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TABLE OF CONTENTS
APPENDIX A TABLE OF CONTENTS
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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o | Preliminary Proxy Statement | |
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ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material |
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(4) | Date Filed: |
6100 Stevenson Blvd.
Fremont, California 94538
May 5, 2016
TO OUR SHAREHOLDERS:
It is our pleasure to invite you to attend our 2016 Annual Meeting of Shareholders (the "Annual Meeting") at 11:00 a.m., Pacific daylight time, on Thursday, June 16, 2016, at our Executive Offices located at 6100 Stevenson Blvd, Fremont, California 94538. Holders of record of our common stock as of April 19, 2016 are entitled to notice of, and to vote at, the Annual Meeting.
The attached Notice of Annual Meeting and Proxy Statement are a critical element of the corporate governance process and are intended to provide you with information about the Company's Board of Directors and executive officers, and a discussion of proposals that require your vote. Please read these materials so you will understand the business that will be transacted and voted upon at the Annual Meeting.
We have elected to take advantage of Securities and Exchange Commission ("SEC") rules that allow us to furnish proxy materials to certain shareholders through the Internet. On or about the date of this letter, we began mailing a Notice of Internet Availability of Proxy Materials (the "Notice") to holders of record of our common stock as of April 19, 2016. At the same time, we provided those shareholders with access to our online proxy materials and filed our proxy materials with the SEC. We believe furnishing proxy materials to our shareholders through the Internet will allow us to provide our shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. If you have received the Notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained in the Notice.
This will be our first annual meeting as Tailored Brands, Inc. The name "Tailored Brands" emphasizes the fact that our company has many distinct brands within its portfolio. We have evolved, over a relatively short period, from one company with a single brand operating primarily as a house of brands into a multi-layered company with many brands, each with its own distinct brand identity, design ethos, and development requirements. Our retail operations now include Men's Wearhouse, Moores and K&G, each a house of brands; Joseph Abboud, which is a design house; and Jos. A. Bank, which is a branded house. In addition, we have corporate apparel operations through Twin Hill in the U.S. and Dimensions, Alexandra and Yaffy in the UK as well as dry cleaning operations through MW Cleaners in Texas. All of these operations utilize a shared services platform that leverages common functions and services for each brand. As a result of our evolution, the Board of Directors recognized that structural change was necessary to develop a more holistic view of the Company, to better support the growth of our many brands, and to further enhance shareholder value. After careful consideration, the Board decided to implement a holding company structure with Tailored Brands serving as an umbrella over all the Company's family of brands. Looking to our future as Tailored Brands, we are guided by our mission to provide a personal, convenient, one-of-a-kind shopping experience with compelling products and world class service.
On behalf of the employees and directors of Tailored Brands, Inc., we thank you for your continued support and confidence in our Company.
Regards, | ||
Douglas S. Ewert, President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: | ||
Time: | 11:00 a.m., Pacific daylight time | |
Place: | 6100 Stevenson Blvd., Fremont, CA 94538 | |
Record Date: | ||
Items of Business: | •
•
•
•
• Approval, on an advisory basis, of the compensation of •
•
| |
Proxy Voting: | You are cordially invited to attend the meeting in person. To ensure that your vote is properly recorded, please vote as soon as possible, even if you plan to attend the Annual Meeting in person. As described in the Notice of Availability of Proxy Materials, you may submit your proxy by mail, Internet, or telephone. If you attend the meeting you can vote either in person or by your proxy. For further details on voting, please refer to the section entitled "Voting and Other Information" beginning on page 1 of the proxy statement. | |
Admission to the Annual Meeting: | If you wish to attend the meeting in person and you are a registered owner of shares of our common stock on the record date, you must show a government issued form of identification which includes your picture. If you are a beneficial owner of shares as of the record date that are held for your benefit by a bank, broker or other nominee, in addition to the picture identification, you will need to provide proof of ownership of our common stock on the record date to be admitted to the meeting. A recent brokerage statement or a letter from your bank, broker, or other nominee holder that shows that you were an owner on the record date |
Beginning on May 6, 2016, we are making these materials available to you in connection with our solicitation of proxies, on behalf of our Board of Directors, for the 2016 Annual Meeting of Shareholders.
By Order of the Board of Directors | ||
Corporate Secretary |
May 19, 20155, 2016
Your broker may not vote on any non-routine matters without instructions from you. If you are a beneficial owner of our Common Stockcommon stock and do not give your broker instructions on how to vote your shares, the broker will return the proxy card to us without voting on proposals not considered "routine." This is known as a broker non-vote. Only the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2015 is considered to be a routine matter.
Vote As Soon As Possible Even if you plan to attend our Annual Meeting in person, please read this proxy statement carefully and vote Please follow the directions on your proxy card or voting instruction card carefully. If you hold our If you hold your stock through a This proxy statement is furnished to the shareholders of Tailored Brands, Inc., successor reporting company to The Men's Wearhouse, Inc. (the "Company", also referred to in this proxy statement as "we", "us", or "our"), whose The Annual Meeting will be held to: Annual Meeting of Shareholders Matters to be Voted on at the Annual Meeting Procedures and Processes for Determining Director Compensation Director Compensation Table Director Qualifications Identifying and Evaluating Nominees for Directors Affirmative Determination of Directors Independence Board Leadership Structure and Role in Risk Oversight Attendance at the Annual Meeting of Shareholders Communications with the Committees of the Board of Directors and Meeting Attendance Corporate Governance Materials Available on the Company's Web Site Compensation Committee Interlocks and Insider Participation U.S. Federal Income Tax Consequences New Plan Benefits Section 162(m) of the Internal Revenue Code Compensation Discussion and Analysis Compensation Committee Report Summary Compensation Table Employment Agreements Grants of Plan-Based Awards Table Outstanding Equity Awards At Fiscal Year End Table Option Exercises and Stock Vested Table Pension Benefits Nonqualified Deferred Compensation Potential Payments upon Termination or Change in Control Transactions with Related Persons Policies and Procedures for Approval of Related Person Transactions This summary highlights information contained in this proxy statement. You should read the entire proxy statement carefully before voting. Annual Meeting of Shareholders Matters to be Voted on at the Annual Meeting Who is soliciting my vote? The Board of Directors of Who may vote? You may vote if you were the holder of record of shares of our through a bank, broker, or other nominee)Vote Right Awayright awayas soon as possible using any of the following methods. In all cases, have your proxy card or voting instruction card in hand and follow the instructions.By Internet By telephone By mailing your proxy card
Visit 24/7
www.proxyvote.com
Dial toll-free 24/7
(800) 690-6903
Cast your ballot, sign your proxy card and send by mail in the enclosed postage-paid envelopeCommon Stockcommon stock in a brokerage account (that is, in "street name"), your ability to vote by telephone or over the Internet depends on your broker's voting process. If you plan to vote in person at the Annual Meeting and you hold our Common Stockcommon stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting.Men's WearhouseTailored Brands employee benefit plan, please follow the instructions provided to you by each plan or broker through which you hold shares (which may be different than the instructions provided above). To vote all of your shares of our Common Stock,common stock, you must complete, sign, date, and return each proxy card you receive or vote the shares as instructed for each set of proxy materials you receive.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERSJULY 1, 2015JUNE 16, 2016principaltwo main executive offices are located at 6380 Rogerdale Road, Houston, Texas 77072, and at 6100 Stevenson Blvd., Fremont, California 94538, in connection with the solicitation by our Board of Directors of proxies to be used at the Annual Meeting of Shareholders to be held at 11:00 a.m., Pacific daylight time, on Wednesday, July 1, 2015,Thursday, June 16, 2016, at the Company's executive offices located at 6100 Stevenson Blvd., Fremont, CA 94538,California office, or any adjournment(s) thereof (the "Annual Meeting").eightall ten directors to our Board of Directors for the Company to hold office untilcoming year;next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified;Tailored Brands, Inc. 2016 Long-Term Incentive Plan;proposal to amend the Company's 2004 Long-Term Incentive Plan, as amended, to (i) increase both the number of shares authorized for issuance under the plan and the related annual limits to individual participants and (ii) remove remaining share recycling provisions from the plan;•approve the material terms of the performance goals for performance awards under the Company's 2004 Long-Term Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code;majority vote in uncontested director elections;the Company'sour named executive officers;the appointment of the firm of Deloitte & Touche LLP as our independent registered public accounting firm for the Company for fiscal 2015;2016; andThis proxy statement is being made available onOn or about May 22, 2015,6, 2016, we began mailing to the holders of record of our common stock, $.01 par value per share ("Common Stock"common stock"), on May 6, 2015April 19, 2016 (the "Record Date")., a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Notice of Annual Meeting of Shareholders, this proxy statement, the form of proxy and our Annual Report on Form 10-K for the fiscal year ended January 30, 2016 over the Internet. At the close of business on the Record Date, there were outstanding and entitled to vote 48,321,40848,629,978 shares of our Common Stock,common stock, and only the holders of record on such date shall bethe Record Date are entitled to notice of, and to vote at, the Annual Meeting.The Men's Wearhouse, Inc. 2015 Proxy Statement i Tailored Brands, Inc. 2016 Proxy Statement i TABLE OF CONTENTS20152016 Proxy Statement Summary 1 1 1
Voting and Other Information
1
Proposal 1: Election of Directors
5
Director Compensation
9 19Election of DirectorsRetirement Payments and Benefits for David Edwab 510 10 9Director Nominations and Qualifications
11 Corporate GovernanceResponsibility for Selection of Director Candidates
11 11 12 BoardShareholder Nominees13
Corporate Governance
13 1213 1214 1315CompanyBoard of Directors 13Investor Information1315 1315Procedures and Processes for Determining Executive and Director CompensationEquity Ownership 151717 1518
Proposal 2: Adoption of the 2016 Long-Term Incentive Plan
18 Compensation Committee Report16Audit Committee Report16Proposal to Amend the Company's 2004 Long-Term IncentiveKey Plan18Overview of Proposed Amendments18Summary of the 2004 Plan Features 19 U.S. Federal Income Tax Consequences of Awards Granted Under the 2004 Plan27Awards Under the 2004 Plan29Equity Plan Compensation Information31Proposal to Approve the Material Terms of the Performance Goals forPerformance Awards Under the Company's 2004 Long-Term Incentive Plan for Purposes of Section 162(m) of the Internal Revenue Code 3220OverviewSummary of the 2016 Long-Term Incentive Plan20 28 31
Equity Plan Compensation Information
32
Proposal 3: Adoption of the 2016 Cash Incentive Plan
32 32 Employees Eligible to Receive Performance AwardsSummary of the 2016 Cash Incentive Plan 33 Business Criteria on which Performance Goals may be BasedNew Plan Benefits 3337Maximum Amount PayableProposal 4: Approval of Amendment to an Employee upon AttainmentBylaws to Require the Resignation of Any Director Who Does Not Receive a Performance GoalMajority Vote in Uncontested Director Elections
34
37
Executive Officers
3539
Executive Compensation
3740 3740 Tailored Brands, Inc. 2016 Proxy Statement ii 55 5256 5357 6559 6661The Men's Wearhouse, Inc. 2015 Proxy Statement ii 6962 6962 6962 6962
Proposal 5: Approval, On An Advisory Basis, of the Compensation of the Company'sour Named Executive Officers
7869
Certain Relationships and Related Transactions
8070 8070 8070
Independent Registered Public Accounting Firm
8170
Audit Committee Report
71
Proposal 6: Ratification of the Appointment ofDeloitte & Touche LLP as our Independent Registered Public Accounting Firm
8274
Security Ownership of Certain Beneficial Owners and Management
8375
Section 16(a) Beneficial Ownership Reporting Compliance
8476
Shareholder Proposals for Next2017 Annual Meeting
8576
Other Matters
8879
Appendix A: The Men's Wearhouse,Tailored Brands, Inc. 20042016 Long-Term Incentive Plan As Amended
A-1
Appendix B: Tailored Brands, Inc. 2016 Cash Incentive Plan
B-1 The Men's Wearhouse, Inc. 2015 Proxy Statement iii Tailored Brands, Inc. 2016 Proxy Statement iii Date and Time: Wednesday, July 1, 2015,Thursday, June 16, 2016, at 11:00 a.m., Pacific daylight time
Place:
The Men's Wearhouse,Tailored Brands, Inc. executive offices located at
6100 Stevenson Blvd., Fremont, CA 94538
Record Date:
If you were a shareholder of record at the close of business on May 6, 2015, you may vote at the meeting and any adjournment(s) thereofApril 19, 2016 Board
Recommendation Page Reference
for More
InformationProposal 1: Elect eightall ten directors to our Board of the Company to hold office until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified:
Directors FOR 5
William B. Sechrest
Sheldon I. Stein
Rinaldo S. Brutoco
David H. Edwab Grace NicholsDinesh S. Lathi Douglas S. Ewert Grace Nichols B. Michael Becker Allen I. Questrom Rinaldo S. BrutocoIrene Chang Britt B. Michael BeckerSheldon I. Stein Approve a proposal to amendProposal 2: Adopt the Company's 2004Tailored Brands, Inc. 2016 Long-Term Incentive Plan as amended, to (i) increase both the number of shares authorized for issuance under the plan and the related annual limits to individual participants and (ii) remove remaining share recycling provisions from the plan.
FOR
18ApproveProposal 3: Adopt the material terms of the performance goals for performance awards under the Company's 2004 Long-TermTailored Brands, Inc. 2016 Cash Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code.
FOR
32
Proposal 4: Approve an amendment to our Bylaws to require the resignation of any director who does not receive a majority vote in uncontested director elections
FOR
37
Proposal 5: Approve, on an advisory basis, the compensation of the Company'sour named executive officers.officers
FOR
7869
Proposal 6: Ratify the appointment of the firm of Deloitte & Touche LLP as our independent registered public accounting firm for the Company for fiscal 2015.
2016
FOR
82The Men's Wearhouse,Tailored Brands, Inc. is soliciting your vote at the Annual Meeting of Shareholders. Costs of the solicitation are being borne by the Company.Common Stockcommon stock at the close of business on May 6, 2015,April 19, 2016, also referred to as the "Record Date". Only the holders of record shallat the Record Date will be entitled to notice of, and to vote at, the Annual Meeting. You are entitled to one vote on each matter presented at the Annual Meeting for each share of our Common Stockcommon stock for which you were athe holder of record on the Record Date. If you held shares of our Common Stock on the Record Datecommon stock in "street name" (usuallyThe Men's Wearhouse, Inc. 2015 Proxy Statement , then on the Record Date, the record holder of your shares will generally vote those shares in accordance with your instructions.
How do I vote? The process for voting your shares of our common stock depends on how your shares are held. Generally, you may hold shares in your name as a "record holder" (that is, in your own
| | Tailored Brands, Inc. 2016 Proxy Statement 1 |
name) or in "street name" (that is, through a nominee, such as a broker or bank). If you hold shares of our common stock in street name, you are considered to be the "beneficial owner" of those shares.
Record Holders. If you are a record holder, you may vote your shares using one of the following methods:
If you vote via the Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned a proxy card.If you vote via the Internet or by telephone, do not return a proxy card.
Held In Street Name. If you hold shares of our common stock in the name of a broker, bank or other nominee, you should receive a Notice of Internet Availability of Proxy Materials or separate instructions from the broker, bank or other nominee. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by the broker, bank or other nominee to instruct your broker, bank or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker, bank or other nominee.Your broker, bank or other nominee is permitted to vote your shares with respect the "routine" proposal to ratify the appointment of the Company's independent registered public accounting firm without your instruction as to how to vote but will not be permitted to vote your shares with respect to any of the other proposals at the Annual Meeting without your instructions as to how to vote.
If you hold shares of our common stock in the name of a broker, bank or other nominee and you want to vote in person, you will need to obtain (and bring with you to the Annual Meeting) a legal proxy from the record holder of your shares (who must have been the record holder of your shares of our common stock as of the close of business on April 19, 2016) indicating that you were a beneficial owner of shares of our common stock as of the close of business on April 19, 2016, as well as the number of shares of which you were the beneficial owner on such date, and appointing you as the record holder's proxy to vote the shares of our common stock covered by that proxy at the Annual Meeting.
What am I voting on? You are voting on:
| | Tailored Brands, Inc. 2016 Proxy Statement 2 |
What is the quorum requirement for holding the Annual Meeting? The holders of a majority of the total shares of our Common Stockcommon stock issued and outstanding on May 6, 2015,April 19, 2016, must be present in person or represented by proxy for the meeting to be held. The shares held by each shareholder who properly submits a proxy will be counted for purposes of determining the presence of a quorum at the meeting. As of the close of business on May 6, 2015,April 19, 2016, we had 48,321,40848,629,978 shares of our Common Stockcommon stock outstanding and entitled to vote at the Annual Meeting.
What vote is required to elect a director at the Annual Meeting? To be elected, a director nominee must receive a plurality of the votes cast. The form of proxy provides a means for you to vote for all, some or none of the nominees. The withholding of authority to vote for some or all of the nominees by you will reduce the number of votes received by, but otherwise will have no effect on the results of the election of, those directors for whom authority to vote is withheld. The holders of shares of our common stock have no cumulative voting rights in the election of directors.
What vote is required to pass the other proposals at the Annual Meeting? The affirmative vote of a majority of theall of our outstanding shares is required to approve the amendment to our Bylaws. For all other proposals.proposals other than the election of directors, the affirmative vote of a majority of the votes cast on that proposal, including abstentions, is required for approval.
What is the effect of an "abstain" vote on the proposals to be voted on at the Annual Meeting? Abstentions are counted toward the calculation of a quorum, but are not treated as either a vote for or against a proposal. Exceptand, except as discussed below with respect to advisory votes, an abstention hashave the same effect as a vote against a proposal or, in the case of the election of directors, as shares to which voting power has been withheld. With respect to the vote to approve, on an advisory basis, the compensation of our named executive officers, a shareholder's choice to abstain will reduce the number of votes cast for, but otherwise will have no effect on the results of, this advisory vote.proposal.
What is the effect of a "broker non-vote" on the proposals to be voted on at the Annual Meeting? A "broker non-vote" occurs if your shares of our Common Stockcommon stock are not registered in your name and you do not provide the record holder of your shares (usually a bank, broker, or other nominee) with voting instructions on any matter as to which, under the New York Stock Exchange ("NYSE") Listing Standards, a broker may not vote without instructions from you, but the broker nevertheless provides a proxy for your shares of our Common Stock.common stock. Broker non-votes are considered present for purposes of determining whether a quorum exists, but are not considered "votes cast" or shares "entitled to vote" with respect to any matter and therefore will have no effect on the results of a shareholder vote.vote, except for the proposal to approve the amendment to our Bylaws. Broker non-votes will have the effect of a vote against the bylaw amendment because the affirmative vote of a majority of all our outstanding shares is required to approve the amendment; therefore, any share not voted in favor of the amendment has the same effect as a vote against.
Under the NYSE Listing Standards, the ratification of the appointment of our independent registered public accounting firm is the only matter for consideration at this meeting that a broker may vote on
The Men's Wearhouse, Inc. 2015 Proxy Statement
without your instructions. Therefore, if you do not provide instructions to the record holder of your shares with respect to all other proposals, a broker non-vote as to your shares of our Common Stockcommon stock will result with respect to these proposals.
If your shares of our Common Stockcommon stock are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in the shareholder voting on these important matters.
| | Tailored Brands, Inc. 2016 Proxy Statement 3 |
How do I vote? The process for voting your sharesTable of our Common Stock depends on how your shares are held. Generally, you may hold shares in your name as a "record holder" (that is, in your own name) or in "street name" (that is, through a nominee, such as a broker or bank). If you hold shares of our Common Stock in street name, you are considered to be the "beneficial owner" of those shares.Contents
If you are a record holder, you may vote by proxy or you may vote in person at the Annual Meeting. If you are a record holder and would like to vote your shares by proxy prior to the Annual Meeting:
If you plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot at the Annual Meeting. Even if you vote by proxy, you may still attend the Annual Meeting.
If your shares of our Common Stock are held in the name of a broker, bank, or other nominee, you should receive separate instructions from the holder of your shares describing how to vote. You must respond as set out in those instructions in order for your shares to be voted on the matters to be presented at the Annual Meeting. If you do not instruct your broker, bank, or other nominee on how to vote in the election of directors; the vote to approve the proposal to amend our 2004 Long-Term Incentive Plan; the vote to approve the material terms of performance goals for performance awards under our 2004 Long-Term Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code; and the vote to approve, on an advisory basis, the compensation of our named executive officers, your shares will not be voted on these matters.
Nonetheless, if your shares of our Common Stock are held in the name of a broker, bank, or other nominee and you want to vote in person, you will need to obtain (and bring with you to the Annual Meeting) a legal proxy from the record holder of your shares (who must have been the record holder of your shares of our Common Stock as of the close of business on May 6, 2015) indicating that you were a beneficial owner of shares of our Common Stock as of the close of business on May 6, 2015, as well as the number of shares of which you were the beneficial owner on such date, and appointing you as the record holder's proxy to vote the shares of our Common Stock covered by that proxy at the Annual Meeting.
What if I do not specify a choice for a matter when returning a proxy? Properly submitted proxies received either by mail, Internet, or telephone in time for the meetingAnnual Meeting will be voted as specified therein. If you did not indicate otherwise (excluding broker non-votes), the persons named as proxies on the proxy card will vote your shares of our Common Stockcommon stock as follows:
The Men's Wearhouse, Inc. 2015 Proxy Statement
Can I revoke my proxy? Yes, you may revoke your proxy if you are a record holder by:
If your shares of our Common Stockcommon stock are held in street name through a broker, bank, or other nominee, you should contact the record holder of your shares regarding how to revoke your proxy.
Why did I receive a Notice Regardingof Internet Availability of Proxy Materials? Pursuant to the "notice and access" rules adopted by the Securities and Exchange Commission (the "SEC"), we have elected to provide shareholders access to our proxy materials (including the Notice of Annual Meeting of Shareholders, this proxy statement and our 2015 Annual Report on Form 10-K) over the Internet. As a result, instead of a paper copy of our proxy materials, a Notice Regardingof Availability of Proxy Materials will be delivered to some or all of our shareholders.shareholders, except for those shareholders who have previously requested to receive a paper copy of the proxy materials. This notice explains how you can access our proxy materials over the Internet and also describes how to request a printed copy of these materials.
Why didn't I receive aThe Notice Regardingof Internet Availability of Proxy Materials? We are mailing our proxy materialsMaterials only identifies the items to our shareholders who have previously requestedbe voted on at the Annual Meeting. You cannot vote by marking the Notice of Internet Availability of Proxy Materials and returning it. The Notice of Internet Availability of Proxy Materials provides instructions on how to receive a paper copy of the proxy materials.cast your vote.
How can I access the proxy materials over the Internet? You can access this proxy statement and our 20142015 Annual Report on Form 10-K atwww.menswearhouse.com www.tailoredbrands.com under "Investor Relations""Investors". If you wish to help reduce the costs incurred by us in mailing proxy materials, you can consent to receiving all proxy materials for future annual meetings of shareholders electronically by e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
How may I obtain a paper or e-mail copy of the proxy materials? If you received a Notice Regardingof Internet Availability of Proxy Materials, you will find instructions about how to obtain a paper or e-mail copy of the proxy materials and our 20142015 Annual Report on Form 10-K in your notice. We will mail a paper copy of the proxy materials and our 20142015 Annual Report on Form 10-K to all shareholders to whom we do not send a Notice Regarding Internet Availability of Proxy Materials.
| | Tailored Brands, Inc. 2016 Proxy Statement 4 |
What should I do if I receive more than one Notice Regardingof Internet Availability of Proxy Materials or more than one paper copy of the proxy materials? Certain shareholders may receive more than one Notice Regardingof Internet Availability of Proxy Materials or more than one paper copy of the proxy materials, including multiple proxy cards. For example, if you hold your shares of our Common Stockcommon stock in more than one brokerage account, you may receive a separate notice or a separate voting instruction card for each brokerage account in which you hold shares. If you are a shareholder of record and your shares of our Common Stockcommon stock are registered in more than one name, you may receive a separate notice or a separate set of paper proxy materials and proxy card for each name in which you hold shares. To vote all of your shares of our Common Stock,common stock, you must complete, sign, date, and return each proxy card you receive or vote the shares to which each proxy card relates. If you havehold shares of our Common Stock heldcommon stock in one or more street names, you must complete, sign, date, and return to each bank, broker or other nominee through whichwhom you hold shares each instruction card received from that bank, broker or other nominee.
How can I attend the Annual Meeting? If you wish to attend the meeting in person and you are the record holder of shares of our Common Stockcommon stock on May 6, 2015,April 19, 2016, you must show a government issued form of identification which includes your picture. If you are a beneficial owner of shares of our Common Stockcommon stock as of May 6, 2015April 19, 2016 that are held for your benefit by a bank, broker or other nominee, in addition to the picture identification, you will need proof of ownership of our Common Stockcommon stock on May 6, 2015April 19, 2016 to be admitted to the meeting. A recent brokerage statement or a letter from your bank, broker, or other nominee holder that shows that you were an owner on May 6, 2015,April 19, 2016, are examples of proof of ownership.
The Men's Wearhouse, Inc. 2015 Proxy Statement Where can I find the voting results for the Annual Meeting?
We will report the voting results in a Current Report on Form 8-K filed with the SEC within four business days following our 2016 Annual Meeting. You can access this report at www.tailoredbrands.com – Investors – SEC Filings – Latest Current Report.
Table of Contents
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, eightten directors, constituting the entire Board of Directors of the Company (the "Board of Directors" or the "Board"), are to be elected.standing for election. All directors of the Company hold office until the next annual meeting of shareholders or until their respective successors are elected and qualified or their earlier death, resignation or removal.
TheAt a meeting on March 16, 2016, the Board approved the recommendation of the Nominating and Corporate Governance Committee and nominated the following persons have been nominated to fillstand for election at the eight positions to be elected by the shareholders.Annual Meeting. It is the intentionexpected that all of the persons named innominees will be able to serve. However, if before the election, one or more of the nominees are unable to serve or for good cause will not serve, the proxy toholders will vote the proxies for the election of theremaining nominees named below, unless otherwise specified. Management of the Company does not contemplate that any of the nominees will become unavailableand for any reason, but if that should occur before the meeting, proxies will be voted for another nominee, or othersubstitute nominees to be selected by the Nominating and Corporate Governance Committee ofand approved by the Board of Directors.
Name | Age | Position with the Company | Director Since | Age | Position with the Company | Director Since | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
William B. Sechrest | 72 | Chairman of the Board | 2004 | | 73 | Chairman of the Board | | 2004 | |||||||
David H. Edwab | 60 | Vice Chairman of the Board | 1991 | 61 | Vice Chairman of the Board | 1991 | |||||||||
Douglas S. Ewert | 51 | Chief Executive Officer and Director | 2011 | | 52 | President and Chief Executive Officer and Director | | 2011 | |||||||
B. Michael Becker | 71 | Director | 2013 | ||||||||||||
Irene Chang Britt | | 53 | Director | | 2015 | ||||||||||
Rinaldo S. Brutoco | 68 | Director | 1992 | 69 | Director | 1992 | |||||||||
Sheldon I. Stein | 61 | Director | 1995 | ||||||||||||
Dinesh S. Lathi | | 45 | Director | | 2016 | ||||||||||
Grace Nichols | 68 | Director | 2011 | 69 | Director | 2011 | |||||||||
Allen I. Questrom | 75 | Director | 2013 | | 76 | Director | | 2013 | |||||||
B. Michael Becker | 70 | Director | 2013 | ||||||||||||
Sheldon I. Stein | 62 | Director | 1995 |
| | Tailored Brands, Inc. 2016 Proxy Statement 5 |
Further biographical information about our nominees for director and the experience, qualifications, attributes, and skills considered by our Nominating and Corporate Governance Committee and Board of Directors in determining that the nominee should serve as a director appears below.
William B. Sechrest | ||
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Mr. Sechrest was a founding shareholder in the law firm of Winstead Sechrest & Minick P.C. from 1973 to 2006, specializing in finance and banking practice. Currently, Mr. Sechrest is actively involved as a founding shareholder and member of the board of directors of OCB Bancorp, formerly known as Ojai Community Bank, and SimpliPhi Power, Inc., formerly known as Ojai Energy Systems, Inc., is the chief financial officer of SimpliPhi Power, Inc., and is a member of the law firm Calhoun, Bhella & Sechrest LLP. Mr. Sechrest is a member of the American College of Real Estate Lawyers.
Mr. Sechrest's extensive experience advising others with respect to developing, financing and protecting businesses and his combination of skill in legal, financial and organizational matters qualify him to sit on our Board.
Mr. Sechrest serves as non-executive Chairman of the Board of Directors and is a member of the Audit Committee.
David H. Edwab |
Mr. Edwab joined the Company in 1991 and served as Senior Vice President, Treasurer and Chief Financial Officer of the Company. In 1993, he served as Chief Operating Officer of the Company. In 1997, Mr. Edwab was named President of the Company. In 2000, Mr. Edwab was named non-executive Vice Chairman of the Board for the Company. In 2002, Mr. Edwab re-joined the Company as executive Vice Chairman of the Board until his retirement as an executive officer and employee of the Company on October 1, 2014. He continues to serve as the non-executive Vice Chairman of the Board. Mr. Edwab is also a director of New York & Company, Inc., where he serves as chairman of their nomination and governance committee and is on their audit committee, and Vitamin Shoppe, Inc., where he serves on their audit committee and is a member of their nomination and governance committee. Mr. Edwab is an inactive CPA and has experience in investment banking and private equity.
Mr. Edwab's broad financial, operational and transactional experience in retailing and extensive experience serving on the boards of directors of retail companies qualify him to sit on our Board.
Douglas S. Ewert |
Mr. Ewert joined the Company in 1995. From 1996 to 1999, he served as General Merchandise Manager. From 1999 to 2000, he served as Vice President – Merchandising and General Merchandise Manager. In April 2000, he was named Senior Vice President – Merchandising, and in March 2001, he was named Executive Vice President and Chief Operating Officer of K&G Men's Wearhouse, Inc. 2015 Proxy Statement Company. In March 2002, he was named Executive Vice President and General Merchandise Manager for the Company. In January 2005, he was named Executive Vice President and Chief Operating Officer. In January 2008, he was named President and Chief Operating Officer. On June 15, 2011, Mr. Ewert became President and Chief Executive Officer of the Company and, in September 2014, his title was changed to Chief Executive Officer. In March 2016, he assumed the position of President in addition to Chief Executive Officer.
Mr. Ewert's demonstrated leadership and long-term experience with the Company, as well as extensive experience with men's retailing generally, qualify him to sit on our Board.
| | Tailored Brands, Inc. 2016 Proxy Statement 6 |
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Mr. Becker served as an Audit Partner for Ernst & Young LLP from 1979 until his retirement in 2006. Mr. Becker was a Senior Consultant on airline risks to Pay Pal, Inc. from August 2008 to November 2009 and from August 2006 to August 2008 had a consulting practice which had an arrangement with Ernst & Young LLP to provide accounting and audit consulting services for two of its clients. Mr. Becker holds an MBA and is also a director at Vitamin Shoppe, Inc., where he is chairman of its audit committee and is on its compensation committee.
Mr. Becker's extensive experience in financial matters and in auditing and reporting on the financial statements and internal control over financial reporting of large publicly held companies, including retail companies, as well as extensive experience in serving a variety of retailers as auditor, consultant and board member, qualify him to sit on our Board.
Mr. Becker serves as the Chairman of the Audit Committee.
Irene Chang Britt |
Ms. Britt joined Campbell Soup Company in 2005 and held a number of roles including President, Pepperidge Farm, Inc. 2015 Proxy Statement and Senior Vice President and Chief Strategy Officer with responsibility for global strategy development, global marketing services and global consumer insights. Prior to Campbell, she held leadership roles with Kraft Foods and Kimberly-Clark. Ms. Britt currently serves on the boards of TerraVia Inc. and Dunkin Brands Group, Inc., including on the audit committee of Dunkin Brands, and formerly served on the Board of Sunoco, Inc. from November 2011 to October 2012.
Ms. Britt's deep knowledge of the consumer products industry with extensive executive experience and expertise in global strategy development, marketing services and consumer insights, as well as extensive experience serving on the boards of directors of other public companies, qualify her to sit on our Board.
Ms. Britt is a member of the Audit Committee.
Rinaldo S. Brutoco |
Mr. Brutoco has served as President and Chief Executive Officer of ShangriLa Consulting, Inc., which is affiliated with the ShangriLa Group, a privately held consulting and merchant banking concern, and he is President of Seven Oaks Ranch, Inc. and Live Well Brands, Inc., both of which are manufacturers and distributors of organic products. He also is founder, President and Chief Executive Officer of the World Business Academy and has authored multiple books and articles on business theory, economics, corporate governance, corporate responsibility, energy policy and innovation.
Mr. Brutoco's significant legal, financial, retailing and organizational experience, as well as extensive knowledge of new technologies and business methodologies, qualify him to sit on our Board.
Mr. Brutoco is a member of the Audit Committee and the Nominating and Corporate Governance Committee.
Dinesh S. Lathi |
Mr. Lathi joined One Kings Lane, Inc., a leading online destination for premium home décor, in 2011 and held a number of roles including Chief Financial Officer, Chief Operating Officer and most recently Chief Executive Officer since 2014. Prior to One Kings Lane, Mr. Lathi spent seven years in various senior executive roles at eBay, Inc. Prior to eBay, Mr. Lathi spent eight years in investment banking and private equity.
| | Tailored Brands, Inc. 2016 Proxy Statement 7 |
Mr. Lathi's extensive experience in leadership, operation and financial management of online retailing as well as his financial expertise gained as an investment banker, private equity executive and chief financial officer qualify him to sit on our Board.
Mr. Lathi is a member of the Compensation Committee.
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Ms. Nichols spent more than twenty years at Limited Brands, including 14 years as Chief Executive Officer of Victoria's Secret Stores from 1992 until she retired in January 2007. Prior to joining Limited Brands, Ms. Nichols held various senior merchandising positions in teen's and women's apparel at The Broadway Southern California divisions of Carter, Hawley, Hale, Inc. Ms. Nichols is also a director of New York & Company, Inc., where she serves as non-executive chairperson and is on the nomination and governance committee and the compensation committee. In addition, Ms. Nichols served as a director of Pacific Sunwear of California Inc. from 2007 to March 2012.
Ms. Nichols' extensive experience as a senior executive and director in the retail industry, with particular expertise in branding and merchandising, and her ability to understand and analyze the operational and management challenges associated with large retail companies qualify her to sit on our Board.
Ms. Nichols serves as Chair of the Nominating and Corporate Governance Committee.
Allen I. Questrom |
Mr. Questrom was Chairman and Chief Executive Officer of Neiman Marcus, Inc. 2015 Proxy Statement from 1988 to 1990. He was Chairman and CEO of Federated Department Stores, Inc. (now Macy's) from February 1990 to May 1997. He served as Chairman of the Board of Barneys New York, Inc. from 1999 to 2001 and as Chief Executive Officer and President from 1999 until 2000. From 2000 through 2004, he was the Chairman and Chief Executive Officer of J.C. Penney Company. He has been a Senior Advisor for Lee Equity Partners since 2006. Mr. Questrom is currently a member of the Board of Directors of At Home retail chain and a Trustee of Boston University. Mr. Questrom was a member of the board of directors of Sotheby's until June 2014; a member of the board of directors of Foot Locker, Inc. until 2013; and a member of the board of directors of Wal-Mart Stores, Inc. and the non-executive chairman of Deb Shops, Inc. until 2010.
Mr. Questrom's vast executive management experience as the chief executive officer of several large, publicly held retailers and extensive knowledge and expertise in areas such as marketing, merchandising, customer service and the overall retail marketplace qualify him to serve on our Board.
Mr. Questrom is a member of the Compensation Committee.
Sheldon I. Stein |
Mr. Stein is the President and Chief Executive Officer of Glazer's Distributors, one of the country's largest distributors of wine, spirits, and malt products. From 2008 until July 2010, Mr. Stein was a Vice Chairman of Global Investment Banking and Head of Southwest Investment Banking for Bank of America, Merrill Lynch. Before joining Merrill Lynch, Mr. Stein had been with Bear Stearns for over twenty years as a Senior Managing Director running Bear Stearns' Southwest Investment Banking Group and as a member of Bear Stearns' President Advisory Council. Mr. Stein is also a director of Alon USA Partners, LP, where he serves on the audit committee. In addition, Mr. Stein served as a director of Tuesday Morning Corporation from September 2011 until May 2012.
| | Tailored Brands, Inc. 2016 Proxy Statement 8 |
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Mr. Stein's long history of serving as a strategic advisor to chief executive officers of large public companies, as well as extensive experience and skills in corporate finance and mergers and acquisitions, qualify him to sit on our Board.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Table Mr. Stein serves as Chairman of Contentsthe Compensation Committee and is a member of the Nominating and Corporate Governance Committee.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.
OurMr. Ewert, our sole employee directors dodirector, does not receive any additional compensation in respect of theirfor his service as directors. After review of recommendations for board compensation provided by Pay Governance, a prominent consulting firm specializing in advisory services related to executive and director compensation, and as a result of our acquisition of Jos. A. Bank Clothiers, Inc. ("Jos. A. Bank") and the additional responsibilities assumed by the Board over a now much larger enterprise, the Board increased its annual compensation commencing with the payments made at the end of the third quarter of fiscal 2014.director. Each of our non-employee directors now receives an annual cash retainer of $125,000 (increased from $100,000).$125,000. In addition, Mr. Sechrest, as the Chairman of the Board, receives an additional annual cash retainer of $125,000 (increased from $50,000 as lead director).$125,000. The Chair of the Audit Committee now receives an additional annual cash retainer of $25,000, (increased from $20,000), members of the Audit Committee who aredo not otherwiseserve as the Chairman of the Board or a chair of another committee will receive an additional annual cash retainer of $15,000 (increased from $10,000) and any members of the Audit Committee who are also the Chairman of the Board or a chair of another committee will continue to receive an additional annual cash retainer of $10,000. The Chair of the Compensation Committee now receives an additional annual cash retainer of $20,000 (increased from $10,000) and the Chair of the Nominating and Corporate Governance Committee receives an additional annual cash retainer of $15,000 (increased from $10,000).$15,000.
Further,During fiscal 2015, each non-employee director on the last day of each fiscal quarter receivesreceived a grant of a number of shares of restricted stock equal to $31,250 (increased from $25,000) divided by the closing price of our Common Stockcommon stock on the last trading day of such fiscal quarter. In addition, on September 11, 2014, each non-employee director received a one-time grant of 2,500 restricted shares of our Common Stock that vests on September 12, 2015 in recognition ofUpon appointment to the Jos. A. Bank acquisition and the additional responsibilities related thereto. Upon his or her appointment,Board, any new director will receive a grant of 2,500 restricted shares of our Common Stock ascommon stock. Beginning in fiscal 2016, instead of the first day such person is appointed or electedquarterly equity grants, each non-employee director will receive an annual equity grant equal to the Boarda number of Directors (changed from a grantshares of restricted shares having a fair market valuestock or DSUs equal to $25,000$125,000 divided by the closing price of our common stock as reported on the NYSE on the date of grant).grant, which will be the date of our annual meeting of shareholders. All such awards are or will be subject to the terms of the Tailored Brands, Inc. 2004 Long-Term Incentive Plan. AllThe restrictions on the restricted stock or DSU awards lapse one year after the date of grant or, if earlier, upon the occurrence of a Changechange in Controlcontrol of the Company (as definedCompany; provided, that if a director ceases to serve on the Board for any reason other than removal for cause, any outstanding restricted stock or DSU awards will vest on a pro rata basis based on the number of completed months of service during the one-year vesting period.
Procedures and Processes for Determining Director Compensation |
As set forth in the award agreements entered,Corporate Governance Guidelines (the "Guidelines"), the Board of Directors or an authorized committee thereof may from time to be entered, into between ustime review and the directors under the 2004 Plan,determine the form and amount of which was filed as Exhibit 10.12 to our Annual Report on Form 10-Kdirector compensation, including cash, equity-based awards, and other director compensation. The Guidelines further provide that, in determining director compensation, the following should be considered: (1) fair and competitive compensation for the fiscal year ended January 31, 2015).time commitment to appropriately discharge the work required for a company of similar size and scope; (2) alignment of the director's interest with the long-term interests of the Company; and (3) a transparent and readily understandable compensation program. From time to time, the Compensation Committee reviews director compensation with its independent compensation consultants and makes recommendations to the full Board for approval of any changes to director compensation.
| | Tailored Brands, Inc. 2016 Proxy Statement 9 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
Retirement Payments and Benefits for David Edwab |
Mr. Edwab retired as an executive officer and employee of the Company effective October 1, 2014, but continues to serve as the non-executive Vice Chairman of the Board. The Compensation Committee and the Board determined, based on the services he will perform in his new role and the Board's belief that the change in his role will be in the best interest of the Company, that his service as a director would satisfy his responsibilities under his employment agreement and permit the vesting of his equity awards, in each case as contemplated by his employment agreement. Accordingly, in accordance with the terms of his employment agreement and in connection with his retirement, as of February 6, 2015, Mr. Edwab became entitled to receive the following:
In addition, Mr. Edwab will provide up to ten hours a month of consulting services to us through February 6, 2017 for no additional consideration. Services provided in excess of ten hours a month will be compensated at a rate equal to $750 per hour.
Mr. Edwab's outstanding equity awards, including 5,000 time-based DSUs and 19,360 shares of restricted stock, which were scheduled to vest on April 13, 2015 vested on February 5, 2015. Upon vesting, Mr. Edwab realized an aggregate value of $1,163,190, based on the $47.75 closing price of our common stock on February 5, 2015. All remaining equity awards held by Mr. Edwab were forfeited as of February 6, 2015.
Mr. Edwab agreed to continue to serve on the Board of Directors and as non-executive Vice Chairman for a period of two years beginning with last year's annual meeting of shareholders, if requested by the Board of Directors and elected by the shareholders at the relevant annual meeting. Beginning with his election on July 1, 2015 and for any future periods, Mr. Edwab will be compensated on the same basis as a non-employee director.
Director Compensation Table |
The following table summarizes compensation paid to each non-employee director during the fiscal year ended January 31, 2015:30, 2016:
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1)(2)(3) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) (4) | Total ($)(3) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2)(3) | Option Awards ($) (3) | All Other Compensation ($) (4) | Total ($) | ||||||||||||||||||||||||||
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William B. Sechrest | 212,500 | 239,436 | — | — | — | 10,938 | (5) | 462,874 | | 260,000 | | 125,005 | | — | | 10,494 | (5) | | 395,499 | |||||||||||||||||||
David H. Edwab | 73,489 | 93,757 | — | 1,802,414 | (6) | 1,969,660 | ||||||||||||||||||||||||||||||||
B. Michael Becker | | 150,000 | | 125,005 | | — | | 2,636 | | 277,641 | ||||||||||||||||||||||||||||
Irene Chang Britt | 19,382 | 82,195 | (7) | — | 450 | 102,027 | ||||||||||||||||||||||||||||||||
Rinaldo S. Brutoco | 125,000 | 239,436 | — | — | — | 2,516 | 366,952 | | 140,000 | | 125,005 | | — | | 2,636 | | 267,641 | |||||||||||||||||||||
Grace Nichols | 140,000 | 125,005 | — | 7,178 | (8) | 272,183 | ||||||||||||||||||||||||||||||||
Allen C. Questrom | | 125,000 | | 125,005 | | — | | 2,636 | | 252,641 | ||||||||||||||||||||||||||||
Sheldon I Stein | 127,500 | 239,436 | — | — | — | 2,516 | 369,452 | 145,000 | 125,005 | — | 2,636 | 272,641 | ||||||||||||||||||||||||||
Grace Nichols | 121,264 | 239,436 | — | — | — | 6,231 | (6) | 366,931 | ||||||||||||||||||||||||||||||
Allen I. Questrom | 112,500 | 239,436 | — | — | — | 3,289 | 355,225 | |||||||||||||||||||||||||||||||
B. Michael Becker | 132,500 | 239,436 | — | — | — | 3,691 | 375,627 | |||||||||||||||||||||||||||||||
Michael L. Ray, Ph.D. (7) | 41,401 | 25,005 | (8) | — | — | — | 8,843 | (9) | 75,249 | |||||||||||||||||||||||||||||
Deepak Chopra, M.D. (7) | 37,637 | 25,005 | (8) | — | — | — | 8,843 | (9) | 71,485 |
| | Tailored Brands, Inc. 2016 Proxy Statement 10 |
| Aggregate Unvested Stock Awards Outstanding as of January 31, 2015 | Aggregate Options Outstanding as of January 31, 2015 | Aggregate Unvested Stock Awards Outstanding as of January 30, 2016 | Aggregate Options Outstanding as of January 30, 2016 | ||||||||||
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William B. Sechrest | 4,845 | 3,000 | | 4,132 | | — | ||||||||
David H. Edwab | 3,586 | — | ||||||||||||
B. Michael Becker | | 4,132 | | — | ||||||||||
Irene Chang Britt | 4,779 | — | ||||||||||||
Rinaldo S. Brutoco | 4,845 | 4,500 | | 4,132 | | 3,000 | ||||||||
Sheldon I. Stein | 4,845 | 4,500 | ||||||||||||
Grace Nichols | 4,845 | — | 4,132 | — | ||||||||||
Allen I. Questrom | 4,845 | — | | 4,132 | | — | ||||||||
B. Michael Becker | 4,845 | — | ||||||||||||
Michael L. Ray, Ph.D. | — | — | ||||||||||||
Deepak Chopra, M.D. | — | — | ||||||||||||
Sheldon I. Stein | 4,132 | — |
DIRECTOR NOMINATIONS AND QUALIFICATIONS
Responsibility for Selection of Director Candidates |
The Board is responsible for re-election atselecting director candidates. The Board has delegated the 2014 Annual Meeting.
Director Qualifications |
The Nominating and Corporate Governance Committee is responsible for reviewing with the Board the requisite skills and characteristics of new Board candidates. When evaluating candidates, the Board takes into account the composition of the entire Board, including the requirement that a majority of Board members be independent; the diversity of experiences and backgrounds represented on the Board; the need for financial, business, academic, public company and other expertise on the Board and its Committees; and the need to have directors who will work collegially to represent the best interests of the Company and its shareholders, its employees, and the communities in which we do business. This evaluation includes assessing the knowledge and experience of Board candidates in retail, finance, administration, operations, technology, risk management, social media, and marketing.
The Company considers diversity broadly to include differences of viewpoint, professional experience, individual characteristics, personal background, qualities, skills, qualifications, gender, and ethnicity/race. Although the Company does not have a formal policy with respect to the consideration of diversity in identifying director nominees, the Board and the Nominating and Corporate Governance
| | Tailored Brands, Inc. 2016 Proxy Statement 11 |
Committee believe that diversity in experiences, qualifications, backgrounds, and personal characteristics is important to the effectiveness of the Board's oversight of the Company. The Nominating and Corporate Governance Committee does not assign specific weight to particular factors and, depending on the current needs of the Board, may weigh certain factors more or less heavily.
Director candidates should be able to provide insights and practical wisdom based on their experience and expertise. Directors are expected to prepare for, attend and participate in Board and Board Committee meetings, to ask direct questions and require straight answers, and to devote time needed to properly discharge their responsibilities and duties as directors. Each Board member is expected to ensure that other existing and planned future commitments do not, and that they have no conflict of interest that would, materially interfere with the member's service as a director. Service on other boards and other commitments are considered by the Nominating and Corporate Governance Committee when reviewing Board candidates.
The Board believes that each of its directors is knowledgeable and has significant insight relevant to the Company's businesses, has high ethical standards and personal integrity, takes his or her responsibility to the Board seriously, demonstrates strong leadership skills in his or her area of present and past expertise, has the interest, time available and commitment to fulfill his or her responsibilities as director, and has the ability and willingness to contribute with other directors and with management.
Based on the all of these factors, the Company believes that each of its directors is qualified to serve on its Board of Directors.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Identifying and Evaluating Nominees for Directors |
The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. The Committee also regularly engages in Board succession planning by assessing the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the applicable criteria for directors. In addition, when the Committee seeks a new candidate for directorship, it seeks qualifications from the individual that will complement the attributes and perspectives of the other members of the Board. The Committee takes into consideration whether particular individuals satisfy the independence criteria set forth in the NYSE listing standards, together with any special criteria applicable to service on various committees of the Board.
In the event that vacancies are anticipated, or otherwise arise, the Committee considers various potential candidates for director from any reasonable source, including through current Board members, current management, professional search firms, shareholders or other persons. These candidates will be evaluated at regular or special meetings of the Committee or through one-on-one meetings between Committee members and Board candidates and may be considered at any point during the year. In evaluating any potential nominee, the Committee seeks to achieve a diverse view of thoughts based on each Board member's knowledge, life experiences, capabilities, and professional and personal background.
With respect to the nomination of Ms. Britt and Mr. Lathi, the Committee engaged a professional search firm to provide potential candidates for their consideration. After research, interviews and further deliberation, the Committee recommended Ms. Britt and Mr. Lathi to the full Board for election as directors effective December 7, 2015 and March 8, 2016, respectively, and for inclusion in the list of nominees to be elected at the Annual Meeting.
| | Tailored Brands, Inc. 2016 Proxy Statement 12 |
The policy of the Nominating and Corporate Governance Committee is to consider written recommendations from shareholders for positions on the Board of Directors. A shareholder who wishes to recommend a prospective nominee for director for general consideration by the Board should notify the Corporate Secretary of the Company or any member of the Committee in writing with whatever supporting material the shareholder considers appropriate, including the nominee's name and qualifications for Board membership. In evaluating the nominations, the Committee seeks to address the criteria set forth above. In addition, shareholders may nominate persons for election as directors at an annual shareholders' meeting if such nominations are made in accordance with the procedures set forth in the "Shareholder Proposals For 2017 Annual Meeting" section on page 76 of this proxy statement. The Company received no shareholder nominations for the upcoming Annual Meeting.
Corporate governance is typically defined as the system that allocates duties and authority among a company's shareholders, Board of Directors, and management. The shareholders elect the Board and vote on extraordinary matters. The Board has the ultimate decision-making authority for the Company, except with respect to those matters specifically reserved to the shareholders. The Board has responsibility for the Company's long-term strategic plans, for establishing broad corporate policies, for hiring, overseeing and evaluating executive management, particularly the Chief Executive Officer, and for our overall performance and direction, but is not directly involved in our day-to-day operations. Management runs the Company's day-to-day operations. Board members keep informed about our business by participating in meetings of the Board and its Committees, by reviewing analyses, reports and other materials provided to them by Company management and through discussions with our Chief Executive Officer and other executive officers.
Our Board of Directors currently consists of ten directors, including eight independent directors and two individuals who are not considered independent directors. If all of the nominees for election are elected, the Board will continue to be comprised of eight independent directors and two non-independent directors.
As noted, our business and affairs are managed under the direction of the Board of Directors to enhance the long-term value of the Company for our shareholders. In exercising its authority to direct, the Board recognizes that the long-term interests of our shareholders are best advanced by appropriate consideration of other stakeholders and interested parties including employees and their families, customers, suppliers, communities and society as a whole. To assist the Board in fulfilling its responsibilities, the Board has adopted certain Corporate Governance Guidelines (the "Guidelines").Guidelines. The Guidelines can be found on our websiteare available at www.tailoredbrands.com under "Investor Relations – Corporate Governance.Governance – Governance Documents." The Board, with the assistance of the Nominating and Corporate Governance Committee, periodically reviews the Guidelines to ensure they comply with all applicable requirements of the NYSE rules. As contemplated by the Guidelines, the Board of Directors has regular executive sessions where non-management directors meet without management participation. The director designated by the Board as the Chairman of the Board is the presiding director for each executive session.
