERS
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 amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter 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 2021.
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 2021 table on page 44.
(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 3.23% and the PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2021.
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 on the following page 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.
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| 57 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
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 | | 1,160,298 | | | — | | | 4,200 | | | 1,164,498 | |
| Edmond Mesrobian | | 1,600,000 | | | — | | | 4,200 | | | 1,604,200 | |
(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 2021 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.
Pay Ratio Disclosure
SEC rules require that U.S. publicly traded companies disclose the ratio of their PEO’s compensation to that of their median employee. Our PEO is our CEO, Erik Nordstrom.
For fiscal year 2021:
•the annual total compensation of Erik Nordstrom was $5,753,133; and
•the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom, was $26,479.
Based on this information, for 2021 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 217 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 2021 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 29, 2022, 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 2021, approximately 37,000 of our 67,000 employees – or 55% 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 2021 Summary Compensation Table on page 43.
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PROPOSAL 43: | APPROVAL OF THE NORDSTROM, INC. 2019 EQUITY INCENTIVE PLAN
ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION |
The Board recommends a vote FOR this proposal.
Shareholders are being asked toThe Company is providing shareholders with an advisory (nonbinding) vote on a proposal to approve the adoptioncompensation program of our NEOs as disclosed in this Proxy Statement. At the 2017 Annual Meeting of Shareholders, over 95% of the Nordstrom, Inc. 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan is intendedvotes cast approved our Board’s recommendation to be a successor tohold advisory votes on an annual basis.
At 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. All2021 Annual Meeting of these plans, with the exceptionShareholders, over 90% of the Prior Plans, have expired. The Company wishesvotes cast were supportive of our compensation program. In light of this support of the compensation program for our NEOs, the CPCC continues to replaceapply the Prior Plans to ensuresame pay and benefits philosophy which underlies our pay-for-performance philosophy.
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| Compensation Program Highlights |
As described in the CD&A beginning on page 32, 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 Company has sufficient shares available to continue its long-held approach tofollowing:
•We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. At least 70% of the value of the targeted compensation package for each of our NEOs is weighted toward pay for performance through granting equityand 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 2021, the CPCC maintained the same financial performance measures of Incentive Adjusted EBIT, which emphasizes the importance of earnings and its employeesrole in driving shareholder value, and nonemployee directors, and to incorporate terms for future grants that reflect current best practices in executive compensation. The Company’s pay forIncentive Adjusted ROIC, which ensures our overall performance philosophyaligns directly with shareholder returns over the long term. For additional detail on our performance-based annual bonus program, see page 37.
•While the CPCC considers the 50th percentile (median) of our peer group as a reference, there is described in the Compensation Discussion and Analysis beginning on page 29.
The 2019 Plan was approvedno specific percentage of target total direct compensation targeted by the BoardCPCC other than to remain generally competitive with similarly situated peer companies. Target opportunities for individual pay elements vary by executive role based on February 27, 2019scope of responsibilities and will become effective upon its adoption by the shareholders.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 terms of the 2019 Plan will:CPCC has retained and directs an independent compensation consultant.
reserve for issuance by the Company 9,500,000 shares;•We do not have employment agreements with our executives.
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•We do 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 taxesprovide tax gross-ups, except those related to relocation expenses when an outstanding award; or shares repurchased on the open market with the proceeds of aexecutive must move to assume Company responsibilities.
•We do not allow stock option exercise price will not be returned to the 2019 Plan;grant repricing or backdating, nor do we grant options below 100% of fair market value.
provide for “double trigger” rather than “single trigger” accelerated vesting, meaning awards will be accelerated•We have a derivative and hedging policy that prohibits Directors and Executive Officers (as well as the result of a changeother key insiders and their immediate families) from engaging 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 andhedging transactions 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%any equity securities of the available shares authorized for issuance under the 2019 Plan. Under the 2010 Equity Incentive Plan, this 5% limit applied only to grantsCompany held by them.
•We have restrictions on pledging 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 to the Company’s clawback policy as described on page 40; and
prohibit the transfer of awards, except in the context of death or otherwise required by law, or as approved by the Committee.
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Shares Available under PlansShareholder Support |
We are asking our shareholders to indicate their support for our NEOs’ compensation as described in this Proxy Statement.
