(1) | Adjusted operating income is a non-GAAP financial measure that reflects the Company’s operating income excluding certain special items. Attached as Appendix A are reconciliations of the Company’s fiscal 2022, 2021, 2020 and 2019 adjusted operating income to the Company’s fiscal 2022, 2021, 2020 and 2019 GAAP operating income, as well as other important disclosures regarding non-GAAP financial measures. For fiscal 2022 and fiscal 2019, we did not make any adjustments to operating income; therefore, for fiscal 2022 and fiscal 2019, was $3.8 million, which is well below the median of our peers. In addition, 2020 target pay is 37% below the median. In summary, there is alignment between our performance, our stockholders’ interests and our CEO’s pay. The Board recommends a vote FOR this proposal.
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COMPENSATION-RELATED MATTERSCompensation Discussion and AnalysisExecutive Summary
| We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s continued decline in performance, the Compensation Committee reduced our CEO’s target and actual compensation each year since 2016. As illustrated by the chart below, these actions by the Compensation Committee, resulted in CEO compensation that decreased significantly more than the decline in performance. Specifically, when comparing fiscal 2019 CEO pay with performance:
| | | | | | | | | •
| | | On a one year basis (from February 1, 2019 to January 31, 2020) our stock price is down 15% and adjusted operating income is down 14% while actual CEO direct compensation is down 20%.
| | | •
| | | On a three year basis (from January 27, 2017equal to January 31, 2020) our stock price is down 61%fiscal 2022 and adjustedfiscal 2019 GAAP operating income, is down 40% while actual CEO direct compensation is down 79%.
| | | •
| | | On a five year basis (from January 30, 2015 to January 31, 2020) our stock price is down 73% and adjusted operating income is down 37% while actual CEO direct compensation is down 87%.
| | | | | | | | | CEO target and actual compensation for fiscal 2019 is near the lowest among our peers. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward.
| | | | | | | | | | respectively. |
(2) | The Total Shareholder Return chart represents $100 invested in Company stock at the closing price on February 2, 2019, including reinvestment of dividends. Stock prices prior to August 3, 2021, have been adjusted to give effect to the Victoria’s Secret & Co. spin-off. |
During fiscal 2022, our leadership team was keenly focused on aggressively controlling costs and improving efficiencies while accelerating investments in the business to drive our long-term growth and profitability and enhance stockholder value. Specifically, our leadership team took, among several actions in 2022, the following initiatives to ensure the long-term success of our business: Leveraged agility in our unique vertically integrated and predominantly domestic supply chain, effectively managing inventory, responding to customer preferences and chasing our best performing products. Successfully launched our loyalty program nationwide, achieving industry-leading speed in customer adoption of the program and approximately 36 million members as of the mailing date of this proxy statement.
Expanded our buy online-pick up in store (“BOPIS”) option to over 800 more Company-operated stores, ending fiscal 2022 with BOPIS capabilities in more than 1,300 stores. TABLE OF CONTENTSCompleted the construction of our first direct channel fulfillment distribution center, which we expect will provide us with additional capacity for our direct channel and enhanced fulfillment capabilities for our business.
Fiscal 2019 Overview
Financial performance in 2019 was belowAccelerated our expectations. Operating income declined whileinformation technology separation from Victoria’s Secret & Co. to support our long-term growth across our brands was mixed as growth at and profitability. 32 Bath & Body Works, Inc. | 2023 Proxy Statement
Named Executive Officers Our success is built on the leadership of our executive team with significant industry experience. Our fiscal 2022 NEOs are as follows: | | | NAMED EXECUTIVE OFFICER | | TITLE | | | Gina R. Boswell | | Chief Executive Officer | | | Wendy C. Arlin | | Chief Financial Officer | | | Julie B. Rosen | | President, Retail | | | Deon N. Riley | | Chief Human Resources Officer | | | Michael C. Wu | | Chief Legal Officer and Corporate Secretary | | | Sarah E. Nash | | Former Executive Chair and Interim Chief Executive Officer | | | Andrew M. Meslow | | Former Chief Executive Officer |
Leadership Transition In February 2022, Mr. Meslow unexpectedly announced that he would be stepping down as our Chief Executive Officer and as a member of our Board due to health reasons, effective as of May 12, 2022. In connection with this announcement and to facilitate a smooth transition while the Board searched for a permanent replacement for Mr. Meslow, the Board appointed Ms. Nash to serve as Executive Chair, effective as of February 22, 2022, and as Interim Chief Executive Officer, effective upon Mr. Meslow’s departure. Ms. Nash played an instrumental role in leading the Company’s strategy and delivering robust financial results during this transformational period by controlling costs, improving efficiencies and accelerating investments to drive long-term growth and profitability. In the Company’s first full year as a standalone company, Ms. Nash was able to facilitate a smooth Chief Executive Officer transition and provide exceptional leadership, including launching the loyalty program nationwide, strengthening the Company’s omnichannel platform with the roll-out of BOPIS capabilities to over 800 additional stores, improving store productivity with the closure of 48 principally mall stores and opening of 95 off-mall North American locations, expanding market share across our three major categories and investing in technology as a standalone infrastructure. Effective as of December 1, 2022, after a comprehensive search for a seasoned leader to build on and accelerate the Company’s position as a global omnichannel home, personal care and fragrance brand, the Board appointed Ms. Boswell as our Chief Executive Officer and a member of the Board. Ms. Boswell has more than offset by declines30 years of experience, including beauty and personal care leadership roles at Victoria’s Secret. Atglobal companies. She brings deep expertise in sales, marketing, brand-building, and business development and strategy, along with strong operational experience and a demonstrated track record of delivering successful business outcomes, both domestically and internationally.In connection with Ms. Boswell’s appointment, Ms. Nash stepped down as Interim Chief Executive Officer on December 1, 2022, but continued to serve as Executive Chair until the end of fiscal 2022. Effective as of January 29, 2023, Ms. Nash transitioned from her role as Executive Chair to become the non-executive Chair of the Board. Chief Financial Officer Transition On April 6, 2023, the Company announced that Ms. Arlin will cease serving as Chief Financial Officer effective July 29, 2023, or such earlier date on which her successor commences employment with the Company (the “Transition Date”). The Company has initiated a search to identify the Company’s next Chief Financial Officer. If the Transition Date occurs before July 29, 2023, Ms. Arlin is expected to remain a Company associate through July 29, 2023 (the “Separation Date”), and be available to provide transition services in connection with the appointment of a new Chief Financial Officer. Subject to Ms. Arlin’s continued employment in good standing through the Separation Date, on such date Ms. Arlin’s employment with the Company will be terminated without “cause” and she will become entitled to the payments and benefits applicable on such a termination under the terms of the executive severance agreement and the executive retention agreement between the Company and Ms. Arlin, each dated May 13, 2022, in accordance with and subject to the terms thereof, including the Company’s receipt of an effective release of claims against the Company from Ms. Arlin. 2023 Proxy Statement | Bath & Body Works, an aligned, experienced leadership teamInc. 33
Stockholder Advisory Vote and strong customer response toStockholder Engagement At our merchandise assortments, driven by a close connection to our customers and a fast and agile supply chain, resulted in another record year, on top2022 annual meeting of a record 2018. In 2019, Bath & Body Works’ comparable sales increased 10% and operating income increased 11%. Sales in the digital channel increased 32%. We ended the year with more than 800 newly remodeled stores, which include the White Barn store design. These stores present a new, compelling store experience for the brand and customers alike, driving sales growth. Victoria’s Secret underperformed in 2019 due to a poor assortment which reduced traffic and resulted in increased promotion that negatively impacted margin rates. Our team is working hard to improve the assortment. Victoria’s Secret segment comparable sales declined 7% for the year, and adjusted operating income decreased significantly.
In Victoria’s Secret Lingerie (“VSL”), comparable sales declined in the high-single digit range in 2019, and the merchandise margin rate declined significantly. John Mehas joined the business in mid-February 2019 as the new CEO for Victoria’s Secret Lingerie. John is an experienced and talented fashion merchant leader, and he is focused on getting close to our customers and improving the merchandise assortment.
PINK comparable sales declined in the low-double digit range in 2019, and the merchandise margin rate declined significantly. Amy Hauk moved from Bath & Body Works to join PINK as CEO late in 2018. Growth in bras and panties was more than offset by a decline in apparel, particularly in tops. Amy and her team are focused on making adjustments to the merchandise assortment to emphasize merchandise to which our customers are responding positively.
Victoria’s Secret Beauty had a good year and a solid holiday performance, with positive low-single digit comparable sales and an improvement in the merchandise margin rate.
Outside North America, we opened 59 net new stores in 2019, ending the year with 812 stores. Revenue in our international segment was flat in 2019 compared to last year, but adjusted operating income increased, driven by growth in our Bath & Body Works franchise business.
Pay for Performance
At L Brands, we recognize that our business is the ultimate change business. Our focus is on speed and agility, responding to change. Our compensation program reflects this philosophy, rewarding strong performance and significantly reducing compensation when performance does not meet our high expectations.
The Compensation Committee oversees our compensation program, ensuring that pay is aligned with performance. Over the last four years, CEO compensation has decreased significantly following performance that was challenged by changes intended to simplify the business and accelerate growth.
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The following chart illustrates how CEO compensation has aligned with performance. Over the last five years, CEO compensation has decreased significantly in line with the decline in total shareholder return:
The significant decrease in CEO compensation for fiscal 2019 resulted in CEO compensation that was significantly below the 25th percentile of our peer group (discussed below under the heading “Compensation Comparison”):
While these charts show how the compensation paid to Mr. Wexner, our CEO, by the Company aligns with performance, it is also important to note that Mr. Wexner is the beneficial owner of 17.40%stockholders, 95.7% of the Common Stock. Accordingly, his personal wealth is tied directly to our stock price performance, which provides direct alignment with stockholder interests.
Stockholder Advisory Vote
In 2019, 98.7% of our stockholdersshares voted were voted in favor of our executive compensation program. As part of our ongoing shareholder engagement program, in fiscal 2022, we met with approximately 55 of our stockholders representing more than 60% of our shares outstanding as of December 31, 2022. The CompensationHCC Committee carefully considers this advisory vote and other stockholder feedback and discusses our executive compensation program and the voting results with Willis Towers Watson, the HCC Committee’s independent compensation consultant, including when making compensation decisions for NEOs. We have a policy of robust engagement with stockholders, with continuing outreach to and dialogue with our major investors on a range of issues, including executive compensation matters. NEOs.As indicated by the high-levelhigh level of support for our executive compensation program in 2019,2022, the feedback from our stockholders received in 2019our 2022 meetings regarding our executive compensation program and compensation decisions made in 2021 indicated understanding and support for our compensation design outcomes. TABLE OF CONTENTS
| The Company reviewed its long-term compensation practices considering market practice and stockholder interests. As a result, the Compensation Committee redesigned the long-term performance-based equity incentive program, making changes to more closely align the program with policies that are deemed best practices (such as multiple performance metrics and performance period of three years). The key features of the re-designed program are as follows:
| | | •
| | | Long-term equity incentives were granted as a mix of 50% performance stock units (“PSUs”), 30% time-vested restricted stock units (“RSUs”) and 20% stock options.
| | | •
| | | PSUs are subject to achievement of two metrics – revenue growth and operating income as a percent of sales, each relative to our peer group and weighted equally at 50%.
| | | •
| | | Performance will be evaluated based on a scale, and payout will be interpolated between threshold, target and maximum:
| | | | | | •
| | | Payout at threshold performance is 50% and is set at the 30th percentile of our peer group.
| | | | | | •
| | | Payout at target performance is 100% and is set at the 50th percentile of our peer group.
| | | | | | •
| | | Payout at maximum performance is 150% and is set at the 80th percentile of our peer group.
| | | •
| | | The performance period for both metrics is three years, and 100% of both RSUs and PSUs vest after three years.
| | | | | | | | | | |
We continue the following compensation practices in accordanceThe HCC Committee is committed to continued engagement with our corporate governance principlesstockholders to understand their viewpoints and in response to stockholderdiscuss and advisory firm feedback:
No tax gross-ups for NEOs upon a change in control.
“No hedging” policy governing stock trading.
Adopted a policy that discourages pledging of Company stockdemonstrate the important connection between our executive compensation program and requires advance approval by our General Counsel.
None of the Company’s stock held by our NEOs or Board members is pledged.
No re-pricing of stock options without stockholder approval.
Double trigger vesting of equity awards upon a change in control.
Clawback policy as described under “—Compensation Governance—Recovery of Compensation.”
Stock ownership guidelines set at five times base salary for our CEObusiness strategy, goals and three times base salary for other NEOs. Members of our Board must maintain ownership of at least the number of shares of Common Stock received as Board compensation over the previous four years.
Stock plan that requires a vesting period of at least one year.
Conclusion
Executive Summary
| We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s continued decline in performance, the Compensation Committee reduced our CEO’s target and actual compensation each year since 2016. These actions by the Compensation Committee, resulted in CEO compensation that decreased significantly more than the decline in performance. Specifically, when comparing fiscal 2019 CEO pay with performance:
| | | | | | | | | •
| | | On a one year basis (from February 1, 2019 to January 31, 2020) our stock price is down 15% and adjusted operating income is down 14% while actual CEO direct compensation is down 20%.
| | | •
| | | On a three year basis (from January 27, 2017 to January 31, 2020) our stock price is down 61% and adjusted operating income is down 40% while actual CEO direct compensation is down 79%.
| | | •
| | | On a five year basis (from January 30, 2015 to January 31, 2020) our stock price is down 73% and adjusted operating income is down 37% while actual CEO direct compensation is down 87%.
| | | | | | | | | CEO target and actual compensation for fiscal 2019 is near the lowest among our peers. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward.
| | | | | | | |
performance.TABLE OF CONTENTS
Executive Compensation Philosophy The CompensationHCC Committee has builtoversees an executive compensation program based on the following clear and purposeful guiding principles: | Compensation Component
| | | Our Principles
| | COMPENSATION COMPONENT | | OUR PRINCIPLES | | | Pay Level | | | | | | Attract and retain superior leaders in a highly competitive market for talent. | | | | | | Pay competitively and equitably. | | | | | | Recognize depth and scope of accountability and complexity of responsibility. | | | | Pay Mix | | | | | | Emphasize performance-contingent, long-term equity-based compensation over fixed compensation. | | | | Pay for Performance | | | | | | Recognize and reward enterprise brand and individual performance. | | | | | | Align Utilize performance metrics that closely align executives’ interests with stockholders’ interests.
| | | | | | Require executivesNEOs to own a significant amount of our Common Stock. | | | | | | Set Spring and Fall season goals that reflect the seasonal nature of our business and incentivizeincent goal achievement in each season. | | | | | | Create long-term stockholder value through regular achievement of short-term goals while pursuing our longer-term strategy of growth in North America and internationally. | | | | | | Retain and incentivizeincent high-performers through long-term equity incentive awards. | |
Connecting Pay and Performance TwoThere are two key elements of our program’sexecutive compensation program design that connect pay to performance. First, our incentive goals are designed to challenge our NEOs to achieve a high level of performance to earn incentives at target.target levels. When our NEOs hitmeet and exceed, or fall short of, these goals, we compensate them accordingly. Second, to further connect NEOs’executive pay to performance and stockholder interests, we employ a pay mix philosophy that places greater emphasis on performance-based and equityincentive compensation over non-performance-basedbase salary. salary and RSUs.34 Bath & Body Works, Inc. | 2023 Proxy Statement
The following charts illustrate ourthe pay mix philosophy which consists of our normal, ongoing executive compensation program, showing a lowerhigher percentage of base salary comparedperformance-based incentive compensation. Given our Chief Executive Officer transition in fiscal 2022, and Ms. Boswell’s start date of December 1, 2022, we present Ms. Boswell’s target pay mix for fiscal 2023, as the compensation paid to performance-based pay at target. TABLE OF CONTENTS
To assess whetherindividuals serving as our Chief Executive Officer in fiscal 2022 (including for the Company’s compensation program reflectsstub-year period for Ms. Boswell) does not reflect our financial results as designed, the Compensation Committee’s independent compensation consultant, Willis Towers Watson, tested the alignment of pay delivered over multiple timeframes relative to our peer group with performance measured by specific metrics that are important to our Company and its stockholders.
Based on this analysis, Willis Towers Watson and the Compensation Committee concluded that our CEO compensation is aligned with performance and that thenormal, ongoing executive compensation program’s design responds to changes in our business and results.
program. For additional details regarding Ms. Boswell’s target compensation for fiscal 2023, see “—Compensation for NEOs—Chief Executive Officer Fiscal 2023 Target Pay” below.Compensation Comparison We comparereview our NEO compensation withagainst publicly available data on executive compensation. We definecompensation, including compensation paid by a group of peer companies, to evaluate the competitiveness of our compensation levels, establish an appropriate mix of our NEO compensation elements and ensure we are properly attracting, retaining and incenting highly talented executives who are critical to executing our strategy and business plan.The HCC Committee selects our peer group used for compensation comparisons (the “Compensation Peer Group”) in consultation with the help of Willis Towers Watson,HCC Committee’s independent compensation consultant and with consideration for companies considered to be peers by certain proxy advisory firms, to generally include: include a balanced mix of the following criteria:Businesses that are generally similar to the Company in size and scope (using criteria such as total revenue, market capitalization, global locations,footprint, business and/or merchandise focus;focus); Retailers that compete with the Companyus for executive talent; and Specialty and department store retailers; and
Companies with brands that have emotional content.similar talent and business model characteristics. 2023 Proxy Statement | Bath & Body Works, Inc. 35
We review our peer group annually and, did not make anyin 2022, removed Big Lots, Inc. and Revlon Inc. and added Signet Jewelers Limited. These changes in 2019. Ourwere made to recalibrate the peer group consistswith companies that more closely align with our business model and merchandise focus. Following this review, our Compensation Peer Group consisted of the following companies: companies for fiscal 2022: | | | | | | | | Abercrombie & Fitch Co. | | Gap Inc. | J. C. Penney Company,
| The Estée Lauder Companies Inc. | | | Ross Stores, Inc.
| | | | American Eagle Outfitters, Inc. | | lululemon athletica inc. | Kohl’s Corporation
| | | Starbucks Corporation Tractor Supply Company | Avon Products, Inc.
| | | Macy’s, Inc.
| | | Tapestry Inc.
| Bed Bath & BeyondBurlington Stores, Inc. | | Newell Brands Inc. | NIKE,
| Ulta Beauty, Inc. | | | The TJX Companies, Inc.
| The Estee Lauder Companies Inc.
| | | Nordstrom, Inc.
| | | Williams-Sonoma, Inc.
| | | | Ralph Lauren Corporation | | Victoria’s Secret & Co. | | | | DICK’S Sporting Goods, Inc. | | Sally Beauty Holdings, Inc. | | Williams-Sonoma, Inc. | | | | Foot Locker, Inc. | | Signet Jewelers Limited | | |
We do not specifically set our NEOs’ compensation against our peer group.Compensation Peer Group. Instead, we consider peer group comparisons provided by Willis Towers Watson as one of several factors in applying our pay philosophy and setting the pay of our NEOs. OurThe peer group is used by Willis Towers Watson,to evaluate performance under our PSUs (the “Performance Peer Group”) granted to our NEOs in the first half of fiscal 2022, including the Retention PSU Awards (as defined under the heading “—Compensation for NEOs—Compensation Components—2022 Retention Program” below), reflects the Compensation Committee’s independent compensation consultant, to analyzePeer Group before the effectivenesschanges noted above. A description of our compensation program at delivering paythe Performance Peer Group is included under the heading “—Compensation for performance on a relative basis. Stock Ownership Guidelines
The NEOs—Compensation Committee encourages Common Stock ownership by our NEOs through stock ownership guidelines which promote a long-term focus on performance, discourage inappropriate risk-taking and align the interests of our NEOs with those of our stockholders. Stock ownership guidelines can be met through direct or beneficial ownership of Common Stock, including Common Stock held under our stock and retirement plans.
Our CEO is required to maintain ownership of Common Stock with a value of five times his base salary. As the beneficial owner of 48,121,098 shares of Common Stock (17.40% of shares outstanding), Mr. Wexner’s stock ownership far exceeds this minimum requirement.
Other NEOs are required to maintain beneficial ownership of Common Stock with a value of three times the NEO’s base salary within five years of becoming subject to the ownership guideline. All of our NEOs are in compliance with this guideline.
Members of our Board must maintain ownership of at least the number of shares of Common Stock received as Board compensation over the previous four years. All members of our Board are in compliance with this policy.
Components—Long-Term Equity Compensation—Performance Share Units.”TABLE OF CONTENTS
Compensation for NEOs Compensation Setting Process The CompensationHCC Committee makes all decisions regarding Mr. Wexner’sChief Executive Officer compensation with advisory input from Willis Towers Watson. Our Chief Executive Officer recommends, and Mr. Wexner makesthe HCC Committee approves, compensation recommendations for the other NEOs. The Compensation Committee oversees the evaluation process and compensation structure for the other NEOs, including all grants of stock awards to our NEOs. In making compensation decisions for our NEOs, the HCC Committee takes into consideration input, recommendations and approves all NEO stock awards. market-based analyses provided by both management and Willis Towers Watson. Target compensation for the NEOs is reviewed annually and is designed to reward historical performance, incentivizeincent future performance and be competitive with the external market for talent. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward. The three principal elements of our executive compensation programs are base salary, short-term performance-based cash incentive compensation and long-term performance-based equity incentive compensation. Each NEO’s base salary is set considering themultiple factors below anddescribed below. For fiscal 2022, all of our NEOs including(other than Mses. Boswell and Nash with respect to our CEO, participatelong-term equity incentive compensation program for the reasons discussed below) participated in the same short-term performance-based cash incentive compensation. The sizecompensation program and grant timing of long-term performance-based equity incentive compensation forprogram. The Company also provides our CEO is different from the other NEOs but the other key terms of the award are the same, including vestingwith health and performance requirements. Other elements of compensation that may be paid to NEOs includewelfare benefits, retirement and other post-employment benefits and perquisites. Our CEO is not eligible for post-employment benefits under a severance or change in control agreement.limited set of perquisites. Additional information about each of these compensation components is provided below. The following factors are considered in determining any base salary adjustments: adjustments for our NEOs:Scope and responsibility of the NEO’s position;NEOs’ positions; Achievement of seasonal and annual business goals; Level of overall compensation paid by competitors for comparable positions; Recruitment, retention and development of leadership talent; and The Company’s challenging expectations for future growth; and
The appropriate balancing of our NEOs’ base salarysalaries against their incentive compensation. 36 Bath & Body Works, Inc. | 2023 Proxy Statement
Mr. Wexner’s base salary decreased 10% in fiscal 2019Based on top of a decrease of 50% in fiscal 2018. Minimal or no changes were made to thethese factors, our NEOs’ base salaries of the other NEOs. Mr. Burgdoerfer and Mr. McGuigan have not received awere adjusted during fiscal 2022 as follows: | | | | | | | | | | | | | NAMED EXECUTIVE OFFICER(1) | | 2021 BASE SALARY ($) | | | 2022 BASE SALARY ($) | | | % INCREASE | | | | | | Ms . Boswell | | | N/A | | | | 1,500,000 | | | | N/A | | | | | | Ms . Arlin | | | 750,000 | | | | 800,000 | | | | 6.7% | | | | | | Ms . Rosen | | | 870,000 | | | | 1,000,000 | | | | 14.9% | | | | | | Ms . Riley | | | 760,000 | | | | 800,000 | | | | 5.3% | | | | | | Mr. Wu | | | 675,000 | | | | 725,000 | | | | 7.4% | |
(1) | In fiscal 2022, Mr. Meslow’s annual base salary for 2022 was $1,350,000, which was unchanged from fiscal 2021. Upon stepping in as an interim executive officer, Ms. Nash received an annual base salary of $1,000,000 while she served as Executive Chair from February 22, 2022, through May 11, 2022. Upon assuming the role of Interim Chief Executive Officer, her annual base salary increased to $1,350,000. |
Ms. Arlin’s base salary increase since 2016. Mr. Wexner | | | 900,000 | | | 1,000,000 | | | -10.0% | Mr. Burgdoerfer | | | 900,000 | | | 900,000 | | | 0.0% | Mr. McGuigan | | | 1,300,000 | | | 1,300,000 | | | 0.0% | Ms. Milano | | | 900,000 | | | 900,000 | | | 0.0% | Mr. Bersani | | | 800,000 | | | 770,000 | | | 3.9% |
Short-Term Performance-Basedrecognizes her expanded scope of responsibility following the leadership realignment, including the additions of information technology and real estate oversight responsibilities. Ms. Rosen’s base salary increase was also made in recognition of the significant expansion of her responsibilities, including additional oversight over stores, digital, e-commerce, international, planning and operations and store design and construction. Ms. Riley’s increase recognizes the criticality of her focus on culture and associate engagement during this time of leadership transition, along with her ongoing support for the Company’s diversity, equity and inclusion initiatives. Mr. Wu’s increase recognizes the importance of his focus on corporate governance, structure and compliance during the formative stage of the Company being established as a standalone public company and leading, along with Ms. Riley, the implementation of measures agreed to as part of the settlement resolving all stockholder derivative lawsuits filed in 2020 and 2021 in the United States District Court for the Southern District of Ohio and the Delaware Court of Chancery, respectively, alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the “Shareholder Derivative Settlement”).Short-term Performance-based Incentive Compensation Short-term performance-based incentive compensation, if earned, is paid in cash pursuant to the Company’s 2015 Cash Incentive Compensation Performance Plan (as amended, the “2015 ICPP”). This programcompensation component focuses on achievement of six-month goals, reflecting the seasonal nature of our business and the fact that achievement of our short-term goals season after season creates long-term value for our stockholders. Our operations consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). The Fall including theseason, which includes holiday season,sales, is weighted more heavily at 60% because of its importance to our profitability.