Affirmative Determination of Directors Independence As set forth in the Guidelines, a majority of the members of the Board of Directors must qualify as independent directors in accordance with the applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules promulgated thereunder, and the applicable rules of the NYSE. In addition, at least two-thirds least the nearest whole number to two-thirds that is less than two-thirds) A director The Board Board Leadership Structure and Role in Risk Oversight The Board of Directors believes that it is beneficial to the Company and increases the effectiveness of the Board to have an independent director integrally involved in establishing and leading the Board agenda and interacting with management on a regular basis. As a result, the Board of Directors has appointed Mr. Sechrest to serve as the non-executive Chairman of the Board. In his capacity as Chairman, Mr. Sechrest consults regularly with Mr. Ewert and other members of management; has primary responsibility with Mr. Ewert for preparing the agenda for Board meetings; leadership structure and retains the authority to modify the structure, as and when appropriate, to address our then current circumstances. The Board and its Committees play an important role in overseeing management's identification, assessment, and mitigation of In particular, the Audit Committee assists the Board in fulfilling its oversight responsibility relating to the performance of our system of internal controls, legal and regulatory compliance, our audit, accounting and financial reporting processes, and the evaluation of enterprise risk issues, particularly those risk issues not overseen by other committees. The Audit Committee also periodically reviews with our General Counsel legal matters, if any, that may have a material adverse impact on our financial statements, compliance with laws, and material reports, if any, received from regulatory agencies. The Compensation Committee is responsible for overseeing the management of risks relating to The Attendance at the Annual Meeting of Shareholders Our Board of Directors holds a regular meeting in conjunction with the Annual Meeting of Shareholders. Therefore, the directors are encouraged to and generally attend our Annual Meeting of Shareholders. All of Communications with the Board of Directors The Board believes that it is important for shareholders and other interested parties to have a process by which to send communications to the Director Qualificationsin number (ifof the directors (or if two-thirds is not a whole number then at Tailored Brands, Inc. 2016 Proxy Statement 13 of the directors shallmust meet the following qualifications:shallmay not serve on more than four boards of directors of publicly-held companies (including our Board of Directors) unless the full Board determines that such service does not impair the director's performance of his or her duties to the Company. Directors are expected to report changes in their business or professional affiliations or responsibilities, including retirement, to the Chairman of the Board and the Chair of the Nominating and Corporate Governance Committee and will be expected to offer to resign if the Nominating and Corporate Governance Committee concludes that the director no longer meets our requirements for service on the Board of Directors.Board. The Nominating and Corporate Governance Committee of the Board may establish from time to time additional qualifications for directors, taking into account the composition and expertise of the entire Board.believes that directors should be shareholders and have a financial stake in the Company. Therefore, the Board requires directors to hold an ownership position in the Company, which inThe Men's Wearhouse, Inc. 2015 Proxy Statement September 2014 was increased to the lesser of 12,000 shares or $625,000 in aggregate market value. New directors must reach the ownership requirement within five years of becoming a director. Each director has met the new requirement, except Messrs. Becker and Questrom who have until September 2016 to do so.Identifying and Evaluating Nominees for Directors The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Nominating and Corporate Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating and Corporate Governance Committee will consider various potential candidates for director. Candidates may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms, shareholders or other persons. These candidates will be evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year. In evaluating such nominations, the Nominating and Corporate Governance Committee seeks to achieve a diverse view of thoughts based on each Board member's knowledge, life experiences, capabilities, and ethnic background. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, it does attempt to identify director nominees who can provide a diverse perspective to the Board of Directors.Board of Directors Independence The Board of Directors has affirmatively determined that each member of the Board, with the exception of Messrs.Mr. Edwab and Mr. Ewert, is independent in accordance with NYSE Listing Standards and our Guidelines and has no current material relationship with the Company, except as a director. When determining whether a director qualifies as independent, the Board, in accordance with NYSE rules, broadly considers all relevant facts and circumstances to determine whether the director has any material relationship with the Company, either directly or indirectly (as a partner, shareholder or officer of an organization that has a relationship with the Company), other than serving as one of our directors.with Mr. Ewert, leads the meetings of the Board of Directors;Directors with Mr. Ewert; and chairs the executive sessions of the Board. We believe that the bifurcation of the chairman and chief executive officer roles leads to more prudent risk management practices and brings a level of oversight to management activities that may not otherwise exist if the chairman and chief executive officer was a single individual. The Board periodically reviews our Tailored Brands, Inc. 2016 Proxy Statement 14 Directors addressesrisks that are material to us. The Board has ultimate oversight responsibility for our risk management program and discharges many of its responsibilities and oversight functions with respect to risk through its Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.the Company's overall business strategy, including the risks related to mergers and acquisitions, divestitures, and other significant non-recurring transactions. With respect to theour compensation programs. In connection with its oversight ofresponsibility, the Company's operational risks, the Company's Chief Compliance Officer supervises the day-to-day risk management responsibilities and in turn reports to the Audit Committee on particular areas of risk. The Audit Committee focuses on the process the Company goes through to identify financial, operational and data security risks and the procedures for addressing such risks, and periodically requires the Chief Compliance Officer and other members of senior management to report to the Audit Committee with respect thereto. The Compensation Committee considers human resources risksperiodically reviews and evaluates and setsour compensation programs to determine if there are any pay practices that encourage decision-making predicated uponmay create, and any factors that may reduce the likelihood of, excessive risk taking by our employees to determine whether our compensation program presents a level ofmaterial risk consistent with our business strategyto us. Based on its most current review and to ensureevaluation, the Compensation Committee has concluded that our compensation policies, programs and practicesfor our employees (including our executive officers) do not create risks that are reasonably likely to have a material adverse effect on the Company.us.Men's Wearhouse, Inc. 2015 Proxy Statement Table of ContentsNominating and Corporate Governance Committee oversees risks associated with corporate governance, business conduct, and ethics.theour then current directors attended the 2014our 2015 Annual Meeting of Shareholders.Company
AnyBoard. Accordingly, any shareholder or other interested party wishing to send written communications to any one or more members of our Board Committees or the Board of Directors including the Chairman of the Board or other non-management directors, may do so by sending communications to them in care of the Corporate Compliance, 6380 Rogerdale Road, Houston, Texas 77072.Secretary, 6100 Stevenson Blvd., Fremont, California 94538. All such communications will be reviewed by the Company and forwarded to Board members as appropriate.
Committees of the Board of Directors and Meeting Attendance |
During the fiscal year ended January 31, 2015, no30, 2016, the Board of Directors held seven meetings. Each director attended fewer than 75% of all of the meetings of the Board of Directors and of anyeach committee of which suchthe director was a member.
| | Tailored Brands, Inc. 2016 Proxy Statement 15 |
During the fiscal year ended January 31, 2015, the Board
Table of Directors held ten meetings.Contents
The Board of Directors has established three standing committees: Audit, Compensation and Nominating and Corporate Governance. In addition, during 2013, the Board established a special Transaction Committee in connection with our acquisition of Jos. A. Bank, which continued to meet into early 2014 but is no longer an active committee.
The committee(s) on which each director serves is set forth below:
| Audit | Compensation | Nominating and Corporate Governance | |||||
---|---|---|---|---|---|---|---|---|
William B. Sechrest | | |||||||
David H. Edwab | ||||||||
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Douglas S. Ewert | | | | |||||
B. Michael Becker | C | |||||||
Irene Chang Britt | M | | | |||||
Rinaldo S. Brutoco | M | M | ||||||
Dinesh S. Lathi | | M | | |||||
Grace Nichols | M | C | ||||||
Allen I. Questrom | | M | | |||||
Sheldon I. Stein | C | M |
C = Chair
M = Member
Audit Committee
The Audit Committee operates under a written charter.charter adopted by the Board which reflects SEC and NYSE rules relating to audit committees. The Board affirmatively determined that all members of the Audit Committee are "independent" in accordance with the NYSE Listing Standards and Rule 10A-3(b)(1) of the Exchange Act. In addition, the Board has determined that each of the members of the Audit Committee is "financially literate" and that each is an "audit committee financial expert," as that term is defined in the rules promulgated by the SEC pursuant to the Sarbanes-Oxley Act of 2002. The Audit Committee Chair is Mr. Becker. The Committee's responsibilities to the Board of Directors are detailed in
The Men's Wearhouse, Inc. 2015 Proxy Statement
the Amended and Restated Charter of the Audit Committee Charter, which can be found on the Company's website under "Investor Relations"Investors – Corporate Governance – Governance Documents," and are discussed in further detail in the Audit Committee's report which appears below.on page 71 of this proxy statement. During the fiscal year ended January 31, 2015,30, 2016, the Audit Committee held ninefive meetings.
Compensation Committee
The Compensation Committee operates under a written charter.charter adopted by the Board which reflects SEC and NYSE rules relating to compensation committees. The Board affirmatively determined that each member of the Compensation Committee is "independent" in accordance with the NYSE Listing Standards, is a "non-employee director," as defined in Section 16 of the Exchange Act, and is an "outside director," as defined by Section 162(m) of the Internal Revenue Code.Code of 1986, as amended (the "Code"). The Compensation Committee Chair is Mr. Stein. The Compensation Committeeassists the Board in its oversight responsibilities related to the Company's compensation strategies, objectives, and programs; reviews and recommends to the Board for approval the principal elements of Board compensation; and reviews and approves our overall compensation policy and considersbenefit programs and approves, on behalf ofpay levels for the Board of Directors, the compensation of our Named Executive Officers, including theCompany's Chief Executive Officer and certain other seniorfor executive officers andbelow the implementation of any compensation program for the benefit of any of ourchief executive officers.officer level. The Compensation Committee's responsibilities to the Board of Directors are detailed in the Charter of the Compensation Committee Charter which can be found on the Company's website under "Investor Relations"Investors – Corporate Governance.Governance – Governance Documents." During the fiscal year ended
| | Tailored Brands, Inc. 2016 Proxy Statement 16 |
January 31, 2015,30, 2016, the Compensation Committee held tenseven meetings. The Compensation Committee's report appears below.on page 55 of this proxy statement.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee operates under a written charter.charter adopted by the Board which reflects SEC and NYSE rules relating to nominating committees. The Board affirmatively determined that all members of the Nominating and Corporate Governance Committee are "independent" in accordance with the NYSE Listing Standards. The Nominating and Corporate Governance Committee Chair is Ms. Nichols. The Nominatingresponsible for reviewing and Corporate Governance Committee developsapproving the overall corporate governance policies for the Company, for identifying, screening, recruiting and recommendspresenting director candidates to the Board of Directors a set of corporate governance principles for the Company, studies and reviewsconsistent with management the overall effectiveness of the organization ofcriteria approved by the Board, of Directorsnominating directors for Board seats and the conduct of its businesscommittee membership, and reportsoverseeing Board and makes recommendations to the Board of Directors as appropriate, and considers candidates to be elected directors and recommends to the Board of Directors the nominees for directors.Committee evaluations. The Nominating and Corporate Governance Committee's responsibilities to the Board of Directors are detailed in the Charter of the Nominating and Corporate Governance Committee Charter which can be found on the Company's website under "Investor Relations"Investors – Corporate Governance."
The Nominating and Corporate Governance Committee normally does not consider unsolicited director nominees put forth by shareholders because the need for a new director generally only occurs on limited occasions when a director position becomes open as a result of a decision to increase the size of the Board or if a director retires or resigns. If and when such an event might occur, the Board of Directors feels that it is in the best interest of the Company to focus our resources on evaluating candidates at the appropriate time and who come to us through reputation or a relationship which initially validates the reasonableness of the person as a candidate or through professional search processes that do the same.– Governance Documents." During the fiscal year ended January 31, 2015,30, 2016, the Nominating and Corporate Governance Committee held one meeting.
Director Equity Ownership |
In November 2013,The Board believes that directors should be shareholders and have a financial stake in the Company. Therefore, the Board established a special Transaction Committee following the unsolicited proposal from Jos. A. Bankrequires directors to acquire the Company. The Board established the special Transaction Committee for the limited purpose of coordinating with Company management discussions related to a possible combination with Jos. A. Bank, to actively participatehold an ownership position in the negotiations with respect to such a combination, and to make recommendationsCompany, equal to the full Boardlesser of Directors with respect12,000 shares or $625,000 in aggregate market value. New directors must reach the ownership requirement within five years of becoming a director. Each director has met the new requirement, except Ms. Britt and Mr. Lathi, who have until December 2020 and March 2021, respectively, to any such combination. The Transaction Committee recommended, and the full Board approved, that we enter into an Agreement and Plan of Merger with Jos. A. Bank, dated as of March 11, 2014, pursuant to which we
do so.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Corporate Governance Materials Available on the Company's Web Site |
Information relating to the Company's corporate governance, including the following governance documents, are available at the Company's investor relations website (www.tailoredbrands.com) under "Investors – Corporate Governance – Governance Documents":
The Company's shareholders may obtain printed copies of these documents by writing to Tailored Brands, Inc., Corporate Secretary, 6100 Stevenson Blvd. Fremont, CA 94538.
| | Tailored Brands, Inc. 2016 Proxy Statement 17 |
acquired Jos. A. Bank on June 18, 2014, for total consideration of approximately $1.8 billion. The Transaction Committee is not a standing committee of the Board but may be reconstituted in the event another significant potential transaction is presented to the Board in the future. During the fiscal year ended January 31, 2015, the Transaction Committee held five meetings.
Compensation Committee Interlocks and Insider Participation |
During fiscal 2014, no member of the Compensation Committee was an officer or employee of the Company or any of our subsidiaries, or was formerly an officer of the Company or any of our subsidiaries, or had any relationships requiring disclosure by us under Item 404 of Regulation S-K of the General Rules and Regulations of the SEC or the NYSE Listing Standards.
During fiscal 2014,2015, none of our executive officers served as (i) a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served on the Compensation Committee, (ii) a director of another entity, one of whose executive officers served on the Compensation Committee, or (iii) a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served as a director of the Company.
The Men's Wearhouse, Inc. During fiscal 2015, Proxy Statement
Tableno member of Contentsthe Compensation Committee was an officer or employee of the Company or any of our subsidiaries, or was formerly an officer of the Company or any of our subsidiaries, or had any relationships requiring disclosure by us under Item 404 of Regulation S-K of the General Rules and Regulations of the SEC or the NYSE Listing Standards.
Compensation Committee ReportPROPOSAL 2:
ADOPTION OF THE
2016 LONG-TERM INCENTIVE PLAN
The Board proposes that our shareholders approve the adoption of the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the "2016 LTIP"). On March 16, 2016, based upon the recommendation of the Compensation Committee, has reviewed and discussed the Compensation Discussion and Analysis includedBoard adopted the 2016 LTIP, subject to approval by our shareholders. Set forth below is a summary of the material features of the 2016 LTIP, which summary is qualified in its entirety by the text of the 2016 LTIP, a copy of which is attached to this proxy statement with the Company's management. Based upon such review and the related discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Audit Committee Report
as Appendix A.
The Audit Committee is composed entirely of non-management directors. The memberspurpose of the Audit Committee meet the independence and financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. Each member of the Audit Committee is an "audit committee financial expert" as defined by the SEC. The Audit Committee has adopted, and annually reviews, a charter which complies with all current regulatory requirements and outlines the practices the Audit Committee follows.
The role of the Audit Committee2016 LTIP is to assistadvance the Board of Directors in fulfilling its oversight responsibilities with respect to the accounting and financial reporting processes of the Company, including its internal control over financial reporting. In fulfilling its role, the Audit Committee relies on the work and assurances of the Company's management and internal audit and the independent registered public accounting firm. Management is responsible for the financial statements and the reporting process, the system of internal controls, including internal control over financial reporting, risk management, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company's independent registered public accounting firm, Deloitte & Touche LLP, is responsible for auditing the consolidated financial statements and expressing an opinion on the fair presentation of those financial statements in conformity with accounting principles generally accepted in the United States, performing reviews of the unaudited quarterly financial statements and auditing and expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
During fiscal 2014, the Audit Committee met and held discussions with management, internal audit and the independent registered public accounting firm and independently as a committee. The Audit Committee discussed with the Company's independent registered public accounting firm and internal audit the overall scope and plans for their respective audits. In addition, the Audit Committee met with the independent registered public accounting firm and internal audit with and without management present to discuss the results of their examinations. The Audit Committee also reviewed with management and the independent registered public accounting firm significant risks and exposures identified by management, the overall adequacy of the Company's legal, regulatory and ethical compliance programs, including the Company's Code of Conduct and the Company's information technology security programs.
Management represented to the Audit Committee that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States and the Audit Committee has reviewed and discussed the consolidated financial statements as of and for the year ended January 31, 2015 with management and the independent registered public accounting firm, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant accounting judgments and critical accounting policies and estimates, the clarity of disclosures in the financial statements, and the overall quality of the Company's financial reporting.
The Men's Wearhouse, Inc. 2015 Proxy Statement
In addition, the Audit Committee reviewed and discussed with management and the independent registered public accounting firm the adequacy and effectiveness of the Company's financial reporting procedures, disclosure controls and procedures, and internal control over financial reporting, including the respective reports of management and the independent registered public accounting firm on the effectiveness of the Company's internal control over financial reporting. The Audit Committee also discussed with the Chief Executive Officer and the Chief Financial Officer of the Company their respective certifications with respect to the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal year ended January 31, 2015. The Audit Committee discussed with the independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board ("PCAOB"), including those matters required to be discussed by Auditing Standards No. 16,Communications with Audit Committees, and Rule 2-07 of Regulation S-X.
In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditor's independence from the Company and its management, including the matters in the written disclosures regarding Deloitte & Touche LLP's communications with the Audit Committee concerning independence, provided to the Audit Committee by the firm pursuant to applicable requirements of the PCAOB. The Audit Committee pre-approved the audit and non-audit services provided by the independent registered public accounting firm. The Company considered with the independent registered public accounting firm whether the provision of non-audit services to the Company by them and the related fees was compatible with the auditor's independence. The Audit Committee has concluded that the independent registered public accounting firm, Deloitte & Touche LLP, is independent from the Company and its management.
The Audit Committee is directly responsible for the appointment, evaluation, retention, compensation, oversight, and when appropriate, the termination of the independent registered public accounting firm. The Audit Committee evaluates the performance of the Company's independent registered public accounting firm, including the lead audit partner and the engagement team, each year and determines to reengage the current independent registered public accounting firm or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors and the auditors' capabilities, technical expertise and knowledge of the Company's operations and industry. The Audit Committee also considers the quality of its ongoing discussions with the auditors, the ability of the auditors to remain independent, external data relating to audit quality and performance, including recent PCAOB reports on Deloitte & Touche LLP and its peer firms, the appropriateness of fees charged, and tenure as the Company's auditors. Based on this evaluation, the Audit Committee decided that it was in the best interests of the Company and its shareholders to continueand promote the retention of Deloitte & Touche LLP as our independent registered public accounting firm for the year ended January 31, 2015. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, the Audit Committee will continue its practice of recommending that the Board ask the shareholders, at their annual meeting, to ratify the appointment of the independent registered public accounting firm.
In reliance on the reviews and discussions referred to above, and the receipt of the unqualified opinions from Deloitte & Touche LLP dated March 27, 2015, with respect to the consolidated financial statements of the Company as of and for the year ended January 31, 2015, and with respect to the effectiveness of the Company's internal control over financial reporting, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements and management's assessment of the effectiveness of the Company's internal control over financial reporting be included in the Company's Annual Report on Form 10-K for the year ended January 31, 2015, for filing with the SEC.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Overview of Proposed Amendments
On May 1, 2015, the Board approved, subject to shareholder approval, the Fourth Amendment to The Men's Wearhouse, Inc. 2004 Long-Term Incentive Plan (the "2004 Plan"), as further described below. The 2004 Plan permits the grant of options (both incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock, deferred stock units ("DSUs"), performance stock awards, performance units, other stock-based awards and cash-based awards to non-employee directors, officers and other employees of the Company. As of May 6, 2015, 430,481 shares of our Common Stock remain available for grant of future awards under the 2004 Plan.
At the Annual Meeting, shareholders are being asked to approve the proposed amendments to the 2004 Plan to increase the number of shares authorized for issuance under the 2004 Plan by 2,300,000; increase the number of shares for equity-based awards and maximum cash-based awards which may be granted to any individual participant in a given year; and remove all remaining share recycling provisions from the 2004 Plan. If the Fourth Amendment is not approved by our shareholders, the 2004 Plan will remain in force and effect in accordance with its current terms and conditions and we may grant awards up to the number of shares of Common Stock remaining available for issuance under the 2004 Plan through March 29, 2024.
If the Fourth Amendment is approved by shareholders:
In addition, the Fourth Amendment would remove all remaining "share recycling" provisions of the 2004 Plan. The Company had previously amended the 2004 Plan to only allow share recycling in the event an award was made as part of a compensation package for an individual who was hired as an
The Men's Wearhouse, Inc. 2015 Proxy Statement
employee or an individual who became an employee when his or her employer joined the Company as a result of an acquisition by merger or otherwise. If approved by shareholders, after the effective date of the amendment, the 2004 Plan would provide that: (1) shares of our Common Stock tendered as payment for an option exercise and shares of our Common Stock withheld from exercised or vested awards for taxes will no longer be available for further issuance under the 2004 Plan and (2) when a stock appreciation right is settled in shares of our Common Stock, the total number of shares subject to the stock appreciation right under the award agreement will be counted against the number of shares available for future issuances under the 2004 Plan.
The following is a brief summary intended to highlight certain of the principal features of the 2004 Plan, as amended. Because the following is a summary, it may not contain all of the information that is important to you. A copy of the 2004 Plan, as amended, is attached asAppendix A to this proxy statement and includes the proposed amendments as described herein. The description that follows is qualified in its entirety by reference to the full text of the 2004 Plan, as amended, set forth inAppendix A.
Purpose. The 2004 Plan is intended to reward certain non-employee directors of the Company and certain corporate officers and other employees of the Company and its affiliates by enabling them to acquire shares of our Common Stock and to receive other compensation based on the increase in value of our Common Stock or certain other performance measures. The 2004 Plan is also intended to advance the best interests of the Company and our shareholders by providing those persons who have substantial responsibility for the direction, management andlong-term growth of the Company by providing participants with incentives to maximize shareholder value and its subsidiaries with additional performance incentives and an opportunity to obtain or increase their proprietary interest inotherwise contribute to the success of the Company, thereby encouragingaligning the interests of participants with the interests of the Company's shareholders and providing them additional incentives to continue in their employment or affiliation with the CompanyCompany. The 2016 LTIP serves these purposes by making equity-based and its subsidiaries.equity-related awards ("Awards") available for grant to eligible participants in the form of:
| | Tailored Brands, Inc. 2016 Proxy Statement 18 |
If our shareholders in 2008. An amendmentapprove the 2016 LTIP: (1) the Company will have 6,400,000 shares of common stock available for future grant under the 2016 LTIP, less (a) one share of common stock for every share of common stock subject to increasean Option or SAR granted after May 1, 2016 under our existing long-term incentive plan, the numberTailored Brands, Inc. 2004 Long-Term Incentive Plan (the "2004 LTIP"), and (b) two shares of authorized shares was approved by the Boardcommon stock for every share of Directors and the shareholders in 2011. The Board of Directors approved an amendmentcommon stock subject to the 2004 Plan in 2012 to limit the use of share recyclingany other award granted after May 1, 2016 under the 2004 LTIP; (2) the 2016 LTIP will replace the 2004 LTIP; (3) shares will no longer be available for grant under the 2004 LTIP (except for the planned DSU grants to our non-employee directors discussed below in "New Plan Benefits"); and (4) awards outstanding under the 2004 LTIP will remain in effect in accordance with the terms of the awards and the 2004 LTIP. If the 2016 LTIP is not approved, shares will remain available for grant under the 2004 LTIP.
As of the Record Date, there were: (1) 1,093,546 shares of our common stock remaining available for issuance under the 2004 LTIP; (2) 1,271,575 outstanding stock options, with a weighted average exercise price of $29.26 and a weighted average term to clarifyexpiration of 7.51 years; (3) 960,770 outstanding DSUs; (4) 366,881 outstanding performance units; and (5) 48,629,978 total shares of common stock outstanding.
Our average share usage rate, sometimes referred to as burn rate, over the three years ended January 30, 2016 (calculated as equity-based awards granted under our equity compensation plan for the relevant year, divided by average basic common shares outstanding for that year) is approximately 1.2%. Based on that average share usage rate and recent stock price, the 6.4 million shares should enable us to continue to grant equity incentive compensation for the next 2 years or more. The potential dilution resulting from issuing all 6.4 million shares authorized under the 2016 LTIP, and taking into account outstanding awards, would be 15.7% on a fully-diluted basis.
Key Plan Features |
The 2016 LTIP includes provisions prohibiting cash buy-outs bydesigned to protect the interests of our shareholders and reflect corporate governance best practices, including:
| | Tailored Brands, Inc. 2016 Proxy Statement 19 |
granted Option or SAR for a payment of cash or other property, without the prior approval of the Company's shareholders.
Section 162(m) of the Internal Revenue Code |
Under the term2016 LTIP, the Compensation Committee may grant Cash-Based Awards, Performance Stock Awards and Performance Unit Awards in a manner that constitutes "qualified performance-based compensation" for purposes of Section 162(m) of the 2004 Plan until 2024, which amendment was approved by shareholders at our 2013 Annual Meeting. As a resultCode and the Treasury Regulations promulgated thereunder. Section 162(m) generally limits the deduction that we may take for certain remuneration paid in excess of such amendments, no awards may be$1,000,000 to any "covered employee" (as defined in Section 162(m)) in any one taxable year. Cash-Based Awards, Performance Stock Awards and Performance Unit Awards granted under the 2004 Plan2016 LTIP will not count against this $1,000,000 deduction limitation provided that (1) the lapse of restrictions on such Awards and the distribution of cash, common stock or after March 29, 2024, unlessother property pursuant to such Awards is contingent upon satisfying one or more of the 2004 Planperformance criteria enumerated in the 2016 LTIP, as established and certified by the Compensation Committee, and (2) such Awards otherwise satisfy the requirements for qualified performance-based compensation under Section 162(m). The 2016 LTIP is subsequently amended, withdesigned so that Options and SARs granted thereunder will be considered qualified performance-based compensation for purposes of Section 162(m). We are submitting the 2016 LTIP, including the performance criteria set forth therein, to the shareholders for approval of shareholders,at the Annual Meeting to extendensure that Cash-Based Awards, Performance Stock Awards and Performance Unit Awards granted under the termination date.2016 LTIP will be deductible as qualified performance-based compensation.
Summary of the 2016 Long-Term Incentive Plan |
Administration
Administration. The Compensation Committee (or a subcommitteewill administer the 2016 LTIP. The 2016 LTIP requires the Compensation Committee to be comprised of at least two directors, each of its members) or, inwhom will be an "outside director" (within the absence thereof or in the casemeaning of Section 162(m) of the non-employeeCode and the Treasury Regulations promulgated thereunder) and a "non-employee" director (within the meaning of Rule 16b-3 under the Exchange Act). The Compensation Committee currently consists of three directors, each of whom is an "outside director" and a "non-employee director."
| | Tailored Brands, Inc. 2016 Proxy Statement 20 |
In its capacity as plan administrator, the Compensation Committee will have full and exclusive power to interpret and apply the terms and provisions of the Company,2016 LTIP and Awards made under the Board, shall administer2016 LTIP, and to adopt such rules, regulations and guidelines for implementing the 2004 Plan (the "Plan Committee").2016 LTIP as the Compensation Committee may deem necessary or proper. In administeringcarrying out its authority under the 2004 Plan, the PlanCompensation Committee shallwill have full and final authority and discretion, including the full power tofollowing rights, powers and authorities to: (1) determine the personsparticipants to whom and the time or times at which awardsAwards will be made; (2) determine the number and exercise price of shares of our Common Stockcommon stock covered in each award, subject to the terms and provisions of the 2004 Plan;Award; (3) determine the terms, provisions and conditions of each award, which need not be identical and need not match the default terms set forth in the 2004 Plan;Award; (4) accelerate the time at which any outstanding awardAward will vest; (5) prescribe, amend and rescind rules and regulations relating to administration of the 2004 Plan;2016 LTIP; and (6) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the 2004 Plan.2016 LTIP.
Eligibility. Key employees who have substantial responsibility for All determinations and decisions made by the Compensation Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Compensation Committee will be final, conclusive and binding on all parties.
With respect to each Award granted under the 2016 LTIP, we will enter into a written or involvementelectronic award agreement with the managementparticipant which describes the terms and growthconditions of the Award, including (1) the type of Award and when and how it may be exercised or earned, (2) any exercise price associated with the Award, (3) how the Award will or may be settled and (4) any other applicable terms and conditions affecting the Award.
Eligibility
The Compensation Committee may select any (1) employees of the Company orand its subsidiariesaffiliates, (2) persons who have agreed to become employees of the Company and its affiliates and are expected to become such within three months of the date of the Award, (3) non-employee directors of the Company and (4) consultants who render services to the Company or its affiliates (other than the prohibited services described in the 2016 LTIP) to receive Awards under the 2016 LTIP. As of May 1, 2016, there were approximately 25,000 employees of the Company and its affiliates and nine non-employee directors of the Company. We are unable to reasonably estimate the number of third-party consultants who will be eligible to receive awards (other than incentive stock options)Awards under the 2004 Plan. An2016 LTIP.
Available Common Stock
The Men's Wearhouse, Inc. 2015 Proxy Statement
incentive stock option may be awarded only to an employee who is employed by the Company or one of its subsidiary corporations and determined by the Plan Committee to be a key employee on the date of the grant of the option.
Maximum Shares Available. Assuming the amendment Subject to the 2004 Plan is approved by our shareholders at the Annual Meeting:
Upon the grant of the award to satisfy tax obligations with respect to such award, such sharesan ISO, a NQSO or a SAR, we will count againstreduce the aggregate number of shares of our Common Stockcommon stock available for awards under the 2004 Plan and will no longer be available for further issuance under the 2004 Plan. When2016 LTIP by an amount equal to the number of shares of common stock subject to such Award. Upon the grant of an Award other than an ISO, a NQSO or a SAR (a "Full Value Award"), we will reduce the number of shares of our common stock appreciation rightavailable for issuance under the 2016 LTIP by an amount equal to the number of shares of common stock subject to such Award multiplied by 2.0. In the case of any SAR which is settled in shares of our Common Stock,common stock, the number of shares of common stock subject to the stock appreciation right under the award agreementSAR will be counted against the aggregate number of shares of our Common Stockcommon stock available for grant under the 2004 Plan as one sharefuture Awards for every share of common stock subject to the stock appreciation right,SAR, regardless of the number of shares of our Common Stock actuallycommon stock used to settle the stock appreciation rightSAR upon exercise.
AnyThe following shares of our Common Stock delivered pursuantcommon stock may be awarded under the 2016 LTIP and do not count against the 6,400,000 share limit:
| | Tailored Brands, Inc. 2016 Proxy Statement 21 |
of common stock or in part,a manner such that all or some of authorizedthe shares of Stock covered by the Award are not issued or are exchanged for Awards that do not involve shares of common stock;
During any fiscal year of the Company, the Compensation Committee may not grant any employee:
The maximum number of shares of common stock subject to Awards granted during a single fiscal year to any non-employee director, together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $500,000 in total value (based on the grant date fair value of such Awards for financial reporting purposes).
If and to the extent necessary or appropriate to reflect any stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company or other similar transaction affecting our common stock, the Compensation Committee will adjust the number of shares of common stock available for issuance under the 2016 LTIP, any other limit applicable under the 2016 LTIP with respect to the number of Awards that may be granted thereunder, and the number, class and exercise price (if applicable) or base price (if applicable) of any outstanding Award, and/or make such substitution, revision or other provisions or take such other actions with respect to any outstanding Award or the holder or holders thereof, in each case as it determines to be equitable.
On April 29, 2016, the closing price of our common stock on the NYSE was $17.42.
Types of Awards
Options. The PlanCompensation Committee may grant options underOptions at any time during the 2004 Plan to eligible personsterm of the 2016 LTIP in such number and upon such terms as the Plan Committee may determine, subjectit determines; provided, that to the terms and provisions of the 2004 Plan. The Plan Committee may award incentive stock options intended to satisfy the requirements of section 422 of the Internal Revenue Code or nonqualified stock options which are not intended to satisfy the requirements of section 422 of the Internal Revenue Code.
The price at which shares of our Common Stock may be purchased under an option shall be determined by the Plan Committee, but such price may not be less than 100% of the fair market value of the shares on the date the option is granted. No incentive stock option may be granted to any person who, at the time the option is granted, owns shares of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, unless the exercise price of such option is at least
The Men's Wearhouse, Inc. 2015 Proxy Statement
110% of the fair market value of our Common Stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted. Effective for options granted under the 2004 Plan on or after January 1, 2005, an option may not be granted with any dividend equivalent rights.
Unless a shorter term is specified in an option agreement or is an incentive stock option described in the prior paragraph, an option shall expire on the tenth anniversary of the date the option is granted. An option shall not continue to vest after the termination of the employment relationship between the optionee and the Company and its subsidiaries, or in the case of a non-employee director of the Company, the term of such director's service to the Board, for any reason other than death or disability of the optionee, unless otherwise specified in an option agreement.
Subject to certain conditions and exceptions, an option which is or has become exercisable on the date on which an optionee ceases to be an employee of the Company or, in the case of a non-employee director of the Company, the term of such director's service to the Board:
The Plan Committee shall specify in the option agreement the time and manner in which each option may be exercised. The Plan Committee may accelerate the time in which any outstanding option may be exercised. However, in no event shall any option be exercisable on or after the tenth anniversary of the date of the grant of the option.
To the extent that the aggregate fair market value (as defined in the 2016 LTIP) of shares of our Common Stockcommon stock with respect to which incentive stock optionsISOs first become exercisable by a holder of such awardparticipant in any calendar year exceeds $100,000, taking into account bothsuch Options will be treated as NQSOs. The exercise price of any Option will at least equal the fair market value of the our common stock (i.e., the closing price of the our common stock on the NYSE) on the date the Option is granted, and may be paid (1) in cash, (2) by tendering previously-acquired shares of our Common Stock subjectcommon stock, (3) by a cashless exercise or (4) through any other method approved by the Compensation Committee. The Compensation Committee will also determine the term of the option (which may not exceed ten years), the vesting terms and conditions and any other terms and conditions of the Option, all of which will be reflected in the related award agreement. The award agreement will specify whether the Option is intended to incentivebe an ISO or a NQSO. The Compensation Committee may grant all of the common stock options
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available for issuance under the 2004 Plan and our Common Stock subject2016 LTIP with respect to incentive stock options under all other plansISOs. However, the Compensation Committee may only grant ISOs to employees of the Company such options shallor its subsidiaries, and ISOs will be treated as nonqualified stock options. In reducingsubject to certain additional restrictions, including without limitation compliance with the numberrequirements of options treated as incentive stock options to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Plan Committee may designate which shares of our Common Stock are to be treated as shares acquired pursuant to the exercise of an incentive stock option.
An optionee shall not have any rights as a shareholder with respect to our Common Stock covered by an option until the date on which the optionee becomes a shareholder of record with respect to such Common Stock after exerciseSection 422 of the option.Code.
Stock Appreciation Rights. The 2004 Plan authorizesCompensation Committee may grant SARs at any time during the Plan Committee to issue stock appreciation rights ("SARs") to eligible personsterm of the 2016 LTIP in such number and upon such terms as it determines. The exercise price of any SAR will at least equal the fair market value of our common stock on the date the SAR is granted. The Compensation Committee will also determine the term of the SAR (which may not exceed ten years), the vesting terms and conditions asand any other terms and conditions of the SAR, all of which will be reflected in the related award agreement. Upon exercise of a SAR, a participant will be entitled to receive a payment from the Company in an amount determined by the Plan Committee. SARs granted under the 2004 Plan may be freestanding SARs, tandem SARs or any combination of these forms of SARs.
A SAR granted under the 2004 Plan shall confer upon a recipient a right to receive, upon exercise of such SAR, an amount equal tomultiplying the excess of the fair market value of onea share of our Common Stockcommon stock on the date of exercise over the grant price of the SAR which shall not be less than 100 percentby the number of the fair market value of one shareshares of our Common Stock on the date of grant ofcommon stock with respect to which the SAR and in no event less than par value of one share of our Common Stock. Such amount may be paid to the optionee in cash, in our
The Men's Wearhouse, Inc. 2015 Proxy Statement
Common Stock of equivalent value, in some combination thereof, or in any other manner approved by the Plan Committee in its sole discretion.is exercised. A SAR may not be granted with any dividend equivalent rights.settled in our common stock, cash or a combination thereof, as determined by the Compensation Committee.
Restricted Stock. The PlanCompensation Committee may impose such conditions and/or restrictions on anygrant shares of our CommonRestricted Stock receivedat any time during the term of the 2016 LTIP in such number and upon exercise of a SAR granted pursuant to the 2004 Plansuch terms as it may deem advisable or desirable. Thesedetermines. The Compensation Committee will determine the terms, conditions and any vesting, transferability and forfeiture restrictions may include, but shall notapplicable to each Restricted Stock Award, all of which will be limited to, a requirementreflected in the related award agreement. During the period that the holder of such award hold the shares of our CommonRestricted Stock received upon exerciseremain subject to forfeiture, (1) we may retain the certificates representing shares of Restricted Stock, (2) a SAR for a specified period of time.
Subject to the terms and provisions of the 2004 Plan and the applicable award agreement, by delivery of written notice in the manner designated by the Plan Committee and upon whatever additional terms and conditions the Plan Committee, in its sole discretion, imposes: (a) freestanding SARsparticipant may be exercised in wholenot sell or in part, and (b) tandem SARs may be exercised for all or part ofotherwise transfer the shares of our CommonRestricted Stock subject toand (3) unless otherwise provided in the related option upon the surrender of the rightaward agreement, a participant will generally be entitled to exercise the equivalent portion of the related option. A tandem SAR may be exercised onlyfull voting rights and receive all dividends paid with respect to the shares of our CommonRestricted Stock for which its related option is then exercisable. With respect to a tandem SAR issued in connection with an incentive stock option, the tandem SAR(except that receipt of any dividends will expire no later than the expiration of the underlying incentive stock option; the value of the payout with respect to the tandem SAR may be for no more than 100% of the excess of the fair market value of the shares of our Common Stock subject to the underlying incentive stock option at the time the tandem SAR is exercised over the option price of the underlying incentive stock option;same terms, conditions and the tandem SAR may be exercised only when the fair market value of the shares of our Common Stock subject to the incentive stock option exceeds the option price of the incentive stock option. The Plan Committee shall determine the right of each SAR holder to exercise the SAR following the termination of such holder's employment with the Company or its subsidiaries or service to the Board.
The term of a SAR granted under the 2004 Plan shall be determined by the Plan Committee; provided that, no SAR shall be exercisable on or after the tenth anniversary date of its grant.
A recipient of a SAR award,restrictions as such, shall have no rights as a shareholder.
Restricted Stock. Under the 2004 Plan, the Plan Committee may award restricted stock to eligible persons in such numbers and upon such terms as the Plan Committee shall determine. The amount of, the vesting, and the transferability restrictions applicable to any award of restricted stock will be determined by the Plan Committee. The recipient of the restricted stock will have all the rights of a shareholder with respectapply to the shares of restricted stock included in the restricted stock award during the restriction period established for the restricted stock award. Dividends paid with respect to restricted stock in cash or property other than shares of our Common Stock or rights to acquire shares of our Common Stock shall be paid to the recipient of the restricted stock award currently. Dividends paid in shares of our Common Stock or rights to acquire shares of our Common Stock shall be added to and become a part of the restricted stock.Restricted Stock).
Deferred Stock Unit Awards. The 2004 Plan authorizes the PlanCompensation Committee tomay grant DSUs to eligible personsat any time during the term of the 2016 LTIP in such amountsnumber and upon such terms as the Plan Committee shall determine. Eachit determines. The value of any DSU shall have a valuewill equal to the fair market value of a share of our Common Stock.common stock. The amount of,Compensation Committee will determine the terms, conditions and any vesting, transferability and the transferabilityforfeiture restrictions applicable to each DSU Award, all of which will be reflected in the related award agreement. The award agreement for a DSU may also specify that the holder of the DSU Award will be entitled to the payment of dividend equivalents under the Award. Unless otherwise provided in the related award agreement, any dividend equivalents paid under a DSU award shallAward will be subject to the same vesting, transferability and forfeiture restrictions as the Award with respect to which such dividend equivalents are to be paid. A DSU may be settled in our common stock, cash or a combination thereof, as determined by the Plan Committee. Payment under a DSU award shall be made in either cash or shares of our Common Stock as specified in the applicable award agreement. Payment under a DSU award shall be madeCompensation Committee at such time as is specified in the applicable award agreement.
An Performance Awards. The Compensation Committee may grant Cash-Based Awards, Performance Stock Awards and Performance Unit Awards at any time during the term of the 2016 LTIP in such number and upon such terms as it determines. The Compensation Committee will determine the terms, conditions and any vesting, transferability and forfeiture restrictions applicable to each Cash-Based Award, Performance Stock Award and Performance Unit Award, all of which will be reflected in the related award agreement for a DSU may specify thatagreement. Such restrictions will be based upon the holderattainment of such award shall be entitled toperformance goals determined by the paymentCompensation Committee. The Compensation Committee will base the performance goals on one or more of dividend equivalents under the award. Each recipientfollowing performance criteria enumerated in the 2016 LTIP:
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The Men's Wearhouse, Inc. 2015 Proxy Statement
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As determined by the Compensation Committee, the selected performance criteria may relate to the individual participant, the Company, one or more business units, subsidiaries, divisions, departments, regions, stores, segments, products or functions of the Company or its affiliates, or the Company as a whole, and may be measured on a per share, per capita, per unit, per square foot, per employee, per store, per customer or other objective basis, on a pre-tax or after-tax basis or on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other companies, financial metrics and/or an index).
With respect to holders who are not covered employees and who, in the Compensation Committee's judgment, are not likely to be covered employees at any time during the applicable performance period or during any period in which Cash-Based Award, Performance Stock Award or Performance Unit Award may be paid following a performance period, the performance objectives established for the performance period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed in the 2016 LTIP, and such performance objectives will be subject to such other special rules and conditions as the Compensation Committee may establish at any time.
To the extent permitted by Section 162(m) of the Code, the Compensation Committee may provide that amounts relating to or arising from one or more of the following may be included or excluded from the performance goals on a non-discretionary basis: (1) unusual, infrequently occurring or non-recurring events affecting the Company and/or its affiliates; (2) changes in applicable tax laws; (3) changes in accounting principles; (4) changes related to restructured or discontinued operations; (5) restatement of prior financial results; and (6) any other unusual, infrequently occurring or non-recurring gain or loss including those described in the Financial Accounting Standards Board's authoritative guidance, footnotes to the Company's financial statements, in management's discussion and analysis of financial condition and results of operations appearing in the Company's reports on Form 10-K, 10-Q or 8-K for the applicable year and/or appearing in a press release reporting the Company's earnings for any fiscal period. Under the 2004 Plan,2016 LTIP, the PlanCompensation Committee may grant performance stockhas the authority to exercise negative discretion and performance unit awardsreduce (but not increase with respect to eligible personsholders of Awards who are Covered Employees or who, in such amounts and upon such terms as the Plan Committee shall determine.
TheCompensation Committee's judgment, are likely to be Covered Employees) the amount of a Cash-Based Award, Performance Stock Award or Performance Unit Award actually paid to a participant.
For each Cash-Based Award, Performance Stock Award or Performance Unit Award granted to a covered employee, the vesting, andCompensation Committee will establish the transferability restrictions applicable to any performance stock or performance unit award shall be based upon the attainment of such performance goals aswhile the Plan Committee may determine. Aoutcome of the applicable performance goal for a particular performance stock or performance unit award must be established by the Plan Committeegoals is substantially uncertain, but in any event prior to the earlier to occur of (a)(1) 90 days after the commencement of the period of service to which the performance goal relates or (b)and (2) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain. Aservice. Each performance goal must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met and may be based on one or more of the following business criteria: earnings per share, earnings per share growth, total shareholder return, economic value added, cash return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income, stock price, market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, shareholder value, net cash flow, operating income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost ratios (per employee or per customer), proceeds from dispositions, project completion time and budget goals, net cash flow before financing activities, customer growth, and total market value. Goals may also be based on performance relative to a peer group of companies. Unless otherwise stated, such a performance goal need not be based upon an increase or positive result under a particular business criterion, and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).met.
Subject to the terms and conditions of the 2004 Plan,2016 LTIP, each holder of a performance stock award or a performance unit award payable in shares of our CommonPerformance Stock shallAward will have all the rights of a shareholder with respect to the shares of our common stock issued to suchthe holder pursuant to the awardAward during any period in which such issued shares of our Common Stockcommon stock are subject to forfeiture and restrictions on transfer, including the right to vote such shares of stock.stock; provided, however, that the holder shall not receive payment of dividends until and only to the extent that the performance goals applicable to such Award are satisfied. An award agreement for a performance unit awardPerformance Unit Award may
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specify that the holder of such award shallAward will be entitled to the payment of dividend equivalents under the award.
Payment underAward; provided, however, that the holder will not receive payment of such dividend equivalents until and only to the extent that the performance goals applicable to such Award are satisfied. A Performance Unit Award may be settled in our common stock, cash or a performance unit award shall be made at such timecombination thereof, as is specified indetermined by the applicable award agreement.Compensation Committee.
Internal Revenue Code Section 162(m). It is intended that the 2004 Plan will conform with the standards of section 162(m) of the Internal Revenue Code and Treasury Regulations section 1.162-27(e)(2)(i). Neither the Plan Committee nor the Board may increase the amount of compensation payable under a performance stock award or performance unit award. If the time at which any performance stock award or performance unit award will vest is accelerated, the number of shares of our Common Stock subject to, or the amount payable under, such award shall be reduced pursuant to Department of Treasury Regulation section 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.
No payments of stock or cash will be made pursuant to a performance stock award or performance unit award unless the shareholder approval requirements of Department of Treasury Regulation section 1.162-27(e)(4) are satisfied. See "Proposal to Approve the Material Terms of the Performance Goals for Performance Awards Under the Company's 2004 Long-Term Incentive Plan for Purposes of Section 162(m) of the Internal Revenue Code" below.
Cash-Based Awards and Other Stock-Based Awards. The PlanCompensation Committee may grant cash-based awards underOther Stock-Based Awards at any time during the 2004 Plan to eligible personsterm of the 2016 LTIP in such amountsnumber and upon such terms including the achievement of specific performance goals, as the Planit determines. The Compensation Committee shall determine. The 2004 Plan authorizes the Plan Committee to grant other types of equity-based or equity-related awards not otherwise described bywill determine the terms, conditions and provisionany vesting, transferability and forfeiture restrictions applicable to each Other Stock-Based Award, all of which will be reflected in the 2004 Plan, including the grant or offer for sale of
The Men's Wearhouse, Inc. 2015 Proxy Statement
unrestricted shares of our Common Stock, in such amounts and subject to such terms and conditions, as the Plan Committee shall determine. Such awards may involve the transfer of actual shares of our Common Stock to holders thereof, or payment in cash or otherwise of amounts based on the value of shares of our Common Stock, andrelated award agreement. Other Stock-Based Awards may include without limitation, awardsAwards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States. Other Stock-Based Awards may be settled in our common stock, cash or a combination thereof, as determined by the Compensation Committee at such time as is specified in the applicable award agreement.
Termination of Employment or Service
The PlanCompensation Committee in its sole discretion, shallwill determine the extent to which each Award granted under the holder of an award shall2016 LTIP will vest and the extent to which a participant will have the right to continue to hold cash-based awards and other stock-based awards followingexercise and/or settle the Award in connection with a participant's termination of such holder's employment with the Company or its subsidiaries, orservice. Such provisions, which will be reflected in the case of a non-employee director, the termination of service on the Board. Such provisionsrelated award agreement, need not be uniform among all cash-based awardsAwards and other stock-based awards issued pursuant tomay reflect distinctions based on the 2004 Plan.reasons for termination.
Substitution Awards.Change in Control
If a Change in Control (as defined in the 2016 LTIP) occurs while unexercised or unvested Awards remain outstanding under the 2016 LTIP, then, except as otherwise provided in an Award agreement or other agreement between the holder of the Award and the Company, the Compensation Committee will effect one or more of the following alternatives (which may vary among Awards and among individual holders of Awards granted under the 2016 LTIP):
(1) accelerate the time at which some or all of the outstanding Awards may be granted underexercised and specify the 2004 Plan in substitution for stock options and other awards held by employees and directors of other corporations who are abouttime at which all such Awards that remain unexercised will terminate;
(2) require (A) the mandatory surrender to become employees of or affiliated with the Company of some or anyall of its subsidiariesthe outstanding Awards as a result of a mergerdate before or consolidation ofafter such Change in Control and (B) the employing corporation with the Company, or the acquisitionpayment by the Company of substantiallya cash amount per share to the holders of the Awards upon such surrender equal to the excess, if any, of the per share price offered to shareholders of the Company in connection with such Change in Control over the exercise prices applicable to such Awards;
(3) in accordance with the terms of the 2016 LTIP, provide for the assumption or substitution of some or all of the assetsoutstanding Awards by a party to the Change in Control transaction that is employing, or affiliated or associated with, the holder of another corporationthe Awards in the same or a substantially similar manner as the acquisitionCompany prior to the Change in Control;
(4) adjust the number of shares and class or series of our common stock covered by an Award so that, when exercised, the Award will cover the number of shares and class or series of our common stock or other securities or property (including, without limitation, cash) the holder of the Award would have been entitled to in connection with the Change in Control if, immediately prior to the Change in Control, the holder of the Award had been the holder of record of the number of shares of our common stock then covered by the CompanyAward; or
(5) make such adjustments to outstanding Awards then outstanding as the Compensation Committee deems appropriate to reflect such Change in Control.
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If the Compensation Committee chooses to effect one or more of the issued and outstanding stock of another corporation as the result of whichalternatives set forth in paragraphs (3), (4) or (5) above, it becomes an affiliate of the Company. The terms and conditions of the substitute awards granted may vary from the terms and conditions set out in the 2004 Plan to the extent the Board, ataccelerate the time of grant,at which some or all outstanding Awards may deem appropriate to conform, in whole or in part, to the provisions of the options and stock awards in substitution for which they are granted, but with respect to options that are incentive stock options, no such variation shall be such as to affect the status of any such substitute option as an "incentive stock option" under section 422 of the Internal Revenue Code.exercised.
Transferability
Non-Transferability. Except as specifiedotherwise provided in the applicablea related award agreement or in a domestic relations court order, (1) a participant may not transfer, sell, assign, pledge, hypothecate, encumber or otherwise dispose of an award granted under the 2004 Plan shall not be transferable by the holder thereof (whether for consideration or otherwise) other thanAward, except by will or under the laws of descent and distribution and shall be exercisable,(2) during such holder'sa participant's lifetime, only by himthe participant or her. Any attempted assignment ofhis or her guardian or legal representative may exercise an award in violation of the 2004 Plan shall be null and void. In the discretion of the Plan Committee, any attempt to transfer an award other than under the terms of the 2004 Plan and the applicable award agreement may terminate the award.Award.
Forfeiture
No incentive stock option granted underIf a Forfeiture Determination (as defined in the 2004 Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or2016 LTIP) is made by the lawsCompensation or a court of descent and distribution. Further, all incentive stock options granted to an employee undercompetent jurisdiction, as applicable, the 2004 Plan shall be exercisable during such employee's lifetime only by the employee and, afterBoard of Directors may determine that time, by the employee's heirs and estate.
Forfeiture. If the Plan Committee finds by a majority vote that a holder of an award granted under the 2004 Plan, before or after termination of his employment with the Company or any of its subsidiaries or severance of his affiliation relationship with the Company and all its affiliates, (a) committed fraud, embezzlement, theft, felony or an act of dishonesty in the course of his employment by or affiliation with the Company or an affiliate and such conduct damaged the Company or an affiliate, (b) disclosed trade secrets of the Company or an affiliate or (c) violated the terms of any non-competition, non-disclosure or similar agreement with respect to the Company or any affiliate to which the holder of such award is a party, then, as of the date the Plan Committee makes its finding, some or all awards awardedAwards granted to such holderany participant (including vested awardsAwards that have been exercised, vested awardsAwards that have not been exercised, and awardsAwards that have not yet vested), as determined by the Plan Committee in its sole discretion, and some or all net proceeds realized with respect to any such awards,Awards (including any dividends that have been paid with respect to shares of the common stock covered by the Award) will be forfeited to the Company on such terms as determined by the Plan Committee.Board of Directors. The findings and decision of the Plan Committee with respect to the matter shall be final for all purposes.
The Men's Wearhouse, Inc. 2015 Proxy Statement
The PlanCompensation Committee may specify in an award agreement that the rights, payments and benefits of a holder of an awardAward granted under the 2004 Plan with respect to such award shall2016 LTIP will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an award. Such events may include, but shall not be limited to, termination of employment for cause, termination of such holder's provision of services to the Company or its subsidiaries, violation of material policies of the Company or its subsidiaries, breach of non-competition, confidentiality, or other restrictive covenants that may apply to such holder, or other conduct by such holder that is detrimental to the business or reputation of the Company or its subsidiaries.Award.
Antidilution. If the Company shall effect a capital readjustment or any increase or reduction of the number of shares of our Common Stock outstanding, without receiving compensation therefor in money, services or property, then (1) the number, class or series and per share price of our Common Stock subject to outstanding awards under the 2004 Plan shall be appropriately adjusted (subject to the restriction discussed below under the heading "Award Agreements" regarding repricing) as to entitle a holder of an award under the 2004 Plan to receive upon exercise, for the same aggregate cash consideration, the equivalent total number and class or series of our Common Stock the holder would have received had the holder of such award exercised in full immediately prior to the event requiring the adjustment, and (2) the number and class or series of our Common Stock then reserved to be issued under the 2004 Plan shall be adjusted.
Changes in the Company's Capital Structure. If a Corporate Change (suchNo Rights as a merger in which the Company is not the surviving entity, a sale of all or substantially all of the Company's assets, the dissolution of the Company or another corporate transaction as defined in the Internal Revenue Code) occurs while unexercised awards remain outstanding under the 2004 Plan, then, exceptShareholder
Except as otherwise provided in anthe 2016 LTIP or in a related award agreement, or other agreement between the holder of the award and the Company, ora participant will not have any rights as a result of the Plan Committee's effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any award then outstanding may be exercised, and no later than ten days after the approval by the shareholders of the Company and consummation of such Corporate Change, the Plan Committee, acting in its sole and absolute discretion, shall act to effect one or more of the following alternatives, which may vary among individual holders of awards granted under the 2004 Plan and which may vary among awards held by any individual holder of an award granted under the 2004 Plan:
(1) accelerate the time at which some or all of the awards then outstanding may be exercised, after which all such awards that remain unexercised and all rights of holders of awards thereunder shall terminate;
(2) require the mandatory surrender to the Company by all or selected holders of awards granted under the 2004 Plan of some or all of the then outstanding awards held by such holders as of a date, before or after such Corporate Change, in which event the Plan Committee shall thereupon cancel such award and the Company shall pay to each such holder an amount of cash per share equal to the excess, if any, of the per share price offered to shareholders of the Company in connection with such Corporate Change over the exercise prices under such award for such shares;
(3)shareholder with respect to all or selected holders of awards granted under the 2004 Plan, have some or all of their then outstanding awards assumed or have a new award of a similar nature substituted for some or all of their then outstanding awards under the 2004 Planour common stock covered by an entity which is a party toAward unless and until the transaction resulting in such Corporate Change and which is then employing suchparticipant becomes the record holder or which is affiliated or associated with such holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or subsidiary of such entity, provided that (A) such assumptioncommon stock.