We currently have shares available for grant under two existing equity incentive plans:
2002 Nonemployee Director Stock Incentive Plan with 257,883 shares available asThis proposal gives our shareholders the opportunity to express their views on the compensation of our record date, March 15, 2019. OnceNEOs. This vote is not intended to address any specific item of compensation, but rather 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 asoverall compensation 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 Planour NEOs and the expired 2004 Equity Incentive Plan.philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the 2022 Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Company’s NEOs, as disclosed in the CD&A, 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.
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| 59 | 2022 Proxy Statement | NORDSTROM, INC. | |
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. |
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|
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 and 2019 EIPs generally provide that if a participant’s employment is terminated by reason of death or disability, all unvested RSUs will immediately vest, 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 specifiedone-time RSU grant made on August 26, 2019. The one-time RSU grant made on August 26, 2019 to Edmond Mesrobian provides that if his employment is terminated by reason of death or disability, a prorated number of the RSUs will immediately vest 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 2021, 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.
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 2021, 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 for their annual grants 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 have each reached the minimum retirement age of 55 with at least 10 years of service. The one-time RSU grant made on March 6, 2018 to Kenneth Worzel does not provide for continued vesting for termination by reason of retirement or without cause, so no amounts are shown for this grant.
If, during the term of any outstanding grant, the executive engages in any business competitive with the eventCompany or divulges or improperly uses any of the termination ofCompany’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 recipient’s service.
NORDSTROM, INC. - 2010 and 2019 Proxy Statement 67
A holder of performance share unitsany payment or accelerated benefit upon a change in control with respect to their RSUs. However, a NEO will have no rights to dividends and will notgenerally 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 holder to receive, if and when the applicable performance share units vest, an amount in cash or stock equal to the dividends that would have been paidaccelerated vesting if the performance share units had been settled in shares of Common Stock onexecutive experiences a qualifying termination (termination by the Company without cause or beforetermination by the record dateexecutive for any dividends declared on the Company’s Common Stock, subject to applicable withholding taxes.
At the discretion 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”good reason) 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 of the Committee may also allowCompany, 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 55 for information about when a change in control occurs.
The amounts shown include the values, as of the end of fiscal year 2021, 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 payment 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 assumption, substitutionremaining life of the executive with a 50% survivor annuity paid to the surviving spouse or exchangelife partner for the remainder of any or all outstanding awards.their life after the executive’s death, as described in the Pension Benefits section on pages 51 and 52.
Federal Income Tax Consequences
Death
The tax consequencesamounts shown are the present values of the 2019 Plan50% survivor annuity, payable in equal installments to the spouse or life partner of the executive, and would continue for the remaining lifetime of the spouse or life partner.
Disability
The amounts shown for Erik Nordstrom and Peter Nordstrom are complex,the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amounts shown 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 2021. No amount is shown for Kenneth Worzel, the other eligible NEO, as he has not reached the normal retirement age of 58, which is the earliest eligibility for the SERP disability benefit.
Retirement or Termination without Cause
The amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter 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 2021.
COMPENSATION OF EXECUTIVE OFFICERS
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 amounts shown for Erik Nordstrom and Peter Nordstrom are the present values of their SERP benefits as they have met the minimum age of 58 with at least 10 years of service and would be eligible for their full retirement benefits under the SERP. The amount shown for Kenneth Worzel is the present value of his SERP benefit for early retirement, as he has 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 Erik Nordstrom, Peter 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 2021.
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 2021 table on page 44.
(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 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 incomeexecutive and the Company can claim no deduction. (However,would continue to share in the differencescost 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 3.23% and the PRI2012 White Collar, Fully Generational Mortality Table with projection scale MP2021.
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 on the following page 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.
| | | | | | | | | | | | | | |
| 57 | 2022 Proxy Statement | NORDSTROM, INC. | |
COMPENSATION OF EXECUTIVE OFFICERS
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 | | 1,160,298 | | | — | | | 4,200 | | | 1,164,498 | |
| Edmond Mesrobian | | 1,600,000 | | | — | | | 4,200 | | | 1,604,200 | |
(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 2021 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.
Pay Ratio Disclosure
SEC rules require that U.S. publicly traded companies disclose the ratio of their PEO’s compensation to that of their median employee. Our PEO is our CEO, Erik Nordstrom.
For fiscal year 2021:
•the annual total compensation of Erik Nordstrom was $5,753,133; and
•the estimated median of the annual total compensation of all employees of our Company, other than Erik Nordstrom, was $26,479.