Short-term performance-based cash incentive compensation targets are set at a percentage The use of base salary withtwo six-month performance periods in our plan design reflects our belief that achievement of our short-term goals season after season creates long-term value for our stockholders.The pre-established, objective financial goal for the amount earned ranging from zero to doubleSpring and Fall seasons of fiscal 2022 was the target incentive, based on the extent to which financial goals are achieved or exceeded. TABLE OF CONTENTS
The financial incentive provided by the short-term performance-based incentive compensation plan is a key component in driving the performance of the Company. For fiscal 2019, our NEOs’ focus on maximizing operating income was especially important given strategic initiatives that were expected to put pressure onCompany’s adjusted operating income. Accordingly, target percentages for each of the NEOs were increased to incent future performance and place further emphasis on the performance-based component of their compensation package:
Mr. Wexner | | | 167% | | | 150% | Mr. Burgdoerfer | | | 180% | | | 170% | Mr. McGuigan | | | 180% | | | 170% | Ms. Milano | | | 130% | | | 120% | Mr. Bersani | | | 140% | | | 130% |
While the target percent for Mr. Wexner increased, the increase is the result of the decrease in his base salary. The dollar target for fiscal 2019 remained unchanged from fiscal 2018 at $1,500,000 and his total cash compensation at target is down 4%.
The pre-established, objective financial goals for fiscal 2019 were based solely onHCC Committee used adjusted operating income subject to adjustment for extraordinary items pursuant to the 2015 Incentive Compensation Performance Plan (the “2015 ICPP”) and approved by the Compensation Committee. Operating income is used because it is a performance measure over which executives can have significant impact and is also directly linked to the Company’s long-term growth plan and performance that drives stockholder value. When evaluatingThe HCC Committee sets the adjusted operating income goals the Compensation Committee compares the increase in operating income relative to the change in the incentive payments to associates at target.
Operating income goals are set at the beginning of each six-month season based on:
Anon an analysis of historical performance;
Income goals for that brand;
Financialperformance, the overall economic environment including financial results of other comparable businesses;businesses and
Progress progress toward achieving our strategic plan.
Short-termThe HCC Committee carefully considered the Spring and Fall season goals in order to ensure that our executives were properly incentivized in fiscal 2022, while at the same time incorporating a level of rigor that maintained a strong link between pay and performance in fiscal 2022. The HCC Committee approved the Spring and Fall season goals to reflect the prior year’s record-setting performance and the anticipated normalization of demand for our products following the pandemic, as well as to account for anticipated headwinds in fiscal 2022 resulting from significant inflationary impacts to our cost structure, including increases in raw material, distribution and labor costs, planned investments in the Company’s customer loyalty program and other technology capabilities, and decreased customer spending. The HCC Committee believes incentive payoutsgoals for allboth seasons were set at challenging and meaningful levels, maintaining the NEOs were based onsame level of rigor as in the following operating income goalsprior years. 2023 Proxy Statement | Bath & Body Works, Inc. 37
The tables below show the Spring and weighting: | 80% weighted average of major brand operating income:
| | | 55% Victoria’s Secret operating income
| | | 30% Bath & Body Works operating income
| | | 15% Other operating income
| | | 20% Total L Brands operating income
| |
The table below shows theFall season adjusted operating income goals required to earn short-term performance-based incentive compensation at target, along with the range of performance goals as a percentage of target for threshold and maximum payouts and actual performance by season: results achieved in fiscal 2022: | | | Fiscal 2019 Spring Season
| | | Fiscal 2019 Fall Season
| | | | | | | | | | | | | | | | | THRESHOLD | Operating Income
Goal
| | OPERATING INCOME GOAL | Actual
Performance
| | MAXIMUM | | | ACTUAL OPERATING INCOME(1) | | | Operating Income
Goal OPERATING INCOME GOAL ACHIEVEMENT | | | Actual
Performance(1)
| Total L Brands
| | | $402 million
| | | $328 million
| | | $1,086 million
| | | $894 million
| Victoria’s Secret
Spring Season (40% Weighting) | | | 19087% of target
| | | | $710 million | | | 49
| 107% of target | | | | $522 million | | | 315 million
| 0% of target | | 62 million
| Bath & Body Works
| | | 286 million
| | | 337 million
| | | 811 million
| | | 866 million
| Other(2)
Fall Season (60% Weighting) | | | 10582% of target
| | | | $750 million | | | 111
| 115% of target | | | | $854 million | | | 185 million
| 195% of target | | 184 million
|
| Actual performance presentsFor fiscal 2022, we did not make any adjustments to operating income; therefore, for fiscal 2022 adjusted operating income on anis equal to our GAAP operating income. See Appendix A for reconciliations of the Company’s non-GAAP adjusted basis which removes certain special items which are not indicative of our ongoing operations due to their size and nature. The Company uses adjusted financial information as key performance measures of results for purposes of evaluating performance internally, which may not correspond to amounts reported externally. |
| Other includes business unit operating income that is an internal performance measure and does not correspond to amounts reported externally.the Company’s GAAP operating income, as well as other important disclosures regarding non-GAAP financial measures. |
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Spring and Fall season goals for Victoria’s Secret were set below prior year actual results to provide meaningful performance incentives during a time of continued operating income pressure. Performance-based incentive compensation paid to our NEOs did not include any payout based on Victoria Secret’s performance. Spring season goals for Bath & Body Works were set slightly below prior year actual results to account for the expected impact of China tariffs and investments in sourcing and logistics. To earn threshold payout, performance goals average approximately 50% to 90% of target. To earn maximum payout, performance goals average approximately 115% to 155% of target. Performance below threshold results in no payout. Performance between threshold and target and target and maximum is interpolated to determine the payout percentage beginning at 20% atfor threshold performance up to 200% at maximum.maximum performance. Short-term performance-based incentive compensation targets are set as a percentage of base salary with the amount earned ranging from 0% to 200% of the target incentive, based on the extent to which financial goals are achieved.Due to the challenging macroeconomic environment, including significant inflationary pressure that negatively impacted our cost structure and customer spending, we did not meet the operating income threshold for a payout in the Spring season. In the Fall season, through the exceptional leadership of our NEOs, we achieved above-target results driven by our focus on innovation and newness, optimization and vertical integration of the supply chain to chase into products with strong customer demand, as well as aggressive cost control and improvement in overall efficiencies. The table below shows the short-term performance-based incentive compensation targets as a target percentage of base salary for each NEO during fiscal 2022: | | | | | | | | | NAMED EXECUTIVE OFFICER | | FISCAL 2021 | | | FISCAL 2022 | | | | | Ms. Boswell | | | N/A | | | | 190% | | | | | Ms. Arlin | | | 90% | | | | 115% | | | | | Ms. Rosen | | | 115% | | | | 160% | | | | | Ms. Riley | | | 80% | | | | 100% | | | | | Mr. Wu | | | 80% | | | | 100% | | | | | Ms. Nash | | | N/A | | | | 190% | | | | | Mr. Meslow(1) | | | 190% | | | | N/A | |
(1) | Mr. Meslow was not entitled to short-term performance-based incentive compensation in fiscal 2022. |
The HCC Committee approved an increase to the short-term incentive target percentage of base salary for Ms. Rosen to align with the market pay levels for comparable roles, in light of the significant expansion of Ms. Rosen’s responsibilities during the leadership transition period. The short-term incentive target percentages of base salary for Mses. Arlin and Riley and Mr. Wu were also increased to reflect expanded scope of responsibilities during the leadership transition, incent future performance and place further emphasis on the performance-based components of their compensation packages. 38 Bath & Body Works, Inc. | 2023 Proxy Statement
PayoutsThe NEOs’ payouts for fiscal 20192022 performance are set forth below and in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of the 20192022 Summary Compensation Table below. The performance | | | | | | | | | | | | | | | | | | | | | | | FISCAL 2022 TARGET INCENTIVE ($) | | | FISCAL 2022 SPRING INCENTIVE PAYOUT ($) | | | FISCAL 2022 FALL INCENTIVE PAYOUT ($) | | | TOTAL FISCAL 2022 PAYOUT ($) | | | PERCENT OF FISCAL 2022 TARGET (%) | | | | | | | | Ms. Boswell(1) | | | 554,341 | | | | 0 | | | | 1,080,964 | | | | 1,080,964 | | | | 195 | % | | | | | | | Ms. Arlin | | | 920,000 | | | | 0 | | | | 1,076,400 | | | | 1,076,400 | | | | 117 | % | | | | | | | Ms. Rosen | | | 1,600,000 | | | | 0 | | | | 1,872,000 | | | | 1,872,000 | | | | 117 | % | | | | | | | Ms. Riley | | | 800,000 | | | | 0 | | | | 936,000 | | | | 936,000 | | | | 117 | % | | | | | | | Mr. Wu | | | 725,000 | | | | 0 | | | | 848,250 | | | | 848,250 | | | | 117 | % | | | | | | | Ms. Nash(2) | | | 1,989,989 | | | | 0 | | | | 3,001,050 | | | | 3,001,050 | | | | 151 | % | | | | | | | Mr. Meslow | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | % |
(1) | Ms. Boswell’s fiscal 2022 target incentive and payout were pro-rated based on the number of days that she served in the Chief Executive Officer role during the Fall season. |
(2) | Ms. Nash’s target incentive for the Spring season was pro-rated based on the number of days that she served in the Interim Chief Executive Officer role during the Spring season. |
With the changes to base salary and short-term performance-based compensation targets were set(described above) appropriately reflecting the scope and responsibility of each NEO’s role, following the end of fiscal 2022, the HCC Committee determined not to increase the base salaries or short-term performance-based incentive compensation targets for these awards and the payouts were made before the recent eventsany of the COVID-19 crisis unfolded. Total Fiscal 2019 Incentive Payout
Mr. Wexner | | | 1,500,000 | | | 473,400 | | | 558,900 | | | 1,032,300 | | | 69% | Mr. Burgdoerfer | | | 1,620,000 | | | 511,272 | | | 603,612 | | | 1,114,884 | | | 69% | Mr. McGuigan | | | 2,340,000 | | | 738,504 | | | 871,884 | | | 1,610,388 | | | 69% | Ms. Milano | | | 1,170,000 | | | 369,252 | | | 435,942 | | | 805,194 | | | 69% | Mr. Bersani | | | 1,120,000 | | | 353,472 | | | 417,312 | | | 770,784 | | | 69% |
our NEOs for fiscal 2023.Long-Term Equity Compensation StockDuring fiscal 2022, we granted stock awards are made to our NEOs (other than Mr. Meslow) under the 2015 Plan. Our equity-based long-term performance-based incentive program is comprised2020 Plan, which was approved by our stockholders at our 2020 annual meeting of a mix of three types of awards: stockholders. Performance Share Units PSUs time-vested RSUs and stock options providing a balance of performance incentive, alignment with stockholders and retention. Our long-term performance-based equity incentive program is designed to: Incentivize achievement of key performance metrics (through the performance requirement);
Align executive rewards with those realized by stockholders (through the market value of our stock);
Retain superior executive talent (through the time vesting requirements); and
Reward exceptional individual performance (through annual determination of the size of the award).
For the NEOs other than Mr. Wexner, individual performance (including contribution to the achievement of business goals, execution of retail fundamentals and accomplishment of talent and cultural objectives), company performance, competitive practice, the Company’s overall equity compensation expense budget, stockholder dilution, internal equity and retention risk are all considered in determining the size of their equity awards. The size and timing of Mr. Wexner’s equity award is determined on a different basis, as described in detail below.
Equity awards are granted on the date the award is approved, unless the effective date of the reason for the award (such as hire date) is later than the approval date. In this case, the grant date is the later date.
Performance Stock Units
Performance stock units incentivizeincent executive performance through the achievement of challenging growth and profitability metrics. Themetrics that closely align the long-term interests of our executives with those of our stockholders. For our NEOs’ annual 2022 PSU awards, the two equally weighted metrics are three-year(i) revenue growth relative to a designated peer group and three-year(ii) cumulative operating income as a percentpercentage of cumulative sales each relative to our peer group(operating income margin). These metrics were chosen by the HCC Committee because they align with the strategic direction of the Company and weighted equally at 50%.
provide a balance between growth and profitability metrics. Performance for awards granted in fiscal 2022 will be evaluated based on performance over a three-year performance period, starting with fiscal 2022 through the end of fiscal 2024.The specific targets are as follows: | | | | | | | | | | | | | | | PAYOUT PERCENTAGE | | | 3-YEAR REVENUE GROWTH RELATIVE TO PERFORMANCE PEER GROUP (50% WEIGHTING) | | | 3-YEAR OPERATING INCOME MARGIN (50% WEIGHTING) | | | | | | Threshold | | | 50 | % | | | 30th percentile | | | | 16 | % | | | | | Target | | | 100 | % | | | 50th percentile | | | | 20 | % | | | | | Maximum | | | 150 | % | | | 90th percentile | | | | 24 | % |
Performance will be evaluated based on a scale, and payout, if any, will be interpolated between threshold, target and maximum:maximum levels. The earned annual PSU awards (if any) granted in fiscal 2022 will vest in May 2025, subject generally to the executive’s continued employment through such date. 2023 Proxy Statement | Bath & Body Works, Inc. 39
Payout at thresholdThe Performance Peer Group used to determine relative revenue growth performance is 50%achievement was selected, in consultation with Willis Towers Watson, based on the same criteria set forth under “—Executive Compensation Philosophy—Compensation Comparison” and is set atapplying those criteria to Bath & Body Works as a standalone public company. Based on such review, the 30th percentileHCC Committee removed Designer Brands Inc., Hanesbrands Inc., Michael’s Co. Inc., Nu Skin Enterprises Inc. and Tapestry, Inc. and added DICK’s Sporting Goods, Inc., Gap, Inc. and Victoria’s Secret & Co. Following these changes, the Performance Peer Group companies for the 2022 PSUs are as follows: | | | | | | | | Abercrombie & Fitch Co. | | Foot Locker, Inc. | | Sally Beauty Holdings, Inc. | | | | American Eagle Outfitters, Inc. | | Gap, Inc. | | The Estée Lauder Companies Inc. | | | | Big Lots, Inc. | | lululemon athletica inc. | | Tractor Supply Company | | | | Burlington Stores, Inc. | | Newell Brands Inc. | | Ulta Beauty Inc. | | | | Coty Inc. | | Ralph Lauren Corporation | | Victoria’s Secret & Co. | | | | DICK’s Sporting Goods, Inc. | | Revlon, Inc. | | Williams-Sonoma, Inc. |
As described under the heading “2022 Retention Program” below, in addition to the annual PSUs granted by the Company, the HCC Committee approved Retention PSU Awards to each of Mses. Arlin, Rosen and Riley and Mr. Wu in May 2022, reflecting the importance the HCC Committee placed on leadership continuity with the unexpected resignation of our peer group. Payout at target performance is 100% and is set at the 50th percentile of our peer group.
Payout at maximum performance is 150% and is set at the 80th percentile of our peer group.
Chief Executive Officer.TABLE OF CONTENTSRestricted Stock Units
The performance period for both metrics is three years, and PSUs vest after three years.
Time-vested RSUs are granted to ensure market competitiveness of the executive compensation package, align executives’ long-term interests with our stockholders and to retain executives over the long-term. Time-vestedThe RSU awards vest over three years in three tranches (30% one year from the grant date, 30% two years from the grant date and 40% three years from the grant date), in each case subject generally to continued employment through each such date.To induce Ms. Boswell to join the Company, she received RSUs grantedas part of her hiring incentive. See “Chief Executive Officer Fiscal 2023 Pay” below for additional information. 2022 Nash Equity Award Ms. Nash joined the Board as an independent director in 2019 and assumed the role of Board Chair in May 2020. Since that time, Ms. Nash has provided unparalleled leadership and support to the Company through a period of significant uncertainty, transition and transformation, taking on roles that far exceeded that of a typical Board member and Board Chair. Specifically, in 2019, Ms. Nash had a key role in the comprehensive review of options to best position the Company, which at the time owned both the Bath & Body Works and Victoria’s Secret businesses, for long-term success and to drive shareholder value. The review resulted in the Company’s definitive agreement with Sycamore Partners (“Sycamore”) to sell a majority stake in Victoria’s Secret to Sycamore, which would position Bath & Body Works as a highly profitable, standalone public company. In 2020, when the Sycamore transaction fell through following the onset of the pandemic, Ms. Nash played a significant role in the leadership transition when she assumed the role of Board Chair from Mr. Leslie Wexner, who founded the Company and led it for 57 years. Ms. Nash was integral to transitioning Mr. Meslow into his first Chief Executive Officer role following the decision by the prior Bath & Body Works brand chief executive officer to step down for personal reasons in March 2020 during one of the most turbulent and uncertain periods in history with the onset of the pandemic. Ms. Nash guided the Company through the pandemic, took decisive actions to implement a profit improvement plan at Victoria’s Secret and led the process that culminated in the successful spin-off of Victoria’s Secret & Co. in August 2021. In addition, Ms. Nash provided critical oversight over, and led, the successful Shareholder Derivative Settlement related to Victoria’s Secret. From May 14, 2020, when Ms. Nash assumed the role of Board Chair, through March 10, 2022, the grant date for the Nash Award (as defined below), the Company delivered total shareholder returns of approximately 467% (assuming reinvestment of dividends and adjusted to give effect to the Victoria’s Secret & Co. spin-off). Ms. Nash has been the one consistent leader who navigated the Company through these unprecedented challenges that began in 2019 and included three Chief Executive Officer transitions, including Ms. Nash’s assumption of the position on an interim basis when Mr. Meslow unexpectedly departed for health reasons and the successful onboarding of Ms. Boswell in December 2022, which allowed the Company’s management team to focus on the Company’s business operations. 40 Bath & Body Works, Inc. | 2023 Proxy Statement
The Board believes that Ms. Nash has been, and will continue to be, vital to the Company’s successful transformation and that her retention over the next several years (including in her role as Executive Chair and Interim Chief Executive Officer during portions of fiscal 2022) is critically important to the interests of our stockholders. Accordingly, and in light of the extraordinary contributions Ms. Nash made to the business during this period, as previously disclosed in the Company’s 2022 proxy statement, on March 10, 2022, the Board approved a one-time award of RSUs to Ms. Nash with a grant date value of approximately $18 million (the “Nash Award”). The Nash Award is scheduled to vest in three approximately equal annual installments, subject generally to Ms. Nash’s continued service as a member of the Board through each NEOvesting date. As such, if Ms. Nash resigns from our Board or voluntarily decides not to stand for reelection to the Board, any unvested portion of the Nash Award would be forfeited. The Board believes that the Nash Award was a prudent action to help ensure Ms. Nash’s continued retention, as well as to provide stability of the Company’s leadership team during the transition to a new Chief Executive Officer. In determining the value and structure of the award, the HCC Committee and the Board considered (among other things) an analysis by Willis Towers Watson of one-time grants provided to leaders of companies undergoing strategic transformations or transactions, as well as in unique circumstances to recognize expansion of responsibilities in transformative periods. The Board also considered the appropriateness of a time-vested award and determined that, based on the Board’s expectation that Ms. Nash would return to being a non-executive director following her interim service as an executive officer, service-based vesting provides the desired retention and aligns with market practice for Ms. Nash’s intended role as a non-executive Board Chair (which re-commenced at the beginning of fiscal 2023). The Nash Award was unanimously approved by the independent members of the Board following the unanimous recommendation of the HCC Committee. 2022 Retention Program In light of the significant uncertainty associated with the Chief Executive Officer transition and search process in fiscal 2019 cliff vest after three years, subject2022 and reflecting the importance the HCC Committee placed on leadership continuity of the executive leadership team, on May 13, 2022, the Company entered into executive retention agreements (the “Retention Agreements”) with each of Mses. Arlin, Rosen and Riley and Mr. Wu. With the successful track record of the Company and an unusually competitive market for talent, the HCC Committee believes that our executives are attractive targets for recruitment given the uncertainty related to continued employment. Stock Options
Stock options by their naturea change in leadership. The Retention Agreements are performance-based, aligning executive interestsintended to reinforce the focus and dedication of management without distraction while the Company successfully identified, recruited and onboarded a new Chief Executive Officer. The HCC Committee believes that the retention program is in the best interest of the Company’s stockholders to ensure continuity of management and retain and incent the Company’s leaders who have a proven track record of success and are critical to positioning the Company for long-term future growth. To further align with stockholder interests, approximately half of the retention award was made in the form of PSUs, which must be earned through the achievement of rigorous performance criteria. Specifically, the allocation between PSUs and cash retention awards was determined by creatingbalancing the need to ensure the retention of our NEOs during a direct linkperiod of significant uncertainty in connection with the Chief Executive Officer transition process, while at the same time ensuring that the awards appropriately incented our NEOs to maximize value for our stockholders during the same period.Under the Retention Agreements, the NEOs are eligible to receive an equally weighted combination of PSUs and cash over two years. The two-year period was designed in order to align with the anticipated time horizon related to the search for, and the hiring and onboarding of, a new Chief Executive Officer, during which period the retention of our NEOs is crucial to the success of our business. The aggregate cash retention bonuses (the “Cash Retention Bonuses”) under the Retention Agreements are outlined below. | | | | | | | | | | | | | | | | | | | FIRST INSTALLMENT ON MAY 19, 2022 ($) | | | SECOND INSTALLMENT ON JANUARY 13, 2023 ($) | | | THIRD INSTALLMENT ON MAY 5, 2023 ($) | | | TOTAL CASH RETENTION ($) | | | | | | | Ms. Arlin | | | 480,000 | | | | 360,000 | | | | 360,000 | | | | 1,200,000 | | | | | | | Ms. Rosen | | | 800,000 | | | | 600,000 | | | | 600,000 | | | | 2,000,000 | | | | | | | Ms. Riley | | | 480,000 | | | | 360,000 | | | | 360,000 | | | | 1,200,000 | | | | | | | Mr. Wu | | | 435,000 | | | | 326,250 | | | | 326,250 | | | | 1,087,500 | |
To receive the payments outlined above, the executive must remain continuously employed through each applicable payment date. In addition, if an executive voluntarily terminates employment prior to the third retention bonus installment payment date, the executive will be required to repay to the Company any Cash Retention Bonus amounts previously paid (on an after-tax basis). 2023 Proxy Statement | Bath & Body Works, Inc. 41
The PSUs awarded under the Retention Agreements (the “Retention PSU Awards”) to each of Mses. Arlin, Rosen and Riley and Mr. Wu had target values of approximately $1.2 million, $2.0 million, $1.2 million and $1.1 million, respectively. Similar to annual PSU awards, the Retention PSU Awards will be earned between compensation0% and stockholder return. Stock options granted150% based on achievement of two equally weighted performance metrics (revenue growth relative to a designated peer group and operating income margin), each measured over the Company’s 2022 and 2023 fiscal years. The Performance Peer Group used to determine relative revenue growth performance achievement is the same group of companies listed above for the annual PSU awards in fiscal 2019 to each NEO2022. The specific targets are as follows: | | | | | | | | | | | | | PAYOUT PERCENTAGE | | | 2-YEAR REVENUE GROWTH RELATIVE TO PERFORMANCE PEER GROUP (50% WEIGHTING) | | 2-YEAR OPERATING INCOME MARGIN (50% WEIGHTING) | | | | | | Threshold | | | 50% | | | 30th percentile | | | 16% | | | | | | Target | | | 100% | | | 50th percentile | | | 20% | | | | | | Maximum | | | 150% | | | 90th percentile | | | 24% | |
Performance will be evaluated based on a scale, and payout, if any, will be interpolated between threshold, target and maximum levels. The earned Retention PSU Awards (if any) will vest in equal installments over three years,May 2024, subject to continued employment. The exercise price is equalgenerally to the closing price of our Common Stock on the grantexecutive’s continued employment through such date. Below is a summary of the time-vested RSUs,long-term equity incentive compensation, including PSUs and stock optionsRSUs, awarded into our NEOs during fiscal 2019. These awards were made before the COVID-19 crisis arose. Mr. Wexner(1) | | | 496,322 | | | 297,785 | | | 126,676 | | | 920,783 | Mr. Burgdoerfer | | | 787,906 | | | 472,738 | | | 238,495 | | | 1,499,139 | Mr. McGuigan | | | 1,138,075 | | | 682,850 | | | 344,496 | | | 2,165,421 | Ms. Milano | | | 787,906 | | | 472,738 | | | 238,495 | | | 1,499,139 | Mr. Bersani | | | 700,363 | | | 420,223 | | | 211,995 | | | 1,332,581 |
2022. | | | | | | | | | | | | | | | | | | | TARGET VALUE OF ANNUAL PSU AWARD ($) | | | VALUE OF TIME-VESTED RSU AWARD(S) ($) | | | TARGET VALUE OF RETENTION PSU AWARD ($) | | | TOTAL FISCAL 2022 EQUITY AWARD VALUE ($) | | | | | | | Ms. Boswell | | | 0 | | | | 3,853,024 | (2) | | | 0 | | | | 3,853,024 | | | | | | | Ms. Arlin | | | 570,674 | | | | 579,355 | | | | 1,242,435 | | | | 2,392,464 | | | | | | | Ms. Rosen | | | 713,377 | | | | 724,228 | | | | 2,070,742 | | | | 3,508,347 | | | | | | | Ms. Riley | | | 618,257 | | | | 627,662 | | | | 1,242,435 | | | | 2,488,354 | | | | | | | Mr. Wu | | | 523,137 | | | | 531,095 | | | | 1,125,957 | | | | 2,180,189 | | | | | | | Ms. Nash | | | 0 | | | | 17,412,228 | (2) | | | 0 | | | | 17,412,228 | | | | | | | Mr. Meslow(1) | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| WhileIn light of his unexpected resignation that the Company announced in February 2022, Mr. Meslow did not receive any long-term equity award mix and performance requirement are the same, the amount and timing of Mr. Wexner’s equity award are determined on a different basis than that of our other NEOs, as described in detail in the section “CEO Compensation”.incentive compensation awards during fiscal 2022. |
(2) | RSU awards represent a sign-on award for Ms. Boswell and a special award for Ms. Nash and do not represent annual awards in fiscal 2022. Please see “2022 Nash Equity Award” and “Chief Executive Officer Fiscal 2023 Target Pay” for additional information. |
Other Benefits and Perquisites Qualified Defined Contribution Retirement and Other Post-Employment Benefits Retirement and other post-employment benefits consist ofPlanOur qualified and non-qualified defined contribution retirement plan benefits and termination benefits. Qualified Defined Contribution Retirement Plan
The qualified plan is available to all Company associates who meet certain age and service requirements. Associates can contribute up to the amounts allowable under Section 401 of the Code. The Company matches associates’ contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates’ eligible annual compensation and years of service. Associates’ contributions and Company matching contributions to the qualified plan vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service.
