TABLE OF CONTENTS
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Key Compensatory Decisions Applicable to Fiscal
2020 PayIn2022
Subsequent to fiscal 2020 we expect2021, the Compensation Committee engaged in its annual review of executive compensation for purposes of considering compensation for fiscal 2022. Key changes to continue the precedent we setcompensation program for fiscal 2022 include:
Expansion and Modification of SPMP—The Compensation Committee amended the SPMP to, among other things, expand participation in the SPMP to all director-level and above employees, with varying matching percentage opportunities based on employee levels. Commencing with matching RSUs granted for participation related to fiscal 2019 with respect2021 bonus payouts, matching RSUs will now vest as to our20%, 20%, and 60% of the RSUs on the first, second, and third anniversaries of the grant date, provide for pro-rata acceleration of vesting for qualifying terminations, and align the forfeiture provision for selling related shares to the revised pay plan,vesting schedule. The Compensation Committee approved the expansion of the SPMP, which has been overwhelmingly supported by our shareholders as evidenced by continued conversations ourwill replace other annual equity awards to non-executive employees, to provide the same opportunity for a broader group of Company leaders to participate in the Company’s ownership-based compensation program.
Adoption of Fiscal 2022 Long Term Incentive Plan Program—The Compensation Committee has had with our shareholders in fiscal 2019, as well as the high level of support we received from shareholders during our 2018 “say on pay” vote. Since we granted each executiveapproved a single, largenew long-term equity incentive program for fiscal 2022. As discussed above, our reorganization contributed to significant changes in our leadership team following Mr. Athayde’s appointment less than one year ago. To align the reconstituted leadership team under our new CEO, the Committee determined it was appropriate to award inlong term equity incentive awards for the executive officers for fiscal 20192022. These one-time awards were delivered half in the form of PSUsstock options and RSUs at the outset of a five-year period, our executives will not receive annual grants in fiscal 2020 and are not expected to receive additional automatic annual grants for the remainder of the period, subject to possible inducement, retention or performance grants in particular situations. For fiscal 2020, the Committee approved one grant for Mr. Kapadiahalf in the form of a restrictedcash-settled stock unit award that cliff vests in three years, having a grant date fair value of $600,000.In fiscal 2020, we will continue to reward pay for performance by permitting our executives to participate in our matching share program by contributing up to half of their earned, fiscal 2019 annual cash incentive, net of normalized tax withholding (“bonus”) to purchase shares of our common stock and the Company will provide them a matching grant of RSUs with a value equal to up to 200% of their contributionappreciation rights, compensating leaders only to the plan (before deducting any related or normalized tax withholding). These RSUs are subjectextent our shareholders benefit through stock price appreciation. The awards will vest on the first three annual anniversaries of the date of grant in increments of 20%, 20% and 60% of the shares, respectively. Consistent with past practice, the Committee expects these awards, coupled with the continuation of the SPMP, to a five-year cliff vesting condition and participants are also required to hold their underlying purchased shares forprovide the same five-year period. Eligible executives who elect to contribute 25%desired alignment of their earned fiscal 2019 bonus, net of normalized tax withholding, to purchase shares will receive a 100% match on their contribution (before deducting any related or normalized tax withholding); similarly executives who elect to contribute 50% of their earned fiscal 2019 bonus, net of normalized tax withholding, to share purchases will receive a 200% match on their contribution (before deducting any related or normalized tax withholding).
Awards made under our 2018 Long Term Incentive Plan, including any awards made in fiscal 2020 and beyond, are also subject to double trigger acceleration upon a change in control as the default treatment.
In fiscal 2020, we will stay the course as we believe that the pay for performance-centered pay plan we effectuated in fiscal 2019 has focused our leaders on sustainable, long-term performance. The compensation levels for our NEOs remain relatively flat for fiscal 2020, other than an increase in Mr. Kapadia’s base salary to $600,000.
leadership team with shareholders’ interests. EXECUTIVE COMPENSATION DiscussionThese changes described above will be discussed in more detail and Analysis
reflected in the compensation tables in next year’s proxy statement. | |
2021 PROXY STATEMENT32 | | | |
TABLE OF CONTENTS
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Governance Policies and Additional
Compensation-Related Items
We believe in holding ourselves to a high standard of ethics, transparency, and accountability. Accordingly, we have adopted corporate governance practices and policies that, in many cases, go beyond SEC and
stock exchangeNYSE requirements to reflect emerging best practices.
Compensation Practice | Regis Policy
|
Independent Compensation
Committee | | | Our Compensation Committee is composed solely of directors who are independent under the standards of the SEC and the NYSE, including the higher standards applicable to Compensation Committee members. | |
| Clawback Policy | | | Our “clawback” policy permits us to recover certain equity as well as cash incentive payments from executive officers whose misconduct or negligence resulted in a significant financial restatement. | |
| Limited Severance Benefits
and Perks | | | We have benchmarked and implemented market severance terms (generally, base salary plus bonus, or two times base plus bonus after a change in control), while retaining our “double trigger” structure. | |
| No Tax Gross-Ups | | | We do not provide tax gross-ups on perquisites or “golden parachute” payments. | |
| Frozen Supplemental
Retirement Benefit Plan | | | We froze the benefits under our supplemental retirement benefit plan as of June 30, 2012, as well as certain executive life insurance benefits. Mr. Bakken is the only currently employed NEO who so qualifies.qualifies, and following the termination of his employment on December 31, 2020, there are no further participants. | |
| Stock Ownership Guidelines | | | We have meaningful stock ownership guidelines for our executives, discussed in more detail below. | |
| Hedging Restrictions/
Prohibitions | | | Our insider trading policy prohibits our directors, officers, other employees, and designees of the foregoing from purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars and exchange funds, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our common stock, including shares held directly or indirectly (however, our policy does not prohibit general portfolio diversification transactions). | |
| Pledging Restrictions/
Prohibitions | | | Our insider trading policy prohibits our employees, officers, and directors from holding our stock in a margin account or pledging it as collateral for a loan, except in the limited circumstance that an individual has demonstrated financial capacity to repay the loan without resort to the pledged securities and obtains approval from our General Counsel approval.Counsel. | |
| Independent Compensation
Consultant | | | Pay Governance has advised our independent Compensation Committee since fiscal 2018. | |
| Risk Assessment | | | We consider risk in our compensation programs and periodically conduct a risk assessment, which is led by our independent compensation consultant. | |
| Annual Say-on-Pay Vote | We
| | Every year, we offer our shareholders the opportunity to cast an advisory vote on our executive compensation every year.compensation. | |
| No Repricing or Exchange of
Underwater Options/SARs | | | Our plan prohibits the repricing or exchange of underwater stock options and stock appreciation rights without shareholder approval. | |
Stock Ownership by
Our Continuing Named Executive Officers
The Board believes that each of our
officersexecutives who has reached the level of Senior Vice President or above should be a shareholder and should have a significant financial stake in the Company. Accordingly, the
Compensation Committee adopted stock ownership requirements, which are reflected in our Corporate Governance Guidelines, requiring each
officerexecutive to hold our common stock having a fair market value equal to a multiple of their base salary, as set forth below:
•
Chief Executive Officer—3x annual base salary
•
Executive Vice President—2x annual base salary
•
Senior Vice President—1x annual base salary
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EXECUTIVE COMPENSATION Discussion and AnalysisDISCUSSION AND ANALYSIS
The current stock ownership requirements were established in April 2013. The guidelines require officers to retain at least 75% of the shares received from equity compensation awards, net of shares withheld or tendered to satisfy withholding taxes, until the stock ownership requirement is satisfied. All shares beneficially owned by an officerexecutive are included in the calculation, except that shares subject to performance-based vesting conditions, and shares subject to unexercised stock options, and SARs are not included. For purposes of the stock ownership calculation, the shares are valued at the greater of (i) the average closing price of aone share of the Company’s common stock during the most recent fiscal year and (ii) the closing price on the last day of the most recent fiscal year.
As set forth in
In addition, our Corporate Governance Guidelines require executives to retain at least 75% of the
tableshares they received from equity compensation awards, net of shares withheld or tendered to
satisfy withholding taxes, until the
right, of our currently employed NEOs, onlystock ownership requirement is satisfied. Accordingly, Ms. Zupfer and Mr. Kapadia
who joined us in June 2018, did not hold stock greater than our stock ownership policy minimum as of June 30, 2019.remain subject to this holding requirement.
The Nominating and Corporate Governance Committee is responsible for measuring and monitoring compliance with these guidelines.
| Stock Ownership
Guideline
Felipe A. Athayde | Current Ownership
Level | | 3x | | | 4.8x | |
Hugh E. Sawyer | 3x
Kersten D. Zupfer | 4.0x | | 2x | | | 1.1x | |
Andrew H. Lacko | 2x
Chad Kapadia | 2.6x | | 2x | | | 1.0x | |
Eric A. Bakken | 2x
Amanda P. Rusin | 3.9x | | 2x | | | 2.0x | |
Chad Kapadia 1
| 2x
| 1.5x
|
Jim B. Lain
| 2x
| 2.7x As of the end of fiscal 2021. |
Employment Agreements and Post-Employment Compensation
EachThree of the NEOs named in this Proxy Statement, is partyMs. Zupfer, Mr. Sawyer, and Mr. Bakken, are or were parties to a written employment agreementagreements with the Company, with the exceptions of Mr. Lacko and Mr. Kapadia.Company. Pursuant to their employment agreements, all of our eligiblethese NEOs are entitled to certain compensation and other benefits if their employment terminates due to certain articulated reasons (including in connection with a change in control), as described below under “Summary of Executive Agreements.” TheFurther, these employment agreements with our NEOs contain covenants not to compete or solicit, as well as confidentiality provisions, thatwhich the Compensation Committee considers especially valuable in the event of an executive’s termination of employment. TheyThese employment agreements also provide for payment of post-termination payments, which are conditioned upon signing, and not rescinding, a release of claims and compliancecomplying with the restrictive covenants in the employment agreement.
The Compensation Committee and the Board recognize the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with any rumored or actual change in control of the Company. Accordingly, the Compensation Committee and Board have structured change in control provisions to incentivize executives to remain employed by the Company while a transaction is under consideration or pending, and to not to favor one transaction structure over another merely because of the impact on the executive’s compensation. These provisions are discussed below in the section captioned “Summary of Executive Agreements.”
ChangesOur NEOs who are not parties to Severance Program
During the past few years, our Company experienced numerous meaningful changes, which the Board and Committee believe will ultimately help position the Company for future success. Most critically, we announced a strategic shift to accelerate and expand our franchise model. In an effort to support retention of key talent in January 2017, the Committee provided that any future severance payments made to our executives would be paid in a lump sum upon termination, rather than as salary continuation (whenever feasible without adverse tax consequences to the employee), and that, for employees with employment agreements (including Mr. Athayde) are entitled to severance benefits under which casha senior executive severance would be offsetpolicy adopted by earnings from otherthe Compensation Committee in May 2020. Under this severance policy, Senior Vice Presidents and above who are not parties to employment agreements are entitled to receive certain severance benefits if their employment is terminated without cause. To receive severance benefits under this policy, an eligible executive must sign, and not rescind, a release of claims and must comply with one-year non-competition and non-solicitation covenants. The terms of this policy are discussed in the Committee providedsection captioned “Senior Executive Severance Policy.”
While not subject to an employment agreement, we entered into a letter agreement with Mr. Athayde that cash severance would no longer be offset by earnings from non-competitive employment (as determined according tosets forth the terms of theirhis employment agreement). These changes werewith the Company. The terms of the letter agreement with Mr. Athayde include, among others, establishing his annual base salary and his annual target payout for his annual cash bonus. The letter agreement also adoptedsets forth certain negotiated terms related to incentivize executivesMr. Athayde leaving his prior employment to remainaccept this position at the Company, including a signing bonus (which is subject to pro-rata repayment if he is terminated under certain circumstances prior to the first anniversary of the date he commenced employment) and sign-on equity awards, as well as providing for reimbursement of his relocation expenses, including temporary housing, for up to 12 months, up to an aggregate amount of $150,000. As a condition to his employment with the Company, through its transformation in spiteMr. Athayde entered into the Company’s customary restrictive covenants agreement, including non-compete, non-disclosure, non-solicitation, and non-hire covenants. The terms of the uncertainty caused by strategic change. These policy changes do not apply to Mr. Sawyer, as specified in his employment agreement.
In August 2018, we entered into letter agreements with our executive officers which provided for a one-time lump sum paymentagreement are discussed in the event the executive experienced a “Qualifying Termination” prior to August 31, 2019. “Qualifying Termination” for our executives other thansection captioned “Compensatory Arrangements with Mr. Sawyer means (a) a termination of employment without Cause (as defined in our 2016 Long Term Incentive Plan) under circumstances in which the Board does not intend to fill the position that the employee held immediately prior to the Qualifying Termination, or (b) a termination of employment without Cause or for Good Reason
Athayde.”EXECUTIVE COMPENSATION Discussion and Analysis
| |
2021 PROXY STATEMENT34 | | | |
following the appointment of a successor or interim successor to the current Chief Executive Officer, Mr. Sawyer. “Good Reason” has the meaning set forth in the employee’s employment agreement, as amended by the letter agreement, or if the employee does not have an employment agreement, as defined in the letter agreement. A “Qualifying Termination” with respect to Mr. Sawyer means his termination without Cause. None of our executives experienced a “Qualifying Termination” prior to August 31, 2019. The August 2018 letter agreements also contained a waiver of each executive providing that none of: the implementation of the fiscal 2019 pay plan, the terms and conditions of the fiscal 2019 equity awards or the fact that the Company is not obligated to grant the executive additional equity awards through August 30, 2023 could constitute “Good Reason” under the terms of such executive’s employment agreement or otherwise.TABLE OF CONTENTS
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Deductibility of Executive Compensation
Code Section 162(m) precludes the Company from taking a federal income tax deduction for compensation paid in excess of $1 million to our “covered employees” (which as of fiscal
20192021, includes the
CEO, CFO,President and Chief Executive Officer, Chief Financial Officer, our three other most highly compensated
executive officersexecutives, and certain former employees identified as a covered employee in fiscal 2018 or any subsequent year).
The
Compensation Committee continues to believe that a significant portion of our executives’ compensation should be tied to the Company’s performance
and]and that shareholder interests are best served if
itsthe Company’s discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards may have resulted in the past, and are expected to result in the future, in non-deductible compensation expenses to the Company. The
Compensation Committee’s ability to continue to provide a competitive compensation package to attract, motivate, and retain the Company’s most senior executives is considered critical to the Company’s success and to advancing the interests of its shareholders.
Regulatory Considerations
The
Compensation Committee considered (i) the accounting treatment of various types of equity-based compensation under Accounting Standards Codification
(ASC)(“ASC”) Topic 718 and (ii) the non-deductibility of excess parachute tax payments under Code Section 280G (and the related excise tax imposed on covered employees under Code Section 4999) in its design of executive compensation programs. In addition, the
Compensation Committee considered other tax and accounting provisions in developing the compensation programs for our NEOs. These
considerations included the special rules applicable to non-qualified deferred compensation arrangements under Code Section 409A, as well as the overall income tax rules applicable to various forms of compensation. While the
Compensation Committee strove to compensate our NEOs in a manner that produced favorable tax and accounting treatment, its main objective was to develop fair and equitable compensation arrangements that appropriately motivate, reward, and retain those executives.
Compensation Committee Report The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the management of the Company. Based on its review and related discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Daniel G. Beltzman Chair
Virginia Gambale
Mark S. Light
Michael J. Merriman
M. Ann Rhoades, Chair
Members of the Compensation Committee
34 | | | | |
TABLE OF CONTENTSExecutive Compensation Tables
EXECUTIVE COMPENSATION TABLES
EXECUTIVE COMPENSATION TABLES Summary Compensation Table The following table shows for each personindividual who served as our principal executive officer andin fiscal 2021, the individual who served as our principal financial officer in fiscal 2019,2021, the three other most highly compensated executive officers in fiscal 20192021 who were still serving as such on June 30, 20192021, and one additional individual who served as an executive officer during part of fiscal 2021 but who was not serving as an executive officer at the end fiscal 2021 and whose total compensation for the year would have made the individual one of the three most highly compensated executives officers for the fiscal 2021 (together, referred to as the Named“Named Executive OfficersOfficers” or “NEOs”), information concerning compensation earned for services in all capacities during each of the fiscal years ended June 30, 2019, 2018,2021, 2020, and 2017.2019.
| | | | | | | | | |
Name and Principal Position | Fiscal Year | Salary1 ($) | Bonus2 ($) | Stock Awards3 ($) | Option Awards3 ($) | Non-Equity Incentive Plan Compensation4 ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 ($) | All Other Compensation6 ($) | Total ($) |
Hugh E. Sawyer President and Chief Executive Officer | 2019 | 950,000 | 145,802 | 6,588,878 | — | 715,431 | — | 26,946 | 8,427,057 |
2018 | 950,000 | — | — | — | 1,966,500 | — | 161,832 | 3,078,332 |
2017 | 197,917 | 585,000 | 730,044 | 3,680,000 | — | — | 4,682 | 5,197,643 |
Andrew H. Lacko Executive Vice President and Chief Financial Officer7 | 2019 | 527,000 | 53,460 | 1,162,142 | — | 240,570 | — | 12,934 | 1,996,106 |
2018 | 527,000 | 125,000 | 786,851 | — | 534,600 | — | 60,992 | 2,034,443 |
Eric A. Bakken Executive Vice President, President - Franchise, Former Interim Chief Financial Officer, General Counsel and Corporate Secretary | 2019 | 527,000 | 66,825 | 1,313,472 | — | 300,713 | 151,934 | 33,812 | 2,393,756 |
2018 | 527,000 | — | 546,076 | — | 1,113,750 | — | 33,260 | 2,220,086 |
2017 | 519,500 | — | 399,990 | — | — | — | 31,625 | 951,115 |
Chad Kapadia Executive Vice President and Chief Technology Officer8 | 2019 | 495,000 | 42,768 | 1,262,125 | — | 204,930 | — | 13,040 | 2,017,863 |
Jim B. Lain Executive Vice President and Chief Operating Officer | 2019 | 432,000 | 19,008 | 1,043,642 | — | 113,760 | — | 9,442 | 1,617,852 |
2018 | 432,000 | — | 436,860 | — | 792,000 | — | 6,774 | 1,667,634 |
2017 | 432,000 | — | 399,990 | — | — | — | 10,465 | 842,455 |
1Includes amounts provided to the NEOs (with the exception of Messrs. Sawyer and Kapadia) in the form of a modest perquisite allowance of approximately $32,000 per NEO that primarily covers an automobile allowance. The entire allowance is paid to the NEOs regardless of whether they spend the entire amount on automobile expenses and, therefore, is reported as base salary; however, the allowance amount is not included as base salary for purposes of determining other compensation and benefits amounts.
2The amounts for fiscal 2019 represent an additional payment paid pursuant to the AIC awards under the Short Term Plan described under “Annual Incentive Decisions for Fiscal 2019” in the CD&A. The amount for fiscal 2018 for Mr. Lacko represents a sign-on payment in connection with the commencement of his employment. The amount for fiscal 2017 for Mr. Sawyer represents a sign-on payment made in connection with the commencement of his employment.