Based on this information, for 2021 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 217 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 2021 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 29, 2022, 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 2021, approximately 37,000 of our 67,000 employees – or 55% 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 2021 Summary Compensation Table on page 43.
| | | | | |
| 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 2021 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 32, 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 fair marketfollowing:
•We deliver the majority of compensation through a pay-for-performance framework where incentives are based on achieving results. At least 70% of the value of the shares upon exercisetargeted compensation package for each of our NEOs is weighted toward pay for performance and the exercise price is an itemvariable compensation to reinforce our philosophy 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 one 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 realizedcompensating our executives when the shares are sold will be treated as capital gain,they and the Company will receiveare 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 2021, the CPCC maintained the same financial performance measures of Incentive Adjusted EBIT, which emphasizes the importance of earnings and its role in driving shareholder value, and Incentive Adjusted ROIC, which ensures our overall performance aligns directly with shareholder returns over the long term. For additional detail on our performance-based annual bonus program, see page 37.
•While the CPCC considers the 50th percentile (median) of our peer group as a reference, there is no correspondingspecific 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 deduction.gross-ups, except those related to relocation expenses when an executive must move to assume Company responsibilities.
When the Committee grants a nonqualified•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 participant realizes no taxable incomeCompany held by them.
•We have restrictions on pledging of Common Stock.
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 Company can claim no deduction. On exercise of a nonqualified stock option,philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the participant realizes ordinary income tofollowing resolution at the extent2022 Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the spreadCompany’s NEOs, as disclosed in the CD&A, the compensation tables and the Company can claimrelated narrative disclosure in this Proxy Statement.”
Our Board has adopted a tax deduction forpolicy of annual executive compensation advisory votes. As an advisory vote, this proposal is not binding on the same amount.
WhenCompany. However, our CPCC and Board value the Committee grants a stock appreciation right,opinions of our shareholders and will consider 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 valueoutcome of the Common Stock onvote when making future compensation decisions regarding the date of grant and the Company can generally claim a tax deduction for the same amount.Company’s NEOs.
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.
| | | | | | | | | | | | | | |
| 59 | 2022 Proxy Statement | NORDSTROM, INC. | |
The grant of restricted stock units and performance share units generally does not result in taxable income to the participant. Upon vesting, 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.
68 NORDSTROM, INC. - 2019 Proxy Statement
New Plan Benefits
EQUITY COMPENSATION PLANS
The Committee has full discretion to determinefollowing table provides information as of the number and amountfiscal year ended January 29, 2022 about Common Stock that may be issued upon the exercise of options stock appreciationand rights unrestricted and restricted shares, and restricted share units and performance share units tothat have been or may be granted to participants, subject to the annual limitations described on page 66. Therefore, the benefitsemployees and amounts that will be received by eachmembers of the Named Executive Officers, the executive officers as a group, nonemployee directors andBoard under 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 $43.74 per share.
Term, Termination and Amendment
The 2019 Plan will remain in effect for a period of 10 years unless earlier terminated by the Board. The Board may, at any time and for any reason, amend the 2019 Plan. An amendment of the Plan will be subject to the approval of the Company’s shareholdersexisting equity compensation plans.
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(1) (#) | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
(2) ($) | | 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) | 15,122,224 | | (b) | 39 | | | 20,706,533 | | (c) |
Equity compensation plans not approved by the Company’s shareholders (d) | 993 | | | 6 | | | — | | |
| TOTAL | 15,123,217 | | | 39 | | | 20,706,533 | | |
(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 38,699 of deferred Director awards and 62,922 related to deferred PSUs.
(c)Includes 17,446,360 shares from the extent required by applicable laws, regulations or rules.2019 EIP, and 3,260,173 shares from the ESPP.
(d)Consist of plans created in connection with our subsidiaries.
NORDSTROM, INC. - 2019 Proxy Statement 69
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, 2019.2022.