Non-Qualified Defined Contribution Deferred Compensation and Supplemental Retirement Plan
The non-qualified plan is available to all associates who meet certain age, service, job level and compensation requirements. The non-qualified plan is an unfunded plan which provides benefits beyond the Code limits for qualified defined contribution plans. The Company does not set aside assets to fund liabilities of the non-qualified plan. Assets that may be used to satisfy such liabilities are general assets of the Company, subject to the claims of the Company’s creditors.
Associates can contribute to the non-qualified plan up to a maximum percentage of eligible compensation. The Company matches associates’ contributions and contributes additional amounts based on a percentage of the associates’ eligible compensation and years of service.
The plan also permits participating associates to defer additional compensation which the Company does not match.42 Bath & Body Works, Inc. | 2023 Proxy Statement
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Associates’ contributions to the non-qualified plan and the related interest accruals vest immediately. Company contributions and credits to the non-qualified plan and the related interest are subject to vesting based on years of service.
Termination Benefits: Severance and Change in Control Agreements
We have entered into severance and change in control agreements with all of our NEOs other than Mr. Wexner. See “Retirement and Other Post-Employment Benefits—Estimated Post-Employment Payments and Benefits” below for a description of estimated benefits in certain termination situations, including a change in control.
Upon a change in control, equity awards will only vest if the executive’s employment is terminated by the executive for good reason or by the Company other than for cause within 24 months of the change in control. None of our NEOs is entitled to a tax gross-up upon a change in control.
We provide our NEOs with minimalcertain perquisites that the CompensationHCC Committee has determined are reasonable and in the best interests of the Company and its stockholders. These perquisites may include the reimbursement of financial planning costs of up to $9,500 per year and supplemental disability and life insurance coverage, an annual executive physical and a financial planning reimbursement up to $14,000 per year. None of our NEOs other than Mses. Boswell and Nash were permitted to use corporate aircraft for personal purposes during fiscal 2022. We also provide relocation benefits, as applicable, pursuant to the Company’s policy applicable to senior executives or as may otherwise be set forth in an applicable employment agreement, including relocation benefits to Mses. Boswell and Riley and Mr. Wu during fiscal 2022. Ms. Riley and Mr. Wu completed their relocations to the Columbus, Ohio region during fiscal 2022. The Company anticipates that Ms. Boswell will complete her relocation during fiscal 2023. According to the Company’s relocation policy, if an executive voluntarily resigns or is terminated for cause (i) before the first anniversary of their hire date, the executive is obligated to reimburse the Company for 100% of the relocation benefits and (ii) before the second anniversary of their hire date, the executive is obligated to reimburse the Company for one-half of the relocation benefits. We maintain corporate aircraft that are used primarily by our senior management for business travel. During fiscal 2022, the HCC Committee approved the use of corporate provided aircraft for personal purposes by Mses. Boswell and Nash to ensure their safety and promote the efficient and effective use of their time while traveling. The value associated with personal use of corporate provided aircraft was imputed as income to the executive based on the Internal Revenue Service’s Standard Industrial Fare Level formula. We do not cover, reimburse or otherwise gross-up the income taxes owed for personal use of corporate aircraft. The aggregate incremental cost to the Company of personal use of Company aircraft is disclosed in the All Other Compensation column of the 2022 Summary Compensation Table below. Ms. Boswell’s personal use of Company aircraft during fiscal 2022 was in connection with her relocation from her residence in Florida, allowing for efficient travel to the Company’s offices in Columbus, Ohio while she searches for and relocates to a permanent residence in the Columbus, Ohio region. The use of Company aircraft also provides Ms. Boswell with an environment that permits her to perform confidential work while commuting from her personal residence, which would otherwise be impossible on commercial aircraft. Ms. Nash’s permanent residence is in New York, New York and, considering the temporary nature of her appointment as Executive Chair and Interim Chief Executive Officer, the Board determined that it was not feasible or desirable to require Ms. Nash to relocate to Columbus, Ohio during her tenure as a Company executive. In order to provide for efficient travel for Ms. Nash and maximize her time devoted to Company business, including a significant amount of time at the Company’s offices in Columbus, Ohio, the HCC Committee permitted Ms. Nash to use Company aircraft to travel from her personal residences and offices to the Company’s offices in Columbus, Ohio to conduct business until Ms. Boswell’s appointment and transition. Under the Commission’s rules, this travel between her residences and offices and the Company’s offices during the time she served as Executive Chair and Interim Chief Executive Officer is considered personal travel without regard to the fact that the travel was for business reasons and for the convenience of the Company. In addition to aircraft usage, expenses for Ms. Nash’s hotel, ground transportation and meals while working in Columbus are considered personal expenses. To offset the hotel, ground transportation and meal expenses in part, the HCC Committee approved an expense allowance for Ms. Nash of $22,500 per quarter (pro-rated for partial quarters). The HCC Committee believes that these perquisites are reasonable and in the best interest of the Company’s stockholders given the temporary nature of Ms. Nash’s role as Executive Chair and Interim Chief Executive Officer. Chief Executive Officer Fiscal 2023 Pay Consistent with our guiding principles, the HCC Committee believes that our Chief Executive Officer compensation should be highly competitive, emphasize performance-based compensation and be designed to recognize and reward strong performance in order to maximize value creation for our stockholders. Accordingly, in connection with the commencement of her employment with the Company in December 2022, the HCC Committee determined to provide Ms. Boswell with a compensation package that is designed to be competitive and balanced, with a reasonable base salary along with participation in our short-term and long-term incentive compensation programs on the same basis as the other NEOs. Under the terms of her employment agreement, Ms. Boswell receives an annual base salary of $1.5 million, an annual short-term performance-based incentive compensation target equal to 190% of her base salary and an annual long-term equity incentive award opportunity in fiscal 2023 with a value of $7.5 million. Ms. Boswell’s 2023 compensation package is consistent with our pay mix philosophy that places greater emphasis on performance-based incentive compensation. 2023 Proxy Statement | Bath & Body Works, Inc. 43
As part of Ms. Boswell’s hiring incentive, to induce her to join the Company and consistent with arrangements common in the highly competitive market for top talent, Ms. Boswell received a one-time cash sign-on bonus in the amount of $1.5 million and a one-time award of RSUs with a grant date value of approximately $4 million. The cash sign-on bonus is subject to repayment (on an after-tax basis) in the event Ms. Boswell is terminated by the Company for associates at“cause” or she voluntarily resigns other than for “good reason,” in each case prior to December 1, 2023. The RSU award is designed to establish and build Ms. Boswell’s ownership interest in Company stock and to immediately align a significant portion of her compensation with the Vice President levellong-term interests of our stockholders. The terms of Ms. Boswell’s sign-on RSUs are consistent with the terms and above, includingvesting schedule of the NEOs. In addition,RSUs granted to Mses. Arlin, Rosen and Riley and Mr. Wu and will be forfeited upon her voluntary termination of employment to the extent that corporateunvested. Severance and Change in Control Agreements Chief Executive Officer In connection with the commencement of her employment in fiscal 2022, the Company entered into an executive severance agreement with Ms. Boswell, which provides for terms and conditions generally consistent with those provided aircraft is usedto each of our other current NEOs (as described below). Under her severance agreement, in the event of a termination of Ms. Boswell’s employment by any NEOthe Company without “cause” or by her for personal purposes,“good reason” (as defined in her severance agreement and described in more detail under the NEO has reimbursedheading “—Potential Payments Upon Termination or Change in Control” below), in each case other than during the three-month period prior to, and the 24-month period following, a “change in control” of the Company, she will be entitled to receive (i) continued payment of annual base salary for two years following the termination date, (ii) an amount equal to two years of COBRA premiums, (iii) the incentive compensation award for the season in which the termination date occurs, prorated based on the greaternumber of days employed during such season and determined based on actual performance, (iv) the incentive compensation she would have received if she had remained employed by the Company for two years following the termination date, determined based on actual performance, (v) accelerated vesting of a pro rata portion of the amount establishedunvested equity awards held by her that vest solely upon the Internal Revenue Service (“IRS”) as reasonable for personal use or the aggregate incremental cost associated with the personal usetime-based vesting conditions (including her sign-on RSU award) and (vi) continued vesting of a pro rata portion of the corporate owned aircraft asunvested equity awards held by her that vest based on performance-based vesting conditions, which will remain subject to the existing performance metrics. In the event such termination of employment occurs during the three-month period prior to, or during the 24-month period following, a “change in control” of the Company, then Ms. Boswell will be entitled to receive (a) the amounts described in clause (i) above (with such amounts paid in a lump sum if the termination of employment occurs on or after a change in control) and clause (ii) above, (b) a payment equal to the sum of the incentive compensation payouts that she received for the four completed seasons prior to the termination date (with the payout for any partial seasonal performance period to be annualized and the target seasonal incentive opportunity to be included if she has not been employed long enough to be eligible for four seasonal incentive payouts), (c) her incentive compensation award for the season in which the termination date occurs, prorated based on the number of days employed during such season and determined by an independent, third party aircraft costing service. CEO Compensation
Overview of CEO Pay
Mr. Wexner’s compensation reflectsreference to the Company’s performance. Total compensation, as disclosed in the 2019 Summary Compensation Table, decreased 17% from fiscal 2018 to 2019 while adjusted operating income(1) decreased 14%. Over the three-year period from fiscal 2016 to fiscal 2019, CEO compensation decreased 79% while total shareholder return decreased 22%.
| Operating income determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for L Brands decreased 79%. The reconciliation of the adjusted measure to the comparable GAAP figure is on pages 28 to 29 of the Company’s 2019 Annual Report on Form 10-K (the “2019 10-K”). |
CEO Stock Award Determination Overview
Mr. Wexner’s fiscal 2019 stock grant was awarded near the endaverage of the Fall season when Mr. Wexner’sincentive compensation payouts she received for the four completed seasons prior to the termination date (with the payout for any partial seasonal performance period to be annualized and the Company’starget seasonal incentive opportunity to be included in such average if she has not been employed long enough to be eligible for four seasonal incentive payouts) and (d) accelerated vesting of any outstanding unvested equity awards held by her (including her sign-on RSU award), with performance was substantially determined for the fiscal year. This stock award recognizes financial, strategic and operational performance for the fiscal year and incentivize future performance. The stock award was granted with agoals deemed to be achieved at target value of $1.17 million (77% below target) as a combination of stock options, time-vested RSUs and PSUs. Stock options vest in equal installments over three years and time-vested RSUs and PSUs vest 100% after three years, each subject to continued employment and achievementlevels if less than one-third of the applicable performance requirement.
Mr. Wexner’s stock award is subject toperiod has lapsed, otherwise performance in two ways:
The Compensation Committee goes through a rigorous quantitative and qualitative evaluation of historical performance to determine the size of the award; and
Once granted, 70% of the award is subject to performance of the Company. PSUs, which represent 50% of Mr. Wexner’s total equity award, must be earned based on the attainment of quantitative performance metrics and the value of stock options is contingent on the stock price increasing.
The rigorous quantitative and qualitative evaluation that is used to determine the size of the award relative to target includes an analysis of:
Absolute and relative total shareholder return over one and three years;
Absolute and relative return on invested capital over one and three years;
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Sales and operating income growth;
Earnings per share;
Performance against pre-established financial targets;
Leadership talent development; and
Success in fostering a high-performance culture.
While the size of Mr. Wexner’s stock award is determined on a quantitative and qualitative basis, once the size of the grant is determined, 70% of the award is subject to future performance of the Company. PSUs, which represent 50% of Mr. Wexner’s total equity award, must be earned based on the attainment of two quantitative performance metrics and the ultimate value of stock options is contingent on the stock price increasing. The performance metrics for PSUs are the same as the metrics required for the other NEOs: three-year revenue growth and three-year cumulative operating income as a percentage of cumulative sales, each relative to our peer group and weighted equally at 50%.
CEO Termination Benefits
Due to his unique role as the founder of the Company, Mr. Wexner is not covered by a severance or change in control agreement. However, all of Mr. Wexner’s unvested stock options will vest upon death and all conditions applicable to the RSUs and PSUs, including the performance conditiongoals will be deemed to have been satisfied. Subjectbe achieved at maximum levels.Ms. Boswell is not entitled to the achievement of pre-established performance conditions, PSUs and RSUs will continue to vest upon Mr. Wexner’s total disability. Upon retirement from his servicea tax gross-up for any excise taxes on compensation paid in connection with the Company, RSUs and PSUs will vest pro rata based on the fraction of whole months worked from the grant date over the full vesting period (i.e., one-third will vest if 12 full months are completed from the grant date for a grant that would otherwise vest over three years), subject to the achievement of performance conditions. In the event of a change in control unvested RSUunder her agreements with the Company. Other NEOs We entered into revised severance and PSU awards will vest ifchange in control arrangements with each of Mses. Arlin, Riley and Rosen and Mr. Wexner’s service is terminated other than for cause within 24 monthsWu in May 2022 in order to ensure that the terms of such protections are consistent across all of such NEOs and to be competitive with the market. Under the revised arrangements, upon a termination of the change in control. In connection with the Transaction, Mr. Wexner announced his resignation, effective as of the Closing. At this time,applicable executive’s employment by the Company has not entered into anywithout “cause” or by the executive for “good reason” (as defined in such executive’s severance arrangements with Mr. Wexneragreement and described in connection with his resignation.
CEO Perquisites
The Board of Directors has approved a security program (the “Security Program”) that provides security services to Mr. Wexner and his family. The Security Program is for the benefit of the Company and is appropriate given the risks associated with Mr. Wexner’s position. We periodically hire a third party to review our Security Program to verify that a bona fide Company oriented security concern exists and that the Security Program costs are reasonable and consistent with these concerns. The Security Program requires Mr. Wexner to use corporate provided aircraft, or private aircraft that is in compliance with the Security Program, whether the purpose of the travel is business or personal.
The cost of security services which are not business related have been reimbursed to the Company by Mr. Wexner. In addition, to the extent that corporate provided aircraft is used by Mr. Wexner for personal purposes, he has reimbursed the Company as noted abovemore detail under the heading “— CompensationPotential Payments Upon Termination or Change in Control” below), in each case other than during the three-month period prior to, and the 24-month period following, a “change in control” of the Company, the applicable executive will be entitled to receive (i) continued payment of annual base salary for NEOs—Perquisites”.two years following the termination date, (ii) an amount equal to two years of COBRA premiums, (iii) the executive’s incentive compensation award for the season in which the termination date occurs, prorated based on the number of days employed during such season and determined based on actual performance,44 Bath & Body Works, Inc. | 2023 Proxy Statement
Compensation Governance
Compensation Committee
Our(iv) the incentive compensation the executive compensation program is overseenwould have received if the executive had remained employed by the Compensation Committee. AllCompany for two years following the termination date, determined based on actual performance, (v) accelerated vesting of a pro rata portion of the unvested equity awards held by the executive that vest solely upon the time-based vesting conditions and (vi) continued vesting of a pro rata portion (excluding Retention PSU Awards, which will fully vest) of the unvested equity awards held by the executive that vest based on performance-based vesting conditions, which will remain subject to the existing performance metrics. In the event such termination of employment occurs during the three-month period prior to, or during the 24-month period following, a “change in control” of the Company, then the executive will be entitled to receive (a) the amounts described in clauses (i) and (ii) above, (b) a payment equal to the sum of the incentive compensation payouts that the executive received for the four completed seasons prior to the termination date, (c) the executive’s incentive compensation award for the season in which the termination date occurs, prorated based on the number of days employed during such season and determined by reference to the average of the incentive compensation payouts the executive received for the four completed seasons prior to the termination date, and (d) accelerated vesting of any outstanding unvested equity awards held by the executive (with performance goals deemed to be achieved at target levels if less than one-third of the applicable performance period has lapsed, otherwise performance goals will be deemed to be achieved at maximum levels). None of our CompensationNEOs is entitled to a tax gross-up for any excise taxes on compensation paid in connection with a change in control under their agreements with the Company. Ms. Nash Because Ms. Nash’s appointment as Executive Chair and Interim Chief Executive Officer was intended to be temporary, we did not enter an agreement with Ms. Nash that provides for severance protection. Mr. Meslow In connection with Mr. Meslow’s departure in fiscal 2022 due to health reasons, we entered into a Transition and General Release Agreement (the “Transition and Release Agreement”) with Mr. Meslow both in order to ensure an orderly transition of Mr. Meslow’s role as the Company’s Chief Executive Officer and to secure meaningful additional protections for the Company beyond Mr. Meslow’s then-existing contractual obligations (as described below). While Mr. Meslow’s departure was initially announced in February 2022, by entering into the Transition and Release Agreement, we were able to secure his services for an additional period through May 2022. This additional period was vital to ensuring a smooth transition of the Chief Executive Officer role to Ms. Nash and limiting the disruption to our business and stakeholders. In addition, the Transition and Release Agreement was entered into to recognize the circumstances of his departure and his exceptional leadership since May 2020 during a period of significant transformation for the Company. The terms provided under the Transition and Release Agreement were unanimously approved by the members of the HCC Committee, members are appointedin consultation with Willis Towers Watson. By entering into the Transition and Release Agreement, Mr. Meslow agreed to (i) extend the period of his non-competition and non-solicitation obligations by our Boardan additional 12 months (such that these restrictions will apply for a total period of 24 months) and meet independence(ii) expand the scope of his non-competition obligations to apply to any country (or part thereof) in the world in which the Company operates, sells or markets its products, or with respect to which Mr. Meslow had responsibility or supervisory authority or obtained any confidential information. In addition, pursuant to the Transition and other NYSE requirements. Compensation Committee members are selected based on theirRelease Agreement, Mr. Meslow agreed to execute a waiver and release of claims in favor of the Company that he was not otherwise required to provide, as well as to cooperate with the Company in connection with certain matters in which he was involved or had knowledge and experienceduring his employment. In return, Mr. Meslow will receive an aggregate cash amount equal to $7.0 million, payable in compensation matters from both their professional experience and their roles on other boards. As partratable biweekly installments over 24 months following his termination of its self-evaluation process, the Compensation Committee considers prevailing best practices andemployment, subject to compliance with the highest governance standards. During fiscal 2019,Transition and Release Agreement. In addition, Mr. Meslow will be eligible to receive Company paid health coverage under the Compensation Committee also continuedCompany’s group health plan for up to engage with the full Board to maximize its effectiveness.24 months. The role of the Compensation Committee and information about its meetings are set forth in this proxy statement.
The Compensation Committee participated in the preparationvalue of this CD&A and recommendedpayment was determined by the HCC Committee in consultation with Willis Towers Watson. In addition, the HCC Committee attributed value for the additional period of transition services that Mr. Meslow agreed to provide at the Board that it be included in this proxy statement.
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The Compensation Committee, together withCompany’s request following the initial announcement of his departure, as well as the meaningful additional contractual protections the Company also evaluates the Company’s compensation structure from the perspective of enterprise risk. The Company’s compensation structure includes risk mitigating factors such as a mix of pay that is balanced between long- and short-term, and fixed and variable payoutsobtained under the 2015 PlanTransition and 2015 ICPP. BasedRelease Agreement, including Mr. Meslow’s agreement to provide cooperation on this evaluation, the Compensation Committee believes that the Company’s compensation structures are appropriate and do not incentivize inappropriate takingcertain matters relating to his employment (as described above). Outstanding equity awards held by Mr. Meslow as of business risks.
The Compensation Committee is governed byhis termination date remained subject to their existing terms. As a charter which is available on our website at www.lb.com.
Committee Meetings and Delegation
Members of Company management, including the Chief Operating Officer and the Chief Financial Officer, attend the Compensation Committee meetings along with the Chief Human Resources Officer, who generally prepares meeting materials, and the Corporate Secretary, who records the minutes of the meeting. Members of Company management, including the CEO, do not play a role in recommending CEO compensation. The Compensation Committee regularly meets in executive session without management present.