3Values expressed represent the aggregate grant date fair value of stock or option awards granted in each fiscal year, as computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date for RSUs and PSUs with performance metrics other than market conditions, the Monte Carlo model for PSUs with market conditions and the Black-Scholes model for SARs. See Note 12 | Felipe A. Athayde
President and Chief
Executive Officer8 | 2021 | 520,064 | 2,500,000 | 2,500,000 | 4,218,453 | 587,344 | — | 169,118 | 10,494,979 | |
| Kersten D. Zupfer
Executive Vice President
and Chief Financial Officer9 | 2021 | 457,000 | — | 300,721 | — | 228,225 | — | 270 | 986,216 | |
2020 | 393,097 | 43,750 | 553,484 | — | 190,312 | — | 430 | 1,181,073 | |
| Chad Kapadia
Executive Vice President
and Chief Technology Officer | 2021 | 600,000 | — | — | — | 322,200 | — | 36,677 | 958,877 | |
2020 | 558,596 | 69,900 | 599,988 | — | 304,065 | — | 18,293 | 1,550,842 | |
2019 | 495,000 | 42,768 | 1,262,125 | — | 204,930 | — | 13,040 | 2,017,863 | |
| Amanda P. Rusin
Executive Vice
President, General
Counsel and Chief
Development Officer10 | 2021 | 382,000 | — | 251,680 | — | 193,171 | — | 42,163 | 869,014 | |
| James A. Townsend
Former Executive
Vice President and
Chief Marketing Officer11 | 2021 | 495,000 | — | 317,785 | — | 265,815 | — | 50,321 | 1,128,921 | |
2020 | 475,279 | 59,400 | — | — | 258,390 | — | 21,728 | 814,797 | |
| Hugh E. Sawyer
Former President and
Chief Executive Officer12 | 2021 | 244,808 | — | — | — | 570,000 | — | 1,255,372 | 2,070,180 | |
2020 | 861,821 | — | — | — | — | — | 28,040 | 889,861 | |
2019 | 950,000 | 145,802 | 6,588,878 | — | 715,431 | — | 26,946 | 8,427,057 | |
| Eric A. Bakken
Former Executive
Vice President and
President - Franchise13 | 2021 | 263,500 | — | — | — | — | 106,076 | 445,484 | 815,060 | |
2020 | 507,279 | 74,250 | — | — | 322,988 | 196,421 | 21,608 | 1,122,546 | |
2019 | 527,000 | 66,825 | 1,313,472 | — | 300,713 | 151,934 | 33,812 | 2,393,756 | |
1
| As to only Ms. Zupfer and Ms. Rusin, this value includes amounts provided in the form of a modest perquisite allowance of approximately $32,000 per NEO, and as to Mr. Bakken, this value includes amounts provided in the form of a modest perquisite allowance of approximately $16,000, which primarily covers an automobile allowance. The entire allowance is paid to the NEOs regardless of whether they spend the entire amount on automobile expenses and, therefore, is reported as base salary; however, the allowance amount is not included as base salary for purposes of determining other compensation and benefits amounts. |
2
| The amounts for fiscal 2020 and 2019 represent the portion of AIC awards attributed to individual performance goals as the Committee determined that each NEO would receive a payout equal to at least 100% of his or her individual performance metric. The amount for fiscal 2021 for Mr. Athayde represents a sign-on payment in connection with the commencement of his employment. |
3
| Values expressed represent the aggregate grant date fair value of stock or option awards granted in each fiscal year, as computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date for RSUs and PSUs with performance metrics other than market conditions, the Monte Carlo model for PSUs with market conditions and the Black-Scholes model for SARs. See Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for a description of the assumptions used in calculating these amounts. |
2021 PROXY STATEMENT | 35 |
TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
The grant date fair values for stock awards for the fiscal year ended June 30, 2021 include:
RSUs to acquire 358,680 shares that were granted to Mr. Athayde, which vest on the first anniversary of Mr. Athayde’s commencement of employment.
Matching RSUs that were granted in December 2020: Ms. Zupfer—$234,056; Ms. Rusin—$185,015; and Mr. Townsend—$317,785.
RSUs to acquire 6,307 shares that were granted in February 2021 as an incentive related to leadership retention to Ms. Zupfer and Ms. Rusin—$66,665 each.
The grant date fair values for stock awards for the fiscal year ended June 30, 2020 include:
Matching RSUs that were granted in August 2019 for a description of the assumptions usedto Ms. Zupfer—$28,508.
RSUs to acquire 7,564 shares that were granted to Ms. Zupfer in
calculating these amounts.November 2019 in connection with her promotion to CFO—$131,235; and PSUs to acquire 22,694 shares that were granted to Ms. Zupfer in November 2019 in connection with her promotion to CFO—$393,741.
RSUs to acquire 37,105 shares that were granted to Mr. Kapadia in September 2019 as an incentive related to leadership retention—$599,988.
The grant date fair values for stock awards for the fiscal year ended June 30, 2019 include:
•
PSUs that were granted in August 2018: Mr. Sawyer—$4,313,880; Mr.
Lacko—$663,670; Mr. Bakken—$829,587;
and Mr. Kapadia—$
663,670; and Mr. Lain—$663,670.•663,670, which PSUs were not earned based on results for the 2019-2021 performance period.
RSUs that were granted in August 2018: Mr. Sawyer—$2,274,998; Mr.
Lacko—$349,983; Mr. Bakken—$437,490;
and Mr. Kapadia—$
349,983; and Mr. Lain—$349,983.
•
Matching RSUs that were granted in August 2018: Mr.
Lacko—$148,489; Mr. Bakken—$46,395;
and Mr. Kapadia—$
148,489; and Mr. Lain—$29,989.•148,489.
RSUs to acquire 5,361 shares that were granted to Mr. Kapadia in June 2019 in connection with the successful completion of a key technology initiative related to a mobile application and a new
partnership —$partnership—$99,983.
The grant date fair values for stock awards for the fiscal year ended June 30, 2018 include:
•PSUs that were granted in October 2017: Mr. Lacko—$276,863; Mr. Bakken—$346,079; and Mr. Lain—$276,863. The grant date fair values of these awards assumed that the target level achievement would be attained. If the grant date fair values had been calculated assuming the maximum level of achievement, the grant date fair values would have been: Mr. Lacko—$553,726; Mr. Bakken—$692,158; and Mr. Lain—$553,726.
Executive Compensation Tables
4
| For Mr. Athayde, the value expressed represents (a) 1,100,000 options to purchase shares of the Company’s common stock, which are eligible to vest, as to the service requirement, on the fourth anniversary of the commencement of Mr. Athayde’s employment with the Company, subject to achievement, prior to the fifth anniversary of the commencement of his employment, of a volume-weighted average closing price per share of the Company equal to or in excess of 150% of the closing price per share on the trading day immediately prior to the date of the announcement of Mr. Athayde’s employment with the Company; and (b) 358,680 options to purchase shares of the Company’s common stock, which vest on the fourth anniversary of the commencement of his employment. |
5
| Amounts for fiscal 2021 represent amounts earned pursuant to AIC awards under the Short Term Plan as described more fully under the heading “Annual Incentive Awards for Fiscal 2021” in the CD&A section of this Proxy Statement. |
6
| Amounts represent the change in the present value of benefits under the pension plans. Mr. Bakken is the only NEO eligible for such plans. |
7
| The following table sets forth All Other Compensation amounts by type: |
| Felipe A. Athayde | | | 13,542 | | | 150,000 | | | 5,576 | |
| Kersten D. Zupfer | | | — | | | — | | | 270 | |
| Chad Kapadia | | | 27,273 | | | — | | | 9,404 | |
| Amanda P. Rusin | | | 25,428 | | | — | | | 16,735 | |
| James A. Townsend | | | 28,125 | | | — | | | 22,196 | |
| Hugh E. Sawyer | | | — | | | — | | | 1,255,372 | |
| Eric A. Bakken | | | — | | | — | | | 445,484 | |
a
| The Company matches the NEOs’ contributions into its retirement savings plans up to $25,000 per calendar year. Amounts greater than $25,000 are due to the difference between calendar and fiscal year compensation. |
b
| Amount reflects reimbursements of Mr. Athayde’s relocation expenses. |
c
| Total All Other Compensation includes the following perquisites, which primarily relate to medical benefits, including the reimbursement of co-pay and other out-of-pocket expenses: Mr. Athayde—$4,545; Mr. Kapadia—$7,391; Ms. Rusin—$6,556; Mr. Townsend—$20,726; Mr. Sawyer—$565; and Mr. Bakken—$2,800; PTO payout/post-employment consulting payments: Mr. Sawyer—$1,254,808; and severance payments earned in fiscal 2021: Mr. Bakken—$442,684. |
8
| Mr. Athayde was appointed as President and CEO on October 5, 2020. |
9
| Ms. Zupfer was promoted to CFO on November 11, 2019. |
10
| Ms. Rusin first became an NEO in fiscal 2021. |
11
| Mr. Townsend’s employment commenced April 8, 2019 and ended on June 30, 2021. |
12
| Mr. Sawyer’s employment ended on October 4, 2020. |
13
| Mr. Bakken’s employment ended on December 31, 2020. |
36 | | |
36 | | |
The grant date fair values for stock awards for the fiscal year ended June 30, 2017 include:
•PSUs that were granted in August 2016: Mr. Bakken—$239,999; and Mr. Lain—$239,999. The grant date fair values of these awards assumed that the target level achievement would be attained. If the grant date fair values had been calculated assuming the maximum level of achievement, the grant date fair values would have been: Mr. Bakken—$479,998; and Mr. Lain—$479,998.
•A special sign-on grant of SARs and RSUs made to Mr. Sawyer in April 2017 valued at $3,680,000 and $730,044, respectively; these awards cliff vest after two years. In the case of the RSUs, they are also subject to the satisfaction of performance goals related to the Company’s stock price, which was satisfied in April 2019. Furthermore, the SARs will not become exercisable and the RSUs will not be settled until the third anniversary of the date of grant, and the SARs will be exercisable until the tenth anniversary of the date of grant.
4Amounts for fiscal 2019 represent amounts earned pursuant to AIC awards under the Short Term Plan.
5Amounts represent the change in the present value of benefits under the pension plans. Mr. Bakken is the only NEO eligible for such plans. The pension value for Mr. Bakken decreased by $54,403 and $6,843 in fiscal 2018 and 2017, respectively.
6The following table sets forth All Other Compensation amounts by type:
| | | |
Name | Company Match and Profit- Sharing Contributiona ($) | Moving / Travel Expensesb ($) | Total All Other Compensationc ($) |
Hugh E. Sawyer | — | 22,058 | 26,946 |
Andrew H. Lacko | — | — | 12,934 |
Eric A. Bakken | 24,506 | — | 33,812 |
Chad Kapadia | 5,469 | — | 13,040 |
Jim B. Lain | 2,000 | — | 9,442 |
aThe Company matches our NEOs’ contributions into our retirement savings plans up to $25,000 per calendar year. Amounts greater than $25,000 are due to the difference between calendar and fiscal year compensation.
bMr. Sawyer is entitled to reimbursement of temporary housing expenses for 18 months from his start date of April 17, 2017, up to $175,000 in total, pursuant to his employment agreement. Any unspent portion will be paid to him if he remains employed after 18 months.
cTotal All Other Compensation for Mr. Sawyer, Mr. Lacko, Mr. Bakken, Mr. Kapadia and Mr. Lain; also includes $4,888, $12,934, $9,306, $7,571 and $7,442 of perquisites, respectively, which primarily relate to medical benefits, including the reimbursement of co-pay and other out-of-pocket expenses.
7Mr. Lacko’s employment commenced July 1, 2017.
8Mr. Kapadia’s employment commenced June 18, 2018.
TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
Grants of Plan-Based Awards in 2019
2021
The following table sets forth certain information concerning plan-based awards granted to the
Named Executive OfficersNEOs during the fiscal year ended June 30,
2019. No options were granted, repriced or materially modified during the fiscal year. | | | | | | | | | | | |
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Possible Payouts Under Equity Incentive Plan Awards2 | | |
Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target3 (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units2 (#) | Grant Date Fair Value of Stock & Option Awards4 ($) |
Hugh E. Sawyer | | | 546,250 | 1,092,500 | 2,185,000 | | | | | | |
8/31/2018 | 8/14/2018 | | | | | — | 319,074 | — | | 4,313,880 |
8/31/2018 | 8/14/2018 | | | | | | | | 106,358 | 2,274,998 |
Andrew H. Lacko | | | 148,500 | 297,000 | 594,000 | | | | | | |
8/31/2018 | 8/14/2018 | | | | | — | 49,088 | — | | 663,670 |
8/31/2018 | 8/14/2018 | | | | | | | | 23,304 | 498,473 |
Eric A. Bakken | | | 185,625 | 371,250 | 742,500 | | | | | | |
8/31/2018 | 8/14/2018 | | | | | — | 61,360 | — | | 829,587 |
8/31/2018 | 8/14/2018 | | | | | | | | 22,622 | 483,885 |
Chad Kapadia | | | 148,500 | 297,000 | 594,000 | | | | | | |
8/31/2018 | 8/14/2018 | | | | | — | 49,088 | — | | 663,670 |
8/31/2018 | 8/14/2018 | | | | | | | | 23,304 | 498,473 |
6/05/2019 | 5/30/2019 | | | | | | | | 5,3615 | 99,983 |
Jim B. Lain | | | 120,000 | 240,000 | 480,000 | | | | | | |
8/31/2018 | 8/14/2018 | | | | | — | 49,088 | — | | 663,670 |
8/31/2018 | 8/14/2018 | | | | | | | | 17,764 | 379,972 |
2021.1These amounts represent the threshold, target, and maximum non-equity incentive (bonus) amounts that could have been earned by our executives for fiscal 2019 under the Short Term Plan, as described under “Annual Incentive Decisions for Fiscal 2019” in the CD&A. Based on fiscal 2019 results, the non-equity incentive awards paid out at percentages ranging from 55.3% to 99.0% of target as described in “Annual Incentive Decision for Fiscal 2019” in the CD&A.
2Annual grants for the fiscal year ended June 30, 2019 include:
•RSUs that were granted in August 2018: Mr. Sawyer—106,358; Mr. Lacko—16,362; Mr. Bakken—20,453; Mr. Kapadia—16,362; and Mr. Lain—16,362. These awards cliff vest on the third anniversary of the grant date.
•Matching RSUs that were granted in August 2018: Mr. Lacko—6,942; Mr. Bakken—2,169; Mr. Kapadia—6,942; and Mr. Lain—1,402. These awards cliff vest on the fifth anniversary of the grant date.
3These amounts represent the number of PSUs that were available to our executives with respect to the fiscal 2019 PSU awards for the performance period ending June 30, 2021 as described under “Long-Term Incentive Decisions for Fiscal 2019” in the CD&A. These awards will vest on the fifth anniversary of the grant date if the participant is still employed by the Company and the performance goal has been achieved.
4Amounts are computed in accordance with FASB ASC Topic 718.
5Represents an award of RSUs to acquire 5,361 shares that was granted to Mr. Kapadia in June 2019 in connection with the successful completion of a key technology initiative related to a mobile application and a new partnership. This award will cliff vest on the third anniversary of the grant date.
Executive Compensation Tables
| Felipe A. Athayde | | | | | | | | | 437,500 | | | 656,25010 | | | 1,750,000 | | | | | | | | | | | | | | | | | | | | | | |
| 10/5/2020 | | | 9/4/2020 | | | | | | | | | | | | | | | | | | | | | 358,6805 | | | | | | | | | 2,500,000 | |
| 10/5/2020 | | | 9/4/2020 | | | | | | | | | | | | | | | | | | | | | | | | 358,6806 | | | 6.53 | | | 1,072,453 | |
| 10/5/2020 | | | 9/4/2020 | | | | | | | | | | | | | | | | | | | | | | | | 1,100,0007 | | | 6.53 | | | 3,146,000 | |
| Kersten D. Zupfer | | | | | | | | | 127,500 | | | 255,000 | | | 510,000 | | | | | | | | | | | | | | | | | | | | | | |
| 12/21/20 | | | 4 | | | | | | | | | | | | | | | | | | | | | 25,276 | | | | | | | | | 234,056 | |
| 2/8/21 | | | 01/26/2021 | | | | | | | | | | | | | | | | | | | | | 6,3078 | | | | | | | | | 66,665 | |
| Chad Kapadia | | | | | | | | | 180,000 | | | 360,000 | | | 720,000 | | | | | | | | | | | | | | | | | | | | | | |
| Amanda P. Rusin | | | | | | | | | 107,917 | | | 215,833 | | | 431,667 | | | | | | | | | | | | | | | | | | | | | | |
| 12/21/20 | | | 4 | | | | | | | | | | | | | | | | | | | | | 19,980 | | | | | | | | | 185,015 | |
| 2/8/21 | | | 01/26/2021 | | | | | | | | | | | | | | | | | | | | | 6,3078 | | | | | | | | | 66,665 | |
| James A. Townsend | | | | | | | | | 158,895 | | | 317,79011 | | | 635,580 | | | | | | | | | | | | | | | | | | | | | | |
| 12/21/20 | | | 4 | | | | | | | | | | | | | | | | | | | | | 34,3189 | | | | | | | | | 317,7859 | |
| Hugh E. Sawyer | | | | | | | | | 285,000 | | | 570,000 | | | 1,150,000 | | | | | | | | | | | | | | | | | | | | | | |
| Eric A. Bakken | | | | | | | | | 185,625 | | | 371,250 | | | 742,500 | | | | | | | | | | | | | | | | | | | | | | |
1
| These amounts represent the threshold, target, and maximum non-equity incentive (“bonus”) amounts that could have been earned by our executives for fiscal 2021 under the Short Term Plan, as described under “Annual Incentive Decisions for Fiscal 2021” in the CD&A section of this Proxy Statement. Based on fiscal 2021 results, bonus payments equal to 89.5% of target were earned as described in “Annual Incentive Decisions for Fiscal 2021” in the CD&A section of this Proxy Statement. |
2
| Annual grants for the fiscal year ended June 30, 2021 include matching RSUs that were granted in December 2020 to: Ms. Zupfer—25,276; Ms. Rusin – 19,980; and Mr. Townsend—34,318. These awards cliff vest on the fifth anniversary of the grant date. |
3
| Amounts are computed in accordance with FASB ASC Topic 718. |
4
| Awards granted pursuant to terms of matching share program approved August 14, 2018. |
5
| Represents 358,680 RSUs, with a value equal to $2,500,000 (based on the closing price of a share on September 4, 2020), which vest on the first anniversary of the commencement of Mr. Athayde’s employment, subject to his continued service. |
6
| Represents 358,680 options to purchase shares of the Company’s common stock, which vest on the fourth anniversary of the commencement of Mr. Athayde’s employment, subject to his continued service. |
7
| Represents 1,100,000 options to purchase shares of the Company’s common stock, granted under the Company’s 2018 Long Term Incentive Plan, which are eligible to vest, as to the service requirement, on the fourth anniversary of the commencement of Mr. Athayde’s employment, subject to achievement, prior to the fifth anniversary of his start date, of a volume-weighted average closing price per share of the Company equal to or in excess of 150% of the closing price per share on the trading day immediately prior to the date of the announcement of Mr. Athayde's employment with the Company. |
8
| Represents awards of RSUs to acquire 6,307 shares that were granted to Ms. Zupfer and Ms. Rusin in February 2021 as an incentive related to leadership retention. These awards vest on the first anniversary of the grant date. |
9
| Represents RSUs that were forfeited by Mr. Townsend in connection with his resignation from the Company effective as of June 30, 2021. |
10
| Mr. Athayde’s Target AIC is prorated from the commencement of his employment in October 2020 through the end of the fiscal year. |
11
| Following his resignation on the last day of our fiscal year, Mr. Townsend remained eligible to receive his annual bonus for fiscal 2021, to the extent earned, to be paid at the same time as bonus payments to the Company’s other executive officers. |
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TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
Summary of Terms of Equity Awards
The terms of the equity awards granted as part of the
current long-term incentives
for fiscal 2019 are summarized below:
•
Performance Stock Units—PSUs are grants of restricted stock units that are earned based on the achievement of thean end-of-period stock price performance goal(s) established by the Compensation Committee. ThePSUs were granted in fiscal 2019 as part of the first year of our five-year executive pay plan, and Ms. Zupfer received an incremental PSU in fiscal 2020 in connection with her promotion. The PSUs have a three-year performance period with performance assessed as of July 1, 2021 (or November 12, 2022 in the case of Ms. Zupfer’s incremental PSUs), and will vest on the fifth anniversary of the grant date if the participant is still employed by the Company and the performance goal has been achieved, as described above in the CD&A section under “Long-Term Incentive Decisions for Fiscal 2019.2021.” The PSUs earn dividend equivalents but have no voting rights. The PSUs are also subject to the Company’s clawback policy. The PSUs granted in fiscal 2019 were not earned and are no longer outstanding. In the event of a termination of employment, unvested PSUs are generally forfeited; provided, however:
•
If a participant’s employment is terminated (i) without Cause (as defined in the 2016 Long Term
Plan)Plan or the 2018 Long Term Plan, as applicable) or for Good Reason (as defined in the award agreement), in each case within 12 months following a Change in Control (as defined in the award agreement), (ii) due to death or disability, or (iii) without Cause by the Company after the
one yearone-year anniversary of the Grant Date and the Board does not intend to fill the participant’s position at the Company with another person, then if the termination occurs (a) prior to the end of the performance period a pro-rated amount of the
fiscal 2019 PSUs will vest or (b) on or after the end of the performance period but prior to the fifth anniversary of the grant date and the performance goal is achieved, 100% of the
fiscal 2019 PSUs will vest. Clause (iii) does not apply to Mr. Sawyer.