Repricing
The 2016 LTIP expressly prohibits the Board or substitution is onCompensation Committee from amending the terms of an outstanding Award to (1) reduce the exercise price or grant price of an outstanding Option or SAR or (2) cancel an outstanding Option or SAR in exchange for a basis where the excesspayment of cash or other property if the aggregate fair market value of our Common Stock subject tosuch Option or SAR is less than the award immediately after the assumption or substitution over the aggregategross exercise price of
The Men's Wearhouse, Inc. 2015 Proxy Statement
such Common Stock is equal to the excess of the aggregate fair market value of all our Common Stock subject to the award immediately before such assumption or substitution over the aggregate exercisegrant price of such Common Stock,Option or SAR, in each case without shareholder approval.
Clawback
If the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under applicable securities laws, the current or former holder who was a current or former executive officer of the Company or an affiliate must forfeit and (B)repay to the assumed rights or the substituted rights will have the same terms and conditions as the rightsCompany any compensation awarded under the existing award assumed2016 LTIP to the extent specified in any clawback or substituted for;
(4) providesimilar policy that may be implemented by the number and class or series of our Common Stock covered byCompany from time to time, including such policies that may be implemented after the date an award shall be adjusted so that such award when exercised shall thereafter cover the number and class or series of our Common Stock or other securities or property (including, without limitation, cash) to which the holder of such award would have been entitledAward is granted, pursuant to the termslisting standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, or other agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the holder of such award had been the holder of record of the number of shares of our Common Stock then covered by such award; orarrangement with a holder.
Effective Date and Term
(5) make such adjustments to awards then outstanding as the Plan Committee deems appropriate to reflect such Corporate Change.
If the Plan Committee chooses to effect one or more of the alternatives set out in paragraphs (3), (4) or (5) above, it may, inThe 2016 LTIP will become effective upon its sole and absolute discretion and without the consent or approval of any holder of an award granted under the 2004 Plan, accelerate the time at which some or all awards then outstanding may be exercised. With respect to a reincorporation merger in which holders of the Company's ordinary shares will receive one ordinary share of the successor corporation for each ordinary share of the Company, none of the alternatives set forth above shall apply and, without Plan Committee action, each award shall automatically convert into a similar award of the successor corporation exercisable for the same number of ordinary shares of the successor as the award was exercisable for ordinary shares of stock of the Company. In the event of changes in our outstanding Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any award and not otherwise provided for above, any outstanding award and any award agreements evidencing such award shall be subject to adjustment by the Plan Committeeshareholders and, unless earlier terminated, will continue indefinitely until terminated in accordance with its sole and absolute discretion as to the number and price of our Common Stock or other consideration subject to such award. In the event of any such change in our outstanding Common Stock, the aggregate number of shares of our Common Stock available under the 2004 Plan may be appropriately adjusted by the Plan Committee.terms.
After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each holder of an award granted under the 2004 Plan shall be entitled to have his restricted stock appropriately adjusted based on the manner in which the shares of our Common Stock were adjusted under the terms of the agreement of merger or consolidation.
Award Agreements. Each award shall be embodied in a written award agreement that shall be subject to the terms and conditions of the 2004 Plan. The award agreement may specify the effect of a Change in Control of the Company on the award. The award agreement may contain any other provisions that the Plan Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the 2004 Plan. Except as described above under "Change in Control", the Plan Committee may not directly or indirectly lower the exercise price of a previously granted option or the grant price of a previously granted SAR or otherwise pay consideration to repurchase, cancel or revoke such award; provided that such prohibition shall not apply to shares of our Common Stock withheld to pay the option price of any option or to pay the withholding tax arising from the exercise of any option or SAR.
Restrictions on Stock Received. The Plan Committee may impose such conditions and/or restrictions on any shares of our Common Stock issued pursuant to an award as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the holder of an award granted under the 2004 Plan hold the shares of our Common Stock for a specified period of time.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Amendment and Termination.or Termination
The PlanBoard or Compensation Committee may amend or terminate the 2016 LTIP at any time, and from time to time, alter, amend, modify, suspend,except that no amendment or terminate the 2004 Plan and any award agreement in whole or in part. However, no termination amendment, suspension, or modification of the 2004 Plan or an award agreement shall adversely affect in any material way any award previously granted under the 2004 Plan, without the written consent of the holder holding such award. Without the prior approval of our shareholders and except as described above under "Change in Control", the Plan Committee shall not directly or indirectly lower the option price of a previously granted option or the grant price of a previously granted SAR issued under the 2004 Plan or otherwise pay consideration to repurchase, cancel or revoke such award (provided that such prohibition shall not apply to shares of our Common Stock withheld to pay the option price of any option or to pay the withholding tax arising from the exercise of any option or SAR). No amendment of the 2004 Plan shallmay be made without shareholder approval if shareholdersuch approval is required by applicable law or stock exchange rules.
U.S. Federal Income Tax Consequences of Awards Granted Under the 2004 Plan
U.S. Federal Income Tax Consequences |
The following is a brief summary of the general U.S. federal income tax consequences relating to participation in the 2016 LTIP. This summary is based on U.S. federal tax laws and Treasury Regulations in effect on the date of this proxy statement and does not purport to be a complete description of the U.S. federal income tax consequences generally applicable to the Company and a recipient of an incentive stock option, a nonqualified stock option, a SAR, a restricted stock award, a DSU award, a performance stock award, a performance unit award, a cash-based award or an other stock-based award granted under the 2004 Plan. This discussion is based on current law, islaws. In addition, this summary does not intended to constitute tax advice and does not address all aspects ofor describe federal employment, state, local or foreign tax consequences. Each participant should consult with his or her tax advisor concerning the U.S. federal income taxation that may be relevant to a particular participant in light of his or her personal circumstancestax and does not describe foreign, state, or localother tax consequences which may be substantially different.of participating in the 2016 LTIP.
Incentive Stock Options.Options When
The Company intends for ISOs to qualify for special treatment available under Section 422 of the Plan Committee grants an employee an incentive stock option to purchase shares of our Common Stock under the 2004 Plan, the employeeCode. A participant will not be required to recognize any U.S. federal taxable income aswhen an ISO is granted, and we will not receive a result ofdeduction at that time. A participant will not recognize ordinary income upon the grant or as a result of the employee's exercise of the incentive stock option; however, the difference between the exercise price and the fair market value of the shares of our Common Stock at the time of exercise is an item of tax preference that may require payment of an alternative minimum tax. On the sale of the shares acquired through exercise of an incentive stock option (assuming such saleISO, provided that the participant was, without a break in service, an employee of the Company or a subsidiary during the period beginning on the grant date of the ISO and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant's employment is terminated due to disability).
If the participant does not occursell or otherwise dispose of the our common stock acquired upon the exercise of an ISO within two years from the grant date of the date of grant of the optionISO or within one year fromafter the dateparticipant receives the common stock, then, upon disposition of exercise),such common stock, any gain (or loss)amount realized in excess of the exercise price will be taxed to the participant as long terma capital gain, (or loss) and the Companywe will not be entitled to any deduction in connection with the sale (or the grant or exercise) of the incentive stock option. With respect to a sale of shares that occurs after the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares.
However, if the employee sells the shares acquired upon exercise of an incentive stock option before the later of (i) two years from the date of grant and (ii) one year from the date of exercise, the employee will be treated as having received, at the time of sale, compensation taxable as ordinary income, and the Company will be entitled to a corresponding deduction. The participant generally will recognize a capital loss to the extent that the amount treated as compensationrealized is less than the exercise price.
If the foregoing holding period requirements are not met, the participant generally will recognize ordinary income isat the time of the disposition of the common stock in an amount equal to the lesser of: (1) the excess of the fair market value of the shares atcommon stock on the timedate of exercise over the exercise price, andprice; or (2) the excess, if any, amount realized in excess of the fair market value of the shares at the time of exercise would be treated as long or short term capital gain, depending on how long such shares were held. With respect to a sale of shares that occurs before the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares and the compensation income reported at the time of sale of the shares.
Nonqualified Stock Options. When the Plan Committee grants a nonqualified stock option to purchase shares of our Common Stock under the 2004 Plan, the recipient will not be required to recognize any U.S. federal taxable income as a result of the grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the nonqualified stock option. Generally, the measure of the income will be equal to the difference between the fair market value of the shares of
The Men's Wearhouse, Inc. 2015 Proxy Statement
our Common Stock acquired on the date the shares are acquired and the option price. The tax basis of the shares acquired on exercise of the nonqualified stock option for the purpose of a subsequent sale includes the option price paid and the ordinary income reported on exercise of the nonqualified stock option. The income reportable on exercise of the nonqualified stock option by an employee is subject to federal tax withholding. Generally, the Company will be entitled to a deduction in the amount reportable as income by the recipient on the exercise of a nonqualified stock option.
Stock Appreciation Rights. The grant of a SAR under the 2004 Plan generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for the Company at the time of grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the SAR. Generally, the measure of the income will be equal to the amount realized on exerciseupon disposition of the SAR. The income reportable on exercise of the SAR by an employee is subject to federal tax withholding. Generally, the Company will be entitled to a deduction in the amount reportable as income by the recipient oncommon stock over the exercise of a SAR.
Restricted Stock Awards. The grant of a restricted stock award under the 2004 Plan generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for the Company at the time of grant unless the recipient timely makes an election under section 83(b) of the Internal Revenue Code. Upon the expiration of the forfeiture restrictions applicable to the restricted stock award (i.e., as the shares become vested), the recipient will recognize ordinary income in an amount equal to the excess of the fair market value of those shares at that time over the amount (if any) the recipient paid for the shares. The income realized by an employee is subject to federal tax withholding. The Company will be entitled to a deduction in the amountprice, and at the time the recipient recognizes income. If an election under section 83(b) of the Internal Revenue Code has not been made, any dividends received with respect to any restricted shares that are not vested (i.e., the forfeiture restrictions have not yet lapsed) generally will be treated as compensation that is taxable as ordinary income to the recipient and the Companywe will be entitled to a corresponding deduction. With respect to any restricted shares that are vested (i.e., the forfeiture restrictions have lapsed), the recipient will be taxed on any dividends on such shares as the dividends are paid to the recipient and the Company will not be entitled to deductions with respect to the dividends.
If the recipientAny amount realized in excess of the restricted stock award makes an election under section 83(b)value of the Internal Revenue Code within 30 days ofcommon stock on the date of transferexercise will be capital gain. If the amount realized is less than the exercise price, the participant generally will recognize a capital loss equal to the excess of the restricted shares awarded underexercise price over the restricted stock award,amount realized upon the recipientdisposition of the common stock.
The rules that generally apply to ISOs do not apply when calculating any alternative minimum tax liability. The rules affecting the application of the alternative minimum tax are complex, and their effect depends on individual circumstances, including whether a participant has items of adjustment other than those derived from ISOs.
Nonqualified Stock Options
A participant will not recognize any income when a NQSO is granted, and we will not receive a deduction at that time. However, when a NQSO is exercised, a participant will recognize ordinary income on the date the shares are awarded. The amount of ordinary income required to be recognized is an amount equal to the excess, if any, of the fair market value of our common stock that the sharesparticipant purchased on the date of awardexercise over the exercise price. If a participant uses our common stock or a combination of our common stock and cash to pay the exercise price of a NQSO, the participant will recognize ordinary
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income equal to the value of the excess of the number of shares of our common stock that the participant purchases over the number of shares of our common stock that the participant surrenders, less any cash the participant uses to pay the exercise price. When a NQSO is exercised, we will be entitled to a deduction equal to the ordinary income that the participant recognizes.
If the amount a participant receives upon disposition of our common stock that the participant acquired by exercising a NQSO is greater than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the common stock for more than one year after the participant acquired them by exercising the NQSO. Conversely, if the amount a participant receives upon disposition of the common stock that the participant acquired by exercising a NQSO is less than the sum of the aggregate exercise price the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the common stock for more than one year after the participant acquired them by exercising the NQSO.
Stock Appreciation Rights
A participant will not recognize taxable income when a SAR is granted, and we will not receive a deduction at that time. When a SAR is exercised, a participant will recognize ordinary income equal to the excess of the cash and/or the fair market value of the common stock the participant receives over the aggregate exercise price of the SAR, if any, and we will be entitled to a corresponding deduction. If the amount a participant receives upon disposition of the common stock that the participant acquired by exercising a SAR is greater than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the common stock for such shares. In such case,more than one year after the recipientparticipant acquired them by exercising the SAR. Conversely, if the amount a participant receives upon disposition of the common stock that the participant acquired by exercising a SAR is less than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the common stock for more than one year after the participant acquired them by exercising the SAR.
Restricted Stock
Unless a participant makes an election under Section 83(b) of the Code (a "Section 83(b) Election"), the participant generally will not be required to recognize additionaltaxable income when Restricted Stock is granted, and we will not receive a deduction at that time. Instead, a participant will recognize ordinary income when the Restricted Stock vests (i.e., when the underlying shares vest. However,of common stock are freely transferable or not subject to a substantial risk of forfeiture) equal to the fair market value of the common stock that the participant receives when the terms, conditions and restrictions have been met, less any consideration paid for the Restricted Stock, and we generally will be entitled to a deduction equal to the income that the participant recognizes.
If the amount a participant receives upon disposition of these shares of common stock is greater than the fair market value of the common stock when the Restricted Stock vested, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the common stock for more than one year after the Restricted Stock vested. Conversely, if the shares are later forfeited, a loss can only be recognized up to the amount the individual paid, if any, for theparticipant receives upon disposition of these shares of Common Stock.common stock is less than the fair market value of the common stock when the Restricted Stock vested, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the common stock for more than one year after the Restricted Stock vested.
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If a participant makes a Section 83(b) Election, the participant will recognize ordinary income on the grant date equal to the fair market value of the common stock subject to the Restricted Stock Award on the grant date, and we will be entitled to a deduction equal to the income that the participant recognizes at that time.
However, the participant will not recognize income when (and if) the Restricted Stock vests. If a participant who has made a Section 83(b) Election earns the common stock subject to a Restricted Stock Award, any appreciation between the grant date and the date the participant disposes of the common stock will be treated as a long-term or short-term capital gain, depending on whether the participant held the common stock for more than one year after the grant date. Conversely, if the amount the participant receives upon disposition of the common stock is less than the fair market value of the common stock on the grant date, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the common stock for more than one year after the grant date. Also, if a participant forfeits his or her Restricted Stock, the participant cannot take a tax deduction in connection with the forfeiture of the Restricted Stock subject to a Section 83(b) Election.
Deferred Stock Unit Awards.Awards
The grant of a DSU awardAward under the 2004 Plan2016 LTIP generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for the Company at the time of grant. At the time a DSU awardAward vests, the recipient will recognize ordinary income and the Company will be entitled to a corresponding deduction. Generally, the measure of the income and deduction will be the fair market value of our Common Stockcommon stock at the time the DSU is settled.
Cash-Based Awards
A participant will not recognize ordinary income at the time a Cash-Based Award is granted, and we will not be entitled to a deduction at that time. In general, a participant will recognize ordinary income when the Cash-Based Award is settled equal to the amount of the cash received, and we will be entitled to a corresponding deduction.
Performance Stock and Performance Unit Awards.Awards
Performance stock awardsStock Awards granted under the 2004 Plan2016 LTIP generally have the same tax consequences as restricted stock awardsRestricted Stock Awards as discussed above (except that the compensation deduction limitation described belowunder Section 162(m) of the Code generally will not apply). A recipient of a performance unit awardPerformance Unit Award under the 2004 Plan2016 LTIP generally will not realize U.S. federal taxable income at the time of grant of the award,Award, and the Company will not be entitled to a deduction at that time with respect to the award.Award. When the performance goals applicable to the performance unit awardPerformance Unit Award are attained and
The Men's Wearhouse, Inc. 2015 Proxy Statement
amounts are due under the award,Award, the holder of the awardAward will be treated as receiving compensation taxable as ordinary income, and the Company will be entitled to a corresponding deduction.
Cash-Based Awards and Other Stock-Based Awards.Awards The grant of
Generally, a cash-based award under the 2004 Plan generallyparticipant will not result in the recognition of any U.S. federalrecognize taxable income by the recipient orwhen an Other Stock-Based Award is granted, and we will not receive a deduction forat that time. However, upon the Company atsettlement of an Other Stock-Based Award, the time of grant. At the time a cash-based award is settled in cash, the recipientparticipant will recognize ordinary income andequal to the Companycash and/or fair market value of the common stock that the participant receives, less the aggregate exercise price of the Other Stock-Based Award, if any. We generally will be entitled to a corresponding deduction. Generallydeduction equal to the measureincome that the participant recognizes.
If the participant receives common stock upon the settlement of an Other Stock-Based Award and the amount the participant receives upon disposition of the income and deductioncommon stock acquired upon the settlement of the Other Stock-Based Award is greater than the fair market value of the shares of common stock when
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they were issued to the participant, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares of common stock for more than one year after they were issued. Conversely, if the amount of cash received by the recipientparticipant receives upon disposition of the award atcommon stock is less than the time the cash-based award is settled. Other stock-based awards granted under the 2004 Plan generally have the same tax consequences as DSU awards.
Compensation Deduction Limitation. Under section 162(m)value of the Internal Revenue Code,shares of common stock when they were issued, the Company's federal income tax deductionsdifference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares of common stock for certain compensation paid to designated executives is limited to $1,000,000 per year. These executives include the Company's Chief Executive Officer and the next three highest compensated officers (othermore than the Company's Chief Financial Officer). one year after they were issued.
Section 162(m)409A
Section 409A of the Internal Revenue Code provides an exceptionimposes certain restrictions on amounts deferred under non-qualified deferred compensation plans and a 20% additional tax on amounts that are subject to, this limitation for certain "performance based" compensation approved by a committee consisting solely of at least two "outside directors". The Company believes that nonqualified stock options to purchase shares of our Common Stock, SARs, and performance based awards granted under the 2004 Plan generally should qualify as performance based compensation for purposes of section 162(m) of the Internal Revenue Code. See "Proposal to Approve the Material Terms of Performance Goals for Performance Awards Under the Company's 2004 Long-Term Incentive Plan for Purposes of Section 162(m) of the Internal Revenue Code" below.
Compliancebut do not comply with, Section 409A. Section 409A includes a broad definition of non-qualified deferred compensation plans, which includes certain types of equity incentive compensation. The Company intends for the Awards granted under the 2004 Plan shall be designed, granted and administered in such a manner that they are either exempt from the application of, or2016 LTIP to comply with the requirements of section 409A of the Internal Revenue Code and the Department of Treasury rules and regulations issued thereunder (collectively, "Section 409A"). If the Plan Committee determines that an award granted under the 2004 Plan, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the 2004 Plan would, if undertaken, cause a holder of an award to become subject to additional taxes under Section 409A, then unless the Plan Committee specifically provides otherwise, such award, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the 2004 Plan and/or award agreement for the award will be deemed modified, or, if necessary, suspended in order to comply withexempt from the requirements of Section 409A toand the extent determined appropriate by the Plan Committee, in each case without the consent of or notice to the holder of the award. The period of exercisability of an option or a SAR shall not be extended to the extent that such extension would subject holder of that option or SAR to additional taxes under Section 409A.Treasury Regulations promulgated thereunder.
New Plan Benefits |
All Awards Under the 2004 Plan
In addition to approximately 300 key employees (including our executive officers), there are currently six non-employee directors of the Company who are eligible to participate in the 2004 Plan. Each non-employee director will be granted on the last day of each fiscal quarter a number of shares of restricted stock or DSUs equal to $31,250 divided by the closing price of our Common Stock as reported on the NYSE on the last trading day of such fiscal quarter. For further information, see "Director Compensation" in this proxy statement.
Since awards to be granted in the future under the 2004 Plan are2016 LTIP will be at the discretion of the Compensation Committee it is not possible to determineand, in the benefits orcase of Cash-Based Awards, Performance Stock Awards and Performance Unit Awards, dependent upon the amounts received orCompany's future performance. As a result, the specific number and terms of Awards that (1) will be received under the 2004 Plan by eligible participants. During the fiscal year ended January 31, 2015, equity grants under the 2004 Plan were awardedgranted to the following individuals who comprise our "Named Executive Officers" for fiscal 2014, which included awards made in September 2014 as part of a one-time
The Men's Wearhouse, Inc. 2015 Proxy Statement
accelerated issuance of the equity awards thatparticipants or (2) would have been ordinarilygranted to participants during the 2015 fiscal year had the 2016 LTIP been made as part ofin place, are not determinable. Consistent with our annual grant process in fiscal 2015 (See "Compensation Discussion and Analysis"compensation program for additional information):
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For information regarding our common stock to be issued and available for issuance under our existing equity compensation plans, see the "Equity Compensation Plan Information" table appearing on page 32 of this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ADOPTION OF THE PROPOSAL TO AMEND THE 2004 PLAN TO (I) INCREASE BOTH THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE 2004 PLAN AND THE RELATED ANNUAL LIMITS TO INDIVIDUAL PARTICIPANTS AND (II) REMOVE REMAINING SHARE RECYCLING PROVISIONS FROM THE 2004TAILORED BRANDS, INC. 2016 LONG-TERM INCENTIVE PLAN.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
As of the End of the Fiscal YearEQUITY PLAN COMPENSATION INFORMATION
The following table sets forth certain equity compensation plan information for the Company as of January 31, 2015:30, 2016:
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options (a)(1) | Weighted- Average Exercise Price of Outstanding Options (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in column (a)) (c)(3) | Number of Securities to be Issued Upon Exercise of Outstanding Options (a) (1) | Weighted- Average Exercise Price of Outstanding Options (b) (2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in column (a)) (c) (3) | ||||||||||||||
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Equity Compensation Plans Approved by Security Holders | | 1,209,590 | $ | 38.28 | | 1,479,681 | | 1,327,879 | $ | 39.65 | | 3,219,225 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — | — | — | — | ||||||||||||||
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Total | | 1,209,590 | $ | 38.28 | | 1,479,681 | | 1,327,879 | $ | 39.65 | | 3,219,225 | ||||||||
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As of the Record DatePROPOSAL 3:
ADOPTION OF THE 2016 CASH INCENTIVE PLAN
The following table setsBoard proposes that our shareholders approve the adoption of the Tailored Brands, Inc. 2016 Cash Incentive Plan (the "2016 Incentive Plan"). On March 16, 2016, based upon the recommendation of the Compensation Committee, the Board adopted the 2016 Incentive Plan, subject to approval by our shareholders. Set forth certain equity compensation plan information forbelow is a summary of the material features of the 2016 Incentive Plan, which summary is qualified in its entirety by the text of the 2016 Incentive Plan, a copy of which is attached to this proxy statement as Appendix B.
�� The purpose of the 2016 Incentive Plan is to foster and promote the long-term financial success of the Company as ofand its affiliates and increase shareholder value by providing participants an opportunity to earn incentive compensation if specified performance objectives are met, enabling the record date, May 6, 2015:
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options (a)(1) | Weighted- Average Exercise Price of Outstanding Options (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in column (a)) (c)(3) | |||||||
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Equity Compensation Plans Approved by Security Holders | | 1,318,768 | $ | 38.77 | | 1,061,827 | ||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — | |||||||
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Total | | 1,318,768 | $ | 38.77 | | 1,061,827 | ||||
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Section 162(m) of the Internal Revenue Code ("Section 162(m)") generally imposes a limit on the Company's federal income tax deduction for compensation paid to our Chief Executive Officerparticipants.
Section 162(m) of the Internal Revenue Code |
We intend for compensation payable under the 2016 Incentive Plan to constitute "qualified performance-based compensation" for purposes of Section 162(m) of the Code, and the Treasury Regulations promulgated thereunder. Section 162(m) generally limits the deduction that we may take for certain remuneration paid in excess of $1,000,000 to each of our other three most highly compensated executive officers (other thanany "covered employee" (as defined in Section 162(m)) in any one taxable year. Compensation payable under the CFO) as determined2016 Incentive Plan will not count against this $1,000,000 deduction limitation provided that such compensation (1) is contingent on the last dayachievement of a tax yearone or more performance objectives based on the performance criteria enumerated in the 2016 Incentive Plan and (2) otherwise satisfies the requirements for qualified performance-based compensation under Section 162(m). We are submitting the 2016 Incentive Plan, including the performance criteria set forth therein, to our shareholders for approval at the extentAnnual Meeting to ensure that the compensation paid to such officer exceeds $1,000,000 in any one year. That deduction limit does not apply, however, to performance-based compensation that satisfies the requirements of Section 162(m).
The requirements of Section 162(m) for performance-based compensation include shareholder approval of the material terms of the performance goals under which the compensation is to be paid. The material terms include (1) the employees eligible to receive compensation upon attainment of a goal, (2) the business criteria on which the goals may be based, and (3) the maximum amount payable to an employee upon attainment of a goal. The regulations under Section 162(m) provide that if any of the material terms of the performance goals are changed, including the maximum amount payable to an employee upon attainment of a goal, then all the material terms of the performance goal must be disclosed again to, and reapproved by, the Company's shareholders.
The 2004 Plan was initially adopted by the Board of Directors and approved by our shareholders in 2004, and the amendment and restatement of the 2004 Plan was adopted by the Board of Directors and approved by our shareholders in 2008. An amendment to increase the number of authorized shares was approved by the Board of Directors and the shareholders in 2011. The Board of Directors approved an amendment to the 2004 Plan in 2012 to limit the use of share recycling under the 2004 Plan and to clarify the provisions prohibiting cash buy-outs by the Company of awards of stock options or stock appreciation rights granted under the 2004 Plan. Finally, the 2004 Plan was amended again by the Board of Directors in 2013 to extend the term of the 2004 Plan until 2024, which amendment was approved by shareholders at our 2013 Annual Meeting.
On May 1, 2015, the Board approved, subject to shareholder approval, certain changes to the maximum amount payable to an employee upon attainment of a Section 162(m) performance goal under the 2004 Plan. As a result, it is necessary for the Company to obtain shareholder reapproval of the performance goals for options, SARs, performance stock awards and performance unit awards to ensure that such awards granted in the future under the 20042016 Incentive Plan will continue to qualifybe deductible as qualified performance-based compensation that is exempt from the $1,000,000 deduction limitation under Section 162(m) described above.compensation.
Please see "Proposal to Amend the Company's 2004 Long-Term Incentive Plan" set forth above in this proxy statement for a summary description of the 2004 Plan, as amended, included on pages 18 through 30 of this proxy statement. Because this is a summary, it may not contain all of the information that is important to you. A full and complete copy of the 2004 Plan, as amended, is attached as Appendix A to this proxy statement and you are encouraged to read it carefully.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Summary of the 2016 Cash Incentive Plan |
Employees Eligible To Receive Performance AwardsAdministration
Performance-based compensation awards granted to employees underThe Compensation Committee will administer the 20042016 Incentive Plan. The 2016 Incentive Plan are administered byrequires the Compensation Committee to be comprised of our Boardat least two directors and, to the extent necessary under Section 162(m) of Directors. The membersthe Code and the Treasury Regulations promulgated thereunder, each member of the Compensation Committee must qualify aswill be an "outside directors" underdirector" (within the meaning of Section 162(m) in order for awards under the 2004 Plan to qualify as deductible performance-based compensation under Section 162(m). Subject to the terms of the 2004 Plan,Code and the Treasury Regulations promulgated thereunder). The Compensation Committee hascurrently consists of three directors, each of whom is an "outside director." The Compensation Committee will have the sole discretionauthority to determineselect the key employees who shallindividuals to whom awards may be granted, grant awards and determine the amounts, terms and conditions of each award. The Board of Directors confirmsCompensation Committee will also have the authority to construe, interpret and administer the 2016 Incentive Plan. The Compensation Committee may not, however, interpret the 2016 Incentive Plan in a manner that the members ofwould cause any award intended to constitute qualified performance-based compensation under Section 162(m) to fail to so qualify with respect to a covered employee. All determinations made by the Compensation Committee meet these criteria.will be final and conclusive on all participants and other persons.
Eligibility
In selecting participantsThe Compensation Committee may select any officer or other key employee of the Company or any of its affiliates to participate in the 2016 Incentive Plan. The Compensation Committee will select the individuals eligible to participate in the 2016 Incentive Plan for each performance period, which will consist of each fiscal year (or portion thereof) of the 2004 Plan,Company, or such other period of twelve months or less as determined by the Compensation Committee chooses ourCommittee. As of April 4, 2016, there were approximately 12 officers and other key employees who have substantial responsibility for the direction, management and growth of the Company and its subsidiaries. The actual number of employees who will receive awards under the 2004 Plan cannot be determined because eligibility for participation is in the discretion of the Compensation Committee. However, there are currently approximately 300 key employees (including our executive officers) of the Company who are eligible to participate in the 2004 Plan and although participation in future years will be at the discretion of the Compensation Committee, we currently expect that a similar number of employees will be eligible to participate each year.affiliates.
Business Criteria On Which Performance Goals May Be BasedDescription of Awards
Under the 2004 Plan, the price at which shares of our Common Stock may be purchased under an option shall be determined by the Plan Committee, but such price may not be less than 100% of the fair market value of the shares on the date the option is granted. Likewise, the grant price of a SAR granted under the 2004 Plan is determined by the Plan Committee, but such price may not be less than 100% of the fair market value of one share of our Common Stock on the date of grant of the SAR. As a result, theFor each performance goal for options and SARs granted under the 2004 Plan is based on the increase in the value of our Common Stock after the date of grant of the award to the date the award is exercised by the employee.
Under the 2004 Plan the amount of and the vesting and transferability restrictions applicable to any performance stock award or performance unit award shall be based upon the attainment of such performance goals asperiod, the Compensation Committee may grant awards in such amounts and on such terms as it determines. For each award granted under the 2016 Incentive Plan, the Compensation Committee will establish one or more performance objectives that will be applied to determine for employees based on the termsamount of compensation payable with respect to such award. The Compensation Committee will base the 2004 Plan.
A performance goal set by the Plan Committee must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met and may be basedobjectives on one or more of the following businessperformance criteria set outenumerated in the 2004 Plan which were previously approved by2016 Incentive Plan:
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The Compensation Committee may alsoapply different performance criteria and performance objectives to individual participants or to groups of participants. The performance criteria and performance objectives selected by the Compensation Committee may relate to the individual participant, the Company, one or more affiliates of the Company and/or one or more divisions or business units of the
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Company or its affiliates, and may be basedapplied on performancean absolute basis and/or be relative to aone or more peer group of companies. Unless otherwise stated, suchcompanies or indices.
With respect to participants who are not covered employees and who, in the Compensation Committee's judgment, are not likely to be covered employees at any time during the applicable performance period or during any period in which incentive compensation may be paid following a performance goal needperiod, the performance objectives established for the performance period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed in the 2016 Incentive Plan, and such performance objectives will be based upon an increase or positive result under a particular business criterionsubject to such other special rules and could include, for example, maintainingconditions as the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).Compensation Committee may establish at any time.
Performance goalThe Compensation Committee may state the amount of compensation payable if the performance objectives underlying an award are met as a specific dollar amount, a percentage of a participant's Annual Base Salary (as defined in the 2016 Incentive Plan), a percentage (not to exceed 100%) of an aggregate amount allocable to a group of participants or in any other objective manner determined by the Compensation Committee. In addition, the Compensation Committee may state the amount of compensation payable as a target amount payable if the applicable performance objectives are met and in larger or smaller increments if the applicable performance objectives are exceeded or partially met. No participant may receive compensation of more than $7 million in any fiscal year under the 2016 Incentive Plan.
With respect to each award granted under the 2016 Incentive Plan, the Compensation Committee will establish in writing the applicable performance objectives, performance period and method for computing the compensation payable with respect to the award while the outcome of the applicable performance objectives is substantially uncertain, but in no event later than the earlier of (1) 90 days after the beginning of the applicable performance period or (2) the expiration of 25% of the applicable performance period.
After the end of each performance period, the Compensation Committee will certify in writing the extent to which the applicable performance objectives with respect to any award have or have not been met and whether any other material terms of the award were satisfied. We will pay a participant's compensation for each performance period in one or more cash payments. A participant may elect to defer payment of his or her award under the 2016 Incentive Plan pursuant to the terms of a deferred compensation program (if any) then maintained by the Company or its affiliates.
To the extent consistent with Section 162(m) of the Code, the Compensation Committee may adjust the performance objectives relating to an award in recognition of: (1) unusual, infrequently occurring or non-recurring events affecting the Company and/or its affiliates; (2) changes in applicable tax laws; (3) changes in accounting principles; (4) changes related to restructured or discontinued operations; (5) restatement of prior financial results; and (6) any other unusual, infrequently occurring or non-recurring gain or loss including those described in the Financial Accounting Standards Board's authoritative guidance, footnotes to the Company's financial statements, in management's discussion and analysis of financial condition and results of operations appearing in the Company's reports on Form 10-K, 10-Q or 8-K for the applicable year and/or appearing in a press release reporting the Company's earnings for any fiscal period. The Compensation Committee will make appropriate adjustments to reflect the effect (if any) on any performance criteria mayor performance objectives of any stock dividend, stock split, recapitalization, merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares or similar corporate change. Under the 2016 Incentive Plan, the Compensation Committee has the authority to exercise negative discretion and reduce (but not increase) the amount of compensation to be measuredpaid to a participant with respect to an employee, one or more business units of the Company, the Company as a whole, or any combination of the foregoing. The Compensation Committee may set performance periods and performance goals that differ from participant to participant.award.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Maximum Amount Payable to an Employee upon AttainmentTermination of a Performance GoalEmployment
NeitherIf, during a performance period, a participant's employment is terminated involuntarily without Cause or as a result of the participant's death, Disability or Retirement (as such terms are defined in the 2016 Incentive Plan), unless otherwise provided in an agreement between the participant and the Company, in the sole discretion of the Compensation Committee, nor the Boardparticipant may be eligible to receive a pro-rata portion (based on the number of Directors may increasecalendar days that the amountparticipant was employed by us during the performance period) of the compensation that would have been payable underif he or she had remained employed for the full performance period. If a participant's employment is terminated prior to the end of a performance stock awardperiod for any other reason, the participant will not be eligible to receive any compensation under the 2016 Incentive Plan for such performance period. If a participant's employment is terminated after the end of a performance period but prior to the related payment date, the participant will be entitled to payment of any compensation earned for such performance period under the 2016 Incentive Plan, except in the event of a termination for Cause, in which case the participant will not be eligible to receive any compensation earned for such performance period.
Change in Control
Except as otherwise provided in an agreement between the participant and the Company or in a change in control plan or program sponsored by the Company covering the participant, if a Change in Control (as such term is defined in the 2016 Incentive Plan) occurs during a performance unitperiod, we will consider each award granted under the 2004 Plan. If the time at which any performance stock award or performance unit award will vest is accelerated, the number of shares of our Common Stock subject2016 Incentive Plan to orbe earned and payable in the amount payable under, such award shall be reduced pursuant to Department of Treasury Regulation § 1.162-27(e)(2)(iii) to reasonably reflect the time value of money. No further grants of awards intended to be performance-based compensation awards will be madedetermined by the Compensation Committee, based upon the extent to which the performance objectives applicable to the award have been satisfied as of the date of the Change in Control. We will pay the compensation payable with respect to each such award to the participant within 30 days following the date of the Change in Control, unless the participant has made a valid deferral election under a deferred compensation plan maintained by the Company or its affiliates.
Transferability
A participant may not alienate, assign, pledge, encumber, transfer, sell or otherwise dispose of any rights or benefits under the 2016 Incentive Plan prior to his or her actual receipt of such rights or benefits.
Clawback
All awards granted under the 2016 Incentive Plan will be subject to deduction, forfeiture, recoupment or similar requirement in accordance with any clawback or similar policy that may be implemented by the Company from time to time, including such policies that may be implemented after the date an award is granted, pursuant to the listing standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, or other agreement or arrangement with a participant.
Effective Date
The 2016 Incentive Plan will be effective as of January 31, 2016, subject to its approval by our shareholders. Any awards granted by the Compensation Committee to participants prior to the date on which the 2016 Incentive Plan is approved by our shareholders will be contingent upon such shareholder approval and will be null and void and of no effect in the event that our shareholders do not approve the 2016 Incentive Plan.
Amendment or Termination
The Compensation Committee may amend, revise, suspend or discontinue the 2016 Incentive Plan at any time without the consent of any participant, subject to any shareholder approval requirements imposed by applicable law, rules or regulations. However, to the extent required by Section 162(m) of Departmentthe
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Table of Treasury Regulation § 1.162-27(e)(4) are satisfied for such awards.Contents
Code, the Compensation Committee may not change the performance criteria enumerated in the 2016 Incentive Plan without shareholder approval.
Section 409A
Section 409A of the Code imposes certain restrictions on amounts deferred under non-qualified deferred compensation arrangements and a 20% additional tax on amounts that are subject to, but do not comply with, Section 409A. We intend for the awards granted under the 2016 Incentive Plan to be exempt from the requirements of Section 409A and the Treasury Regulations promulgated thereunder, and the Compensation Committee will interpret, administer and operate the 2016 Incentive Plan accordingly.
New Plan Benefits |
All awards granted under the 2016 Incentive Plan will be at the discretion of the Compensation Committee and dependent upon our future performance. As a result, the exact benefits or amounts that (1) participants will receive or (2) participants would have received during the 2015 fiscal year had the 2016 Incentive Plan been in place, are not determinable. The Board of Directors has approved,Compensation Committee granted awards under the 2016 Incentive Plan to 12 officers and other key employees subject to shareholder approval the following changes to the performance-based compensation awards under the 2004 Plan:
Given that payments under the 2004 Plan will be determined by comparing actual performance toFor information concerning the performance goals establishedbonus opportunities provided to our executive officers in fiscal 2015 and the performance bonuses earned by the executive officers in fiscal 2015, see "Compensation Discussion and Analysis – Detailed Report – Elements of 2015 Executive Compensation Committee from time to time, it is not possible to conclusively state the amount of benefits that will be paid under the 2004 Plan for any performance period.
The Compensation Committee or the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate the 2004 Plan and any award agreement in whole or in part. However, no termination, amendment, suspension, or modification of the 2004 Plan or an award agreement shall adversely affect in any material way any award previously granted under the 2004 Plan, without the written consent of the holder holding such award. No amendment of the 2004 Plan shall be made without shareholder approval if shareholder approval is required by applicable law or stock exchange rules.
As discussed above, if our shareholders approve the material terms of the performance goals under which Section 162(m) performance-based compensation will be paid under the 2004 Plan then future grants of such awards should continue to qualify as performance-based compensation that is exempt from the $1,000,000 deduction limitation described above. Thus, our shareholders' approval– Annual Cash Performance Bonuses" beginning on page 48 of this proposal will help ensure that the Company can continue to deduct for federal income tax purposes all such compensation paid by the Company.proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE MATERIAL TERMSADOPTION OF THE PERFORMANCE GOALS FOR PERFORMANCE AWARDS UNDER2016 CASH INCENTIVE PLAN.
PROPOSAL 4:
APPROVAL OF AMENDMENT TO BYLAWS TO REQUIRE THE COMPANY'S 2004 LONG-TERM INCENTIVE PLAN FOR PURPOSESRESIGNATION OF SECTION 162(m)ANY DIRECTOR WHO DOES NOT RECEIVE A MAJORITY VOTE IN UNCONTESTED DIRECTOR ELECTIONS
On March 16, 2016, the Board of Directors determined that it would seek shareholder input about whether the Company should amend its bylaws to allow for a form of majority voting in uncontested director elections. The Board is asking that shareholders consider a form of majority voting for non-contested director elections in which directors would continue to be elected by a plurality vote, but the director would be required to resign, subject to Board's acceptance of the resignation, in the event that the director nominee in an uncontested election receives more "against" votes than "for" votes.
To accomplish this, we would amend our Bylaws to require a nominee for election or reelection as a director to deliver to the Company a written and irrevocable resignation letter prior to the meeting of shareholders at which his or her name is to be placed in nomination. The resignation letter shall state that the person resigns as a director of the Company effective upon (i) receiving less than a majority of the vote (i.e., more "against" votes than "for" votes), in an uncontested election of directors and (ii) the Board of Directors voting to accept such resignation by at least a majority vote of all directors. Within 90 days of
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the date of the annual meeting, the Board shall issue a Current Report on Form 8-K indicating whether it had accepted the resignation and its reasons therefor.
An election shall be considered contested if, at the time of the meeting at which such election is to take place, the number of persons standing for election as a director exceeds the number of directors to be elected at the meeting of shareholders.
The Board has authorized, and recommends that shareholders approve, this change to the voting standard for directors in uncontested elections. If the proposed amendment is approved, Section 2.06 of our Bylaws will be amended and restated to read as follows:
Section 2.06. Submission of Questionnaire, Representation and Agreement; Resignation. To be eligible to be a nominee for election or reelection as a director of the corporation (other than a nominee nominated pursuant to Section 2.05(A)(1)(a) or (b) or Section 2.05(B)(1) of Article II), a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.05 of Article II of these bylaws) to the Secretary at the principal executive offices of the corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to the corporation or (2) any Voting Commitment that could limit or interfere with such person's ability to comply, if elected as a director of the corporation, with such person's fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person's individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock trading policies and guidelines of the corporation. In addition, for any person to be eligible to be a nominee for election or reelection as a director of the corporation, that person must deliver to the Secretary of the corporation a written and irrevocable resignation letter meeting the requirements of Section 21.4091 of the Texas Business Organization Code. Such resignation must be delivered prior to the meeting of shareholders at which his or her name is to be placed in nomination and shall state that it is irrevocable and that the person resigns as a director of the corporation effective upon (i) receiving less than a majority of the votes cast for the election of directors in an uncontested election of directors (i.e., more "against" votes than "for votes"), by shareholders entitled to vote in the election of directors at the meeting of the shareholders at which a vote is being taken with respect to the election of such person as a director and (ii) the Board of Directors of the corporation voting to accept such resignation by at least a majority vote of all directors. An election shall be considered contested if, at the time of the meeting of the shareholders at which such election is to take place, the number of persons standing for election, including any person with respect to whom the corporation has received a notice of intent to nominate in compliance with Section 2.05 of these Bylaws, exceeds the number of directors to be elected at the meeting of shareholders.
If approved, this amendment will become effective immediately for all future elections of directors beginning in 2017.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE INTERNAL REVENUE CODE.AMENDMENT TO OUR BYLAWS TO REQUIRE THE RESIGNATION OF ANY DIRECTOR WHO DOES NOT RECEIVE A MAJORITY VOTE IN UNCONTESTED DIRECTOR ELECTIONS.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
The following table lists the name, age, current position and period of service with the Company for each executive officer. Each officer will hold office until his or her successor shall have been elected and qualified or appointed.
Name | Age | Position with the Company | Executive Officer Since | Age | Position with the Company | Executive Officer Since | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | | 51 | Chief Executive Officer | | 2000 | | 52 | President and Chief Executive Officer | | 2000 | ||||||||
Mary Beth Blake | 48 | President and Chief Merchandising Officer | 2012 | |||||||||||||||
James R. Bragg II | | 45 | Executive Vice President – Distribution | | 2012 | |||||||||||||
Kelly M. Dilts | 46 | Senior Vice President – Finance and Investor Relations | 2012 | |||||||||||||||
Benjamin C. Baum | 43 | Executive Vice President and Chief Digital Officer | 2015 | |||||||||||||||
Jon W. Kimmins | | 57 | Executive Vice President, Chief Financial Officer, Treasurer and Principal Financial Officer | | 2013 | | 58 | Executive Vice President, Chief Financial Officer, Treasurer and Principal Financial Officer | | 2013 | ||||||||
Mark Neutze | 52 | Executive Vice President – Store Operations | 2012 | |||||||||||||||
Hyon C. Park | | 42 | Executive Vice President and Chief Information Officer | | 2015 | 43 | Executive Vice President and Chief Information Officer | 2015 | ||||||||||
A. Alexander Rhodes | 56 | Executive Vice President and General Counsel | 2015 | | 57 | Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary | | 2015 | ||||||||||
Carole L. Souvenir | | 54 | Executive Vice President – Employee Relations | | 2006 | |||||||||||||
Matthew Stringer | 39 | Executive Vice President – Marketing | 2014 | 40 | Executive Vice President – Marketing | 2014 | ||||||||||||
Bruce K. Thorn | | 49 | Executive Vice President and Chief Operating Officer | | 2015 | |||||||||||||
Brian T. Vaclavik | | 48 | Senior Vice President, Chief Accounting Officer and Principal Accounting Officer | | 2014 | 49 | Senior Vice President, Chief Accounting Officer and Principal Accounting Officer | 2014 |
See the discussion under "Board of Directors" for the business experience of Mr. Ewert.
Mary Beth BlakeBenjamin C. Baum joined the Company in 2008May 2015 as Chief Merchandising Officer of K&G Men's Company Inc., a wholly-owned subsidiary of the Company. In November 2008, Ms. Blake was named President of K&G. In February 2013, Ms. Blake was named Executive Vice President – Business Development of the Company and, in April 2013, her title was changed to Executive Vice President and Chief MerchandisingDigital Officer. In September 2014, Ms. Blake was named President and Chief Merchandising Officer of the Company.
James R. Bragg II joinedPrior to joining the Company, in 1991. Infrom March 2014 through March 2015, Mr. Baum founded and served as omnichannel retail executive for Digital Commerce and Retail Advisory, LLC. Mr. Baum's previous roles include executive vice president and chief digital officer of Bebe, Inc. since October 2005, Mr. Bragg was named Vice President – Distribution. In April 2007, Mr. Bragg was named Senior Vice President – Tuxedo Distribution2012, head of business development, shopping at Google since May 2011, and in March 2011, Mr. Bragg was named Executive Vice President – Distribution.
Kelly M. Dilts joined the Company in 1998 as Assistant Controller. In March 2003, Ms. Dilts was named Associate Vice President – Finance & Accountingseveral executive strategy and in March 2007, she was named Vice President – Finance & Accounting. In August 2012, Ms. Dilts was named Senior Vice President – Chief Accounting Officer and Principal Accounting Officer of the Company and, in June 2014, she was named Senior Vice President – Finance and Investor Relations.merchandising positions at Target.
Jon W. Kimmins joined the Company in 2013 as Executive Vice President, Chief Financial Officer, Treasurer and Principal Financial Officer. Mr. Kimmins served as the Executive Vice Presidentexecutive vice president – Financefinance and Operationsoperations of LF-USA, Inc., a division of Li & Fung Limited, a wholesaler of apparel, footwear and fashion accessories, since April 2008.
Mark Neutze joined the Company in 1995. In March 2004, Mr. Neutze was named Vice President – Stores. In April 2007, Mr. Neutze was named Senior Vice President – Stores. In March 2010, Mr. Neutze was named Executive Vice President – U.S. Store Operations and, in 2011, he was named Executive Vice President – Store Operations.
Hyon C. Park joined the Company in 2011 as Vice President – Information Technology and, in October 2011, he was named Senior Vice President and Chief Information Officer. In January 2015, he was named Executive Vice President and Chief Information Officer. Prior to joining the Company,
The Men's Wearhouse, Inc. 2015 Proxy Statement
Mr. Park was with The Gymboree Corporation, a children's specialty apparel retailer, since November 2002 serving as a Sr. Director, Information Technology.
A. Alexander ("Sandy") Rhodes joined the Company in April 2015 as Executive Vice President and General Counsel. In July 2015, Mr. Rhodes also became Chief Compliance Officer of the Company and, in January 2016, Corporate Secretary of the Company. Prior to joining the Company, Mr. Rhodes was with Chico's FAS, Inc., a women's specialty apparel retailer, since January 2003 most recently serving as its Executive Vice President-General Counselexecutive vice president-general counsel and Corporate Secretary.
Carole L. Souvenir joined the Company in 1998 as Vice President – Employee Relations. In March 2002, she was named Senior Vice President – Employee Relations. In August 2006, she was promoted to Chief Legal Officer and Executive Vice President – Employee Relations.corporate secretary.
Matthew Stringer joined the Company in 1999. In March 2008, Mr. Stringer was named Vice President – Marketing and, in March 2011, was named Senior Vice President – Marketing. In September 2014, Mr. Stringer was promoted to Executive Vice President – Marketing.
Bruce K. Thorn joined the Company in June 2015 as Executive Vice President and Chief Operating Officer. Mr. Thorn held various enterprise level roles with PetSmart, Inc. since 2007, most recently as executive vice president, store operations, services and supply chain. Mr. Thorn's other experiences include leadership positions with Gap, Inc., Cintas Corp., LESCO, Inc. and The United States Army.
Brian T. Vaclavik joined the Company in 2000 as Assistant Controller. In April 2005, Mr. Vaclavik was promoted to Corporate Controller and, in April 2006, he was named Associate Vice President and Corporate Controller. In April 2007, Mr. Vaclavik was promoted to Vice President and Corporate Controller and, in December 2012, he was named Vice President – Finance & Accounting. In June 2014, Mr. Vaclavik became Senior Vice President, Chief Accounting Officer and Principal Accounting Officer of the Company.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our executive compensation programsphilosophy, objectives and practicespolicies and focuses on the compensation of our Named Executive Officers in our 2015 fiscal year. Our Named Executive Officers for our 2015 fiscal year 2014 Named Executive Officers:consisted of:
Effective October 1, 2014,Please note that Mr. Edwab retired as an executive officerThorn, Mr. Rhodes, and employee ofMr. Baum joined the Company. Mr. Edwab continues to serve as non-executive Vice Chairman of the Board. Each of ourCompany at various times during 2015. Thus, there is no historical compensation information for these three Named Executive Officers who is currently employed byother than the Company is referred to as a "continuing Named Executive Officer."compensation received in fiscal 2015.
Executive Summary
Significant Compensation Decisions During 2014Objectives
The Company's compensation program is designed to attract and retain talented leaders who appreciate and are committed to our culture and mission and emphasizes pay for performance. Our compensation elements seek to balance all aspects of an executive's responsibilities: base salary for day-to-day responsibilities, cash incentive bonus for shorter-term returns linked to annual Company performance, and equity awards for aligning the executives' focus with shareholder value and the long-term, future performance of the Company.
We set the applicable performance goals for our annual cash performance bonus program near the beginning of the fiscal year using challenging but realizable targets so that achievement of the goals is both uncertain and objective. These goals are based upon the annual financial plan approved by the Board.
In addition to our core elements of base salary, cash incentives, and equity awards, our compensation program includes other standard benefits that are available to all employees, such as medical and dental insurance, life and disability insurance, a 401(k) Savings Plan, and a broad-based employee stock discount plan, among other optional benefits. Senior executives are also covered by a supplemental long-term disability plan and may also participate in an annual executive physical program.
2015 Performance
On June 18, 2014, we acquired all of the outstanding common stock of Jos. A. Bank Clothiers, Inc. ("Jos. A. Bank"), a men's specialty retailer, for $65.00 per share in cash, or total consideration of approximately $1.8 billion. The acquisition was the culmination of our successful defense against an unsolicited proposal from Jos. A. Bank to acquire the Company. As a result, the Company experienced a major expansion inOur store count, inventory, suppliers, personnel, assets and liabilities, revenue and expense in connection withincreased materially as a result of the transaction involvingacquisition. The integration of Jos. A. Bank which came shortly after the Company's acquisition ofand the Joseph Abboud brand (which we acquired in 2013. The Jos. A. Bank transaction required2013) continued to require a significant commitment of time, energy and focus by our Board of Directors and management team in fiscal 2015. An important element of the Jos. A. Bank integration involved transitioning away from the promotions previously offered by Jos. A. Bank, which we believe are ultimately unsustainable for the business. Although our Men's Wearhouse, Moores, and K&G brands continued to completeperform well in fiscal 2015, the necessary change to the Jos. A. Bank promotional model has been significantly more difficult than we expected and continuesnegatively impacted our fiscal 2015 results.
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A summary of our GAAP financial and operating performance for fiscal 2015, which includes the results of Jos. A. Bank from June 18, 2014, compared to fiscal 2014 is presented below.
Key operating metrics for fiscal 2015 include:
Key liquidity metrics for fiscal 2015 include:
During the fourth quarter of fiscal 2015, we began implementing a profit improvement plan intended to reduce costs and improve operating performance. This plan includes a store rationalization program designed to improve our expense structure, which identified approximately 250 stores to be closed, and other operating efficiencies.
Pay for Performance
Our compensation philosophy emphasizes pay for performance and places a significant percentage of Named Executive Officer compensation "at risk." In fiscal 2015, our financial performance did not meet our goals and expectations. We did not achieve the required threshold level of net income before any bonus could be paid. As a result, except for certain one-time contractual cash inducement awards for the first year of their employment paid to Mr. Thorn and Mr. Baum, Named Executive Officers did not receive any cash incentive bonus for fiscal 2015. In addition, the Company has determined that the performance units granted in September 2014 and throughout 2015 to each of our Named Executive Officers are no longer likely to vest given the Company's performance. (2) Furthermore, all long-term incentive awards granted to our Named Executive Officers for fiscal 2015, including those granted in September 2014, are equity-based whereby stock price movement impacts the value realized by the Named Executive Officer if the award vests or is earned.
As a result, we believe that the fiscal 2015 performance-based compensation together with base salary levels are well-aligned with the Company performance for the year andthe link between pay and performance is strong.
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2015 Executive Compensation Program
In light of the significant changes the Company experienced in fiscal 2014, the Compensation Committee, with the assistance of Pay Governance a prominent consulting firm specializing in advisory services related to executive and directorLLC ("Pay Governance"), the Compensation Committee's independent compensation undertookconsultant, conducted a comprehensive review of the Company's compensation practices following the completion of the Jos. A. Bank acquisition. As a result of this review, and taking into consideration the input from the Company's Chief Executive Officer and Pay Governance, in September 2014, the Compensation Committee determined in September 2014 that it was in the best interest of the Company to increase certain executive officers' base salaries and to revise and adjust various aspects of the Company's compensation practices pertaining to both our annual cash incentive planperformance bonus program and equity-based long term incentiveequity awards. Under the new compensation program, senior executive officers, including each of our continuing Named Executive Officers other than Mr. Ewert, will receive equity awards in the following ratio: 40% performance units, 30% stock options and 30% time-vested DSUs, and Mr. Ewert will receive equity awards as follows: 50% performance units, 30% stock options and 20% time-vested DSUs. The annual cash incentive plan for 2015 will be established as a percentage of base salary and allow for payout based 80% on financial metric objectives based
The Men's Wearhouse, Inc. 2015 Proxy Statement
primarily on net consolidated earnings before interest and taxes ("EBIT") and 20% on personal performance objectives. These changes arewere designed and intended to reflectaddress the substantially increased demands upon and responsibilities of our executives and the material impact the Jos. A. Bank acquisition will have on the sizescope of the Company's operations and the Company's overall financial performance.