The Compensation Committee may delegate its authority to subcommittees or the Chair of the Compensation Committee. In accordance with its charter, the Compensation Committee has delegated to our Chief Human Resources Officer, the authority to make stockresult, Mr. Meslow forfeited more than 1.4 million shares underlying unvested equity awards under the provisions of the 2015 Plan with a value up to $400,000of approximately $65 million at the time of separation from the Company.For additional details regarding the severance and change in any year to any associate who is notcontrol arrangements with our NEOs (including a Section 16 officerdescription of the Company estimated benefits in connection with a change in control and/or a senior leadership team member.termination of employment), see“—Potential Payments Upon Termination or Change in Control” below. 2023 Proxy Statement | Bath & Body Works, Inc. 45
Compensation Governance Independent Compensation Consultant As permitted by its charter, the CompensationHCC Committee retained Willis Towers Watson as its independent executive compensation consultant and has the sole authority to retain and terminate any independent executive compensation consultant. The CompensationHCC Committee consideringconsiders recommendations from our management team and determines the work to be performed by the consultant. The consultant works with management to gather data required in preparing analyses for CompensationHCC Committee review. Specifically, the services the consultant provides include: Assisting in evaluation of CEO and other NEO compensation;
Informing the Compensation Committee of changing market practices;
Consulting on our executive compensation strategy and program design;
Analyzing alignment of pay and performance;
Assisting in the selection of our peer group; and
Assisting in the preparation and review of this disclosure.
| • | | Assisting in the evaluation of, and providing recommendations for, Chief Executive Officer and other NEO compensation; |
| • | | Informing the HCC Committee of changing market practices; |
| • | | Consulting on our executive compensation strategy and program design; |
| • | | Analyzing the competitiveness of our executive pay; |
| • | | Assisting in the selection of our peer groups; and |
| • | | Assisting in the preparation and review of this disclosure. |
In addition to the services provided at the request of the CompensationHCC Committee, a separate divisionmanagement, with the knowledge of the HCC Committee, has engaged Willis Towers Watson providesfor a limited number of additional services, including provision of a call center tracking system for which we pay quarterly software usage fees and provides compensation survey reports.(provided by a separate division of Willis Towers Watson). For fiscal 2019, these2022, the fees totaled $138,044. The fees paid or payable to Willis Towers Watson totaled $338,226, of which $214,656 related to services rendered for its services to the CompensationHCC Committee in fiscal 2019 were $94,788. Total fees paidconnection with the review of executive and director compensation, and $123,570 related to Willis Towers Watson forservices performed at the fiscal year were $232,832. The Compensation Committee, in its sole discretion, engaged Willis Towers Watson; such engagement was not made or recommended byrequest of management. The CompensationHCC Committee did not participate in management’s decision to engage Willis Towers Watson for itsthe provision of a call center tracking system. The CompensationHCC Committee has determined that the provision of this workthese limited services by Willis Towers Watson to management is not material and does not impair the independence and objectivity of advice provided to or otherwise raise any conflict of interest for the CompensationHCC Committee on executive compensation matters. The CompensationHCC Committee reviews and approves the provision of additional services by Willis Towers Watson to the Company and evaluates the performance and independence of Willis Towers Watson, specifically considering independence factors identified by the Commission.NYSE rules. This evaluation includes a review of written representations from Willis Towers Watson confirming their independence. Based on its evaluation, the CompensationHCC Committee believes that there are no conflicts of interest that could impair Willis Towers Watson’s ability to provide independent, objective advice to the CompensationHCC Committee regarding executive compensation matters. TABLE OF CONTENTSCompensation Risk Assessment
In additionOn an annual basis, the HCC Committee considers the risks to consulting providedour business associated with our compensation policies and practices for the purpose of determining whether any risks arising from those policies and practices are reasonably likely to have a material adverse effect on the Company. The HCC Committee determined that the Company’s compensation structure includes mitigating factors such as a mix of pay that is balanced between long- and short-term, and fixed and variable payouts under the 2020 Plan (and its predecessor plan) and the 2015 ICPP, a robust clawback policy and robust executive stock ownership guidelines. Based on these features, we believe our executive compensation program effectively (i) ensures that our compensation program does not encourage excessive risk taking, (ii) keeps our NEOs focused on the creation of long-term, sustainable value for our stockholders and (iii) provides competitive and appropriate levels of compensation over time. Executive Stock Ownership Guidelines The HCC Committee encourages and mandates Common Stock ownership by Willis Tower Watson,our NEOs through stock ownership guidelines that promote a long-term focus on stock performance, discourage inappropriate risk-taking and further align the Compensation Committee engaged David Kollat, who served asinterests of our NEOs with those of our stockholders. Stock ownership guidelines can be met through direct ownership of Common Stock and indirect ownership through both grants of stock-based awards under our stock incentive plans and Common Stock held through Company benefit plans. Our Chief Executive Officer is required to achieve and maintain ownership of Common Stock with a value of five times the ChairChief Executive Officer’s base salary, and each other NEO is required to achieve and maintain ownership of the Committee until May 2019, as an advisorCommon Stock with a value of three times such NEO’s base salary. Our NEOs are required to achieve these ownership levels within five years of becoming subject to the Compensation Committee. Dr. Kollat’s services included consulting relatedownership guidelines. All of our NEOs are either in compliance with the guidelines or are on track to CEO compensation, establishment of short-term, performance-based incentive compensation goals andcomply with the drafting of this CD&A. Compensation paid to Dr. Kollat in connection with his services toguidelines within the Compensation Committee is disclosed in the section “Fiscal 2019 Director Compensation.”required time frame. 46 Bath & Body Works, Inc. | 2023 Proxy Statement
Section 162(m) of the Code generally does not allow a tax deduction to public companies for compensation paid to certain executive officers that is more than $1 million during the tax year. The HCC Committee takes into consideration the tax implications of our executive compensation program, including with respect to the tax deductibility of compensation paid under Section 162(m) of the Code provided an exemption from this deduction limitation for compensation that qualified as “performance-based compensation.” However, as partCode. In the exercise of the Tax Cutsits business judgment, and Jobs Act of 2017, this exemption was repealed, effective for taxable years beginning after December 31, 2017, subject to transition relief for certain arrangements in place as of November 2, 2017. The Company intends to administer grandfathered compensation in accordance with its compensation philosophy, the transition relief to the extent reasonably practicable. Going forward, non-grandfathered annual compensation in excess of $1 million for our covered senior executives will generally not be deductible. The CompensationHCC Committee continues to have the flexibility to pay non-deductibleaward compensation that is not tax deductible if it believes itdetermines that such award is in theour stockholders’ best interests of the Company. and is necessary to comply with contractual commitments, or to maintain flexibility needed to attract talent, promote retention or recognize and reward desired performance.Recovery of Compensation Under the 2020 Plan (and its predecessor plan) and the 2015 ICPP, and the 2015 Plan, the CompensationHCC Committee has the power and authority to recover previously awarded bonuses or equity-based compensation or profits if (i) required by applicable law with respect to a participant, (ii) a participant engaged in fraudulent conduct or activities (or had knowledge of such conduct or activities) relating to the Company or (iii) a participant should have had knowledge of such conduct or activities based on his or herthe participant’s position, duties or responsibilities. In addition, under the Company’s compensation recoupment policy, the HCC Committee has the ability to cancel and/or recoup certain cash and equity incentive compensation and severance compensation paid to associates who are at the level of Vice President or above (including our NEOs) in the event of a termination of employment for cause, or the HCC Committee’s discovery that grounds for cause existed at the time of such associate’s termination of employment. The HCC Committee will review and adopt such compensation recoupment policy in connection with the NYSE’s adoption of final clawback rules under the Dodd-Frank Act. Tally Sheets To assess the reasonableness of the compensation of our NEOs, the CompensationHCC Committee annually reviews a three-year history of all of the components of the NEOs’ compensation, including salary, short-term incentive compensation, realized and unrealized gains on stock options, PSUs and RSUs, the cost to the Company of all perquisites benefits earned and accrued under the Company’s non-qualified deferred compensation and supplemental executive retirement plan, and potential payouts under several potential severance and change-in-controlchange of control scenarios. Based on this review, the CompensationHCC Committee concluded that our NEOs’ compensation components individually and in aggregate are reasonable, encourage retention, incentivizeincent performance and are in the best interests of the Company and its stockholders. Conclusion
| We are committed to aligning our executive compensation with our Company’s performance. In connection with
| | | | | | Report of the Company’s continued decline in performance, theHuman Capital & Compensation Committee reduced our CEO’s target and actual compensation each year since 2016. These actions by the Compensation Committee, resulted in CEO compensation that decreased significantly more than the decline in performance. Specifically, when comparing fiscal 2019 CEO pay with performance: | | | | | |
The HCC Committee is composed of five directors who are independent, as defined under the NYSE listing standards. Additionally, each member of the HCC Committee is a “non-employee director” within the meaning of Section 16b-3 under the Exchange Act. The HCC Committee reviews the CD&A on behalf of the Board. The HCC Committee has reviewed and discussed the CD&A with management and, based on the review and discussions, the HCC Committee recommended to the Board that the CD&A be included in the 2022 10-K and the Company’s 2023 proxy statement. Human Capital & Compensation Committee Michael Morris, Chair Patricia Bellinger Alessandro Bogliolo Francis Hondal Danielle Lee 2023 Proxy Statement | Bath & Body Works, Inc. 47
| | | | | | •
| 2022 Summary Compensation Table | | On a one year basis (from February 1, 2019 to January 31, 2020) our stock price is down 15% and adjusted operating income is down 14% while actual CEO direct compensation is down 20%.
| | | •
| | | On a three year basis (from January 27, 2017 to January 31, 2020) our stock price is down 61% and adjusted operating income is down 40% while actual CEO direct compensation is down 79%.
| | | •
| | | On a five year basis (from January 30, 2015 to January 31, 2020) our stock price is down 73% and adjusted operating income is down 37% while actual CEO direct compensation is down 87%.
| | | | | | | | | CEO target and actual compensation for fiscal 2019 is near the lowest among our peers. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward.
| | | | | | | |
With these actions to reduce CEO pay, Mr. Wexner’s total compensation for fiscal 2019 was $3.8 million, which is well below the median of our peers. In addition, 2020 target pay is 37% below the median. In summary, there is alignment between our performance, our stockholders’ interests and our CEO’s pay. Accordingly, we recommend stockholders vote FOR the executive compensation program as outlined in Proposal 6.
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2019 Summary Compensation TableThe following table sets forth information concerning total compensation earned by or paid to our CEO, Chief Financial Officer and our three other most highly compensated NEOs during the fiscal year ended February 1, 2020. Leslie H. Wexner Chairman of the Board, CEO
| | | 2019 | | | $900,000 | | | $0 | | | $794,107 | | | $126,676 | | | $1,032,300 | | | $676,394 | | | $253,744 | | | $3,783,221 | | 2018 | | | 1,000,000 | | | 0 | | | 952,729 | | | 244,137 | | | 1,383,900 | | | 638,289 | | | 334,255 | | | 4,553,310 | | 2017 | | | 2,000,000 | | | 0 | | | 920,767 | | | 253,420 | | | 1,112,320 | | | 601,942 | | | 807,128 | | | 5,695,577 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stuart B. Burgdoerfer Executive Vice President, Chief Financial Officer
| | | 2019 | | | 900,000 | | | 0 | | | 1,260,644 | | | 238,495 | | | 1,114,884 | | | 89,235 | | | 303,913 | | | 3,907,171 | | 2018 | | | 900,000 | | | 0 | | | 1,748,530 | | | 117,737 | | | 1,411,578 | | | 79,008 | | | 260,080 | | | 4,516,933 | | 2017 | | | 900,000 | | | 0 | | | 1,616,479 | | | 83,980 | | | 1,022,040 | | | 70,437 | | | 316,520 | | | 4,009,456 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Charles C. McGuigan Chief Operating Officer, CEO/President, Mast Global
| | | 2019 | | | 1,300,000 | | | 0 | | | 1,820,925 | | | 344,496 | | | 1,610,388 | | | 139,555 | | | 428,769 | | | 5,644,133 | | 2018 | | | 1,300,000 | | | 0 | | | 2,059,168 | | | 169,926 | | | 2,038,946 | | | 123,879 | | | 369,008 | | | 6,060,927 | | 2017 | | | 1,300,000 | | | 0 | | | 2,434,972 | | | 121,308 | | | 1,476,280 | | | 110,693 | | | 451,336 | | | 5,894,589 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shelley M. Milano Chief Human Resources Officer
| | | 2019 | | | 900,000 | | | 0 | | | 1,260,644 | | | 238,495 | | | 805,194 | | | 18,876 | | | 191,411 | | | 3,414,620 | | 2018 | | | 849,846 | | | 0 | | | 1,357,942 | | | 114,894 | | | 996,408 | | | 8,979 | | | 133,123 | | | 3,461,192 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James L. Bersani President, Real Estate
| | | 2019 | | | 794,231 | | | 0 | | | 1,120,586 | | | 211,995 | | | 770,784 | | | 180,374 | | | 233,514 | | | 3,311,484 | | 2018 | | | 766,923 | | | 0 | | | 1,775,448 | | | 98,009 | | | 923,523 | | | 164,461 | | | 202,717 | | | 3,931,081 |
2022, 2021 and 2020, as applicable. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME AND PRINCIPAL POSITION | | YEAR | | | SALARY ($) | | | BONUS ($)(1) | | | STOCK AWARDS ($)(2)(3) | | | OPTION AWARDS ($)(2)(3) | | | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(4) | | | CHANGE IN PENSION VALUE AND NON-QUALIFIED DEFERRED COMPENSATION EARNINGS ($)(5) | | | ALL OTHER COMPENSATION ($)(6) | | | TOTAL ($) | | | | | | | | | | | | Gina Boswell Chief Executive Officer | | | 2022 | | | | 213,462 | | | | 1,500,000 | | | | 3,853,024 | | | | 0 | | | | 1,080,964 | | | | 0 | | | | 261,541 | | | | 6,908,991 | | | | | | | | | | | | Wendy Arlin Chief Financial Officer | | | 2022 | | | | 790,385 | | | | 1,088,000 | | | | 2,392,464 | | | | 0 | | | | 1,076,400 | | | | 0 | | | | 43,392 | | | | 5,390,641 | | | | 2021 | | | | 712,884 | | | | 496,000 | | | | 1,858,830 | | | | 0 | | | | 1,143,775 | | | | 20,777 | | | | 56,044 | | | | 4,288,310 | | | | | | | | | | | | Julie Rosen President, Retail | | | 2022 | | | | 969,231 | | | | 1,400,000 | | | | 3,508,347 | | | | 0 | | | | 1,872,000 | | | | 0 | | | | 40,930 | | | | 7,790,508 | | | | 2021 | | | | 866,153 | | | | 0 | | | | 1,169,319 | | | | 271,987 | | | | 1,804,102 | | | | 0 | | | | 21,018 | | | | 4,132,579 | | | | 2020 | | | | 277,885 | | | | 1,000,000 | | | | 849,986 | | | | 0 | | | | 805,632 | | | | 0 | | | | 870 | | | | 2,934,373 | | | | | | | | | | | | Deon Riley Chief Human Resources Officer | | | 2022 | | | | 792,308 | | | | 1,090,000 | | | | 2,488,354 | | | | 0 | | | | 936,000 | | | | 0 | | | | 553,477 | | | | 5,860,139 | | | | 2021 | | | | 758,077 | | | | 1,750,000 | | | | 1,052,655 | | | | 231,194 | | | | 1,096,346 | | | | 0 | | | | 41,189 | | | | 4,929,461 | | | | 2020 | | | | 54,808 | | | | 0 | | | | 749,996 | | | | 0 | | | | 720,000 | | | | 0 | | | | 209 | | | | 1,525,013 | | | | | | | | | | | | Michael Wu Chief Legal Officer and Corporate Secretary | | | 2022 | | | | 715,385 | | | | 761,250 | | | | 2,180,189 | | | | 0 | | | | 848,250 | | | | 0 | | | | 645,765 | | | | 5,150,839 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sarah Nash(7) Former Interim Chief Executive Officer and Executive Chair | | | 2022 | | | | 1,159,286 | | | | 0 | | | | 17,412,228 | | | | 0 | | | | 3,001,050 | | | | 0 | | | | 1,222,449 | | | | 22,795,013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Andrew Meslow(8) Former Chief Executive Officer | | | 2022 | | | | 410,192 | | | | 2,000,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 7,057,247 | | | | 9,467,439 | | | | 2021 | | | | 1,335,577 | | | | 4,000,000 | | | | 5,444,545 | | | | 1,903,973 | | | | 4,625,208 | | | | 80,547 | | | | 278,777 | | | | 17,668,627 | | | | 2020 | | | | 1,183,462 | | | | 0 | | | | 12,330,555 | | | | 0 | | | | 4,489,428 | | | | 146,274 | | | | 345,220 | | | | 18,494,939 | |
| Performance-based incentive compensation bonuses are disclosedThe bonus amount paid to Ms. Boswell represents a one-time cash sign-on bonus in this tableconnection with her hire in 2022. The after-tax amount of Ms. Boswell’s hiring bonus is subject to repayment to the Company upon certain terminations of employment prior to the first anniversary of her hire date. Bonus amounts for Ms. Arlin and Mr. Meslow include payment in fiscal 2022 of the final installment of the special cash retention awards approved by the HCC Committee during fiscal 2020 to ensure long-term retention during particularly turbulent times for our business in the amount of $248,000 and $2,000,000, respectively, conditioned on their continued employment through January 31, 2022. The bonus amount reported for Ms. Riley includes a cash retention bonus of $250,000 awarded in connection with her hire in fiscal 2020 and set forth in her employment agreement. The bonus amounts also include the first two installments of the Cash Retention Bonuses under the Non-Equity Incentive Plan 2022 Retention Program awarded to each of Mses. Arlin, Rosen and Riley and Mr. Wu during fiscal 2022 in such amounts and subject to the terms as described above under the heading “—Compensation column. None of our NEOs receivedDiscussion and Analysis—Compensation for NEOs—Compensation Components—2022 Retention Program,” including a nonperformance-based award in fiscal 2019.requirement to repay to the Company such cash retention bonuses previously paid (on an after-tax basis) if the executive voluntarily terminates his or her employment prior to the third retention bonus installment payment date. |
| The value of stock and option awards reflects the aggregate grant date fair value, excluding estimated forfeitures, computed in accordance with Accounting Standards Codification (“ASC”)ASC Topic 718 Compensation—Stock Compensation, for each award. Stock options are valued using the Black-Scholes option pricing model. The grant date fair value of the PSUs granted to the NEOs during fiscal 2022 was calculated based on the probable outcome of the performance conditions as of the grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC Subtopic 718-10, excluding the effect of estimated forfeitures. The grant date value of the PSUs granted to the NEOs in fiscal 2022 assuming the maximum level of performance conditions will be achieved is $2,719,664 for Ms. Arlin, $4,176,179 for Ms. Rosen, $2,791,038 for Ms. Riley and $2,473,641 for Mr. Wu. Mses. Boswell and Nash and Mr. Meslow were not granted any PSUs in fiscal 2022. |
| See Note 2016 to the Company’s financial statements filed in the 2019 2022 10-K for the related assumptions for stock optionsawards granted during fiscal 2019, 2018 and 20172022 and for a discussion of our assumptions in determining the aggregate grant date fair value of these awards. Awards vest over time and, therefore, are not realizable on an annual basis, nor is the ultimate value determinable without reference to future performance. |
| Stock and option awards were granted to each NEO under the Company’s 20152020 Plan. Awards are long-term compensation and generally vest over threetwo to fivethree years and are not realizable on an annual basis. See discussion under the heading “—Compensation Discussion and Analysis—Compensation for NEOs—Compensation Components—Long-Term Equity Compensation” for additional detail. |
| Represents the aggregate of the non-equity performance-based incentive compensation for the applicable fiscal Spring and Fall selling seasons. Incentive compensation targets are set based on a percentage of base salary and are paid seasonally based on the achievement of adjusted operating income results. The following table illustratesMs. Boswell’s fiscal 2022 incentive payout was pro-rated based on the amountnumber of days that she served in the compensation which is paid in cash and voluntarily deferred:Chief Executive |
Mr. Wexner | | | $1,004,689 | | | $27,611 | | | $1,032,300 | Mr. Burgdoerfer | | | 1,076,103 | | | 38,781 | | | 1,114,884 | Mr. McGuigan | | | 1,563,126 | | | 47,262 | | | 1,610,388 | Ms. Milano | | | 621,588 | | | 183,606 | | | 805,194 | Mr. Bersani | | | 737,903 | | | 32,881 | | | 770,784 |
48 Bath & Body Works, Inc. | 2023 Proxy Statement
| Officer role during the Fall season. See the discussion under the heading “—Compensation Discussion and Analysis—Compensation for NEOs—Short-Term Performance-Based Incentive Compensation” for additional detail. |
(5) | The Company does not sponsor a defined benefit retirement plan (tax-qualified(tax-qualified or non-qualified). For The Company’s non-qualified deferred compensation plan was terminated in fiscal 2019, the amounts shown represent the amount by which earnings on each NEO’s non-qualified plan balance at an annual effective rate of 5.59% exceed 120% of the applicable federal long-term rate at the time the rate was set2020, and balances were distributed in October 2018.July 2021. |
(6)
| The following table detailsand related footnotes detail all other compensation paid to each NEO during our last fiscal year:2022: |
Mr. Wexner | | | $0 | | | $1,977 | | | $251,767 | | | $253,744 | Mr. Burgdoerfer | | | 9,500 | | | 2,664 | | | 291,749 | | | 303,913 | Mr. McGuigan | | | 0 | | | 2,582 | | | 426,187 | | | 428,769 | Ms. Milano | | | 0 | | | 2,400 | | | 189,011 | | | 191,411 | Mr. Bersani | | | 9,500 | | | 2,145 | | | 221,869 | | | 233,514 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | INCREMENTAL COMPANY COST TO PROVIDE SUPPLEMENTAL LIFE AND DISABILITY INSURANCE COVERAGE ($) | | | COMPANY CONTRIBUTIONS TO THE EXECUTIVES’ QUALIFIED RETIREMENT PLAN ACCOUNT ($) | | | FINANCIAL PLANNING BENEFIT ($) | | | EXECUTIVE PHYSICAL ($) | | | PERSONAL USE OF COMPANY AIRCRAFT ($)(a) | | | COMMUTING EXPENSE ALLOWANCE ($)(b) | | | RELOCATION ($)(c) | | | TRANSITION PAY ($)(d) | | | BOARD CASH RETAINER ($)(e) | | | TOTAL ($) | | | | | | | | | | | | | Ms. Boswell | | | 35 | | | | 0 | | | | 0 | | | | 0 | | | | 199,562 | | | | 0 | | | | 61,944 | | | | 0 | | | | 0 | | | | 261,541 | | | | | | | | | | | | | Ms. Arlin | | | 672 | | | | 30,720 | | | | 12,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 43,392 | | | | | | | | | | | | | Ms. Rosen | | | 840 | | | | 26,090 | | | | 14,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 40,930 | | | | | | | | | | | | | Ms. Riley | | | 672 | | | | 26,090 | | | | 14,000 | | | | 3,600 | | | | 0 | | | | 0 | | | | 509,115 | | | | 0 | | | | 0 | | | | 553,477 | | | | | | | | | | | | | Mr. Wu | | | 609 | | | | 13,890 | | | | 13,199 | | | | 3,600 | | | | 0 | | | | 0 | | | | 614,467 | | | | 0 | | | | 0 | | | | 645,765 | | | | | | | | | | | | | Ms. Nash | | | 84 | | | | 0 | | | | 14,000 | | | | 0 | | | | 1,107,815 | | | | 84,066 | | | | 0 | | | | 0 | | | | 16,484 | | | | 1,222,449 | | | | | | | | | | | | | Mr. Meslow | | | 228 | | | | 12,200 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 7,044,819 | | | | 0 | | | | 7,057,247 | |
| (a) | The amount reflects the aggregate incremental cost to the Company of Mses. Boswell’s and Nash’s personal use of the Company’s aircraft. The Company calculates the aggregate incremental cost to the Company based on an hourly charge for use of Company aircraft that includes variable charges such as fuel, salaries of flight personnel, landing and parking fees and variable maintenance as well as certain fixed fees associated with operating the Company’s aircraft. See “—Compensation Discussion and Analysis—Compensation for NEOs—Other Benefits and Perquisites—Perquisites” for additional information. Ms. Boswell’s personal usage of Company aircraft was solely related activities in connection with her relocation to the Columbus, Ohio region. See “—Compensation Discussion and Analysis—Compensation for NEOs—Other Benefits and Perquisites—Perquisites” for additional information. |
| (b) | In connection with trips to and from the Company’s headquarters in Columbus, Ohio during her interim service as an executive officer of the Company, Ms. Nash was provided an expense allowance of $22,500 per quarter (pro-rated for partial quarters) to offset hotel, ground transportation and meal expenses while working in Columbus, Ohio. |
| (c) | As part of Mses. Boswell’s and Riley’s and Mr. Wu’s relocation packages to Columbus, Ohio, (i) Ms. Boswell received $33,852 of relocation assistance with an additional $28,092 of related tax assistance in connection therewith; Ms. Riley received $433,166 of relocation assistance with an additional $75,949 of related tax assistance in connection therewith; and Mr. Wu received $562,156 of relocation assistance with an additional $52,311 of related tax assistance in connection therewith. Ms. Riley and Mr. Wu completed their relocations to the Columbus, Ohio region during fiscal 2022. The Company anticipates that Ms. Boswell will complete her relocation during fiscal 2023. According to the Company’s policy, if an executive voluntarily resigns or is terminated for cause (i) before the first anniversary of their hire date, the executive is obligated to reimburse the Company for 100% of the relocation benefits and (ii) before the second anniversary of their hire date, the executive is obligated to reimburse the Company for one-half of the relocation benefits. |
| (d) | Represents payments to Mr. Meslow pursuant to his Transition and Release Agreement in connection with his termination of employment. For additional details regarding Mr. Meslow’s Transition and Release Agreement, see “—Compensation Discussion and Analysis—Compensation for NEOs—Severance and Change in Control Agreements—Mr. Meslow” above. |
| (e) | For fiscal 2022, the Board approved Board Chair compensation of $500,000 annually, payable 50% in cash and 50% in stock. Ms. Nash ceased being a non-associate director on February 22, 2022. Board Cash Retainer reflects the pro-rated amount of Ms. Nash’s Board Chair annual cash compensation of $250,000 for her service as a non-associate director of the Company from January 30, 2022, through February 22, 2022, prior to Ms. Nash commencing her service as an interim executive officer. |
(7) | Ms. Nash ceased to serve as Interim Chief Executive Officer on December 1, 2022, and served as Executive Chair until the end of fiscal 2022. Effective as of January 29, 2023, Ms. Nash transitioned from her role as Executive Chair to become the independent, non-executive Chair of the Board. |
(8) | Mr. Meslow ceased to serve as Chief Executive Officer and terminated employment due to health reasons on May 12, 2022. |
2023 Proxy Statement | Bath & Body Works, Inc. 49
TABLE OF CONTENTS
Grants of Plan-Based Awards for Fiscal 2019 | | | | | | | Grants of Plan-based Awards for Fiscal 2022 | | | | | |