•
If the performance goal is achieved and a participant’s employment is terminated on or after the third anniversary of the grant date due to (i) the participant’s retirement (which is defined to mean termination at age 62 or after age 55 with 15 years or more of continuous service), or (ii) termination without Cause by the Company then, if the termination occurs (a) on or after the third anniversary of the grant date but before the fourth anniversary of the grant date, 60% of the
fiscal 2019 PSUs will vest and (b) on or after the fourth anniversary of the grant date but before the fifth anniversary of the grant date, 80% of the
fiscal 2019 PSUs will vest. This termination event trigger does not apply to Mr. Sawyer.
•
If a participant’s employment is terminated without Cause by the Company or for Good Reason both (i) after the
one yearone-year anniversary of the Grant Date and (ii) following the appointment of a successor or interim successor to Mr. Sawyer, then a greater than pro rata portion of the
fiscal 2019 PSUs will vest in accordance with the formula set forth in the award agreement. This termination event trigger does not apply to Mr. Sawyer.
The terms of
In connection with Mr. Sawyer’s fiscal 2019departure, he forfeited the PSUs are substantially similar to thosethat were granted to our other NEOs, provided thathim.
Restricted Stock Units—RSUs were granted to Ms. Rusin and Ms. Zupfer in fiscal 2021 as an incentive related to leadership retention. The RSUs granted cliff vest on the event the performance condition is achieved and he is terminated by the Company without Cause (i) on or after April 17, 2020 but before the thirdfirst anniversary of the grant date a pro-rated amountif the participant is still employed by the Company. The RSUs granted as part of theour fiscal 2019 PSUs will vest, (ii) on or after the third anniversary of the grant date but before the fourth anniversary of the grant date, 60% of the fiscal 2019 PSUs will vest and (b) on or after the fourth anniversary of the grant date but before the fifth anniversary of the grant date, 80% of the fiscal 2019 PSUs will vest. Mr. Sawyer’s vesting under the applicable termination event triggers will not occur until the performance goal is achieved and the later of (A) the first to occur of (1) a Change in Control and (2) July 1, 2021 and (B) the date of his termination.•Restricted Stock Units—The fiscal 2019 RSUsexecutive pay plan cliff vest on the third anniversary of the grant date if the participant is still employed by the Company. The RSUs earn dividend equivalents but have no voting rights. The RSUs are also subject to the Company’s clawback policy.
In the event of a termination of employment, unvested RSUs are generally forfeited; provided, however:
•If
Under the 2016 Long Term Plan, if a participant’s employment is terminated (i) without Cause (as defined in the 2016 Long Term Plan) or for Good Reason (as defined in the award agreement), in each case within 12 months following a Change in Control (as defined in the award agreement)
, or, (ii) due to death or disability or (iii) without Cause by the Company after the
one yearone-year anniversary of the grant date and the Board does not intend to fill the participant’s position at the Company with another person, then a pro-rated amount of the
fiscal 2019 RSUs will vest.
•
If a participant’s employment is terminated without Cause by the Company or for Good Reason both (i) after the one yearone-year anniversary of the grant date and (ii) following the appointment of a successor or interim successor to Mr. Sawyer, then a greater than pro rata portion of the fiscal 2019 RSUs will vest in accordance with the formula set forth in the award agreement.
Executive Compensation Tables
The terms of Mr. Sawyer’s fiscal 2019 This termination event does not apply to the RSUs are substantially similar to thosethat were granted to our other NEOs providedMs. Rusin or Ms. Zupfer in fiscal 2021, but does apply to the RSUs that were granted to Ms. Zupfer in fiscal 2020.
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TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
Under the 2018 Long Term Plan, if
hisa participant’s employment is terminated (i) without Cause (as defined in the
20162018 Long Term Plan) or
(ii) for Good Reason (as defined in the award agreement), in each case within 12 months following a Change in Control (as defined in the
award agreement) (ii)2018 Long Term Plan) or (iii) due to death or disability,
or (iii) without Cause by the Company after the Initial Term (as defined in his employment agreement), then a pro-rated amount of the
fiscal 2019 RSUs will vest.
In connection with Mr. Sawyer’s departure, he forfeited the RSUs that were granted to him.
Sign-On Equity Awards for Mr. Athayde—In connection with his hire, Mr. Athayde received grants of RSUs and stock options as follows:
○ | The RSUs for 358,680 shares vest on the first anniversary of Mr. Athayde’s employment commencement date if he is still employed by the Company. If Mr. Athayde’s employment is terminated by the Company without Cause (as defined in the award agreement), if he resigns for Good Reason (as defined in the award agreement), or if his employment terminates as a result of his death or disability, in each case, prior to the first anniversary of his employment commencement date, then the RSUs fully vest as of the date of such termination. In the event that Mr. Athayde resigns without Good Reason prior to the first anniversary of his employment commencement date, a pro rata portion of the RSUs vest as of the date of his termination of employment, based on the number of days he was employed by the Company during the vesting period. |
○ | The performance-based stock options to purchase 1,100,000 shares are subject to both a service-based and a performance-based vesting condition. The service-based vesting condition will be satisfied on the fourth anniversary of the commencement of Mr. Athayde’s employment, subject to continued employment, and the performance-based vesting condition will be satisfied on the date the volume-weighted average closing price per share equals or exceeds 150% of the closing price per share on the trading day immediately preceding the announcement of Mr. Athayde’s employment with the Company, subject to continued employment on such date and provided that such date occurs prior to the fifth anniversary of the commencement of Mr. Athayde’s employment. If, after the fourth anniversary, Mr. Athayde’s employment is terminated by the Company without Cause, he resigns for Good Reason, or his employment is terminated as a result of death or disability, and the performance-based vesting condition has not been satisfied prior to such termination, the performance-based options shall remain outstanding and eligible to satisfy the performance-based vesting condition until the fifth anniversary date. If Mr. Athayde’s employment is terminated as a result of death or disability following the first anniversary of the commencement of his employment, a pro-rated portion of the performance-based options, based on the number of days he was employed by the Company during the four-year service-vesting period, shall either (i) vest as of the date of such termination if the performance-based vesting condition was satisfied prior to the date of such termination or (ii) remain outstanding and eligible to satisfy the performance-based vesting condition for one year following the date of such termination. |
○ | Mr. Athayde also received certain “matching” stock options equal to the number of shares subject to the RSU, which is 358,680 shares, which vest on the fourth anniversary of the commencement of Mr. Athayde’s employment, subject to continued employment. If prior to such fourth anniversary, Mr. Athayde sells or transfers any of the shares acquired in connection with the settlement of the sign-on RSUs (other than in connection with the net settlement of the sign-on RSUs), a corresponding number of matching options will be forfeited. If Mr. Athayde’s employment terminates for any reason other than by the Company for Cause following the second anniversary of the commencement of Mr. Athayde’s employment and prior to the fourth anniversary, a pro-rated number of matching options outstanding as of the date of such termination (after taking into account any matching options that have been forfeited) shall vest as of the date of such termination, based on the number of days employed by the Company during the vesting period. |
Matching Share Program – Restricted Stock Units
Executives who elected to participate in our recently adopted matching share program by contributing 25% to 50% of their target fiscal 2018 bonus, net of normalized tax withholding, to purchase shares
Matching RSUs granted as part of our
common stock, received a matching RSU grant valued at up to 100% of their contribution. These matching RSUsSPMP during fiscal years 2019, 2020, and 2021 are subject to a five-year continued service and cliff vesting conditions and participants are also required to hold their underlying purchased shares for the same five-year
period.period to avoid a reduction in the number of unvested RSUs. The matching RSUs earn dividend equivalents but have no voting rights.
If an executive contributed 25% of his or her target fiscal 2018 bonus, net of normalized tax withholding, to purchase shares of our common stock, he or she received a matching RSU grant valued at 50% of his or her contribution, while a contribution of 50% of his or her target fiscal 2018 bonus resulted in a matching RSU grant valued at 100% of his or her contribution.If a participant’s employment is terminated (i) without Cause (as defined in the 2018 Long Term Incentive Plan) or for Good Reason (as defined in the award agreement), in each case within 12 months following a Change in Control (as defined in the 2018 Long Term Incentive Plan) or (ii) due to death or disability, if the termination occurs (a) prior to the third anniversary of the grant date, a pro-rated amount of the matching RSUs will vest or (b) on or after the third anniversary of the grant date, 100% of the matching RSUs will vest.
If a participant’s employment is terminated on or after the second anniversary of the grant date due to (i) the participant’s retirement (which is defined to mean termination at age 62 or after age 55 with 15 years or more of continuous service) or (ii) termination without Cause by the Company, then a pro-rated amount of the matching RSUs will vest.
Executive Compensation Tables
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TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
Matching RSUs granted during fiscal 2022 (including with respect to participation in the SPMP with bonuses paid with respect to fiscal 2021 performance) vest as to 20%, 20%, and 60% of the shares on the first, second, and third anniversaries of the date of grant, respectively, subject to continued service and participants are required to hold their underlying purchased shares for the same three-year period to avoid a reduction in the number of unvested RSUs. If a participant’s employment is terminated (i) without Cause or for Good Reason, in each case, within 12 months following a Change in Control, (ii) due to death or disability, or (iii) due to the participant’s retirement or termination without Cause by the Company, then a pro-rated amount of the RSUs scheduled to vest on the next scheduled vesting date and shall be calculated based on (i) the number of days the participant was employed as a percentage of (ii) the total number of days, in each case between the most recently completed and the next scheduled vesting date.
Outstanding Equity Awards at
20192021 Fiscal Year-End
The following table sets forth certain information concerning outstanding equity awards held by the Named Executive Officers
atas of June 30,
2019. | | | | | | | | | |
| Option Awards | | Stock Awards1 |
Name | Number of Securities underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | | Option Expiration Date2 | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested3 ($) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights That Have Not Vested3 ($) |
Hugh E. Sawyer | — | 1,000,0004 | 11.15 | | 4/17/2027 | | | | |
| | | | | 106,3585 | 1,765,543 | | |
| | | | | | | 319,0746 | 5,296,628 |
Andrew H. Lacko | — | — | — | | — | | | | |
| | | | | 22,7187 | 563,667 | | |
| | | | | 8,0318 | 199,274 | | |
| | | | | 16,3625 | 271,609 | | |
| | | | | 6,9429 | 115,237 | | |
| | | | | | | 18,07210 | 298,911 |
| | | | | | | 49,0886 | 814,861 |
Eric A. Bakken | 4,200 | — | 18.90 | | 4/29/2020 | | | | |
4,200 | — | 16.60 | | 4/28/2021 | | | | |
22,250 | — | 18.01 | | 8/31/2022 | | | | |
26,578 | — | 15.78 | | 8/30/2023 | | | | |
23,916 | — | 15.11 | | 8/29/2024 | | | | |
45,584 | — | 10.84 | | 8/31/2025 | | | | |
| | | | | 4,24211 | 70,417 | | |
| | | | | 10,0398 | 166,647 | | |
| | | | | 20,4535 | 339,520 | | |
| | | | | 2,1699 | 36,005 | | |
| | | | | | | 22,59010 | 374,994 |
| | | | | | | 61,3606 | 1,018,576 |
Chad Kapadia | — | — | — | | — | | | | |
| | | | | 3,24112 | 53,801 | | |
| | | | | 16,3625 | 271,609 | | |
| | | | | 6,9429 | 115,237 | | |
| | | | | 5,36113 | 88,993 | | |
| | | | | | | 12,77214 | 203,715 |
| | | | | | | 49,0886 | 814,861 |
| | | | | | | | |
| | | | | | | | |
Jim B. Lain | 4,346 | — | 15.50 | | 11/11/2023 | | | | |
20,926 | — | 15.11 | | 8/29/2024 | | | | |
39,886 | — | 10.84 | | 8/31/2025 | | | | |
| | | | | 4,24211 | 70,417 | | |
| | | | | 8,0318 | 133,315 | | |
| | | | | 16,3625 | 271,609 | | |
| | | | | 1,4029 | 23,273 | | |
| | | | | | | 18,07210 | 299,995 |
| | | | | | | 49,0886 | 814,861 |
2021. | Felipe A. Athayde | | | — | | | 1,100,000 | | | 6.53 | | | 10/5/2030 | | | | | | | | | | | | | |
| — | | | 358,680 | | | 6.53 | | | 10/5/2030 | | | | | | | | | | | | | |
| | | | | | | | | | | | | 358,68015 | | | 3,357,245 | | | | | | | |
| Kersten D. Zupfer | | | 11,396 | | | — | | | 10.84 | | | 8/31/2025 | | | | | | | | | | | | | |
| | | | | | | | | | | | | 10,2265 | | | 95,715 | | | | | | | |
| | | | | | | | | | | | | 8327 | | | 7,788 | | | | | | | |
| | | | | | | | | | | | | 1,7638 | | | 16,502 | | | | | | | |
| | | | | | | | | | | | | 7,5649 | | | 70,799 | | | | | | | |
| | | | | | | | | | | | | 25,27613 | | | 236,583 | | | | | | | |
| | | | | | | | | | | | | 6,30714 | | | 59,034 | | | | | | | |
| | | | | | | | | | | | | | | | | | | 30,6806 | | | 287,165 | |
| | | | | | | | | | | | | | | | | | | 22,69410 | | | 212,416 | |
| Chad Kapadia | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | 16,3625 | | | 153,148 | | | | | | | |
| | | | | | | | | | | | | 6,9427 | | | 64,977 | | | | | | | |
| | | | | | | | | | | | | 5,36111 | | | 50,179 | | | | | | | |
| | | | | | | | | | | | | 37,10512 | | | 347,303 | | | | | | | |
| | | | | | | | | | | | | | | | | | | 49,0886 | | | 459,464 | |
| Amanda P. Rusin | | | — | | | — | | | — | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | 10,2265 | | | 95,715 | | | | | | | |
| | | | | | | | | | | | | 3,5067 | | | 32,816 | | | | | | | |
| | | | | | | | | | | | | 8,4608 | | | 79,186 | | | | | | | |
| | | | | | | | | | | | | 19,98013 | | | 187,013 | | | | | | | |
| | | | | | | | | | | | | 6,30714 | | | 59,034 | | | | | | | |
| | | | | | | | | | | | | | | | | | | 30,6806 | | | 287,165 | |
| James A. Townsend | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Hugh E. Sawyer | | | 1,000,0004 | | | — | | | 11.15 | | | 4/17/2027 | | | | | | | | | | | | | |
| Eric A. Bakken | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
1
| Stock award numbers include accrued dividend equivalents, where applicable. |
2
| All awards of stock options and SARs expire ten years after the date of grant or in the case of retirement, voluntary termination, or dismissal without cause, 90 days after the termination. |
3
| Value based on a share price of $9.36, which was the last reported sale price for a share of our common stock on the NYSE on June 30, 2021. |
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EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
4
| Award vested in full on April 17, 2019 and became exercisable on April 17, 2020. |
5
| Award cliff vests on the third anniversary of the date of grant, which was August 31, 2018. |
6
| Amounts presented represent the number of shares that may be earned during the performance period ended June 30, 2021 with respect to the PSUs granted on August 31, 2018. If the PSUs are earned, they will be subject to an additional two-year service-based vesting requirement, which will expire on August 31, 2023. The performance condition was not satisfied, and the award was forfeited. |
7
| Award cliff vests on the fifth anniversary of the date of grant, which was August 31, 2018. |
8
| Award cliff vests on the fifth anniversary of the date of grant, which was August 30, 2019. |
9
| Award cliff vests on the third anniversary of the date of grant, which was November 11, 2019. |
10
| Awards presented represent the target number of shares that may be earned during the performance period ending November 11, 2022 with respect to the PSUs granted on November 11, 2019. If the PSUs are earned, they will be subject to an additional two-year service-based vesting requirement, which will expire on November 11, 2024. |
11
| Award cliff vests on the third anniversary of the date of grant, which was June 5, 2019. |
12
| Award cliff vests on the third anniversary of the date of grant, which was September 1, 2019. |
13
| Award cliff vests on the fifth anniversary of the date of grant, which was December 21, 2020. |
14
| Award cliff vests on the first anniversary of the date of grant, which was February 8, 2021. |
15
| Award vests on the first anniversary of the date of grant, which was October 5, 2020. |
1Stock award numbers include accrued dividend equivalents where applicable.
2All awards of stock options and SARs expire ten years after the date of grant or in the case of retirement, voluntary termination, or dismissal without cause, 90 days after the termination.
3Value based on a share price of $16.60, which was the last reported sale price for a share of our common stock on the NYSE on June 28, 2019.
4Award vested in full on April 17, 2019 but will not become exercisable until April 17, 2020.
5Award cliff vests on the third anniversary of the date of grant, which was August 31, 2018.
6Amounts presented represent the number of shares that may be earned during the performance period ended June 30, 2021 with respect to the performance units granted on August 31, 2018. If the units are earned, they will be subject to an additional two-year service-based vesting requirement which will expire on August 31, 2023.
7Award vests as to 33% of the shares covered by the award on each of the first three anniversaries of the date of grant, which was July 1, 2017.
8Award vests as to 33% of the shares covered by the award on each of the first three anniversaries of the date of grant, which was August 31, 2017.
9Award cliff vests on the fifth anniversary of the date of grant, which was August 31, 2018.