For fiscal 2015, our annual cash performance bonus program for the currentour Named Executive Officers consisted of a Company performance component based on net consolidated earnings before interest and successive fiscal years.taxes ("EBIT") and an individual performance component. The Compensation Committee believes it is imperative to retain and incent our management team in order to successfully integrateestablished the Jos . A. Bank operations with the Company. See "Elements of Compensation – Performance Based Annual Cash Bonuses" for a discussion pertaining to annual non-equity incentive awards and "Equity Awards – Stock Options" and "Equity Awards – Deferred Stock Units" below for a discussionpercentages of the criteria appliedannual cash performance bonus based on Company performance and individual performance at 80% and 20%, respectively, for our Named Executive Officers. In addition, the annual cash performance bonus program was contingent on achieving 75% of our net income target for fiscal 2015 for any awards to performance-basedbe achieved. As this target was not achieved, no annual cash performance bonuses were paid to our Named Executive Officers, except as required for Mr. Thorn and time-based long term equity incentive awards.Mr. Baum.
As customary, in April 2014, the Compensation Committee made its awards of stock options and time and performance based equity grants to Company executives and employees. In addition, as part of the implementation of the updated compensation program recommended by Pay Governance, the Compensation Committee determined that it was in the best interests of the Company to issuegrant equity awards to certain senior executive officers, including our continuingthen Named Executive Officers, under the new program in September 2014 instead of during our regular annual grant process in fiscal 2015. The Compensation Committee believed it was important to recognize the extraordinary efforts of Mr. Ewert and other senior executivethese officers including our continuing Named Executive Officers, at that time and provide a strong incentive for them to remain with the Company, and achieve strong results, during and following the integration of the Jos. A. Bank operations and achieve superior results in connection therewith.Bank. The September 2014 equity awards in September were intended to berepresent an accelerated issuanceacceleration of the equity awards that the Compensation Committee would customarily would be madegrant during the first quarter of fiscal 2015. As a resultDue to the acceleration of this accelerated issuance ofthe fiscal 2015 equity awards and a special one-time cash bonus paidother factors described in June 2014this report, the total compensation reported in recognition of the outstanding efforts by senior management in connection with the successful conclusion of the Jos. A. Bank transaction, total reported compensationSummary Compensation Table for Mr. Ewert and the other continuing Named Executive Officers will appear to be significantly higher than the amounts reported in priorMr. Kimmins for fiscal years.However, our continuing Named Executive Officers' reported pay in next year's proxy statement attributable to equity awards will be2015 is significantly lower than the amounts reported in this proxy statement since they will not receivefor fiscal 2013 and fiscal 2014.
Mr. Thorn, Mr. Rhodes, and Mr. Baum joined the Company at various times during 2015 and received equity grantsawards as partdescribed on pages 50-52.
2015 Advisory Vote on Executive Compensation
At our 2015 Annual Meeting of Shareholders, our shareholders approved the compensation of our annual grant process during fiscal 2015.
OverviewNamed Executive Officers, with 98.6% of Fiscal 2014 Financial Performance
A summarythe votes cast in favor of our financial performance for fiscal 2014, which includes"say-on-pay" resolution. The Compensation Committee views this strong level of support as an affirmation of our executive pay practices. The Compensation Committee considered the results of Jos. A. Bank from June 18, 2014, comparedthe 2015 "say-on-pay" vote in its evaluation of our executive compensation program, and in light of the overwhelming support our shareholders expressed last year, it did not make any material changes to fiscal 2013 is presented below:
Despite the successful acquisition and the increase in our revenues in fiscal 2014,executive compensation program as a result of the market conditions in place at the end of our fiscal year, our stock price decreased 1.0% from $48.04 on2015 "say-on-pay" vote.
| | Tailored Brands, Inc. 2016 Proxy Statement 42 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
the last trading day of fiscal 2013 to $46.47 per share on the last trading day of fiscal 2014. However, on March 12, 2015, after announcement of our year end results, the closing price was $52.26.
The total compensation received by Mr. Ewert, our Chief Executive Officer, in fiscal 2014 as reported in the Summary Compensation Table was $9,672,031 as compared to total compensation of $3,622,131 in fiscal 2013, an increase of approximately $6.0 million, of which approximately $4.2 million resulted from the equity grants awarded to him in September 2014 in lieu of those that would have been issued in April 2015 (as further discussed in this Compensation Discussion and Analysis). As described in "Chief Executive Officer Reported Pay vs. Realized Value" below, over the same period, Mr. Ewert's realized pay increased 92% from $3,199,875 in fiscal 2013 to $6,132,902 in fiscal 2014, and his realized pay as a percentage of reported pay decreased from 88.3% in 2013 to 63.4% in fiscal 2014, a decrease of 28%.
OverviewSummary of Compensation PhilosophyPractices and Policies
Our executiveCompensation practices that encourage and support good governance and mitigate excessive risk taking that we follow, and problematic compensation philosophy is focused on pay for performance and is designed to reflect appropriate governance practices aligned with the needs of our business and the interests of our shareholders, which has dramatically changed over the last fiscal year and is constantly evolving. Below is a brief summary of compensation practices we have adopted, and a list of problematic pay practices that we avoid.avoid, include the following:
WHAT WE DO
üPay for Performance: We align executive compensation with Company objectives on both a short-term and long-term basis. The majority of our target total direct compensation for our Named Executive Officers is comprised, over the long term, of variable compensation through our annual cash performance bonuses and equity awards. Actual total direct compensation varies based on the extent of achievement of, among other things, operational and financial performance goals and individual performance criteria.
üStock Ownership Guidelines: Our stock ownership guidelines encourages executives to own stock and/or have an interest in deferred stock units valued at a multiple of base salary, ranging from 2.5 times current base salary for our senior executives to 5 times current base salary for the Chief Executive Officer.
üMitigation of Risk: Our compensation plans include provisions designed to mitigate excessive risk taking, including caps on the maximum level of payouts, clawback provisions, varied performance measurement periods, and multiple performance metrics. In addition, the Board and management perform a periodic risk assessment to identify potential risks created by our incentive plans. We do not believe any of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company.
üClawback Requirement: Clawback provisions for incentive compensation are included in the award agreements under our long-term incentive plans, employment agreements and change in control agreements.
üIndependent Compensation Consultant: The Compensation Committee retained Pay Governance to serve as its independent executive compensation consultants. During fiscal 2015, Pay Governance did not provide any material services to the Company other than services related to employee and director compensation.
üDouble Trigger: Equity awards granted on or after September 1, 2014 will not automatically vest in the event of a change in control unless also accompanied by a qualifying termination of employment.
WHAT WE DON'T DO
cNo Tax Gross-Ups in Change in Control Agreements: We do not provide for tax gross-ups for excise taxes that may be imposed as a result of payments made in connection with a change in control.
cNo Current Payment of Dividend Equivalents on Unvested Long-Term Incentives: For all equity awards granted after April 3, 2013, dividend equivalents on unvested deferred stock units or performance units are only paid if the underlying award is ultimately earned.
cNo Repricing of Underwater Stock Options: Our 2004 LTIP and our proposed 2016 LTIP do not permit us to reprice or exchange underwater options without shareholder approval.
cNo Hedging, Pledging, Short Sales, or Derivative Transactions: Company policies prohibit our directors and executives from hedging, pledging, or trading in derivatives involving our common stock.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
WHAT WE DON'T DODetailed Report
Compensation Philosophy and Objectives
We design our executive compensation program to promote the following philosophy and objectives: The Compensation Committee believes that the structure of our compensation program should be fundamentally the same across our entire management team. While individual compensation levels vary based on job responsibilities, individual performance and the compensation paid to similarly-positioned executives within our Peer Group (as defined below), the Named Executive Officers generally receive the same components of compensation (i.e., base salary, annual cash performance bonus and long-term equity awards) as the rest of our executive management team. In addition, similar performance goals apply to the annual cash performance bonuses that the Named Executive Officers and the rest of the executive management team are eligible to receive. For example, in 2015, each executive management team member's annual cash performance bonus had, as a significant financial component, EBIT. The Compensation Committee believes this consistency fosters team work and a collaborative approach to managing our business, ensures that the entire management team focuses on the same corporate goals and objectives and shares in the risks and rewards of our performance in a similar manner and reduces the likelihood of excessive risk taking. Role of Executive Officers Consistent with past practice, in fiscal 2015, the Compensation Committee requested that
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Chief Executive Officer, with the assistance of other members of senior management, make initial recommendations to the Compensation Committee regarding our executive compensation program for fiscal 2015 and the compensation of our Named Executive Officers. In the course of establishing executive compensation for fiscal 2015, the Compensation Committee obtained the input of the Chief Executive Officer and other members of management. At the request of the Compensation Committee, the Chief Executive Officer and certain other members of management from time to time attended and participated in Compensation Committee meetings. The Compensation Committee believes this input is valuable because of the Chief Executive Officer's close working relationship with the other Named Executive Officers and management's comprehensive knowledge of our business, operations and financial and strategic goals. The Chief Executive Officer does not make recommendations regarding his own compensation, nor is he present when his compensation is being deliberated or determined. The Compensation Committee has sole authority to determine all elements of executive compensation and makes all final determinations regarding the Named Executive Officers' compensation.
Role of Compensation Consultant and Consultant Independence
The Compensation Committee continuesengaged Pay Governance to focus on putting in place competitiveserve as its independent compensation consultant for the Company's2015. Pay Governance's engagement focused on: (1) reviewing and evaluating our executive officers, and,compensation program as a result, works from time to timewhole, each principal component and the mix of compensation; (2) analyzing and providing the Compensation Committee with compensation consultants to advise itcompetitive pay data with respect to competitive compensation arrangements. Upon consummation of the Jos. A. Bank transaction,other retail apparel companies; and in recognition of the significantly increased responsibilities Mr. Ewert and other Company executives would assume as a result thereof,(3) advising the Compensation Committee reviewed again its approach to itson executive compensation practicestrends and engageddevelopments. At the servicesrequest of the Compensation Committee, Pay Governance who undertook a new reviewattended
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certain Compensation Committee meetings relating to our executive compensation policiesprogram for fiscal 2015 and practices. Asdiscussed with management the recommendations that management planned to make to the Compensation Committee regarding fiscal 2015 compensation. Additionally, in the fourth quarter of fiscal 2015, Pay Governance began working with the Compensation Committee on the development of our 2016 LTIP and our 2016 Incentive Plan, which are the subject of Proposals No. 2 and No. 3, respectively.
During fiscal 2015, Pay Governance reported directly to the Compensation Committee and we did not engage Pay Governance for, and Pay Governance did not provide, any material services beyond those services it provided to the Compensation Committee. The Compensation Committee requested and received a result,written statement from Pay Governance detailing its independence criteria and, based on such statement and other factors, the Compensation Committee determined that Pay Governance was independent under the applicable SEC rules and NYSE Listing Standards and that engaging Pay Governance did not present any conflicts of interest.
Determination of Compensation for Fiscal 2015
In 2015, the Compensation Committee: (1) reviewed and approved annual compensation for executives whose annual base salary plus maximum payout under our annual cash performance bonus program is at least $500,000; (2) reviewed and approved the executive compensation program as presented to the Compensation Committee by the Chief Executive Officer; and (3) reviewed and approved the annual equity awards granted to all employees as recommended to the Compensation Committee by management.
When setting Named Executive Officer compensation, the Compensation Committee considers the aggregate compensation payable to the executive, the executive's current and prior compensation (including the vesting and value of previously granted equity awards) and the form and mix of the compensation awarded. The Compensation Committee seeks to achieve an appropriate balance between immediate cash rewards and incentives for the achievement of both annual and long-term financial and non-financial objectives. The Compensation Committee determines the number of shares of common stock granted to our Named Executive Officers through equity awards on a discretionary basis, rather than formulaically, by considering the executive's position, responsibilities, accomplishments, achievements and tenure with the Company. The Compensation Committee may modify its approachthe mix of base salary, annual awards and long-term awards as it deems appropriate based on a Named Executive Officer's specific circumstances.
The Compensation Committee reviews and approves all elements of executive compensation on an established schedule, which may vary from year to year but generally occurs during the first quarter of the fiscal year. In connection with establishing the Named Executive Officers' compensation for fiscal 2015, the Compensation Committee reviewed: (1) the level of achievement of the financial, operating, and personal objectives applicable to our executive compensation program for fiscal 2014; and (2) the recommendations of our Chief Executive Officer with respect to our executive compensation program for fiscal 2015, including recommendations with respect to the compensation of our Named Executive Officers for fiscal 2015.
After completing this review, the Compensation Committee approved the base salaries and the annual cash performance bonus program for Mr. Ewert and Mr. Kimmins. The Compensation Committee did not grant any equity awards for fiscal 2015 to Mr. Ewert's overall compensation. TheEwert or Mr. Kimmins. As part of the implementation of our updated compensation program in fiscal 2014, the Compensation Committee determined that a greater proportion of Mr. Ewert's overall compensation package should beit was in the formbest interests of performance-basedthe Company to grant equity incentive awards in order to provide a strong incentive tocertain senior executives, including Mr. Ewert and Mr. Kimmins, under the new program in September 2014 instead of during our regular annual grant process in fiscal 2015. The September 2014 awards represent an accelerated grant of the equity awards that the Compensation Committee would customarily grant during fiscal 2015. These awards were intended to recognize the efforts of these officers and serve as a powerful retention tool to incent each to remain with the Company.
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The Compensation Committee reviewed and approved the base salary, the annual cash performance bonus level, and the equity awards for Mr. Thorn, Mr. Rhodes, and Mr. Baum, who each joined the Company during fiscal 2015, near their respective start dates.
The Compensation Committee may continue to periodically review salaries and equity awards as it deems necessary in order to more strongly emphasizeaddress new appointments or promotions or other special circumstances that may arise during the fiscal year.
Benchmarking Compensation Committee's desire to reward superior performance while at the same time, reflect the competitive market for executive managerial talent such as Mr. Ewert. In its analysis,
On an annual basis, Pay Governance providedprovides the Compensation Committee with data with respect to other retail apparel companies, similar in size to projectedus based on revenues and market capitalization ofin order to benchmark compensation in the newly combined Company. The companies selected by Pay Governance included: Abercrombie & Fitch Co., Aeropostale, Inc., American Eagle Outfitters, Inc., ANN INC., Ascena Retail Group, Inc., Brown Shoe Company, Inc., Chico's FAS, Inc., DSW Inc., Express, Inc., Foot Locker, Inc., Genesco Inc., Guess?, Inc., The Children's Place Retail Stores, Inc., and competitive market. In 2015, the primary comparator group included the following companies:
• Abercrombie & Fitch Co. | • Express, Inc. | |
• American Eagle Outfitters, Inc. | • Foot Locker, Inc. | |
• Ascena Retail Group, Inc. | • Genesco Inc. | |
• Caleres, Inc. | • Guess?, Inc. | |
• Chico's FAS, Inc. | • The Children's Place Retail Stores, Inc. | |
• DSW Inc. | • The Finish Line, Inc. |
While the Compensation Committee considered this data in addition to other information when determining what would be appropriate compensation for a chief executive officer of the Company,Named Executive Officers, it did not target Mr. Ewert's compensation to any specific benchmark against the peer group or any particular member or sub-set of the peer group.
For 2014, Mr. Ewert received a base salary of $1,250,000, an annual bonus payout under our non-equity incentive bonus program of $1,718,750, option awards having a fair market value on the date of grant of $2,051,278, and deferred stock units (or DSUs) subject to solely time-based vesting having a fair market value at grant equal to $4,135,552, and DSUs subject to performance-based vesting having a fair market value at grant equal to $2,585,537. The primary factor in the significant increase between the fiscal 2013 and fiscal 2014 reported Chief Executive Officer compensation is the fact that in June 2014, the Compensation Committee issued a special one-time cash bonus to Mr. Ewert and other executives in recognition of their outstanding performance in connection with the Jos. A. Bank transaction and issued new stock options and performance-based and time-based DSUs in September 2014. The Compensation Committee also awarded non-equity incentive bonuses for 2014 to Mr. Ewert and the other Named Executive Officers equal to 138% of their respective target bonus amounts due to the
The Men's Wearhouse, Inc. 2015 Proxy Statement
superior financial performance of the Company as we exceeded our financial performance targets. The equity incentive awards made in September 2014 are intended by the Compensation Committee to be in lieu of the equity incentive awards that would have been made during our fiscal 2015 annual grant process which typically occurs in April. As a result of this accelerated issuance of equity awards, the special one-time cash bonus and the significant non-equity incentive bonus, total compensation for Mr. Ewert and the other Named Executive Officers is significantly greater in fiscal 2014 than in fiscal 2013. We view these increases as a result of a change to our compensation practices attributed to the extraordinary changes in the Company, including the acquisition of Jos. A. Bank, which occurred during fiscal 2014.Since Mr. Ewert and each of our other continuing Named Executive Officers will not receive equity awards as part of our annual grant process during fiscal 2015, it is anticipated that the reported pay in next year's proxy statement attributable to equity awards will be significantly lower than the amounts reported in this proxy statement.
2014 Chief Executive Officer Annual Compensation
With respect to Mr. Ewert's 2014 annual compensation, 66% was designed to be "at-risk" pay (annual incentive bonus, non-qualified stock options and performance units), and 34% was intended as fixed pay (base salary, special bonus and time-based DSUs). For additional information regarding the individual components of his compensation, see "Elements of Compensation" below.
In April 2015, the Company entered into an Amended and Restated Employment Agreement and Amended and Restated Change in Control Agreement with Mr. Ewert. See "Employment Agreements – Douglas S. Ewert" and "Potential Payments Upon Termination or Change in Control" below for a more detailed discussion of Mr. Ewert's new agreements.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Chief Executive Officer Reported Pay vs. Realized Value
It is important to note that the grant date fair value of the performance units and DSUs (both time and performance-based vesting)the nonqualified stock options as set forth in our Summary Compensation Table on page 5256 is provided for accounting and SEC disclosure purposes and isdoes not reflect realized pay for the indicated years. The table below shows the pay Mr. Ewert realized for the past three fiscal years in contrastcompared to the compensation reported pay presented in the Summary Compensation Table. The difference between
For 2015, Mr. Ewert's reported pay andcompensation is significantly lower than his realized pay reinforcespay. His lowered reported compensation it attributable to: (1) the concept that a significant portionacceleration of Mr. Ewert's fiscal 2015 equity grant into fiscal 2014, and (2) Mr. Ewert not earning an annual cash performance bonus for fiscal 2015 because the applicable performance targets were not achieved. His realized pay reflects approximately $1.37 million in equity compensation is at risk of forfeiture and dependent on the performance of the Company.from awards granted in prior years.
Year of Compensation | Reported Pay ($)(1) | Realized Pay ($)(2) | Realized Pay vs. Reported Pay ($) | Realized Pay as a Percentage of Reported Pay (%) | Reported Pay ($) (1) | Realized Pay ($) (2) | Realized Pay vs. Reported Pay ($) | Realized Pay as a Percentage of Reported Pay (%) | ||||||||||||||||||
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2015 | | 1,296,022 | | 2,661,841 | | +1,365,819 | | 205.3 | ||||||||||||||||||
2014 | 9,672,031 | 6,132,902 | –3,539,129 | 63.4 | 9,672,031 | 6,132,902 | –3,539,129 | 63.4 | ||||||||||||||||||
2013 | 3,622,131 | 3,199,875 | –422,256 | 88.3 | | 3,622,131 | | 3,199,875 | | –422,256 | | 88.3 | ||||||||||||||
2012 | 2,094,570 | 3,965,782 | +1,871,212 | 189.3 |
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column in the Summary Compensation Table for the indicated fiscal year. Excludes the value of any unearned and unvested DSUs, including performance-based DSUs,performance units, which will not actually be received, if earned, until a future date.
In April 2015, the Company entered into an Amended and Restated Employment Agreement and Amended and Restated Change in Control Agreement with Mr. Ewert. See "Employment Agreements – Douglas S. Ewert" and "Potential Payments Upon Termination or Change in Control" below for a more detailed discussion of Mr. Ewert's new agreements.
2014 Advisory Vote onElements of 2015 Executive Compensation
At our 2014 annual meeting of shareholders, in response toFor fiscal 2015, the advisory vote to approve executive compensation, more than 96% of the votes cast were in favor of our named executive officer compensation and, as a result, the named executive officer compensation was approved. We value this positive endorsement by our shareholdersprincipal components of our executive compensation policiesprogram were:
Compensation arrangements for each fiscal year are generally considered by the Compensation Committee over a 90-day period following our fiscal year end and implemented immediately thereafter. Therefore, the Compensation Committee had not yet received the results of the 2014 advisory vote by shareholders when determining the executive compensation for 2014 set out in this proxy statement. However, the Board of Directors and the Compensation Committee will consider shareholder feedback in making compensation determinations for fiscal years which occur after the receipt of such feedback; for example, the Compensation Committee considered the results of the 2013 advisory vote on executive compensation received in September 2013 when it considered the executive compensation for 2014, and it then considered the results of the 2014 advisory vote on executive compensation received in June 2014 when it considered executive compensation for fiscal 2015. The Compensation Committee continues to believe that our programs are effectively designed, instrumental to achieving our business strategy, consistent with our corporate culture, and aligned with the interests of our shareholders.
In addition, consistent with the preference expressed by our shareholders at the 2011 annual meeting of shareholders, our Board of Directors has decided that we will include a vote to approve, on an advisory basis, the compensation of our named executive officers in our proxy materials every year until
The Men's Wearhouse, Inc. 2015 Proxy Statement
the next required advisory vote to approve the frequency of an advisory vote on executive compensation, which will occur no later than our annual meeting of shareholders to be held in 2017.
Our Board of Directors and our Compensation Committee value the opinions of our shareholders and, to the extent that there is any significant vote against the compensation of ourthose Named Executive Officers as disclosed in this proxy statement, we will consider our shareholders' concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. Our Board of Directors unanimously recommends that you vote"FOR" the approval, on an advisory basis, of the compensation of our Named Executive Officers, as disclosed in this proxy statement. For more information, see "Approval, on an Advisory Basis, of the Compensation of the Company's Named Executive Officers" on page 78 of this proxy statement.
Our Compensation Philosophy
What Our Compensation is Designed to Reward
Our compensation program is designed to reward teamwork and each individual's contribution towho joined the Company as well as to produce positive long-term results for our shareholders and employees by aligning compensation with the Company's business strategies and the creation of long-term shareholder value. Accordingly, a significant portion of each executive's compensation is performance-based.
Objectives of Compensation Program
The primary objectives of our compensation program, including our executive compensation program, are to retain and motivate qualified employees who are enthusiastic about and committed to our culture and mission. In doing so, we design competitive total compensation and rewards programs to enhance our ability to attract and retain knowledgeable and experienced executives who appreciate and are committed to our Company culture. Promotion from within is a key principle at the Company and a majority of our executive officers have reached their current career positions through an average career development tenure in excess of 15 years with us. Differences in compensation among our exempt employees are generally due to performance, position, seniority, or local requirements. In line with this philosophy, executive officers generally receive minimal perquisites.
Each executive's current and prior compensation is considered in setting future compensation and consideration is given to the vesting and value of previously granted equity awards. As a result, the composition of our named executive officer group often varies from year to year based upon the equity awards granted in any given year. In addition, the Chief Executive Officer focuses on relative compensation throughout the organization.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Elements of Compensation
The following table describes the primary elements of our executive compensation program:
Compensation Element | Purpose | Link to Performance | Fixed or Performance- Based | Short- or Long-Term | |||||
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Base Salary | Provides an appropriate level of fixed compensation to attract and retain leaders | Based on individual performance | Fixed | Short-Term | |||||
Annual Cash Bonus | Encourages executives to achieve annual results that create shareholder value | Linked to annual achievement of predetermined Company objectives | Performance-Based | Short-Term | |||||
Equity Awards (including non-qualified stock options, restricted stock awards, | • Directly links executives' and shareholders' interests by tying long-term incentives to stock appreciation and/or the Company's financial performance • Encourages executives to achieve long-term business goals and objectives (including achieving financial performance that balances growth, profitability, and asset management) • Rewards management for taking prudent actions and achieving results that create shareholder value • Helps to retain management through business cycles | Initial grant value is linked to individual performance; however, the ultimate value of the award is linked to stock price performance over a period of time or, in the case of | Performance-Based (non-qualified stock options and Fixed | Long-Term |
Base SalariesSalary
Base salary is the fixed component of the Named Executive Officers' compensation. We intend for base salary to provide a core amount of compensation so that executives do not feel pressured to take unnecessary or excessive risks or focus on the price of our common stock to the detriment of other important financial and operational measures. The Compensation Committee annually reviews and subjectively determines each Named Executive Officer's base salary based on the following factors:
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In September 2014, wethe Compensation Committee adjusted the base salaries of certain senior executives, including Mr. Ewert and Mr. Kimmins, primarily due to the increased duties and responsibilities those executives assumed in connection with the Jos. A. Bank transaction.acquisition. We believe that thethese adjustments made bringmake the base salaries of these executives to more closely reflectconsistent with the base salary levels of similarly positioned executives in the current market rates for equivalent talent and expertise.competitive market. The following table sets forth the annual base salary for each of our continuing Named Executive Officers in effect on the last day of each of the following fiscal years:
Name | 2013 Base Salary ($) | 2014 Base Salary ($) | 2014 Base Salary ($) | 2015 Base Salary ($) | % Change | ||||||||||||
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Douglas S. Ewert | 1,250,000 | 1,250,000 | | 1,250,000 | | 1,250,000 | | 0 | % | ||||||||
Jon W. Kimmins | 450,000 | 550,000 | 550,000 | 550,000 | 0 | % | |||||||||||
Mary Beth Blake | 540,000 | 600,000 | |||||||||||||||
Mark Neutze | 309,000 | 400,000 | |||||||||||||||
Carole L. Souvenir | 330,000 | 400,000 | |||||||||||||||
Bruce K. Thorn | | — | | 650,000 | | — | |||||||||||
A. Alexander Rhodes | — | 380,000 | — | ||||||||||||||
Benjamin C. Baum | | — | | 425,000 | | — |
Based on its review, the Compensation Committee determined to keep Mr. Ewert's and Mr. Kimmins' base salaries in fiscal 2015 unchanged from their levels at the end of fiscal 2014, primarily as a result of the base salary adjustments made in September 2014. As noted above, Mr. Thorn, Mr. Rhodes, and Mr. Baum joined the Company at various times during 2015.
Performance-Based Annual Cash Performance Bonuses
To align executive pay with Company financial and individual performance, our executivesNamed Executive Officers are eligible to receive annual cash bonuses pursuant to our non-equity annual incentivecash performance bonus program. For fiscal 2015, our annual cash performance bonus program for our Named Executive Officers required that we achieve a threshold net income performance requirement of at least 75% of the Company's $138.0 million net income target, or $103.5 million, for any bonuses to be paid.
The Compensation Committee established a Company performance component and an individual performance component for our fiscal 2015 annual cash performance bonus program. The Compensation Committee established the percentages of the annual cash performance bonus opportunity based on Company performance and individual performance at 80% and 20%, respectively, for our Named Executive Officers.
The Compensation Committee believes that this allocation fosters a results-driven, pay-for-performance culture, builds accountability and aligns the interests of our Named Executive Officers and our shareholders.
During the first quarter of fiscal 2015, the Compensation Committee established the annual cash performance bonus program for fiscal 2015, including (1) the award formula and the Company and individual performance goals that will determine the bonus (if any) that each Named Executive Officer would earn and (2) the threshold, target and maximum bonuses that each Named Executive Officer would be eligible to earn. The Compensation Committee selected the threshold, target and maximum bonuses subjectively after considering the annual performance bonus opportunities for similarly-positioned executives in the competitive market, our past practices, the Named Executive Officer's scope of responsibility and the recommendations of our Chief Executive Officer.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Financial Performance Bonus – 80% of Award Formula
Subject to our achievement of the threshold net income requirement, the annual cash performance amount attributable to the financial performance component is determined based on performance against EBIT goals as follows:
EBIT ($M) | Payout (% of Target) | |||
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$379.9 | | 200 | % | |
$316.6 | 100 | % | ||
$284.9 | | 50 | % | |
<$284.9 | 0 | % |
For purposes of our annual cash performance bonus payout possibleprogram EBIT means earnings before interest expense and income tax, as adjusted for any income or expense that is unusual, non-recurring or extraordinary, as the Compensation Committee deems appropriate. In addition, the Compensation Committee adopted a Named Executive Officer under our non-equityfinancial performance program varies by individual, with the maximum payout (subject to adjustment as described below) established at $1,718,750 for fiscal 2014. The target bonus and bonus received, in actual dollars andmodifier based on EBIT Margin (EBIT as a percentage of base salary atRevenue) that modifies the timefinancial performance payout by +/-10% depending on the level of EBIT Margin achieved. As the Company's performance did not satisfy the threshold achievement goal, no bonuses were earned under the plan and the financial performance modifier was not relevant for fiscal 2015.
Individual Performance Bonus – 20% of Award Formula
In April 2015, the Compensation Committee (with input from our Chief Executive Officer) established the performance goals for the individual performance component of the grant,annual cash performance bonus program for fiscal 2015 for Mr. Ewert and Mr. Kimmins. Individual performance goals were established for each of Mr. Thorn, Mr. Rhodes, and Mr. Baum after they joined the Company. The individual performance goals relate to specific strategic and business objectives relevant to each Named Executive Officer's area of responsibility and, as a result, the individual performance goals are unique for each Named Executive Officer. At the end of the fiscal year, the Compensation Committee (with input from our Chief Executive Officer) would determine, based on its evaluation of the satisfaction of the individual performance goals, whether the Named Executive Officer's overall performance satisfied the threshold, target or maximum performance levels applicable to the individual performance component of the annual cash performance bonus for fiscal 2015 and, therefore, merits the award of an individual performance bonus. However, as the Company's net income threshold performance requirement was not achieved, the Compensation Committee did not evaluate performance against goals for this year.
The Company did not meet the threshold net income performance requirement for fiscal 2015 and, as a result, no payouts were made to Named Executive Officers under our annual cash performance bonus program for fiscal 2015. Mr. Thorn and Mr. Baum did, however, receive certain one-time
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contractual cash inducement awards in connection with their hiring. The following table sets forth details regarding the payout for each of the Named Executive Officers in fiscal 2014 are set forth below:2015:
Name | Target Bonus ($) | Target Bonus (% of Base Salary) | Actual Bonus Received ($) | Bonus Received (% of Base Salary) | |||||||||
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Douglas S. Ewert | 1,250,000 | 100 | 1,718,750 | 138 | |||||||||
Jon W. Kimmins | 450,000 | 100 | 618,750 | 138 | |||||||||
Mary Beth Blake | 300,000 | 55 | 412,500 | 76 | |||||||||
Mark Neutze | 200,000 | 50 | 275,000 | 89 | |||||||||
Carole L. Souvenir | 150,000 | 45 | 206,250 | 63 | |||||||||
David H. Edwab | 420,000 | 100 | 577,500 | 138 |
Executive | Target Performance Bonus | Corporate Financial Performance Factor | Target × Financial Performance Factor | Individual Strategic Bonus | Cash Inducement | As a % of Target | |||||||||||||
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Douglas S. Ewert | $ | 1,250,000 | | 0.0 | % | $ | 0 | $ | 0 | $ | 0 | | 0 | % | |||||
Jon W. Kimmins | $ | 450,000 | 0.0 | % | $ | 0 | $ | 0 | $ | 0 | 0 | % | |||||||
Bruce K. Thorn | $ | 487,500 | | 0.0 | % | $ | 0 | $ | 0 | $ | 243,750 | | 50 | % | |||||
A. Alexander Rhodes | $ | 247,000 | 0.0 | % | $ | 0 | $ | 0 | $ | 0 | 0 | % | |||||||
Benjamin C. Baum | $ | 212,500 | | 0.0 | % | $ | 0 | $ | 0 | $ | 106,250 | | 50 | % |
Due to the Jos. A. Bank acquisition and the difficulty in fairly evaluating the financial performance of the Company when combining the results of the two organizations mid-year, in addition to the accounting and other financial adjustments that would occur as a result of the combination, in April 2014, the Compensation Committee established a financial performance metric for the April 2014 awards based on growth in EBIT, or earnings before interest and taxes for the Company, exclusive of Jos. A. Bank. The Compensation Committee believed that this metric, which is based on ongoing operating results from the traditional businesses of the Company, more accurately and fairly gauged the growth and financial performance of the Company rather than developing a performance metric that included a partial and then unknown period of operations of Jos. A. Bank. As a result, the Compensation Committee set a 12% increase in EBIT from fiscal 2013 to 2014, exclusive of the impact of the Jos. A. Bank transaction and operations on the performance metric target for fiscal 2014.
The Compensation Committee determined that for the April 2014 non-equity incentive awards, (i) 75% of an individual's maximum amount would be tied to the specified EBIT target (the "2014 Performance Target") based on the following schedule: (A) 50% of the performance bonus would be paid if the Company achieved 70% of the 2014 Performance Target (equating to an 8.4% increase in EBIT); (B) 100% of the bonus would be paid if the 2014 Performance Target was met; and (C) up to 150% of the bonus amount would be paid if the Company exceeded the 2014 Performance Target by 130% or greater (equating to an EBIT of 15.6% or higher). The Compensation Committee also concluded that there would be no performance-based payout if the Company failed to achieve at least 70% of the 2014 Performance Target (or a minimum of 8.4% EBIT) and that there would be a pro-rated payout if the Company achieved between 70% and 150% of the 2014 Performance Target (or EBIT between 8.4% and 15.6%). The remaining 25% of the maximum annual cash bonus would be left to the discretion of the Compensation Committee, with the input of our Chief Executive Officer, and would be based on the Compensation Committee's determination of the executive's achievement of personal performance goals. The Compensation Committee believed that the requirement to achieve a financial target with respect to obtaining 75% of the incentive bonus opportunity embodied an emphasis on pay for performance.
Because the Company achieved EBIT that was 130% or greater than the EBIT target, 150% of the bonus attributed to the specified EBIT target was paid. In addition, the Compensation Committee awarded the full 25% discretionary cash bonuses under the non-equity incentive program to the Named Executive Officers and certain other executives in recognition of their individual contributions.
The average target annual cash bonus compensation, as a percentage of base salary, for all executive officers who were eligible to participate in the program at the end of fiscal 2014 was 64% and the actual payout was 86% for all executive officers who were eligible to participate in the program at the end of fiscal 2014, including the Named Executive Officers. For comparison purposes, for fiscal 2013, the
The Men's Wearhouse, Inc. 2015 Proxy Statement
maximum average annual cash bonus compensation, as a percentage of base salary, for all executive officers who were eligible to participate in the program at the end of fiscal 2013 was 68% and the actual payout was 23% for all executive officers who were eligible to participate in the program at the end of fiscal 2013, including the Named Executive Officers.
In addition, shortly after the closing of the Jos. A. Bank transaction, the Compensation Committee again reviewed the compensation arrangements for the Company's senior executives. In June 2014, the Compensation Committee determined that, in recognition of the outstanding efforts by senior management in connection with the successful conclusion of the Jos. A. Bank transaction, a special one-time cash bonus would be paid to the Company's senior executives. The special one-time cash bonus was in addition to, and separate and apart from, the non-equity incentive bonus and financial performance metrics adopted in April 2014 and described above. For information regarding the amounts of these special one-time cash bonus awards, see "Summary Compensation Table" below.
Equity Awards
We generally grant stock options and DSUs or a combination thereof, toThe equity component of our executive officers as a meanscompensation programs is designed to retain their services over a periodprovide compensation that motivates and rewards long-term performance, aligns the interests of time and to align their interests with shareholders by incentivizing them to drive the Company's stock price higher by achieving excellent financial results. For information regarding specific grants to theour Named Executive Officers and our shareholders, promotes retention, and balances long-term operating decisions with short-term goals. To accomplish these objectives, the Compensation Committee generally grants our Named Executive Officers equity awards on an annual basis in the form of (1) stock options, (2) time-based deferred stock units, or DSUs, and (3) performance-based deferred stock units, or performance units.
As part of the implementation of our updated compensation program, the Compensation Committee determined that it was in the best interests of the Company to grant equity awards to certain senior executives under the new program in September 2014 instead of during our regular annual grant process in fiscal 2015. The Compensation Committee believed it was important to recognize the efforts of our Named Executive Officers at that time and provide a strong incentive for our Named Executive Officers to remain with the Company, and achieve strong results, during and following the integration of Jos. A. Bank. The September 2014 equity awards were targeted to the following mix:
The September 2014 equity awards were intended to represent an acceleration of the equity awards that the Compensation Committee would customarily grant during the first quarter of fiscal 2015 and, as a result, Mr. Ewert and Mr. Kimmins did not receive any equity awards in fiscal 2015. The acceleration of the awards served to recognize the efforts of these officers and offer them a substantial incentive to remain with the Company.
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Mr. Thorn, Mr. Rhodes, and Mr. Baum, who each joined the Company during fiscal 2014,2015, were granted the standard equity mix when they were hired (for additional discussion regarding the details of these grants, see "Grants of Plan-Based Awards Table" below.below). The Compensation Committee believes that providing a "portfolio" of equity awards balances the objectives of the long-term incentive program by rewarding the creation of shareholder value with stock options, retaining executive talent with time-based DSUs, and motivating the achievement of financial goals with performance units.
Stock Options
Nonqualified stock options provide executivesour Named Executive Officers with the opportunity to purchase our Common Stockcommon stock at a price fixed on the grant date regardless of future market prices. Since a stock option becomes valuable only if the holder of the option remains employed during the period required for the option to "vest,""vest" and if the market price is above the exercise price, stock options provide an incentive for an option holder to remain employed by us. In addition, since a stock option becomes valuable to the holder only if the market price of our Common Stockcommon stock price increases above its exercise price (which is the market price on the date of grant), stock options link a portionalign the interests of the employee's compensation to shareholders' interestsour Named Executive Officers and our shareholders by providing an incentive to make decisions designed to achieve long-term business goals and objectives and thereby maximizeincrease the market price of our stock. In fiscal 2014,Stock options vest ratably over a three-year period and must be exercised within ten years of the Company issued a totaldate of 190,641 stock options to our Named Executive Officers.grant.
Time-Based Deferred Stock Units
A DSU is a commitment by us to issue a share of our Common Stockcommon stock for each DSU at the time the restrictions set forth in the award agreement lapse. The Compensation Committee believes that granting time-based DSUs to our Named Executive Officers aligns the interests of the Named Executive Officers with the interests of our shareholders and encourages retention. For all DSU awards madegranted on or after April 3, 2013, dividend equivalents will be credited to a DSU when dividends are paid to our shareholders, but will not be paid out unless and until the underlying DSU award is earned. Awards madegranted before April 3, 2013 provide for dividend equivalents to be paid on the DSUs if and to the extent paid to our shareholders. DSUs are generally forfeited upon termination of employment with us if the restrictions outlinedset forth in the awardsaward agreements are not met. The Compensation Committee has adopted a policy that time-basedsatisfied. Time-based DSUs granted to Named Executive Officers after April 2012 may not vest more quickly than on a pro-rata basis over three years except in unusual circumstances as determined by the Compensation Committee (such as a person nearing retirement age). In fiscal 2014, the Company issued 49,433 time-based DSUs to our Named Executive Officers.vest ratably over a three-year period.
Performance-Based Deferred Stock Units or Performance Units
A performance-based DSU, or performance unit, is an agreement by the Company to issue a stated number of shares of our Common Stockcommon stock to the recipient in each of year of theupon vesting period, typically three years, only if the Company meets or exceeds certain pre-determinedpredetermined financial performance criteria.
The Men's Wearhouse, Inc. 2015 Proxy Statement
As with time-vested DSUs, for all performance-based DSU or performance unitsunit awards madegranted on or after April 3, 2013, dividend equivalents will be credited when dividends are paid to our shareholders, but will not be paid out unless and until the underlying award is earned. During fiscal 2013, the Compensation Committee introduced performance-based DSUsperformance units to the mix of long-term incentives granted to our executives where the number of shares earned is based on achievement of financial performance targets tied to growth in consolidated earnings before interest and taxes (or EBIT)EBIT as a percentage of sales over the vesting period. The vesting for such awards has varied but is typically over a three-year period. We believe performance-based DSUs reflect our compensation philosophy by establishing a clear connection between the compensation of our executives, including our Named Executive Officers, and the achievement of performance goals that are important for long-term shareholder value creation. Performance-based DSUsPerformance units provide an incentive to the recipient to work toward the financial success of the Company over the vesting period in order for the DSUsperformance units to vest, thereby aligning the financial interest of the recipient with that of the Company and driving increased shareholder value.
One-third of the shares subject to the performance-based DSU grants made during fiscal 2013 are eligible to vest based on achievement of EBIT growth targets, stated as a percentage of the Company's consolidated sales during each of our 2013, 2014 and 2015 fiscal years. The EBIT growth target for the first tranche of the award, relating to fiscal 2013, was consolidated EBIT of 8.6% of consolidated sales and, for the second tranche of the award, relating to fiscal 2014, the EBIT growth target was 9.2% of consolidated sales, neither of which were met and, therefore, no performance-based DSUs granted in fiscal 2013 vested with respect to the first two tranches of performance-based DSUs. The EBIT growth target for the first tranche of the 2013 performance-based DSU grants was based on the prior fiscal year results and the targets for the 2014 tranche increased the EBIT growth target by 7% over the prior year's target. The award agreements provide that if the EBIT percentage target is not achieved in the first or second year of the three year vesting period, then the shortfall can be made up by the end of the three years by achieving EBIT dollars in excess of those necessary to achieve the EBIT percentage target for the second or third year in an amount that, when added to the EBIT for the year with the shortfall, would be sufficient to increase the EBIT percentage for that shortfall year to the EBIT percentage target for that year. If that is achieved, then the portion of the DSUs that did not vest in year one or two because of the shortfall would then vest when the shortfall is made up in year two or three.
In April 2014, in response to the pending Jos. A. Bank transaction and the anticipated impact that transaction would have on the Company, and due to the difficulty in fully and fairly evaluating the Company's financial performance when the Jos. A. Bank acquisition would have a substantial and material effect on all aspects of the Company's operations and financial results, the Compensation Committee determined to retain EBIT growth targets with respect to the Company's traditional business, exclusive of the impact of the Jos. A. Bank transaction and operations, as a means of measuring the Company's financial performance for performance-based DSUs granted in fiscal 2014. The April 2014 award agreements provided that if EBIT for fiscal 2014, exclusive of the Jos. A. Bank transactions and operations and as further adjusted as permitted under the agreement, was equal to or greater than 110% of EBIT for fiscal 2013, then 100% of the shares covered by such award would vest In April 2015. The Compensation Committee determined that the target had been achieved, and the April 2014 awards vested in accordance with their terms on April 13, 2015.
As previously discussed, as part of the changes to the compensation program following the Jos. A. Bank acquisition, the Compensation Committee issued additional equity awards to certain senior executive officers in September 2014 in lieu of the equity awards that would have been made during our fiscal year 2015 annual grant process. It was determined to grant these awards in September 2014 in lieu of April 2015 to ensure full alignment of the executive's long-term incentive opportunity with shareholders at a time closely following the closing of the acquisition and the establishment of financial goals associated with the integration of the two companies. Each of the performance units issued on September 12, 2014 represents the right to receive up to a maximum of 2.25 shares of Common Stock. The performance units will cliff-vest with respect to all shares covered thereby on April 13, 2018 if the
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The Men's Wearhouse, Inc. 2015 Proxy Statement
specified The performance units granted in September 2014 and in 2015 will vest with respect to all shares of common stock underlying the performance units on April 13, 2018 if we achieve the applicable adjusted earnings per share performance target for fiscal 2017 is achieved.2017. Assuming we achieve the earnings per share performance target, is achieved, the number of performance units earned will be adjusteddetermined based on multipliers, ranging from 50% to 150%, related to each of (1) the Company's adjusted earnings per share for fiscal 2017 and (2) the Company's relative total shareholder return ("TSR") compared to the TSR of the apparel companies in S&P's Retail Select Index from the grant date to the last trading day of fiscal year 2017. In 2018,The Company has determined that the Company will provide information regarding the relative achievement of the targets and the number of shares actually earned with respect to these performance units. Inunits granted in September 2014 the Company issued 57,480 performance unitsand throughout 2015 to each of our Named Executive Officers which cover a potential maximum of 129,330 shares of our Common Stock.are no longer likely to vest given the Company's performance.
Benefits and Perquisites
Employee Benefits. We offer a variety of health and welfare and retirement programs to all eligible employees. Executives are generally eligible for the same benefit programs on the same basis as the rest of the broad-basedour other employees. TheOur health and welfare programs are intended to protect employees against catastrophic loss and encourage a healthy lifestyle. Our health and welfare programs include medical, wellness, pharmacy, dental, vision, life insurance, and accidental death and disability.
We also maintain defined contribution plans pursuant to the provisions of Section 401(k) of the Internal Revenue Code. The plans cover our full-time employees who meet age and service requirements. The plans provide for pre-tax, elective employee contributions with a matching contribution from us. For fiscal 2015, the Company contribution made on behalf of each Named Executive Officer who participates in the 401(k) plan was $200. Our Named Executive Officers participate in these defined contribution plans on the same terms as our other employees.
Determination of CompensationPerquisites. In fiscal 2015, we did not provide our Named Executive Officers with any material perquisites.
AdministrationChange in Control Agreements
The Compensation Committee is composed entirely of independent, non-management members of the Board of Directors. No Compensation Committee member participatesCompany has entered into Change in anyControl agreements with each of our employee compensation programs, other than our equity incentive plans,Named Executive Officers. The Agreements are identical in all respects, except for the amounts payable thereunder, and certain Compensation Committee members receive health insurance benefits throughremain in effect for so long as the Company.applicable Named Executive Officer is employed by us or until we mutually agree to terminate his Agreement. The Compensation Committee (i) reviewsdetermined that it was in our best interests to enter into the Change in Control Agreements is based on several considerations, including to: (1) serve as a retention tool and approves annual compensation for officers whose annual base salary plus maximum payout under our annual non-equity cash incentive program is equal to or in excess of $500,000, (ii) reviews the compensation program for all other senior officers as presented to the Compensation Committee by the Chief Executive Officer, and (iii) reviews and approves the annual awards under equity incentive plans to all employees as recommended to the Compensation Committee by management. Recommendations for the executive officers, includingincentivize the Named Executive Officers (other than himself),to continue focusing on our business in the event of a potential change in control transaction; (2) ensure the Named Executive Officers pursue business alternatives that maximize shareholder value without a concern for job security; and (3) ensure our compensation practices remained competitive.
The benefits payable under the Change in Control agreements in certain circumstances are made bydisclosed below on pages 62 - 65. These agreements generally provide that if a Change in Control occurs and we fail to extend the Chief Executive Officer.executive's agreement or terminate the executive's employment without cause or if the executive terminates his or her employment for good reason, the executive will receive an amount equal to two times the sum of the executive's base salary plus an amount equal to the maximum annual performance bonus in the fiscal year in which a Change in Control occurs or the immediately preceding fiscal year, whichever is higher, plus basic benefits as more fully described in the Change in Control agreement.
Relative Size of Major Compensation ElementsClawback Provisions
In setting Named Executive Officer compensation, the Compensation Committee considers the aggregate compensation payable to the executive and the form of the compensation. The Compensation Committee seeks to achieve an appropriate balance between immediate cash rewards and incentives for the achievement of both annual and long-term financial and non-financial objectives. The number of shares granted under equity awards to each executive is made on a discretionary basis, rather than formulaically, by taking into consideration the executive's position, responsibilities, accomplishments, achievements and tenure with the Company. The Compensation Committee may decide, as appropriate, to modify the mix of base salary, annual awards, and long-term awards to best fit a Named Executive Officer's specific circumstances.
Timing of Compensation DecisionsEmployment Agreements
All elementsThe employment agreements with Mr. Ewert, Mr. Kimmins, and Mr. Thorn provide that if it is determined that Mr. Ewert, Mr. Kimmins or Mr. Thorn, respectively, before or after the termination of executive officer compensation are reviewed and approved on an established schedule, which may vary from year to year, but generally occurs over a 90-day period following our fiscaltheir
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The Men's Wearhouse, Inc. 2015 Proxy Statement
year endemployment relationship with us, has committed certain acts which materially and adversely affect us, then some or all (A) benefits payable or to be provided, or previously paid or provided, to him under his employment agreement or (B) cash bonuses paid to him by us on or after a reviewthe date of financial, operating,his employment agreement, or equity awards granted to him by us that vest, on or after the date of his employment agreement will be forfeited or repaid to us. For additional discussion regarding these clawback provisions, including those acts which could trigger such forfeiture, see the discussion regarding their respective employment agreements under "Employment Agreements" below.
Change in Control Agreements
The Change in Control agreement with each of our executives also contains clawback provisions which provide that in the event that it is determined that an executive, before or after the termination of his or her employment relationship with us, has committed certain acts which materially and personal objectives with respectadversely affect the Company, then some or all of such executive's awards (including cash bonuses paid to such executive by us or equity awards that vest after the prior year's results. The Compensation Committee reviewed the Chief Executive Officer's recommendations and approved base compensation and annual non-equity incentive bonuses and equity grants to the Named Executive Officers and other executives, managers and Company employees in April 2014. However, fiscal 2014 was different from prior years due to the Board and management time, focus and attention on the Jos. A. Bank transaction and the commencementeffective date of the processexecutive's Change in Control agreement) will be forfeited or repaid to us. For additional discussion regarding these clawback provisions, including those acts which could trigger such forfeiture, see the discussion under "Potential Payments Upon Termination or Change in Control – Change in Control Agreements" below.
Pension Plans and Retirement Plans
We do not maintain defined benefit pension plans or supplemental executive retirement plans for our executive officers or any defined contribution plans which provide for the deferral of integrating the operationscompensation on a basis that is not tax-qualified.
Executive Officer Equity Ownership
The Board of the two entities. AsDirectors has established a result of this transaction, and the significantly increased levels of responsibility assumedguideline for Company equity ownership by management in connection therewith, the Compensation Committee approved adjustments to the base compensation of certain of our senior executive officers, which included continuingincluding our Named Executive Officers. These guidelines are designed to further align the interests of the Named Executive Officers and approvedour shareholders and enhance shareholder value over the grant of equity awards to certain senior executive officers, including our continuinglong term. Under the guideline, each Named Executive Officers,Officer is expected to hold equity interests in September 2014 insteadthe form of during ourcommon stock, restricted stock, DSUs or performance units having an aggregate value of at least two and one half times his then current annual grant process in 2015. The Compensation Committee may continue to periodically review salaries and equity awards as it deems necessary in order to address new appointments or promotions or other special circumstances that may arise during the fiscal year.
Compensation Consultant
In 2014, the Compensation Committee engaged Pay Governance to advise it with respect to evaluating the compensation arrangements for Mr. Ewert, other senior executives and the Boardbase salary within five years of Directors. Pay Governance reported directlybecoming subject to the Compensation Committee and all such services were providedholding requirement. Failure to satisfy the Compensation Committee. Pay Governance did not provide any non-executive compensation services to us directly or indirectly through affiliates, nor have either of the consultants provided any services to the Company other than those that were related to its engagement as independent consultant to the Compensation Committee and other than an engagement by the Company to provide further advice regarding equity compensation and corporate bonus structure for key employees.
In connection with its engagement of Pay Governance, the Compensation Committee assessed the independence of Pay Governance pursuant to SEC rules and NYSE Listing Standards and considered various factors including, but not limited to, any other services provided by Pay Governance to the Company, the amount of fees received by Pay Governance from the Company as a percentage of their total revenue, Pay Governance's policies and procedures designed to prevent conflicts of interest, any shares of our Common Stock owned by those persons at the consultants actually working on the engagement, and the existence of any business or personal relationship that could impact Pay Governance's independence. After performing its assessment, the Compensation Committee determined that Pay Governance was independent and that its engagement did not present any conflicts of interest. Pay Governance also determined that it was independent from management and provided a written statement delivered to the Chair of the Compensation Committee to such effect. In connection with any future engagements of Pay Governanceguideline will be taken into consideration by the Compensation Committee in determining compensation for the Named Executive Officer. In addition, the Compensation Committee will considerhas adopted an additional equity ownership requirement for the engagement described above as well as any other factors set forthChief Executive Officer that encourages him to hold equity interests in the SEC Rulesform of our common stock, restricted stock or DSUs having an aggregate equity value of at least five times his then current annual base salary.
The Compensation Committee has also implemented a requirement in the NYSE Listing Standards.award agreements for executive officer equity grants providing that if the executive officer is not in compliance with the applicable equity ownership guideline at the time of vesting of his or her restricted stock awards or DSUs or upon exercise of his or her stock options, 50% of the vested or acquired shares must be retained until the officer satisfies the guideline.
No Hedging or Pledging Our Common Stock
Pursuant to the Company's insider trading policies, our directors, officers and employees are prohibited from hedging or pledging equity positions in our common stock arising from equity compensation awards.
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Impact of Accounting and Tax Treatment
In recognizing share-based compensation, we follow the provisions of the authoritative guidance regarding share-based awards. This guidance establishes fair value as the measurement objective in accounting for stock awards and requires the application of a fair value based measurement method in accounting for compensation cost, which is recognized over the requisite service period. We use the Black-Scholes option pricing model to estimate the fair value of stock options on the date of grant. The fair value of restricted stock awards and DSUs is determined based on the number of shares granted and the quoted price of our Common Stockcommon stock on the date of grant. The fair value of awards that contain a market condition is measured using a Monte Carlo simulation method. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period. For grants
The Men's Wearhouse, Inc. 2015 Proxy Statement
that are subject to pro-rata vesting over a service period (other than performance-based awards), we recognize expense on a straight-line basis over the requisite service period for the entire award.