The following table provides information relating to plan-based awards and opportunities granted to the NEOs during the fiscal year ended February 1, 2020. Leslie H. Wexner | | | 1/29/2020 | | | | | | | | | | | | | | | | | | | | | | | | 30,233 | | | $23.22 | | | $126,676 | | | | 1/29/2020 | | | | | | | | | | | | | | | | | | | | | 15,116 | | | | | | | | | $297,785 | | | | 1/29/2020 | | | | | | | | | | | | 12,597 | | | 25,194 | | | 37,791 | | | | | | | | | | | | $496,322 | | | | | | | $300,000 | | | $1,500,000 | | | $3,000,000 | | | | | | | | | | | | | | | | | | | | | | Stuart B. Burgdoerfer | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | | | | 38,654 | | | $27.94 | | | $238,495 | | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | 19,327 | | | | | | | | | $472,738 | | | | 3/28/2019 | | | | | | | | | | | | 16,106 | | | 32,212 | | | 48,318 | | | | | | | | | | | | $787,906 | | | | | | | $324,000 | | | $1,620,000 | | | $3,240,000 | | | | | | | | | | | | | | | | | | | | | | Charles C. McGuigan | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | | | | 55,834 | | | $27.94 | | | $344,496 | | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | 27,917 | | | | | | | | | $682,850 | | | | 3/28/2019 | | | | | | | | | | | | 23,264 | | | 46,528 | | | 69,792 | | | | | | | | | | | | $1,138,075 | | | | | | | $468,000 | | | $2,340,000 | | | $4,680,000 | | | | | | | | | | | | | | | | | | | | | | Shelley M. Milano | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | | | | 38,654 | | | $27.94 | | | $238,495 | | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | 19,327 | | | | | | | | | $472,738 | | | | 3/28/2019 | | | | | | | | | | | | 16,106 | | | 32,212 | | | 48,318 | | | | | | | | | | | | $787,906 | | | | | | | $234,000 | | | $1,170,000 | | | $2,340,000 | | | | | | | | | | | | | | | | | | | | | | James L. Bersani | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | | | | 34,359 | | | $27.94 | | | $211,995 | | | | 3/28/2019 | | | | | | | | | | | | | | | | | | | | | 17,180 | | | | | | | | | $420,223 | | | | 3/28/2019 | | | | | | | | | | | | 14,317 | | | 28,633 | | | 42,950 | | | | | | | | | | | | $700,363 | | | | | | | $224,000 | | | $1,120,000 | | | $2,240,000 | | | | | | | | | | | | | | | | | | | | | |
2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | GRANT DATE | | | APPROVAL DATE | | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(3) (#) | | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) | | | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | | | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(4) ($) | | | THRESHOLD ($) | | | TARGET ($) | | | MAXIMUM ($) | | | THRESHOLD (#) | | | TARGET (#) | | | MAXIMUM (#) | | | | | | | | | | | | | | | Ms. Boswell | | | 12/1/2022 | | | | 11/1/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 92,443 | | | | | | | | | | | | 3,853,024 | | | | | | | | | | | | | | | | | | | | | | | | | | 110,868 | | | | 554,341 | | | | 1,108,682 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Arlin | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | 6,291 | | | | 12,581 | | | | 18,872 | | | | | | | | | | | | | | | | 570,674 | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,581 | | | | | | | | | | | | 579,355 | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | 5/11/2022 | | | | | | | | | | | | | | | | 12,560 | | | | 25,120 | | | | 37,680 | | | | | | | | | | | | | | | | 1,242,435 | | | | | | | | | | | | | | | | | | | | | | | | | | 184,000 | | | | 920,000 | | | | 1,840,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Rosen | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | 7,864 | | | | 15,727 | | | | 23,591 | | | | | | | | | | | | | | | | 713,377 | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,727 | | | | | | | | | | | | 724,228 | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | 5/11/2022 | | | | | | | | | | | | | | | | 20,934 | | | | 41,867 | | | | 62,801 | | | | | | | | | | | | | | | | 2,070,742 | | | | | | | | | | | | | | | | | | | | | | | | | | 320,000 | | | | 1,600,000 | | | | 3,200,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Riley | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | 6,815 | | | | 13,630 | | | | 20,445 | | | | | | | | | | | | | | | | 618,257 | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,630 | | | | | | | | | | | | 627,662 | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | 5/11/2022 | | | | | | | | | | | | | | | | 12,560 | | | | 25,120 | | | | 37,680 | | | | | | | | | | | | | | | | 1,242,435 | | | | | | | | | | | | | | | | | | | | | | | | | | 160,000 | | | | 800,000 | | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Wu | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | 5,767 | | | | 11,533 | | | | 17,300 | | | | | | | | | | | | | | | | 523,137 | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 3/9/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,533 | | | | | | | | | | | | 531,095 | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | 5/11/2022 | | | | | | | | | | | | | | | | 11,383 | | | | 22,765 | | | | 34,148 | | | | | | | | | | | | | | | | 1,125,957 | | | | | | | | | | | | | | | | | | | | | | | | | | 145,000 | | | | 725,000 | | | | 1,450,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Nash | | | 3/10/2022 | | | | 3/10/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 374,376 | | | | | | | | | | | | 17,412,228 | | | | | | | | | | | | | | | | | | | | | | | | | | 397,998 | | | | 1,989,989 | | | | 3,979,978 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Meslow(5) | | | | | | | | | | | 513,000 | | | | 2,565,000 | | | | 5,130,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-Equity Incentive Plan Awards represent the Threshold, Target and Maximum opportunities under the 2015 ICPP for the 2019fiscal 2022 Spring and Fall seasons. The actual amount earned for fiscal 2022 under this plan is disclosed in the 20192022 Summary Compensation Table in the “Non-Equity“Non-Equity Incentive Plan Compensation” column. Ms. Nash’s fiscal 2022 threshold, target and maximum amounts are pro-rated based on the number of days that she served in the Interim Chief Executive Officer role during the Spring season. Ms. Boswell’s fiscal 2022 threshold, target and maximum amounts are pro-rated based on the number of days that she served in the Chief Executive Officer role during the Fall season. |
| Equity Incentive Plan Awards were PSUs granted pursuant to the Company’s 20152020 Plan. The awards willGrant dates were established on the date the grants were approved (or otherwise deemed effective) by the HCC Committee. Awards granted on March 9, 2022 vest aton the endthird anniversary of the three year performance period,grant date. Awards granted on May 13, 2022, vest on the second anniversary of the grant date. The March 9, 2022, and May 13, 2022, awards are subject to continued employment through such vesting date, with the number of shares to be awarded determined based on the Company’s relative achievement of (i) revenue growth during the three yeartwo- or three-year performance period, as applicable, relative to the Performance Peer Group and (ii) cumulative operating income as a percentage of cumulative sales over the two- or three-year performance period, as applicable, in each case as set forth under the heading “Long-Term“—Compensation Discussion and Analysis—Compensation for NEOs—Compensation Components—Long-Term Equity Compensation”.Compensation.” |
| All Other Stock Awards were RSUs granted pursuant to the Company’s 20152020 Plan. Grant dates were established on the date the grants were approved (or otherwise deemed effective) by the CompensationHCC Committee. Awards granted on March 9, 2022 and December 1, 2022 vest 100%30% on each of the first and second anniversaries of the grant date, and 40% on the third anniversary of the grant date, subject to continued employment. |
| Option Awards were granted pursuant toemployment through each such date. Ms. Nash’s award vests 33% on each of the Company’s 2015 Plan. Optionfirst and second anniversaries of the grant dates were establisheddate, and 34% on the date the grants were approved by the Compensation Committee and the exercise price is the closing price of Common Stock on the grant date. Option Awards vest in three equal installments on the first through third anniversariesanniversary of the grant date, subject to Ms. Nash’s continued employment.service as a member of the Board through each such date. |
(4) | The value of stock and option awards reflects the grant date fair value under ASC Topic 718 Compensation—Stock Compensation for each award. Options are valued usingThe grant date fair values of the Black-Scholes option pricing modelPSUs granted to the NEOs during fiscal 2022 were calculated based on the probable outcome of the performance conditions as of the grant date, consistent with the following weighted average assumptionsestimate of aggregate compensation cost to be recognized over the service period determined as set forth inof the grant date under ASC Subtopic 718-10, excluding the effect of estimated forfeitures. See Note 16 to the Company’s financial statements filed in the 2019 10-K: dividend yield2022 10-K for the related assumptions for stock awards granted during fiscal 2022 and for a discussion of 4.4%, volatility of 40%, risk free interest rate of 2.2% and expected life of 3.2 years. RSUs and PSUs are valued based on the Company’s assumptions in determining the aggregate grant date fair market value of a sharethese awards. |
(5) | In light of Common Stock onhis announced departure in February 2022, Mr. Meslow was not eligible for payment under the date of grant, adjustednon-equity incentive plan and did not receive any long-term incentive compensation awards in fiscal 2022. |
50 Bath & Body Works, Inc. | 2023 Proxy Statement
| | | | | | | Outstanding Equity Awards at Fiscal Year-end for anticipated dividend yields.2022 | | | | | |
TABLE OF CONTENTS
Outstanding Equity Awards at Fiscal Year-End for Fiscal 2019The following table provides information relating to outstanding equity awards granted to the NEOs as of the fiscal year end, February 1, 2020. Leslie H. Wexner | | | 1/31/2013 | | | 161,559 | | | 0 | | | 0 | | | 45.03 | | | 1/31/2023 | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | 55,129 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | 1/30/2014 | | | 124,191 | | | 0 | | | 0 | | | 49.38 | | | 1/30/2024 | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | 42,585 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | 1/28/2015 | | | 124,539 | | | 0 | | | 0 | | | 81.11 | | | 1/28/2025 | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 18,426 | | | 7,899(1) | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | | | | | 1/27/2016 | | | 91,588 | | | 39,253(2) | | | 0 | | | 91.71 | | | 1/27/2026 | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 10,932 | | | 16,400(3) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | | | | | 1/25/2017 | | | 37,834 | | | 56,750(4) | | | 0 | | | 61.85 | | | 1/25/2027 | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 4,777 | | | 19,108(5) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | 1/30/2019 | | | 0 | | | 40,894(6) | | | 0 | | | 27.51 | | | 1/30/2029 | | | | | | | | | | | | | | | | | | | 1/29/2020 | | | 0 | | | 30,233(7) | | | | | | 23.22 | | | 1/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/28/2015 | | | 0 | | | 0 | | | 37,363(8) | | | 865,327 | | | | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 0 | | | 0 | | | 7,899(9) | | | 182,941 | | | | | | | | | | | | | | | | | | | | | | 1/27/2016 | | | 0 | | | 0 | | | 78,505(10) | | | 1,818,176 | | | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 16,400(11) | | | 379,824 | | | | | | | | | | | | | | | | | | | | | | 1/25/2017 | | | 0 | | | 0 | | | 75,667(12) | | | 1,752,448 | | | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 19,108(13) | | | 442,541 | | | | | | | | | | | | | | | | | | | | | | 1/30/2019 | | | 0 | | | 0 | | | 40,894(14) | | | 947,105 | | | | | | | | | | | | | | | | | | | | | | 1/29/2020 | | | 15,116(15) | | | 350,087 | | | 25,194(16) | | | 583,493 | Stuart B. Burgdoerfer | | | 3/31/2011 | | | 12,773 | | | 0 | | | 0 | | | 26.43 | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | 17,329 | | | 0 | | | 0 | | | 41.54 | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | 23,611 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | 22,797 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 9,819 | | | 4,211(1) | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 3,416 | | | 5,125(3) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 2,866 | | | 11,465(5) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 17,599(17) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 0 | | | 38,654(18) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 0 | | | 0 | | | 9,825(9) | | | 227,547 | | | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 18,791(11) | | | 435,200 | | | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 33,546(13) | | | 776,925 | | | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 0 | | | 17,599(19) | | | 407,593 | | | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 0 | | | 0 | | | 44,416(20) | | | 1,028,675 | | | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 19,327(21) | | | 447,613 | | | 32,212(22) | | | 746,030 |
ended January 28, 2023. Pursuant to the terms of the Employee Matters Agreement, dated as of August 2, 2021, by and between the Company and Victoria’s Secret & Co., each applicable stock option, RSU and PSU held by our associates (including the applicable NEOs) as of such date was equitably adjusted upon the occurrence of the separation of the Company and Victoria’s Secret & Co. The amounts included in the table below for our applicable NEOs reflect these equitable adjustments. The market value of the stock awards assumes a stock price of $44.65, the closing price of our Common Stock on January 27, 2023 (the last trading day during fiscal 2022).TABLE OF CONTENTS
Charles C. McGuigan | | | 3/31/2011 | | | 22,991 | | | 0 | | | 0 | | | 26.43 | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | 20,580 | | | 0 | | | 0 | | | 41.54 | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | 28,037 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | 27,071 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 14,395 | | | 6,171(1) | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 4,441 | | | 6,663(3) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 4,140 | | | 16,561(5) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 25,400(17) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 0 | | | 55,834(18) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 0 | | | 0 | | | 14,400(9) | | | 333,504 | | | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 24,427(11) | | | 565,729 | | | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 50,531(13) | | | 1,170,298 | | | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 0 | | | 25,400(19) | | | 588,264 | | | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 0 | | | 0 | | | 46,954(20) | | | 1,087,455 | | | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 27,917(21) | | | 646,558 | | | 46,528(22) | | | 1,077,588 | Shelley M. Milano | | | 3/31/2016 | | | 5,381 | | | 0 | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 2,106 | | | 8,427(5) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 13,794(17) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | | | | | 5/16/2018 | | | 0 | | | 3,839(23) | | | 0 | | | 34.19 | | | 5/16/2028 | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 0 | | | 38,654(18) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 19,662(24) | | | 455,372 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 13,794(25) | | | 319,469 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 5/16/2018 | | | 0 | | | 0 | | | 36,012(26) | | | 834,038 | | | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 19,327(21) | | | 447,613 | | | 32,212(22) | | | 746,030 | James L. Bersani | | | 3/31/2011 | | | 28,373 | | | 0 | | | 0 | | | 26.43 | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | 11,279 | | | 0 | | | 0 | | | 41.54 | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | 11,638 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | 9,260 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 4,029 | | | 1,728(1) | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 3,416 | | | 5,125(3) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 2,388 | | | 9,555(5) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 14,650(17) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 0 | | | 34,359(18) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/02/2015 | | | 4,033(27) | | | 93,404 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 10,079(28) | | | 233,430 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 28,662(24) | | | 663,812 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 14,650(25) | | | 339,294 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 48,787(29) | | | 1,129,907 | | | 0 | | | 0 | | | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 17,180(21) | | | 397,889 | | | 28,633(22) | | | 663,140 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | NAME | | GRANT DATE | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (# EXERCISABLE) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (# UNEXERCISABLE) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#) | | | OPTION EXERCISE PRICE ($) | | | OPTION EXPIRATION DATE | | | GRANT DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) | | | | | | | | | | | | | | Ms. Boswell | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/1/2022 | | | | 92,443 | (2) | | | 4,127,580 | | | | | | | | | | | | | | | | | | | | | | Ms. Arlin | | | 3/29/2013 | | | | 1,625 | | | | 0 | | | | 0 | | | | 33.80 | | | | 3/29/2023 | | | | 3/16/2021 | | | | 15,418 | (3) | | | 688,414 | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 2,854 | | | | 0 | | | | 0 | | | | 43.75 | | | | 3/31/2024 | | | | 5/19/2021 | | | | 9,664 | (4) | | | 431,498 | | | | | | | | | | | | | | | | | | | | | | | | | 5/7/2014 | | | | 568 | | | | 0 | | | | 0 | | | | 41.15 | | | | 5/7/2024 | | | | 8/18/2021 | | | | 4,710 | (5) | | | 210,302 | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 3,055 | | | | 0 | | | | 0 | | | | 73.58 | | | | 4/2/2025 | | | | 3/9/2022 | | | | 12,581 | (6) | | | 561,742 | | | | 12,581 | (10) | | | 561,742 | | | | | | | | | | | | | | | | | 3/31/2016 | | | | 5,292 | | | | 0 | | | | 0 | | | | 70.87 | | | | 3/31/2026 | | | | 5/13/2022 | | | | | | | | | | | | 25,120 | (11) | | | 1,121,608 | | | | | | | | | | | | | | | | | 3/31/2017 | | | | 6,905 | | | | 0 | | | | 0 | | | | 38.01 | | | | 3/31/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | | 13,964 | | | | 0 | | | | 0 | | | | 31.81 | | | | 3/21/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Rosen | | | 3/16/2021 | | | | 0 | | | | 12,334 | (1) | | | 0 | | | | 48.64 | | | | 3/16/2031 | | | | 9/28/2020 | | | | 33,403 | (7) | | | 1,491,444 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/16/2021 | | | | 6,168 | (3) | | | 275,401 | | | | 10,279 | (12) | | | 458,957 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/18/2021 | | | | 4,710 | (5) | | | 210,302 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 15,727 | (6) | | | 702,211 | | | | 15,727 | (10) | | | 702,211 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | | | | | | | | | 41,867 | (11) | | | 1,869,362 | | | | | | | | | | | | | | Ms. Riley | | | 3/16/2021 | | | | 0 | | | | 10,484 | (1) | | | 0 | | | | 48.64 | | | | 3/16/2031 | | | | 3/16/2021 | | | | 5,242 | (3) | | | 234,055 | | | | 8,738 | (12) | | | 390,152 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/18/2021 | | | | 4,710 | (5) | | | 210,302 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 13,630 | (6) | | | 608,580 | | | | 13,630 | (10) | | | 608,580 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | | | | | | | | | 25,120 | (11) | | | 1,121,608 | | | | | | | | | | | | | | Mr. Wu | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/19/2021 | | | | 9,664 | (4) | | | 431,498 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/18/2021 | | | | 1,767 | (5) | | | 78,897 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/9/2022 | | | | 11,533 | (6) | | | 514,948 | | | | 11,533 | (10) | | | 514,948 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/13/2022 | | | | | | | | | | | | 22,765 | (11) | | | 1,016,457 | | | | | | | | | | | | | | Ms. Nash | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/20/2020 | | | | 3,770 | (8) | | | 168,331 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/10/2022 | | | | 374,376 | (9) | | | 16,715,888 | | | | | | | | | | | | | | | | | | | | | | Mr. Meslow(13) | | | 4/2/2015 | | | | 7,133 | | | | 0 | | | | 0 | | | | 73.58 | | | | 5/12/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | | 10,583 | | | | 0 | | | | 0 | | | | 70.87 | | | | 5/12/2023 | | | | | | | | | | | | | | | | | | | | | |
(1)
| Options50% of the options vested on March 16, 2023, and the remaining 50% will vest on April 2, 2020.March 16, 2024. |
(2)
| OptionsShares vest 30% on December 1, 2023, 30% on December 1, 2024, and 40% on December 1, 2025. |
2023 Proxy Statement | Bath & Body Works, Inc. 51
(3) | 50% of the shares vested on March 16, 2023, and the remaining 50% will vest on January 27, 2021.March 16, 2024. |
(3) (4) | OptionsShares vest 50%43% on May 19, 2023, and 57% on May 19, 2024. |
(5) | Shares vest 43% on August 18, 2023, and 57% on August 18, 2024. |
(6) | 30% of the shares vested on March 31, 20209, 2023, and 50%the remaining will vest 30% on March 31, 2021. |
(4)
| Options vest 50% on January 25, 20219, 2024, and 50% on January 25, 2022. |
(5)
| Options vest 25%40% on March 31, 2020, 37.5%9, 2025. |
(7) | Shares vest 100% on September 28, 2023. |
(8) | Shares vest 100% on August 20, 2023. |
(9) | 33% of the shares vested on March 31, 2021 and 37.5% on March 31, 2022. |
(6)
| Options vest 20% on January 30, 2021, 20% on January 30, 2022, 30% on January 30,10, 2023, and 30% on January 30, 2024. |
(7)
| Optionsthe remaining will vest 33% on January 29, 2021, 33% on January 29, 2022March 10, 2024, and 33% on January 29, 2023. |
TABLE OF CONTENTS
| The time-based vesting conditions on these shares vested on January 28, 2020, however, the performance-based vesting restrictions are still subject to review and approval by our Compensation Committee. |
(9)
| Shares vest on April 2, 2020, subject to achievement of a performance condition. |
| The time-based vesting conditions for 50% of these shares vested on January 27, 2020, however, the performance-based vesting restrictions are still subject to review and approval by our Compensation Committee. Remaining shares vest on January 27, 2021, also subject to achievement of a performance condition. |
(11)
| Shares vest 50%34% on March 31, 2020 and 50% on March 31, 2021, subject to achievement of a performance condition.10, 2025. |
(10) | The time-based vesting conditions for 25% of these shares vested on January 25, 2020, however, the performance-based vesting restrictions are still subject to review and approval by our Compensation Committee. Remaining shares vest 50% on January 25, 2021 and 50% on January 25, 2022, also subject to achievement of a performance condition. |
| Subject to achievement of a performance condition,conditions assumed at target, 100% of these shares vest 25% on March 31, 2020, 37.5% on March 31, 2021 and 37.5% on March 31, 2022.9, 2025. |
(11) | Subject to achievement of a performance condition,conditions assumed at target, 100% of these shares vest 20% on January 30, 2021, 20% on January 30, 2022, 30% on January 30, 2023 and 30% on January 30,May 13, 2024. |
(15) (12) | Shares vest on January 29, 2023. |
(16)
| Shares vest on January 29, 2023, subject to achievement of a performance condition. |
(17)
| Options vest 20% on March 21, 2020, 20% on March 21, 2021, 30% on March 21, 2022 and 30% on March 21, 2023. |
(18)
| Options vest 33% on March 28, 2020, 33% on March 28, 2021, and 33% on March 28, 2022. |
| Subject to achievement of a performance condition, shares vest 20% on March 21, 2020, 20% on March 21, 2021, 30% on March 21, 2022 and 30% on March 21, 2023. |
| Subject to achievementconditions assumed at target, 100% of a performance condition, shares vest 20% on April 25, 2020, 20% on April 25, 2021, 30% on April 25, 2022 and 30% on April 25, 2023. |
(21)
| Shares vest on March 28, 2022. |
(22)
| Subject to achievement of a performance condition,these shares vest on March 28, 2022.16, 2024. |
(23) (13) | Options vest 20% on May 16,Outstanding stock options held by Mr. Meslow at the time of his termination of employment were treated in accordance with the existing terms of the 2020 20% on May 16, 2021, 30% on May 16, 2022Plan (and its predecessor plan) and 30% on May 16, 2023.the applicable award agreements thereunder (i.e., stock options that were vested at the time of his separation remain exercisable for one year following his separation date and unvested stock options were forfeited). |
(24)
| Shares vest 25% on March 31, 2020, 37.5% on March 31, 2021 | | | | | | Option Exercises and 37.5% on March 31, 2022.Stock Vested Information for Fiscal 2022 | | | | | |
(25)
| Shares vest 20% on March 21, 2020, 20% on March 21, 2021, 30% on March 21, 2022 and 30% on March 21, 2023. |
| Subject to achievement of a performance condition, shares vest 20% on May 16, 2020, 20% on May 16, 2021, 30% on May 16, 2022 and 30% on May 16, 2023. |
(27)
| Shares vest on April 2, 2020. |
(28)
| Shares vest 50% on March 31, 2020 and 50% on March 31, 2021. |
(29)
| Shares vest 20% on April 25, 2020, 20% on April 25, 2021, 30% on April 25, 2022 and 30% on April 25, 2023. |
TABLE OF CONTENTS
Option Exercises and Stock Vested Information for Fiscal 2019The following table provides information relating to Option Awardsoption awards exercised and RSU Awardsand PSU awards vested during the fiscal year ended February 1, 2020. Leslie H. Wexner | | | 0 | | | 0 | | | 150,622 | | | 3,382,970 | Stuart B. Burgdoerfer | | | 0 | | | 0 | | | 35,872 | | | 805,685 | Charles C. McGuigan | | | 0 | | | 0 | | | 48,711 | | | 1,094,049 | Shelley M. Milano | | | 0 | | | 0 | | | 17,472 | | | 481,878 | James L. Bersani | | | 0 | | | 0 | | | 24,745 | | | 680,210 |
2022. | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | NAME | | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | | | VALUE REALIZED ON EXERCISE ($)(1) | | | NUMBER OF SHARES ACQUIRED ON VESTING (#) | | | VALUE REALIZED ON VESTING ($)(2) | | | | | | | Ms. Boswell | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | Ms. Arlin | | | 0 | | | | 0 | | | | 47,865 | | | | 2,309,393 | | | | | | | Ms. Rosen | | | 0 | | | | 0 | | | | 2,019 | | | | 81,285 | | | | | | | Ms. Riley | | | 0 | | | | 0 | | | | 14,379 | | | | 596,079 | | | | | | | Mr. Wu | | | 0 | | | | 0 | | | | 4,899 | | | | 196,281 | | | | | | | Ms. Nash | | | 0 | | | | 0 | | | | 2,829 | | | | 109,369 | | | | | | | Mr. Meslow | | | 93,737 | | | | 1,479,167 | | | | 89,434 | | | | 4,431,580 | |
(1)
| Restricted Option Award Value Realized is calculated based on the difference between the sale price and the option exercise price. |
(2) | Stock Award Value Realized is calculated based on the closing stock price on the date the RSUs or PSUs vested. |
52 Bath & Body Works, Inc. | 2023 Proxy Statement
TABLE OF CONTENTS
Retirement and Other Post-Employment BenefitsNon-qualified Deferred Compensation for Fiscal 2019(1)Leslie H. Wexner | | | 59,527 | | | 234,903 | | | 1,890,521 | | | 0 | | | 35,816,769 | Stuart B. Burgdoerfer | | | 60,845 | | | 263,685 | | | 249,411 | | | 0 | | | 4,825,631 | Charles C. McGuigan | | | 91,620 | | | 398,123 | | | 390,056 | | | 0 | | | 7,537,439 | Shelley M. Milano | | | 48,670 | | | 165,163 | | | 52,757 | | | 0 | | | 1,203,784 | James L. Bersani | | | 43,531 | | | 193,805 | | | 514,052 | | | 0 | | | 9,888,432 |
| Amounts disclosed include non-qualified cash deferrals, Company matching contributions, retirement credits and earnings under the Company’s Supplemental Retirement Plan (a non-qualified defined contribution plan) and stock deferrals and related reinvested dividend earnings under the Company’s amended and restated 1993 Stock Option and Performance Incentive Plan (the “1993 Plan”), 2011 Plan and 2015 Plan. Executive Contributions and related matching Registrant Contributions represent 2019 calendar year deferrals and matches on incentive compensation payments earned based on performance for the Fall 2018 season, which was paid | | | | | | Potential Payments Upon Termination or Change in March 2019, and for the Spring 2019 season, which was paid in August 2019.Control | | | | | |
| All of the contributions are reported in the 2019 Summary Compensation Table under the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns. |
| Reflects the Company’s 200% match of associate contributions of up to 3% of base salary and bonus above the IRS qualified plan maximum compensation limit and the Company’s retirement contribution of 6% for less than five years of service or 8% for five or more years of service of compensation above the IRS qualified plan maximum compensation limit. Associates become fully vested in these contributions after six years of service. These contributions are also included under the “All Other Compensation” column of the 2019 Summary Compensation Table. |
(4)
| Non-qualified deferred cash compensation balances earn a fixed rate of interest determined prior to the beginning of each year. |
The portion of the earnings on deferred cash compensation that exceeds 120% of the applicable federal long-term rate in the amount of $676,394, $89,235, $139,555, $18,876 and $180,374 for Mr. Wexner, Mr. Burgdoerfer, Mr. McGuigan, Ms. Milano and Mr. Bersani, respectively, is disclosed in the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column of the 2019 Summary Compensation Table.