| | | | | | | | | | | | | | | | | |
| Name of Beneficial Owner | | Amount and Nature of
Beneficial Ownership
(#) | | Percent of
Ownership
(%) |
| (a) | Erik B. Nordstrom | | 3,334,551 | | 2.08 | % |
| (b) | Peter E. Nordstrom | | 3,310,401 | | 2.06 | % |
| (c) | Kenneth J. Worzel | | 327,144 | | * |
| (d) | Anne L. Bramman | | 144,138 | | * |
| (e) | Edmond Mesrobian | | 108,540 | | * |
| (f) | Brad D. Smith | | 60,373 | | * |
| (g) | Bradley D. Tilden | | 52,515 | | * |
| (h) | Shellye L. Archambeau | | 35,823 | | * |
| (i) | Stacy Brown-Philpot | | 26,347 | | * |
| (j) | Kirsten A. Green | | 18,504 | | * |
| (k) | Glenda G. McNeal | | 18,504 | | * |
| (l) | James L. Donald | | 13,414 | | * |
| (m) | Mark J. Tritton | | 13,414 | | * |
| (n) | Amie Thuener O'Toole | | — | | * |
| (o) | Directors and Executive Officers as a group (21 persons) | | 8,820,086 | | 5.45 | % |
| | | | | |
| Greater than 5% Security Holders | | | | |
| (p) | Bruce A. Nordstrom
1617 Sixth Avenue
Seattle, Washington 98101 | | 25,241,423 | | 15.75 | % |
| (q) | Anne E. Gittinger
1617 Sixth Avenue
Seattle, Washington 98101 | | 15,404,192 | | 9.61 | % |
| (r) | FMR, LLC 245 Summer Street Boston, Massachusetts 02210 | | 13,921,314 | | 8.69 | % |
| (s) | Blackrock, Inc.
55 East 52nd Street
New York, New York 10055 | | 11,512,934 | | 7.19 | % |
| (t) | The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355 | | 10,116,234 | | 6.31 | % |
* Does not exceed 1% of the Company’s outstanding Common Stock.
(a) Erik B. Nordstrom
|
| | | | | | | |
| 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•2,598,883 shares owned by him directly;directly, of which 457,582 shares are pledged as collateral for loans and are in compliance with the Company’s policy regarding pledging;
355 nonvoting deferred��26,985 shares held by him in the Company’s 401(k) Plan;
•466,442 shares that may be acquired by him through stock units. The stock units are convertible into Common Stock and payable upon the occurrence of certain events;options exercisable within 60 days after March 15, 2022;
261,776•42,646 shares owned by his wife individually; and
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; and
1,555,200•199,595 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 shehe 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.trustee.
(c)
| | | | | | | | | | | | | | |
| 61 | 2022 Proxy Statement | NORDSTROM, INC. | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(b) 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•34,987 shares held by him in the Company’s 401(k) Plan;
502,727•466,442 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019;2022;
•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•112,419 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) Erik B. Nordstrom(c) Kenneth J. Worzel
Amount and nature of beneficial ownership includes:
2,583,088•71,111 shares owned by him directly, of which 457,582 shares are pledged as collateral for loans and are in compliance withdirectly;
•6,021 nonvoting stock units held under the Company’s policy regarding pledging;NDCP;
24,802•5,084 shares held by him in the Company’s 401(k) Plan; and
502,727•244,928 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019;2022.
42,646 shares owned by his wife individually; and
24,530 shares held by a trust of which he is the trustee.
(e) Kenneth J. Worzel(d) Anne L. Bramman
Amount and nature of beneficial ownership includes:
19,923•82,361 shares owned by her directly; and
•61,777 shares that may be acquired by her through stock options exercisable within 60 days after March 15, 2022.
(e) Edmond Mesrobian
Amount and nature of beneficial ownership includes:
•65,197 shares owned by him directly; and
5,671 nonvoting stock units held under the Company’s Executive Deferred Compensation Plan;
4,222 shares held by him in the Company’s 401(k) Plan; and
124,036•43,343 shares that may be acquired by him through stock options exercisable within 60 days after March 15, 2019.
NORDSTROM, INC. - 2019 Proxy Statement 712022.
(f) Anne L. BrammanBrad D. Smith
Amount and nature of beneficial ownership includes:
18,396 shares owned by her directly.
(g) Christine F. Deputy
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•60,373 shares held by a family trust, of which he is a trustee and beneficiary.
(i) B. Kevin Turner(g) Bradley D. Tilden
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•52,515 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)(h) Shellye L. Archambeau
Amount and nature of beneficial ownership includes:
2,296•6,614 shares owned by her directly; and
14,879•17,265 shares held by a limited liability company over which she has control; and
•11,944 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) Bradley D. Tilden
Amount and nature of beneficial ownership includes:
12,783 shares held by a family trust, of which he is a trustee and beneficiary.
(n) Tanya L. Domier
Amount and nature of beneficial ownership includes:
12,062 shares owned by her directly.