Section 162(m) of the Internal Revenue Code placesgenerally prohibits a limit of $1,000,000 on the amount ofcompany from deducting compensation paid to the Chief Executive Officercertain "covered employees" (its principal executive officer and the three other most highly compensated executive officers (other than the Chief Financial Officer) that may be deducted by usprincipal financial officer)) in excess of $1 million in any year unlessfiscal year. Compensation that qualifies as "performance-based" is excluded from the compensation is performance-based compensation as described in Section 162(m) and the related regulations.$1 million limit. The Compensation Committee believes that it is generally in the Company's best interests to satisfy the requirements for deductibility under Section 162(m). However, notwithstanding this general policy, the Compensation Committee also believes that there may be circumstances in which the Company's interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Section 162(m).
Section 409A of the Internal Revenue Code provides that deferrals of compensation under a nonqualified deferred compensation plan for all taxable years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income, unless certain requirements or exemptions are met. We structure any deferred compensation arrangements to be in compliancecomply with sectionSection 409A of the Internal Revenue Code.
Change in Control Agreements
The Company has entered into Change in Control agreements with each of our executives, including the Named Executive Officers. The Compensation Committee believes that Change in Control arrangements have important characteristics and value, particularly in the current economic environment and given the events we experienced in 2013 and 2014. For example, executives often look to Change in Control agreements to provide protection for lost professional opportunities in the event of a Change in Control and consequently assign significant value to them. The Compensation Committee believes that our current Change in Control agreements protect shareholder interests by retaining management should periods of uncertainty arise. Because our Change in Control agreements are structured to serve the above purpose and because Change in Control agreements represent a contractual obligation of our Company, decisions relating to other elements of compensation have minimal effect on decisions relating to existing Change in Control agreements.
The benefits payable under the Change in Control agreements in certain circumstances are disclosed below on pages 71 through 76. These agreements generally provide that if a Change in Control occurs and we fail to extend the executive's agreement or terminate the executive's employment without cause or if the executive terminates his or her employment for good reason, the executive will receive an amount equal to two times the sum of the executive's base salary plus an amount equal to the maximum annual performance bonus in the fiscal year in which a Change in Control occurs or the immediately preceding fiscal year, whichever is higher, plus basic benefits as more fully described in the Change in Control agreement.
Clawback Provisions
Under Employment Agreements
As discussed later in this proxy statement, the employment agreements with each of Messrs. Ewert and Kimmins provide that if it is determined that Mr. Ewert or Mr. Kimmins, respectively, before or after the termination of his employment relationship with us, has committed certain acts which materially and adversely affect us, then some or all (A) benefits payable or to be provided, or previously paid or provided, to him under his employment agreement or (B) cash bonuses paid to him by us on or after the date of his employment agreement, or equity awards granted to him by us that vest, on or after the date of his employment agreement will be forfeited or repaid to us. For additional discussion regarding these
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The Men's Wearhouse, Inc. 2015 Proxy Statement
clawback provisions, including those acts which could trigger such forfeiture, see the discussion regarding their respective employment agreements under "Employment Agreements" below.
Under Change in Control Agreements
The Change in Control agreement with each of our executives also contains clawback provisions which provide that in the event that it is determined that an executive, before or after the termination of his or her employment relationship with us, has committed certain acts which materially and adversely affect the Company, then some or all of such executive's awards (including cash bonuses paid to such executive by us or equity awards that vest after the effective date of the executive's Change in Control agreement) will be forfeited or repaid to us. For additional discussion regarding these clawback provisions, including those acts which could trigger such forfeiture, see the discussion under "Potential Payments Upon Termination or Change in Control – Change in Control Agreements" below.
Executive Officer Equity OwnershipCompensation for Fiscal 2016
The Board of Directors has established a guideline for Company equity ownership by certain of our senior executive officers, including the continuing Named Executive Officers. These guidelines are designed to further strengthen and align Company leadership with shareholders' interests and to enhance shareholder value over the long term. Under the guideline, each Named Executive Officer is expected to hold equity interests in the form of Common Stock, restricted stock, DSUs or performance units having an aggregate equity value of at least two and one half times his or her base salary within five years of becoming subject to the holding requirement. Failure to achieve the guideline will be taken into consideration byIn April 2016, the Compensation Committee in determiningapproved the following related to compensation for the continuing Named Executive Officer. All of the Named Executive Officers have achieved their required ownership levels, except Mr. Neutze who has until September 2019 to do so. In addition, the Compensation Committee has adopted an additional equity ownership requirement for the Chief Executive Officer to require him to hold equity interests in the form of our Common Stock, restricted stock or DSUs having an aggregate equity value of at least five times his base salary. Mr. Ewert currently meets this increased ownership requirement.Officers:
Pay Element | Action | Rationale | ||
---|---|---|---|---|
Base Salary | The Committee kept Named Executive Officer salaries at current levels. | To align with levels of base salary for comparable roles in the competitive market. | ||
Annual Incentives | • Replace plan-specific net income performance qualifier with a 162(m) compliant operating cash flow metric. • Simplify the financial performance element by eliminating the EBIT margin multiplier and focusing solely on EBIT performance. | Simplifies plan and focuses on well understood strategic operating priorities. | ||
Long-Term Incentives | • Change goal on performance units from a single, year ending EPS goal to a 2-year compound annual growth rate. • Performance units will vest 50% after year 2 and 50% after year 3 based on performance over the 2-year period. | Simplifies plan and focuses on well understood strategic operating priorities. Using a compound annual growth rate ensures focus on sustainable growth over time. |
Compensation Committee Report |
The Compensation Committee has also adopted a requirement that award agreements for equity grants to an executive officer subjectreviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with the Company's management. Based upon such review and the related discussions, the Compensation Committee has recommended to the holding requirements contain a provisionBoard of Directors that if a person is subject to the holding requirement at the time of vesting of his or her restricted stock awards or DSUs or upon exercise of his or her stock options,Compensation Discussion and such person is not thenAnalysis be included in compliance with the then existing equity ownership guidelines for senior executive officers described in the previous paragraph, then 50% of the vested or acquired shares must be retained until the person meets the equity ownership guidelines. Further, pursuant to the Company's insider trading policies, our directors, officers and employees are prohibited from hedging equity positions in our Common Stock arising from equity compensation awards. In addition, the Company strongly discourages pledging of our Common Stock through the required pre-approval by the designated executive officer pursuant to our insider trading policies.this proxy statement.
Pension Plans and Retirement PlansCOMPENSATION COMMITTEE
Sheldon I. Stein, Chair
Grace Nichols
Allen I. Questrom
Dinesh S. Lathi
We do not maintain defined benefit pension plans or supplemental executive retirement plans for our executive officers nor do we have any defined contribution plans which provide for the deferral of compensation on a basis that is not tax qualified.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
Summary Compensation Table |
The following table sets forth certain information regarding compensation paid in respect of our fiscal year ended January 31, 2015,30, 2016, to (i) each individual who served as our Chief Executive Officer or Chief Financial Officer during the year, (ii)and the next three most highly compensated executive officers and (iii) one additional individual for whom disclosure would have been provided pursuant to (ii) but for the fact that he was not serving as an executive officer as of January 31, 2015 (collectively, the "Named Executive Officers"):
Name and Principal Position (1) | Year | Salary ($)(2) | Bonus ($) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | | 2014 | | 1,250,000 | | 500,000 | (5) | | 4,135,552 | (6) | | 2,051,278 | (6) | | 1,718,750 | | — | 16,451 | (7)(8) | | 9,672,031 | (6) | |||||
Chief Executive Officer | | 2013 | | 1,163,173 | | — | | 1,999,993 | | — | | 416,667 | | — | 42,298 | (7)(8) | | 3,622,131 | |||||||||
| | 2012 | | 616,635 | | 300,000 | (9) | | 500,020 | | 499,973 | | 100,000 | | — | 77,942 | (7)(8) | | 2,094,570 | ||||||||
Jon W. Kimmins | 2014 | 484,615 | 300,000 | (5) | 670,310 | (6) | 410,249 | (6) | 618,750 | — | 4,352 | (8) | 2,488,276 | (6) | |||||||||||||
Executive Vice President, | 2013 | 380,769 | 275,000 | (10) | 1,000,013 | 249,996 | 150,000 | — | — | 2,055,778 | |||||||||||||||||
Chief Financial Officer, | |||||||||||||||||||||||||||
Treasurer and Principal Financial Officer | |||||||||||||||||||||||||||
Mary Beth Blake | | 2014 | | 560,769 | | 50,000 | (5) | | 817,123 | (6) | | 470,256 | (6) | | 412,500 | | — | 15,500 | (7)(8) | | 2,326,148 | (6) | |||||
President and Chief | | 2013 | | 536,335 | | — | | 249,995 | | — | | 100,000 | | — | 20,746 | (7)(8)(11) | | 907,076 | |||||||||
Merchandising Officer | | | | | | | | | |||||||||||||||||||
Mark Neutze | 2014 | 379,020 | 25,000 | (5) | 633,590 | (6) | 286,186 | (6) | 275,000 | — | 8,311 | (7)(8)(12) | 1,607,107 | (6) | |||||||||||||
Executive Vice President – Store Operations | |||||||||||||||||||||||||||
Carole L. Souvenir, | | 2014 | | 354,231 | | 100,000 | (5) | | 453,498 | (6) | | 201,720 | (6) | | 206,250 | | — | 2,204 | (7)(8) | | 1,317,903 | (6) | |||||
Executive Vice President – Employee Relations | | | | | | | | | |||||||||||||||||||
David H. Edwab, | 2014 | 453,551 | 200,000 | (5) | — | — | 577,500 | — | 361,460 | (7)(8)(14) | 1,592,511 | ||||||||||||||||
Vice Chairman of the Board (13) | 2013 | 415,423 | — | 1,323,600 | — | 130,000 | — | 42,018 | (7)(8) | 1,911,041 | |||||||||||||||||
2012 | 400,317 | 33,333 | (5) | — | — | 66,667 | — | 55,957 | (7)(8) | 556,274 |
Name and Principal Position (1) | Year | Salary ($) (2) | Bonus ($) | Stock Awards ($) (3) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | | 2015 | | 1,250,000 | | — | | — | | — | | — | | — | | 46,022 | (7)(8)(9) | | 1,296,022 | |||||||||
President and Chief Executive Officer | | 2014 | | 1,250,000 | | 500,000 | (5) | | 4,135,552 | (6) | | 2,051,278 | (6) | | 1,718,750 | | — | | 16,451 | (7)(8) | | 9,672,031 | ||||||
| | 2013 | | 1,163,173 | | — | | 1,999,993 | | — | | 416,667 | | — | | 42,298 | (7)(8) | | 3,622,131 | |||||||||
Jon W. Kimmins, | 2015 | 550,000 | — | — | — | — | — | 9,973 | (8) | 559,973 | ||||||||||||||||||
Executive Vice President, Chief | 2014 | 484,615 | 300,000 | (5) | 670,310 | (6) | 410,249 | (6) | 618,750 | — | 4,352 | (8) | 2,488,276 | |||||||||||||||
Financial Officer, Treasurer and Principal Financial Officer | 2013 | 380,769 | 275,000 | (10) | 1,000,013 | 249,996 | 150,000 | — | — | 2,055,778 | ||||||||||||||||||
Bruce K. Thorn, | | 2015 | | 387,500 | | 443,750 | (11) | | 839,983 | | 359,992 | | — | | — | | 33,370 | (7)(12) | | 2,064,595 | ||||||||
A. Alexander Rhodes | 2015 | 306,923 | 150,000 | (13) | 279,982 | 120,006 | — | — | 8,600 | (14) | 865,511 | |||||||||||||||||
Benjamin C. Baum, | | 2015 | | 292,611 | | 181,250 | (15) | | 209,987 | | 90,002 | | — | | — | | — | | 773,850 |
| | Tailored Brands, Inc. 2016 Proxy Statement 56 |
additional information regarding amounts included in the Summary Compensation Table attributable to the special one-time cash bonus made to our Named Executive Officers
The Men's Wearhouse, Inc. 2015 Proxy Statement
paid in connectionJune 2014 and the acquisition of Jos. A. Bank and decision to grant equity awards to our Named Executive Officersgranted in September 2014 in lieu of during our regular annual grant process in 2015:
Name | 2014 Total As Reported Above ($) | Special Jos. A. Bank Completion Bonus Paid in June 2014 ($) | Stock Awards Granted in September 2014 ($) | Option Awards Granted in September 2014 ($) | 2014 Total Without Special Bonus and September 2014 Equity Grants ($) | 2013 Total As Reported Above ($) | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | | 9,672,031 | | 500,000 | | 2,968,892 | | 1,200,006 | | 5,003,133 | | 3,622,131 | |||||||
Jon W. Kimmins | 2,488,276 | 300,000 | 586,991 | 239,994 | 1,361,291 | 2,055,778 | |||||||||||||
Mary Beth Blake | | 2,326,148 | | 50,000 | | 733,803 | | 300,002 | | 1,242,343 | | 907,076 | |||||||
Mark Neutze | 1,607,107 | 25,000 | 366,902 | 149,992 | 1,065,213 | — | |||||||||||||
Carole L. Souvenir | | 1,317,903 | | 100,000 | | 293,523 | | 119,997 | | 804,383 | | — | |||||||
David H. Edwab | 1,592,511 | 200,000 | — | — | 1,392,511 | 1,911,041 |
Name | 2014 Total As Reported Above ($) | Special Jos. A. Bank Completion Bonus Paid in June 2014 ($) | Stock Awards Granted in September 2014 ($) | Option Awards Granted in September 2014 ($) | 2014 Total Without Special Bonus and September 2014 Equity Grants ($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | | 9,672,031 | | 500,000 | | 2,968,892 | | 1,200,006 | | 5,003,133 | ||||||
Jon W. Kimmins | 2,488,276 | 300,000 | 586,991 | 239,994 | 1,361,291 |
Employment Agreements |
Employment Agreements
We have entered into employment agreements with Mr. Ewert, Mr. Kimmins and Mr. Thorn. The basic terms of those agreements are summarized below. For information regarding payments to be received by Mr. Ewert, Mr. Kimmins and Mr. Thorn in the event of termination of their employment see "-Potential Payments Upon Termination or Change in Control" on pages 66-69 of this proxy statement.
Douglas S. Ewert
In recognition of the increased size of the Company following the Jos. A. Bank acquisition and the resulting increase in the responsibilities of the Chief Executive Officer, theThe Company entered into an Amended and Restated Employment Agreement with Mr. Ewert on April 22, 2015. Mr. Ewert's compensation under the amended employment agreement does not materially differ from the compensation reported in the Summary Compensation Table above.
The initial term of Mr. Ewert's amended employment agreement is for a period of three years from the date we entered into the amended employment agreement and will be automatically extendedextend for successive twelve-month periods unless either we or Mr. Ewert gives written notice of an election not to extend the employment agreement not less than 90 days prior to the end of any employment period.
Under Mr. Ewert's amended employment agreement, we agreed, among other things, to:
The Men's Wearhouse, Inc. 2015 Proxy Statement
100% of his annual base salary for the year with respect to which such bonus is being set (though the actual bonus paid may be greater or lesser than the target bonus and shall be determined consistent with the criteria set for our other senior management executives by the Board or a committee thereof, based on such factors as it may determine);
| | Tailored Brands, Inc. 2016 Proxy Statement 57 |
We may terminate Mr. Ewert's employment under his employment agreement for "cause". Under Mr. Ewert's amended employment agreement, "cause" is limited to Mr. Ewert's:
For purposes of termination for "cause," no act or failure to act on the part of Mr. Ewert shall be considered "willful" unless it is done or omitted to be done by him in bad faith or without reasonable belief that his action or omission was in the best interests of the Company. Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the Board (or any committee of the Board) or in reliance on the legal advice of counsel for the Company is conclusively presumed to have been done by Mr. Ewert in good faith and in the best interests of the Company. The termination of Mr. Ewert's employment will not be deemed to be for "cause" unless and until there is delivered to Mr. Ewert a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose finding that, in the good faith opinion of the Board, an event constituting "cause" has occurred.
If we terminate Mr. Ewert's employment without "cause" or Mr. Ewert terminates his employment for "good reason" or if we notify Mr. Ewert that we do not intend to extend his employment under his
The Men's Wearhouse, Inc. 2015 Proxy Statement
employment agreement at the end of the current term or any extended term, then, in addition to any other benefits which may be owing in accordance with our plans and policies:
In addition, all options to acquire securities of the Company held by Mr. Ewert immediately prior to date of termination that would have vested if his employment continued for two years after the termination date will continue to vest over such two year period in accordance with the terms of the relevant stock option agreements, regardless of whether or not the vesting conditions set forth in the stock option agreements have been satisfied in full, and will remain exercisable for the period to end upon the earlier of the stated term of such option or the third anniversary of the termination date (provided, that, if such agreements provide for a longer exercise period, such longer period shall apply), and all restrictions on any time-vesting restricted stock or DSUs of the Company held by Mr. Ewert immediately prior to his date of termination that would have lapsed if his employment continued for two years after the termination date shall continue to lapse over such two year period in accordance with the terms of the relevant award agreements, notwithstanding the terms of the relevant award agreements (including any requirements for continued employment), and regardless of whether the conditions set forth in the relevant award agreements have been satisfied in full. Restrictions on any performance units (or performance-based deferred stock units) shall lapse, if at all, in accordance with the terms of the relevant performance unit award agreement and nothing in the employment agreement shall be deemed to modify the terms of such performance unit award agreements.
We have also agreed that, if Mr. Ewert's employment with the Company terminates because we terminated his employment without "cause," or Mr. Ewert terminated his employment for "good reason," or if we notify Mr. Ewert that we do not intend to extend his employment under his employment agreement at the end of the current term or any extended term, Mr. Ewert is not required to seek other employment or otherwise attempt in any way to mitigate or otherwise reduce any benefits or amounts payable to him and, other than the continued provision of medical benefits by us, in the event that Mr. Ewert obtains other employment during the period in which he is receiving the benefits from us under his employment
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agreement, we will not be entitled to any right of offset with respect to the benefits or amounts payable to him.
Under Mr. Ewert's employment agreement, as amended, "good reason" means:
provided, however, that no termination shall be for good reason until Mr. Ewert has provided us with written notice of the conduct alleged to have caused good reason within ninety (90) days of his knowledge of such conduct and at least thirty (30) days have elapsed after our receipt of such written notice from Mr. Ewert, during which we have failed to cure any such alleged conduct.
If Mr. Ewert's employment is terminated as a result of his death, then, in addition to any other benefits which may be owing in accordance with our plans and policies, we will be required to:
In addition, all options to acquire securities of the Company held by Mr. Ewert immediately prior to his termination date that would have vested if his employment continued for two years after the termination date shall become fully exercisable and shall remain exercisable for the period to end upon the earlier of
The Men's Wearhouse, Inc. 2015 Proxy Statement
the stated term of such option or one year following the date of his death, notwithstanding the terms of the relevant stock option agreements (provided, that, if such agreements provide for a longer exercise period, such longer period shall apply), and regardless of whether or not the vesting conditions set forth in the relevant stock option agreements have been satisfied in full, and all restrictions on any time-vesting restricted stock or DSUs of the Company held by Mr. Ewert immediately prior to his termination date that would have lapsed if his employment continued for two years after the termination date shall be removed, notwithstanding the terms of the relevant restricted stock or DSU award agreements, and regardless of whether the vesting conditions set forth in the relevant restricted stock or DSU award agreements have been satisfied in full. In addition, on the date on which any performance units (or performance-based DSUs) held by Mr. Ewert immediately prior to the date of termination would have vested had he remained employed in accordance with the respective terms of the relevant performance unit agreement, all restrictions shall be removed on a number of shares of our Common Stock equal to the number of shares calculated in accordance with the vesting provisions of any such performance unit agreement times the quotient determined by dividing (x) the number of days from the grant date through the termination date by (y) the number of days in the applicable performance period, notwithstanding the terms of the relevant performance unit agreement.
Further, Mr. Ewert's estate or designated beneficiaries shall also be entitled to any other benefits which may be owing in accordance with the Company's plans and policies and such amounts shall be paid in accordance with such plans and policies.
If Mr. Ewert's employment is terminated because of his permanent disability, then, in addition to any other benefits which may be owing in accordance with our plans and policies:
In addition, all options to acquire securities of the Company held by Mr. Ewert immediately prior to the date of termination that would have vested if his employment continued for two years after the termination date shall become fully exercisable and shall remain exercisable for the period to end upon the earlier of the stated term of such option or one year following the termination date, notwithstanding the terms of the relevant stock option agreements (provided, that, if such agreements provide for a longer exercise period, such longer period shall apply), and regardless of whether or not the vesting conditions set forth in the relevant stock option agreements have been satisfied in full, and all restrictions on any time-vesting restricted stock or DSUs of the Company held by Mr. Ewert immediately prior to his termination date that would have lapsed if his employment continued for two years after the termination date shall be removed, notwithstanding the terms of the relevant restricted stock or DSU agreements and regardless of whether the conditions set forth in the relevant restricted stock or DSU agreements have been satisfied in full. Further, on the date on which any performance units (or performance-based DSUs) held by Mr. Ewert
The Men's Wearhouse, Inc. 2015 Proxy Statement
immediately prior to the termination date would have vested had he remained employed in accordance with the respective terms of the relevant performance unit agreement, all restrictions shall be removed on a number of shares of our Common Stock equal to the number of shares calculated in accordance with the vesting provisions of any such performance unit agreement times the quotient determined by dividing (x) the number of days from the grant date through the termination date by (y) the number of days in the applicable performance period, notwithstanding the terms of the relevant performance unit agreement.
If Mr. Ewert's employment agreement is terminated (1) as a result of his death or permanent disability, or (2) by us without cause or by our non-renewal of his employment agreement, or (3) by Mr. Ewert for good reason, we will arrange to provide Mr. Ewert and his spouse and eligible dependents who were covered under our group health plan on the date of his termination and who, in the case of eligible dependents, continue to be eligible dependents, group health plan coverage until Mr. Ewert reaches age 65, or in the case of a termination due to Mr. Ewert's death, until his spouse reaches age 65, which coverage will be substantially similar to that provided to our executive officers during such period and at the same cost as if Mr. Ewert remained an executive officer of the Company during the period such coverage is provided. Subject to Mr. Ewert's group health plan coverage continuation rights under section 4980B of the Internal Revenue Code, the benefits described above will (i) be reduced (on a participant by participant basis) to the extent benefits of the same type are received by Mr. Ewert, his spouse or any eligible dependent from any other person during such period and (ii) cease if Mr. Ewert (A) obtains other employment that offers participation in a health insurance plan providing substantially similar benefits during such period, or (B) violates the restrictive covenants in the employment agreement. We have also agreed that if Mr. Ewert's employment with us is terminated during the term of his employment agreement, Mr. Ewert is not required to seek other employment or to attempt in any way to reduce any benefits or insurance coverage payable to him.
As a condition to the receipt of any amounts or benefits after termination of employment for whatever reason, Mr. Ewert, or his personal representative, shall be required to execute a written release agreement in a mutually agreed form containing, among other things, a general release of claims against us and our affiliates except for rights and claims under the employment agreement and pursuant to the terms of any benefit plans, equity grants or other similar plans or agreements, or pursuant to his change in control agreement. In addition, Mr. Ewert must refuse to exercise any right to revoke such release agreement during any applicable rescission period. Mr. Ewert, or his personal representative, must deliver the executed release on or before the date that is 30 days (90 days in the event of his death) after any termination date or all rights to the payments described above shall be forfeited, except for amounts due and owing as of the date of Mr. Ewert's death or termination (excluding the bonus amounts).
Certain of the payments to be made to Mr. Ewert under his employment agreement may be deferred in order to comply with the requirements of section 409A of the Internal Revenue Code. We will not take any action or omit to take any action that would expose any payment or benefit to Mr. Ewert to additional tax that may become due under Section 409A and in furtherance thereof, we will negotiate reasonably and in good faith to amend his employment agreement in a manner that brings it into compliance with Section 409A.
Under his employment agreement, Mr. Ewert has agreed not to compete with us during the term thereof and for any period in which he is receiving payments from us under his employment agreement (other than the continuation of medical benefits).
Finally, Mr. Ewert's employment agreement provides that in the event that (i) prior to a Change in Control of the Company, the Board determines by a majority vote, or (ii) following a Change in Control of the Company, a court of competent jurisdiction determines by a final, non-appealable order, that Mr. Ewert, before or after the termination of his employment relationship with us, has committed certain acts which materially and adversely affect us, then some or all (A) benefits payable or to be provided, or previously paid or provided, to Mr. Ewert under his employment agreement or (B) cash bonuses paid to Mr. Ewert by us on or after the date of his employment agreement, or (C) equity awards granted to
The Men's Wearhouse, Inc. 2015 Proxy Statement
Mr. Ewert by us that vest, on or after the date of his employment agreement, will be forfeited to us on such terms as determined by the Board or the final, non-appealable order of a court of competent jurisdiction. The acts which could trigger such a forfeiture include:
For purposes of this provision, an "act of dishonesty" requires a material breach by Mr. Ewert of his duties, obligations or undertakings owed to or on behalf of us, as determined by the Board. In determining whether a matter materially and adversely affects us, the Board shall be entitled to consider all relevant factors and exercise reasonable business judgment in making such determination including, but not limited to, the financial consequences, adverse reputational consequences or legal consequences to us or our subsidiaries, individually or taken as a whole, as a result of such action.
Jon W. Kimmins
In connection with the appointment of Jon W. Kimmins as Executive Vice President, Chief Financial Officer, Treasurer and Principal Financial Officer of the Company, weWe entered into an employment agreement with Mr. Kimmins, effective as of April 1, 2013. The initial term of Mr. Kimmins' employment agreement shall bewas for a period of one year and thereafter shall automatically be extendedextends for successive twelve-month periods unless we or Mr. Kimmins gives written notice of an election not to extend the employment agreement not less than 180 days prior to the end of the initial employment period and 90 days prior to the end of any extended employment period. Under Mr. Kimmins' employment agreement, we agreed, among other things, to:
Bruce K. Thorn
We entered into an employment agreement with Mr. Thorn, effective as of June 29, 2015. The initial term of Mr. Thorn's employment agreement shall be for a period of one year and thereafter automatically extends for successive twelve-month periods unless we or Mr. Thorn gives written notice of an election not to extend the employment agreement not less than 90 days prior to the end of any extended employment period. Under Mr. Thorn's employment agreement, we agreed, among other things, to:
The Men's Wearhouse, Inc. 2015 Proxy Statement
his annual salary; provided that the actual bonus paid for the fiscal year ended February 1, 2014 shallJanuary 30, 2016 may not be less than $225,000;
We may terminate Mr. Kimmins' employment under his employment agreement for "cause". Under Mr. Kimmins' employment agreement, "cause" is limited to Mr. Kimmins':
If we terminate Mr. Kimmins for cause, or if Mr. Kimmins terminates his employment with us without "good reason" (as defined below) or he chooses not to renew his employment agreement at the end of the current term or any extended term, we will pay all amounts owed to Mr. Kimmins under his employment agreement through the date of termination and any other benefits which may be owing in accordance with our policies or applicable law, which will satisfy all of our obligations under his employment agreement.
If we terminate Mr. Kimmins' employment without "cause" or Mr. Kimmins terminates his employment for "good reason" or if we notify Mr. Kimmins that we do not intend to extend his employment under the employment agreement at the end of the current term or any extended term, then, in addition to any other benefits which may be owing in accordance with our plans and policies:
The Men's Wearhouse, Inc. 2015 Proxy Statement
Under Mr. Kimmins' Employment Agreement, "good reason" means:
provided, however, that no termination shall be for good reason until Mr. Kimmins has provided us with written notice of the conduct alleged to have caused good reason and at least thirty (30) days have elapsed after our receipt of such written notice from Mr. Kimmins, during which we have failed to cure any such alleged conduct.
If Mr. Kimmins' employment is terminated as a result of his death, then, in addition to any other benefits which may be owing in accordance with our plans and policies, we will be required to:
If Mr. Kimmins' employment is terminated because of his permanent disability, then, in addition to any other benefits which may be owing in accordance with our plans and policies:
The Men's Wearhouse, Inc. 2015 Proxy Statement
If Mr. Kimmins' employment agreement is terminated (1) as a result of Mr. Kimmins' death or permanent disability, or (2) by us without cause or by our non-renewal of his employment agreement or (3) by Mr. Kimmins for good reason, we shall pay Mr. Kimmins' COBRA health benefits premium for an 18-month period following his termination; provided, however, that such benefits shall be reduced to the extent health benefits are received by Mr. Kimmins, his spouse or any eligible dependent from any other person during such period and Mr. Kimmins will be required to use any medical insurance provided by a new employer, if available, during such 18-month period.
As a condition to the receipt of any amounts or benefits after termination of employment for whatever reason, Mr. Kimmins, or his personal representative, shall be required to execute a written release agreement in a form satisfactory to the Company containing, among other things, a general release of claims against us and our affiliates except for rights and claims under the employment agreement and pursuant to the terms of any benefit plans, equity grants or other similar plans or agreements, or pursuant to his change in control agreement. In addition, Mr. Kimmins must refuse to exercise any right to revoke such release agreement during any applicable rescission period.Ewert, Mr. Kimmins or his personal representative, must deliver the executed release on or before the date that is 30 days after any termination date or all rights to the payments described above shall be forfeited, except for amounts due and owing as of the date of Mr. Kimmins' termination or amounts payable to Mr. Kimmins in connection with a termination as a result of his death.
Certain of the payments to be made to Mr. Kimmins under his employment agreement may be deferred in order to comply with the requirements of section 409A of the Internal Revenue Code.
Under his employment agreement, Mr. Kimmins hasThorn have each agreed not to compete with us during the term thereofof his employment agreement and for any period in which he is receiving payments or benefits from us under his employment agreement (other than the continuation of medical benefits).
Finally,The employment agreements also provide that if Mr. Kimmins' employment agreement provides that in the event that (i) prior to a Change in Control of the Company, the Board determines by a majority vote,Ewert, Mr. Kimmins or (ii) following a Change in Control of the Company, a court of competent jurisdiction determines by a final, non-appealable order, that Mr. Kimmins,Thorn, respectively, before or after the termination of his employment relationship with us, has committedcommit certain acts which
| | Tailored Brands, Inc. 2016 Proxy Statement 58 |
materially and adversely affect us, then some or all of the (A) benefits payable or to be provided, or previously paid or provided, to Mr. Kimminshim under his employment agreement, or (B) cash bonuses paid to Mr. Kimminshim by us on or after the date of his employment agreement, or (C) equity awards granted to Mr. Kimminshim by us that vest, on or after the date of his employment agreement, will be forfeited to us on such terms as determined by the Board or the final, non-appealable order of a court of competent jurisdiction. Thoseus. The acts which could trigger such a forfeiture generally include:
The Men's Wearhouse, Inc. 2015 Proxy Statement
David H. Edwab
Additionally, in anticipation of his approaching retirement, on February 25, 2014, we entered into a Sixth Amended and Restated Employment Agreement with David H. Edwab, Vice Chairman of the Company, for a term extending through February 6, 2015. Effective October 1, 2014, Mr. Edwab retired as an executive officer and employee of the Company but remains non-executive Vice Chairman of the Board. Given that the Board of Directors considered the change to be in the best interest of the Company and in anticipation of the active assistance to be provided by Mr. Edwab in such capacity, the Compensation Committee and the Board of Directors approved: (1) the continuation of Mr. Edwab's salary through February 6, 2015, (2) participation in the Company's annual cash incentive plan as if he continued to be an employee to the end of fiscal 2014 and until the time of payment under the annual cash incentive plan and (3) for his continued service as a director to constitute fulfillment of his responsibilities under his employment agreement and to allow for vesting of his equity awards, in each case as contemplated by his employment agreement and as further described below.
Under Mr. Edwab's employment agreement we agreed, among other things, to:
In addition, on April 3, 2013, we issued Mr. Edwab (i) 20,000 DSUs, the vesting of which is time-based and shall vest annually over a period of four years in equal, pro rata installments and (ii) 20,000 DSUs, the vesting of which is performance-based and shall vest annually over a period of four years if the specified performance criteria are achieved. Because Mr. Edwab was deemed to have remained employed by us through February 5, 2015, as contemplated by his employment agreement, then notwithstanding the terms of the award agreements related to such DSU grants, the portion of the DSUs that were scheduled to vest on April 13, 2015 vested on February 5, 2015; provided, however, because the requisite targets had not been met in the case of his performance-based DSUs, only his
The Men's Wearhouse, Inc. 2015 Proxy Statement
time-based DSU awards vested. Mr. Edwab forfeited the remaining unvested DSUs, including all of the performance-based DSUs, effective as of February 6, 2015.
Except as described above, Mr. Edwab will not be entitled to receive any future equity awards pursuant to his employment agreement.
With respect to the 96,800 shares of restricted stock issued to Mr. Edwab on February 5, 2011, pursuant to terms of his fourth amended and restated employment agreement, which vest in equal numbers of 19,360 on each February 5th in 2012 through 2016, the tranche eligible to vest on February 5, 2015 vested. Mr. Edwab forfeited the remaining shares of restricted stock that had not vested as of February 6, 2015.
In accordance with the terms of his employment agreement, as a result of the deemed termination of his employment on February 6, 2015, as of such date:
Certain of the payments to be made to Mr. Edwab under his employment agreement may be deferred in order to comply with the requirements of section 409A of the Internal Revenue Code. In addition, to the extent that a Change in Control occurs during the term of Mr. Edwab's employment agreement and any obligations under his employment agreement remain in effect, Mr. Edwab will be entitled to receive the greater of his benefits under his employment agreement and his change in control agreement (for a discussion of the terms of his change in control agreement, see "– Potential Payments Upon Termination or Change in Control – Change in Control Agreements").
Under his employment agreement, Mr. Edwab has agreed not to compete with us during the term thereof and for a period of one year thereafter. However, Mr. Edwab may render services for compensation and engage in other business activities; provided, that (i) rendering such services or engaging in such activities does not violate the non-competition provisions of his employment agreement and (ii) Mr. Edwab must continue to devote more of his working time to us than to any other single business or group of related businesses.
In addition, pursuant to the terms of Mr. Edwab's Fifth Amended and Restated Employment Agreement, in February 2014, we assigned to Mr. Edwab our interest in the insurance policies referred to and covered by the split-dollar life insurance agreements between the Company and Mr. Edwab. The cash surrender value of such insurance policies at the time of the assignment was $329,782.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Grants of Plan-Based Awards Table |
The following table sets forth certain information regarding grants of plan-based awards to our Named Executive Officers during the fiscal year ended January 31, 2015:30, 2016:
| | | | | | | | | All Other Option Awards: Number of Securities Under- lying Options (#) | | | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | | ||||||||||||||||||||||||
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||||
Name | Grant Date (1) | Threshold ($)(2) | Target ($)(2) | Maximum ($)(2) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
Douglas S. Ewert | | 4/17/14 | | 468,750 | | 1,250,000 | | 1,718,750 | | — | | — | | 8,816 | (5) | | 15,870 | (7) | | 51,885 | (9) | | 47.26 | | 2,017,932 | |||||||||
| | 9/12/14 | | — | | — | | — | | 9,843 | (6) | | 39,370 | (6) | | 88,583 | (6) | | 15,748 | (8) | | 69,652 | (10) | | 50.80 | | 4,168,898 | |||||||
Jon W. Kimmins | 4/17/14 | 168,750 | 450,000 | 618,750 | — | — | 1,763 | (5) | — | 10,377 | (9) | 47.26 | 253,574 | |||||||||||||||||||||
9/12/14 | — | — | — | 1,575 | (6) | 6,299 | (6) | 14,173 | (6) | 4,724 | (8) | 13,930 | (10) | 50.80 | 826,985 | |||||||||||||||||||
Mary Beth Blake | | 4/17/14 | | 112,500 | | 300,000 | | 412,500 | | — | | — | | 1,763 | (5) | | — | | 10,377 | (9) | | 47.26 | | 253,574 | ||||||||||
| | 9/12/14 | | — | | — | | — | | 1,969 | (6) | | 7,874 | (6) | | 17,717 | (6) | | 5,906 | (8) | | 17,413 | (10) | | 50.80 | | 1,033,805 | |||||||
Mark Nuetze | 4/17/14 | 75,000 | 200,000 | 275,000 | — | — | 1,411 | (5) | 4,232 | (7) | 8,301 | (9) | 47.26 | 402,882 | ||||||||||||||||||||
9/12/14 | — | — | — | 984 | (6) | 3,937 | (6) | 8,858 | (6) | 2,953 | (8) | 8,706 | (10) | 50.80 | 516,894 | |||||||||||||||||||
Carole L. Souvenir | | 4/17/14 | | 56,250 | | 150,000 | | 206,250 | | — | | — | | 846 | (5) | | 2,539 | (7) | | 4,981 | (9) | | 47.26 | | 241,698 | |||||||||
| | 9/12/14 | | — | | — | | — | | 788 | (6) | | 3,150 | (6) | | 7,088 | (6) | | 2,362 | (8) | | 6,965 | (10) | | 50.80 | | 413,520 | |||||||
David H. Edwab | 4/17/14 | 157,500 | 420,000 | 577,500 | — | — | — | — | — | — | — |
| | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | | | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) (6) | |||||||||||||||||||||||||||||
Name | Grant Date (1) | Threshold ($) (2) | Target ($) (2) | Maximum ($) (2) | Threshold (#) (3) | Target (#) (3) | Maximum (#) (3) | |||||||||||||||||||||||||||
Douglas S. Ewert | | 4/10/15 | | 625,000 | | 1,250,000 | | 2,500,000 | | — | | — | | — | | — | | — | | — | | — | ||||||||||||
Jon W. Kimmins | 4/10/15 | 225,000 | 450,000 | 900,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Bruce K. Thorn | | 6/29/15 | | 243,750 | | 487,500 | | 975,000 | | 1,588 | | 6,351 | | 14,290 | | 5,644 | | 17,895 | | 63.78 | | 1,199,975 | ||||||||||||
A. Alexander Rhodes | 4/13/15 | 123,500 | 247,000 | 494,000 | 728 | 2,913 | 6,554 | 2,268 | 6,914 | 52.91 | 399,988 | |||||||||||||||||||||||
Benjamin C. Baum | | 5/26/15 | | 106,250 | | 212,500 | | 425,000 | | 458 | | 1,833 | | 4,124 | | 1,559 | | 4,815 | | 57.74 | | 299,989 |
| | Tailored Brands, Inc. 2016 Proxy Statement 59 |
50% to 150%, related to each of (1) the Company's adjusted earnings per share for fiscal 2017 and (2) the Company's relative TSR compared to the TSR of other select companies over a pre-defined period. For further information, see "Compensation Discussion and Analysis – Detailed Report – Elements of 2015 Compensation – Equity Awards." Each performance unit award includes the right to receive dividend equivalents, which will be credited to a DSU or performance unit when dividends are paid to our shareholders, but will not be paid out unless and until the underlying DSU or performance unit award is earned. If a grant is cancelled, the recipient will not receive any dividend equivalents with respect to such DSU or performance unit award.
| | Tailored Brands, Inc. 2016 Proxy Statement 60 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
Outstanding Equity Awards at Fiscal Year-End Table
Outstanding Equity Awards at Fiscal Year-End Table |
The following table summarizes certain information regarding equity awards outstanding and held by each of the Named Executive Officers as of the end of the fiscal year ended January 31, 2015:30, 2016:
| Option Awards | Stock Awards | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (1) | |||||||||||||||||||
Douglas S. Ewert | | 80,000 | | 20,000 | (2) | | — | | 41.33 | | 11/16/2017 | | — | | — | | — | | — | |||||||||
| | 32,997 | | 22,008 | (3) | | — | | 22.72 | | 3/28/2018 | | — | | — | | — | | — | |||||||||
| | 42,867 | | — | | — | | 27.94 | | 4/6/2021 | | — | | — | | — | | — | ||||||||||
| | 29,053 | | — | | — | | 40.13 | | 3/27/2022 | | — | | — | | — | | — | ||||||||||
| | — | | 51,885 | (4) | | — | | 47.26 | | 4/17/2024 | | — | | — | | — | | — | |||||||||
| | — | | 69,652 | (5) | | — | | 50.80 | | 9/12/2024 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 7,555 | (6) | | 103,579 | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 10,580 | (7) | | 145,052 | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 15,748 | (8) | | 215,905 | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | — | | — | | — | | — | ||||||||||
| | — | | — | | — | | — | | — | | — | | — | | 37,776 | (9) | | 517,909 | |||||||||
| | | | | | | | | | | | | | | | 39,370 | (10) | | 539,763 | |||||||||
Jon W. Kimmins | 12,720 | 6,360 | (11) | — | 33.09 | 4/3/2023 | — | — | — | — | ||||||||||||||||||
— | 10,377 | (4) | — | 47.26 | 4/17/2024 | — | — | — | — | |||||||||||||||||||
— | 13,930 | (5) | — | 50.80 | 9/12/2024 | — | — | — | — | |||||||||||||||||||
— | — | — | — | — | 18,133 | (12) | 248,603 | — | — | |||||||||||||||||||
— | — | — | — | — | 4,724 | (8) | 64,766 | — | — | |||||||||||||||||||
— | — | — | — | — | — | — | 6,299 | (10) | 86,359 | |||||||||||||||||||
Bruce K. Thorn | | — | | 17,895 | (5) | | — | | 63.78 | | 6/29/2025 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 5,644 | (8) | | 77,379 | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | — | | — | | 6,351 | (10) | | 87,072 | |||||||||
A. Alexander Rhodes | — | 6,914 | (5) | — | 52.91 | 4/13/2025 | — | — | — | — | ||||||||||||||||||
— | — | — | — | — | 2,268 | (8) | 31,094 | — | — | |||||||||||||||||||
— | — | — | — | — | — | — | 2,913 | (10) | 39,937 | |||||||||||||||||||
Benjamin C. Baum | | — | | 4,815 | (5) | | — | | 57.74 | | 5/26/2025 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 1,559 | (8) | | 21,374 | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | — | | — | | 1,833 | (10) | | 25,130 |
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The Men's Wearhouse, Inc. 2015 Proxy Statement
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| | Tailored Brands, Inc. 2016 Proxy Statement 61 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
The Men's Wearhouse, Inc. 2015 Proxy Statement
Option Exercises and Stock Vested Table |
The following table sets forth the amount realized (before any tax withholding) by each of the Named Executive Officers regarding the exercise of options and the vesting of restricted stock awardsperformance units and DSUs during the fiscal year ended January 31, 2015:30, 2016:
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | |||||||||
Douglas S. Ewert | | — | | — | | 25,814 | | 1,365,819 | |||||
Jon W. Kimmins | — | — | 7,807 | 413,068 | |||||||||
Bruce K. Thorn | | — | | — | | — | | — | |||||
A. Alexander Rhodes | — | — | — | — | |||||||||
Benjamin C. Baum | | — | | — | | — | | — |
| Option Awards | Stock Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||
Douglas S. Ewert | — | — | 51,008 | 2,647,701 | |||||||||
Jon W. Kimmins | — | — | 6,044 | 289,991 | |||||||||
Mary Beth Blake | 20,000 | 499,806 | 5,000 | 239,900 | |||||||||
Mark Neutze | 12,950 | 278,127 | 3,270 | 156,895 | |||||||||
Carole L. Souvenir | — | — | 3,519 | 168,842 | |||||||||
David H. Edwab | — | — | 24,360 | 1,148,465 |
Pension Benefits |
We currently have no defined benefit pension plans in which our executive officers participate.
Nonqualified Deferred Compensation |
We currently have no defined contribution plans which provide for the deferral of compensation on a basis that is not tax qualified.
Potential Payments upon Termination or Change in Control |
Change in Control
Agreements
General
We have entered into Change in Control agreements with our executive officers, including the Named Executive Officers, which entitle the executives to receive certain benefits in the event that a Change in Control occurs and the executive's employment with the Company is terminated after the occurrence of that Change in Control. The agreements terminate on the first to occur of (a) the executive's death or disability, (b) the termination of the executive's employment with the Company, or (c) the end of the last day of (i) the current two-year period which runs through May 15, 2017 (or any period for which the term shall have been automatically extended) if no Change in Control shall have occurred during that two-year period or (ii) the two-year period beginning on the date on which a Change in Control occurred if a Change in Control of the Company shall have occurred during the applicable two-year period; provided, however, that, if the agreement has not terminated due to the executive's death or disability and we have not given the executive notice at least 90 days before any applicable expiration date that the term will expire on such expiration date, then the term of the agreement shall be automatically extended for successive two-year periods. We entered into an amended and restated Change in Control agreement with Mr. Ewert on April 22, 2015, a copy of which was filed as Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on April 28, 2015. The form of Change in Control agreement for our other executive officers, including the Named Executive Officers, was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 20, 2009. Prior to entering into his amended and restated Change in Control agreement, Mr. Ewert was party to the same form of Change in Control agreement as our other continuing Named Executive Officers as described herein.
The Change in Control agreements do not limit or otherwise affect any rights an executive may have under any other contract or agreement with the Company or any of our affiliates. Amounts which are
| | Tailored Brands, Inc. 2016 Proxy Statement 62 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
vested benefits or which the executive is otherwise entitled to receive under any plan, program, policy, or practice of or provided by, or any contract or agreement with, the Company or any of our affiliates at or subsequent to the date of termination of the executive's employment with the Company shall be payable or otherwise provided in accordance with such plan, program, policy, or practice or contract or agreement except as explicitly modified by the executive's Change in Control agreement.
Pursuant to the agreements, a "Change in Control" generally occurs when:
In addition, if following the commencement of any discussion with a third person (other than discussions with an investment banker, attorney, accountant or other advisor engaged by us) that
The Men's Wearhouse, Inc. 2015 Proxy Statement
ultimately results in a Change in Control, the executive's (i) employment with the Company is terminated, (ii) duties are materially changed or the executive's status and position with the Company is materially diminished, (iii) annual base salary is reduced, or (iv) annual bonus potential is reduced to an amount less than such executive's maximum annual bonus potential for the preceding year (the "Benchmark Bonus"), then for all purposes of the agreement, such Change in Control shall be deemed to have occurred on the date immediately prior to the date of such termination, change, diminution, or reduction.
Change in Control Benefits
If a Change in Control occurs and an executive's employment by the Company is terminated, the executive shall be entitled to the following benefits:
then we shall pay to the executive, or the executive's estate or beneficiaries, as applicable, those amounts earned or benefits accumulated due to the executive's continued service through his termination date.
| | Tailored Brands, Inc. 2016 Proxy Statement 63 |
In addition, we at our sole expense shall take the following actions: (1) throughout the period beginning on the termination date and ending on the first to occur of the second anniversary of the termination date,for two years, or the date on which the executive becomes employed on a full-time basis by another person (the "Coverage Period"), we shall maintain, in effect, and not materially reduce the benefits provided by, our group health plan in which the executive was a participant immediately before the termination date;plan; and (2) we shall arrange for the executive's uninterrupted participation throughout the coverage periodCoverage Period in our group health plan in which the executive was a participant immediately before the termination date;plan; provided that if the executive's participation after the termination date in such group health plan is not permitted by the terms of that plan, then throughout the Coverage Period, we (at our sole expense) shall
The Men's Wearhouse, Inc. 2015 Proxy Statement
provide the executive with substantially the same benefits that were provided to the executive by that plan immediately before the termination date.benefits.
Assuming that a Change in Control occurred during fiscal 20142015 and each of the executives were terminated under the above-described circumstances effective as of January 31, 2015,30, 2016, the Named Executive Officers would have been entitled to receive the following:
Name | 2x Base & Bonus ($) | Insurance Premiums ($) | Health Coverage ($) | Total ($)(2) | 2x Base & Bonus ($) | Insurance Premiums ($) | Health Coverage ($) | Total ($) (1) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert | 5,937,500 | 3,737 | 32,060 | 5,973,297 | | 5,000,000 | | 3,737 | | 31,664 | | 5,035,401 | ||||||||||||||
Jon W. Kimmins | 2,337,500 | 3,737 | 32,461 | 2,373,698 | 2,750,000 | 3,737 | 32,065 | 2,785,802 | ||||||||||||||||||
Mary Beth Blake | 2,025,000 | 3,737 | 25,730 | 2,054,467 | ||||||||||||||||||||||
Mark Neutze | 1,350,000 | 3,737 | 32,314 | 1,386,051 | ||||||||||||||||||||||
Carole L. Souvenir | 1,212,500 | 3,737 | 11,060 | 1,227,297 | ||||||||||||||||||||||
Bruce Thorn | | 3,250,000 | | 173 | | 26,771 | | 3,276,944 | ||||||||||||||||||
A. Alexander Rhodes | 1,748,000 | 3,564 | — | 1,751,564 | ||||||||||||||||||||||
Benjamin C. Baum | | 1,700,000 | | 3,737 | | 36,063 | | 1,739,800 |
Each payment required to be made to an executive pursuant to the foregoing shall be made by check drawn on an account of the Company or the successor and shall be paid generally within 30 days after the date of termination; provided, however, that certain of the payments to be made to the executives under the Change in Control agreements may be deferred in order to comply with the requirements of section 409A of the Internal Revenue Code. In the event that it is determined that any payment, benefit or distribution by us or our affiliates to or for the benefit of the executive (whether paid or payable, distributed or distributable, or provided or to be provided, pursuant to the terms of his Change in Control agreement or otherwise) would be nondeductible by us or any of our affiliates for federal income tax purposes because of section 280G of the Internal Revenue Code then the aggregate present value of amounts payable or distributable to or for the benefit of the executive pursuant to his Change in Control agreement shall be reduced to an amount expressed in present value which maximizes the aggregate present value of agreement payments without causing any payment to be nondeductible by us or any of our affiliates because of section 280G of the Internal Revenue Code. With respect to Mr. Ewert's Change in Control agreement, if our independent registered public accounting firm determines that any payment, benefit or distribution by us or our affiliates to or for the benefit of the Mr. Ewert are subject to the 280G excise tax, then the accounting firm will determine whether such payments shall be reduced provided such reduction will only occur if the reduction would result in Mr. Ewert retaining, on an after tax basis, a larger amount as a result of such reduction than he would receive if he received all of the payments owed to him under his Change in Control agreement.
Pursuant to the terms of the Change in Control agreements, an "Event of Termination for Cause" shall be deemed to have occurred if, after a Change in Control, the executive shall have committed:
The Men's Wearhouse, Inc. 2015 Proxy Statement
No act, or failure to act, on the part of the executive shall be deemed "intentional" if it was due primarily to an error in judgment or negligence, but shall be deemed "intentional" only if done, or omitted to be done, by the executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. The Executive shall not be deemed to have been terminated as a result of an "Event of Termination for Cause" under the agreement unless and until there shall have been delivered to the executive a certified copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the members of the Board of Directors then in office (but excluding the executive from any such vote or determination if he is then a member of the Board of Directors) at a meeting of the Board of Directors called and held for such purpose, finding that, in the good faith opinion of the Board of Directors, the executive had committed an act set forth above and specifying the particulars thereof in detail.
Further, as defined in the Change in Control agreements (other than Mr. Ewert's agreement), an "Event of Termination for Good Reason" shall occur if, on or after a Change in Control, the Company or the successor:
The Men's Wearhouse, Inc. 2015 Proxy Statement
The Men's Wearhouse, Inc. 2015 Proxy Statement
For purposes of Mr. Ewert's Change in Control agreement, an "Event of Termination for Good Reason" shallgenerally occur if any of the following occur on or after a Change in Control:
| | Tailored Brands, Inc. 2016 Proxy Statement 64 |
In addition, pursuant to the terms of the Change in Control agreements, immediately upon the occurrence of a Change in Control, all options to acquire our voting securities held by an executive shall become fully exercisable and all restrictions on our restricted voting securities granted to an executive prior to a Change in Control shall be removed and the securities shall be freely transferable. In addition, the award agreements between the Named Executive Officers and the Company related to the awards of DSUs provide that such units shall immediately vest upon a Change in Control. However, effective for all awards made on or after September 1, 2014, equity awards will not vest in the event of a Change in Control unless also accompanied by a qualifying termination of employment. If a Change in Control occurred on January 31, 201530, 2016 and, in the case of any equity awards granted on or after September 1, 2014, each of the executives were terminated under the above-described circumstances as of the same date, the following awards would have vested for each of the Named Executive Officers which, based on the closing sales price of $46.47$13.71 for our Common Stockcommon stock on January 30, 201529, 2016 (the last trading day of the fiscal year ended January 31, 2015)30, 2016), would have resulted in the indicated realized value to the Named Executive Officers:
The Men's Wearhouse, Inc. 2015 Proxy Statement
| Option Awards | Restricted Stock and Deferred Stock Unit Awards | | Option Awards | Restricted Stock and Deferred Stock Unit Awards | | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares (#) | Value Realized ($) | Number of Shares or Units (#) | Value Realized ($) | Total Value Realized ($)(2) | Number of Shares (#) | Value Realized ($) (1) | Number of Shares or Units (#) | Value Realized ($) | Total Value Realized ($) (2) | ||||||||||||||||||||||
Douglas S. Ewert | 194,228 | 999,513 | 136,843 | 6,359,096 | 7,358,609 | | 163,545 | | — | | 111,029 | | 1,522,208 | | 1,522,208 | |||||||||||||||||
Jon W. Kimmins | 37,027 | 170,194 | 36,963 | 1,717,671 | 1,887,865 | 30,667 | — | 29,156 | 399,729 | 399,729 | ||||||||||||||||||||||
Mary Beth Blake | 67,790 | 872,400 | 43,098 | 2,002,765 | 2,875,165 | |||||||||||||||||||||||||||
Mark Neutze | 19,196 | 13,878 | 17,804 | 827,351 | 841,229 | |||||||||||||||||||||||||||
Carole L. Souvenir | 14,270 | 14,734 | 14,487 | 673,212 | 687,946 | |||||||||||||||||||||||||||
Bruce C. Thorn | | 17,895 | | — | | 11,995 | | 164,451 | | 164,451 | ||||||||||||||||||||||
A. Alexander Rhodes | 6,914 | — | 5,181 | 71,032 | 71,032 | |||||||||||||||||||||||||||
Benjamin C. Baum | | 4,815 | | — | | 3,392 | | 46,504 | | 46,504 |
Clawback Provisions
Finally, the Change in Control agreements provide that in the event that (i) prior to a Change in Control, our Board of Directors determines by a majority vote, or (ii) following a Change in Control, a court of competent jurisdiction determines by a final, non-appealable order, thatif an executive, before or after the termination of his employment relationship with us, has committed certain acts which materially and adversely affect the Company, then some or all (A) benefits payable or to be provided, or previously paid or provided, to the executive under his Change in Control agreement or (B) cash bonuses paid to the executive by the Company, or equity awards granted to the executive by the Company that vest, on or after the executive executed the Change in Control agreement will be forfeited to us on such terms as determined by the Board of Directors. Those acts which could trigger such a forfeiture include:
| | Tailored Brands, Inc. 2016 Proxy Statement 65 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
Employment Agreements
We may terminate the employment agreements with Mr. Ewert, Mr. Kimmins and Mr. Thorn with or without cause and Mr. Ewert, Mr. Kimmins and Mr. Thorn may each terminate his respective agreement with good reason. The respective employment agreement will also be terminated as a result of Mr. Ewert, Mr. Kimmins or Mr. Thorn's death or permanent disability.