Amount includes dividends earned on deferred stock and RSU balances in the amount of $9,906 for Mr. Bersani. Dividends are reinvested into additional stock units based on the closing market price of Common Stock on the dividend payment date.
| Participants may elect to receive the funds in a lump sum or in up to ten annual installments following termination of employment, but generally may not make withdrawals during their employment. Deferrals under the Supplemental Retirement Plan, the 1993 Plan, the 2011 Plan and the 2015 Plan are unfunded. |
| Balance includes the value of deferred stock and RSUs at calendar year-end in the amount of $198,868 for Mr. Bersani. Value is calculated based on a stock price of $23.16 per share of Common Stock on January 31, 2020. |
Estimated Post-Employment Payments and Benefits
We have entered into certain agreements with our current NEOs that will require us to provide compensation in the event of a terminationcertain terminations of employment, including a termination following a change in control of our Company. Mr. Wexner is not covered by such an agreement but is entitled to certain termination compensation under the terms of our benefit and stock plans.
The following tables set forth the expected benefits to be received by each of the otherour current NEOs in the event of termination resulting from various scenarios, assuming a termination date of February 1, 2020January 28, 2023, and a stock price of $23.16,$44.65, the closing price of our Common Stock on January 31, 2020.27, 2023 (the last trading day during fiscal 2022). Each scenario relates to the single termination event described and amounts are not cumulative in situations where multiple scenarios may apply. TABLE OF CONTENTS
Assumptions and explanations of the numbers set forth in the tables below are set forth in additional text following the tables.(1) Leslie H. Wexner
Base Salary | | | $0 | | | 0 | | | $0 | | | $0 | | | $0 | | | $0 | Bonus(2) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | | Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 3,730,520 | | | 7,321,941 | | | 7,321,941 | | | 7,321,941 | | | 3,730,520 | Benefits and Perquisites(4) | | | 48,619 | | | 48,619 | | | 48,619 | | | 1,848,619 | | | 503,045 | | | 48,619 | Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | Total | | | $48,619 | | | $3,779,139 | | | $7,370,560 | | | $9,170,560 | | | $7,824,986 | | | $3,779,139 |
Stuart B. Burgdoerfer
Base Salary | | | $900,000 | | | $1,800,000 | | | $1,800,000 | | | $0 | | | $0 | | | $0 | Bonus(2) | | | 0 | | | 1,620,000 | | | 2,526,462 | | | 0 | | | 0 | | | 0 | Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 1,652,813 | | | 4,069,583 | | | 4,069,583 | | | 4,069,583 | | | 1,652,813 | Benefits and Perquisites(4) | | | 65,405 | | | 72,148 | | | 72,148 | | | 1,851,919 | | | 505,291 | | | 51,919 | Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | Total | | | $965,405 | | | $5,144,961 | | | $8,468,193 | | | $5,921,502 | | | $4,574,874 | | | $1,704,732 |
Charles C. McGuigan
Base Salary | | | $1,300,000 | | | $2,600,000 | | | $2,600,000 | | | $0 | | | $0 | | | $0 | Bonus(2) | | | 0 | | | 2,340,000 | | | 3,649,334 | | | 0 | | | 0 | | | 0 | Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 2,235,264 | | | 5,469,396 | | | 5,469,396 | | | 5,469,396 | | | 2,235,264 | Benefits and Perquisites(4) | | | 91,497 | | | 98,324 | | | 98,324 | | | 2,077,843 | | | 631,257 | | | 77,843 | Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | Total | | | $1,391,497 | | | $7,273,588 | | | $11,817,054 | | | $7,547,239 | | | $6,100,653 | | | $2,313,107 |
| | | | | | | | | | | | | | | | | | | | | | | INVOLUNTARY WITHOUT CAUSE OR VOLUNTARY WITH GOOD REASON ($) | | | INVOLUNTARY WITHOUT CAUSE FOLLOWING CHANGE IN CONTROL ($) | | | DEATH(6) ($) | | | DISABILITY ($) | | | VOLUNTARY OR RETIREMENT ($) | | Ms. Boswell | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | | 3,000,000 | | | | 3,000,000 | | | | — | | | | — | | | | — | | | | | | | | IC(2) | | | 5,700,000 | | | | 7,315,950 | | | | — | | | | — | | | | — | | | | | | | | Value of Vested Stock(3) | | | 114,661 | | | | 4,127,580 | | | | 4,127,580 | | | | 4,127,580 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | 48,257 | | | | 48,257 | | | | 2,000,000 | | | | 300,000 | | | | — | | | | | | | | Total | | | 8,862,918 | | | | 14,491,787 | | | | 6,127,580 | | | | 4,427,580 | | | | — | | Ms. Arlin(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | | 1,600,000 | | | | 1,600,000 | | | | — | | | | — | | | | — | | | | | | | | IC(2) | | | 1,840,000 | | | | 2,220,175 | | | | — | | | | — | | | | — | | | | | | | | Cash Retention(5) | | | 360,000 | | | | 360,000 | | | | 360,000 | | | | 360,000 | | | | — | | | | | | | | Value of Vested Stock(3) | | | 2,063,678 | | | | 3,575,304 | | | | 3,575,304 | | | | 3,575,304 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | 45,183 | | | | 45,183 | | | | 1,600,000 | | | | 300,000 | | | | — | | | | | | | | Total | | | 5,908,861 | | | | 7,800,662 | | | | 5,535,304 | | | | 4,235,304 | | | | — | | Ms. Rosen | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | | 2,000,000 | | | | 2,000,000 | | | | — | | | | — | | | | — | | | | | | | | IC(2) | | | 3,200,000 | | | | 3,676,102 | | | | — | | | | — | | | | — | | | | | | | | Cash Retention(5) | | | 600,000 | | | | 600,000 | | | | 600,000 | | | | 600,000 | | | | — | | | | | | | | Value of Vested Stock(3) | | | 3,920,047 | | | | 5,709,887 | | | | 5,709,887 | | | | 5,709,887 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | 48,257 | | | | 48,257 | | | | 2,020,945 | | | | 320,945 | | | | — | | | | | | | | Total | | | 9,768,304 | | | | 12,034,246 | | | | 8,330,832 | | | | 6,630,832 | | | | — | | Ms. Riley | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | | 1,600,000 | | | | 1,600,000 | | | | — | | | | — | | | | — | | | | | | | | IC(2) | | | 1,600,000 | | | | 2,032,346 | | | | — | | | | — | | | | — | | | | | | | | Cash Retention(5) | | | 360,000 | | | | 360,000 | | | | 360,000 | | | | 360,000 | | | | — | | | | | | | | Value of Vested Stock(3) | | | 1,892,892 | | | | 3,173,276 | | | | 3,173,276 | | | | 3,173,276 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | 48,257 | | | | 48,257 | | | | 1,611,112 | | | | 311,112 | | | | — | | | | | | | | Total | | | 5,501,149 | | | | 7,213,879 | | | | 5,144,388 | | | | 3,844,388 | | | | — | | Mr. Wu | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary(1) | | | 1,450,000 | | | | 1,450,000 | | | | — | | | | — | | | | — | | | | | | | | IC(2) | | | 1,450,000 | | | | 1,821,978 | | | | — | | | | — | | | | — | | | | | | | | Cash Retention(5) | | | 326,250 | | | | 326,250 | | | | 326,250 | | | | 326,250 | | | | — | | | | | | | | Value of Vested Stock(3) | | | 1,479,522 | | | | 2,556,748 | | | | 2,556,748 | | | | 2,556,748 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | — | | | | — | | | | 1,461,112 | | | | 311,112 | | | | — | | | | | | | | Total | | | 4,705,772 | | | | 6,154,976 | | | | 4,344,110 | | | | 3,194,110 | | | | — | |
2023 Proxy Statement | Bath & Body Works, Inc. 53
TABLE OF CONTENTS
Shelley M. Milano
Base Salary | | | $900,000 | | | $1,800,000 | | | $1,800,000 | | | $0 | | | $0 | | | $0 | Bonus(2) | | | 0 | | | 1,170,000 | | | 1,801,602 | | | 0 | | | 0 | | | 0 | Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 935,456 | | | 2,802,522 | | | 2,802,522 | | | 2,802,522 | | | 0 | Benefits and Perquisites(4) | | | 44,080 | | | 51,784 | | | 51,784 | | | 1,911,054 | | | 564,906 | | | 0 | Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | Total | | | $944,080 | | | $3,957,240 | | | $6,455,908 | | | $4,713,576 | | | $3,367,428 | | | $0 |
James L. Bersani
Base Salary | | | $800,000 | | | $1,600,000 | | | $1,600,000 | | | $0 | | | $0 | | | $0 | Bonus(2) | | | 0 | | | 1,120,000 | | | 1,694,307 | | | 0 | | | 0 | | | 0 | Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 1,339,366 | | | 3,520,876 | | | 3,520,876 | | | 3,520,876 | | | 1,339,366 | Benefits and Perquisites(4) | | | 49,900 | | | 56,727 | | | 56,727 | | | 2,036,246 | | | 464,660 | | | 36,246 | Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | Total | | | $849,900 | | | $4,116,093 | | | $6,871,910 | | | $5,557,122 | | | $3,985,536 | | | $1,375,612 |
| | | | | | | | | | | | | | | | | | | | | | | INVOLUNTARY TERMINATION OF SERVICE ($) | | | CHANGE IN CONTROL ($) | | | DEATH(6) ($) | | | DISABILITY ($) | | | VOLUNTARY RESIGNATION FROM THE BOARD ($) | | Ms. Nash | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | IC | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | Value of Vested Stock(3) | | | 16,884,219 | | | | 16,884,219 | | | | 16,884,219 | | | | 16,884,219 | | | | — | | | | | | | | Benefits and Perquisites(4) | | | — | | | | — | | | | 1,500,000 | | | | 300,000 | | | | — | | | | | | | | Total | | | 16,884,219 | | | | 16,884,219 | | | | 18,384,219 | | | | 17,184,219 | | | | — | |
(1)
| AssumesIn the event of a termination of the NEO’s employment by the Company other than for “Cause” or by the NEO for “Good Reason,” other than during the three-month period prior to or the 24-month period following a “Change in Control,” the NEO will receive continued payment of base salary for 24 months following the termination date in accordance with the Company’s normal payroll practices. If such termination occurs within the three-month period prior to or the 24-month period following a Change in Control, the NEO will receive a lump sum payment equal to two times his or her annual base salary. The foregoing payments are subject to such NEO’s execution and non-revocationof February 1, 2020.a release of claims. |
| Bonus amounts assumed at target. Under “Involuntary without CauseIn the event of a termination of the NEO’s employment by the Company other than for “Cause” or Voluntary with Good Reason” termination scenarios, actualby the NEO for “Good Reason,” other than during the three-month period prior to or the 24-month period following a “Change in Control,” the NEO will receive bonus payments would be equal tobased on the bonus paymentamounts the NEO would have received if he or sheunder the 2015 ICPP had the NEO remained employed withby the Company for four seasons following the NEO’s termination date plus a period of one year afterpro rata amount for the season in which the termination date of February 1, 2020. Under an “Involuntary Without Causeoccurs. If such termination occurs within the three-month period prior to or the 24-month period following a Change in Control” termination scenario, bonus paymentsControl, the NEO will bereceive a lump sum amount equal to the sum of the last four seasonal bonus payments received.received under the 2015 ICPP, plus a pro rata amount for the season in which the termination occurs (based on an average of the prior four payments received). For purposes of these tables, future bonus amounts are assumed at target levels. For Ms. Boswell, the seasonal target incentive award opportunity was used for purposes of calculating the last four seasonal bonus payments since she was not eligible for four seasonal payouts due to the date of her commencement of employment. |
| Reflects the value of the “double-trigger” acceleration of unvested RSUs, PSUs and stock options, that, subject to achievement of pre-established performance conditions, if applicable, would become vested based onRSUs and PSUs in the $23.16 fair market valueevent of a share of Common Stock on the last trading daytermination of the fiscal year (January 31, 2020).NEO’s employment by the Company without “Cause” or by the NEO for “Good Reason” within three months prior to or 24 months following a “Change in Control” or due to the NEO’s death or “Disability.” In the event of a termination of the NEO’s employment by the Company without “Cause” or by the NEO for “Good Reason” absent a “Change in Control,” unvested stock options, RSUs and PSUs will accelerate on a pro-rated basis. For purposes of these tables, PSUs are assumed achieved at target levels. Under the terms of Ms. Nash’s equity awards, her RSUs (i) will be forfeited upon her voluntary resignation from the Board or her voluntary determination not to stand for reelection to the Board prior to vesting and (ii) will vest in full upon her involuntary termination of service or termination of service or due to death or disability. |
| EstimatesReflects estimates for benefits and perquisites include the pro rata value of retirement plan contributions on earnings accrued uppayable to the NEOs upon a termination date andof employment, which includes an amount equal to two years of COBRA premiums (based on the continuationpremium rate in effect as of medical, dental and other insurance benefits.January 28, 2023). Under the “Death”death and “Disability”disability scenarios, includesthe applicable amounts include proceeds from life and disability insurance policies, as applicable, and the value of unvested retirement plan balances that would become vested.vested, as applicable. |
| In the case of the NEO’s termination of employment by the Company without “Cause,” by the NEO for “Good Reason,” due to the death of the NEO or the NEO’s disability, the amounts reflect remaining unpaid retention bonus amounts, as applicable. |
(6) | Generally, in the event of ana NEO’s death, subject to the achievement of any underlying performance conditions, any time-vesting conditions are deemed satisfied. Upon death, any outstanding RSUs or PSUs held by Mr. Wexner vest in full without regard to performance. RSUs and PSUs awarded to our other NEOs continue to be subject to continued vesting based on performance (except for RSUs grantedperformance. |
(7) | On April 6, 2023, the Company announced that Ms. Arlin will cease serving as Chief Financial Officer effective on July 29, 2023, or such earlier date on which her successor commences employment with the Company. If the Transition Date occurs before July 29, 2023, Ms. Arlin is expected to Mr. Bersaniremain a Company associate through July 29, 2023, and be available to provide transition services in connection with the appointment of a new Chief Financial Officer. Subject to Ms. Arlin’s continued employment in good standing through the Separation Date, on such date Ms. Arlin’s employment with the Company will be terminated without “cause” and she will become entitled to the payments and benefits applicable on such a termination under the terms of the executive severance agreement and the executive retention agreement between the Company and Ms. Milano, for whom there are no performance conditions attachedArlin, each dated May 13, 2022, in accordance with and subject to the RSU grants awarded in March or Aprilterms thereof, including the Company’s receipt of 2018).an effective release of claims against the Company from Ms. Arlin. |
| Ms. Milano has not met the age and/or service requirement to qualify for pro rata RSU or PSU vesting and retirement plan contributions under the retirement provisions of the 2011 Plan, the 2015 Plan and the qualified and non-qualified retirement plans. |
AssumptionsIn connection with Mr. Meslow’s termination of employment and Explanationshis entering into the Transition and Release Agreement, Mr. Meslow will receive an aggregate cash amount equal to $7.0 million, payable in accordance with the Company’s normal payroll practices over 24 months following his termination of Numbers in Tables employment. In addition, Mr. Meslow will be eligible to receive Company paid health coverage under the Company’s group health plan for up to 24 months, valued at $44,819 as of January 28, 2023. Because Ms. Nash’s appointment as Executive Chair and Interim Chief Executive Officer was intended to be temporary, the Company did not enter into an agreement with Ms. Nash that provides for severance protection.The CompensationHCC Committee retains discretion to provide, and in the past has provided, additional benefits to NEOs upon termination or resignation if it determines the circumstances so warrant. The tables do not include the payment of the aggregate balance of the NEO’s non-qualified deferred compensation that is disclosed in the Non-qualified Deferred Compensation for Fiscal 2019 table above.54 Bath & Body Works, Inc. | 2023 Proxy Statement
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Confidentiality, Non-CompetitionNon-competition and Non-SolicitationNon-solicitation Agreements As a condition to each NEO’s entitlement to receive certain severance payments and equity vesting acceleration upon certain termination scenarios, the NEO is required to execute a release of claims against usthe Company and shall be bound by the terms of certain restrictive covenants, including non-competition and non-solicitation agreements which prohibit the NEO from soliciting or diverting any current or potential employee,associates, customer or supplier or competing with any of ourthe Company’s businesses in which he or she has been employed for a period of one year from the date of termination. Termination Provisions—Definitions of Cause and Good Reason The agreements for all NEOs other thanMses. Boswell, Arlin, Rosen and Riley and Mr. Wexner, who does not have an agreement,Wu contain customary definitions of cause and good reason. “Cause” generally means that (1) for Mr. Burgdoerfer, he willfully failed to perform his or her duties with(i) the Company (other than a failure resulting from the NEO’s incapacity due to physical or mental illness), or for our other NEOs, he or sheapplicable NEO was grossly negligent in the performance of his or her duties with the Company; (2)Company (in each case, other than a failure resulting from his or her incapacity due to physical or mental illness); (ii) the NEO has pled “guilty” or “no contest” to or has been convicted of an act which is defined as a felony under federal or state law; or (3)(iii) the NEO engaged in misconduct in bad faith (or, in Mr. Burgdoerfer’s case “willful misconduct”) which could reasonably be expected to materially harm the Company’s business or its reputation. reputation; or (iv) the NEO committed or engaged in sexual harassment (including creation of a hostile work environment), gender discrimination and retaliation related to the foregoing or a violation of any policy of the Company relating to sexual harassment (including creation of a hostile work environment), gender discrimination and retaliation related to the foregoing.In addition, Messrs. BurgdoerferMses. Boswell, Arlin, Rosen and McGuiganRiley and Mr. Wu have the right to resign for “Good Reason” in case of certain events. “Good Reason” generally means (1)(i) for Ms. Boswell, the NEO’s failure to continue as Chief Executive Officer of the Company (or, in the event of a capacity originally contemplatedchange in control, the resulting ultimate parent company) and, for Mses. Arlin, Riley and Rosen and Mr. Wu, a material diminution in the NEO’s position as of the date set forth in the severance agreement; (2)(ii) the assignment to the NEO of any duties materially inconsistent with, the NEO’s position,and that constitute a material adverse change to, his or her duties, authority, responsibilities or reporting requirements as set out inor structure, including, for Mses. Arlin, Riley and Rosen and Mr. Wu, ceasing being a direct report of the Chief Executive Officer of the Company; (iii) his or her agreement; (3) a material reduction of or a delay in payment ofmandatory relocation to an office location more than fifty (50) miles from the NEO’s total cash compensation and benefits from those required to be provided; (4)principal office location in the requirement that, for Mr. Burgdoerfer the NEO be based outside of Columbus, Ohio and for Mr. McGuigan, the NEO be based outside of the United States, in each case other than for travel that is reasonably required to carry out the NEO’s duties; or (5)area; (iv) the failure by the Company to obtain the assumption in writing of its obligation to perform the agreement by a successor. successor; (v) for Ms. Boswell only, a reduction in her annual base salary, target annual bonus opportunity or target annual equity award opportunity (other than any across the board reduction in annual base salary not to exceed 15% of the annual base salary (and corresponding decrease in target annual bonus opportunity) that applies uniformly to Ms. Boswell and similarly situated executives of the Company); (vi) for Ms. Boswell only, the Company’s failure to renominate Ms. Boswell to the Board upon the expiration of her term of service as a member of the Board occurring during her employment; or (vii) for Ms. Boswell only, any other material breach by the Company of any material agreement between her and the Company.Payments Upon a Termination in Connection with a Change in Control A “Change in Control” of the Company will generally be deemed to have occurred upon the first to occur of any of the following events to occur: events: | (a) | any person, together with all affiliates, becomes a beneficial owner of securities representing 33% or more of the combined voting power of the voting stock then outstanding; |
| (b) | during any period of 24 consecutive months, individuals who at the beginning of such period constitute the Board (and any new director, whose election by the Board or nomination for election by the stockholders of the Company was approved by a vote of at least two-thirds of the directors then in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason to constitute a majority of directors then constituting the Board; |
| (c) | a reorganization, merger or consolidation of the Company is consummated, unless more than 50% of the outstanding shares of Common Stock resulting from such reorganization, merger or consolidation are beneficially owned by individuals and entities who beneficially owned Common Stockthe Company’s voting stock outstanding just prior to such reorganization, merger or consolidation; or |
(d)
| (d) | the consummation of a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company. |
Participants in the 20152020 Plan (and its predecessor plan) receive accelerated vesting of equity awards upon a Change in Control in the event of the participant’s termination of employment (other than for Cause) within 24 months of the Change in Control (“double trigger” vesting). 2023 Proxy Statement | Bath & Body Works, Inc. 55
In the event of a termination following a Change in Control, none of our NEOs are entitled to reimbursement or gross-up for any excise taxes that may be imposed under Section 280G of the Code. TABLE OF CONTENTS
Executive Summary
| We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s continued decline in performance, the Compensation Committee reduced our CEO’s target and actual compensation each year since 2016. These actions by the Compensation Committee, resulted in CEO compensation that decreased significantly more than the decline in performance. Specifically, when comparing fiscal 2019 CEO pay with performance:
| | | | | | 2022 Pay Ratio Disclosure | | | | | •
| | | On a one year basis (from February 1, 2019 to January 31, 2020) our stock price is down 15% and adjusted operating income is down 14% while actual CEO direct compensation is down 20%.
| | | •
| | | On a three year basis (from January 27, 2017 through January 31, 2020) our stock price is down 61% and adjusted operating income is down 40% while actual CEO direct compensation is down 79%.
| | | •
| | | On a five year basis (from January 30, 2015 through January 31, 2020) our stock price is down 73% and adjusted operating income is down 37% while actual CEO direct compensation is down 87%.
| | | | | | | | | CEO target and actual compensation for fiscal 2019 is near the lowest among our peers. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward.
| | | | | | | |
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Fiscal 2019 Director CompensationThe following table sets forth compensation earned by the individuals who served as directors of the Company during fiscal 2019(1).