(o)(i) Stacy Brown-Philpot
Amount and nature of beneficial ownership includes:
•3,444 shares owned by her directly; and
4,656•22,903 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)(j) Kirsten A. Green
Amount and nature of beneficial ownership includes:
772•18,504 shares owned by her directly.
(q)(k) Glenda M.G. McNeal
Amount and nature of beneficial ownership includes:
772•18,504 shares owned by her directly.
(l) James L. Donald
Amount and nature of beneficial ownership includes:
72 NORDSTROM, INC.• - 13,414 shares held in a trust of which he is a trustee and beneficiary.
(m) Mark J. Tritton
Amount and nature of beneficial ownership includes:
•2019 Proxy Statement 13,414 shares owned by him directly.
Amount and nature of beneficial ownership includes:
•0 shares owned by her directly.
(r)(o) Directors and executive officersExecutive Officers as a group (21 persons)
Collectively, the combined amount and nature of beneficial ownership for the Directors and all executive officersExecutive Officers include:
5,698,405•5,983,399 shares owned directly, of which 705,977687,582 shares are pledged as collateral for third party obligations;
730,713•1,054,326 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•34,846 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•83,752 shares held by participating executive officersExecutive Officers and their eligible spouses in the Company’s 401(k) Plan; and
1,608,820•1,657,742 shares that may be acquired by the executive officersExecutive Officers as a group through stock options exercisable within 60 days after March 15, 2019.2022.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(p) Bruce A. Nordstrom
Pursuant to a Schedule 13G filing made with the SEC, as of December 31, 2021, 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, 2021, the aggregate amount beneficially owned by Ms. Gittinger includes:
•15,404,192 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, 2021, the aggregate amount beneficially owned by FMR, LLC includes:
•1,179,475 shares for which it has sole power to vote or to direct the vote; and
•13,921,314 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, 2021, the aggregate amount beneficially owned by Blackrock, Inc. includes:
•10,823,759 shares for which it has the sole power to vote or to direct the vote; and
•11,512,934 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, 2018,2021, the aggregate amount beneficially owned by The Vanguard Group includes:
13,502,343•61,986 shares for which it has soleshared power to vote or to dispose or to direct disposition; andthe vote;
183,677•160,533 shares for which it has shared power to dispose or to direct disposition.disposition; and
•9,955,701 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 29, 2022 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 late relating to the distribution of shares from the Directors Deferred Compensation Plan.Act.
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,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 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 improvements will be surrendered to the Company. The material terms of the sublease are as follows:
The current sublease carries a term through July 2020, with the Company having the right to terminate it at any time upon 90 days’ notice to LLC, and payment to LLC of the unamortized portion of the construction cost of the hangar.
LLC pays the Company a monthly base rent and estimated real estate tax in the form of reimbursement to the Company of its pro 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 reimbursement to the Company of its pro rata share of maintenance costs of the common areas, currently $900 per month, plus a monthly management fee of $135.
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 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 $1,800,276January 29, 2022, there were no related party transactions that require disclosure 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 deemedthis Proxy Statement.
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| 63 | 2022 Proxy Statement | NORDSTROM, INC. | |
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
20202023 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 20202023 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, 2022. Any such proposal must comply with all the requirements of Rule 14a-8.
If a shareholder intends to solicit proxies for a Director nominee in accordance with Rule 14a-19, our Corporate Secretary must receive notice of such intention at our executive offices no later than the close of business on March 19, 2023. Any such notice of intent to solicit proxies must comply with all the requirements of Rule 14a-19. The requirements of Rule 14a-19 are in addition to the requirements under our Bylaws with respect to advance notice of Director nominations.
Under our Bylaws, shareholders must follow certain procedures to nominate a person for election as a directorDirector 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 20202023 Annual Meeting of Shareholders no earlier than January 24, 202018, 2023 and no later than February 23, 2020.17, 2023.
•However, if we hold the 20202023 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,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 directorDirector 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. - 2019 Proxy Statement 75
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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| 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, the Record Date, and were entitled to receive notice of the 20192022 Annual Meeting of Shareholders and to vote on matters that will be presented at the Annual Meeting.