As a condition to the receipt of any amounts or benefits after termination of employment for whatever reason, Mr. Ewert, Mr. Kimmins or Mr. Thorn, or his respective personal representative, shall be required to execute a written release agreement in a form satisfactory to the Company containing, among other things, a general release of claims against us and our affiliates except for rights and claims under the employment agreement and pursuant to the terms of any benefit plans, equity grants or other similar plans or agreements, or pursuant to his change in control agreement.
Upon Death or Disability
If any of Mr. Ewert, Mr. Kimmins and Mr. Thorn's employment is terminated as a result of his death or permanent disability, then, in addition to any other benefits which may be owing in accordance with our plans and policies, we will be required to pay to Mr. Ewert, Mr. Kimmins or Mr. Thorn or his estate a lump sum payment in cash equal to the number of days in our fiscal year up to and including the date of disability or death divided by the total number of days in our fiscal year multiplied by the bonus earned for our fiscal year ending contemporaneously with or immediately following the date of his disability or death.
In addition, all options, restricted stock and DSUs of the Company held immediately prior to his termination date that would have vested if his employment continued for one year (two years in the case of Mr. Ewert) after the termination date shall vest. In addition, on the date on which any performance units (or performance-based DSUs) held by Mr. Ewert immediately prior to the date of termination would have vested, all restrictions shall be removed on a number of shares of our common stock equal to the number of shares calculated in accordance with the vesting provisions of any such performance unit agreement times the quotient determined by dividing (x) the number of days from the grant date through the termination date by (y) the number of days in the applicable performance period, notwithstanding the terms of the relevant performance unit agreement.
Without Cause or For Good Reason
Under the employment agreements, "cause" is generally limited to:
Under the employment agreements, "good reason" generally means, subject to notification and opportunity for us to cure the alleged conduct:
| | Tailored Brands, Inc. 2016 Proxy Statement 66 |
In the case of Mr. Ewert, "good reason" also includes the failure to receive an annual equity grant and the Board's failure to nominate Mr. Ewert for election to the Board at such times as his membership on the Board comes up for re-election, unless the Board determines in good faith, based on guidance from Institutional Shareholder Services (or a similar nationally recognized organization), that it is generally considered poor corporate governance practice for the Chief Executive Officer to serve on a Company's board of directors.
If we terminate the employment of any of Mr. Ewert, Mr. Kimmins or Mr. Thorn without "cause" or any of them terminates his employment for "good reason" or if we notify any of Mr. Ewert, Mr. Kimmins or Mr. Thorn that we do not intend to extend his employment under his employment agreement at the end of the current term or any extended term, then, in addition to any other benefits which may be owing in accordance with our plans and policies:
In addition, all options, restricted stock and DSUs of the Company held immediately prior to his termination date that would have vested if his employment continued for one year (two years in the case of Mr. Ewert) after the termination date shall vest. Restrictions on any performance units (or performance-based DSUs) held immediately prior to the date of termination shall lapse, if at all, in accordance with the terms of the relevant performance unit award agreement.
Health Coverage Upon Termination
If Mr. Ewert's employment agreement is terminated (1) as a result of his death or permanent disability, or (2) by us without cause or by our non-renewal of his employment agreement, or (3) by Mr. Ewert for good reason, we will arrange to provide Mr. Ewert and his spouse and eligible dependents who were covered under our group health plan on the date of his termination and who, in the case of eligible dependents, continue to be eligible dependents, group health plan coverage until Mr. Ewert reaches age 65, or in the case of a termination due to Mr. Ewert's death, until his spouse reaches age 65;
| | Tailored Brands, Inc. 2016 Proxy Statement 67 |
provided, however, that such benefits shall be reduced (A) to the extent health benefits are received by him, his spouse or any eligible dependent from any other person during such period or he obtains other employment that offers participation in a health insurance plan providing substantially similar benefits during such period, or (B) Mr. Ewert violates the restrictive covenants in the employment agreement.
If Mr. Kimmins or Mr. Thorn's employment agreement is terminated (1) as a result of his death or permanent disability, or (2) by us without cause or by our non-renewal of his employment agreement or (3) by him for good reason, we shall pay his COBRA health benefits premium for an 18-month period following his termination; provided, however, that such benefits shall be reduced to the extent health benefits are received by him, his spouse or any eligible dependent from any other person during such period and he will be required to use any medical insurance provided by a new employer, if available, during such 18-month period.
Summary Table
The following table summarizes the potential payments each of Messrs.Mr. Ewert, Mr. Kimmins and Kimmins'Mr. Thorn would have received in the event their employment with the Company occurred on January 31, 201530, 2016 pursuant to their respective employment agreements. The amounts in the table are calculated pursuant to SEC rules and are not intended to reflect actual payments that may be made. Actual payments that may be made will be based on the dates and circumstances of the applicable event. See "Employment Agreements" above for additional information regarding the terms of each of Messrs. Ewert and Kimmins' respective employment agreements.
| |||||||||||||
|
Name and Termination Scenarios | Cash Severance ($) (1) | Equity ($) (2) | Health Coverage ($) (3) | Total ($) (4) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas S. Ewert(5) | | | | | |||||||||
for Cause or w/o Good Reason | | — | | — | | — | | — | |||||
death or disability | | — | | 1,522,208 | | 221,647 | | 1,743,855 | |||||
w/o Cause or for Good Reason | | 5,000,000 | | 910,481 | | 197,900 | | 6,108,381 | |||||
Jon W. Kimmins | |||||||||||||
for Cause or w/o Good Reason | — | — | — | — | |||||||||
death or disability | — | 399,729 | 24,049 | 423,778 | |||||||||
w/o Cause or for Good Reason | 1,375,000 | 104,443 | 24,049 | 1,503,492 | |||||||||
Bruce K. Thorn | | | | | |||||||||
for Cause or w/o Good Reason | | — | | — | | — | | — | |||||
death or disability | | 243,750 | | 164,451 | | 20,078 | | 428,279 | |||||
w/o Cause or for Good Reason | | 1,381,250 | | 25,789 | | 20,078 | | 1,427,117 |
| | Tailored Brands, Inc. 2016 Proxy Statement 68 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
Retirement Payments and Benefits for David EdwabPROPOSAL 5:
APPROVAL, ON AN ADVISORY BASIS,
OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS
Mr. Edwab retired as an executive officer and employee of theThe Company effective October 1, 2014, but continuesis asking you to serve as the non-executive Vice Chairman of the Board. Given that the Board of Directors considered the change to be in the best interest of the Company and in anticipation of the active assistance to be provided by Mr. Edwab in such capacity, the Compensation Committee and the Board of Directors approved that his continued service as a director would constitute fulfillment of his responsibilities under his employment agreement and allowed for vesting of his equity awards, in each case as contemplated by his employment agreement and as further described below. Therefore, in accordance with the terms of his employment agreement and in connection with his retirement, as of February 6, 2015, Mr. Edwab became entitled to receive the following:
In addition, Mr. Edwab will provide up to ten hours a month of consulting services to us through February 6, 2017 for no additional consideration; provided that services provided in excess of ten hours a month will be compensated at a rate equal to $750 per hour.
In accordance with the terms of his employment agreement, Mr. Edwab's outstanding equity awards, including 5,000 time-based DSUs and 19,360 shares of restricted stock, which were scheduled to vest on April 13, 2015 vested on February 5, 2015. Upon vesting, Mr. Edwab realized an aggregate value of $1,163,190, based on the $47.75 closing price of our Common Stock on February 5, 2015. All remaining equity awards held by Mr. Edwab were forfeited as of February 6, 2015.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we provide our shareholders with the opportunity to vote to approve on a nonbinding, advisory basis, the compensation of our Named Executive Officers as discloseddescribed in the Executive Compensation section of this proxy statement in accordance with the compensation disclosure rules of the SEC.
We seek to closely align the interests of our Named Executive Officers with the interests of our shareholders. Our compensation programs are designed to reward teamwork and each individual's contribution to the Company as well as to produce positive long-term results for our shareholders and employees by aligning compensation with the Company's business strategies and the creation of long-term shareholder value. We endeavor to ensure that our compensation program is perceived as fundamentally fair to all stakeholders. Differences in compensation among our exempt employees are generally due to position, seniority, or local requirements. In line with this philosophy, executive officers generally receive minimal perquisites. The Compensation Committee seeks to achieve the appropriate balance between immediate cash rewards and incentives for the achievement of both annual and long-term financial and non-financial objectives. Our Named Executive Officers' total compensation consists of a mix of base salary, annual cash incentive awards and long-term equity incentive awards, with a significant portion of each executive's compensation being performance-based.statement. We encourage you to read our Compensation Discussion and Analysis on pages 40-55 for a more detailed discussion and analysisthe details of our executive compensation program, including information aboutprogram. While the fiscal 2014 compensation of the Named Executive Officers and changes made to the compensation program during fiscal 2014.
The Men's Wearhouse, Inc. 2015 Proxy Statement
As discussed at the outset of our Compensation Discussion and Analysis, fiscal 2014 proved to be an eventful year for the Company and its stakeholders. The Company experienced many events throughout fiscal 2014 which required significant time and focus by management, primarily the Jos. A. Bank acquisition. In addition, during fiscal 2014, our Board of Directors declared an aggregate of $0.72 per share in dividends to shareholders. Our stock price as of the last trading day of fiscal 2014 was $46.47 per share, a 1.0% decrease over the last trading day of fiscal 2013, but on March 12, 2015, after announcement of our year end results, the closing price was $52.26.
Over the same period, the total reported compensation available to Mr. Ewert, our Chief Executive Officer, as reported in the Summary Compensation Table on page 52 of this proxy statement, increased approximately $6.0 million from $3,622,131 in fiscal 2013 to $9,672,031 in fiscal 2014, of which approximately $4.2 million of the increase resulted from the equity grants awarded to him in September 2014 in lieu of those that would have been issued in April 2015. Over the same period, Mr. Ewert's realized pay increased 92% from $3,199,875 in fiscal 2013 to $6,132,902 in fiscal 2014, and his realized pay as a percentage of reported pay decreased from 88.3% in 2013 to 63.4% in fiscal 2014, a decrease of 28%, which reflects that Mr. Ewert's compensation is significantly based on Company performance.
The primary reason for the significant increase in the reported Chief Executive Officer compensation is that, in light of the significant changes the Company experienced in fiscal 2014, theits Compensation Committee withwill carefully consider the assistance of Pay Governance, undertook a comprehensive review ofshareholder vote, the Company's compensation practices following the completion of the Jos. A. Bank acquisition. As a result of this review, in September 2014, the Compensation Committee determined that it was in the best interest of the Company to revise and adjust various aspects of the Company's compensation practices. These changes are designed and intended to reflect the substantially increased demands upon and responsibilities of our executives and the material impact of the Jos. A. Bank acquisition on the size of the Company's operations and the Company's overall financial performance. The Compensation Committee believes it is imperative to retain and incent our management team in order to successfully integrate the Jos. A. Bank operations with the Company. As a result, as part of the implementation of the updated compensation program, the Compensation Committee determined that it was beneficial to issue equity awards to certain senior executive officers, including our continuing Named Executive Officers, under the new program in September 2014 instead of during our regular annual grant process in 2015. The Committee believed it important to recognize the extraordinary efforts of Mr. Ewert and other senior executive officers at that time and provide a strong incentive for them to remain with the Company during the integration of the Jos. A. Bank operations and achieve superior results in connection therewith. The equity awards in September were intended to be an accelerated issuance of the equity awards that customarily would have been made in April 2015 as part of our annual grant process. As a result of this accelerated issuance of equity awards and a special one-time cash bonus paid in June 2014 in recognition of the outstanding efforts by senior management in connection with the successful conclusion of the Jos. A. Bank transaction, total reported compensation for Mr. Ewert and the other Named Executive Officers are significantly higher than the amounts reported In prior fiscal years.However, our continuing Named Executive Officers reported pay in next year's proxy statement attributable to equity awards will be significantly lower than the amounts reported in this proxy statement since they will not receive equity awards as part of our annual grant process during fiscal year 2015.
The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers, taken as a whole, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. Thefinal vote is advisory which means that the vote is not binding on,in nature and will not be construed as overruling any decision by,binding on the Company, our Board of Directors, or the Compensation Committee. Furthermore, because this advisory vote primarily relates to the compensation of our Named Executive Officers that has already been paid or contractually committed, there is generally no opportunity to revisit these past decisions.Company. However, our Board of Directors values the opinions of our shareholders and, to the extent that there is
The Men's Wearhouse, Inc. 2015 Proxy Statement
any significant vote against our Named Executive Officer compensation as disclosed in this proxy statement, the Compensation Committee will evaluate whether any actions are necessary to address the concerns of shareholders.
The Company has long demonstrated its commitment to sound executive compensation practices and corporate governance principles, working to ensure that its practices protect and further the interests of shareholders. We believe that our executive compensation programs are structured (i) to promote a performance-based culture which links the interests of management and shareholders, (ii) to support our business objectives, and (iii) to align our programs with recognized corporate governance best practices. Our compensation elements seek to balance all aspects of an executive's responsibilities: base salary for day-to-day responsibilities, cash incentive bonus for shorter-term returns linked to annual Company performance, and equity awards for aligning the executives' focus with shareholder value and the long-term, future performance of the Company.
At our 2015 Annual Meeting of Shareholders, our shareholders approved the compensation of our Named Executive Officers, with 98.6% of the votes cast in favor of our "say-on-pay" resolution. We have applied the same philosophy and practices in determining 2015 compensation for our Named Executive Officers.
Our compensation philosophy emphasizes pay for performance and places a significant percentage of Named Executive Officer compensation "at risk." In fiscal 2015, our financial performance did not meet our goals and expectations. We did not achieve the required threshold level of net income before any bonus could be paid. As a result, except for certain one-time contractual cash inducement awards for the first year of their employment paid to Mr. Thorn and Mr. Baum, Named Executive Officers did not receive any cash incentive bonus for fiscal 2015. In addition, the Company has determined that the performance units granted in September 2014 and throughout 2015 to each of our Named Executive Officers are no longer likely to vest given the Company's performance. Furthermore, all long-term incentive awards granted to our Named Executive Officers for fiscal 2015, including those granted in September 2014, are equity-based whereby stock price movement impacts the value realized by the Named Executive Officer if the award vests or is earned.
As a result, we believe that the fiscal 2015 performance-based compensation together with base salary levels are well-aligned with the Company performance for the year andthe link between pay and performance is strong.
| | Tailored Brands, Inc. 2016 Proxy Statement 69 |
Accordingly, we ask our shareholders to vote to approve the following resolution at the Annual Meeting:
"RESOLVED, that the compensation paid to the Company's Named Executive Officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended January 30, 2016, there were no transactions with related persons, as described in Item 404(a) of Regulation S-K.
The Board of Directors formally adopted a written policy with respect to related person transactions to document procedures pursuant to which such transactions are reviewed, approved or ratified. The policy applies to any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (i) we or any of our subsidiaries are a participant, (ii) any related person has a direct or indirect interest and (iii) the amount involved exceeds $120,000. The Audit Committee is responsible for reviewing, approving and ratifying any related person transaction. The Audit Committee intends to approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders.
The Men's Wearhouse, Inc. 2015 Proxy Statement
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees for professional services provided by Deloitte & Touche LLP ("D&T"), the Company's independent registered public accounting firm, in each of the last two fiscal years in each of the following categories were:
| Fiscal Year | Fiscal Year | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2014 | 2013 | 2015 | 2014 | ||||||||||
Audit Fees (1) | $ | 3,317,000 | $ | 1,715,000 | $ | 2,495,000 | $ | 3,317,000 | ||||||
Audit Related Fees (2) | 380,500 | 494,400 | 30,000 | 380,500 | ||||||||||
Tax Fees (3) | 1,103,400 | 346,600 | | 1,933,600 | | 1,103,400 | ||||||||
All Other Fees (4) | 686,100 | 2,800 | 3,000 | 686,100 | ||||||||||
| | | | | | | | | | | | | | |
$ | 5,487,000 | $ | 2,558,800 | |||||||||||
| | | | | | | | $ | 4,461,600 | $ | 5,487,000 | |||
| | | | | | | | | | | | | ||
| | | | | | | | | | | | | ||
| | | | | | | |
| | Tailored Brands, Inc. 2016 Proxy Statement 70 |
control over financial reporting, and the reviews of unaudited quarterly financial statements as well as work generally only the independent registered public accounting firm can reasonably provide, such as consents, comfort letters, and review of documents filed with the SEC.
The Audit Committee has considered whether non-audit services provided by D&T to us are compatible with maintaining D&T's independence.
The Audit Committee has implemented pre-approval policies and procedures for all audit and non-audit services. Generally, the Audit Committee requires pre-approval of any services to be provided by our independent registered public accounting firm to us or any of our subsidiaries. The pre-approval procedures include the designation of such pre-approval responsibility to one individual on the Audit Committee, currently Mr. Becker, the Audit Committee Chair. There were no services approved by the Audit Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during fiscal years 2015 and 2014.
During the 2015 and 2014 fiscal years, all services provided by D&T were pre-approved in accordance with the terms of the Audit Committee's pre-approval policies and procedures.
The Men's Wearhouse, Inc. 2015 Proxy Statement Audit Committee is composed entirely of non-management directors. The members of the Audit Committee meet the independence and financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. The Board has determined that each member of the Audit Committee is an "audit committee financial expert" as defined by the SEC. The Audit Committee has adopted, and annually reviews, a charter which complies with all current regulatory requirements and describes the Audit Committee's responsibilities and the practices it follows.
The role of the Audit Committee is to assist the Board of Directors in its oversight of (a) the integrity of the Company's financial statements and its accounting and reporting processes and financial statement audits; (b) the Company's system of disclosure controls and procedures, internal control over financial reporting, and compliance with the Company's Code of Ethics & Business Conduct; (c) the Company's compliance with legal and regulatory requirements; (d) the Company's independent registered public accounting firm and their qualifications and regulatory requirements; and (e) the performance of the Company's internal audit function and independent registered public accounting firm. The Audit Committee also oversees the establishment of procedures to receive, retain and address complaints regarding accounting, internal controls and auditing matters. In fulfilling its role, the Audit Committee relies on the work and assurances of the Company's management and internal audit and the independent registered public accounting firm. Management is responsible for the financial statements and the reporting process, the system of internal controls, including internal control over financial reporting, risk management, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company's independent registered public accounting firm, Deloitte &
| | Tailored Brands, Inc. 2016 Proxy Statement 71 |
Touche LLP, is responsible for auditing the consolidated financial statements and expressing an opinion on the fair presentation of those financial statements in conformity with accounting principles generally accepted in the United States, performing reviews of the unaudited quarterly financial statements and auditing and expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
During fiscal year 2015, the Audit Committee met and held discussions with management, internal audit and the independent registered public accounting firm and independently as a committee. The Audit Committee discussed with the Company's independent registered public accounting firm and internal audit the overall audit strategy, scope and plans for their respective audits, the nature and extent of specialized skills used in their audits, and issues, if any, encountered in their audits. In addition, the Audit Committee met with the independent registered public accounting firm and internal audit with and without management present to discuss the results of their examinations. The Audit Committee also reviewed with management and the independent registered public accounting firm the risk management process and significant risks and exposures identified by management, the overall adequacy of the Company's legal, regulatory and ethical compliance programs, including the Company's Code of Conduct and the Company's information technology security programs.
Management represented to the Audit Committee that the Company's consolidated financial statements included in the Company's 2015 Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal year ended January 30, 2016, were prepared in accordance with accounting principles generally accepted in the United States and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accounting firm, including a discussion of the quality, not just the acceptability, of the accounting principles, significant financial reporting risks, the reasonableness of significant accounting judgments and critical accounting policies and estimates, the clarity of disclosures in the financial statements, and the overall quality of the Company's financial reporting. The Audit Committee also reviewed press releases with management prior to the release of earnings announcements.
In addition, the Audit Committee reviewed and discussed with management and the independent registered public accounting firm the adequacy and effectiveness of the Company's financial reporting procedures, disclosure controls and procedures, and internal control over financial reporting, including the respective reports of management and the independent registered public accounting firm on the effectiveness of the Company's internal control over financial reporting. The Audit Committee also discussed with the Chief Executive Officer and the Chief Financial Officer of the Company their respective certifications with respect to the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for the fiscal year ended January 30, 2016. The Audit Committee discussed with the independent registered public accounting firm all matters required to be discussed under the standards of the Public Company Accounting Oversight Board ("PCAOB"), including those matters required to be discussed by Auditing Standards No. 16,Communications with Audit Committees, and Rule 2-07 of Regulation S-X.
In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditor's independence from the Company and its management, including the matters in the written disclosures regarding Deloitte & Touche LLP's communications with the Audit Committee concerning independence, provided to the Audit Committee by the firm pursuant to applicable requirements of the PCAOB. The Audit Committee pre-approved the audit and non-audit services provided by the independent registered public accounting firm. The Company considered with the independent registered public accounting firm whether the provision of non-audit services to the Company by them and the related fees was compatible with the auditor's independence. The Audit Committee has concluded that the independent registered public accounting firm, Deloitte & Touche LLP, is independent from the Company and its management.
| | Tailored Brands, Inc. 2016 Proxy Statement 72 |
The Audit Committee is directly responsible for the appointment, evaluation, retention, compensation, oversight, and when appropriate, the termination of the independent registered public accounting firm. The Audit Committee evaluates the performance of the Company's independent registered public accounting firm, including the lead audit partner and the engagement team, each year and determines whether to reengage the current independent registered public accounting firm or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors and the auditors' capabilities, technical expertise and knowledge of the Company's operations, personnel, culture, accounting policies and practices, and internal control over financial reporting. The Audit Committee also considers the quality of its ongoing discussions with the auditors, the ability of the auditors to remain independent, the auditors industry and sector specific experience, external data relating to audit quality and performance, including recent PCAOB reports on Deloitte & Touche LLP and its peer firms, the results of a survey of the Company's management by the Audit Committee regarding Deloitte & Touche LLP's service and quality, the appropriateness of fees charged, and tenure as the Company's auditors. Deloitte & Touche LLP has been the Company's independent registered public accounting firm since 1992. Based on this evaluation, the Audit Committee decided that it was in the best interests of the Company and its shareholders to continue the retention of Deloitte & Touche LLP as our independent registered public accounting firm for the year ended January 30, 2016. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, as a good corporate governance practice, the Audit Committee will continue its practice of recommending that the Board ask the shareholders, at their annual meeting, to ratify the appointment of the independent registered public accounting firm.
In reliance on the reviews and discussions referred to above, and the receipt of the unqualified opinions from Deloitte & Touche LLP dated March 25, 2016, with respect to the consolidated financial statements of the Company as of and for the year ended January 30, 2016, and with respect to the effectiveness of the Company's internal control over financial reporting, the Audit Committee recommended to the Board, and the Board has approved, that the audited consolidated financial statements and management's assessment of the effectiveness of the Company's internal control over financial reporting be included in the Company's Annual Report on Form 10-K for the year ended January 30, 2016, for filing with the SEC.
B. Michael Becker,Chair Rinaldo S. Brutoco Irene Chang Britt William B. Sechrest |
| | Tailored Brands, Inc. 2016 Proxy Statement 73 |
PROPOSAL 6:
RATIFICATION OF DELOITTE & TOUCHE LLP
AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
D&T has served as our independent registered public accounting firm providing auditing, financial and tax services since their engagement in fiscal 1992. At present, the Audit Committee intends to continue the appointment of D&T as our independent registered public accounting firm for the fiscal year ending January 30, 2016.28, 2017. In determining to appoint D&T, the Audit Committee carefully considersconsidered, among other things, D&T's past performance for the Company, its independence with respect to the services to be performed, and its general reputation for adherence to professional auditing standards.
Representatives of D&T are expected to attend the Annual Meeting, will be afforded an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions by shareholders.
We are asking our shareholders to ratify the selection of D&T as our independent registered public accounting firm. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of D&T to our shareholders for ratification as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF THED&T AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2015.2016.
| | Tailored Brands, Inc. 2016 Proxy Statement 74 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as of the Record Date (except as noted below), with respect to the beneficial ownership of our Common Stockcommon stock by (i) each director, (ii) each nominee for director, (iii) each Named Executive Officer listed in the Summary Compensation Table, below, (iv) each shareholder known by us to be the beneficial owner of more than 5% of our Common Stockcommon stock and (v) all of our executive officers and directors as a group. Unless otherwise indicated, each person has sole voting power and dispositive power with respect to the shares attributed to him or her.
Name | Number Of Shares | | % of Outstanding Shares | Number Of Shares | | % of Outstanding Shares | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Eminence Capital, LLC | | 6,143,005 | (1) | 12.7 | ||||||||||
BlackRock, Inc. | | 4,523,127 | (1) | 9.4 | 4,555,043 | (2) | 9.4 | |||||||
Eminence Capital, L9 | 4,518,779 | (2) | 9.4 | |||||||||||
The Vanguard Group | | 2,954,515 | (3) | 6.1 | | 3,342,913 | (3) | 6.9 | ||||||
William B. Sechrest | 21,401 | (4)(5) | * | 21,987 | (4) | * | ||||||||
David H. Edwab | | 16,998 | | * | | 31,584 | (5) | * | ||||||
Douglas S. Ewert | 288,403 | (6) | * | 370,065 | (6) | * | ||||||||
B. Michael Becker | | 15,110 | (4)(7)(8) | * | ||||||||||
Irene Chang Britt | 5,929 | (9) | * | |||||||||||
Rinaldo S. Brutoco | | 24,240 | (4)(7) | * | | 28,963 | (4)(10)(11) | * | ||||||
Sheldon I. Stein | 43,899 | (4)(5) | * | |||||||||||
Dinesh S. Lathi | 2,500 | (12) | * | |||||||||||
Grace Nichols | | 18,074 | (4) | * | | 22,660 | (4) | * | ||||||
Allen I. Questrom | 9,615 | (4) | * | 13,201 | (4) | * | ||||||||
B. Michael Becker | | 7,536 | (4)(8) | * | ||||||||||
Sheldon I. Stein | | 44,485 | (4) | * | ||||||||||
Jon W. Kimmins | 17,574 | (9) | * | 28,912 | (13) | * | ||||||||
Mary Beth Blake | | 44,513 | (10) | * | ||||||||||
Mark Neutze | 6,697 | (11) | * | |||||||||||
Carole L. Souvenir | | 53,387 | (12) | * | ||||||||||
All executive officers and directors as a group (18 persons) | 595,976 | (8)(13)(14) | 1.2% | |||||||||||
Bruce Thorn | | 7,122 | (14) | * | ||||||||||
A. Alexander Rhodes | 2,729 | (15) | * | |||||||||||
Benjamin C. Baum | | 1,928 | (16) | * | ||||||||||
All executive officers and directors as a group (17 persons) | 617,345 | (7)(8)(11)(17)(18) | 1.3% |
| | Tailored Brands, Inc. 2016 Proxy Statement 75 |
Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 59,870102,787 of these shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 3,8004,800 of these shares as a result of its serving as investment manager of Australian investment offerings.
The Men's Wearhouse, Inc. 2015 Proxy Statement
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
To our knowledge, based solely on a review of the copies of the reports required pursuant to Section 16(a) of the Exchange Act that have been furnished to us and written representations that no other reports were required, during the fiscal year ended January 31, 2015,30, 2016, all Section 16(a) filing requirements applicable to our directors, executive officers, and greater than 10% beneficial owners have been met except for the inadvertent late reporting ofForm 4 related to a charitable giftpurchase made by Mr. EdwabBrutoco in June 2014July 2015 of 1002,637 shares of our Common Stock.common stock which was inadvertently filed one day late.
The Men's Wearhouse, Inc. 2015 Proxy Statement
SHAREHOLDER PROPOSALS FOR 2017 ANNUAL MEETING
Any proposals of shareholders intended to be presented at our annual meeting of shareholders to be held in 20162017 must be received by us at our offices, 6380 Rogerdale Road, Houston, Texas 77072,6100 Stevenson Blvd., Fremont, California 94538, Attention: Corporate Compliance,Secretary, or via facsimile at (713) 578-9871, no later than January 20, 2016,5, 2017, in order to be considered for inclusion in the proxy statement and form of proxy relating to that meeting.
The Company's Sixth Amended and Restated Bylaws provide that, for business to be properly brought before an Annual Meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a shareholder's notice must be delivered to the Secretary of the Company at our offices (6380 Rogerdale Road, Houston, Texas 77072)(6100 Stevenson Blvd., Fremont, California 94538), no later than the close of business on the 90th day (which for the 20162017 meeting would be February 22, 2016)5, 2017) nor earlier than the 120th day (which for the 20162017 meeting would be January 23, 2016)6, 2017) prior to the anniversary date (as specified in our proxy materials) on which we first mailed our proxy materials for our immediately preceding annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before (which for the 20162017 meeting would be June 1, 2016)May 17, 2017) or more than 60 days after (which for the 20162017 meeting would be August 30, 2016)15, 2017) the anniversary date of the immediately preceding annual meeting,
| | Tailored Brands, Inc. 2016 Proxy Statement 76 |
notice by the shareholder to be timely must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which the date of such meeting is first disclosed to the public by us. In the event that the number of directors to be elected to our Board of Directors at an annual meeting is increased and there is no public announcement by us naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the immediately preceding annual meeting, a shareholder's required notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by us.
To be in proper form, a shareholder's notice must set forth the following items:
The Men's Wearhouse, Inc. 2015 Proxy Statement
| | Tailored Brands, Inc. 2016 Proxy Statement 77 |
(2) any Derivative Instrument (as such term is defined in Section 2.05(A)(2)(c)(i)(B) of our Sixth Amended and Restated Bylaws) directly or indirectly owned beneficially by any Nominating Person or Proposing Person and any other direct or indirect opportunity of any such person to profit or share in any profit derived from any increase or decrease in the value of shares of our Common Stock,common stock,
(3) the existence and material terms of any proxy, contract, arrangement, understanding, or relationship pursuant to which any Nominating Person and/or Proposing Person has a right to vote any shares of any security of the Company (including, if applicable, any contract, arrangement, understanding or relationship pursuant to which any economic interest in the capital stock to be voted is beneficially owned by a person or persons other than the shareholder of record as of the record date),
(4) any short interest in any security of the Company (as such term is defined in Section 2.05(A)(2)(c)(i)(D) of our Sixth Amended and Restated Bylaws) in which any such person has an interest,
(5)(A) if any Nominating Person or Proposing Person is (i) a general or limited partnership, syndicate or other group, the identity of each general partner and each person who functions as a general partner of the general or limited partnership, each member of the syndicate or group and each person controlling the general partner or member, (ii) a corporation or a limited liability company, the identity of each officer and each person who functions as an officer of the corporation or limited liability company, each person controlling the corporation or limited liability company and each officer, director, general partner and person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (iii) a trust, any trustee of such trust (each such person or persons set forth in the preceding clauses (i), (ii) and (iii), a "Responsible Person"), any fiduciary duties owed by such
The Men's Wearhouse, Inc. 2015 Proxy Statement
Responsible Person to the equity holders or other beneficiaries of such Nominating Person or Proposing Person and any material interests or relationships of such Responsible Person that are not shared generally by other record or beneficial holders of the shares of any class or series of the corporation and that reasonably could have influenced the decision of such Nominating Person or Proposing Person to make such nomination or propose such business to be brought before the meeting (together with a true and correct copy of any agreement or disclosure document for investors establishing or describing the same), and (B) if such Nominating Person or Proposing Person is a natural person, any material interests or relationships of such natural person that are not shared generally by other record or beneficial holders of the shares of any class or series of the corporation and that reasonably could have influenced the decision of such Nominating Person or Proposing Person to make such nomination or propose such business to be brought before the meeting,
(6) any shares or other equity interests or any Derivative Instrument in any of our principal competitors or any affiliate thereof held by any Nominating Person or Proposing Person,
(7) a summary of any material discussions regarding any nomination or business proposed to be brought before the meeting (A) between or among any Nominating Persons or Proposing Persons or (B) between or among any Nominating Persons or Proposing Persons and any other record or beneficial holder of the shares of any class or series of the Company (including their names), and
| | Tailored Brands, Inc. 2016 Proxy Statement 78 |
(8) any direct or indirect material interest in any material contract or agreement of any Nominating Person or Proposing Person with any of our principal competitors or any affiliate thereof (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement),
in each case with respect to the information required to be included in the notice pursuant to (1) through (8), as of the date of such notice and as of any applicable date specified in Section 2.05(C)(4) of our Sixth Amended and Restated Bylaws,
We may also require any proposed nominee for director to furnish such other information as it may reasonably require (i) to determine the eligibility of such proposed nominee to serve as a director of the Company, (ii) to determine whether such nominee qualifies as an "independent director" or "audit committee financial expert" under applicable law, securities exchange rule or regulation, or any publicly-disclosed corporate governance guideline or committee charter of the Company, and (iii) that could be material to a reasonable shareholder's understanding of the independence and qualifications, or lack thereof, of such nominee.
The Men's Wearhouse, Inc. 2015 Proxy Statement
OTHER MATTERS
Our management knows of no other matters which may come before the meeting. However, if any matters other than those referred to above should properly come before the meeting, it is the intention of the persons named in the proxy to vote such proxy in accordance with their best judgment.
The cost of solicitation of proxies will be paid by us. In addition to solicitation by use of the mails, certain of our directors, officers or employees may solicit the return of proxies personally or by telephone or other means.
In some cases, only one copy of our proxy statement and our 20142015 Annual Report on Form 10-K will be delivered to multiple shareholders who share the same address. If you received a household mailing this year and would like to receive additional copies of our proxy statement and/or 20142015 Annual Report on Form 10-K, please submit your request in writing to: The Men's Wearhouse,Tailored Brands, Inc., 6380 Rogerdale Road, Houston Texas 77072, Attention: Corporate Compliance, or by calling (281) 776-7000, and we will deliver a separate copy to you promptly upon your request. Any shareholder who wants to receive separate copies of the proxy statement in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should notify the Company.
We are providing without charge, to each person from whom a proxy is solicited, a copy of our Annual Report on Form 10-K for the fiscal year ended January 31, 2015.30, 2016. To request an additional copy of the Form 10-K, please send a request to us in care of Corporate Compliance at 6380 Rogerdale Road, Houston, Texas 77072.
| | Tailored Brands, Inc. 2016 Proxy Statement 79 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
THE MEN'S WEARHOUSE,TAILORED BRANDS, INC.
20042016 LONG-TERM INCENTIVE PLAN(AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 2008),
CONFORMED TO INCLUDE ALL AMENDMENTS THROUGH THE DATE HEREOF(SUBJECT TO SHAREHOLDER APPROVAL AT THE ANNUAL MEETING)
AND SUPPLEMENTED BY THE SUBPLAN FOR UK EMPLOYEES
| | Tailored Brands, Inc. 2016 Proxy Statement A-1 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
| | Tailored Brands, Inc. 2016 Proxy Statement A-2 |
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ARTICLE XII ADMINISTRATION | A-29 | |||
12.1 | Awards | A-29 | ||
12.2 | Authority of the Committee | A-29 | ||
12.3 | Decisions Binding | A-30 | ||
12.4 | No Liability | A-30 | ||
ARTICLE XIII AMENDMENT OR TERMINATION OF PLAN OR AWARD AGREEMENT | A-30 | |||
13.1 | Amendment, Modification, Suspension, and Termination of the Plan | A-30 | ||
13.2 | Amendment, Modification, Suspension, and Termination of Award Agreement | A-30 | ||
13.3 | Awards Previously Granted | A-30 | ||
ARTICLE XIV MISCELLANEOUS | A-31 | |||
14.1 | Unfunded Plan/No Establishment of a Trust Fund | A-31 | ||
14.2 | No Employment Obligation | A-31 | ||
14.3 | Tax Withholding | A-31 | ||
14.4 | Gender and Number | A-31 | ||
14.5 | Severability | A-31 | ||
14.6 | Headings | A-31 | ||
14.7 | Other Compensation Plans | A-31 | ||
14.8 | Retirement and Welfare Plans | A-32 | ||
14.9 | Other Awards | A-32 | ||
14.10 | Law Limitations/Governmental Approvals | A-32 | ||
14.11 | Delivery of Title | A-32 | ||
14.12 | Inability to Obtain Authority | A-32 | ||
14.13 | Investment Representations | A-32 | ||
14.14 | Persons Residing Outside of the United States | A-32 | ||
14.15 | No Fractional Shares | A-32 | ||
14.16 | Interpretation | A-32 | ||
14.17 | Governing Law; Venue | A-33 |
| | Tailored Brands, Inc. 2016 Proxy Statement A-5 |
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The Men's Wearhouse, Inc. 2015 Proxy Statement
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The Men's Wearhouse, Inc. 2015 Proxy Statement
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The Men's Wearhouse, Inc. 2015 Proxy Statement
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The Men's Wearhouse, Inc. 2015 Proxy Statement
THE MEN'S WEARHOUSE,TAILORED BRANDS, INC.20042016 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective April 1, 2008), 2016)
CONFORMED TO INCLUDE ALL AMENDMENTS THROUGH THE DATE HEREOF ARTICLE I(SUBJECT TO SHAREHOLDER APPROVAL AT THE ANNUAL MEETING)
ESTABLISHMENT, PURPOSE AND DURATION
WITNESSETH:
WHEREAS 1.1, effective March 29, 2004, Establishment. The Men's Wearhouse, Inc. (theCompany hereby establishes an incentive compensation plan, to be known as the "Company") adopted The Men's Wearhouse,Tailored Brands, Inc. 20042016 Long-Term Incentive Plan (the "Plan") for the benefit of key employees of the Company and affiliates of the Company;
WHEREAS, the Company desires to allow non-employee directors of the Company to receive awards under the Plan;
WHEREAS, the Company desires to restate the limitationsas set forth in the Plan on the number of shares of stock available for awards granted or paid in shares of stock to reflect the three-for-two stock split effected by the Company through the payment of a 50 percent stock dividend to shareholders of record as of May 31, 2005, and the Company desires to increase the aggregate number of shares of stock with respect to which awards may be granted under the Plan by 1,210,059 shares; and
WHEREAS, the Company desires to amend and restate the Plan on behalf of itself and on behalf of the other adopting entities;
NOW THEREFORE, the Plan is hereby amended and restated in its entirety as follows, effective as of April 1, 2008, except insofar as an earlier effective date is expressly specified.
The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE I
ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment. The Company has previously established the incentive compensation plan known as "The Men's Wearhouse, Inc. 2004 Long-Term Incentive Plan".this document. The Plan permits the grant of Options (both Incentive Stock Options and Nonqualified Stock Options), Stock Appreciation Rights, Restricted Stock, Deferred Stock Units, Cash-Based Awards, Performance Stock Awards, Performance Units, Cash-BasedUnit Awards and Other Stock-Based Awards. The Plan becameshall become effective on March 29, 2004, the date the Plan was approved by the Board, which date was within one year of the date the Plan wasis approved by the holders of at least a majority of the outstanding shares of voting stock of the Company at a meeting of the stockholdersshareholders of the Company (the "Effective Date"), and shall remain in effect as provided in Section 1.3..
1.2 Purpose of the Plan. The purpose of the Plan is to reward certain non-employee directors of the Company and certain corporate officers and other employees of the Company and its Affiliates (collectively, the "TMW Group") by enabling them to acquire shares of common stock of the Company and to receive other compensation based on the increase in value of the common stock of the Company or certain other performance measures. The Plan is intended to advance the best interests of the Company, its Affiliates and its stockholders by providing those persons who have substantial responsibility forshareholders and promote the direction, management andlong-term growth of the TMW GroupCompany by providing Employees, Non-Employee Directors and Third-Party Service Providers with additional performance incentives to maximize shareholder value and an opportunity to obtain or increase their proprietary interest inotherwise contribute to the success of the Company and its Affiliates, thereby encouragingaligning the interests of such individuals with the interests of the Company's shareholders and providing them additional incentives to continue in their employment or affiliation with the TMW Group.Company or its Affiliates.
1.3 Duration of Authority to Make Grants Under the Plan. The Plan shall continue indefinitely until it is terminated pursuant toSection 13.1. No Awards may be granted under the Plan on or after March 29, 2024.13.1. The applicable provisions of the Plan will continue in effect with respect to an Award granted under the Plan for as long as such Award remains outstanding.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Table Notwithstanding the foregoing, no Incentive Stock Option may be granted under the Plan on or after the tenth anniversary of Contentsthe Effective Date.
DEFINITIONS
The wordsEach word and phrasesphrase defined in this Article shall have the meaning set out below throughout the Plan, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning.
2.1 "Affiliate" means any corporation, partnership, limited liability company or association, trust or other entity or organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (a) to vote more than 50fifty percent (50%) of the securities having ordinary voting power for the election of directors or comparable individuals of the controlled entity or organization, or (b) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.
2.2 "Assets" means assets of any kind owned by the Company, including but not limited to securities of the Company's direct and indirect subsidiaries.
2.3 "Authorized Shares" shall have the meaning ascribed to that term inSection 4.1(a).
2.4 "Award" means, individually or collectively, a grant under the Plan of an Incentive Stock Options,Option, a Nonqualified Stock Options, Stock Appreciation Rights,Option, a SAR, Restricted Stock, Deferred Stock Units,a DSU, a Cash-Based Award, a Performance Stock Awards,Award, a Performance Units, Cash-Based Awards, andUnit Award, or an Other Stock-Based Awards,Award, in each case subject to the terms and provisions of the Plan.
| | Tailored Brands, Inc. 2016 Proxy Statement A-6 |
2.5 "Award Agreement" means ana written or electronic agreement that sets forth the terms and conditions applicable to an Award granted under the Plan.
2.4 2.6 "Beneficial Owner" has the meaning ascribed to the term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.7 "Board" means the boardBoard of directorsDirectors of the Company.
2.5 2.8 "Cash-Based Award" means ana cash Award granted to a Holder pursuant to Article X.IX.
2.6 2.9 "Change in Control" means, except as otherwise provided in an Award Agreement, the occurrence of any of the following during the term of the applicable Award Agreement:
(a) the individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board;
(b) the consummation of a Merger of the Company with another Entity, unless:
(i) the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the Voting Securities of either the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger in substantially the same proportions, as to each other, as their ownership of the Company's Voting Securities immediately prior to such Merger; and
(ii) the individuals who comprise the Board immediately prior to such Merger constitute a majority of the board of directors or other governing body of either the surviving Entity or the parent of the surviving Entity;
(c) any Person, other than a Specified Owner, becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities;
(d) a sale, transfer, lease or other disposition of all or substantially all of the Assets is consummated (an "Asset Sale"), unless:
(i) the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company immediately prior to such Asset Sale own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the Voting Securities of the Entity that acquires such Assets in such Asset Sale or its parent immediately after such Asset Sale in substantially the same proportions as their ownership of the Company's Voting Securities immediately prior to such Asset Sale; and
(ii) the individuals who comprise the Board immediately prior to such Asset Sale constitute a majority of the board of directors or other governing body of either the Entity that acquired such Assets in such Asset Sale or its parent; or
(e) The shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.
2.10 "Code" means the United States Internal Revenue Code of 1986, as amended from time to time.
2.7 2.11 "Committee" means (a) in the case of an Award granted to a Non-Employee Director, the Board, and (b) in the case of any other Award granted under the Plan, the Compensation Committee or, if the Compensation Committee chooses to delegate it duties, a committee of at least two persons who are members of the Compensation Committee of the Board and are appointed by the Compensation Committee ofto administer the Board, or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board.Plan. Each member of the Committee in respect of his or her participation in any decision with respect to an Award that is intended to satisfy the requirements of section 162(m) of the Code must
| | Tailored Brands, Inc. 2016 Proxy Statement A-7 |
satisfy the requirements of "outside director" status within the meaning of section 162(m) of the Code;provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. As to Awards grants or other transactions that are authorized by the Committee and that are intended to be exempt under Rule 16b-3 of the General Rules and Regulations under the Exchange Act, the requirements of Rule 16b-3(d)(1) of the General Rules and Regulations under the Exchange Act with respect to committee action must also be satisfied.
2.8 2.12 "Company" means The Men's Wearhouse,Tailored Brands, Inc., a Texas corporation, or any successor (by reincorporation, merger or otherwise).
2.9 2.13 "Compensation Committee" means the Compensation Committee of the Board, the composition and governance of which is subject to Section 303A.05 of the Listed Company Manual of the New York Stock Exchange.
2.14 "Corporate ChangeEvent" shall have the meaning ascribed to that term inSection 4.6(c)4.5(b).
2.10 2.15 "Covered Employee" means a Holderan Employee who is a "covered employee," as defined in section 162(m) of the Code and the regulations and other guidance promulgated thereunder,by the United States Department of Treasury or the Internal Revenue Service under section 162(m) of the Code, or any successor statute.
2.11 2.16 "Deferred Stock Unit" or "DSU" means a deferred stock unit credited to a Holder's ledger account maintained by the Company pursuant to Article VIII.
The Men's Wearhouse, Inc. 2015 Proxy Statement
2.12 "Deferred Stock Unit Award" means an Award granted pursuant to Article VIII.
2.13 "Director" means a member of the Board who is not an Employee.
2.14 2.17 "Disability" means, effective for awards issued under the Plan that are earned and vested on or after January 1, 2005, as determined by the Committee in its discretion exercised in good faith, (a) in the case of an Award that is exempt from the application of the requirements of Section 409A and is granted to a Holder who is covered by the Company's long-term disability insurance policy or plan, a physical or mental condition of the Holder that would entitle him or her to payment of disability income payments under such long-term disability insurance policy or plan as then in effect, (b) in the case of an Award that is exempt from the application of the requirements of Section 409A and is granted to a Holder who is not covered by the Company's long-term disability insurance policy or plan for employees as then in effect; or in the event that the Holder is a Director or is not covered, for whatever reason, under the Company's long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy "Disability" meansor plan, and for purposes of an ISO granted under the Plan, a permanent and total disability as defined in section 22(e)(3) of the Code and (b)(c) in the case of an Award that is not exempt from the application of the requirements of Section 409A, a physical or mental condition of the Holder where (i) the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Holder is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Holder shall submit to an examination by such physician upon request by the Committee.
2.15 2.18 "Dividend Equivalent" means a payment equivalent in amount to dividendsa dividend paid with respect to a share of the Stock to the Company's stockholders.shareholders.
2.16 2.19 "DSU Award" means an Award granted pursuant to Article VIII.
2.20 "Effective DateDate"" shall have the meaning ascribed to that term inSection 1.1.1.1.
2.17 2.21 "Employee" means (a) a person employed by the Company or any Affiliate as a common law employee orand (b) a person who has agreed to become a common law employee of the Company or any Affiliate and is expected to become such within six (6)three (3) months fromafter the date of a determination made for purposesgrant of the Plan.Award.
2.18 2.22 "Entity" means any corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization or other business entity.
| | Tailored Brands, Inc. 2016 Proxy Statement A-8 |
2.23 "Exchange Act" means the United States Securities Exchange Act of 1934, as amended, from time to time.or any successor act.
2.19 2.24 "Fair Market Value" of the Stock as of any particular date means,
(a) if the Stock is traded on a stock exchange,
(i) and if the Stock is traded on that date, the closing sale price of the Stock on that date; or
(ii) and if the Stock is not traded on that date, the closing sale price of the Stock on the last trading date immediately preceding that date;
as reported on the principal securities exchange on which the Stock is traded; or
(b) if the Stock is traded in the over-the-counter market,
(i) and if the Stock is traded on that date, the average between the high bid and low asked price on that date; or
(ii) and if the Stock is not traded on that date, the average between the high bid and low asked price on the last trading date immediately preceding that date;
as reported in such over-the-counter market;provided, however, that (x) if the Stock is not so traded, or (y) if, in the discretion of the Committee, another means of determining the fair market value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another method or means for determining such fair market value, that complieswhich method or means shall comply with the requirements of a reasonable valuation method as described under Section 409A.
The Men's Wearhouse, Inc. 2015 Proxy Statement
2.20 2.25 "Fiscal Year" means the Company's fiscal year.
2.21 2.26 "Freestanding SARForfeiture Determination" shall have the meaning ascribed to that term inSection 4.7(a).
2.27 "Full Value Award" means a SARan Award that is granted pursuant to Article VI independentlysettled by the issuance of any Option.shares of Stock, other than an Incentive Stock Option, a Nonqualified Stock Option or a Stock Appreciation Right.
2.22 2.28 "Holder" means a person who has been granted an Award or any person who is entitled to receive shares of Stock (and/or cash in the case of a Stock Appreciation Right) under an Award.
2.23 2.29 "Incentive Stock Option" or "ISO" means an option whichto purchase Stock granted pursuant to Article V that is intended, as evidenced by its designation,designated as an incentive stock option withinand that is intended to satisfy the meaningrequirements of section 422 of the Code, the award of which contains such provisions (including but not limited to the receipt of stockholder approvalCode.
2.30 "Incumbent Director" means:
(a) a member of the Plan, ifBoard on the AwardEffective Date; or
(b) an individual:
(i) who becomes a member of the Board after the Effective Date;
(ii) whose appointment or election by the Board or nomination for election by the Company's shareholders is made prior to such approval)approved or recommended by a vote of at least two-thirds of the then serving Incumbent Directors (as defined herein); and
(iii) whose initial assumption of service on the Board is made under such circumstances and to such persons as may be necessary to complynot in connection with that section.an actual or threatened election contest.
2.24 2.31 "Mature SharesMerger" means shares of Stock that the Holder has held for at least six months.a merger, consolidation or similar transaction.
2.25 2.32 "Minimum Statutory Tax Withholding ObligationNon-Employee Director" means with respect toa member of the Board who is not an Award, the amount the Company or an Affiliate is required to withhold for federal, state and local taxes based upon the applicable minimum statutory withholding rates required by the relevant tax authorities.Employee.
2.26 2.33 "Nonqualified Stock Option" or "NQSO" means an Optiona "nonqualified stock option" to purchase Stock granted pursuant to Article V that is designated as a nonqualified stock option. Anydoes not satisfy the requirements of section 422 of the Code (any Option granted hereunderunder the Plan that is not expressly designated as an incentive stock optionISO shall be deemed to be designated a nonqualified stock optionNonqualified Stock Option under the Plan and not an incentive stock option under the Code.Plan).
| | Tailored Brands, Inc. 2016 Proxy Statement A-9 |
2.34 "Option" means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant to Article V.Option.
2.28 "Optionee" means a person who is granted an Option under the Plan.
2.29 2.35 "Option Price" shall have the meaning ascribed to that term inSection 5.4.5.4.
2.30 "Option Agreement" means a written contract setting forth the terms and conditions of an Option.
2.31 2.36 "Other Stock-Based Award" means an equity-based or equity-related Award not otherwise described by the terms and provisions of the Plan that is granted pursuant to Article X.
2.32 2.37 "Parent Corporation" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the action or transaction, each of the corporations other than the Company owns stock possessing 50fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
2.33 "Performance-Based Award" means a Performance Stock Award, a Performance Unit, or a Cash-Based Award granted to a Holder under which the fulfillment of performance goals determines the degree of payout or vesting.
2.34 2.38 "Performance-Based Compensation" means compensation under an Award that satisfiesis intended to satisfy the requirements of section 162(m) of the Code for deductibility of remuneration paid to Covered Employees.
2.35 2.39 "Performance Goals" means one or more of the criteria described in Article IXSection 9.2 on which the performance goals applicable to ana Performance Stock Award or a Performance Unit Award are based.
2.36 "Performance Period" means the period of time during which the performance goals applicable to a Performance-Based Award must be met.
2.37 2.40 "Performance Stock Award" means an Award designated as a performance stock award granted to a Holder pursuant to Article IX.
The Men's Wearhouse, Inc. 2015 Proxy Statement
2.38 2.41 "Performance Unit Award" means an Award designated as a performance unit award granted to a Holder pursuant to Article IX.
2.39 2.42 "Period of Restriction" means the period during which Restricted Stock is subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals,performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article VII.
2.40 2.43 "Person" shall have the meaning ascribed to the term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof, except that the term shall not include (a) the Company or any of its Affiliates, (b) a trustee or other fiduciary holding Company securities under an employee benefit plan of the Company or any of its Affiliates, (c) an underwriter temporarily holding securities pursuant to an offering of those securities or (d) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.