10Amounts presented represent the target number of shares that may be earned during the performance period ending June 30, 2020 with respect to the performance units granted on October 17, 2017.
11Award vests as to 33% of the shares covered by the award on each of the first three anniversaries of the date of grant, which was August 31, 2016.
12Award vests as to 33% of the shares covered by the award on each of the first three anniversaries of the date of grant, which was June 18, 2018.
13Award cliff vests on the third anniversary of the date of grant, which was June 5, 2019.
14Amounts presented represent the target number of shares that may be earned during the performance period ending June 30, 2020 with respect to the performance units granted on June 18, 2018.
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EXECUTIVE COMPENSATION TABLES
2021 Option Exercises and Stock Vested
The following table sets forth certain information concerning SARs exercised and stock vested during fiscal
20192021 for the Named Executive Officers:
| | | | | |
| Option Awards | | Stock Awards1 |
Name | Number of Shares Acquired on Exercise2(#) | Value Realized on Exercise1($) | | Number of Shares Acquired on Vesting2(#) | Value Realized on Vesting1($) |
Hugh E. Sawyer | — | — | | 89,6863 | 1,773,989 |
Andrew H. Lacko | — | — | | 15,378 | 273,835 |
Eric A. Bakken | — | — | | 68,186 | 1,327,521 |
Chad Kapadia | — | — | | 1,621 | 29,648 |
Jim B. Lain | 2,173 | 5,041 | | 100,718 | 1,899,819 |
1Value realized on exercise is calculated as the difference between the market value of our common stock on the respective exercise date(s) and the exercise price of the option(s) on a pre-tax basis. Value realized on vesting is the market value of our common stock on the vesting date multiplied by the number of shares acquired, before taxes.
2The number of shares acquired on exercise or vesting of stock awards includes shares that were forfeited for withholding tax obligations. The number of shares forfeited for each Named Executive Officer is reported below:
| Felipe A. Athayde | | | — | | | — | | | — | | | — | |
| Kersten D. Zupfer | | | — | | | — | | | 1,004 | | | 7,420 | |
| Chad Kapadia | | | — | | | — | | | 1,620 | | | 15,471 | |
| Amanda P. Rusin | | | — | | | — | | | 2,213 | | | 18,567 | |
| James A. Townsend | | | — | | | — | | | — | | | — | |
| Hugh E. Sawyer | | | — | | | — | | | — | | | — | |
| Eric A. Bakken | | | 4,165 | | | 49,687 | | | 27,136 | | | 240,344 | |
1
| Value realized on exercise is calculated as the difference between the market value of our common stock on the respective exercise date(s) and the exercise price of the option(s) on a pre-tax basis. Value realized on vesting is the market value of our common stock on the vesting date multiplied by the number of shares acquired, before taxes. |
Name 2
| The number of shares acquired on exercise or vesting of stock awards includes shares that were forfeited for withholding tax obligations. The number of shares forfeited for each NEO is reported below. |
| Felipe A. Athayde | | | — | |
| Kersten D. Zupfer | | | 308 | |
| Chad Kapadia | | | 561 | |
| Amanda P. Rusin | | | 1,188 | |
| James A. Townsend | | | — | |
| Hugh E. Sawyer | | | — | |
Andrew H. Lacko | 5,260
|
Eric A. Bakken | 34,181
|
Chad Kapadia | 561
|
Jim B. Lain | 49,737
9,579 | |
3Award vested on April 17, 2019 upon achieving certain stock price conditions but does not settle until April 17, 2020.
Executive Compensation Tables
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Summary of Executive Agreements Employment Agreements
We are
During at least a portion of fiscal 2021, we were a party to an employment agreement with each of
our NEOs, except for Messrs. LackoMs. Zupfer, Mr. Sawyer, and
Kapadia.Mr. Bakken. The key provisions of the employment agreements are summarized below.
NEOs Currently Employed
| Felipe A. Athayde | | | N/A | | | 700,000 | | | 125 | |
| Kersten D. Zupfer | | | 12/1/2014 | | | 425,000 | | | 60 | |
| Chad Kapadia | | | N/A | | | 600,000 | | | 60 | |
| Amanda P. Rusin | | | N/A | | | 350,000 | | | 70 | |
| | | |
Name | Date of Employment Agreement | Base Salary as of June 30, 2019 ($) | FY19 Target Annual Incentive Award (% of Base Salary) |
Hugh E. Sawyer | 4/17/2017 | 950,000 | 115 |
Andrew H. Lacko1 | N/A | 495,000 | 60 |
Eric A. Bakken | 8/31/2012 | 495,000 | 75 |
Chad Kapadia | N/A | 495,000 | 60 |
Jim B. Lain | 11/11/2013 | 400,000 | 60 |
NEOs No Longer Employed1Messrs. Lacko and Kapadia are not parties to employment agreements with the Company.
| Eric A. Bakken | | | 8/31/2012 | | | 495,000 | | | 75 | |
| Hugh E. Sawyer | | | 4/17/2017 | | | 950,000 | | | 115 | |
| James A. Townsend | | | N/A | | | 495,000 | | | 60 | |
1
| In connection with Mr. Sawyer’s retirement and Mr. Bakken’s separation, they ceased to be eligible for any payout under their fiscal 2021 bonuses; however, Mr. Townsend remained eligible for his bonus payout based on his service through the last day of fiscal 2021. |
Base Salary—
Each NEO receives an annual base salary in the amount set forth above. The base salary amounts are reviewed annually by the Compensation Committee and subject to adjustment.Bonus—
Each NEO is eligible for an annual incentive award. The annual incentive award is set as a percentage of the NEO’s then-current base salary for achievement of target performance, but the actual payout may be less than or greater than such amount for actual performance that is less than or greater than target, respectively.Long-Term Incentives—
Each NEO is entitled to participate in the Company’s long-term equity incentive program on the same basis as the Company’s other executive officers, with the value of the awards being set annually by the Compensation Committee.Life Insurance and Other Benefits—
During the term of their employment, each NEO is entitled to life insurance and health and welfare benefits offered to other headquartersfull-time employees; provided that, while employed by the Company, Mr. Sawyer has agreed not to participate in the employee stock purchase plan.Termination of Employment Payments, Benefits, and Other Obligations—
The following section separately addresses benefits provided to the NEOs upon death or disability, termination without Cause or for Good Reason, termination for Cause or without Good Reason, and termination after a Change in Control pursuant to employment agreements and applicable severance programs for Messrs.Ms. Zupfer, Mr. Sawyer, Bakken and Lain.Mr. Bakken. The severance payments described below are contingent upon the NEO signing, and not rescinding, a release and complying with certain non-competition and non-solicitation provisions.covenants.•
Death or Disability. Disability. Each NEO is entitled to his or her accrued compensation and obligations, including a pro rata bonus for the year of termination.•
Dismissal without Cause or Resignation for Good Reason (Prior to or More than Twenty-Four24 Months Following a Change in Control).. If an NEO is terminated without Cause or if he or she terminates for Good Reason, the NEO will receive an amount equal to one times (two times in the case of Mr. Sawyer if the triggering event occurs prior to April 17, 2020) his or her annual base salary plus a pro-rated portion of any bonus he or she would have earned for the year of termination (based on actual performance), plus 12 months (18 months in the case of Mr. Sawyer if the triggering event occurs prior to April 17, 2020) of benefits continuation coverage.•
Dismissal without Cause or Resignation for Good Reason in Connection with a Change in Control.Control If an NEO’s. Under the terms of Mr. Bakken’s employment isagreement, if his employment was terminated without Cause or if he terminatesterminated for Good
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Reason within 24 months following a change of control, then he willwould instead receive an amount equal to two times base salary plus two times the target annual bonus for the year of termination, as well as 18 months of benefits continuation payments, subject to reduction pursuant to the “best of net” provisions in Mr. Bakken’sthe employment agreement. For Mr. Sawyer and Ms. Zupfer, the severance amount was/is the same as for any dismissal without Cause.
Executive Compensation Tables
•Dismissal for Cause or Resignation withoutWithout Good Reason.Reason. The NEOs are entitled to accrued compensation and obligations where dismissal is for Cause or resignation is without Good Reason. In the event of a termination of employment for Cause or resignation without Good Reason, severance benefits would not be payable.
Provision for Offset of Severance—
The employment agreements provide that severance payments will be paid over the course of the severance period and offset by any compensation an NEO receives from other substantially full-time employment during the severance period. However, the Compensation Committee modified these provisions during fiscal 2017 to provide that severance will be paid in a lump sum and not offset by non-competitive employment. See “Changes to Severance Program” in the CD&A. The severance payments are also contingent upon signing, and not rescinding, a release of claims and complying with certain non-competition and non-solicitation provisions.covenants.Restrictive Covenants—
The NEOs are subject to restrictive covenants prohibiting the disclosure or use of confidential information, along with two-year covenants regarding non-competition and non-solicitation of employees. Our remedies for violation of restrictive covenants include injunctive relief and forfeiture of severance benefits.Mandatory Arbitration—
Disputes arising under the employment agreements are to be resolved by binding arbitration.Sign-On, Relocation, and Related Benefits
When executive officers join
ourthe Company, from time to time, we have agreed to sign-on incentives and relocation benefits that are not part of their ongoing compensation to incentivize them to leave their former employers and join
ourthe Company. Specifically, these benefits to the NEOs include:
Sign-On Incentives—
When Mr. Kapadia joined the Company in June 2018, he received a sign-on bonus equal to $75,000 and initial equity awards with an aggregate value of $350,000, comprised of $262,500 of PSUs and $37,500 of RSUs. When Mr. Sawyer joined ourthe Company in April 2017, Mr. Sawyerhe received a sign-on bonus equal to $585,000, subject to a one-year clawback, and initial equity awards with an aggregate value of $5.0 million, comprised of $4.0 million of stock-settled SARs and $1.0 million of RSUs. When heMr. Athayde joined ourthe Company in July 2017, Mr. LackoOctober 2020, he received a sign-on bonussign-bonus equal to $125,000$2,500,000, subject to a one-year clawback, and initial equity awards with an aggregate value of $350,000,$5.0 million, comprised of RSUs valued on July 1, 2017. When he joined the Company in June 2018, Mr. Kapadia received a sign-on bonus equal to $75,000$4.0 million of stock-settled SARs and initial equity awards with an aggregate value of $350,000, comprised of $262,500 of PSUs and $37,500$1.0 million of RSUs. See below for further detail about these awards.Relocation Expenses—
We agreed to reimbursereimbursed Mr. Sawyer up to $175,000 for temporary housing expenses for 18 months following commencement of his employment, and to pay him any unspent portion if he remains employed after 18 months. We agreed to reimbursewe reimbursed Mr. Lacko up to $50,000 in moving costsAthayde $150,000 for relocation and up to $50,000 in real estate commissions if he soldtemporary housing expenses for 12 months following commencement of his home within the first year of employment.Historical Retirement and Life Insurance Benefits
Retirement Benefits—
Pursuant to certain grandfathered provisions of hisMr. Bakken’s employment agreement, upon retirement (at or after age 65), Mr. Bakken iswould have been entitled to receive a lump sum cash payment equal to the present value of a hypothetical annuity of monthly payments that are equal to the greater of $5,000 or 40% of his respective five-year average monthly compensation for the five-year period endingended June 30, 2012 (i.e., July 1, 2007 through June 30, 2012), excluding bonuses (subject to a 20-year vesting schedule), to be paid for 240 months. Mr. Bakken’s employment agreement providesprovided that he willwould be entitled to the fully vested benefit if his employment iswas terminated without Cause or if he terminatesterminated for Good Reason at any time, and his agreement providesit provided that he willwould be entitled to the fully vested benefit if his employment terminatesterminated for any reason other than for Cause within two years of a Change in Control. Additionally, upon any termination following a Change in Control (except for Cause), he receivesMr. Bakken would have been entitled to receive: (i) the same retirement benefits described below, except that the lump sum iswould be equal to the sum of the payments due, determined as if he iswas fully vested, and (ii) a lump sum payment of any unpaid amounts described below under “Life Insurance.”Under this arrangement, an executive officer hasMr. Bakken had the option to elect to receive his or her retirement benefit in the form of 240 monthly payments rather than thea lump sum,sum; provided that, such election iswas made in accordance with the requirements described in his or her employment agreement and consistent with Code Section 409A. In addition to the possibility for reduction based on (i) the vesting schedule and/or (ii) the present value discount for a lump sum payment, an executive’sMr. Bakken’s retirement benefit iswas subject to
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further discount if paid prior to age 65 (an “Early Retirement”). If payment iswas made in
Executive Compensation Tables
connection with an Early Retirement, the hypothetical annuity of 240 monthly payments iswould be discounted by first calculating the benefit as an annuity starting at age 65, and then converting it to an immediate commencement annuity using the yield to maturity of 30-year U.S. Treasury Notes as of June 30, 2012 (2.76%(i.e., 2.76%).
If an executive officer diesMr. Bakken died before receiving full payment of his or her retirement benefit, payment willwould be made in a lump sum or monthly payments willwould continue, as applicable, to his or her designated beneficiary (or to his or her estate). If an executive officer becomesMr. Bakken became disabled, he or she will receivewould have received monthly payments beginning six months after his or her disability beginsbegan and continuing until the earlier of his or her death or attainment of age 65, or until he or she ceasesceased to be disabled, in an amount equal to his or her monthly benefit. At death or attainment of age 65, he or sheMr. Bakken (or his or her beneficiary) will receivewould have received the benefit described above under “Retirement Benefits.” No retirement benefits arewould be payable in the event of termination of employment for Cause.
Under the amended and restatedterms of Mr. Bakken’s employment agreement, signed by Mr. Bakken effective August 31, 2012, we froze vesting in his retirement benefits as of June 30, 2012, subject to the continued right to full acceleration in the event of termination without Cause or termination for Good Reason, as described above. As indicated, we also limited the calculation of the monthly benefit to his five-year average monthly base salary as of June 30, 2012.
Of our NEOs,This section applies only to Mr. Bakken is eligible for this benefit.
who was employed through December 30, 2020, and not to any continuing NEOs. On July 1, 2021, we paid out Mr. Bakken’s retirement benefits in an amount equal to $1,401,287.Life Insurance—We agreed to pay premiums for a total of ten years on the existing policies insuringthat insure the lives of certain of our executive officersexecutives who were entitled to such benefits and were employed by the Company as of June 30, 2012. As of June 30, 2019,2020, we have made all of the payments that we had agreed to payupon payments on Mr. Bakken’s policies. As of June 30, 2019,2021, the aggregate face amount of Mr. Bakken’s policies is approximately $3.2 million.
Compensatory Arrangements with Mr. Sawyer
In
Mr. Sawyer served as our President and Chief Executive Officer from April 2017 the Board appointedto October 2020. In connection with Mr. SawyerSawyer’s appointment as President and CEO. In connection with his appointment,Chief Executive Officer, the Company entered into an employment agreement with Mr. Sawyer with an initial term of three years, and thereafter renewing annually. He ishim, under which he was entitled to an annual base salary of $950,000, and a target annual incentive opportunity of 115% of his annual base salary. He also receivedsalary, a sign-on bonus of $585,000, to compensate him for forfeited compensation from his former employer (furthermore, a pro-rated portionsign-on equity awards with an aggregate value of this bonus must be repaid if he terminates employment under certain circumstances). The Company also agreed to reimburse Mr. Sawyer$5.0 million, and reimbursement of up to $175,000 for temporary housing expenses for 18 months, and to pay him any unspent portion if he remainsremained employed after 18 months.
| | | | |
| Fiscal 2017 ($) | Fiscal 2018 ($) | Fiscal 2019 ($) | Fiscal 2020 ($) |
Base Salary1 | 950,000 | 950,000 | 950,000 | 950,000 |
Annual Incentive Target1 | — | 1,092,500 | 1,092,500 | —3 |
Long-Term Equity Incentive | — | — | 9,100,0002 | — |
Sign-On Bonus | 585,000 | — | — | — |
Initial Equity Awards | 5,000,000 | — | — | — |
1May be increased in the Committee’s discretion.
2Amount of fiscal 2019 long-term equity incentive reflects the grant of a single, larger equity award at the outset of a five-year period as described above under “Summary of the Fiscal 2019 Pay Plan.”
3Mr. Sawyer has indicated his intention to forego any cash annual incentive award for fiscal 2020 related to the Short Term Plan.
In addition, the Compensation Committee approved sign-on equity awards to Mr. Sawyer with an aggregate value of $5.0 million, comprised of approximately $4.0 million of stock-settled SARs and $1.0 million of performance-contingent RSUs.
| Base Salary | | | 950,000 | | | 950,000 | | | 950,000 | | | 950,000 | | | 950,000 | |
| Annual Incentive
Target | | | — | | | 1,092,500 | | | 1,092,500 | | | —2 | | | — | |
| Long-Term
Equity Incentive | | | — | | | — | | | 9,100,0001 | | | — | | | — | |
| Sign-On Bonus | | | 585,000 | | | — | | | — | | | — | | | — | |
| Initial Equity
Awards | | | 5,000,000 | | | — | | | — | | | — | | | — | |
| Post-Termination
Consulting | | | — | | | — | | | — | | | — | | | 1,200,000 | |
1
| Amount of fiscal 2019 long-term equity incentive reflects the grant of a single, larger equity award at the outset of a five-year period. Mr. Sawyer retired prior to the vesting of these awards, and therefore, did not earn any of the shares under these awards. |
2
| Mr. Sawyer indicated his intention to forego any cash annual incentive award for fiscal 2020 related to the Short Term Plan. |
Mr. Sawyer’s initial equity awards were scheduled to vest on
the second anniversary of the date of grant subject to his continued service through that date, and in the case of his RSUs, were also subject to the satisfaction of performance goals related to the Company’s stock price, which goals were attained in April 2019, at which time the RSUs vested. However, hisHis SARs will not becomebecame exercisable in April 2020 and histhe RSUs will not bewere settled untilat the third anniversary of the date of grant, and hissame time. The SARs will be exercisable untilexpire on the tenth anniversary of the date of grant.
On September 4, 2020, in connection with Mr. Athayde’s appointment as President and Chief Executive Officer of the Company, Mr. Sawyer did not receive an additional equity grant whenentered into a Transition Services and Release Agreement with the Company, made its fiscal 2018 annual equity grants in August 2017. Commencing August 2018 (for fiscal 2019),pursuant to which, during the period between Mr. Sawyer’s departure date and the 12-month anniversary thereof, Mr. Sawyer was eligibleagreed to receive annual equity grants commensurate with his position.
The Committee designed Mr. Sawyer’s compensation to be strongly performance-based, both upon hire and onserve as an ongoing basis, with 76% of his compensation at hire and approximately 80% in future years tiedexecutive advisor to the Company’s performance.
Company in exchange for an annual consulting fee of $1,200,000, payment for three weeks of vacation time valued at $54,808, and reimbursement for the employer portion of COBRA premiums during the consulting term. Pursuant to the transition agreement, Mr. Sawyer agreed to extend the non-competition and non-solicitation restrictions under his employment agreement through the period ending 24 months after the end of the consulting term.