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| 2. | What items will be voted on at the Annual Meeting? |
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| Shareholders will vote on the following matters at the Annual Meeting: | Board Recommendation: | Page Reference
(for more detail)
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| Proposal 1 | To elect the 11nine Director nominees to the Board named in this Proxy Statement to the Board to serve until the 2023 Annual Meeting of Shareholders | FOR each Director Nominee | |
| Proposal 2 | To ratify the appointment of Deloitte & Touche as our Independent Registered Public Accounting Firm to serve for the fiscal year ending January 28, 2023 | 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 | | |
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| 3. | How can I view the webcast? WhereWhat is the date and time of the Annual Meeting being held?Meeting? |
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| Date & Time: | May 18, 2022 at 9:00 a.m. Pacific Daylight Time | Virtual Meeting Access: | virtualshareholdermeeting.com/JWN2022 |
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This Proxy Statement was first mailed to shareholders on or about April 7, 2022. 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. 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 the Record Date or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at investor.nordstrom.comvirtualshareholdermeeting.com/JWN2022. 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/JWN2022. 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 18, 2022. Should you have any difficulty accessing the meeting, please call the numbers found at the top of the log-in page found at virtualshareholdermeeting.com/JWN2022 for technical assistance.
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| 65 | 2022 Proxy Statement | NORDSTROM, INC. | |
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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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, 2019,7, 2022, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders who had not previously requested printed materials.
The Notice of Internet Availability of Proxy Materials 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.Notice of Internet Availability of Proxy Materials. If you have previously chosen to receive our proxy materials electronically, you will receive access to these materials via email unless you elect otherwise.
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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 AccountingLegal 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.
76 NORDSTROM, INC. - 2019reimburses brokers and others for forwarding you the Proxy Statement, proxy card or voting instruction form, 2021 Annual Report and Notice.
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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.
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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.the Annual Meeting virtually.
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:
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| You may vote in advance of the meeting, until 11:59 p.m. Eastern Daylight Time on May 17, 2022 using any of the following methods: |
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| Voting on the Internet. You may vote on the Internet by using the voting portal found at www.proxyvote.com. You can then confirm that your instructions have been properly recorded.Online
At proxyvote.com |
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| 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.Toll-free Phone
Call 1-800-690-6903 |
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* | Voting by Mail. If you request printed materials, you may vote by signing, dating and returning your proxy card.
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| Voting in Person. You may voteMail
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.
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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, 2022, 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
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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.
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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 one copy of our Notice, and for those shareholders that received a paper copy of proxy materials in the mail, one copy of our 2021 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.
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| 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 77,476,37879,699,289 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 directorsDirectors and adopt the other proposals, the following votes are required:
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| Proposal | Vote Required | | Discretionary Voting Allowed? |
| Election of nine Directors to serve until the 2023 Annual Meeting of Shareholders | Majority of Votes Cast | | No |
Ratification of the Appointmentappointment of Deloitte as our Independent Registered Public Accounting Firm to serve for the 2023 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 |
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 answeranswers to Question 12)Questions 13. and 14.) and abstentions are not considered “votes cast” and have no effect on the proposals.
•Election of NineDirectors; 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 28, 2023. You may vote “for,” “against” or “abstain” on this proposal.
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| 67 | 2022 Proxy Statement | NORDSTROM, INC. | |
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
•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: foregoing proposals.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.
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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.
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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, 2022, 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.
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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.
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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.
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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 the Investor Relations Website.
investor.nordstrom.com.
FREQUENTLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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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:
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| Telephone: 206-303-2541 |
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| E-mail: board@nordstrom.com |
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| 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:
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| Telephone: 1-888-832-8358 |
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| Internet: ethicspoint.com |
Your concerns will be investigated and communicated to the AFC, as necessary.
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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.
NORDSTROM, INC. - 2019 Proxy Statement 79
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| 69 | 2022 Proxy Statement | NORDSTROM, INC. | |
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Appendix AAPPENDIX A: | Reconciliation ofRECONCILIATION OF GAAP and Non-GAAP Financial Measures
AND NON-GAAP FINANCIAL MEASURES |
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Incentive Earnings Before Interest and Income Tax Expense (“Incentive EBIT”) and Incentive Adjusted Return on Invested Capital (“Incentive Adjusted ROIC”) |
Incentive Adjusted ROIC and Incentive Adjusted EBITWe 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 2021, 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 sheet operating leases, controls for differences in capital structure between us and 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 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. These metrics are not measures of financial performance under generally accepted accounting principles (“GAAP”) and should be considered in addition to, and not as a substitute for, net earnings, return on assets, total assets or other financial measures prepared in accordance with GAAP. Our method of determining non-GAAP financial measures may differ from other companies’ methods and therefore may not be comparable to those used by other companies.leases. Estimated depreciation on capitalized operating leases and average estimated asset base of capitalized operating leases are not calculated in accordance with, ornor an alternative for, GAAP and should not be considered in isolation or as a substitution ofsubstitute for our results as reported under GAAP.