2.44 "Plan" means The Men's Wearhouse,the Tailored Brands, Inc. 20042016 Long-Term Incentive Plan, as set forth in this document and as it may be amended from time to time.
2.41 2.45 "Preexisting Plan" means the Tailored Brands, Inc. 2004 Long-Term Incentive Plan. After the Effective Date, no further awards will be granted under the Preexisting Plan.
2.46 "Restricted Stock" means shares of restricted Stock issued or granted under the Plan pursuant to Article VII.
2.42 2.47 "Restricted Stock Award"means an authorization by the Committee to issue or transfer Restricted Stock to a Holder.
2.43 2.48 "Retirement"means (a) in the case of an Employee, retirement in accordance with the terms of a retirement plan that is qualified under section 401(a) of the Code and maintainedunless otherwise determined by the Company or an Affiliate in whichCommittee, the Holder is a participantEmployee's voluntary Termination of Employment after attaining age 65 and (b) in the case of a Non-Employee Director, retirement from the Board in accordance with the Board's then applicable retirement policy.
2.44 2.49 "Section 409A" means section 409A of the Code and the regulations and other guidance promulgated by the United States Department of Treasury rules and regulations issued thereunder.or the United States Internal Revenue Service under section 409A of the Code, or any successor statute.
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2.45 2.50 "Stock Appreciation Right" or "SARSpecified Owner" means any stock appreciation right granted pursuant to Article VI of the Plan.following:
(a) the Company;
(b) an Affiliate of the Company;
(c) an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate of the Company;
(d) a Person that becomes a Beneficial Owner of the Company's outstanding Voting Securities representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities as a result of the acquisition of securities directly from the Company and/or its Affiliates; or
(e) a Person that becomes a Beneficial Owner of the Company's outstanding Voting Securities representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities as a result of a Merger if the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least fifty percent (50%) of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the Company or the surviving Entity outstanding immediately after such Merger in substantially the same proportions as their ownership of the Voting Securities of the Company outstanding immediately prior to such Merger.
2.46 2.51 "Stock" means the common stock of the Company, $.01$0.01 par value per share (or such other par value as may be designated by act of the Company's stockholders)shareholders).
2.47 2.52 "Stock Appreciation Right" or "SAR" means a stock appreciation right granted under the Plan pursuant to Article VI.
2.53 "Subsidiary Corporation" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the action or transaction, each of the corporations other than the last corporation in an unbroken chain owns stock possessing 50fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
2.48 2.54 "Substantial Risk of Forfeiture" shall have the meaning ascribed to that term in Section 409A.
2.49 "Tandem SAR" means a SAR that is granted in connection with a related Option pursuant to Article VI, the exercise of which shall require forfeiture of the right to purchase a share of the Stock under the related Option (and when a share of the Stock is purchased under the Option, the Tandem SAR shall similarly be canceled).
2.50 2.55 "Ten Percent StockholderShareholder" means an individual, who, at the time the applicable Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock or series of the Company or of any Parent Corporation or Subsidiary Corporation. An individual shall be considered as owning the stock owned, directly or indirectly, by or for his or her brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants; and stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust, shall be considered as being owned proportionately by or for its stockholders,shareholders, partners, or beneficiaries.
2.51 2.56 "Termination of Employment" means, except as otherwise provided in the case of an ISO in the following sentence of thisSection 2.56, (a) if the Award issuedAgreement is not exempt from and is subject to an Employee other than an Incentive Stock Option,Section 409A the termination of the Employee'sAward recipient's employment with the Company and all Affiliates in a manner that constitutes a "separation from service" (as that term is defined for purposes of Section 409A using the default rules) as determined by the Committee and (b) if the Award Agreement is exempt from and not subject to Section 409A the termination of the Award recipient's employment relationship with the Company and all Affiliates. "TerminationAffiliates as determined by the Committee. "Termination of Employment"Employment" means, in the case of an Incentive Stock Option,ISO, the termination of the Employee's employment relationship with all of the Company, any Parent Corporation, any Subsidiary Corporation and any parent or
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subsidiary corporation (within the meaning of section 422(a)(2) of the Code) of any such corporation that issues or assumes an Incentive Stock OptionISO in a transaction to which section 424(a) of the Code applies.
2.52 2.57 "Termination of Service" means, in the case of an Award issued to a Non-Employee Director or a Third Party Service Provider, (a) if the Award Agreement is not exempt from and is subject to Section 409A the termination of the Award recipient's service relationship with the Company and all Affiliates in a manner that constitutes a "separation from service" (as that term is defined for purposes of Section 409A using the default rules) as determined by the Committee and (b) if the Award Agreement is exempt from and not subject to Section 409A, in the case of an Award to a Non-Employee Director, the termination of thea Non-Employee Director's service on the Board.Board, and, in the case of a Third Party Service Provider, the termination of the Third Party Service Provider's service relationship with the Company and all Affiliates as determined by the Committee.
2.53 2.58 "TMW GroupThird Party Service Provider" shall havemeans any consultant, agent, representative, advisor, or independent contractor who renders services to the meaning ascribed toCompany or an Affiliate that term(a) are not in Section 1.2.
The Men's Wearhouse, Inc. 2015 Proxy Statement
connection with the offer and sale of the Company's securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company's securities.
Table 2.59 "Voting Securities" means the outstanding securities entitled to vote generally in the election of Contentsdirectors or other governing body.
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. TheExcept as otherwise specified in this Article III, the persons who are eligible to receive Awards under the Plan other than Incentive Stock Options, are key Employees, who have substantial responsibility for or involvement with the managementNon-Employee Directors and growth of one or more members of the TMW Group and Directors. However,Third Party Service Providers,provided, however, that (a) only those persons who are, on the dates of grant, key employees of the Company or any Parent Corporation or Subsidiary Corporation are eligible for grants of Incentive Stock Options under the Plan.Plan and (b) Non-Employee Directors and Third Party Service Providers are eligible to receive only NQSOs, SARs, Restricted Stock, and DSUs. Awards other than ISOs, Performance Stock Awards or Performance Units Awards may also be granted to a person who is expected to become a key Employee within three (3) months of the date of grant.
3.2 Participation. Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the eligible persons to whom Awards shall be granted and shall determine the nature and amount of each Award.
The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE IV
GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The Committee may grant Awards to those key Employees, Non-Employee Directors and DirectorsThird Party Service Providers as the Committee shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of Stock or other value to be covered by any Award to be granted under the Plan shall be as determined by the Committee in its sole discretion. On an annual basis, as provided inSection 12.2(d), the Compensation Committee also may delegate to the Chief Executive Officer or other executive officer of the Company the authority to grant Awards (other than Awards pursuant toArticle IX) to eligible persons who are neither (a) Non-Employee Directors or (b) officers of the Company or any Affiliate subject to the provisions of Section 16 of the Exchange Act. Subject to Section 4.2 and Section 4.5, the following rules shall apply to grants of Awards under the Plan:
4.2 Dedicated Shares; Maximum Awards. (a) The aggregate number of shares of Stock with respect to which Awards may be granted under the Plan is 6,910,059.6,400,000 less one (1.0) share of Stock for every one (1.0) share of Stock that was subject to a grant of an Option or Stock Appreciation Right under the Preexisting Plan after May 1,
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2016 and two (2.0) shares of Stock for every one (1.0) share of Stock that was subject to a grant of a Full Value Award under the Preexisting Plan after May 1, 2016 (the "Authorized Shares").
(b) The aggregate number of shares of Stock with respect to which Incentive Stock OptionsISOs may be granted under the Plan is 6,910,059. The aggregateequal to the Authorized Shares.
(c) (i) upon a grant of a Full Value Award, the number of shares of Stock with respect to which Nonqualified Stock Options may be grantedavailable for issuance under the Plan is 6,910,059. The aggregateshall be reduced by an amount equal to the product of (A) 2.0 and (B) the number of shares of Stock with respectsubject to whichsuch Full Value Award, and any shares of Stock Appreciation Rights may be grantedunderlying a Full Value Award that become available for future grant under the Plan is 6,910,059. The aggregatepursuant toSection 4.2 shall be added back to the Plan in an amount equal to the product of (C) 2.0 and (D) the number of shares of Stock with respectsubject to which Restricted Stock Awards may be grantedsuch an Award that become available for future grant under the Plan is 3,455,030. The aggregatepursuant toSection 4.2 and (ii) upon a grant of an Option or Stock Appreciation Right, the number of shares of Stock with respect to which Performance Stock Awards may be grantedavailable for issuance under the Plan is 3,455,030.shall be reduced by an amount equal to the number of shares of Stock subject to such Award, and any shares of Stock underlying an Option or Stock Appreciation Right that become available for future grant under the Plan pursuant toSection 4.2 shall be added back to the Plan in an amount equal to the number of shares of Stock subject to such an Award that become available for future grant under the Plan pursuant toSection 4.2.
(d) The maximum number of shares of Stock with respect to which Incentive Stock OptionsISOs may be granted to an Employee during a Fiscal Year is equal to 500,000. The maximum number of shares of Stock with respect to which Nonqualified Stock OptionsNQSOs may be granted to an Employee or Director during a Fiscal Year is equal to 500,000. The maximum number of shares of Stock with respect to which Stock Appreciation RightsSARs may be granted to an Employee or Director during a Fiscal Year is 500,000. The maximum number of shares of Stock with respectequal to which Restricted Stock Awards may be granted to an Employee or Director during a Fiscal Year is 300,000. The maximum amount with respect to which Deferred Stock Unit Awards may be granted to an Employee or Director during a Fiscal Year may not exceed in value the Fair Market Value of 300,000 shares of Stock determined as of the date of grant.500,000. The maximum number of shares of Stock with respect to which Performance Stock Awards may be granted to an Employee or Director during a Fiscal Year is equal to 300,000. The maximum number of shares of Stock with respect to which Performance Unit Awards payable in shares of Stock may be granted to an Employee or Director during a Fiscal Year is equal to 300,000. In the case of Performance Stock Awards or Performance Unit Awards that are settled in cash based on the Fair Market Value of a share of Stock, the maximum aggregate amount of cash that may respectively be paid pursuant to each such type of Award to any Employee in any Fiscal Year shall be equal to the per share Fair Market Value as of the relevant payment or settlement date multiplied by 300,000. The maximum numbervalue of shares of Stockcash with respect to which Other Stock-BasedCash-Based Awards may be granted to an Employee during a Fiscal Year, is 300,000. The maximum aggregate amount with respect to which Cash-Based Awards may be awarded or credited to an Employee or Director during a Fiscal Year may not exceed in value $5,000,000 determined as of the datedates of grant.grants of the Cash-Based Awards, is $7,000,000. The limitations set forth in thisSection 4.1(d) shall be applied in a manner that is consistent with the provisions of Section 162(m) of the Code.
(e) The maximum aggregate amountnumber of shares of Stock subject to Awards granted during a single Fiscal Year to any Non-Employee Director, taken together with respectany cash fees paid to which Performance Unit Awards may be awarded or credited to an Employee orsuch Non-Employee Director during athe Fiscal Year, mayshall not exceed $500,000 in total value $5,000,000 determined as(calculating the value of any such Awards based on the grant date fair value of grant.such Awards for financial reporting purposes).
(f) Each of the foregoing numerical limits stated in thisSection 4.24.1 shall be subject to adjustment in accordance with the provisions ofSection 4.6. The number of shares of Stock stated in this Section4.5.
4.2 shall also be increased by such number of shares of Stock as become subject to substitute Awards granted pursuant to Article XI; provided, however, that such increase shall be conditioned upon Accounting for Shares Under the approval of the stockholders of the Company to the extent stockholder approval is required by law or applicable stock exchange rules.
4.3Authorized Shares That Count Against Limit.
(a) IfTo the extent that any outstanding Award terminates or expires, is forfeited or terminatescancelled, for any reason, or is settled in cash in lieu of shares of Stock or anyin a manner such that all or some of the shares of Stock covered by the Award is surrendered, in each such case before April 20, 2012,are not issued or are exchanged for Awards that do not involve shares of Stock, the shares of Stock allocable to the unexercisedsuch portion of thatthe Award may againwill immediately become available to be subjectissued pursuant to an Award granted under the Plan. If any
(b) Any shares of Stock subject to outstanding Award expiresawards under the Preexisting Plan as of the Effective Date that on or terminatesafter the Effective Date cease for any reason is settled in cash in lieuto be subject to such awards other than by reason of sharesexercise or settlement of Stock or any Award is surrendered, in each such case on or after April 20, 2012, the shares of Stock allocableawards to the unexercised portion of that Award will count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan and will no longer be availableextent they are exercised for further issuance under the Plan.or
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The Men's Wearhouse, Inc. 2015 Proxy Statement
(b) For Awardssettled in shares of Stock will immediately become available to be issued pursuant to an Award granted under the Plan before April 1, 2008 and exercised before April 1, 2015, ifPlan.
(c) If shares of Stock are withheld from payment of an Award (or an award under the AwardPreexisting Plan) to satisfy tax obligations with respect to such Award, such shares of Stock will not count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. For Awards granted under the Plan before April 1, 2008 and exercised on or after April 1, 2015, if shares of Stock are withheld from payment of the Award to satisfy tax obligations with respect to such Award, such shares of Stock will count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan and will no longer be available for further issuance under the Plan. For Awards granted under the Plan on or after April 1, 2008, if
(d) If shares of Stock are withheld fromtendered in payment of the Award to satisfy tax obligations with respect to such Award,Option Price of an Option (or an option under the Preexisting Plan), such shares of Stock will count againstnot become available to be issued pursuant to an Award granted under the aggregatePlan and the full number of shares of Stock with respectsubject to which Awards maythe Option will be granted undercounted against the Plan and will no longer be availableAuthorized Shares as one share for further issuance undereach share subject to the Plan.Option.
(c)(e) When a Stock Appreciation Right (or a stock appreciation right under the Preexisting Plan) is settled in shares of Stock, the number of shares of Stock subject to the Stock Appreciation Right under the Stock Appreciation Right Award Agreement will be counted against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan as one share for every share subject to the Stock Appreciation Right, regardless of the number of shares used to settle the Stock Appreciation Right upon exercise.
(f) If shares of Stock are repurchased by the Company on the open market with the proceeds of an Option exercise (or proceeds of an option exercise under the Preexisting Plan), such shares of Stock will not become available to be issued pursuant to an Award granted under the Plan.
(g) In the case of any Award granted through the assumption of, or in substitution for, an outstanding award granted by a company or business acquired by the Company or a Subsidiary Corporation or Affiliate of the Company or with which the Company or a Subsidiary Corporation or Affiliate of the Company merges, consolidates or enters into a similar corporate transaction, shares of Stock issued or issuable in connection with such substitute Award shall not count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan.
4.4 4.3 Non-Transferability Non-Transferability.. Except as specified in the applicable Award Agreement or in a domestic relations court order, anno Award shall notmay be transferabletransferred, sold, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by the Holder (whetheroperation of law, for consideration or otherwise) or be subject to execution, attachment or similar process, other than by will or under the laws of descent and distribution, and shall be exercisable, during the Holder's lifetime, only by him or her. Any attempted transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition of an Award in violation of thisSection 4.44.3 shall be null and void. In the discretion of the Committee, any attempt toat transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition of an Award other than under the terms of the Plan and the applicable Award Agreement may terminate the Award. NoNotwithstanding anything in the Plan or an Award Agreement to the contrary, no ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to an Employee under the Plan shall be exercisable during his or her lifetime only by the Employee, and after that time, by the Employee's heirs or estate.
4.5 4.4 Requirements of Law. The Company shall not be required to sell or issue any shares of Stock under any Award if issuing those shares of Stock would constitute or result in a violation by the Holder or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be required to issue any shares of Stock unless the Committee has received evidence satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable securities laws of any country or any political
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subdivision. In the event the shares of Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law, or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause or enable the exercise of an Option or any other Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of any governmental authority.
The Men's Wearhouse, Inc. 2015 Proxy Statement
4.6 4.5 Changes in the Company's Capital Structure.
(a) The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholdersshareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.
(b) If and to the extent necessary or appropriate to reflect any stock dividend, extraordinary dividend, stock split or share combination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company shall effect a subdivision or consolidation of Stock or other capital readjustment,similar transaction affecting the payment ofStock (each, a Stock dividend, or other increase or reduction of"Corporate Event"), the Committee shall adjust the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (1)available for issuance under the Plan, any other limit applicable under the Plan with respect to the number of Awards that may be granted hereunder, and the number, class and exercise price (if applicable) or seriesbase price (if applicable) of any outstanding Award, and/or make such substitution, revision or other provisions or take such other actions with respect to any outstanding Award or the Holder or Holders thereof, in each case as it determines to be equitable. Without limiting the generality of the foregoing sentence, in the event of any such Corporate Event, the Committee shall have the power to make such changes as it deems appropriate in (i) the number and per share pricetype of shares or other securities covered by outstanding Awards, (ii) the prices specified therein (if applicable), (iii) the securities, cash or other property to be received upon the exercise, settlement or conversion of such outstanding Awards or otherwise to be received in connection with such outstanding Awards and (iv) any applicable Performance Goals. After any adjustment made by the Committee pursuant to this 4.5(b), the number of shares of Stock subject to each outstanding Options or other Awards under the PlanAward shall be appropriately adjusted (subjectrounded down to the restriction in Section 4.11 prohibiting repricing) in such a manner as to entitle a Holder to receive uponnearest whole number of whole or fractional shares (as determined by the Committee), and (if applicable) the exercise of an Option or other Award, for the same aggregate cash consideration, the equivalent total number and class or series of Stock the Holder would have received had the Holder exercised his or her Option or other Award in full immediately priorprice thereof shall be rounded up to the event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class or series of Stock then reserved that number and class or series of Stock that would have been received by the owner of an equal number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the adjustment.nearest cent.
(c) If while unexercised Options or otherunvested Awards remain outstanding under the Plan (1) the Company shall not be the surviving entitya Change in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (2) the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as defined under section 424(a) of the Code and applicable Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this sentence (each such event is referred to herein as a "Corporate Change"),Control occurs, then, except as otherwise provided in an Award Agreement or another agreement between the Holder and the Company, (provided that such exceptions shall not apply in the case of a reincorporation merger), or as a result of the Committee's effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Award then outstanding may be exercised, and no later than ten days after the approval by the stockholders of the Company of such Corporate Change, the Committee, acting in its sole and absolute discretion without the consent or approval of any Holder, shall act to effect one or more of the following alternatives, which may vary among individual Holders and which may vary among Awards held by any individual Holder (provided that, with respect to a reincorporation merger in which Holders of the Company's ordinary shares will receive one ordinary share of the successor corporation for each ordinary share of the Company, none of such alternatives shall apply and, without Committee action, each Award shall automatically convert into a similar award of the successor corporation exercisable for the same number of ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock of the Company):Holder:
(1) accelerate the time at which some or all of the Awards then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change)Change in Control) fixed by the Committee, after which specified date all such Awards that remain unexercised and all rights of Holders thereunder shall terminate;
The Men's Wearhouse, Inc. 2015 Proxy Statement
(2) require the mandatory surrender to the Company by all or selected Holders of some or all of the then outstanding AwardsOptions and SARs held by such Holders (irrespective of whether such Awards
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Options and SARs are then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing such Award)Options or SARs) as of a date, before or after such Corporate Change in Control, specified by the Committee, in which event the Committee shall thereupon cancel such AwardOptions and SARs and the Company shall pay to each such Holder an amount of cash per share equal to the excess, if any, of the per share price offered to stockholdersshareholders of the Company in connection with such Corporate Change in Control over the exercise prices or grant prices under such AwardOptions and SARs for such shares;
(3) with respect to all or selected Holders, have some or all of their then outstanding Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change in Control and which is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change in Control, or a parent or subsidiary of such entity,provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the Stockstock subject to the Award immediately after the assumption or substitution over the aggregate exercise price of such StockAward is equal to the excess of the aggregate fair market value of all Stock subject to the Award immediately before such assumption or substitution over the aggregate exercise price of such Stock,Award, and (B) the assumed rights under such existing Award or the substituted rights under such new Award, as the case may be, will have the same or better terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be;
(4) provide that the number and class or series of Stock covered by an Award (whether vested or unvested) theretofore granted shall be adjusted so that such Award when exercised shall thereafter cover the number and class or series of Stock or other securities or property (including without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement or plan relating to such Corporate Change in Control if, immediately prior to such Corporate Change in Control, the Holder had been the holder of record of the number of shares of Stock then covered by such Award; or
(5) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided,in Control (provided, however, that the Committee may determine in its sole and absolute discretion that no such adjustment is necessary)necessary to reflect such Change in Control).
In effecting one or more of the alternatives set out in paragraphs (3), (4) or (5) immediately above, and except as otherwise may be provided in an Award Agreement, the Committee, in its sole and absolute discretion and without the consent or approval of any Holder, may accelerate the time at which some or all Awards then outstanding may be exercised.
(d) In the event of changes in the outstanding Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 4.6, any outstanding Award and any Award Agreement evidencing such Award shall be subject to adjustment by the Committee in its sole and absolute discretion as to the number and price of Stock or other consideration subject to such Award. In the event of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.
(e) After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each Holder shall be entitled to have his Restricted Stock appropriately adjusted based on the
The Men's Wearhouse, Inc. 2015 Proxy Statement
manner in which the shares of Stock were adjusted under the terms of the agreement of merger or consolidation.
(f) The issuance by the Company of stock of any class or series, or securities convertible into, or exchangeable for, stock of any class or series, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon conversion or exchange of stock or obligations of the Company convertible into, or exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the number, class or series, or price of shares of Stock then subject to outstanding Options or other Awards.
4.7 4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the electionIn any case in which a Participant is permitted under section 83(b) of the Code with respect to any Award without the prior written approval of the Chief Financial Officer of the Company. Any Holder who makesmake an election under section 83(b) of the Code in connection with respectan Award, the Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any Award without the prior written approvalfiling and notification required pursuant to regulations issued under section 83(b) of the Chief Financial OfficerCode or other applicable provision.
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(a) Notwithstanding any other provision of the Plan or an Award Agreement to the contrary, if a determination is made as provided inSection 4.7(b) (a "Forfeiture Determination") that (i) the Holder (or, if the Committee finds by a majority vote that a Holder is not the original grantee of the applicable Award, the original grantee of the applicable Award), before or after his Terminationthe termination of Employmentsuch individuals employment or severance of affiliation relationshipservice with the Company and all Affiliates, (a)(A) committed fraud, embezzlement, theft, felony or an act of dishonesty (as defined below) in the course of his employment by or affiliation withservice to the Company or an Affiliate, which conduct damaged(B) knowingly caused or assisted in causing the publicly released financial statements of the Company to be misstated or the Company or an Affiliate, (b)a subsidiary of the Company to engage in criminal misconduct, (C) disclosed trade secrets of the Company or an Affiliate or (c)(D) violated the terms of any non-competition, non-disclosure or similar agreement with respect to the Company or any Affiliate to which the Holder (or, if the Holder is not the original grantee of the applicable Award, the original grantee of the applicable Award) is a party, then asand (ii) in the case of the dateactions described in clause (A), (C) and (D), such action materially and adversely affected the Committee makes its findingCompany, then at or after the time such Forfeiture Determination is made the Board, in good faith, if such Forfeiture Determination is made prior to a Change in Control, or, as determined by a final, non-appealable order of a court of competent jurisdiction, if such Forfeiture Determination is made after a Change in Control, as a fair and equitable forfeiture to reflect the harm done to the Company and a reduction of the benefit bestowed on the Holder (or, if the Holder is not the original grantee of the applicable Award, the original grantee of the applicable Award) had the facts existing at the time the benefit was bestowed that led to the Forfeiture Determination been known to the Company at the time the benefit was bestowed, may determine that some or all Awards awarded(x) of the Holder's rights to shares of the HolderStock covered by an Award (including vested Awardsrights that have been exercised or paid, vested Awardsrights that have not been exercised or paid and Awardsrights that have not yet vested or been paid) or cash payments paid or payable under an Award (including payments for vested rights, amounts payable for vested rights that have not been paid and rights that have not yet vested), as determined(y) some or all of the dividends that have been paid with respect to shares of the Stock covered by the Committee in its sole discretion,Award, and (z) some or all shares of the Stock received as a result of the Holder's grant, receipt, exercise or holding of the Award and some or all net proceeds realized with respect to any shares of the Stock received as a result of the Holder's exercise or holding of the Award in excess of the price paid for such Awards,shares, will be forfeited to the Company on such terms as determined by the Committee.Board or the final, non-appealable order of a court of competent jurisdiction. For purposes of thisSection 4.7, an "act of dishonesty" shall require a material breach by the Holder (or, if the Holder is not the original grantee of the applicable Award, the original grantee of the applicable Award) of his or her duties, obligations or undertakings owed to or on behalf of the Company and its Affiliates, as determined by the Board if such determination is made prior to a Change in Control, or, as determined by a final, non-appealable order of a court of competent jurisdiction, if such determination is made after a Change in Control. In determining whether a matter materially and adversely affects the Company, the Board shall be entitled to consider all relevant factors and exercise business judgment in making such determination, including but not limited to the financial consequences, adverse reputational consequences or legal consequences to the Company and/or its subsidiaries, individually or taken as a whole, as a result of such action.
(b) A Forfeiture Determination for purposes ofSection 4.7(a) shall be made (i) before the occurrence of a Change in Control, by a majority vote of the Board and (ii) on or after the occurrence of a Change in Control, by the final, non-appealable order of a court of competent jurisdiction. The findings and decision of the CommitteeBoard with respect to such matter,a Forfeiture Determination made before the occurrence of a Change in Control, including those regarding the acts of the Holderoriginal grantee of the Award and the damage done to the Company, will be final for all purposes.purposes absent a showing by clear and convincing evidence of manifest error by, or a lack of good faith on the part of, the Board. No decision of the Committee,Board, however, will affect the finality of the discharge of the individualoriginal grantee of the Award by the Company or an Affiliate or severance of the individual's affiliation with the Company and all Affiliates.Affiliate.
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4.8 Forfeiture Events. TheWithout limiting the applicability ofSection 4.7 orSection 4.9, the Committee may specify in an Award Agreement that the Holder's rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, Termination of Employment for cause, terminationTermination of the Holder's provisionService for cause, Termination of services to the CompanyEmployment or its Affiliates,Termination of Service for any other reason, violation of material policies of the TMW Group,Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the business or reputation of the TMW Group.Company and its Affiliates.
4.9 Recoupment in Restatement Situations. Without limiting the applicability ofSection 4.7 orSection 4.8, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, the current or former Holder who was a current or former executive officer of the Company or an Affiliate shall forfeit and must repay to the Company any compensation awarded under the Plan to the extent specified in any clawback or similar policy that may be implemented by the Company from time to time, including such policies that may be implemented after the date an Award is granted, pursuant to the listing standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, or other agreement or arrangement with a Holder.
4.10 Award Agreements.Agreements. Each Award shall be embodied in a written or electronic Award Agreement that shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by or delivered on behalf of an authorized executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed or acknowledged by the Holder to the extent required by the Committee. The Award Agreement may specify the effect of a changeChange in controlControl of the Company on the Award. The Award Agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan. An Award Agreement may be altered, amended, modified, or suspended as provided inSection 13.2. An Award Agreement may be terminated as provided inSection 13.2 and elsewhere in the Plan includingSections 4.7, 4.8 and 4.9.
4.11 Amendments of Award Agreements. The terms of any outstanding Award under the Plan may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate and that is consistent with the terms of the Plan. However, no such amendment shall adversely affect in a material manner any right of a Holder without his or her written consent. Except as
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specified in Section 4.6(c), the Committee may not directly or indirectly lower the exercise price of a previously granted Option or the grant price of a previously granted SAR or otherwise pay consideration to repurchase, cancel or revoke such award; provided that such prohibition shall not apply to shares of Stock withheld to pay the Option Price of any Option or to pay the withholding tax arising from the exercise of any Option or SAR.
4.12 Rights as Stockholder.Shareholder. A Holder shall not have any rights as a stockholdershareholder with respect to Stock covered by an Option, a SAR, a DSU, or a Performance Unit, or an Other Stock-Based Award payable in Stock until the date, if any, such Stock is issued by the Company; and, except as otherwise provided inSection 4.6,4.5, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such Stock.
4.13 4.12 Issuance of Shares of Stock. Shares of Stock, when issued, may be represented by a certificate or by book or electronic entry.
4.14 4.13 Restrictions on Stock Received. The Committee may impose such conditions and/orand restrictions on any shares of Stock issued pursuant to an Award as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Holder hold the shares of Stock for a specified period of time.
4.15 4.14 Compliance With Section 409A. Awards shall be designed, granted and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A. The Plan and each Award Agreement under the Plan that is intended to comply with the requirements of Section 409A shall be construed and interpreted in accordance with such intent. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Holder to become subject to additional taxes under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution,
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deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/orand Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Holder. The exercisability of an Option or a SAR shall not be extended to the extent that such extension would subject the Holder to additional taxes under Section 409A. ThisNotwithstanding any other provision of the Plan or an Award Agreement, if an Award is not exempt from the requirements of Section 4.15409A, the Holder (or, if the Holder is effective for awards issuednot the original grantee of the applicable Award, the original grantee of the applicable Award) is a "specified employee" (within the meaning of Section 409A) and a payment under the PlanAward is due as a result of such individual's "separation from service" (as that term is defined for purposes of Section 409A using the default rules) then no payment shall be made under the Award due to such separation from service before the date that is six (6) months after the date on which the Holder incurs such separation from service, except as otherwise allowed by Section 409A.
4.15 Date of Grant. The date on which an Option or SAR is granted shall be the date the Company completes the corporate action constituting an offer of stock for sale to a Holder under the terms and conditions of the Option or SAR;provided that such corporate action shall not be considered complete until the date on which themaximum number of shares that can be purchased under the Option and the minimum Option price are earned and vestedfixed or determinable. If the corporate action contemplates an immediate offer of stock for sale to a class of individuals, then the date of the grant is the time or date of that corporate action, if the offer is to be made immediately. If the corporate action contemplates a particular date on or after January 1, 2005.which the offer is to be made, then the date of grant is the contemplated date of the offer.
4.16 Source of Shares Deliverable Under Awards. Any shares of Stock delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued shares of Stock or of treasury shares of Stock.
4.17 Limitations on Vesting of Awards.
(a) Unless the applicable Award Agreement specifies otherwise, an Award shall not continue to vest after the Termination of Employment or Termination of Service of the Holder of the Award (or, if the Holder is not the original grantee of the applicable Award, the Termination of Employment or Termination of Service of the original grantee of the applicable Award) for any reason.
The Men's Wearhouse, Inc. 2015 Proxy Statement (b) Any Option or SAR granted under the Plan must include a minimum vesting period of at least one (1) year, provided, however, that (i) an Award Agreement may provide that the Option or SAR will vest before the completion of such one (1) year period upon the death or Disability of the original grantee of the Option or SAR or a Change in Control of the Company and (ii) Options or SAR's covering, in the aggregate, up to five percent (5%) of the Authorized Shares may be issued without any minimum vesting period.
ARTICLE V
OPTIONS
5.1 Authority to Grant Options. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons in such number and upon such terms as the Committee shall determine.determine;provided that ISOs may be granted only to eligible Employees of the Company or of any Parent Corporation or Subsidiary Corporation (as permitted by section 422 of the Code and the regulations thereunder).
5.2 Type of Options Available. Options granted under the Plan may be Incentive Stock Options intended to satisfy the requirements of section 422 of the CodeNQSOs or Nonqualified Stock Options that are not intended to satisfy the requirements of section 422 of the Code.ISOs.
5.3 Option Agreement. Each Option grant under the Plan shall be evidenced by an OptionAward Agreement that shall specify (a) whether the Option is intended to be an ISO or aan NQSO, (b) the Option
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Price, (c) the duration of the Option, (d) the number of shares of Stock to which the Option pertains, (e) the exercise restrictions, if any, applicable to the Option and (f) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan. Notwithstanding the designation of an Option as an ISO in the applicable Award Agreement for such Option, Agreement, to the extent the limitations of section 422Section 5.10 of the CodePlan are exceeded with respect to the Option, the portion of the Option in excess of the limitation shall be treated as a NQSO. Effective for Options granted under the Plan on or after January 1, 2005, anAn Option granted under the Plan may not be granted with any Dividend Equivalents rights.
5.4 Option Price. The price at which shares of Stock may be purchased under an Option (the "Option Price") shall not be less than 100one hundred percent (100%) of the Fair Market Value of the shares of Stock on the date the Option is granted. However, ingranted;provided, however, if the case ofOption is an ISO granted to a Ten Percent Stockholder,Shareholder, the Option Price for an Incentive Stock Option shallmust not be less than 110one hundred ten percent (110%) of the Fair Market Value of the shares of Stock on the date the Incentive Stock OptionISO is granted. Subject to the limitations set forth in the preceding sentences of thisSection 5.4, the Committee shall determine the Option Price for each grant of an Option under the Plan.
5.5 Duration of Options.Option. An Option shall not be exercisable after the earlier of (i)(a) the general term of the Option specified in Section 5.5(a),the applicable Award Agreement (which shall not exceed ten years, and, in the case of a Ten Percent Shareholder, no ISO shall be exercisable later than the fifth (5th) anniversary of the date of its grant) or (ii)(b) the period of time specified herein that follows the Optionee's death, Disability, Retirement or other Termination of Employment or Termination of Service. Unless the Optionee's applicable Option Agreement specifies otherwise, an Option shall not continue to vest after the Optionee's Termination of Employment or Termination of Service for any reason other than the death or Disability of the Optionee.
(a) General Term of Option. Unless the Option Agreement specifies a shorter general term, an Option shall expire on the tenth anniversary of the date the Option is granted. Notwithstanding the foregoing, unless the Option Agreement specifies a shorter term, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, the Option shall expire on the fifth anniversary of the date the Option is granted.
(b) Early Termination of Option Due to Termination of Employment or Termination of Service Other Than for Death, Disability or Retirement. Except as may be otherwise expressly provided by the Committee in an Option Agreement, an Option shall terminate on the earlier of (1) the date of the expiration of the general term of the Option or (2) the date that is one day less than one month after the date of the Optionee's Termination of Employment or Termination of Service, whether with or without cause, for any reason other than the death, Disability or Retirement of the Optionee, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment or Termination of Service. The Committee shall determine whether an authorized leave of absence, absence on military or government service, or any other absence from service shall constitute a termination of the employment relationship between the Optionee and the Company and all Affiliates. Notwithstanding the foregoing, in the case
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of an Incentive Stock Option, if an Optionee has an authorized leave of absence from employment with the Company, a Parent Corporation or a Subsidiary Corporation that exceeds 90 days and the Optionee's right to reemployment is not guaranteed by either statute or contract, the Optionee will be deemed to incur a Termination of Employment on the 91st day of such leave.
(c) Early Termination of Option Due to Death. Unless the Committee specifies otherwise in the applicable OptionAward Agreement in the event of the Optionee's Termination of Employment or Termination of Service due to death before the date of expiration of the general term of the Option, the Optionee's Option shall terminate on the earlier of the date of expiration of the general term of the Option or the first anniversary of the date of the Optionee's death, during which period the Optionee's executors or administrators or such persons to whom such Options were transferred by will or by the laws of descent and distribution, shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of his death.
(d) Early Termination of Option Due to Disability. Unless the Committee specifies otherwise in the applicable Option Agreement, in the event offollows the Termination of Employment or Termination of Service due to Disability before the date of the expirationHolder (or, if the Holder is not the original grantee of the general termapplicable Award, the original grantee of the Option, the Optionee's Option shall terminate on the earlier of the expiration of the general term of the Option or the first anniversary of the date of the Termination of Employment or Termination of Service due to Disability, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment or Termination of Service.applicable Award).
(e) Early Termination of Option Due to Retirement. 5.6 Unless the Committee specifies otherwise in the applicable Option Agreement, in the event of the Optionee's Termination of Employment or Termination of Service due to Retirement before the date of the expiration of the general term of the Option, the Optionee's Option shall terminate on the earlier of the expiration of the general term of the Option or the first anniversary of the date of the Termination of Employment or Termination of Service due to Retirement, during which period the Optionee shall be entitled to exercise the Option in respect of the number of shares of Stock that the Optionee would have been entitled to purchase had the Optionee exercised the Option on the date of such Termination of Employment or Termination of Service.
After the death of the Optionee, the Optionee's executors, administrators or any person or persons to whom the Optionee's Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the termination of the Option to exercise the Option, in respect to the number of all of the remaining unexercised and unexpired shares of Stock subject to the Option.
5.6Amount Exercisable. Each Option may be exercised at the time, in the manner and subject to the conditions the Committee specifies in the OptionAward Agreement in its sole discretion. Unless the Committee specifies otherwise in an applicable Option Agreement, an Option Agreement shall set forth the following terms regarding the exercise of the Option covered by the Option Agreement:
(a) No Option granted under the Plan may be exercised until an Optionee has completed one year of continuous employment with the Company or any subsidiary of the Company or one year of service on the Board following the date of grant;
(b) Beginning on the day after the first anniversary of the date of grant, an Option may be exercised up to1/3 of the shares subject to the Option;
(c) After the expiration of each succeeding anniversary date of the date of grant, the Option may be exercised up to an additional1/3 of the shares initially subject to the Option, so that after the expiration of the third anniversary of the date of grant, the Option shall be exercisable in full;
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(d) To the extent not exercised, installments shall be cumulative and may be exercised in whole or in part until the Option expires on the tenth anniversary of the date of grant.
However, the Committee, in its discretion, may change the terms of exercise so that any Option may be exercised so long as it is valid and outstanding from time to time in part or as a whole in such manner and subject to such conditions as the Committee may set. In addition, the Committee, in its discretion, may accelerate the time in which any outstanding Option may be exercised. However, in no event shall any Option be exercisable on or after the tenth anniversary of the date of the grant of the Option.
5.7 Exercise of Options.Option.
(a) General Method of Exercise. Subject to the terms and provisions of the Plan and an Optionee's Optionthe applicable Award Agreement, Options may be exercised in whole or in part from time to time by the delivery of written notice in the manner designated by the Committee stating (1)(i) that the OptioneeHolder wishes to exercise such optionOption on the date such notice is so delivered, (2)(ii) the number of shares of Stock with respect to which the Option is to be exercised and (3)(iii) the address to which thea stock certificate, if any, representing such shares of Stock should be mailed.mailed or delivered, or the account to which the shares of Stock represented by book or electronic entry should be delivered. Except in the case of exercise by a third party broker as provided below, in order for the notice to be effective the notice must be accompanied by payment of the Option Price (and all applicable federal, state, local and any applicable taxforeign withholding amounts which must be made at the time of exercisetaxes described inSection 14.3) by any combination of the following: (a)(w) cash, certified check, or bank draft or postal or express money order for an amount equal to the Option Price under the Option, (b) Mature Shares(x) shares of stock with a Fair Market Value on the date of exercise equal to the Option Price under the Option (if approved in advance by the Committee or an executive officer of the Company), (y) as described further in (c) below, an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee or an executive officer of the Company) or (d)(z) except as specified below, any other form of payment which is acceptable to the Committee. If Mature Sharesshares of stock are used for payment by the Optionee,Holder, the aggregate Fair Market Value of the shares of Stock tendered must be equal to or less than the aggregate Option Price of the shares of Stock being purchased upon exercise of the Option, and any difference must be paid by cash, certified check, or bank draft or postal or express money order payable to the order of the Company.
If, at the time of receipt by the Company or its delegate of such written notice, (i) the Company has unrestricted surplus in an amount not less than the Option Price of such shares of Stock, (ii) all accrued cumulative preferential dividends and other current preferential dividends on all outstanding shares of preferred stock of the Company have been fully paid, (iii) the acquisition by the Company of its own shares of Stock for the purpose of enabling such Optionee to exercise such Option is otherwise permitted by applicable law, does not require any vote or consent of any stockholder of the Company and does not violate the terms of any agreement to which the Company is a party or by which it is bound, and (iv) there shall have been adopted, and there shall be in full force and effect, a resolution of the Board authorizing the acquisition by the Company of its own shares of stock for such purpose, then such Optionee may deliver to the Company, in payment of the Option Price of the shares of Stock with respect to which such Option is exercised, (x) certificates registered in the name of such Optionee that represent a number of shares of stock legally and beneficially owned by such Optionee (free of all liens, claims and encumbrances of every kind) and having a Fair Market Value on the date of receipt by the Company or its delegate of such written notice that is not greater than the Option Price of the shares of Stock with respect to which such Option is to be exercised, such certificates to be accompanied by stock powers duly endorsed in blank by the record holder of the shares of Stock represented by such certificates, with the signature of such record holder guaranteed by a national banking association, and (y) if the Option Price of the shares of Stock with respect to which such Option is to be exercised exceeds such Fair Market Value, a cashier's check drawn on a national banking association and payable to the order of the Company, in an amount, in United States dollars, equal to the amount of such excess. Notwithstanding the provisions of the immediately preceding sentence, the Committee, in its sole discretion, may refuse to accept shares
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of Stock in payment of the Option Price of the shares of Stock with respect to which such Option is to be exercised and, in that event, any certificates representing shares of Stock that were received by the Company or its delegate with such written notice shall be returned to such Optionee, together with notice by the Company or its delegate to such Optionee of the refusal of the Committee to accept such shares of Stock. If, at the expiration of seven business days after the delivery to such Optionee of such written notice from the Company or its delegate, such Optionee shall not have delivered to the Company or its delegate a cashier's check drawn on a national banking association and payable to the order of the Company in an amount, in United States dollars, equal to the Option Price of the shares of Stock with respect to which such Option is to be exercised, such written notice from the Optionee to the Company or its delegate shall be ineffective to exercise such Option.
Whenever an Option is exercised by exchanging shares of Stock owned by the Optionee,Holder, the OptioneeHolder shall deliver to the Company or its delegate certificates registered in the name of the OptioneeHolder representing a number of shares of Stock legally and beneficially owned by the Optionee,Holder, free of all liens, claims, and encumbrances of every kind, accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by the certificates, (with signature guaranteed by a commercial bank or trust company or by a brokerage firm having a membership on a registered national stock exchange). The delivery of
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certificates upon the exercise of Option is subject to the condition that the person exercising the Option provide the Company with the information the Company might reasonably request pertaining to exercise, sale or other disposition of an Option.
(b) Issuance of Shares. Subject toSection 4.44.3 andSection 5.7(c), as promptly as practicable after receipt of written notification and payment, in the form required bySection 5.7(a), of an amount of money necessary to satisfy the aggregate option price and any withholding tax liability thatmay result from the exercise of such Option, the Company shall deliver to the OptioneeHolder certificates for the number of shares with respect to which the Option has been exercised, issued in the Optionee'sHolder's name. Delivery of the shares shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to the Optionee,Holder, at the address specified by the Optionee.Holder or shall have transferred to the account designated by the Holder to which the shares of Stock represented by book or electronic entry are to be delivered.
(c) Exercise Through Third-Party Broker. The Committee may permit an Optioneea Holder to elect to pay the Option Price and any applicable tax withholding resulting from such exercise by authorizing a third-party broker to sell all or a portion of the shares of Stock acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the Option Price and any applicable federal, state, local and foreign tax withholding resulting from such exercise.
(d) Exercise of ISOs. All ISOs granted to an Employee under this Article V shall be exercisable during his or her lifetime only by such Employee.
(e) Limitations on Exercise Alternatives. The Committee shall not permit an Optioneea Holder to pay such Optionee'sHolder's Option Price upon the exercise of an Option by having the Company reduce the number of shares of Stock that will be delivered pursuant to the exercise of the Option. In addition, the Committee shall not permit an Optionee to pay such Optionee's Option Price upon the exercise of an Option by using shares of Stock other than Mature Shares. An Option may not be exercised for a fraction of a share of Stock.
5.8 Transferability of Options.
(a) Incentive Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to an Optionee under the Plan shall be exercisable during his or her lifetime only by the Optionee, and after that time, by the Optionee's heirs or estate.
(b) Nonqualified Stock Options. Except as otherwise provided in an Optionee's Option Agreement, no NQSO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.
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Further, except as otherwise provided in an Optionee's Option Agreement, all NQSOs granted to an Optionee under the Plan shall be exercisable during his or her lifetime only by such Optionee.
Any attempted assignment of an Option in violation of this Section 5.8 shall be null and void.
5.9 Notification of Disqualifying Disposition. If any OptioneeEmployee shall make any disposition of shares of Stock issued pursuant to the exercise of an ISO under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), such OptioneeEmployee shall notify the Company of such disposition within ten (10) days thereof.
5.10 5.9 No Rights as Stockholder.Shareholder. An OptioneeA Holder of an Option shall not have any rights as a stockholdershareholder with respect to Stock covered by an Option until the date a stock certificate for such Stock is issued by the Company; and, exceptCompany. Except as otherwise provided inSection 4.6,4.5, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate.
5.11 5.10 $100,000 Limitation on Incentive Stock Options.ISOs. To the extent that the aggregate Fair Market Value of shares of Stock with respect to which Incentive Stock OptionsISOs first become exercisable by a Holder in any calendar year exceeds $100,000, taking into account both shares of Stock subject to Incentive Stock OptionsISOs under the Plan and Stock subject to incentive stock options under all other plans of the Company, such Options shall be treated as Nonqualified Stock Options.NQSOs. For this purpose, the "Fair Market Value" of the shares of Stock subject to Options shall be determined as of the date the Options were awarded. In reducing the number of Options treated as Incentive Stock OptionsISOs to meet the $100,000 limit, the most recently granted Options shall be reduced first. To the extent a reduction of simultaneously granted Options is necessary to meet the $100,000 limit, the Committee may, in the manner and to the extent permitted by law, designate which shares of Stock are to be treated as shares acquired pursuant to the exercise of an Incentive Stock Option.ISO.
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5.11 Termination of Employment or Service. Each Award Agreement shall set forth the extent to which the Holder of an Option shall have the right to exercise the Option following the Holder's Termination of Employment or Termination of Service. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Award Agreement or the Plan, and may reflect distinctions based on the reasons for termination or severance.
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STOCK APPRECIATION RIGHTS
6.1 Authority to Grant Stock Appreciation Rights Awards.SAR Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Stock Appreciation RightsSARs under the Plan to eligible persons in such number and upon such terms as the Committee shall determine. Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Holder and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
6.2 Type of Stock Appreciation Rights Available. SARs granted under the Plan may be Freestanding SARs, Tandem SARs or any combination of these forms of SARs.
6.3 General Terms.Terms. Subject to the terms and conditions of the Plan, a SAR granted under the Plan shall confer on the recipient a right to receive, upon exercise thereof, a cashan amount equal to the excess of (a) the Fair Market Value of one share of the Stock on the date of exercise over (b) the grant price of the SAR, which shall not be less than 100one hundred percent (100%) of the Fair Market Value of one share of the Stock on the date of grant of the SAR and in no event less than par value of one share of the Stock. The grant price of a Freestanding SAR shall not be less than the Fair Market Value of a share of the Stock on the date of grant of the SAR. The grant price of a Tandem SAR shall equal the Option Price of the Option which is related to the Tandem SAR. Effective for SARs granted under the Plan on or after January 1, 2005, aA SAR granted under the Plan may not be granted with any Dividend Equivalents rights.
6.4 6.3 Stock Appreciation Right Agreement. SAR Agreement. Each Award of SARs granted under the Plan shall be evidenced by an Award Agreement that shall specify (a) whether the SAR is intended to be a Freestanding SAR or a Tandem SAR, (b) the grant price of the SAR, (c)(b) the term of the SAR, (d)(c) the vesting and termination provisions of the SAR and (e)(d) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan. The Committee may impose such additional conditions or restrictions on the exercise of any SAR as it may deem appropriate.
6.5 6.4 Term of Stock Appreciation Rights.SAR. The term of a SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided that no SAR shall be exercisable on or after the tenth anniversary date of its grant.
6.6 6.5 Exercise of Freestanding SARs.SARs. Subject to the terms and provisions of the Plan and the applicable Award Agreement, Freestanding SARsa SAR may be exercised in whole or in part from time to time by the delivery of written notice in the manner designated by the Committee stating (a) that the Holder wishes to exercise such SAR on the date such notice is so delivered, (b) the number of shares of Stock with respect to which the SAR is to be exercised and (c) the address to which the payment due under such SAR should be mailed.delivered or the account to which any shares of Stock payable as a result of the exercise of the SAR represented by book or electronic entry should be delivered. In accordance with applicable law, a Freestanding SAR may be exercised uponsubject to whatever additional terms and conditions the Committee, in its sole discretion, imposes.
6.7 6.6 Exercise of Tandem SARs.
(a) Subject to the terms and provisions of the Plan and the applicable Award Agreement, Tandem SARs may be exercised for all or part of the shares of Stock subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option and by the delivery of written notice in the manner designated by the Committee stating (a) that the Holder wishes to exercise such SAR on the date such notice is so delivered, (b) the number of shares of Stock with respect to which the SAR is to be exercised and (c) the address to which the payment due under such SAR should be mailed. A Tandem SAR may be exercised only with respect to the shares of Stock for which its related Option is then exercisable. In accordance with applicable law, a Tandem SAR may be exercised upon whatever additional terms and conditions the Committee, in its sole discretion, imposes.
The Men's Wearhouse, Inc. 2015 Proxy Statement
(b) Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (1) the Tandem SAR will expire no later than the expiration of the underlying ISO; (2) the value of the payout with respect to the Tandem SAR may be for no more than 100 percent (100%) of the excess of the Fair Market Value of the shares of Stock subject to the underlying ISO at the time the Tandem SAR is exercised over the Option Price of the underlying ISO; and (3) the Tandem SAR may be exercised only when the Fair Market Value of the shares of Stock subject to the ISO exceeds the Option Price of the ISO.
6.8 Payment of SAR Amount.Amount. Upon the exercise of a SAR, an Employeea Holder shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) Themultiplying the excess of the Fair Market Value of a share of the Stock on the date of exercise over the grant price of the SAR by
(b) The the number of shares of Stock with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in cash, in shares of Stock of equivalent value, in some combination thereof or in any other manner approved by the Committee in its sole discretion. The Committee's determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.
6.9 6.7 Termination of Employment or Termination of Service.Service. Each Award Agreement shall set forth the extent to which the granteeHolder of a SAR shall have the right to exercise the SAR following the grantee'sHolder's Termination of Employment or Termination of Service. Such provisions shall be determined in the sole discretion of the Committee, may be included in the Award Agreement entered into with the grantee, andHolder, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.termination or severance.
6.10 6.8 Nontransferability of SARs. Except as otherwise provided in a Holder's Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Holder's Award Agreement, all SARs granted to a Holder under the Plan shall be exercisable during his or her lifetime only by the Holder, and after that time, by the Holder's heirs or estate. Any attempted assignment of a SAR in violation of this Section 6.10 shall be null and void.
6.11 No Rights as Stockholder.Shareholder. A grantee of a SAR award, as such, shall have no rights as a stockholder.shareholder.
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6.12 6.9 Restrictions on Stock Received.Received. The Committee may impose such conditions and/orand restrictions on any shares of Stock received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Holder hold the shares of Stock received upon exercise of a SAR for a specified period of time.
The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE VII
RESTRICTED STOCK AWARDS
7.1 Restricted Stock Awards.Awards. Subject to the terms and conditionsprovisions of the Plan, the Committee, at any time, and from time to time, may make Awards of Restricted Stock under the Plan to eligible persons in such numbersnumber and upon such terms as the Committee shall determine. The amount of and the vesting, transferability and the transferabilityforfeiture restrictions applicable to any Restricted Stock Award shall be determined by the Committee in its sole discretion. If the Committee imposes vesting, or transferability and forfeiture restrictions on a Holder's rights with respect to Restricted Stock, the Committee may issue such instructions to the Company's share transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for shares of Stock issued pursuant to a Restricted Stock Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law.
7.2 Restricted Stock Award Agreement. Each Restricted Stock Award shall be evidenced by an Award Agreement that contains any vesting, transferability and forfeiture restrictions and other provisions not inconsistent with the Plan as the Committee may specify.
7.3 Holder's Rights as Stockholder.Shareholder. Subject to the terms and conditions of the Plan, each recipient of a Restricted Stock Award shall have all the rights of a stockholdershareholder with respect to the shares of Restricted Stock included in the Restricted Stock Award during the Period of Restriction established for the Restricted Stock Award. Dividends paid with respect to Restricted Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be subject to the same vesting, transferability and forfeiture restrictions applicable to such Restricted Stock. Any dividends described in the preceding sentence shall be paid to the recipient of the Restricted Stock Award currently.at the time that the vesting, transferability and forfeiture restrictions applicable to such Restricted Stock lapse; provided, that, to the extent that such vesting, transferability or forfeiture restrictions do not lapse, such dividends shall be forfeited by the recipient of the Restricted Stock Award. Dividends paid in shares of Stock or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock. During the Period of Restriction, certificates representing the Restricted Stock shall be registered in the recipient'sHolder's name and bear a restrictive legend to the effect that ownership of such Restricted Stock, and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and the applicable Restricted Stock Award Agreement. Such certificates shall be deposited by the recipient with the Secretary of the Company or such other officer or agent of the Company as may be designated by the Committee, together with all stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock which shall be forfeited in accordance with the Plan and the applicable Restricted Stock Award Agreement.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
DEFERRED STOCK UNIT AWARDS
8.1 Authority to Grant Deferred Stock Unit Awards.DSU Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Deferred Stock UnitsDSU Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of and the vesting, transferability and the transferabilityforfeiture restrictions applicable to any Deferred Stock UnitDSU Award shall be determined by the Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account which reflects the number of Deferred Stock UnitsDSUs credited under the Plan for the benefit of a Holder.
8.2 Deferred Stock Unit Awards. DSU Award. A Deferred Stock UnitDSU Award shall be similar in nature to a Restricted Stock Award except that no shares of Stock (or equivalent value in cash) are actually transferred to the Holder until a later date specified in the applicable Award Agreement. Each Deferred Stock UnitDSU shall have a value equal to the Fair Market Value of a share of Stock.