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EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
Compensatory Arrangements with Mr. Lacko
In June 2017,Athayde
On September 4, 2020, the Board appointedCompany entered into a letter agreement with Mr. LackoAthayde in connection with his appointment as Executive Vice President and Chief FinancialExecutive Officer effective July 1, 2017. Heon October 5, 2020. Pursuant to the agreement, Mr. Athayde is entitled toreceiving an annual base salary of $495,000, a$700,000, an annual target annual incentivebonus opportunity of 60%equal to 125% of his annual base salary and(up to a maximum payout of 225% of his annual target long-term incentives valued at $400,000 (with annual grants beginning in fiscal 2018). In addition,base salary), and he received a sign-on bonus of $125,000, a$2,500,000 (which is subject to pro rata repayment if Mr. Athayde’s employment is terminated under certain circumstances prior to the first anniversary of his employment commencement date).
Mr. Athayde also received sign-on equity awardawards granted as of his employment commencement date as follows:
1,100,000 options to purchase shares of the Company’s common stock, granted under the Company’s 2018 Long Term Incentive Plan, which are eligible to vest, as to the service requirement, on the fourth anniversary of the commencement date, subject to achievement, prior to the fifth anniversary of the commencement date, of a volume-weighted average closing price per share of the Company equal to or in excess of 150% of the closing price per share of the Company on the trading day immediately prior to the date of the announcement of Mr. Athayde's employment with the Company; and
358,680 restricted stock units
valued at $350,000, reimbursement of moving expenses upwith a value equal to
$50,000, and reimbursement$2,500,000 (based on the closing price per share on September 4, 2020), which are eligible to vest on the first anniversary of the
real estate commissions in connection with the sale of his home of upcommencement date, based on Mr. Athayde’s continued service, and options to
$50,000 if he sells his home within the first year of his employment with the Company, which were paid in fiscal 2018.Mr. Lacko’s initial RSU award will vest as to one-thirdpurchase 358,680 shares of the sharesCompany’s common stock, which are eligible to vest on the fourth anniversary of the commencement date, each of which will be granted on the first three anniversaries of thecommencement date of grant in accordance with the general terms of the RSU awards the Company grants to employees as part of their annual long-term incentive awards. The RSUs were granted pursuant to the employment inducement exception of the NYSE rules.
Compensatory Arrangements with
All the stock options have a per share exercise price equal to the closing price per share of the Company on the date of grant and will have a term of ten years. The Company also reimbursed Mr.
KapadiaAthayde in an amount equal to $150,000 for certain relocation expenses.
If Mr. Athayde’s employment is terminated either by the Company without Cause or by Mr. Athayde for Good Reason, as defined in his letter agreement, Mr. Athayde will be eligible for severance benefits under the Company’s senior executive severance policy described below. In June 2018,Mr. Athayde’s letter agreement, “Cause” is defined as: indictment for, conviction of, or a plea of guilty or no contest to, any indictable criminal offence or any other criminal offence involving fraud, misappropriation, or moral turpitude; continued failure to perform material duties under the agreement or following the lawful direction of the Board appointedor a material breach of fiduciary duties; theft, fraud, or material dishonesty with regard to the Company in connection with his duties; material violation of the Company’s code of conduct or similar written policies, including the Company’s sexual harassment policy, that is not cured (if curable) within 30 days after written notice by the Board; willful misconduct unrelated to the Company having or likely to have a material negative impact on the Company (economic or reputational); an act of gross negligence or willful misconduct that relates to the affairs of the Company; or material breach of the provisions of the letter agreement that is not cured (if curable) within 30 days after notice by the Board. “Good Reason” is defined in Mr. Athayde’s agreement as: any material diminution of authority, duties or responsibilities; or a material reduction by the Company of his base salary or target annual bonus percentage (other than an across the board reduction of not more than 10% that applies to all other executives of the Company or any temporary reduction of no more than 25% in response to the COVID-19 pandemic or other extraordinary event of similar market consequence that does not last longer than 12 months); provided that, Mr. Athayde must give 60 days’ written notice of termination and opportunity for the Company to cure the event and the Company fails to do so. Mr. Athayde also executed the Company’s non-compete, non-disclosure, non-solicitation, and non-hire agreement.
Senior Executive Severance Policy
In May 2020, the Committee approved a senior executive severance policy whereby Senior Vice Presidents and above without an individual employment agreement are entitled to receive the following severance benefits if the executive’s employment is terminated without cause: one year of base salary paid in installments over a period of 12 months; a pro rata bonus for the fiscal year in which termination occurs based on actual performance, but not to exceed the target bonus amount; and continuation of certain medical benefits for up to 12 months unless and until the executive is covered under the health and/or dental insurance policy of a new employer. The severance benefits are subject to the executive signing a release in favor of the Company and complying with one-year non-competition and non-solicitation restrictions. Because Mr. Kapadia, as Executive Vice PresidentMs. Rusin, and Chief Technology Officer, effective June 18, 2018. He is entitled to an annual base salary of $495,000 and a target annual incentive opportunity of 60% of his annual base salary. He received a sign-on bonus of $75,000 and a sign-on equity award valued at $350,000, comprised of $262,500 of PSUs and $37,500 of RSUs with terms consistentMr. Townsend do not have employment agreements with the Company’s formCompany, they are eligible for severance benefits under this policy if they have a qualifying termination, and Mr. Athayde’s letter agreement incorporates this policy in the event of PSU and RSU awards at the timea qualifying termination of grant.Mr. Athayde’s employment under his letter agreement, subject to certain alternative definitions described above.
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Definitions Under Executive Agreements
Certain of the terms used in the executive agreements as in effect at the end of fiscal
20192021 are defined below:
Cause—
Acts resulting in a felony conviction that is materially detrimental to the financial interests of the Company; willful nonperformance by the executive of his or her material employment duties (other than by reason of physical or mental incapacity) after reasonable notice to the executive and reasonable opportunity (not less than 30 days) to cease such non-performance; or willful engagement in fraud or gross misconduct that is materially detrimental to the financial interests of the Company.Change in Control—
A person is or becomes the beneficial owner of 20% or more of the outstanding common stock or outstanding voting securities of the Company; consummation of a merger or consolidation of the Company, a statutory share exchange or an acquisition of all or substantially all of the Company’s assets unless the beneficial owners of the Company’s outstanding voting securities immediately prior to the transaction beneficially own more than 50% of the voting power of the outstanding voting securities of the surviving entity in substantially the same proportions; or the incumbent directors cease to constitute at least a majority of the Board. Furthermore, in August 2014, the Board adopted an amendment providing that a Change in Control does not occur if a person becomes the beneficial owner of 20% or more of the outstanding common stock or outstanding voting securities of the Company solely as the result of a change in the aggregate number of shares of outstanding common stock or outstanding voting securities since the last date on which such person acquired beneficial ownership of any shares of common stock or voting securities. Beginning with the Company’s fiscal 2019 equity awards, the Change in Control beneficial ownership triggering percentage described above has beenwas increased from 20% to 49%.Good Reason—
Any adverse alteration in the executive’s reporting responsibilities, titles, or offices (or, in the case of Mr. Sawyer, a material diminution of his authority, duties, or responsibilities); a material reduction of the executive’s base salary (or, in the case of Mr. Sawyer, any reduction in his base salary or target annual incentive percentage); failure by the Company to continue any compensation plan, bonus, or incentive plan; material breach of the agreement by the Company; requirement that the executive’s principal place of employment be relocated by more than 30 miles from the Company’s current address (other than for Mr. Sawyer); or the Company’s failure to obtain an agreement from any successor entity to assume the Company’s obligations under the agreement.Disability—Physical or mental disability or health impairment that prevents the effective performance by the executive of his or her duties on a full-time basis.
Executive Compensation Tables
Retirement Plans and Arrangements
We currently provide the
Named Executive OfficersNEOs the option to participate in two Company-sponsored retirement savings plans: the Executive Retirement Savings Plan, a nonqualified deferred compensation plan, and the Regis Individual Secured Retirement Plan (the “RiSRP”), an employee welfare benefit plan, which was added in fiscal 2016 as a post-tax retirement savings option.
Elections to defer compensation under the Executive Retirement Savings Plan are made annually, prior to the beginning of the year in which the deferred compensation is earned. Executives may defer up to 100% of their annual compensation, including annual incentive, on a pre-tax basis. Beginning with elections made in fiscal 2016, in-service distributions must be deferred for a minimum of two years. Employer contributions under the Executive Retirement Savings Plan for our
Named Executive OfficersNEOs include a 25% match on up to a maximum of $100,000 in deferred compensation (i.e., $25,000) and a discretionary annual profit sharing contribution (each on a calendar-year basis)
., although no profit sharing contribution has been made since 2016. We deposit the deferred amounts and employer contributions into a trust for the benefit of plan participants. In accordance with tax laws, the assets of the trust are subject to claims of the Company’s creditors. Participant account balances are deemed invested as the executive directs, from time to time, among the investment alternatives offered. Subject to compliance with plan terms and applicable tax requirements (including, without limitation, Code Section 409A), executives may elect the distribution date for their plan accounts.
Under the RiSRP, participants may elect to contribute amounts from payroll, up to 100% of their annual compensation, including annual incentive, on an after-tax basis. Employee contributions under the RiSRP for our NEOs include the same match opportunity as the Executive Retirement Savings Plan, and if an NEO is participating in both plans, their aggregate match is capped at $25,000. Participants may also make contributions outside of payroll deductions, but these are not eligible for
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EXECUTIVE COMPENSATION TABLES
employer match. Participant contributions and employer matching contributions are deposited in participant-owned life insurance policies. These insurance policies are not subject to claims of the Company’s creditors. Each participant’s account
balancesbalance under the life insurance policy is invested as the participant directs, from time to time, among the investment alternatives available under the insurance policy.
Pension Benefits in 20192021
The following table sets forth certain information concerning pension benefits for the Named Executive Officers for fiscal 2019:2021:
| Eric A. Bakken | | | 54 | | | Employment Agreement | | | 27.5 | | | 1,401,287 | | | —5 | |
1
| Mr. Bakken is the only NEO eligible for the Company’s pension benefits program, as it was frozen prior to the commencement of employment of all other NEOs. |
2
| Retirement benefits for Mr. Bakken are described above under “Summary of Executive Agreements.” |
3
| The number of years of credited service shown for Mr. Bakken represents his actual years of service; however, for purposes of determining the value of their accumulated benefit, his years of credited service was frozen at 18.5. |
4
| The present value of pension benefits for Mr. Bakken is calculated based on the following assumptions: (i) freezing of the pension benefits as described above under “Summary of Executive Agreements—Retirement Plans and Arrangements,” (ii) expected retirement age of the later of (A) June 30, 2020 or (B) age 65, which is the earliest time a participant may retire without any benefit reduction due to age, and (iii) discount rate of 1.87%. |
5
| Mr. Bakken’s balance of $1,401,287 was paid out on July 1, 2021, the day following the end of our fiscal year. |
| | | | | |
Name1 | Age at June 30, 2019 | Plan Name2 | Number of Years of Credited Service3 (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) |
Eric A. Bakken | 52 | Employment Agreement | 25.5 | 1,098,790 | — |
1Mr. Bakken is the only NEO eligible for the Company’s pension benefits program, as it was frozen prior to the commencement of employment of all our other NEOs.
2Retirement benefits provided under the applicable employment agreement for each Named Executive Officer are described above under “Summary of Executive Agreements.”
3The number of years of credited service shown for Mr. Bakken represents his actual years of service; however, for purposes of determining the value of their accumulated benefit, his years of credited service was frozen at 18.5.
4The present value of pension benefits for Mr. Bakken is calculated based on the following assumptions: (i) freezing of the pension benefits as described above under “Summary of Executive Agreements—Retirement Plans and Arrangements,” (ii) expected retirement age of the later of (A) June 30, 2019 or (B) age 65, which is the earliest time a participant may retire without any benefit reduction due to age, and (iii) discount rate of 3.02%.
Executive Compensation Tables
Nonqualified Deferred Compensation for 2019
2021
The following table sets forth certain information concerning nonqualified deferred compensation under our Executive Retirement Savings Plan for the NEOs for fiscal 2019:2021:
| Felipe A. Athayde | | | — | | | — | | | — | | | — | | | — | |
| Kersten D. Zupfer | | | — | | | — | | | 78,550 | | | 0 | | | 355,279 | |
| Chad Kapadia | | | 109,104 | | | 27,273 | | | 61,368 | | | — | | | 289,511 | |
| Amanda P. Rusin | | | 101,500 | | | 25,375 | | | 111,943 | | | — | | | 533,734 | |
| James A. Townsend | | | 116,667 | | | — | | | — | | | — | | | — | |
| Hugh E. Sawyer | | | — | | | — | | | — | | | — | | | — | |
| Eric A. Bakken | | | — | | | — | | | 28,416 | | | 138,402 | | | 190,324 | |
1
| The Company matches deferred compensation contributions to our Executive Retirement Savings Plan at a rate of 25% of the amount contributed by the participant, up to $25,000 per calendar year. Amounts exceeding $25,000 are due to timing differences between the calendar and fiscal year. |
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| | | | | |
Name | Executive Contributions in Last FY1 ($) | Registrant Contributions in Last FY1 ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE2 ($) |
Hugh E. Sawyer | 1,773,9893 | — | (285,201)4 | — | 1,488,788 |
Andrew H. Lacko | — | — | — | — | — |
Eric A. Bakken | 101,975 | 24,506 | 12,104 | (124,553) | 351,304 |
Chad Kapadia | 21,875 | 5,469 | 2,036 | — | — |
Jim B. Lain | 8,000 | 2,000 | — | — | 15,000 |
EXECUTIVE COMPENSATION TABLES
1The Company matches deferred compensation contributions to our Executive Retirement Savings Plan at a rate of 25% of the amount contributed by the participant, up to $25,000 per calendar year. Amounts exceeding $25,000 are due to timing differences between the calendar and fiscal year. Mr. Sawyer did not defer any compensation in fiscal 2019 under our Executive Retirement Savings Plan. For Mr. Sawyer, this value represents the value of his inducement award of restricted stock units that vested upon achieving certain stock price conditions on April 17, 2019. Delivery of the underlying shares is deferred until April 17, 2020. The number of underlying shares is also shown in the Options Exercised and Stock Vested Table. For Messrs. Bakken, Kapadia and Lain, executive contributions were made under the Executive Retirement Savings Plan.
2The following amounts of contributions and earnings reflected in the table above have been reported in the current year or prior years’ Summary Compensation Tables as follows:
| | | | | |
| Current Year Summary Compensation Table |
Name | Total Amount Reported in Current or Prior Summary Compensation Tables ($) | Salary ($) | Non-Equity Incentive Plan ($) | Above-Market Earnings ($) | Company Match and Profit-Sharing Contribution in All Other Compensation ($) |
Hugh E. Sawyer | 730,044 | — | — | — | — |
Andrew H. Lacko | — | — | — | — | — |
Eric A. Bakken | 365,336 | 101,975 | — | — | 24,506 |
Chad Kapadia | 27,344 | 21,875 | — | — | 5,469 |
Jim B. Lain | 25,000 | 8,000 | — | — | 2,000 |
3Reflects value of restricted stock units that vested in fiscal 2019 that will not be settled until fiscal 2021.
4Amount is calculated based on the closing price of the Company’s common stock on June 28, 2019.
2
| The following amounts of contributions and earnings reflected in the table above have been reported in the current year or prior years’ Summary Compensation Tables as follows: |
| Felipe A. Athayde | | | — | | | — | | | — | | | — | | | — | |
| Kersten D. Zupfer | | | — | | | — | | | — | | | — | | | — | |
| Chad Kapadia | | | 67,188 | | | 109,104 | | | — | | | — | | | 27,273 | |
| Amanda P. Rusin | | | 0 | | | 101,500 | | | — | | | — | | | 25,375 | |
| James A. Townsend | | | — | | | — | | | — | | | — | | | 28,125 | |
| Hugh E. Sawyer | | | 730,044 | | | — | | | — | | | — | | | — | |
| Eric A. Bakken | | | 554,317 | | | 0 | | | — | | | — | | | 0 | |
The measurement funds available under the Executive Retirement Savings Plan include
the Company’s common stock and selected mutual funds, which are the same measurement funds available for employees generally with respect to investment of their funds in the Company’s qualified 401(k) plan. Participants in the plan may change their investments in the various measurement funds at any time.
Historically, the Company’s common stock was also available as a measurement fund, but it has subsequently been removed as an investment option.
Contributions made to the RiSRP on behalf of the NEOs are not included in the table above as this plan is an after-tax nonqualified retirement plan that does not provide for a deferral of compensation.
Executive Compensation Tables
| |
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EXECUTIVE COMPENSATION TABLES
Actual and Potential Payments Upon Termination or Change in Control
The tables that follow describe
actual and potential payments and benefits provided to our NEOs or their beneficiaries under the employment agreements, plans and arrangements in existence at June 30,
20192021 under various scenarios involving a termination of employment and/or a change in control, and
as to potential payments, assuming that the termination or change in control event(s) occurred on June 30,
2019.2021. The agreements are described in more detail under “Summary of Executive Agreements.”
The following presentationinformation has been keyed to the following events upon which an NEO or theirhis or her beneficiaries were or would be entitled to a payment or benefit:
| |
•Voluntary termination or involuntary termination not related to a change in control; •Termination due to death;
•Termination due to disability;
| •A change in control not involving an employment termination; and
•Involuntary termination within twenty-four months after a change in control.
|
Termination due to death;
Termination due to disability;
A change in control not involving an employment termination; and
Involuntary termination within twenty-four months after a change in control.
Unless otherwise specified, for purposes of this section, an “involuntary termination” for these purposes includes a termination by the Company without “Cause” or by an NEO for “Good Reason,” but does not include a termination for “Cause.” A “voluntary termination” refers to a termination by thean NEO other than for “Good Reason.” For purposes of this section, the terms “Cause” and “Good Reason” for these purposes have the meanings described above under “Definitions underUnder Executive Agreements.”
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EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
Actual and Potential Payments to NEOs Currently Employed
| | | | | | | | |
| | Not Related to Change in Control | | After a Change in Control |
Name1 | Type of Payment or Benefit | Voluntary Termination ($) | Involuntary Termination2 ($) | Death ($) | Disability ($) | | Not Involving a Termination of Employment ($) | Involuntary Termination3 ($) |
Hugh E. Sawyer | Severance | — | 2,719,375 | — | — | | — | 2,719,375 |
Lump Sum Payment4 | — | 100,000 | — | — | | — | 100,000 |
Medical and Dental Insurance Benefits5 | — | 21,757 | — | — | | — | 21,757 |
Accelerated Vesting of Equity6, 7 | — | 6,938,788 | 7,429,216 | 7,429,216 | | 6,938,788 | 7,429,216 |
Total | — | 9,779,920 | 7,429,216 | 7,429,216 | | 6,938,788 | 10,270,348 |
Andrew H. Lacko8 | Severance | — | — | — | — | | — | — |
Lump Sum Payment4 | — | 200,000 | — | — | | — | 200,000 |
Medical and Dental Insurance Benefits5 | — | — | — | — | | — | — |
Accelerated Vesting of Equity7 | — | — | 817,834 | 817,834 | | 710,376 | 817,834 |
Total | — | 200,000 | 817,834 | 817,834 | | 710,376 | 1,017,834 |
Eric A. Bakken | Severance | — | 773,438 | — | — | | — | 1,732,500 |
Lump Sum Payment4 | — | 250,000 | — | — | | — | 250,000 |
Medical and Dental Insurance Benefits5 | — | 18,321 | — | — | | — | 27,482 |
Retirement Benefits9 | 1,130,703 | 1,330,239 | 1,903,176 | 2,411,626 | | 1,330,239 | 1,330,239 |
Accelerated Vesting of Equity7 | — | — | 1,225,173 | 1,225,173 | | 1,120,860 | 1,225,713 |
Total | 1,130,703 | 2,371,998 | 3,128,349 | 3,636,799 | | 2,451,099 | 4,565,394 |
Chad Kapadia8 | Severance | — | — | — | — | | — | — |
Lump Sum Payment4 | — | 200,000 | — | — | | — | 200,000 |
Medical and Dental Insurance Benefits5 | — | — | — | — | | — | — |
Accelerated Vesting of Equity7 | — | — | 299,060 | 299,060 | | 189,542 | 299,060 |
Total | — | 200,000 | 299,060 | 299,060 | | 189,542 | 499,060 |
Jim B. Lain | Severance | — | 580,000 | — | — | | — | 1,280,000 |
Lump Sum Payment4 | — | 200,000 | — | — | | — | 200,000 |
Medical and Dental Insurance Benefits5 | — | 18,321 | — | — | | — | 27,482 |
Accelerated Vesting of Equity7 | | — | 1,119,463 | 1,119,463 | | 1,037,551 | 1,119,463 |
Total | — | 798,321 | 1,119,463 | 1,119,463 | | 1,037,551 | 2,626,945 |
1Each of the NEOs listed in this table is party to a written employment agreement with the Company, with the exception of Mr. Lacko and Mr. Kapadia.