Patricia S. Bellinger | | | $121,900 | | | $121,902 | | | $243,802 | E. Gordon Gee | | | 134,400 | | | 134,419 | | | 268,819 | Dennis S. Hersch(4) | | | 30,475 | | | 121,902 | | | 152,377 | Donna A. James | | | 164,400 | | | 144,422 | | | 308,822 | David T. Kollat(4)(5) | | | 115,675 | | | 156,911 | | | 272,586 | Michael G. Morris | | | 135,155 | | | 124,417 | | | 259,572 | Sarah E. Nash(4) | | | 96,369 | | | 111,906 | | | 208,276 | Robert H. Schottenstein | | | 124,400 | | | 124,417 | | | 248,817 | Anne Sheehan(4) | | | 87,406 | | | 111,906 | | | 199,313 | Stephen D. Steinour | | | 111,900 | | | 111,928 | | | 223,828 | Allan R. Tessler | | | 194,400 | | | 169,400 | | | 363,800 | Abigail S. Wexner | | | 141,900 | | | 131,905 | | | 273,805 | Raymond Zimmerman | | | 134,400 | | | 134,419 | | | 268,819 |
| Directors who are also associates receive no additional compensation for their service as directors. Our current Board’s compensation plan does not provide for stock option awards, non-equity incentive plan compensation, pension or non-qualified deferred compensation. At the end of four years of membership on the Board, each member must maintain ownership of Common Stock equal to the amount of Common Stock received as director compensation over the four-year period. |
| Directors receive an annual cash retainer of $111,900; directors receive an additional annual cash retainer of $12,500 for membership on the Audit and Compensation Committees and $10,000 for all other committee memberships; the Audit Committee Chair receives an additional $20,000; the Compensation Committee Chair and the Nominating & Governance Committee Chair each receives an additional $15,000; and other committee chairs receive $10,000; and the lead independent director receives an additional cash retainer of $15,000. |
| Directors receive an annual stock retainer worth $111,900; directors receive an additional annual stock grant worth $12,500 for membership on the Audit and Compensation Committees and worth $10,000 for other committee memberships; and the lead independent director receives an additional stock retainer of $15,000. Stock retainers were granted under the 2015 Plan. The number of shares issued is calculated based on the fair market value of Common Stock on the date the shares were issued. The value of stock awards reflects the aggregate grant date fair value, excluding estimated forfeitures, computed in accordance with ASC Topic 718 Compensation—Stock Compensation, for each award. See Note 20 to the Company’s financial statements filed in the 2019 10-K for a discussion of our assumptions in determining the aggregate grant date fair value of these awards. |
(4)
| Mr. Hersch and Dr. Kollat retired from the Board and Ms. Nash and Ms. Sheehan were each named to the Board effective May 16, 2019. |
(5)
| Cash payments to Dr. Kollat include $67,033 for consulting services provided to the Compensation Committee following his retirement from the Board. |
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COMPENSATION COMMITTEE REPORTThe Compensation Committee of the Board is composed of three directors who are independent, as defined under the NYSE listing standards. Additionally, each member of the Compensation Committee is a “non-employee director” within the meaning of Section 16b-3 under the Securities Exchange Act of 1934. The Compensation Committee reviews the CD&A on behalf of the Board.
The Compensation Committee has reviewed and discussed the CD&A with management, and based on the review and discussions, the Compensation Committee recommended to the Board that the CD&A be included in the Company’s annual report on Form 10-K for the year ended February 1, 2020 and the Company’s proxy statement.
| We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s continued decline in performance, the Compensation Committee reduced our CEO’s target and actual compensation each year since 2016. These actions by the Compensation Committee, resulted in CEO compensation that decreased significantly more than the decline in performance. Specifically, when comparing fiscal 2019 CEO pay with performance:
| | | | | | | | | •
| | | On a one year basis (from February 1, 2019 to January 31, 2020) our stock price is down 15% and adjusted operating income is down 14% while actual CEO direct compensation is down 20%.
| | | •
| | | On a three year basis (from January 27, 2017 to January 31, 2020) our stock price is down 61% and adjusted operating income is down 40% while actual CEO direct compensation is down 79%.
| | | •
| | | On a five year basis (from January 30, 2015 to January 31, 2020) our stock price is down 73% and adjusted operating income is down 37% while actual CEO direct compensation is down 87%.
| | | | | | | | | CEO target and actual compensation for fiscal 2019 is near the lowest among our peers. The unfolding COVID-19 crisis and its impact on the economy and our business will be taken into account in reviewing and setting the compensation of NEOs as we go forward.
| | | | | | | |
With these actions to reduce CEO pay, Mr. Wexner’s total compensation for fiscal 2019 was $3.8 million, which is well below the median of our peers. In addition, 2020 target pay is 37% below the median. In summary, there is alignment between our performance, our stockholders’ interests and our CEO’s pay. Accordingly, we recommend stockholders vote FOR the executive compensation program as outlined in Proposal 6.
| | | Compensation Committee
| | | | | | | | Michael G. Morris, Chair
| | | | E. Gordon Gee
| | | | Robert H. Schottenstein
|
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2019 PAY RATIO DISCLOSUREPay Ratio In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio Rule”), we are providing the following estimated information for 2019: the median of the annual total compensation of all our employees (except our CEO) was $13,490;
the annual total compensation of our CEO was $3,783,221; and
the ratio of these two amounts is 280 to 1. We believe that this ratio is calculated in a manner consistent with the requirements of the Pay Ratio Rule.
fiscal 2022: | • | | the median of the annual total compensation of all our employees (except our Chief Executive Officer) was $10,669; |
| • | | the annualized total compensation of our Chief Executive Officer was $9,964,565; and |
| • | | the ratio of these two amounts is 934 to 1. We believe that this ratio is calculated in a manner consistent with the requirements of the Pay Ratio Rule. |
Methodology for Identifying Our “Median Employee” Identifying and Adjusting ourOur Employee Population To identify the median of the annual total compensation of all of our employees (other than our Chief Executive Officer), we identified our total employee population as of February 1, 2020,January 28, 2023, the last day inof our fiscal year. Our employee population consisted of full-time, part-time, seasonal and temporary employees globally. Determining ourOur Median Employee To identify our median employee, we calculated the cash compensation paid during the fiscal year for the employee population, annualizing the cash compensation of any permanent employee who joined the Company during the fiscal year. We identified the median compensation amount using this compensation measure which was consistently applied to all our employees in the calculation. We then selected a reasonably representative employee with total compensation equal to the median compensation amount as our “median employee”. employee.”Using the methodologies described above, we determined that our median employee was a part-time, hourly employee. The total compensation of the median employee was $13,490. $10,669.Determination of Annual Total Compensation of ourOur Median Employee and our CEO Our Chief Executive OfficerOnce we identified our median employee, we then calculated such employee’s annual total compensation for 20192022 using the same methodology we used for purposes of determining the annual compensation of our NEOs for 2019. Our CEO’s2022.For the purpose of calculating our Chief Executive Officer’s total annual compensation used to determine our CEO pay ratio, as permitted by Commission rules, we elected to annualize the compensation of Ms. Boswell, who was serving as Chief Executive Officer on January 28, 2023, the determination date for identifying our median employee. Since Ms. Boswell was appointed Chief Executive Officer effective on December 1, 2022, we annualized her Salary and Non-Equity Incentive Plan Compensation as disclosed in the 2022 Summary Compensation Table, and added the disclosed values of her Bonus, Stock Awards and other components of All Other Compensation to arrive at a value of $9,964,565, used for the ratio of annual total compensation for 2019 for purposes of the Pay Ratio Rule is equalour Chief Executive Officer to the annual total compensation for our median employee: | • | | we annualized Ms. Boswell’s base salary to $1,500,000 (from the $213,462 reported in the 2022 Summary Compensation Table); and |
| • | | we annualized Ms. Boswell’s non-equity incentive plan compensation to $2,850,000 based on her annual target amount (from the $1,080,964 reported in the 2022 Summary Compensation Table). |
We did not annualize Ms. Boswell’s stock awards, as the full grant date fair value of those the one-time sign-on award is already included in Ms. Boswell’s fiscal 2022 compensation under Commission rules. Similarly, we did not annualize Ms. Boswell’s one-time cash sign-on bonus or her relocation benefit and aircraft usage in connection with her relocation from her residence in Florida, as those were benefits associated with a point in time and the full amount reportedis included in the “Total” column in the 2019 Summary Compensation Table. SECMs. Boswell’s fiscal 2022 compensation.The Commission’s rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. Our median employee worked approximately 2111 hours per week during fiscal 2019.2022. If the total compensation per hour earned by the median employee was extrapolated to full-time employment, the median employee’s annual total compensation would be approximately $25,834$37,100 and the ratio would be 146269 to 1. 56 Bath & Body Works, Inc. | 2023 Proxy Statement
| | | | | | | 2022 Pay Versus Performance Disclosure | | | | | |
The following table sets forth the compensation for our Principal Executive Officers (“PEO”) and the average compensation for our othernon-PEO NEOs, both as reported in the 2022 Summary Compensation Table and with certain adjustments to reflect the “compensation actually paid” (as defined under Commission rules) to such individuals for each of fiscal 2022, 2021 and 2020. The table also provides information on our cumulative total shareholder return (“TSR”), the cumulative TSR of our peer group, our net income and our adjusted operating income over such years in accordance with Commission rules. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SUMMARY COMPENSATION TABLE “SCT” TOTAL FOR PEO ($) | | | COMPENSATION ACTUALLY PAID TO PEO ($) (2) | | | SUMMARY COMPENSATION TABLE TOTAL FOR PEO | | | COMPENSATION ACTUALLY PAID TO PEO | | | SUMMARY COMPENSATION TABLE TOTAL FOR PEO ($) | | | COMPENSATION ACTUALLY PAID TO PEO | | | SUMMARY COMPENSATION TABLE TOTAL FOR PEO | | | COMPENSATION ACTUALLY PAID TO PEO | | | | | | | | | | | | | | 6,908,991 | | | | 7,029,815 | | | | 22,795,013 | | | | 21,646,899 | | | | 9,467,439 | | | | (115,380,126 | ) | | | N/A | | | | N/A | | | | | | | | | | | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 17,668,627 | | | | 90,562,269 | | | | N/A | | | | N/A | | | | | | | | | | | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 18,494,939 | | | | 56,713,648 | | | | 1,554,209 | | | | (1,902,884 | ) |
54
| | | | | | | | | | | | | | | | | | | | | | | | | | | AVERAGE SUMMARY COMPENSATION TABLE TOTAL FOR NON-PEO NEOS | | | AVERAGE COMPENSATION ACTUALLY PAID TO NON-PEO NEOS | | | VALUE OF INITIAL FIXED $100 INVESTMENT BASED ON: | | | | | | | | | | | | | PEER GROUP TOTAL SHAREHOLDER RETURN | | | | | | | | | | | | | | | | | | 6,048,032 | | | | 5,371,173 | | | | 248.05 | | | | 123.99 | | | | 800 | | | | 1,376 | | | | | | | | | | | | 5,340,605 | | | | 6,947,481 | | | | 297.58 | | | | 149.72 | | | | 1,333 | | | | 2,019 | | | | | | | | | | | | 3,550,502 | | | | 3,936,298 | | | | 178.17 | | | | 141.39 | | | | 844 | | | | 1,634 | |
(1) | The Company’s PEOs include the following: (i) for fiscal 2022, Gina Boswell, Sarah Nash and Andrew Meslow; (ii) for fiscal 2021, Andrew Meslow; and (iii) for fiscal 2020, Andrew Meslow and Leslie Wexner. |
| Bath & Body Works, Inc.
(2) | The “compensation actually paid” (“CAP”) for the PEOs and average CAP for the Company’snon-PEO NEOs in each of fiscal 2022, 2021 and 2020 reflect such individuals’ “Total Compensation” for the applicable year (as reported in the Summary Compensation Table for such year), as reflected in the table above, adjusted as set forth in the table below in accordance with Commission rules. The dollar amounts of CAP reflected in the table above do not reflect the actual amount of compensation earned by or paid to the PEOs or our other NEOs during the applicable fiscal year, but rather reflect each NEO’s CAP for such year determined pursuant to Commission rules. For information regarding the decisions made by the HCC Committee in regards to the Company’s PEOs’ and other NEOs’ compensation for fiscal 2022, see “—Compensation Discussion and Analysis” above. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL FROM SUMMARY COMPENSATION TABLE (“SCT”) ($) | | | SUBTRACT FAIR VALUE (“FV”) OF AWARDS GRANTED IN YEAR FROM SCT(a) ($) | | | ADD FV OF EQUITY AWARDS GRANTED DURING THE COVERED FISCAL YEAR REMAINING OUTSTANDING AND UNVESTED AT THE END OF THE COVERED FISCAL YEAR(a) ($) | | | DURING THE COVERED FISCAL YEAR AND VESTED DURING THE COVERED FISCAL YEAR(a) ($) | | | FV OF ALL THE EQUITY AWARDS GRANTED DURING ANY PRIOR FISCAL YEAR AND VESTED DURING THE FISCAL YEAR(a) ($) | | | CHANGE IN FV OF EQUITY AWARDS GRANTED DURING ANY PRIOR FISCAL YEAR THAT FAIL TO MEET THE APPLICABLE VESTING CONDITIONS DURING THE COVERED FISCAL YEAR(a) ($) | | | CHANGE IN FV OF EQUITY AWARDS GRANTED DURING ANY PRIOR FISCAL YEAR REMAINING OUTSTANDING AND UNVESTED AS OF THE END OF THE COVERED FISCAL YEAR(a) ($) | | | COMPENSATION ACTUALLY PAID ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ms. Boswell | | | 6,908,991 | | | | 3,853,024 | | | | 3,973,847 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 7,029,815 | | | | | | | | | | | Ms. Nash | | | 22,795,013 | | | | 17,412,228 | | | | 16,342,298 | | | | 0 | | | | (43,538 | ) | | | 0 | | | | (34,646 | ) | | | 21,646,899 | | | | | | | | | | | Mr. Meslow | | | 9,467,439 | | | | 0 | | | | 0 | | | | 0 | | | | (451,632 | ) | | | (124,395,933 | ) | | | 0 | | | | (115,380,126 | ) | | | | | | | | | | | | | 6,048,032 | | | | 2,642,339 | | | | 2,409,483 | | | | 0 | | | | (141,718 | ) | | | 0 | | | | (302,285 | ) | | | 5,371,173 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Meslow | | | 17,668,627 | | | | 7,348,518 | | | | 6,102,879 | | | | 0 | | | | 1,405,205 | | | | 0 | | | | 72,734,076 | | | | 90,562,269 | | | | | | | | | | | | | | 5,340,605 | | | | 1,126,764 | | | | 1,023,384 | | | | 0 | | | | 735,793 | | | | (480,289 | ) | | | 1,454,751 | | | | 6,947,481 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mr. Meslow | | | 18,494,939 | | | | 12,330,555 | | | | 47,762,216 | | | | — | | | | (287,960 | ) | | | — | | | | 3,075,007 | | | | 56,713,648 | | | | | | | | | | | Mr. Wexner | | | 1,554,209 | | | | — | | | | — | | | | — | | | | (1,416,835 | ) | | | (3,181,827 | ) | | | 1,141,568 | | | | (1,902,884 | ) | | | | | | | | | | | | | 3,550,502 | | | | 266,664 | | | | 318,622 | | | | — | | | | (218,354 | ) | | | (760,169 | ) | | | 1,312,361 | | | | 3,936,298 | |
| (a) | Represents the fair value of equity awards calculated in accordance with ASC Topic 718 Compensation—Stock Compensation. |
| | Stock options are valued on the applicable measurement date using the Black-Scholes option pricing model. Valuation assumptions are based on an expected term calculated as the product of (i) the original expected term multiplied by (ii) the ratio of remaining and original terms. Dividend yield is calculated based on the projected dividend at the time of measurement over the expected term. Volatility is calculated based on historical volatility at the time of measurement for the same time period as the expected term. The risk-free interest rate is based on U.S. treasury rates on the measurement date for a time period that most closely aligns with the expected term. |
| | RSUs and PSUs are valued based on the fair market value of a share of Common Stock on the measurement date, adjusted for anticipated dividend yields. PSU value is determined based on the probable outcome of the performance conditions as of the applicable measurement date. |
(3) | The average compensation for thenon-PEO NEOs reflects the compensation for the following individuals: (i) for fiscal 2022, Wendy Arlin, Julie Rosen, Deon Riley and Michael Wu; (ii) for fiscal 2021, Wendy Arlin, James Bersani, Julie Rosen, Deon Riley and Stuart Burgdoerfer; and (iii) for fiscal 2020, Stuart Burgdoerfer, James Bersani, Julie Rosen, Deon Riley, Charles McGuigan and Shelley Milano. |
(4) | TSR is cumulative for the measurement periods beginning on February 2, 2020, and ending on the last day of each of fiscal 2022, 2021 and 2020, calculated in accordance with Item 201(e) of RegulationS-K, including reinvestment of dividends. The Company’s stock prices prior to August 3, 2021, have been adjusted to give effect to thespin-off of Victoria’s Secret & Co. Peer group TSR for purposes of this table is calculated based on the Standard & Poor’s 500 Retail Composite Index. |
(5) | Adjusted operating income is anon-GAAP financial measure that reflects the Company’s operating income excluding certain special items. Attached as Appendix A are reconciliations of the Company’s fiscal 2022, 2021 and 2020 adjusted operating income to the Company’s fiscal 2022, 2021 and 2020 GAAP operating income, as well as other important disclosures regardingnon-GAAP financial measures. For fiscal 2022, we did not make any adjustments to operating income; therefore, for fiscal 2022, adjusted operating income is equal to our GAAP operating income. |
Bath & Body Works, Inc. |
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENTMost Important Performance Measures for Fiscal 2022 The following table sets forth a list of the performance measures that we view as the “most important” measures for linking our PEO and other NEO pay to performance for fiscal 2022. While these financial measures are considered the most important measures, additional financial and other measures were also considered to align pay and performance as further described under the heading “—Compensation Discussion and Analysis” above. | | | Adjusted operating income | | Revenue growth | | Cumulative operating income as a percentage of cumulative sales (“operating income margin”) |
From the above list of performance measures, we view adjusted operating income as our most important financial performance measure used to link compensation actually paid to our PEOs and other NEOs to Company performance for fiscal 2022. Adjusted operating income is a key component of the Company’s performance-based incentive compensation program and is a performance measure over which our NEOs can have significant impact. In addition, adjusted operating income is directly linked to the Company’s long-term strategic growth plan and performance that drive stockholder value and is highly correlated with fluctuations in our stock price. As for the other performance measures listed in the table above, revenue growth and operating income margin are equally weighted metrics in our long-term performance-based incentive compensation program for fiscal 2022, which was a key component of our NEOs’ pay in 2022. For additional information regarding how the above listed performance measures were utilized as part of our executive compensation program in fiscal 2022, see “—Compensation Discussion and Analysis.” Relationship Between CAP and TSR, Net Income and Adjusted Operating Income The following charts illustrate the relationship between CAP and each of the Company’s total shareholder return, net income and adjusted operating income over the Company’s fiscal 2020, 2021 and 2022. As reflected in the charts below, CAP increased in years of positive TSR performance and decreased in 2022 when the Company had negative TSR performance. This alignment of pay and performance reflects our compensation structure that emphasizes performance-based compensation. The chart below shows that the cumulative amount of CAP to our PEOs and the average amount of CAP to our other NEOs are aligned with the Company’s TSR over the covered fiscal years. We believe this is due primarily to the significant emphasis we place on long-term equity incentive awards in our executive compensation program, the values of which are tied directly to our stock price performance, as well as the Company’s financial performance. | Bath & Body Works, Inc.
The chart below reflects the close alignment of CAP with our net income. As shown in the chart below, the Company’s net income increased in fiscal 2021 compared to fiscal 2020 but decreased in fiscal 2022 when the challenging macroeconomic environment, including inflationary pressure, negatively impacted our cost structure and customer spending. The decrease in net income in fiscal 2022 is directly tied to corresponding decreases in our PEOs’ cumulative CAP and the average of our other NEOs’ CAP in fiscal 2022. CAP vs. Adjusted Operating Income As reflected in the chart below, the trend in our adjusted operating income performance during fiscal 2020 through 2022 is reflected in our PEOs’ cumulative CAP and the average of our other NEOs’ CAP during the same period. Adjusted operating income is a key company performance measure utilized under our short-term performance-based incentive compensation program, as well as our long-term equity incentive program (in the form of operating income margin). In fiscal 2020 and 2021, adjusted operating income performance exceeded expectations resulting in short-term incentive payouts above target. In fiscal 2022, short-term cash incentive payments to our NEOs reflected a lower percentage of target compared to prior years, which aligned with our adjusted operating income performance. Bath & Body Works, Inc. |
Relationship Between Company TSR and Peer Group TSR As shown in the chart below, the Company’s three-year cumulative TSR has outperformed companies included in our industry index (S&P 500 Retail Composite Index). | Bath & Body Works, Inc.