We define Incentive Adjusted ROIC as our adjusted net operating profit after tax divided by our average invested capital. Incentive Adjusted EBIT represents net earnings before income tax expense, interest expense and interest income, and contemplates non-operating related adjustments. These metrics are not measures of financial performance under GAAP and should be considered in addition to, and not as a substitute for, return on assets, net earnings, total assets or other GAAP financial measures. Our method of calculating a non-GAAP financial measure may differ from other companies’ methods and therefore may not be comparable to those used by other companies. 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 is a reconciliation of the components ofreturn on assets to Incentive Adjusted ROICROIC:
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| | 12 Fiscal Months Ended |
| ($ in millions) | February 3, 2018 | February 2, 2019 | February 1, 2020 | January 30, 2021 | January 29, 2022 |
| Net earnings (loss) | $ | 437 | $ | 564 | $ | 496 | $ | (690) | $ | 178 |
| Add (Less): income tax expense (benefit) | 353 | 169 | 186 | (538) | 68 |
| Add: interest expense, net | 136 | 104 | 102 | 181 | 246 |
| EBIT | 926 | 837 | 784 | (1,047) | 492 |
| Add (Less): non-operating related adjustments | 26 | 72 | 24 | — | (32) |
| Add: interest income | 5 | 15 | 10 | 3 | 1 |
Add: operating lease interest(a) | — | — | 101 | 95 | 87 |
| Add: rent expense, net | 250 | 251 | — | — | — |
Less: estimated depreciation on capitalized operating leases(b) | (133) | (134) | — | — | — |
| Adjusted net operating profit (loss) | 1,074 | 1,041 | 919 | (949) | 548 |
(Less) Add: estimated income tax (expense) benefit(c) | (480) | (248) | (244) | 416 | (150) |
| Adjusted net operating profit (loss) after tax | $ | 594 | $ | 793 | $ | 675 | $ | (533) | $ | 398 |
| Average total assets | $ | 8,055 | $ | 8,282 | $ | 9,765 | $ | 9,718 | $ | 9,301 |
Add: average estimated asset base of capitalized operating leases(b) | 1,805 | 2,018 | — | — | — |
| Less: average deferred property incentives and deferred rent liability | (644) | (616) | — | — | — |
Less: average deferred property incentives in excess of right-of-use assets(d) | — | — | (307) | (276) | (232) |
| Less: average non-interest-bearing current liabilities | (3,261) | (3,479) | (3,439) | (3,138) | (3,352) |
| Add: non-operating related adjustments | 3 | 4 | — | — | — |
| Average invested capital | $ | 5,958 | $ | 6,209 | $ | 6,019 | $ | 6,304 | $ | 5,717 |
| Return on assets | 5.4 | % | 6.8 | % | 5.1 | % | (7.1 | %) | 1.9 | % |
| Incentive Adjusted ROIC | 10.0 | % | 12.8 | % | 11.2 | % | (8.5 | %) | 7.0 | % |
(a) 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.
(b)Capitalized operating leases is our best estimate of the 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 asset base for each quarter is calculated as the trailing four quarters of rent expense multiplied by eight, a commonly used method to estimate the asset base we would record for our capitalized operating leases.
(c) Estimated income tax (expense) benefit is calculated by multiplying the adjusted net operating profit (loss) by the effective tax rate for the trailing twelve month period. The effective tax rate is calculated by dividing income tax expense (benefit) by earnings (loss) before income taxes for the same trailing twelve month periods.