2Severance amounts in the event of involuntary termination not related to Change in Control represent a cash payment equal to two times annual base salary for Mr. Sawyer and one times annual base salary for the other NEOs, plus, for the other NEOs, a pro-rated portion of any bonus the executive officer would have earned for the year of termination, based on actual performance.
3In the event of an involuntary termination related to a Change in Control, Mr. Sawyer would receive the same severance as for any involuntary termination. Severance to the other NEOs represents a cash payment equal to two times annual base salary plus two times the target annual bonus for the year of termination.
Under Code Section 280G, executives will incur an excise tax on portions of these payments if the parachute value of payments exceeds a specified threshold. Under the 2004 Amended and Restated Long Term Incentive Plan (the “2004 Long Term Plan”), participants who first received awards prior to October 22, 2013 (which includes only Mr. Bakken) are entitled to an excise tax gross-up if an award granted thereunder, either alone or together with other payments and benefits the participant receives or is entitled to receive would constitute a “parachute payment.” These grandfathered rights to tax gross-ups were waived by Mr. Bakken effective in August 2018. The 2016 Long Term Plan does not provide for any excise tax gross-ups on parachute payments. Pursuant to Mr. Bakken’s employment agreement, the Company will determine whether he is better off receiving the full payment due and paying the excise tax, or receiving a reduced payment that falls just below the excise tax threshold, which is referred to as a “best of net” provision. For this hypothetical payment as of June 30, 2019, it has been estimated that Mr. Bakken would be better off receiving the full payment due.
4In connection with the fiscal 2019 long-term incentive awards, in August 2018 we entered into letter agreements with our executive officers which provided for a one-time lump sum payment in the event the executive experienced a “Qualifying Termination” that occur prior to the first anniversary of the date of grant (August 31, 2019) as described under “Governance Policies and Additional Compensation-Related Items— Changes to Severance Program.”
5The amount represents the estimated medical and dental insurance premiums for the applicable benefits continuation period following involuntary termination. The continuation period is 18 months for Mr. Sawyer; for the other NEOs, it is 12 months if not related to a change in control and 18 months if related to a Change in Control.
6Mr. Sawyer is entitled to acceleration of his sign-on equity awards upon death, disability, a change in control, or termination without cause or for good reason, except that in the case of his sign-on RSUs, the Company’s stock price also must exceed a certain price threshold. For more information about these awards, see “Compensatory Arrangements with Mr. Sawyer” in CD&A. Mr. Sawyer’s initial equity awards were scheduled to vest on the second anniversary of the date of grant subject to his continued service through that date, and in the case of his RSUs, also subject to the satisfaction of performance goals related to the Company’s stock price, which goals were attained in April 2019, at which time the RSUs vested. However, his SARs will not become exercisable and his RSUs will not be settled until the third anniversary of the date of grant, and his SARs will be exercisable until the tenth anniversary of the date of grant.
7Amounts represent the intrinsic value of SARs, RSUs, and PSUs as of June 28, 2019 for which the vesting would be accelerated. The value entered for SARs is based on the number of units for which vesting would be accelerated times the excess of $16.60, the closing price of the Company’s common stock on June 28, 2019 on the NYSE, over the SAR exercise price. The value included for RSUs and PSUs is the product of the number of units for which vesting would be accelerated and $16.60.
8Neither Mr. Lacko nor Mr. Kapadia is party to a written employment agreement with the Company stipulating provisions for post-termination payments. They are eligible for accelerated vesting of equity awards upon certain termination scenarios pursuant to terms of the LTIP/grant agreements. Any severance amounts paid upon an actual termination would be determined at the discretion of the Committee.
9The amounts represent a lump sum cash payment equal to the present value of a hypothetical annuity of monthly benefits. The annuity amount and payment period vary according to the termination scenario, as described under “Summary of Executive Agreements — Employment Agreements — Historical Retirement and Life Insurance Benefits.”
Executive Compensation Tables
| Felipe A. Athayde | | | Severance | | | — | | | 1,344,863 | | | — | | | — | | | — | | | 1,344,863 | |
| Medical and Dental Insurance Benefits4 | | | — | | | 13,125 | | | — | | | — | | | — | | | 13,125 | |
| Accelerated Vesting of Equity5 | | | 2,465,040 | | | 3,357,245 | | | 3,357,245 | | | 3,357,245 | | | — | | | 3,357,245 | |
| Total | | | 2,465,040 | | | 4,715,233 | | | 3,357,245 | | | 3,357,245 | | | — | | | 4,715,233 | |
| Kersten D. Zupfer | | | Severance | | | — | | | 640,000 | | | — | | | — | | | — | | | 640,000 | |
| Medical and Dental Insurance Benefits4 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Accelerated Vesting of Equity5 | | | — | | | 306,297 | | | 261,341 | | | 261,341 | | | — | | | 261,341 | |
| Total | | | — | | | 946,297 | | | 261,341 | | | 261,341 | | | — | | | 901,341 | |
| Chad Kapadia8 | | | Severance | | | — | | | 960,000 | | | — | | | — | | | — | | | 960,000 | |
| Medical and Dental Insurance Benefits4 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Accelerated Vesting of Equity5 | | | — | | | 209,411 | | | 432,329 | | | 432,329 | | | — | | | 432,329 | |
| Total | | | — | | | 1,1469,411 | | | 432,329 | | | 432,329 | | | — | | | 1,392,329 | |
| Amanda P. Rusin | | | Severance | | | — | | | 595,000 | | | — | | | — | | | — | | | 595,000 | |
| Medical and Dental Insurance Benefits4 | | | — | | | 13,125 | | | — | | | — | | | — | | | — | |
| Accelerated Vesting of Equity5 | | | — | | | 124,123 | | | 185,384 | | | 185,384 | | | — | | | 185,384 | |
| Total | | | — | | | 732,248 | | | 185,384 | | | 195,384 | | | — | | | 793,509 | |
| James A. Townsend | | | Severance | | | — | | | 792,000 | | | — | | | — | | | — | | | 792,000 | |
| Medical and Dental Insurance Benefits4 | | | — | | | 13,125 | | | — | | | — | | | — | | | 13,125 | |
| Accelerated Vesting of Equity5 | | | — | | | 153,148 | | | 156,078 | | | 156,078 | | | — | | | 156,078 | |
| Total | | | — | | | 958,273 | | | 156,078 | | | 156,078 | | | — | | | 961,203 | |
| Eric A. Bakken6 | | | Severance | | | — | | | 680,625 | | | — | | | — | | | — | | | — | |
| Medical and Dental Insurance Benefits | | | — | | | 11,176 | | | — | | | — | | | — | | | — | |
| Retirement Benefits | | | — | | | 1,401,287 | | | — | | | — | | | — | | | — | |
| Accelerated Vesting of Equity | | | — | | | 203,246 | | | — | | | — | | | — | | | — | |
| Total | | | — | | | 2,296,334 | | | — | | | — | | | — | | | — | |
| Hugh E. Sawyer7 | | | Post-Employment Consulting Arrangement and PTO Payment | | | 1,254,808 | | | — | | | — | | | — | | | — | | | — | |
| Medical and Dental Insurance Benefits | | | 564 | | | — | | | — | | | — | | | — | | | — | |
| Total | | | 1,255,372 | | | — | | | — | | | — | | | — | | | — | |
1
| Ms. Zupfer, Mr. Sawyer, and Mr. Bakken are, or were, each party to a written employment agreement with the Company, which defines their benefits in connection with the events described above. Mr. Athayde, Mr. Kapadia, Ms. Rusin, and Mr. Townsend are, or were, eligible for severance benefits under the Senior Executive Severance Policy. |
2
| Severance amounts in the event of involuntary termination not related to Change in Control represent a cash payment equal to one times annual base salary plus a pro-rated portion of any bonus the executive would have earned for the year of termination, based on actual performance. |
3
| In the event of an Involuntary Termination Related to a Change in Control, all NEOs would receive the same severance as for any involuntary termination. Under Code Section 280G, executives will incur an excise tax on portions of these payments if the parachute value of payments exceeds a specified threshold. The 2016 Long Term Plan does not provide for any excise tax gross-ups on parachute payments. |
4
| The amount represents the estimated medical and dental insurance premiums for the applicable benefits continuation period following involuntary termination. The continuation period is 12 months for the NEOs. Ms. Zupfer and Mr. Kapadia are not currently enrolled in Company health benefit programs. |
5
| Amounts represent the intrinsic value of RSUs and PSUs as of June 30, 2021 for which the vesting would be accelerated. The value included for RSUs and PSUs is the product of the number of units for which vesting would be accelerated at $9.36, the closing price of the Company’s common stock on June 30, 2021 on the NYSE. For Ms. Zupfer, the value includes the value of PSUs granted upon promotion to Chief Financial Officer. |
6
| The amounts for Mr. Bakken reflect actual payments and benefits he received in connection with his termination of employment on December 31, 2020. The severance and benefits continuation payments were made pursuant to the terms of Mr. Bakken’s employment agreement and the accelerated vesting of equity occurred pursuant to the original terms of the equity awards. The retirement benefits are described above under “Pension Benefits in 2021.” |
7
| The amounts for Mr. Sawyer reflect actual payments and benefits he received in connection with his retirement on October 4, 2020. |
| |
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EXECUTIVE COMPENSATION TABLES
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship of the annual total compensation of our median paid employee and the annual total compensation of Mr. Sawyer,Athayde, our President and Chief Executive Officer.
For fiscal 2021, the total compensation for Mr. Athayde was $10,494,979, as reported in the “Total” column of the Summary Compensation Table. Since Mr. Athayde was appointed President and Chief Executive Officer effective October 5, 2020, we annualized his Salary and Non-Equity Incentive Plan Compensation, as disclosed in the Summary Compensation Table. We then added the disclosed values of his Bonus, Stock Awards, Option Awards, and other components of All Other Compensation to arrive at a value of $10,866,152, used for the ratio of annual total compensation for our President and Chief Executive Officer to the annual total compensation for our median employee. We annualized our President and Chief Executive Officer’s total compensation as follows:
| Salary | | | 520,064 | | | 700,000 | | | Annualized salary | |
| Bonus | | | 2,500,000 | | | 2,500,000 | | | Not annualized; One-time cash sign-on bonus payment | |
| Stock Awards | | | 2,500,000 | | | 2,500,000 | | | Not annualized; One-time award of 358,680 RSUs | |
| Option Awards | | | 4,218,453 | | | 4,218,453 | | | Not annualized; One-time award of 1,458,680 stock options | |
| Non-Equity Incentive Plan Compensation | | | 587,344 | | | 783,125 | | | Annualized at 89.5% of target AIC | |
| Change in Pension | | | — | | | — | | | Not participating in defined benefit pension plan | |
| All Other Compensation | | | 169,118 | | | 164,574 | | | Not annualized; Actual amount of the Company’s contributions to the Executive Retirement Savings Plan, relocation expenses, cell phone reimbursement, and life insurance premiums | |
| Total CEO Pay | | | 10,494,979 | | | 10,866,152 | | | | |
For fiscal 2021, our last completed fiscal year:
The annual total compensation of our median paid employee was $24,186.60; and
The annualized total compensation of our President and Chief Executive Officer as shown above was $10,866,152.
Based on this information for fiscal 2021, we reasonably estimate that the ratio of the annual total annualized compensation of our President and Chief Executive Officer to the annual total compensation of the median paid employee, a part-time stylist at one of our salons, was 449:1. This pay ratio
included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
For fiscal 2019, our last completed fiscal year:
•The annual total compensation of our median employee was $20,626; and
•The annual total compensation of our President and CEO, as reported in the Summary Compensation Table presented elsewhere in this proxy statement, was $8,427,057.
Based on this information for fiscal 2019, we reasonably estimate that the ratio of our President and CEO’s annual total compensation to the annual total compensation of our median employee, a part-time stylist at one of our salons, was 409:1. Our fiscal 2019 pay ratio is substantially greater than our fiscal 2018 pay ratio due to our newly revised fiscal 2019 pay plan under which our senior executives, including Mr. Sawyer, each received a single, large equity grant that will cover a five-year period from fiscal 2019 to fiscal 2023, and additional automatic annual equity grants are not anticipated for the remainder of the period.
We used the following methodology and material assumptions and reasonable estimates to identify our median employee in a manner consistent with SEC rules and guidance:
For our fiscal
20192021 pay ratio analysis, we determined that we could not use the same median
paid employee that we identified
last year sincein fiscal 2020 due to our ongoing restructuring efforts
we have experiencedthat resulted in a significant decrease in our employee population
thatand due to dissimilar COVID-19 impacts, all of which we believe would significantly impact our fiscal
20192021 pay ratio disclosure.
We identified
For purposes of identifying our median paid employee, by analyzingwe used our global employee population as of June 30, 2021 (excluding our President and Chief Executive Officer), which consisted of approximately 2,446 total employees, 2,066 of whom were employed in the United States and 380 of whom were employed in foreign jurisdictions. We aggregated annual total cash compensation paid to all members of our global employee population (other than our President and CEO)described above during fiscal 2019 who were employed on June 30, 2019.2021. Total cash compensation incudesincludes wages (for both salaried employees and hourly employees), cash bonuses, and tips, and commissions.if applicable. In making this determination,these determinations, we annualized the total cash compensation of those full-time and part-time permanent employees
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EXECUTIVE COMPENSATION TABLES
who were employed on June 30,
2019,2021 but did not work for us during all
fiscal 2021, including those who did not work for a period of
fiscal 2019.time due to the employee furloughs in connection with COVID-19. We also converted Canadian employee cash compensation from Canadian Dollars to U.S. Dollars using an exchange rate as of June 30, 2021. No full-time equivalent adjustments were made for part-time employees.
After identifying
Once we identified the median
paid employee, we
calculateddetermined the median paid employee’s annual total compensation
for that individual in accordance with the same methodology used for our
named executive officersNamed Executive Officers as set forth on the Summary Compensation Table. With respect to the annual total compensation of our President and
CEO,Chief Executive Officer, we used the amount reported in the “Total” column reported in the Summary Compensation Table.
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
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2019 Proxy Statement |51TABLE OF CONTENTS
EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
Equity Compensation Plan Information
The following table provides information about our common stock that may be issued under all of our stock-based compensation plans in effect as of June 30,
2019. | | | |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans |
Equity compensation plans approved by security holders1 | 2,138,966 | $15.12 | 4,791,1122 |
Equity compensation plans not approved by security holders3 | 1,022,718 | $11.13 | 230,3034 |
Total | 3,161,684 | $13.83 | 5,021,415 |
2021.1Includes shares granted through stock options, SARs, restricted stock awards, RSUs and PSUs under the 2004 Long Term Plan, 2016 Long Term Plan and 2018 Long Term Plan. Information regarding the stock-based compensation plans is included in Notes 1 and 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2019.
2The Company’s 2018 Long Term Plan provides for the issuance of a maximum of 3,818,895 shares of the Company’s common stock through stock options, SARs, restricted stock or RSUs. As of June 30, 2019, there are 3,747,822 shares available for future issuance under the 2018 Long Term Plan and 1,043,300 shares available for issuance under the Company’s Stock Purchase Plan.
3Consists of SARs and RSUs granted to Mr. Sawyer and Mr. Lacko under the NYSE inducement grant exception to its rules for shareholder approval of equity plans in connection with the commencement of his employment, the terms of which are described under “Compensatory Arrangements with Mr. Sawyer” and “Compensatory Arrangements with Mr. Lacko” in the CD&A.
4The Company’s SPMP provides for the issuance of a maximum of 250,000 shares of the Company’s common stock upon purchase of shares at fair market value by eligible participants. As of June 30, 2019, there are 230,303 shares available for issuance under the SPMP. The SPMP is described above under “SPMP and Matching RSU Grants in Fiscal 2019 (Early Participation Program)” in the Compensation Discussion and Analysis.
| Equity compensation plans approved by security holders1 | | | 2,122,407 | | | $9.73 | | | 4,240,7332 | |
| Equity compensation plans not approved by security holders3 | | | 1,717,360 | | | $9.31 | | | 201,3324 | |
| Total | | | 3,839,767 | | | $9.55 | | | 4,442,065 | |
1
| Includes shares granted through stock options, SARs, restricted stock awards, RSUs, and PSUs under the 2004 Long Term Plan, 2016 Long Term Plan, and 2018 Long Term Plan. Information regarding the stock-based compensation plans is included in Notes 1 and 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2021. |
2
| The Company’s 2018 Long Term Plan provides for the issuance of a maximum of 3,818,895 shares of the Company’s common stock through stock options, SARs, restricted stock, or RSUs. As of June 30, 2021, there are 3,341,011 shares available for future issuance under the 2018 Long Term Plan and 899,722 shares available for issuance under the Company’s Stock Purchase Plan. |
3
| Consists of RSUs, stock options, and SARs granted to Mr. Athayde and Mr. Sawyer under the NYSE inducement grant exception to its rules for shareholder approval of equity plans in connection with the commencement of their employment with the Company, the terms of which are described under “Compensatory Arrangements with Mr. Athayde” and “Compensatory Arrangements with Mr. Sawyer” in the CD&A section of this Proxy Statement. |
4
| The Company’s SPMP provides for the issuance of a maximum of 250,000 shares of the Company’s common stock upon purchase of shares at fair market value by eligible participants. As of June 30, 2021, there are 201,332 shares available for issuance under the SPMP. The SPMP is described above under “SPMP and Matching RSU Grants in Fiscal 2021” in the CD&A section of this Proxy Statement. |
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52 2021 PROXY STATEMENT |
| |
RATIFICATION OF
APPOINTMENT
OF INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM
Upon the recommendation of the Audit
Committee of the Board, the Board unanimously
recommends a vote FOR ratification of the
appointment of PricewaterhouseCoopers LLP.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The
On December 7, 2020, the Audit Committee
has selecteddismissed PricewaterhouseCoopers LLP,
certified public accountants andwhich had been serving as the independent registered public accounting firm,
and approved the engagement of Grant Thornton LLP, to serve as our independent registered public accounting firm for the
remainder of the fiscal year
endingended June 30,
2021. A benchmarking exercise based on the Company’s zero-based budgeting initiative helped drive the decision to initiate a competitive audit proposal process, which included proposals from multiple firms, including PricewaterhouseCoopers LLP, as the incumbent, and was centered around the Company's future state as a fully franchised organization. Grant Thornton LLP was subsequently engaged on December 10, 2020. Although not required, the Board wishes to submit the selection of
PricewaterhouseCoopersGrant Thornton LLP for shareholders’ ratification at the Annual Meeting. If the shareholders do not so ratify, the Audit Committee will reconsider its selection.