8.3 Deferred Stock Unit DSU Award Agreement.Agreement. Each Deferred Stock UnitDSU Award shall be evidenced by an Award Agreement that contains any Substantial Risk of Forfeiture, vesting, transferability and forfeiture restrictions, form and time of payment provisions and other provisions not inconsistent with the Plan as the Committee may specify.
8.4 Dividend Equivalents.Equivalents. Effective for Deferred Stock Awards granted under the Plan on or after January 1, 2005, anAn Award Agreement for a Deferred Stock UnitDSU Award may specify that the Holder shall be entitled to the payment of Dividend Equivalents under the Award. Unless otherwise provided in the Award Agreement, any Dividend Equivalents paid under an Award shall be subject to restrictions and a Substantial Risk of Forfeiture to the same extent as the Award with respect to which such Dividend Equivalents are to be paid.
8.5 Form of Payment Under Deferred Stock Unit Award.DSU Award. Payment under a Deferred Stock UnitDSU Award shall be made in either cash, or shares of Stock or any combination thereof, as specified in the applicable Award Agreement.
8.6 Time of Payment Under Deferred Stock Unit Award.DSU Award. A Holder's payment under a Deferred Stock UnitDSU Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (a) by a date that is no later than the date that is two and one-half (21/2) months after the end of the Fiscal Yearcalendar year in which the Deferred Stock UnitDSU Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at a time that is permissible under Section 409A. This Section 8.6 is effective for awards issued under the Plan that are earned and vested on or after January 1, 2005.
8.7 Holder's Rights as Stockholder.Shareholder. Each recipient of Deferred Stock Unitsa DSU Award shall have no rights of a stockholdershareholder with respect to the Holder's Deferred Stock Units.DSUs. A Holder shall have no voting rights with respect to any Deferred Stock UnitDSU Awards.
The Men's Wearhouse, Inc. 2015 Proxy Statement
Table of ContentsARTICLE IX
CASH-BASED AWARDS, PERFORMANCE STOCK AWARDS
AND PERFORMANCE UNIT AWARDS
ARTICLE IX
PERFORMANCE AWARDS
9.1 Authority to Grant Cash-Based Awards, Performance Stock Awards and Performance Unit Awards.Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Cash-Based Awards, Performance Stock Awards and Performance Unit Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. A Cash-Based Award is an Award denominated in cash subject to the attainment of applicable Performance Goals. A Performance Stock Award is similar to a Restricted Stock Award but is subject to attainment of the applicable Performance Goals. A Performance Unit Award is similar to a DSU Award but is subject to attainment of the applicable Performance Goals. The amount of and the vesting, transferability and the transferabilityforfeiture restrictions applicable to any Cash-Based Award, Performance Stock Award or Performance Unit Award shall be based upon the attainment of such Performance Goals as the Committee may determine. A Performance Goal for a particular Performance Stock or Performance Unit Award must be established by the Committee prior to the earlier to occur of (a) 90 days after the commencement of the period of service to which the Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain. A Performance Goal must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units of the Company, or the Company as a whole, with reference to one or more of the following: earnings per share, earnings per share growth, total shareholder return, economic value added, cash return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income, stock price, market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, shareholder value, net cash flow, operating income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost ratios (per employee or per customer), proceeds from dispositions, project completion time and budget goals, net cash flow before financing activities, customer growth and total market value. Goals may also be based on performance relative to a peer group of companies. Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and Performance Stock or Performance Unit Awards, it is intended that the Plan will conform with the standards of section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Stock or Performance Unit Awards made pursuant to the Plan shall be determined by the Committee. If the Committee imposes vesting, or transferability and forfeiture restrictions on
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a recipient'sHolder's rights with respect to a Performance Stock Award or Performance Unit Awards,Award, the Committee may issue such instructions to the Company's share transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for shares of Stock issued pursuant to a Performance Stock Award or Performance Unit Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisableadvisable.
9.2 Performance Goals and Performance Criteria.
(a) A Performance Goal must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met. Unless and until the Committee proposes for shareholder vote and the shareholders approve a change in the general Performance Goals set forth in thisSection 9.2, the Performance Goals upon which the payment or vesting of an Award to complya Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to one or more of the following Performance Goals, which may be based on one or more business criteria that apply to the Employee, or one or more business units, subsidiaries, divisions, departments, regions, stores, segments, products, or functions of the Company or its Affiliates, or the Company as a whole: revenue, revenue growth, product revenue growth, revenue ratios, net revenue, net income or loss, operating income, pre-tax or after-tax income or loss (before or after allocation of corporate overhead and bonus), earnings, net earnings, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), earnings before any one of, or combination of two or more of, interest, taxes, depreciation, amortization and/or any other financial adjustment to earnings set forth in the Company's audited financial statements that is allowed under generally accepted accounting principles, earnings per share, earnings per share growth, economic value, economic value added, gross profits, operating profits, net operating profit, net profits, profit return, gross margin, profit margins, cash margins, operating margin, year-end cash, profit before tax, cash return on capitalization, operating expense, operating expense as a percentage of revenue, improvement in or attainment of expense levels, expense reductions, gross sales, net sales, sales growth, comparable sales growth, stock price, comparisons with various stock market indices, return on equity, return on assets, return on net assets, return on capital, return on capital compared to cost of capital, cost of capital, assets under management, return on capital employed, return on invested capital, debt to capital ratio, debt reduction, shareholder equity, improvement in or attainment of working capital levels, including cash, inventory levels, accounts receivable levels, total shareholder return, shareholder return, shareholder value, growth in shareholder value relative to a pre-determined index, financial ratios (including those measuring liquidity, activity, profitability or leverage), financial return ratio, cash flow, net cash flow, cash flow from operations, net cash provided by operating activities, free cash flow, cash flow per share (before or after dividends), cash flow return on investment, cash value added performance, cost reductions, cost ratios, market share, proceeds from dispositions, project completion time and budget goals, net cash flow before financing activities, financing and other capital raising transactions (including sales of the Company's equity or debt securities), acquisitions and divestitures, operating efficiencies, customer growth, total market value, credit rating, sales or licenses of the Company's and its Affiliates' assets, including intellectual property, whether in a particular jurisdiction or territory or globally, customer satisfaction, customer satisfaction rating, customer complaint frequency, incident resolution success ratio, problem resolution success ratio, strategic plan development and implementation, succession plan development and implementation, improvements in productivity, employee satisfaction, employee turnover, and recruiting and maintaining personnel. A Performance Goal may also be based on performance relative to a peer group of companies. Unless otherwise stated, a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). Performance Goals that are financial metrics may be
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determined in accordance with United States Generally Accepted Accounting Principles ("GAAP") or financial metrics that are based on, or able to be derived from GAAP, and may be adjusted when established (or to the extent permitted under Section 162(m) of the Code, at any time thereafter) to include or exclude any items otherwise includable or excludable under GAAP.
(b) Performance Goals may be measured (a) on a per share, per capita, per unit, per square foot, per employee, per store, per customer or other objective basis established by the Committee, (b) on a pre-tax or after-tax basis, or (c) on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other companies, financial metrics and/or an index). With respect to Holders who are not Covered Employees and who, in the Committee's judgment, are not likely to be Covered Employees at any time during the applicable law.Performance Period or during any period in which any Cash-Based Award, Performance Stock Award or Performance Unit Award may be paid following a Performance Period, the performance goals established for the Performance Period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed herein and such performance goals shall be subject to such other special rules and conditions as the Committee may establish at any time.
(c) At the time the Committee establishes the terms and conditions of the applicable Performance Goal for an Award to a Covered Person intended to satisfy the requirements of Section 162(m) of the Code, the Committee may, in the Committee's discretion, provide that amounts relating to or arising from one or more of the following, as objectively defined by the Committee, may be included or excluded on a non-discretionary basis to the extent permitted by Code Section 162(m):
(i) unusual, infrequently occurring or non-recurring events affecting the Company and/or its Affiliates;
(ii) changes in applicable tax laws;
(iii) changes in accounting principles;
(iv) changes related to restructured or discontinued operations;
(v) restatement of prior financial results; and
(vi) any other unusual, infrequently occurring or non-recurring gain or loss including those described in the Financial Accounting Standards Board's authoritative guidance, footnotes to the Company's financial statements, in management's discussion and analysis of financial condition and results of operations appearing in the Company's reports on Form 10-K, 10-Q or 8-K for the applicable year and/or appearing in a press release reporting the Company's earnings for any fiscal period.
Each of the adjustments described above may relate to the Company as a whole or any part of the Company's business or operations.
(d) Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Cash-Based Award, Performance Stock Award or Performance Unit Award made pursuant to the Plan shall be determined by the Committee. In the case of any Award to a Covered Employee that is intended to satisfy the requirements of Section 162(m) of the Code, the Plan, such Award and the Award Agreement for such Award will be construed and administered to the maximum extent permitted by law in a manner consistent with satisfying the requirements of Section 162(m) of the Code.
9.3 Time of Establishment of Performance Goals. With respect to a Covered Employee, a Performance Goal for a particular Cash-Based Award, Performance Stock Award or Performance Unit
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Award must be established by the Committee prior to the earlier to occur of (a) 90 days after the commencement of the period of service to which the Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain.
9.4 Written Agreement. Each Cash-Based Award, Performance Stock Award or Performance Unit Award shall be evidenced by an Award Agreement that contains any vesting, transferability and forfeiture restrictions and such other provisions not inconsistent with the Plan as the Committee may specify.
9.2 9.5 Form and Time of Payment Under Cash-Based Award. Payment under a Cash-Based Award shall be made in cash, shares of Stock or any combination thereof, as specified in the applicable Award Agreement. A Holder's payment under a Cash-Based Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (a) by a date that is no later than the date that is two and one-half (21/2) months after the end of the calendar year in which the Cash-Based Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at a time that is permissible under Section 409A.
9.6 Form and Time of Payment Under Performance Unit AwardAward.. Payment under a Performance Unit Award shall be made in cash, shares of Stock or any combination thereof, as specified in the applicable Award Agreement. A Holder's payment under a Performance Unit Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (a) by a date that is no later than the date that is two and one-half (21/2) months after the end of the calendar year in which the Performance
The Men's Wearhouse, Inc. 2015 Proxy Statement
Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at a time that is permissible under Section 409A. This Section 9.2 is effective for awards issued under the Plan that are earned and vested on or after January 1, 2005.
9.3 9.7 Holder's Rights as StockholderShareholder With Respect to a Performance Stock Award.Award. Subject to the terms and conditions of the Plan eachand the applicable Award Agreement, a Holder of a Performance Stock Award shall have all the rights of a stockholdershareholder with respect to the shares of Stock issued to the Holder pursuant to the Award during any period in which such issued shares of Stock are subject to forfeiture and restrictions on transfer, including, without limitation, the right to vote such shares of Stock.Stock; provided, however, that the Holder shall not receive payment of dividends until and only to the extent that the Performance Goals applicable to such Award are satisfied.
9.4 Increases Prohibited. 9.8 NeitherIncreases Prohibited. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, none of the Committee, nor the Board, the Company or any Affiliate may increase the amount of compensation payable under a Cash-Based Award, Performance Stock Award or Performance Unit Award.Award with respect to Holders of such Awards who are Covered Employees or who, in the Committee's judgment, are likely to be Covered Employees. The Committee may adjust downward, but not upward, the amount payable pursuant to such Awards, and the Committee may not waive the achievement of the applicable Performance Goals, except in the case of a change in ownership or control of the Company (as defined for purposes of Section 162(m) of the Code) or the death or Disability of the Holder. If the time at which a Cash-Based Award, Performance Stock Award or Performance Unit Award will vest or be paid is accelerated for any reason, the number of shares of Stock subject to, or the amount payable under, the Cash-Based Award, Performance Stock Award or Performance Unit Award shall be reduced pursuant to the extent required under Department of Treasury Regulation § 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.
9.5 9.9 Stockholder Approval. Shareholder Approval. No payments of Stock or cash will be made to a Covered Employee pursuant to this Article IX unless the stockholdershareholder approval requirements of Department of Treasury Regulation § 1.162-27(e)(4) are satisfied.
9.6 9.10 Dividend Equivalents. Effective for Performance Unit Awards granted under the Plan on or after January 1, 2005, an An Award Agreement for a Performance Unit Award may specify that the Holder shall be entitled to the payment of Dividend Equivalents under the Award.Award; provided, however, that the Holder shall not receive payment of such Dividend Equivalents until and only to the extent that the Performance Goals applicable to such Award are satisfied.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE XCASH-BASED AWARDS AND
OTHER STOCK-BASED AWARDS
10.1 Authority to Grant Cash-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to Employees in such amounts and upon such terms, including the achievement of specific performance goals, as the Committee shall determine.
10.2 Authority to Grant Other Stock-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant other types of equity-based or equity-related Awards not otherwise described by the terms and provisions of the Plan (including the grant or offer for sale of unrestricted shares of Stock) under the Plan to eligible persons in such amountsnumber and subject toupon such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer of actual shares of Stock to Holders, or payment in cash or otherwise of amounts based on the value of shares of Stock and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.
10.3 10.2 Value of Cash-Based and Other Stock-Based AwardsAward. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee. Each Other Stock-Based Award shall be expressed in terms of shares of Stock or units based on shares of Stock, as determined by the Committee. The
10.3 Written Agreement. Each Other Stock-Based Award shall be evidenced by an Award Agreement that contains any vesting, transferability and forfeiture restrictions and other provisions not inconsistent with the Plan as the Committee may establish performance goals in its discretion for Cash-Based Awards andspecify.
10.4 Payment of Other Stock-Based Awards. If the Committee exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Holder will depend on the extent to which the performance goals are met.
10.4 Payment of Cash-Based Awards and Other Stock-Based AwardsAward. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash, or shares of Stock or any combination thereof, as the Committee determines.
10.5 Termination of Employment or ServiceService.. The Committee shall determine the extent to which a grantee'sHolder's rights with respect to Cash-Based Awards and Other Stock-Based Awards shall be affected by the grantee'sHolder's Termination of Employment or Termination of Service. Such provisions shall be determined in the sole discretion of the Committee and need not be uniform among all Awards of Cash-Based Awards and Other Stock-Based Awards issued pursuant to the Plan.
10.6 Nontransferability. Except as otherwise determined by the Committee, neither Cash-Based Awards nor Time of Payment of Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided by the Committee, aAward. A Holder's rightspayment under the Plan, if exercisable,an Other Stock-Based Award shall be exercisable during hismade at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (a) by a date that is no later than the date that is two and one-half (21/2) months after the end of the calendar year in which the Other Stock-Based Award payment is no longer subject to a Substantial Risk of Forfeiture or her lifetime only by such Holder.(b) at a time that is permissible under Section 409A.
The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE XI
SUBSTITUTION AWARDS
Awards may be granted under the Plan from time to time in substitution for stock options and other awards held by employees and directors of other corporationsentities who are about to become Employees, or whose employer is about to become a parent or subsidiary corporation as contemplated in Section 3.1, conditioned in the case of an Incentive Stock Option upon the employee becoming an employee of the Company or a parent or subsidiary corporation of the Company,Affiliate as the result of a merger ofor consolidation of the Company or an Affiliate with another corporation, or the acquisition by the Company of substantially all the assets of another corporation, or the acquisition by the Company of at least 50fifty percent (50%) of the issued and outstanding stock of another corporation as the result of which it becomessuch other corporation will become a subsidiary of the Company. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the Awardawards in substitution for which they are granted, but with respect to Options that are Incentive Stock Options, no such variation shall be such as to affect the status of any such substitute Option as an incentive stock option under section 422 of the Code.granted.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
12.1 Awards. Awards. The Plan shall be administered by the Committee or, in the absence of the Committee or in the case of awards issued to Non-Employee Directors, the Plan shall be administered by the Board. The members of the Committee (that is not itself the Board) shall serve at the discretion of the Board. The Committee shall have full and exclusive power and authority to administer the Plan and to take all actions that the Plan expressly contemplates or are necessary or appropriate in connection with the administration of the Plan with respect to Awards granted under the Plan.
12.2 Authority of the CommitteeCommittee..
(a) The Committee shall have full and exclusive power to interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan. A majority of the members of the Committee shall constitute a quorum for the transaction of business relating to the Plan or Awards made under the Plan, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. Any decision or determination reduced to writing and signed by a majority of the members shall be as effective as if it had been made by a majority vote at a meeting properly called and held. All questions of interpretation and application of the Plan, or as to Awards granted under the Plan, shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. When appropriate, the Plan shall be administered in order to qualify certain of the Options granted hereunder as Incentive Stock Options. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his or her own part, including but not limited to the exercise of any power or discretion given to him or her under the Plan, except those resulting from his or her own gross negligence or willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and final authority and discretion, including but not limited to the following rights, powers and authorities to:
(a)to (i) determine the persons to whom and the time or times at which Awards will be made;
(b) (ii) determine the number and exercise price of shares of Stock covered in each Award subject to the terms and provisions of the Plan;
(c) (iii) determine the terms, provisions and conditions of each Award, which need not be identical and need not match the default terms set forth in the Plan;
(d)identical; (iv) accelerate the time at which any outstanding Award will vest;
(e) (v) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and
(f) (vi) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan.
(b) The Committee may make an Award to an individual who the Company expects to become an Employee of the Company or any of its Affiliates within six (6)three (3) months after the date of grant of the Award, with the Award being subject to and conditioned on the individual actually becoming an Employee within that time period and subject to other terms and conditions as the Committee may establish.
(c) The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary or desirable to further the Plan's objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan. As permitted by law and the terms and provisions of the Plan,
(d) On a Fiscal Year basis, the Committee may, by resolution, delegate its authority as identified in this Section 12.2.
The actionsto the Chief Executive Officer of the Committee in exercising allCompany the limited authority to grant Awards under the Plan during such Fiscal Year (other than Awards pursuant toArticle IX) to (i) designated classes of Employees who are not officers of the rights, powers,Company or any Affiliate and authorities set out in this Article XII and all other Articlessubject to the provisions of Section 16 of the Plan, when performed in good faithExchange Act and in its sole judgment,(ii) Third Party Service Providers. The resolution providing such authorization must set forth the total number of shares of Stock that may be granted under Awards by the Chief Executive Officer during the Fiscal Year. The Chief Executive Officer of the Company shall bereport periodically to the
| | Tailored Brands, Inc. 2016 Proxy Statement A-29 |
The Men's Wearhouse, Inc. 2015 Proxy Statement
final, conclusiveCommittee regarding the nature and binding on all persons.scope of the Awards granted pursuant to the authority delegated.
(e) The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such persons.person. As permitted by law and the terms and provisions of the Plan, the Committee may delegate to one or more of its members or to one or more officers of the Company or its Affiliates or other Employees or to one or more agents or advisors such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan.
12.3 Decisions Binding.Binding. All determinations and decisions made by the Committee andor the Board, as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions of the Committee andor the Board, as the case may be, shall be final, conclusive and binding on all persons, including the Company, its stockholders, Employees,Affiliates, its shareholders, Holders and the estates and beneficiaries of Employees and Holders.
12.4 No Liability.Liability. Under no circumstances shall the Company, its Affiliates, the Board or the Committee incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company's, orits Affiliates', the Committee's or the Board's roles in connection with the Plan.
The Men's Wearhouse, Inc. 2015 Proxy Statement
ARTICLE XIII
AMENDMENT OR TERMINATION
OF PLAN OR AWARD AGREEMENT
ARTICLE XIII
AMENDMENT OR TERMINATION OF PLAN
13.1 Amendment, Modification, Suspension, and Termination.Termination of the Plan. Subject toSection 13.2, the CommitteeBoard may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan, provided, however, no amendment of the Plan shall be made without shareholder approval if shareholder approval is required by applicable law or stock exchange rules.
13.2 Amendment, Modification, Suspension, and Termination of Award Agreement. Subject toSection 13.2, the Committee may, in its discretion and at any time and from time to time, alter, amend, modify, suspend, or terminate any Award Agreement in whole or in part; provided, however,part in any manner that it deems appropriate and that is consistent with the terms of the Plan or necessary to implement the requirements of the Plan. Notwithstanding the preceding sentence, without the prior approval of the Company's stockholders andshareholders or except as provided inSection 4.6,4.5, the Committee shall not directly or indirectly lower the Option Price of a previously granted Option or the grant price of a previously granted SAR, issuedor cancel a previously granted Option or previously granted SAR (at a time when the per share Option Price or SAR grant price exceeds the per share Fair Market Value of the underlying Stock) for a payment of cash or in exchange for another Award or other property.
13.3 Awards Previously Granted. Except as expressly provided otherwise under the Plan or otherwise pay consideration to repurchase, cancel or revoke such award (provided that such prohibition shall not apply to shares of Stock withheld to pay the Option Price of any Option or to pay the withholding tax arising from the exercise of any Option or SAR)(includingSections 4.7, 4.8 and 4.9), and no alteration, amendment, of the Plan shall be made without stockholder approval if stockholder approval is required by applicable law or stock exchange rules.
13.2 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment,modification, suspension or modificationtermination of the Plan or an Award Agreement shall adversely affect in any material waymanner any Award previously granted under the Plan, without the written consent of the Holder holding such Award.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
MISCELLANEOUS
14.1 Unfunded Plan/No Establishment of a Trust Fund. Holders shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Affiliates may make to aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in the Plan. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the Company for the payment of any benefit which becomes payable under the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
14.2 No Employment Obligation. The granting of any Award shall not constitute an employment or service contract, express or implied, norand shall not impose upon the Company or any Affiliate any obligation to employ or continue to employ, or to utilize or continue to utilize the services of, any Holder. The right of the Company or any Affiliate to terminate the employment of, or the provision of services by, any person shall not be diminished or affected by reason of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate any Holder's employment or provision of service to the Companyrelationship at any time or for any reason not prohibited by law.
14.3 Tax Withholding. The Company or any Affiliate shall be entitledis authorized to deductwithhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Stock, or any payroll or other compensationpayment to a Holder, amounts of withholding and other taxes due or potentially payable in connection with any transaction or event involving an Award, or to eachrequire a Holder to remit to the Company an amount in cash or other property (including Stock) to satisfy such withholding before taking any sums required by federal, state or local tax law to be withheldaction with respect to the vesting or exercise of an Award, or lapse of restrictions on an Award. Inand to take such other action as the alternative,Committee may deem advisable to enable the Company may requireand Holders to satisfy obligations for the Holder (orpayment of withholding taxes and other person validly exercising the Award)tax obligations relating to pay such sums for taxes directlyany Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Holder's withholding obligations, up to the statutory rate allowed to avoid any adverse accounting consequences for such withholding. The Company orcan delay the delivery to a Holder of Stock under any Affiliate in cash or by check within ten days afterAward to the date of vesting, exercise or lapse of restrictions. In the discretion of the Committee, and with the consent of the Holder,extent necessary to allow the Company may reduce the number of shares of Stock issued to the Holder upon such Holder's exercise of an Option to satisfy the tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock held back shall not exceed the Company's or the Affiliate's Minimum Statutory Withholding Tax Obligations. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory Withholding Tax Obligations arising upon the vesting of Award by delivering to the Holder of the Award a reduced number of shares of Stock in the manner specified herein. If permitted by the Committee and acceptable to the Holder, at the time of vesting of shares of under the Award, the Company shall (a) calculatedetermine the amount of the Company's or an Affiliate's Minimum Statutory Withholding Tax Obligations on the assumption that allwithholding to be collected and to collect and process such shares of Stock vested under the Award are made available for delivery, (b) reduce the number of such shares of Stock made available for delivery so that the Fair Market Value of the shares of Stock withheld on the vesting date approximates the Company's or an Affiliate Minimum Statutory Withholding Tax Obligation and (c) in lieu of the withheld shares of Stock, remit cash to the United States Treasury and/or other applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Withholding Tax Obligations due. The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory Withholding Tax Obligations. Where the Fair Market Value of the withheld shares of Stock does not equal the amount of the Minimum Statutory Withholding Tax Obligations, the Company shall withhold shares of Stock with a Fair Market Value slightly less than the amount of its Minimum Statutory Withholding Tax Obligation and the Holder must satisfy the remaining Minimum Statutory Withholding Tax Obligation in some other manner permitted
The Men's Wearhouse, Inc. 2015 Proxy Statement
under this Section 14.3. The withheld shares of Stock not made available for delivery by the Company shall be retained as treasury shares or will be cancelled and, in either case, the Holder's right, title and interest in such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of restrictions on an Award until the Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Withholding Tax Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold.
14.4 Written Agreement. Each Award shall be embodied in a written agreement or statement which shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by a member of the Committee on behalf of the Committee and the Company or by an executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed by the Holder to the extent required by the Committee. The Award Agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan.withholding.
14.5 14.4 Indemnification of the Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further action on his or her part to indemnity from the Company for, all expenses (including attorney's fees, the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by such member in connection with or arising out of any action, suit or proceeding in which such member may be involved by reason of such member being or having been a member of the Committee, whether or not he or she continues to be a member of the Committee at the time of incurring the expenses, including, without limitation, matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been negligent in the performance of such member's duty as a member of the Committee. However, this indemnity shall not include any expenses incurred by any member of the Committee in respect of matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as a member of the Committee. In addition, no right of indemnification under the Plan shall be available to or enforceable by any member of the Committee unless, within 60 days after institution of any action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. This right of indemnification shall inure to the benefit of the heirs, executors or administrators of each member of the Committee and shall be in addition to all other rights to which a member of the Committee may be entitled as a matter of law, contract or otherwise.
14.6 Gender and Number. If the context requires, words of one gender when used in the Plan shall include the other and words used in the singular or plural shall include the other.
14.7 14.5 Severability. Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
14.8 14.6 Headings. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms and provisions of the Plan.
14.9 14.7 Other Compensation Plans. The adoption of the Plan shall not affect any other option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation arrangements for Employees.Employees, Non-Employee Directors or Third Party Service Providers.
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14.10 14.8 Retirement and Welfare Plans. Neither Awards made under the Plan nor shares of Stock or cash paid pursuant to such Awards, may be included as "compensation" for purposes of computing the benefits payable to any person under the Company's or any Affiliate's retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a participant's benefit.
14.9 Other Awards. The grant of an Award shall not confer upon the Holder the right to receive any future or other Awards under the Plan, whether or not Awards may be granted to similarly situated Holders, or the right to receive future Awards upon the same terms or conditions as previously granted.
The Men's Wearhouse, Inc. 2015 Proxy Statement
14.11 14.10 Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
14.12 Law Limitations/Governmental Approvals.Approvals. The granting of Awards and the issuance of shares of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
14.13 14.11 Delivery of Title.Title. The Company shall have no obligation to issue or deliver evidence of title for shares of Stock issued under the Plan prior to:
to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
(b) completion of any registration or other qualification of the Stock under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.
14.14 14.12 Inability to Obtain Authority.Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares of Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such shares of Stock as to which such requisite authority shall not have been obtained.
14.15 14.13 Investment Representations.Representations. The Committee may require any person receiving Stock pursuant to an Award under the Plan to represent and warrant in writing that the person is acquiring the shares of Stock for investment and without any present intention to sell or distribute such Stock.
14.16 14.14 Persons Residing Outside of the United States. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the TMW GroupCompany or any of its Affiliates operates or has Employees,employees, the Committee, in its sole discretion, shall have the power and authority to:
to (a) determine which Affiliates shall be covered by the Plan;
(b) determine which persons employed outside the United States are eligible to participate in the Plan;
(c) amend or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to persons who reside outside the United States;
(d) establish subplans and modify exercise procedures and other terms and procedures to the extent such actions may be necessary or advisable—advisable (and any subplans and modifications to Plan terms and procedures established under thisSection 14.1614.14 by the Committee shall be attached to the Plan document as Appendices; and
Appendices); an (e) take any action, before or after an Award is made, that it deems advisable to obtain or comply with any necessary local government regulatory exemptions or approvals.
Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act the Code,or any securities law or governing statute or any other applicable law.
14.17 14.15 No Fractional Shares.Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards, or other property shall be issued or paid in lieu of fractional shares of Stock or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
14.18 Arbitration of Disputes. 14.16 Any controversy arising outInterpretation. The term "including" means "including without limitation". The term "or" means "and/or" unless clearly indicated otherwise. The term "vest" includes the lapse of or relatingrestrictions on Awards, including Forfeiture Restrictions. Reference herein to a "Section" shall be to a section of the Plan or an Option Agreement shall be resolved by arbitration conducted pursuant to the arbitration rulesunless indicated otherwise.
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14.19 14.17 Governing Law.Law; Venue. The provisions of the Plan and the rights of all persons claiming thereunder shall be construed, administered and governed under the laws of the State of Texas.Texas, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the sole and exclusive jurisdiction and venue of the federal or state courts of the State of Texas to resolve any and all issues that may arise out of or relate to the Plan or any related Award Agreement.
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The Men's Wearhouse, Inc. 2015 Proxy Statement
THE MEN'S WEARHOUSE, TAILORED BRANDS, INC.20042016 LONG-TERM INCENTIVE PLAN
SUBPLAN FOR UK EMPLOYEES
WHEREAS,, The Men's Wearhouse, Tailored Brands, Inc. (the "Company") maintains the plan known as "The Men's Wearhouse,the "Tailored Brands, Inc. 20042016 Long-Term Incentive Plan" (the "Plan"); and
WHEREAS,, the Company retained the right in Section 14.1614.14 of the Plan to establish subplans under the Plan from time to time; and
WHEREAS,, the Compensation Committee of the Board of Directors of the Company approved resolutions on the date hereof to adopt this Subplan for UK Employees;
NOW, THEREFORE,, the Company hereby adopts this subplan which shall be attached to the Plan as Appendix 1:
1.11.1. Establishment of SubplanSubplan.. The Company has previously established the incentive compensation plan known as "The Men's Wearhouse,the "Tailored Brands, Inc. 20042016 Long-Term Incentive Plan" which provides in Section 14.1614.14 thereof that in order to comply with the laws in other countries in which the TMW Group operatesCompany and its Affiliates operate or hashave Employees, the Committee, in its sole discretion, shall have the power and authority to establish subplans to the extent such actions may be necessary or advisable. Therefore, the Company hereby establishes this subplan to be referred to as "The Men's Wearhouse,the "Tailored Brands, Inc. 20042016 Long-Term Incentive Plan Subplan for UK Employees" (this "Subplan").
1.2.1.2 Terms of SubplanSubplan.. The terms and conditions of this Subplan shall be identical to the terms and conditions of the Plan, which are, except as set forth in this Section 1.2 and in Section 1.3 below, hereby expressly incorporated herein and, as necessary, all references to the Plan shall be deemed to include this Subplan; provided, however, that non-employee directors of the Company and its Affiliates ("Non-Employee Directors") shall not be eligible to receive awards under this Subplan and all references to such Non-Employee Directors and any provisions under the Plan which apply to awards to Non-Employee Directors (however defined under the Plan) shall not be made a part of this Subplan. All defined terms used in this Subplan and not otherwise defined herein shall have the meanings assigned to such terms in the Plan.
1.3 Eligibility for SubplanSubplan.. The persons who are eligible to receive Awards under this Subplan are those key Employees of the Company's Affiliates that are located or operating in the United Kingdom.
Approved by the Compensation Committee
of the Board of Directors of The Men's Wearhouse,Tailored Brands, Inc.Onon March 27, 201216, 2016
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TAILORED BRANDS, INC.
2016 CASH INCENTIVE PLAN
| | Tailored Brands, Inc. 2016 Proxy Statement B-1 |
TAILORED BRANDS, INC.
2016 CASH INCENTIVE PLAN
The Men's Wearhouse,purpose of the Plan is to foster and promote the long-term financial success of the Company and its Affiliates and to increase shareholder value by (a) providing Participants an opportunity to earn Incentive Compensation if specified performance objectives are met, (b) enabling the Company and its Affiliates to attract and retain talented employees, and (c) maximizing the deduction of compensation paid to Participants. Incentive Compensation payable under the Plan is intended to constitute "qualified performance-based compensation" for purposes of Section 162(m) of the Code and Treasury Regulation Section 1.162-27, and the Plan shall be interpreted consistently with such intention.
When used in the Plan, the following capitalized words, terms and phrases shall have the meanings set forth in this Article I. For purposes of the Plan, the form of any word, term or phrase will include any and all of its other forms.
1.1 "Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.
1.2 "Affiliate" means any entity with whom the Company would be considered a single employer under Section 414(b) or (c) of the Code.
1.3 "Annual Base Salary" means for any Participant an amount equal to the rate of annual base salary in effect or approved by the Committee or other authorized Person at the time or immediately before performance objectives are established for a Performance Period, including any base salary that otherwise would be payable to the Participant during the Performance Period but for the Participant's election to defer receipt thereof.
1.4 "Assets" means assets of any kind owned by the Company, including but not limited to securities of the Company's direct and indirect Subsidiaries.
1.5 "Beneficial Owner" has the meaning ascribed to the term in Rule 13d-3 of the General Rules and Regulations under the Act.
1.6 "Board" means the Board of Directors of the Company.
1.7 "Cause" means: (a) gross negligence or willful misconduct in connection with the Participant's duties or in the course of the Participant's employment with the Company or any Wholly-Owned Subsidiary; (b) an act of fraud, embezzlement or theft in connection with the Participant's duties or in the course of the Participant's employment with the Company or any Wholly-Owned Subsidiary; (c) intentional wrongful damage to property (other than of ade minimis nature) of the Company or any Wholly-Owned Subsidiary; (d) intentional wrongful disclosure of secret processes or confidential information of the Company or any Wholly-Owned Subsidiary which the Participant believes or reasonably should believe will have a material adverse effect on the Company; or (e) an act leading to a conviction of a felony, or a misdemeanor involving moral turpitude; provided, however, that if there is a definition of Cause used in an employment agreement between the Company and the Participant, then the definition of Cause herein shall be the same as that used in such employment agreement.
1.8 "Change in Control" means, except as otherwise provided in an award agreement or employment agreement, any of the following:
(a) the individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board;
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(b) the consummation of a Merger of the Company with another Entity, unless:
(i) the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the Voting Securities of either the surviving Entity or the parent of the surviving Entity outstanding immediately after such Merger in substantially the same proportions, as to each other, as their ownership of the Company's Voting Securities immediately prior to such Merger; and
(ii) the individuals who comprise the Board immediately prior to such Merger constitute a majority of the board of directors or other governing body of either the surviving Entity or the parent of the surviving Entity;
(c) any Person, other than a Specified Owner, becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities;
(d) a sale, transfer, lease or other disposition of all or substantially all of the Assets is consummated (an "Asset Sale"), unless:
(i) the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company immediately prior to such Asset Sale own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the Voting Securities of the Entity that acquires such Assets in such Asset Sale or its parent immediately after such Asset Sale in substantially the same proportions as their ownership of the Company's Voting Securities immediately prior to such Asset Sale; and
(ii) the individuals who comprise the Board immediately prior to such Asset Sale constitute a majority of the board of directors or other governing body of either the Entity that acquired such Assets in such Asset Sale or its parent; or
(e) The shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.
1.9 "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
1.10 "Committee" means the Compensation Committee of the Board (or subcommittee thereof), which will be comprised of at least two (2) directors. To the extent necessary under Section 162(m) of the Code and the Treasury Regulations promulgated thereunder, each member of the Committee shall be an "outside director" within the meaning of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.
1.11 "Company" means Tailored Brands, Inc. 2015 Proxy Statement , a Texas corporation, and any successor thereto.
1.12 "Covered Employee" means a "covered employee" within the meaning of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.
1.13 "Disability" means the absence of the Participant from the Participant's duties with the Company on a full-time basis for ninety (90) calendar days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Company or its insurers, and acceptable to the Participant or the Participant's legal representatives; provided, however, that if there is a definition of disability used in an employment agreement between the Company and the Participant, then the definition of Disability herein shall be the same as that used in such employment agreement.
1.14 "Entity" means any corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization or other business entity.
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1.15 "Fiscal Year" means the Company's fiscal year.
1.16 "Incentive Compensation" means the compensation approved by the Committee to be awarded to a Participant for any Performance Period under the Plan.
1.17 "Incumbent Director" means:
(a) a member of the Board on the effective date of this Plan; or
(b) an individual:
(i) who becomes a member of the Board after such effective date;
(ii) whose appointment or election by the Board or nomination for election by the Company's shareholders is approved or recommended by a vote of at least two-thirds of the then serving Incumbent Directors (as defined herein); and
(iii) whose initial assumption of service on the Board is not in connection with an actual or threatened election contest.
1.18 "Merger" means a merger, consolidation or similar transaction.
1.19 "Participant" means an officer or other key employee of the Company or any Affiliate whom the Committee designates as eligible to participate in the Plan.
1.20 "Payment Date" means the date the Committee establishes for the payment to a Participant of any Incentive Compensation under the Plan, as provided in Article IV of the Plan.
1.21 "Performance Award" means an award granted by the Committee under the Plan that is based on one or more of the Performance Criteria.
1.22 "Performance Criteria" means the criteria that are set forth in Section 3.3 of the Plan, any one or more of which may be used in establishing the terms and conditions of a Performance Award.
1.23 "Performance Period" means any period for which performance objectives are established pursuant to Section 3.3. A Performance Period shall be coincident with a Fiscal Year, but may be such shorter period as the Committee determines with respect to a particular Performance Award.
1.24 "Person" shall have the meaning ascribed to the term in Section 3(a)(9) of the Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof, except that the term shall not include (a) the Company or any of its Affiliates; (b) a trustee or other fiduciary holding Company securities under an employee benefit plan of the Company or any of its Affiliates; (c) an underwriter temporarily holding securities pursuant to an offering of those securities or (d) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.
1.25 "Plan" means the Tailored Brands, Inc. 2016 Cash Incentive Plan, as set forth herein and as may be amended from time to time.
1.26 "Retirement" means, unless otherwise determined by the Committee, a Participant's termination of employment (other than for Cause) on or after the date on which the Participant has attained the age of sixty-five (65).
1.27 "Specified Owner" means any of the following:
(a) the Company;
(b) an Affiliate of the Company;
(c) an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate of the Company;
| | Tailored Brands, Inc. 2016 Proxy Statement B-4 |
(d) a Person that becomes a Beneficial Owner of the Company's outstanding Voting Securities representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities as a result of the acquisition of securities directly from the Company and/or its Affiliates; or
(e) a Person that becomes a Beneficial Owner of the Company's outstanding Voting Securities representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding Voting Securities as a result of a Merger if the individuals and Entities who were the Beneficial Owners of the Voting Securities of the Company outstanding immediately prior to such Merger own, directly or indirectly, at least fifty percent (50%) of the combined voting power of the Voting Securities of any of the Company, the surviving Entity or the parent of the Company or the surviving Entity outstanding immediately after such Merger in substantially the same proportions as their ownership of the Voting Securities of the Company outstanding immediately prior to such Merger.
1.28 "Subsidiary" means any corporation or other entity in which the Company owns, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.
1.29 "Voting Securities" means the outstanding securities entitled to vote generally in the election or directors or other governing body.
1.30 "Wholly-Owned Subsidiary" means an Entity that is, directly or indirectly, wholly-owned by the Company.
The Plan shall be administered and interpreted by the Committee; provided that in no event shall the Plan be interpreted in a manner that would cause any Performance Award intended to be qualified performance-based compensation under Section 162(m) of the Code to fail to so qualify with respect to a Covered Employee. The Committee shall have the power and authority to construe, interpret and administer the Plan. Any determination made by the Committee under the Plan shall be final and conclusive on all Participants and other Persons.
ARTICLE III
ELIGIBILITY, PERFORMANCE AWARDS AND PERFORMANCE CRITERIA
3.1 Determination of Eligibility by the Committee. For each Performance Period, the Committee shall select the Participants to whom Performance Awards may be granted under the Plan for such Performance Period consistent with the provisions of the Plan. Participants who participate in the Plan may also participate in other incentive or benefit plans maintained by the Company or any Affiliate.
3.2 Granting Performance Awards. For each Performance Period, the Committee may grant Performance Awards pursuant to the Plan, in such amounts and on such terms in accordance with the provisions of the Plan, as the Committee shall determine.
3.3 Performance Objectives.
(a) For each Performance Period, the Committee will establish for each Performance Award the performance objectives that will be applied to determine the amount of Incentive Compensation payable with respect to such Performance Award. One or more of the following Performance Criteria shall be used by the Committee in setting performance objectives with respect to the Plan: revenue, revenue growth, product revenue growth, revenue ratios, net revenue, net income or loss, operating income, pre-tax or after-tax income or loss (before or after allocation of corporate overhead and
| | Tailored Brands, Inc. 2016 Proxy Statement B-5 |
bonus), earnings, net earnings, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), earnings before any one of, or combination of two or more of, interest, taxes, depreciation, amortization and/or any other financial adjustment to earnings set forth in the Company's audited financial statements that is allowed under generally accepted accounting principles, earnings per share, earnings per share growth, economic value, economic value added, gross profits, operating profits, net operating profit, net profits, profit return, gross margin, profit margins, cash margins, operating margin, year-end cash, profit before tax, cash return on capitalization, operating expense, operating expense as a percentage of revenue, improvement in or attainment of expense levels, expense reductions, gross sales, net sales, sales growth, comparable sales growth, stock price, comparisons with various stock market indices, return on equity, return on assets, return on net assets, return on capital, return on capital compared to cost of capital, cost of capital, assets under management, return on capital employed, return on invested capital, debt to capital ratio, debt reduction, shareholder equity, improvement in or attainment of working capital levels, including cash, inventory levels, accounts receivable levels, total shareholder return, shareholder return, shareholder value, growth in shareholder value relative to a pre-determined index, financial ratios (including those measuring liquidity, activity, profitability or leverage), financial return ratio, cash flow, net cash flow, cash flow from operations, net cash provided by operating activities, free cash flow, cash flow per share (before or after dividends), cash flow return on investment, cash value added performance, cost reductions, cost ratios, market share, proceeds from dispositions, project completion time and budget goals, net cash flow before financing activities, financing and other capital raising transactions (including sales of the Company's equity or debt securities), acquisitions and divestitures, operating efficiencies, customer growth, total market value, credit rating, sales or licenses of the Company's and its Affiliates' assets, including intellectual property, whether in a particular jurisdiction or territory or globally, customer satisfaction, customer satisfaction rating, customer complaint frequency, incident resolution success ratio, problem resolution success ratio, strategic plan development and implementation, succession plan development and implementation, improvements in productivity, employee satisfaction, employee turnover, and recruiting and maintaining personnel. Unless otherwise stated, a performance objective need not be based upon an increase or positive result under a particular Performance Criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific Performance Criteria). Performance Criteria that are financial metrics may be determined in accordance with United States Generally Accepted Accounting Principles ("GAAP") or financial metrics that are based on, or able to be derived from GAAP, and may be adjusted when established (or to the extent permitted under Section 162(m) of the Code, at any time thereafter) to include or exclude any items otherwise includable or excludable under GAAP.
(b) Different Performance Criteria and performance objectives may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may relate to the individual Participant, the Company, one or more Affiliates, or one or more of their respective divisions or business units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, in each case, as determined by the Committee in its sole discretion.
(c) With respect to Participants who are not Covered Employees and who, in the Committee's judgment, are not likely to be Covered Employees at any time during the applicable Performance Period or during any period in which Incentive Compensation may be paid following a Performance Period, the performance objectives established for the Performance Period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed herein and such performance objectives shall be subject to such other special rules and conditions as the Committee may establish at any time.
| | Tailored Brands, Inc. 2016 Proxy Statement B-6 |
3.4 Modifying Performance Awards. To the extent consistent with Section 162(m) of the Code, performance objectives relating to such Performance Awards may be adjusted by the Committee, in recognition of (a) unusual, infrequently occurring or non-recurring events affecting the Company and/or its Affiliates; (b) changes in applicable tax laws; (c) changes in accounting principles; (d) changes related to restructured or discontinued operations; (e) restatement of prior financial results; and (f) any other unusual, infrequently occurring or non-recurring gain or loss including those described in the Financial Accounting Standards Board's authoritative guidance, footnotes to the Company's financial statements, in management's discussion and analysis of financial condition and results of operations appearing in the Company's reports on Form 10-K, 10-Q or 8-K for the applicable year and/or appearing in a press release reporting the Company's earnings for any fiscal period.
3.5 Adjustments. The Committee will make appropriate adjustments to reflect the effect, if any, on any Performance Criteria or performance objectives of any common share dividend or split, recapitalization (including, without limitation, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares or similar corporate change. Notwithstanding the foregoing, no adjustment shall be made under this Section 3.5 to the extent such adjustment would cause any award to a Covered Employee intended to qualify as qualified performance-based compensation under Section 162(m) of the Code to fail to so qualify.
3.6 Amount of Incentive Compensation. The amount of Incentive Compensation payable under the Plan if the performance objectives under a Performance Award are met may be stated as a specific dollar amount, a percentage of a Participant's Annual Base Salary, a percentage (the sum of which may not be greater than one hundred percent (100%)) of an aggregate amount allocable to all or specified groups of Participants or in any other objectively determinable manner, as determined by the Committee. Also, the amount of Incentive Compensation payable may be stated as a target amount due if applicable performance objectives are met and in larger or smaller increments if the applicable performance objectives are exceeded or partially met. Notwithstanding anything in the Plan to the contrary, during any Fiscal Year, no Participant may receive Incentive Compensation of more than $7,000,000 through the Plan.
3.7 Period for Determining Performance Objectives and Amount of Incentive Compensation. With respect to each Performance Award, the performance objectives, the applicable Performance Period and the method for computing Incentive Compensation payable with respect to the Performance Award will be established by the Committee in writing before the outcome of such performance objectives is substantially certain but in no event later than the earlier of: (a) ninety (90) days after the beginning of the applicable Performance Period; or (b) the expiration of twenty-five percent (25%) of the applicable Performance Period.
3.8 Certification. As of the end of each Performance Period, the Committee will certify in writing the extent to which the applicable performance objectives with respect to any Performance Award have or have not been met and whether other material terms, if any, were satisfied.
3.9 Negative Discretion. In the Committee's sole discretion, the amount of Incentive Compensation actually paid to a Participant may be less than the amount determined by the applicable performance objectives under a Performance Award; provided, however, that the exercise of such negative discretion by the Committee with respect to any Covered Employee shall not have the effect of increasing the amount of Incentive Compensation that is payable to any other Covered Employee.
| | Tailored Brands, Inc. 2016 Proxy Statement B-7 |
ARTICLE IV
PAYMENT OF INCENTIVE COMPENSATION
Unless a Participant has made a valid election under a deferred compensation plan maintained by the Company or any Affiliate no later than the date permitted under such plan and except as otherwise provided in Article VI of the Plan, a Participant's Incentive Compensation for each Performance Period, if any, shall be paid in one or more cash payments (net of applicable tax and other required withholdings) after (a) the results for such Performance Period have been finalized and (b) the Committee has made the certification described in Section 3.8 of the Plan; provided, however, that such Incentive Compensation shall be paid no later than the later of (i) the fifteenth (15th) day of the third (3rd) month following the end of the Participant's first taxable year in which such Incentive Compensation is no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Code) or (ii) the fifteenth (15th) day of the third (3rd) month following the end of the first Fiscal Year in which such Incentive Compensation is no longer subject to a substantial risk of forfeiture.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 Involuntary Termination Without Cause or Termination Due to Death, Disability or Retirement During Performance Period. If during a Performance Period a Participant's employment is terminated involuntarily without Cause or as a result of the Participant's death, Disability or Retirement, unless otherwise provided in an agreement between the Participant and the Company, in the sole discretion of the Committee, the Participant may be eligible to receive a pro-rata portion of the Incentive Compensation that would have been payable if the Participant had remained employed for the full Performance Period, which would be determined and paid as follows:
(a) Following the end of the applicable Performance Period, the Committee would determine the extent to which the performance objectives applicable to the Participant's Performance Award have been satisfied to measure the amount of Incentive Compensation that otherwise would have been payable to the Participant under the Plan had his or her employment not terminated prior to the end of the Performance Period.
(b) The Committee would then multiply the amount determined in accordance with subsection (a) of this Section 5.1 by a fraction, the numerator of which is the number of calendar days the Participant was employed by the Company or any of its Affiliates and participated in the Plan during the Performance Period and the denominator of which is the number of calendar days in the Performance Period.
(c) Such resulting amount, if determined to be paid by the Committee in its discretion pursuant to this Section 5.1, would be paid at the time and in the manner provided for in Article IV of the Plan.
5.2 Forfeiture Upon Other Terminations During Performance Period. If a Participant's employment terminates for any reason other than involuntary termination without Cause or due to the Participant's death, Disability or Retirement prior to the end of a Performance Period, then the Participant shall immediately forfeit and relinquish any and all rights and claims to receive any Incentive Compensation hereunder for such Performance Period.
5.3 Termination After Performance Period. If a Participant's employment terminates for any reason other than for Cause after the end of a Performance Period but prior to the Payment Date, then such Participant shall be entitled to payment of any Incentive Compensation for such Performance Period, as determined by the Committee, on the Payment Date. If a Participant's employment terminates for Cause after the end of a Performance Period but prior to the Payment Date, then the Participant shall immediately forfeit and relinquish any and all rights and claims to receive any Incentive Compensation hereunder for such Performance Period.
| | Tailored Brands, Inc. 2016 Proxy Statement B-8 |
Unless otherwise provided in an agreement between the Participant and the Company or in a change in control plan or program sponsored by the Company covering the Participant, if a Change in Control occurs during a Performance Period, then the Performance Award of each Participant shall be considered to be earned and payable in the amount determined by the Committee, based upon the extent to which the performance objectives applicable to the Performance Award have been satisfied as of the date of the Change in Control. Unless a Participant has made a valid election under a deferred compensation plan maintained by the Company or any Affiliate no later than the date permitted under such plan, Incentive Compensation payable with respect to the Performance Award in accordance with this Article VI shall be paid within thirty (30) days following the date of the Change in Control.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Non-Assignability. A Participant cannot alienate, assign, pledge, encumber, transfer, sell or otherwise dispose of any rights or benefits under the Plan prior to the actual receipt thereof, and any attempt to alienate, assign, pledge, encumber, transfer, sell or otherwise make a disposition prior to such receipt, or any levy, attachment, execution or similar process upon any such rights or benefits, shall be null and void.
7.2 No Right to Continue in Employment. Nothing in the Plan shall confer upon any Participant the right to continue in the employment of the Company or any Affiliate, or interfere with or restrict in any way the right of the Company or any Affiliate to terminate any Participant at any time.
7.3 Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflicts of law provisions.
7.4 Binding Effect. The Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Participants and their respective beneficiaries, heirs, and personal representatives.
7.5 Construction of Plan. The captions used in the Plan are for convenience of reference only and shall not be construed in interpreting the Plan. Whenever the context so requires, the masculine shall also include the feminine and neuter, and the singular shall also include the plural, and conversely.
7.6 Section 409A of the Code. The Plan is intended to be exempt from the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly. Nothing in the Plan shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant and none of the Company, its Affiliates, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Section 409A of the Code.
7.7 Withholding. The Company shall have the right to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable federal, state, local or foreign withholding tax requirements imposed with respect to the payment of any Incentive Compensation.
7.8 Beneficiaries. A Participant's beneficiary who shall receive any payments which may be made under the Plan following the Participant's death shall be the Participant's spouse or, if no spouse survives the Participant, the Participant's estate.
7.9 Effect of the Plan. Neither the adoption of the Plan, nor any action of the Committee hereunder, shall be deemed to give any Participant any right to receive Incentive Compensation or to be granted a Performance Award hereunder. In addition, nothing contained in the Plan, and no action taken
| | Tailored Brands, Inc. 2016 Proxy Statement B-9 |
pursuant to its provisions, shall be construed to give any Participant any right to any compensation, except as expressly provided herein, or create any type of fiduciary relationship between the Company and its Affiliates and a Participant or any other person.
7.10 Awards are Subject to Company's Clawback Policy. All Performance Awards granted under the Plan will be subject to deduction, forfeiture, recoupment or similar requirement in accordance with any clawback or similar policy that may be implemented by the Company from time to time, including such policies that may be implemented after the date a Performance Award is granted, pursuant to the listing standards of any national securities exchange or association on which the Company's securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, or other agreement or arrangement with a Participant.
ARTICLE VIII
AMENDMENT OR TERMINATION
The Committee may at any time, and from time to time, without the consent of any Participant, amend, revise, suspend, or discontinue the Plan, in whole or in part, subject to any shareholder approval required by applicable law, rules or regulations; provided, however, the Committee may not amend the Plan to change the Performance Criteria without the approval of the majority of votes cast by the shareholders of the Company in a separate vote to the extent required by Section 162(m) of the Code.
The Plan shall be effective on the first day of the Fiscal Year beginning in calendar year 2016; subject to shareholder approval that is consistent with the shareholder approval requirements of Section 162(m) of the Code. Any Performance Awards granted by the Committee to Participants prior to the date on which this Plan is approved by the Company's shareholders in accordance with the preceding sentence shall be contingent upon such shareholder approval and shall be null and void and of no effect in the event that the Company's shareholders fail to approve the Plan.
| | Tailored Brands, Inc. 2016 Proxy Statement B-10 |
6380 ROGERDALE RD. HOUSTON, TX 77072
| VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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06 Rinaldo S. Brutoco | 07 Dinesh S. Lathi | 08 Grace Nichols | 09 Allen I. Questrom | 10 Sheldon I. Stein | |||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2 through 6. | For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||||||
2. Adoption of the | o | o | o | 6 Ratification of Deloitte & Touche LLP as | o | o | o | ||||||||||||||||||||||
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice, Proxy Statement and our 2014 Annual Report on Form 10-K and Notice & Proxy Statement are available at www.proxyvote.com.
M93573-P66957
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This Proxy will be voted as directed. IF NOT OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED FOR EACH OF THE NOMINEES LISTED HEREIN AND FOR ALL OTHER PROPOSALS. As noted in the accompanying proxy statement, receipt of which is hereby acknowledged, if | ||||||||||
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