(d) For leases with property incentives that exceed the right-of-use assets, we reclassify the amount from assets to other current liabilities and return on assets:
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| | 12 Fiscal Months Ended |
| ($ in millions) | February 2, 2019 |
| | February 3, 2018 |
| | January 28, 2017 |
| | January 30, 2016 |
| | January 31, 2015 |
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| Net earnings | $ | 564 |
| | $ | 437 |
| | $ | 354 |
| | $ | 600 |
| | $ | 720 |
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| Add: income tax expense | 169 |
| | 353 |
| | 330 |
| | 376 |
| | 465 |
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| Add: interest expense, net | 104 |
| | 136 |
| | 121 |
| | 125 |
| | 138 |
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| Earnings before interest and income tax expense | 837 |
| | 926 |
| | 805 |
| | 1,101 |
| | 1,323 |
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| Add: non-operating related adjustments | 72 |
| | 26 |
| | 271 |
| | 145 |
| | 68 |
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| Incentive EBIT | 909 |
| | 952 |
| | 1,076 |
| | 1,246 |
| | 1,391 |
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| Add: interest income | 15 |
| | 5 |
| | 1 |
| | — |
| | 1 |
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| Incentive Adjusted ROIC earnings before interest and income tax expense | 924 |
| | 957 |
| | 1,077 |
| | 1,246 |
| | 1,392 |
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| Add: rent expense | 251 |
| | 250 |
| | 202 |
| | 176 |
| | 137 |
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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 |
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| Less: estimated income tax expense | (248 | ) | | (480 | ) | | (444 | ) | | (512 | ) | | (561 | ) |
| Net operating profit after tax | $ | 793 |
| | $ | 594 |
| | $ | 727 |
| | $ | 816 |
| | $ | 894 |
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| Average total assets | $ | 8,282 |
| | $ | 8,055 |
| | $ | 7,917 |
| | $ | 9,076 |
| | $ | 8,860 |
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| 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 |
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| Add (Less): non-operating related adjustments | 4 |
| | 3 |
| | 90 |
| | 623 |
| | (100 | ) |
| Average invested capital | $ | 6,209 |
| | $ | 5,958 |
| | $ | 5,863 |
| | $ | 7,394 |
| | $ | 6,586 |
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| 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 | % |
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*other liabilities and reduce average total assets, as this better reflects how we manage our business.
| 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. |
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** | Balances associated with our deferred rent liability have been classified as long-term liabilities as of January 28, 2017. |
A-1 NORDSTROM, INC. - 2019 Proxy Statement
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Appendix B | Nordstrom, Inc. 2019 Equity Incentive Plan |
| 2022 Proxy Statement |
| A-1 | |
ARTICLE 1 | Introduction |
The purpose of the Plan is to promote the long-term success of the Company and its Subsidiaries. Specific objectives are intended to encourage 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 those of the Company’s shareholders.
The Plan seeks to achieve this purpose by providing 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. The Compensation Committee shall administer the Plan.
2.2Committee Responsibilities. The Committee, in its absolute and sole discretion, shall (a) select the Employees and Nonemployee Directors who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan and (d) make all other decisions relating to the operation 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 committee 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 of 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.
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.
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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.
NORDSTROM, INC. - 2019 Proxy Statement B-1
APPENDIX A: RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
The following is a reconciliation of net earnings (loss) to Incentive Adjusted EBIT:
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| | 12 Fiscal Months Ended |
| ($ in millions) | February 3, 2018 | February 2, 2019 | February 1, 2020 | January 30, 2021 | January 29, 2022 |
| Net earnings (loss) | $ | 437 | $ | 564 | $ | 496 | $ | (690) | $ | 178 |
| Add (Less): income tax expense (benefit) | 353 | 169 | 186 | (538) | 68 |
| Add: interest expense, net | 136 | 104 | 102 | 181 | 246 |
| EBIT | 926 | 837 | 784 | (1,047) | 492 |
Add: non-operating related and other adjustments(a) | 26 | 72 | 24 | — | 174 |
| Incentive Adjusted EBIT | 952 | 909 | 808 | (1,047) | 666 |
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3.2Additional Shares. (aIf 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) Beginning in the open market using option proceeds, shall not become available again for issuance under this Plan. Shares that again become available for issuance under12 fiscal months ended January 29, 2022, 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.
B-2 NORDSTROM, INC. - 2019 Proxy Statement
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.
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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.
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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.
NORDSTROM, INC. - 2019 Proxy Statement B-3
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.
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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.
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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
B-4 NORDSTROM, INC. - 2019 Proxy Statement
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.
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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.
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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 toAdjusted EBIT measure excludes certain 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.
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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.
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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.
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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).
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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.
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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.
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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 approvalcompensation elements in order to satisfy the applicable requirementsbe more reflective 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.business performance.
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ARTICLE 17 | DefinitionsA-2 | 2022 Proxy Statement | NORDSTROM, INC. | |
17.1
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“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.
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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.
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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);
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(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.
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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.
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NORDSTROM, INC. |
By: | |
| Christine Deputy |
Title: | Chief Human Resources Officer |
B-12 NORDSTROM, INC. - 2019 Proxy Statement