Representatives of
PricewaterhouseCoopersGrant Thornton LLP are expected to
be present atparticipate in the Annual Meeting, will have the opportunity to make a statement if they desire, and are expected to be available to respond to appropriate questions.
Upon the recommendation of the Audit Committee of the Board, the Board unanimously recommends a vote
FOR ratification of the appointment of PricewaterhouseCoopersGrant Thornton LLP.Aggregate audit fees billed for professional services rendered by
PricewaterhouseCoopersGrant Thornton LLP were
$2,323,000$701,500 for the year ended June 30,
2019, and $2,290,000 for the year ended June 30, 2018.2021. Such fees were primarily for professional services rendered for the
auditsaudit of our consolidated financial statements as of and for the
yearsyear ended June 30,
2019 and 2018, limited2021, reviews of our unaudited condensed consolidated interim financial statements,
and accounting consultations required to perform an audit in accordance with generally accepted auditing
standards.standards, and consent and comfort letters for the At-The-Market offering.
There were no audit-related services
rendered by
PricewaterhouseCoopersGrant Thornton LLP in the
yearsyear ended June 30,
2019 or 2018.2021.
Aggregate non-audit related
tax fees billed for
professionaltax services rendered by
PricewaterhouseCoopersGrant Thornton LLP
were $30,379 for the year ended June 30,
2019 and June 30, 2018 were $517,000 and $802,000, respectively.2021. The tax fees
for the years ended June 30, 2019 and 2018 were
primarily for strategic tax planning,
and divestiture services, tax reform, tax compliance, general tax consulting and assistance with income tax audits.
All Other Fees
In addition to
There were no other services rendered by Grant Thornton LLP in the
fees described above, aggregate fees of $1,800 were billed by PricewaterhouseCoopers LLP during each of the yearsyear ended June 30,
2019 and 2018, for fees related to a research tool that we access through PricewaterhouseCoopers LLP.2021.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has approved the engagement of PricewaterhouseCoopersGrant Thornton LLP to perform auditing services for the current fiscal year ending June 30, 2020.2022. In accordance with Company policy, any additional audit or non-audit services must be approved in advance. All of the professional services provided by PricewaterhouseCoopersGrant Thornton LLP during the yearsyear ended June 30, 2019 and June 30, 20182021 were approved or pre-approved in accordance with the policies of our Audit Committee.
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CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Previous Independent Registered Public Accounting Firm
As disclosed above, on December 7, 2020, the Audit Committee dismissed PricewaterhouseCoopers LLP, which had been serving as the independent registered public accounting firm. The reports of PricewaterhouseCoopers LLP on the consolidated financial statements as of and for the past two years ended June 30, 2020 and June 30, 2019 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the years ended June 30, 2020 and June 30, 2019 and the subsequent interim period through December 7, 2020, there were no disagreements between us and PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference thereto in their reports on the financial statements for such years.
During the years ended June 30, 2020 and June 30, 2019 and the subsequent interim period through December 7, 2020, there have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K), except for the material weakness in internal control over financial reporting as we did not maintain effective controls over the derecognition calculation of the Company-owned stores goodwill reporting unit. This material weakness existed until the end of the quarter ended March 31, 2020 when the remaining goodwill associated with the Company-owned reporting unit was fully impaired and, as a result, the material weakness had been remediated.
New Independent Registered Public Accounting Firm
Also as disclosed above, on December 7, 2020, the Audit Committee approved the engagement of Grant Thornton LLP, to audit our financial statements for the year ending June 30, 2021. During the two most recent years ended June 30, 2020 and June 30, 2019 and the subsequent interim period through December 7, 2020, we did not consult with Grant Thornton LLP regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and no written report or oral advice was provided that Grant Thornton LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a “reportable event” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
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The Audit Committee reports to and assists the Board in providing oversight of the financial management, independent auditors, and financial reporting procedures of the Company. Each member of the Audit Committee is “independent” within the meaning of applicable NYSE listing standards. The Audit Committee has adopted a written charter describing its functions, which has been approved by the Board.
Our management is responsible for preparing our financial statements and the overall reporting process, including our system of internal controls. Our independent auditors,
PricewaterhouseCoopersGrant Thornton LLP, are responsible for auditing the financial statements and our system of internal controls over financial reporting and expressing opinions thereon.
In this context, the
Audit Committee has met and held discussions with management and the independent auditors. Management represented to the
Audit Committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Committee has reviewed and discussed the consolidated financial statements with management and the independent auditors. The Committee discussed with the independent auditors matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board
(PCAOB)(“PCAOB”) and the SEC.
In addition, the
Audit Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the
Audit Committee concerning independence and has discussed with the independent auditors the independent auditors’ independence.
The
Audit Committee discussed with our independent auditors the overall scope and plans for their audit. The
Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of our internal controls and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the
Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended June 30,
20192021 for filing with the SEC. The
Audit Committee also has recommended to the Board the selection of
PricewaterhouseCoopersGrant Thornton LLP as our independent registered public accounting firm for the fiscal year ending June 30,
2020.2022.
David J. Grissen
Michael J. Merriman, Chair
Virginia Gambale
David J. Grissen
M. Ann Rhoades
David P. Williams
Members of the Audit Committee
58 | | | | |
TABLE OF CONTENTSCertain Relationships and
Related Transactions
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During fiscal
2019,2021, we were not a party to any related party transactions covered by the Exchange Act rules.
Our Related Party Transaction Approval Policy sets forth our policies and procedures for the review
and approval
or ratification of certain related party transactions by the Nominating and Corporate Governance Committee. The policy applies to any transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements, or relationships in which the Company, or any of its subsidiaries, is or will be a participant and in which a related person has a direct or indirect interest, but exempts the following:
•
Payment of compensation by the Company to a related party for the related party’s service to the Company as a director, officer or employee;
•
Transactions available to all employees or all shareholders of the Company on the same terms;
•
Transactions that, when aggregated with the amount of all other transactions between the Company and the related party or any entity in which the related party has an interest, involve less than $10,000 in a fiscal year; and
•
Transactions in the ordinary course of the Company’s business at the same prices and on the same terms as are made available to customers of the Company generally.
The Nominating and Corporate Governance Committee must approve any related party transaction subject to this policy before commencement of the related party transaction; provided, however, that if a related party is only first identified after it commences or first becomes a related party transaction, it must be brought to the Nominating and Corporate Governance Committee for
ratification.approval or a determination that the transaction should be terminated. Alternatively, the Nominating and Corporate Governance Committee has delegated authority to its Chair to approve related party transactions if they arise between the Nominating and Corporate Governance Committee’s meetings.
The Nominating and Corporate Governance Committee will analyze the following factors, in addition to any other factors it deems appropriate, in determining whether to approve a related party transaction:
| |
•Whether the terms are fair to the Company; •Whether the transaction is material to the Company;
•The role the related party has played in arranging the related party transaction;
| •The structure of the related party transaction; and
•The interests of all related parties in the related party transaction.
|
Whether the transaction is material to the Company;
The role the related party has played in arranging the related party transaction;
The structure of the related party transaction; and
The interests of all related parties in the related party transaction.
The Nominating and Corporate Governance Committee may, in its sole discretion, approve or deny any related party transaction. A transaction will be approved only if it the Nominating and Corporate Governance Committee determines that it is not inconsistent with the interests of the Company and our shareholders. Approval of a related party transaction may be conditioned upon the Company and the related party taking any actions that the Nominating and Corporate Governance Committee deems appropriate. The Nominating and Corporate Governance Committee reviews this policy on an annual basis.
| |
2021 PROXY STATEMENT56 | | | |
TABLE OF CONTENTSSecurity Ownership of
Certain Beneficial Owners
and Management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of August 26, 2019,September 1, 2021, the ownership of our common stock by each shareholder who is known by us to own beneficially more than 5% of our outstanding shares, by each director and director nominee, by each named executive officer identified in the Summary Compensation Table, and by all current executive officers and directors as a group. Except as indicated below, the parties listed in the table have the sole voting and investment power with respect to the shares indicated. Unless otherwise indicated, the address for each person or entity named below is c/o Regis Corporation, 7201 Metro3701 Wayzata Boulevard, Edina,Suite 500, Minneapolis, Minnesota 55439.55416. Our Company had 36,059,87935,878,537 shares of common stock issued and outstanding as of August 26, 2019.September 1, 2021.
| More than 5% Shareholders | | | Cramer Rosenthal McGlynn, LLC2 | | | 6,121,953 | | | 17.1 | |
| Torch BRC, LP3 | | | 3,962,648 | | | 11.0 | |
| BlackRock, Inc.4 | | | 3,730,346 | | | 10.4 | |
| Massachusetts Financial Services Company5 | | | 2,403,167 | | | 6.7 | |
| AllianceBernstein L.P.6 | | | 2,332,088 | | | 6.5 | |
| Named Executive Officers | | | Felipe A. Athayde | | | 358,680 | | | 1.0 | |
| Kersten D. Zupfer | | | 38,070 | | | * | |
| Chad Kapadia | | | 19,902 | | | * | |
| Amanda P. Rusin | | | 33,452 | | | * | |
| James A. Townsend | | | 14,060 | | | * | |
| Hugh E. Sawyer7 | | | 1,001,000 | | | * | |
| Eric A. Bakken8 | | | 116,337 | | | * | |
| Directors and
Nominees
(in addition to
Mr. Athayde, who is
listed above): | | | Lockie Andrews | | | 0 | | | * | |
| Daniel G. Beltzman9 | | | 1,676,476 | | | 4.7 | |
| Virginia Gambale | | | 32,770 | | | * | |
| David J. Grissen | | | 60,792 | | | * | |
| Mark S. Light | | | 60,792 | | | * | |
| Michael Mansbach | | | 3,912 | | | * | |
| Michael J. Merriman | | | 81,186 | | | * | |
| M. Ann Rhoades | | | 49,296 | | | * | |
| All current executive officers, directors, and director nominees as a group (15 persons)10 | | | 2,416,078 | | | 6.5 | |
1
| Includes the following shares not currently outstanding but deemed beneficially owned because of the right to acquire them pursuant to restricted stock units that vest within 60 days or have vested but have not yet been distributed: 17,535 shares for Mr. Beltzman, 32,770 shares for Ms. Gambale, 60,792 shares for Messrs. Grissen and Light, 3,912 shares for Mr. Mansbach, 71,186 shares for Mr. Merriman, and 49,296 shares for Ms. Rhoades. Includes the following shares not currently outstanding but deemed beneficially owned because of the right to acquire them pursuant to options and SARs exercisable within 60 days: 1,000,000 shares by Mr. Sawyer. |
2
| Based on information in a Schedule 13G/A filed by Cramer Rosenthal McGlynn, LLC (“Cramer Rosenthal”) on February 16, 2021, Cramer Rosenthal reported sole voting power over 5,942,722 shares, shared voting power over 0 shares, sole dispositive power over 6,121,953 shares and shared dispositive power over 0 shares. The address for Cramer Rosenthal is 28 Havemeyer Place, Greenwich, CT 06830. |
3
| Based on information in a Schedule 13D/A filed by Torch BRC, LP (“Torch”) on August 31, 2021, Torch reported that Springhill Investments LLC (“Springhill”) serves as the general partner of Torch, the James Grosfeld Trust under Agreement dated December 16, 1988, as amended (the “Grosfeld Trust”) serves as the sole member of Springhill and James Grosfeld serves as the Trustee of the Grosfeld Trust. On the Schedule 13D/A, Torch reported that it had voting power of 0 shares, shared voting power over 3,962,648 shares, sole dispositive power over 0 shares and shared dispositive power over 3,962,648 shares. As the general partner of Torch, Springhill may |
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| | | |
Name of Beneficial Owner or Identity of Group | Number of Shares Beneficially Owned1 (#) | Percent of Class (%) |
More than 5% Shareholders | Birch Run Capital Advisors, LP2 | 10,655,170 | 29.6 |
BlackRock, Inc.3 | 5,016,320 | 13.9 |
Dimensional Fund Advisors LP4 | 3,834,171 | 10.6 |
The Vanguard Group5 | 3,363,675 | 9.3 |
Cramer Rosenthal McGlynn, LLC6 | 2,520,391 | 7.0 |
Named Executive Officers | Hugh E. Sawyer7 | 1,100,186 | 3.0 |
Andrew H. Lacko | 17,798 | * |
Eric A. Bakken8 | 191,974 | * |
Chad Kapadia | 135,712 | * |
Jim B. Lain | 5,877 | * |
Directors and Nominees (in addition to Mr. Sawyer, who is listed above): | Daniel G. Beltzman2 | 10,672,250 | 29.6 |
Virginia Gambale | 9,372 | * |
David J. Grissen | 37,399 | * |
Mark S. Light | 37,399 | * |
Michael J. Merriman | 57,793 | * |
M. Ann Rhoades | 25,903 | * |
David P. Williams9 | 107,028 | * |
All current executive officers and directors as a group (sixteen persons)10 | 12,415,281 | 33.0 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
*less than 1%
1Includes
be deemed to exercise voting and investment power over the
following shares
not currently outstanding but deemed beneficially owned because of
Common Stock directly held by Torch. As the
right to acquire them pursuant to restricted stock units that vest within 60 days or have vested but have not yet been distributed: 89,686 shares for Mr. Sawyer, 4,015 shares for Mr. Lacko, 9,261 shares for Mr. Bakken, 8,257 shares for Mr. Lain, 17,535 shares for Mr. Beltzman, 9,372 shares for Ms. Gambale, 37,399 shares for Messrs. Grissen and Light, 47,793 shares for Mr. Merriman, 25,903 shares for Ms. Rhoades, and shares for Mr. Williams. Includes the following shares not currently outstanding but deemed beneficially owned becausesole member of
the right to acquire them pursuant to options and SARs exercisable within 60 days: 1,000,000 shares by Mr. Sawyer, 95,480 shares by Mr. Bakken, and 65,158 shares by Mr. Lain.2Based on information in a Schedule 13D/A filed by Birch Run Capital Advisors, LP (“Birch Run”) on August 22, 2014 and Form 4s filed by Mr. Beltzman on September 2, 2014 and March 17 and 18, 2015 reporting purchases by the Funds (as defined below), these securities are owned directly by Birch Run Capital Partners, L.P., Torch BRC, L.P. and Walnut BRC, L.P. (collectively, the “Funds”). Birch Run Capital Partners, L.P. is the record owner of 1,658,941 shares. Torch BRC, L.P. is the record owner of 3,962,648 shares. Walnut BRC, L.P. is the record owner of 5,033,581 shares. Birch Run Capital GP, LLC serves as the General Partner to Birch Run Capital Partners, L.P.; Walnut BRC GP, LLC serves as the General Partner to Walnut BRC, L.P.; and Torch BRC GP, LLC serves as the General Partner to Torch BRC, L.P. (collectively, “the General Partners”). Mr. Beltzman and Gregory Smith are the co-Managers of the General Partners. Furthermore, Birch Run Capital Advisors, LP (“the Advisor”) serves as the registered investment adviser to the Funds. BRC Advisors GP, LLC (“Advisor GP”) serves as General Partner to the Advisor. Mr. Beltzman and Mr. Smith are the Limited Partners of the Adviser and the Co-managers of the Adviser GP. The Adviser, the Adviser GP, Mr. Beltzman and Mr. SmithSpringhill, Grosfeld Trust may be deemed to shareexercise voting and dispositiveinvestment power over the reported securities. Eachshares of Common Stock directly held by Torch. As the Adviser, the Adviser GP, Mr. Beltzman,Trustee of Grosfeld Trust, James Grosfeld may be deemed to exercise voting and Mr. Smith disclaim beneficial ownership of any interests of the reported securities in excess of such person’s or entity’s respective pecuniary interest in the securities. On its Schedule 13D/A, Birch Run reported sole votinginvestment power over 0the shares shared voting power over 8,504,788 shares, sole dispositive power over 0 shares and shared dispositive power over 9,996,589 shares. Based on the Form 4s referenced above, the shared voting power number has likely increased, and the shared dispositive power number has likely increased to 10,655,170.of Common Stock directly held by Torch. The address for Birch Run is 1350 Broadway, Suite 2215, New York, NY 10018.
Security Ownership of Certain Beneficial Owners and Management
3Based on information in a Schedule 13G/A filed by BlackRock, Inc. on January 31, 2019, BlackRock, Inc. reported sole voting power over 4,904,659 shares, shared voting power over 0 shares, sole dispositive power over 5,016,320 shares and shared dispositive power over 0 shares. BlackRock, Inc. is a parent holding company and holds the sole power to dispose or to direct the disposition of shares held by its subsidiaries BlackRock Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Advisors, LLC, BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Limited, BlackRock (Netherlands) B.V., BlackRock Financial Management, Inc. and BlackRock Japan Co., Ltd. (collectively, the “BlackRock Subsidiaries”). Except for BlackRock Fund Advisors, noneeach of the BlackRock Subsidiaries own more than 5% of our outstanding shares of common stock. The address for BlackRock, Inc.reporting persons is 55 East 52nd Street, New York, NY 10055.
4Based on information in a Schedule 13G/A filed by Dimensional Fund Advisors LP (“Dimensional”) on February 8, 2019, Dimensional reported sole voting power over 3,690,600 shares, shared voting power over 0 shares, sole dispositive power over 3,834,171 shares and shared dispositive power over 0 shares. The address for Dimensional is Building One 6300 Bee Cave Road, Austin, TX 78746.
5Based on information in a Schedule 13G/A filed by The Vanguard Group (“Vanguard”) on February 11, 2019, Vanguard reported sole voting power over 35,591 shares, shared voting power over 8,600 shares, sole dispositive power over 3,324,384 shares and shared dispositive power over 39,291 shares. The address for Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
6Based on information in a Schedule 13G/A filed by Cramer Rosenthal McGlynn, LLC (“Cramer Rosenthal”) on February 13, 2019, Cramer Rosenthal reported sole voting power over 2,479,679 shares, shared voting power over 0 shares, sole dispositive power over 2,520,391 shares and shared dispositive power over 0 shares. The address for Cramer Rosenthal is 520 Madison Ave., New York, NY 10022.
7Shares are held in a joint brokerage account with his spouse.
8Includes 400 shares held indirectly through a profit-sharing account.
9Includes 2,000 shares held in a joint brokerage account with his father.
10See footnotes 1, 2, 7, 8 and 9 for information regarding the nature of certain indirect and deemed ownership of the shares included in this amount.
Towne Square, Suite 1600, Southfield, MI 48076.4
| Based on information in a Schedule 13G/A filed by BlackRock, Inc. on January 27, 2021, BlackRock, Inc. reported sole voting power over 3,706,624 shares, shared voting power over 0 shares, sole dispositive power over 3,730,346 shares and shared dispositive power over 0 shares. BlackRock, Inc. is a parent holding company and holds the sole power to dispose or to direct the disposition of shares held by its subsidiaries BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., and BlackRock Investment Management, LLC (collectively, the “BlackRock Subsidiaries”). Except for BlackRock Fund Advisors, none of the BlackRock Subsidiaries own more than 5% of our outstanding shares of common stock. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
5
| Based on information in Schedule 13G/A filed by Massachusetts Financial Services Company (“MFS”) on February 11, 2021, MFS reported sole voting power over 2,403,167 shares, shared voting power over 0 shares, sole dispositive power over 2,403,167 shares and shared dispositive power over 0 shares. The address for MFS is 111 Huntington Avenue, Boston, MA 02199. |
6
| Based on information on a Schedule 13G/A filed by AllianceBernstein L.P. (“AllianceBernstein”) on February 15, 2021, AllianceBernstein reported sole voting power over 1,943,868 shares, shared voting power over 0 shares, sole dispositive power over 2,332,988 shares and shared dispositive power over 0 shares. The address for AllianceBernstein is 1345 Avenue of the Americas, New York, NY 10105. |
7
| Includes 1,000 shares held in a joint brokerage account with his spouse. |
8
| Includes 400 shares held indirectly through a profit-sharing account. |
9
| Based on information in a Schedule 13D/A filed by Birch Run Capital Advisors, LP (“BRC”) on August 27, 2021, Birch Run Capital GP, LLC serves as the General Partner (the “General Partner”) to Birch Run Capital Partners, L.P. (the “partnership”), which is the record owner of 1,658,941 shares. Mr. Beltzman and Gregory Smith are the co-Managers of the General Partner. Furthermore, BRC serves as the registered investment adviser to the partnership. BRC Advisors GP, LLC (“Advisor GP”) serves as General Partner to BRC. Mr. Beltzman and Mr. Smith are the Limited Partners of BRC and the Co-managers of the Adviser GP. BRC, the Adviser GP, Mr. Beltzman and Mr. Smith may be deemed to share voting and dispositive power over the reported securities. Each of BRC, the Adviser GP, Birch Run Capital Partners, LP , Mr. Beltzman, and Mr. Smith disclaim beneficial ownership of any interests of the reported securities in excess of such person’s or entity’s respective pecuniary interest in the securities. On its Schedule 13D/A, BRC reported sole voting power over 0 shares, shared voting power over 1,658,941 shares, sole dispositive power over 0 shares and shared dispositive power over 1,658,941 shares. |
10
| See footnotes 1, 7, 8, and 9 for information regarding the nature of certain indirect and deemed ownership of the shares included in this amount. |
| |
2021 PROXY STATEMENT58 | | | |
TABLE OF CONTENTS
Annual Meeting of Shareholders, October 22, 201926, 2021
This Proxy Statement is furnished to shareholders of the Company in connection with the solicitation on behalf of our Board of proxies for use at the Annual Meeting, and at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
The address of our principal executive office is
7201 Metro3701 Wayzata Boulevard,
Edina,Suite 500, Minneapolis, Minnesota
55439.55416.
Availability of Proxy Materials
As permitted by rules adopted by the SEC, we are making our proxy materials, which include our Notice and Proxy Statement and Annual Report on Form 10-K, available to our shareholders over the Internet. We believe that this e-proxy process expedites our shareholders’ receipt of proxy materials and lowers the costs and reduces the environmental impact of the Annual Meeting. In accordance with such SEC rules, we will send shareholders of record as of the close of business on August
26, 201930, 2021 a Notice of Internet Availability of Proxy Materials (the “Notice”), which mailing will commence on or about September
5, 2019.16, 2021. The Notice contains instructions on how shareholders can access our proxy materials and vote their shares over the Internet. If you would like to receive a printed copy of our proxy materials from us instead of downloading them from the Internet, please follow the instructions for requesting such materials included in the Notice.
Participating in the Annual Meeting
The Annual Meeting will be held at 9:00 a.m. Central Time on October 26, 2021. The Annual Meeting will be conducted completely as a virtual meeting via the Internet. Shareholders may access the meeting and submit questions electronically during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/RGS2021. You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on August 30, 2021, the record date, or hold a valid proxy for the meeting. Shareholders will need the 16-digit control number included in the Notice, on the proxy card, or in the instructions that accompanied the proxy materials to access the Annual Meeting. Shareholders may log in to the virtual meeting platform beginning at 8:45 a.m. Central Time on October 26, 2021. Shareholders of record and beneficial owners as of the record date may vote their shares electronically live during the Annual Meeting.
Shareholders may submit questions during the Annual Meeting at www.virtualshareholdermeeting.com/RGS2021 or in advance of the meeting at www.proxyvote.com after logging in with your control number.
If you experience technical difficulties during the meeting or have trouble accessing the Annual Meeting, please call the technical support number that will be posted on the virtual shareholder meeting log in page.
Solicitation and Revocation of Proxies
In addition to the use of the mail, proxies may be solicited personally or by mail, telephone, fax, email, Internet, or other electronic means by our directors, officers, and regular employees who will not be additionally compensated for any such services. Proxies may also be solicited by means of press releases and other public statements.
We will pay all solicitation expenses in connection with the Notice, this
proxy statementProxy Statement and any related proxy soliciting material of the Board, including the expense of preparing, printing, assembling, and mailing such material.
Proxies to vote at the Annual Meeting are solicited on behalf of the Board. Any shareholder giving a proxy may revoke it at any time before it is exercised by attendingparticipating in the Annual Meeting and revoking it or by providing written notice of revocation or by submitting another proxy bearing a later date to our Corporate Secretary at the address set forth above.above prior to the Annual Meeting. Such proxies, if received in time for voting and not revoked, will be voted at the Annual Meeting in accordance with the specifications indicated thereon.
62 | | | | |
TABLE OF CONTENTS
Voting at the Annual Meeting
If you are a shareholder of record as of the record date, you can vote your shares in any of the following ways:
By Internet: You can vote via the Internet by following the instructions on the Notice or by accessing, before the meeting, www.proxyvote.com or, during the meeting, www.virtualshareholdermeeting.com/RGS2021 and following the instructions contained on that website;
By Telephone: In the United States and Canada, you can vote by telephone by following the instruction in the Notice or by calling 1-800-690-6903 and following the instructions; or
By Proxy: You can vote by mail by requesting a full packet of proxy materials be sent to your home address. Upon receipt of the materials, you may fill out the enclosed proxy card and return it per the instructions on the card.
Unless you vote live at the Annual Meeting, we must receive your vote by 11:59 p.m. Central Time on October 25, 2021, the day before the Annual Meeting, for your vote by proxy to be counted.
If You Hold Your Shares in “Street Name”
If you hold your shares in “street name,” i.e., through a bank, broker, or other holder of record (a “custodian”), your custodian is required to vote your shares on your behalf in accordance with your instructions. If you do not give instructions to your custodian, your custodian will not be permitted to vote your shares with respect to “non-discretionary” items, such as the election of directors and the Say-on-Pay proposal. Accordingly, we urge you to promptly give instructions to your custodian to vote on these matters by following the instructions provided to you by your custodian. Please note that if you intend to vote your street name shares by participating in person at the Annual Meeting, you must provide a “legal proxy” from your custodian at the Annual Meeting.
With the adoption of our Corporate Governance Guidelines, the Board established independence standards in accordance with the requirements of the NYSE corporate governance rules. To be considered independent under the NYSE rules, the Board must affirmatively determine that a director or director nominee does not have a material relationship with us (directly, or as a partner, shareholder, or officer of an organization that has a relationship with us). In addition, no director or director nominee may be deemed independent if the director or director nominee has in the past three years:
•Received (or whose immediate family member has received) more than $120,000 per year in direct compensation from us, other than director or committee fees;
•
Been an employee of ours;
•
Had an immediate family member who was an executive officer of ours;
•
Been (or whose immediate family member has been) an affiliate or employee of a present or former internal or independent auditor of ours;
•Been (or whose immediate family member has been) employed as an executive officer of another company whose compensation committee within the past three years has included a present executive officer of ours; or
•
Is currently an employee or executive officer (or has an immediate family member who is an executive officer) of another company that makes payments to us, or receives payments from us, for property or services in an amount that, in any single fiscal year, exceeds the greater of $1.0 million or 2% of such other company’s consolidated gross revenues.
2021 PROXY STATEMENT | 63 |
TABLE OF CONTENTS
Voting Rights and Requirements
Only shareholders of record as of the close of business on August 26, 201930, 2021 will be entitled to sign proxies or to vote. On that date, there were 36,059,87935,806,264 shares issued, outstanding and entitled to vote. Each share of common stock is entitled to one vote. A majority of the outstanding shares present in person or by proxy at the Annual Meeting is required to transact business and constitutes a quorum for voting on items at the Annual Meeting. If you vote, your shares will be part of the quorum. Abstentions and broker non-votes will be counted as being present at the Annual Meeting in determining the quorum, but neither will be counted as a vote in favor of a matter. A “broker non-vote” is a proxy submitted by a bank, broker or other custodian that does not indicate a vote for some of the proposals because the broker does not have or does not exercise discretionary voting authority on certain types of proposals and has not received instructions from its client as to how to vote on those proposals.
The table below summarizes the proposals that will be voted on, the vote required to approve each item, voting options, how votes are counted and how the Board recommends you vote:
Proposal | Vote Required
| Voting
Options
| Board
Recommendation1
| Broker
Discretionary
Voting Allowed2
| Impact of
Abstention
|
Election of the eight director nominees listed in this Proxy Statement
| | | Majority of votes cast “FOR” must exceed “AGAINST” votes3 | “FOR”
“AGAINST”
“ABSTAIN”
| “FOR”
| No | | “FOR” “AGAINST” “ABSTAIN” | | | “FOR”
| | | No | | | None | |
| Advisory “Say-on-Pay” vote | | | Majority of votes cast “FOR” must exceed “AGAINST” votes4 | “FOR”
“AGAINST”
“ABSTAIN”
| “FOR”
| No | | “FOR” “AGAINST” “ABSTAIN” | | | “FOR”
| | | No | | | None | |
| Ratification of the appointment of PricewaterhouseCoopersGrant Thornton LLP as our independent registered public accounting firm for 2020fiscal 2022 | | | Majority of votes present in person or by proxy and entitled to vote on this item of business or, if greater, the vote required is a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum at the Annual Meeting | “FOR”
“AGAINST”
“ABSTAIN”
| “FOR”
| Yes | | “FOR” “AGAINST” “ABSTAIN” | | | “FOR”
| | | Yes | | | “AGAINST” | |
1
| If you are a registered holder and you sign and submit your proxy card without indicating your voting instructions, your shares will be voted in accordance with the Board’s recommendation. |
2
| A broker non-vote will not count as a vote for or against a director or the Say-on-Pay vote. For Item 3, a broker non-vote will have no effect unless a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum at the Annual Meeting is required in order to approve the item, then a broker non-vote will have the same effect as a vote “AGAINST.” |
3
| In an uncontested election of directors at which a quorum is present, if any nominee for director receives a greater number of votes “AGAINST” his or her election than votes “FOR” such election, our Corporate Governance Guidelines require that such person must promptly tender his or her resignation to the Board following certification of the shareholder vote. Our Corporate Governance Guidelines further provide that the Nominating and Corporate Governance Committee will then consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the election. The nominee who tendered his or her resignation will not participate in the Board decisions. Cumulative voting in the election of directors is not permitted. |
4
| The advisory Say-on-Pay vote is not binding on us; however, we will consider the shareholders to have approved the compensation of our named executive officers if the number of shares voted “FOR” the proposal exceeds the number of shares voted “AGAINST” the proposal. |
1If you are a registered holder and you sign and submit your proxy card without indicating your voting instructions, your shares will be voted in accordance with the Board’s recommendation.
2A broker non-vote will not count as a vote for or against a director or the Say-on-Pay vote. For Item 3, a broker non-vote will have no effect unless a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum at the Annual Meeting is required in order to approve the item, then a broker non-vote will have the same effect as a vote “AGAINST.”
3In an uncontested election of directors at which a quorum is present, if any nominee for director receives a greater number of votes “AGAINST” his or her election than votes “FOR” such election, our Corporate Governance Guidelines require that such person must promptly tender his or her resignation to the Board following certification of the shareholder vote. Our Corporate Governance Guidelines further provide that the Nominating and Corporate Governance Committee will then consider the tendered resignation and make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the election. The nominee who tendered his or her resignation will not participate in the Board decisions. Cumulative voting in the election of directors is not permitted.
4The advisory Say-on-Pay vote is not binding on us; however, we will consider the shareholders to have approved the compensation of our named executive officers if the number of shares voted “FOR” the proposal exceeds the number of shares voted “AGAINST” the proposal.
Communications with the Board Shareholders and other interested parties who wish to contact the Board, any individual director or the independent directors as a group, are welcome to do so by writing to our Corporate Secretary at the following address: Regis Corporation,
7201 Metro3701 Wayzata Boulevard,
Edina,Suite 500, Minneapolis, Minnesota
55439.55416.
Comments or questions regarding our accounting, internal controls or auditing matters will be referred to members of the Audit Committee. Comments or questions regarding the nomination of directors and other corporate governance matters will be referred to members of the Nominating and Corporate Governance Committee.
64 | | | | |
2019 Proxy Statement |61TABLE OF CONTENTS
Proposals of Shareholders
Shareholders who intend to present proposals at the
20202022 annual meeting of shareholders, and who wish to have such proposals included in our proxy statement for the
20202022 annual meeting, must be certain that such proposals are received by us not later than May
8, 2020.16, 2022. Such proposals must meet the requirements set forth in the rules and regulations of the SEC in order to be eligible for inclusion in the proxy statement for our
20202022 annual meeting.
For shareholders who intend to present proposals or director nominees directly at the
20202022 annual meeting and not for inclusion in our
20202022 proxy statement, we must receive notice of such proposal not later than July
24, 202028, 2022 and not earlier than June
24, 2020,28, 2022, provided that in the event that the date of the
20202022 annual meeting is more than 30 days before or more than 70 days after the anniversary date of the Annual Meeting, notice by the shareholder must be delivered not earlier than the close of business on the 120th day prior to the
20202022 annual meeting and not later than the close of business on the later of the 90th day prior to the
20202022 annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by us. Such proposals must meet the requirements set forth in our bylaws in order to be presented at our
20202022 annual meeting.
Proposals and notices of intention to present proposals at our
20202022 annual meeting should be addressed to our Corporate Secretary, Regis Corporation,
7201 Metro3701 Wayzata Boulevard,
Edina,Suite 500, Minneapolis, Minnesota
55439.55416.
Annual Report to Shareholders and Form 10-K Our Annual Report to Shareholders and Form 10-K, including financial statements for the year ended June 30,
2019,2021, is available on our website at www.regiscorp.com. If requested, we will provide shareholders with copies of any exhibits to the Form 10-K upon the payment of a fee covering our reasonable expenses in furnishing the exhibits. Such requests should be directed to our Corporate Secretary, at our address stated herein.
Notice of Internet Availability of Proxy Materials I
mportant Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on October 22, 2019.26, 2021.The Notice and Proxy Statement and Annual Report on Form 10-K are available in the Investor Relations section of our website
at www.regiscorp.com.
The Board knows of no other matter to be acted upon at the Annual Meeting. However, if any other matter is properly brought before the Annual Meeting, the shares covered by your proxy will be voted thereon in accordance with the best judgment of the persons acting under such proxy.
Your vote is very important no matter how many shares you own.
You are urged to read this
proxy statementProxy Statement carefully and, whether or not you plan to attend the Annual Meeting, to promptly submit a proxy by telephone or through the Internet in accordance with the voting instructions provided to you.
By Order of the Board
Amanda P. Rusin
September 5, 201913, 2021
www.regiscorp.com/investor
| |
REGIS CORPORATION
7201 METRO BOULEVARD
MINNEAPOLIS, MN 55439
| There are three ways to vote your Proxy:
Your telephone or Internet vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on October 21, 2019 for shares held directly. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on October 21, 2019 for shares held directly. 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.
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 Regis Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE2021 PROXY MATERIALSSTATEMENT | Help us make a difference by eliminating paper mailings to your home or business. 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. You can, of course, change your preference and choose to receive paper copies of these materials at any time. 65
|
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | |
| | |
| E83288-P27940 | KEEP THIS PORTION FOR YOUR RECORDS |
| DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
TABLE OF CONTENTSREGIS CORPORATION
| | | | | |
The Board of Directors recommends you vote FOR each of the following director nominees: | | | |
| | | | | |
1. | Election of Directors | | | |
| | | | | |
| Nominees: | For | Against | Abstain |
| | | | | |
| 1a. | Daniel G. Beltzman | ☐ | ☐ | ☐ |
| | | | | |
| 1b. | Virginia Gambale | ☐ | ☐ | ☐ |
| | | | | |
| 1c. | David J. Grissen | ☐ | ☐ | ☐ |
| | | | | |
| 1d. | Mark S. Light | ☐ | ☐ | ☐ |
| | | | | |
| 1e. | Michael J. Merriman | ☐ | ☐ | ☐ |
| | | | | |
| 1f. | M. Ann Rhoades | ☐ | ☐ | ☐ |
| | | | | |
| 1g. | Hugh E. Sawyer III | ☐ | ☐ | ☐ |
| | | | | |
| 1h. | David P. Williams | ☐ | ☐ | ☐ |
| | | | |
| | | | |
| | | | |
| | | | |
The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain |
| | | |
2. | Approval of an advisory vote on the compensation of the Company’s named executive officers (a “Say-on-Pay Vote”). | ☐ | ☐ | ☐ |
| | | | |
The Board of Directors recommends you vote FOR the following proposal: | | | |
| | | | |
3. | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. | ☐ | ☐ | ☐ |
| | | | |
| | | |
| | | |
| | | |
| | | |
NOTE: The proxies are authorized to vote, in their discretion, on any other matters as may properly come before the annual meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH DIRECTOR NOMINEE AND FOR PROPOSALS 2 AND 3.
Where stock is registered jointly in the names of two or more persons ALL should sign. Signature(s) should correspond exactly with the name(s) as shown above. Please sign and date and return promptly in the enclosed envelope. No postage need be affixed if mailed in the United States.
| | | | | |
| | | | | |
Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
REGIS CORPORATION
PROXY FOR ANNUAL MEETINGTABLE OF SHAREHOLDERSCONTENTS
TABLE OF CONTENTS
OCTOBER 22, 2019
9:00 a.m.
Regis Corporation
7201 Metro Boulevard
Minneapolis, Minnesota 55439
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.If you Vote by Phone or Internet, please do not mail your Proxy Card
êplease detach hereê |
E83289-P27940 |
| | | |
| Regis Corporation | | |
| 7201 Metro Boulevard, Minneapolis, MN 55439 | proxy | |
| | | |
| PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, OCTOBER 22, 2019 | |
| | | |
| The undersigned hereby appoints Hugh E. Sawyer III and Amanda P. Rusin, and either of them, proxies for the undersigned, with full power of substitution, to represent the undersigned and to vote as directed on the reverse side of this proxy card all of the shares of the Common Stock of Regis Corporation (the “Company”) which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held on October 22, 2019, and at any adjournments thereof. | |
| | | |
| THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be voted as directed herein. If no direction is given, this proxy will be voted FOR each of the director nominees and each of proposals 2 and 3, and will be voted in the discretion of the proxies on any other matters as may properly come before the annual meeting and any adjournments thereof. | |
| | | |
| (Continued, and TO BE COMPLETED AND SIGNED on the reverse side) | |
| | | |