Stockholder Proposal Regarding an Independent Board Chairman (Item 5 on the Proxy Card) John Chevedden, 2215 Nelson Ave., No. 205, Redondo Beach, California 90278, owner of 90 shares of Common Stock, has notified the Company that he intends to submit the following proposal at the 2023 annual meeting: Proposal 5 – Independent Board Chairman Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO. Whenever possible, the Chairman of the Board shall be an Independent Director. The Board has the discretion to select a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board on an accelerated basis. It is a best practice to adopt this policy soon. However this policy could be phased in when there is a contract renewal for our current CEO or for the next CEO transition. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company. The job of the CEO is to manage the company. The job of the Chairman is to oversee the CEO and management. | • | | There is no statement that the lead director has a key role for the strategic direction of the company. |
| • | | There is no example of a lead director prevailing when there is a disagreement between the Chairman/CEO and lead director. |
A Lead Director is no substitute for an independent Board Chairman. A lead director is not responsible for the strategic direction of the company. And a Chairman/CEO can ignore the advice and feedback from a lead director. According to the 2022 Bath & Body Works annual meeting proxy the Lead Director has limited duties and lacks in having exclusive powers. These are some of the vague principle tasks of the lead director according to the 2022 Bath & Body Works annual meeting proxy that allow for these conclusions: | • | | serves as a liaison between the Executive Chair and independent directors, a role that others can play. |
| • | | can only approve of information sent to the Board, no role in directing what specific information is initiated. |
| • | | reviews proposed Board meeting agendas, a review that can be ignored. |
| • | | approves meeting schedules but only to make sure there is enough time. |
| • | | has the authority to call meetings of some of the directors, a role that others can play. |
Plus management fails to give shareholders enough information on this topic to make a more informed decision. There is no management comparison of the exclusive powers of the Office of the Chairman and the de minimis exclusive powers of the Lead Director. Please vote yes: Independent Board Chairman – Proposal 5 62 Bath & Body Works, Inc. | 2023 Proxy Statement
RESPONSE TO STOCKHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD CHAIRMAN The Board is committed to strong corporate governance and independent leadership on the Board. The Company’s Nominating & Governance Committee charter already requires that two separate people hold the office of the Chair and the office of the Chief Executive Officer. Our Board Chair is also an independent director. As such, the Board has determined that support for this proposal is unwarranted and further believes that requiring that the Chair be independent is not necessary to promote independent Board oversight and is not in the best interest of the Company and its stockholders. The Company believes that it is in the best interests of its stockholders to retain flexibility to determine the optimal leadership structure at any given time. In addition, the Company believes that the independence of our Board committees and other strong corporate governance practices ensure and encourage independent oversight. Consequently, the Board recommends a vote AGAINST the proposal. Key Reasons to Vote Against this Proposal. | • | | The Company already has an independent Board Chair. |
| • | | The Company’s Nominating & Governance Committee charter already requires that our Chair be distinct from our Chief Executive Officer. |
| • | | If our Chair is not an independent director, our corporate governance principles require that there will be a Lead Independent Director with robust leadership responsibilities to provide further independent oversight. |
| • | | The Board believes that it should retain the flexibility to maintain a leadership structure that best serves the interests of the Company at a particular time. |
| • | | The Company’s existing governance practices and current leadership structure promote effective and independent Board oversight. |
| • | | The Company’s strong corporate governance policies, including stockholders’ right to call a special meeting and our robust stockholder outreach program, promote effective and independent Board oversight and accountability to stockholders. |
The Company already has an independent Chair. The Board already has an independent Chair. Its current Chair, Sarah Nash, is independent under the applicable Commission and NYSE standards. Since May 2020, Ms. Nash has been the independent Chair of our Board, except when she temporarily served as the non-independent Executive Chair from February 2022 until January 28, 2023, when the Company was identifying a permanent Chief Executive Officer and then to provide for a smooth transition. From March 10, 2022, through January 28, 2023, the Board appointed a Lead Independent Director to provide further independent oversight. The Board believes that Ms. Nash’s strong leadership and governance experience enable her to lead the Board effectively and independently. As Chair, Ms. Nash presides at all meetings of stockholders and of the Board and, along with the rest of our directors, ensures that the Board’s time and attention are focused on the effective oversight of the matters most critical to the Company. Our Nominating & Governance Committee charter already requires that our Chair be distinct from our Chief Executive Officer. We therefore believe that it is unnecessary to adopt any additional policy or further amend our governing documents to separate these offices as suggested in the proposal. If the Board were to elect a non-independent Chair in the future, the Board will designate a Lead Independent Director. Our corporate governance principles provide that if the role of Chair were to be filled by a director that does not qualify as an independent director under the relevant standards, which again is not the current situation, the Board will designate a Lead Independent Director. If designated, our corporate governance principles provide that the Lead Independent Director will have the following roles and responsibilities: | • | | presiding at all meetings of the Board at which the Chair is not present, including executive sessions of our independent and non-management directors; |
| • | | serving as a liaison between our Chair and our independent and non-management directors; |
| • | | approving information sent to the Board; |
| • | | collaborating with the Chair to set meeting agendas for the Board; |
| • | | approving meeting schedules to assure that there is sufficient time for discussion of all agenda items; |
| • | | having the authority to call meetings of the independent and non-management directors; |
2023 Proxy Statement | Bath & Body Works, Inc. 63
| • | | if requested by major stockholders, ensuring that he or she is available for consultation and direct communication; |
| • | | assisting the Chair and the Board in assuring compliance with and implementation of the Company’s corporate governance principles; and |
| • | | performing any other duties that may be deemed appropriate or necessary by the Board. |
The Board believes that it should retain the flexibility to maintain a leadership structure that best serves the interests of the Company at a particular time. The Company’s governing documents provide the Board flexibility to determine the appropriate leadership structure for the Company, including whether the Chair should be independent. The most effective leadership structure at a given time will depend on a variety of factors, including the Company’s strategic direction, the Board’s assessment of its leadership needs at the time and the best interests of the Company’s stockholders. While the Board believes that it is currently appropriate to have an independent Chair, it also believes that it should retain the ability to determine a leadership structure that best serves the interests of the Company and its stockholders at a particular time in accordance with its fiduciary duties, rather than pursuant to an inflexible policy established in advance. The stockholder proposal mandates a one-size-fits-all form of Board leadership that, if adopted, would unnecessarily limit the Board’s options in applying the leadership structure it needs to ensure appropriate alignment with the Company’s evolving business and strategic needs and selecting the most appropriate individual to lead the Board at any given time. The Board has deep knowledge of the strategic goals of the Company, the unique opportunities and challenges it faces, and the various capabilities of our directors and management, and is therefore best positioned to determine the most effective leadership structure to protect and enhance long-term stockholder value. The Company’s existing governance practices and current leadership structure promote effective and independent Board oversight. A policy requiring an independent Chair is also unnecessary given the Company’s strong governance practices and policies that encourage independent Board oversight and accountability to stockholders. The Company’s strong corporate governance policies and practices, including the items outlined below, empower our independent directors to effectively oversee management. | • | | We have a diverse and experienced Board whose members are elected annually by our stockholders. |
| • | | Our corporate governance principles require that a majority of our directors be independent, and that our Audit Committee, HCC Committee and Nominating & Governance Committee consist solely of independent directors. |
| • | | All of our current directors, except our Chief Executive Officer, are independent, and all of our Board committees are composed entirely of independent directors. |
| • | | The independent directors of the Board meet in regular executive sessions, providing opportunities for discussion regarding matters that they deem relevant or appropriate. |
| • | | All directors have full access to all members of management, other Company associates and outside advisors. |
| • | | Board composition and tenure decisions are in part based on feedback from our annual Board and Committee evaluations. |
| • | | As a result of the Company’s Board refreshment efforts, more than 75% of the Company’s directors having joined the Board since 2019, and 12 of the Company’s 13 directors are independent, resulting in a balanced range of tenures and ensuring both continuity and fresh perspectives among our Board members. |
The Company’s strong corporate governance policies, including our stockholders’ right to call a special meeting and our robust stockholder outreach program, promote effective and independent Board oversight and accountability to stockholders. The Board believes that the Company’s corporate governance practices and policies provide transparency and accountability of the Board to all Company stockholders and allow stockholders to advance their points of view: | • | | Right to Call Special Meeting. Our Bylaws permit stockholders holding at least 25% of our outstanding shares of Common Stock to call a special meeting. |
| • | | Proxy Access for Director Nominations. The Company has adopted a proxy access bylaw that allows any stockholder (or group of up to 20 stockholders) owning 3% or more of the Company’s outstanding Common Stock continuously for at least three years to nominate and include in the Company’s proxy statement director nominees constituting the greater of two directors or up to 20% of the Board. |
| • | | Stockholder Nomination Rights. Our Bylaws permit stockholders to nominate directors for consideration at the annual meeting of stockholders. |
64 Bath & Body Works, Inc. | 2023 Proxy Statement
| • | | Annual Elections of Directors. All of the Company’s directors are elected on an annual basis and by majority vote of the stockholders in uncontested elections, and stockholders can remove directors with or without cause. |
| • | | Majority Voting for Charter and Bylaw Amendments. The Company’s charter and bylaw provisions do not have supermajority voting provisions—stockholders can approve binding charter and bylaw amendments with a majority vote. |
The Company also has a robust stockholder outreach program that enables us to understand and respond to stockholder concerns and views on important issues, including corporate governance matters. In fiscal 2022, we met with approximately 55 of our stockholders representing more than 60% of our shares outstanding as of December 31, 2022, as well as other key stakeholders and prospective investors. We believe these meetings strengthen our relationship with our stockholders and reinforce our commitment to incorporate stockholder feedback into various decisions made by the Board and management. In light of the Company’s strong corporate governance practices and policies and the need to retain the flexibility to maintain a leadership structure that best serves the interests of the Company at a particular time, the Board believes that adoption of the stockholder proposal is unnecessary and is not in the best interests of the Company and its stockholders. WE RECOMMEND THAT YOU VOTE “AGAINST” THE ADOPTION OF THIS STOCKHOLDER PROPOSAL REGARDING AN INDEPENDENT BOARD CHAIR. Beneficial Ownership of Common Stock The following table includes certain information about the securities ownership of all directors (and nominees) of the Company, the executive officers of the Company named in the “20192022 Summary Compensation Table”Table above and all directors and current executive officers of the Company as a group. Name of Beneficial Owner
| | | Number of Shares of Common
Stock Beneficially
Owned(a)(b)
| | | Percent of Class
| | | Patricia S. Bellinger
NAME OF BENEFICIAL OWNER | | NUMBER OF SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)(2) | 11,271(d)
| | PERCENT OF CLASS | *
| James Bersani
| | | 213,848(c)(e)
| | | *
| Stuart B. Burgdoerfer
Wendy Arlin | | | 161,105(c) 96,961 | (3) | | | * | | E. Gordon Gee
| | | 24,349(d)
| | | *
| Donna A. James
Patricia Bellinger | | | 65,305(d) 33,141 | (3) | | | * | | Charles C. McGuigan
| | | 322,899(c)(g)
| | | *
| Shelley B. Milano
Alessandro Bogliolo | | | 44,110(c) 3,463 | (3) | | | * | | Michael G. Morris
| | | 24,791(d)
| | | *
| Sarah E. Nash
Gina Boswell | | | 5,251(d) — | | | | * | | Robert H. Schottenstein
| | | 15,865(d)(j)
| | | *
| Anne Sheehan
Lucy Brady | | | 4,086(d) — | | | | * | | Stephen D. Steinour
| | | 16,277(d)
| | | *
| Allan R. Tessler
Francis Hondal | | | 116,501 5,154 | (3) | | | * | | Abigail S. Wexner
| | | 14,557,292(f)
| | | 5.26%
| Leslie H. Wexner
Thomas Kuhn | | | 48,121,098(c)(g)(h) 5,000 | | | 17.40%
| * | | Raymond Zimmerman
| | | 164,835(d)(i)
| | | *
| | | | 5,154 | (3) | | | * | | | | | Andrew Meslow | | | 16,675 | (4) | | | * | | | | | Michael Morris | | | 75,847 | (3) | | | * | | | | | Sarah Nash | | | 89,842 | | | | * | | | | | Juan Rajlin | | | 3,463 | (3) | | | * | | | | | Deon Riley | | | 23,868 | (3) | | | * | | | | | Julie Rosen | | | 11,535 | (3) | | | * | | | | | Stephen Steinour | | | 61,143 | (3)(5) | | | * | | | | | J.K. Symancyk | | | 4,822 | (3) | | | * | | | | | Steven Voskuil | | | — | | | | * | | | | | Michael Wu | | | 9,862 | (3) | | | * | | | | | All directors and current executive officers as a group (18 people) | | | 49,311,591(c)-(i) 443,187 | (3)(5) | | 17.83%
| * | |
2023 Proxy Statement | Bath & Body Works, Inc. 65
(1) | Unless otherwise indicated, each named person has voting and investment power over the listed shares and such voting and investment power is exercised solely by the named person or shared with a spouse. None of the listed shares have been pledged as security or otherwise deposited as collateral. |
(b) (2) | Reflects beneficial ownership of shares of Common Stock, and shares outstanding, as of February 1, 2020.March 31, 2023. |
(3) | Includes the following number of shares issuable within 60 days of February 1, 2020,March 31, 2023, upon the exercise or vesting of outstanding stock awards: Ms. Arlin, 36,779; Ms. Bellinger, 3,091; Mr. Bersani, 104,852;Bogliolo, 3,091; Ms. Hondal, 3,091; Ms. Lee, 3,091; Mr. Burgdoerfer, 114,442;Morris, 3,091; Mr. McGuigan, 152,817;Rajlin, 3,091; Ms. Milano, 32,911;Riley, 5,243; Ms. Rosen, 6,169; Mr. Wexner, 684,537;Steinour, 3,091; Mr. Symancyk, 3,091; Mr. Wu, 4,141; and all directors and current executive officers as a group, 1,089,559.88,592. |
(4) | Includes 4,589 shares held in the following number of deferred stock units creditedBath & Body Works, Inc. 401(k) Savings and Retirement Plan over which Mr. Meslow has investment power but does not have voting power except to directors’ accounts under the 2003 Stock Award and Deferred Compensationextent permitted by the Company’s Retirement Plan Committee from time to time. |
(5) | Includes 9,900 shares held in the Patricia M. Steinour Legacy Trust, for Non-Associate Directors that could be convertible into Common Stock within 60 days after termination from the Board: Ms. Bellinger, 11,271; Dr. Gee, 23,393; Ms. James, 43,567; Mr. Morris, 14,681; Ms. Nash, 5,251; Mr. Schottenstein, 11,365; Ms. Sheehan, 4,086; Mr. Steinour, 6,277; Mr. Zimmerman, 115,348; and all directors as a group, 235,239. Mr. Morris has elected to receive pay-out of his deferred stock units over three years, and his total represents 1/3 of the units which he would be owed upon his termination from the Board. Mr. Steinour has elected to receive pay-out of his deferred stock units over five years, and his total represents 1/5 of the units which he would be owed upon his termination from the Board. |
| Includes the following number of deferred stock units credited to executives’ accounts under the Company’s Stock Option and Performance Incentive Plan that could be convertible into Common Stock within 60 days after termination of employment with the Company: Mr. Bersani, 8,586. |
| Excludes 33,563,806 shares beneficially owned by Mr. Wexner as to which Mrs. Wexner disclaims beneficial ownership. Includes 127,567 shares held by The Linden East Trust; 3,081,741 shares held by The Wexner Family Charitable Fund; and 191,515 shares held by The Beech Trust. Mrs. Wexner sharesshared voting and investment power, with Mr. Wexner with respect to shares held by The Linden East Trust, The Wexner Family Charitable Fund and The Beech Trust, and shares voting and investment power with Dennis Hersch with respect to shares held by The Linden East Trust. Includes 11,156,469 shares directly owned by Mrs. Wexner. |
| Includes the following number of9,900 shares held in the Savings and Retirement Plan (as of February 1, 2020), overStephen D. Steinour Dynasty Trust, for which Messrs. McGuigan and Wexner have investment but not voting power: Mr. McGuigan, 4,874; and Mr. Wexner, 1,913,207. |
| Includes 127,567 shares held by The Linden East Trust; 8,483,845 shares held by The Linden West Trust; 3,081,741 shares held by The Wexner Family Charitable Fund; and 191,515 shares held by The Beech Trust. Mr. Wexner sharesSteinour has shared voting and investment power with Mrs. Wexner with respect topower. Includes 12,925 shares held by The Linden East Trust, The Wexner Family Charitable Fund and The Beech Trust, and shares voting and investment power with Dennis Hersch with respect to the shares held by The Linden East Trust and The Linden West Trust. Includes 4,892,608 shares held by the Wexner Personal Holdings Corporation, of which Mr. Wexner is the sole stockholder, director and officer. Includes 11,156,469 shares directly owned by Mrs. Wexner,Mr. Steinour’s spouse, as to which Mr. WexnerSteinour may be deemed to share voting and investment power. Includes 17,589,609 |
The following table sets forth the names of all persons who, as of the dates indicated below, were known by the Company to be the beneficial owners (as defined in the rules of the Commission) of more than 5% of the shares of Common Stock. | | | | | | | | | NAME AND ADDRESS OF BENEFICIAL OWNER | | AMOUNT BENEFICIALLY OWNED | | | PERCENT OF CLASS | | | | | The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 | | | 25,351,380 | | | | 11.10 | % | | | | Lone Pine Capital LLC, David F. Craver, Brian F. Doherty, Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler(2) Two Greenwich Plaza Greenwich, CT 06830 | | | 20,630,231 | | | | 9.0 | % | | | | BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055 | | | 16,898,598 | | | | 7.4 | % | | | | Third Point LLC(4) 55 Hudson Yards New York, NY 10001 | | | 13,751,100 | | | | 6.02 | % |
(1) | As of December 31, 2022, based solely on information set forth in the Schedule 13G/A filed on February 9, 2023, by The Vanguard Group, The Vanguard Group reported having shared voting power over 343,217 shares, directly ownedsole dispositive power over 24,391,073 shares and shared dispositive power over 960,307 shares. |
(2) | As of December 31, 2022, based solely on information set forth in the Schedule 13G/A filed on February 14, 2023, by Mr. Wexner. |
| Includes 3,648 shares which are Mr. Zimmerman’s pro rata share of 10,944 shares owned byLone Pine Capital LLC, David F. Craver, Brian F. Doherty, Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler (each, a corporation of which Mr. Zimmerman is president and a 33% stockholder. |
| Includes 2,500 shares held by the Frances Schottenstein 2010 Irrevocable Trust, for which Mr. Schottenstein is co-trustee and shares“Lone Pine Reporting Person”), each Lone Pine Reporting Person has shared voting and investment power; and 2,000 shares heldshared dispositive power over 20,630,231 shares. |
(3) | As of December 31, 2022, based solely on information set forth in the Schedule 13G/A filed on January 31, 2023, by the Irving Schottenstein Marital Trust 2, for which Mr. Schottenstein is co-trustee and hasBlackRock, Inc., BlackRock, Inc. reported having sole voting power over 15,118,316 shares and investment power. Mr. Schottenstein has a financial interest in 500 of the foregoing shares held by the Irving Schottenstein Marital Trust 2.sole dispositive power over 16,898,598 shares. |
(4) | As of March 6, 2023, based solely on information set forth in the Schedule 13D/A filed on March 6, 2023, by Third Point LLC and Daniel S. Loeb (each, a “Third Point Reporting Person”). Each Third Point Reporting Person reported having shared voting power and shared dispositive power over 13,751,100 shares. |
66 Bath & Body Works, Inc. | 2023 Proxy Statement
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DELINQUENT SECTION 16(A) REPORTSGeneral Matters | | | | | | | Delinquent Section 16(a) Reports | | | | | |
The Company’s executive officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, must file reports of ownership and changes in ownership of the Company’s equity securities with the Commission. Copies of those reports must also be furnished to the Company. Based solely on a review of the copies of reports furnished to the Company and written representations of the Company’s executive officers and directors that no other reports were required, we believe that during fiscal 20192022 our executive officers, directors and greater than 10% beneficial owners complied with these filing requirements, other thanexcept as follows: • | | On June 6, 2022, Mr. Mazurek filed a late Form 4 that reported Mr. Mazurek’s sale of 16,338 shares of Common Stock that occurred on May 27, 2022. The sale transactions were not timely reported due to an inadvertent administrative error made by the Company. |
| | | | | | | Stockholder Proposals or Director Nominations for the 2024 Annual Meeting | | | | | |
Stockholder Proposals Pursuant to Rule 14a-8 Proposals submitted for inclusion in the proxy statement for our 2024 annual meeting of stockholders must be received by the CompanyCompany’s Corporate Secretary at our principal executive offices on or before December 20, 2023. Stockholder Director Nominations for Inclusion in 2024 Proxy Statement Written notice of stockholder nominations of persons for election as a director at our 2024 annual meeting of stockholders that resulted in each of our executive officers (other than Mr. Wexner) being late in filing one Form 4 regarding one transaction relatingare to a stock grant by the Company and each of our directors including Dennis S. Hersch and David T. Kollat (other than Mses. Nash and Sheehan and Mr. Wexner) being late in filing one Form 4 regarding one transaction relating to the stock retainer granted by the Company in connection with Board service. TABLE OF CONTENTS
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERSThe following table sets forth the names of all persons who, as of the dates indicated below, were known by the Company to be the beneficial owners (as defined in the rules of the Commission) of more than 5% of the shares of Common Stock.
Leslie H. Wexner(1) Three Limited Parkway P.O. Box 16000 Columbus, OH 43216
| | | 48,121,098 | | | 17.40% | | | | | | | | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355
| | | 25,799,747 | | | 9.33% | | | | | | | | BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055
| | | 19,475,921 | | | 7.00% | | | | | | | | PRIMECAP Management Company(4) 177 E. Colorado Blvd., 11th Floor Pasadena, CA 91105
| | | 18,278,971 | | | 6.61% | | | | | | | | Lone Pine Capital LLC, David F. Craver, Brian F. Doherty, Mala Gaonkar, Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler(5) | | | 14,691,499 | | | 5.30% | Two Greenwich Plaza Greenwich, CT 06830
| | | | | | | | | | | | | | Melvin Capital Management LP(6) 535 Madison Avenue, 22nd Floor New York, NY 10022
| | | 14,200,000 | | | 5.10% |
| As of February 1, 2020. For a description of Mr. Wexner’s beneficial ownership, see “Security Ownership of Directors and Management” on page 55. |
| As of December 31, 2019, based solely on information set forth in the Schedule 13G/A filed February 12, 2020 by The Vanguard Group, The Vanguard Group has sole dispositive power over 25,488,514 shares and sole voting power over 296,698 shares, and has shared dispositive power over 311,233 shares and shared voting power over 44,137 shares. |
| As of December 31, 2019, based solely on information set forth in the Schedule 13G/A filed February 5, 2020 by BlackRock, Inc., BlackRock, Inc. has sole dispositive power over 19,475,921 shares and sole voting power over 17,815,988 shares. |
| As of December 31, 2019, based solely on information set forth in the Schedule 13G/A filed February 12, 2020 by PRIMECAP Management Company, PRIMECAP Management Company has sole dispositive power over 18,278,971 shares and sole voting power over 17,448,322 shares. |
| As of December 31, 2019, based solely on information set forth in the Schedule 13G filed February 18, 2020 by Lone Pine Capital LLC, David F. Craver, Brian F. Doherty, Mala Gaonkar, Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler (each, a “Lone Pine Reporting Person”), each Lone Pine Reporting Person has shared dispositive power over 14,691,499 shares and shared voting power over 14,691,499 shares. |
| As of March 20, 2020, based solely on information set forth in the Schedule 13G filed March 24, 2020 by Melvin Capital Management LP, Melvin Capital Management LP has shared dispositive power over 14,200,000 shares and shared voting power over 14,200,000 shares. |
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REPORT OF THE AUDIT COMMITTEEAs provided in our written charter, the Audit Committee is instrumental in the Board’s fulfillment of its oversight responsibilities relating to (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of the Company’s independent auditors and (iv) the performance of the Company’s internal audit function.
It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors. Furthermore, while we are responsible for reviewing the Company’s policies and practices with respect to risk assessment and management, it is the responsibility of the CEO and senior management to determine the appropriate level of the Company’s exposure to risk.
We have reviewed and discussed L Brands’ audited financial statements as of and for the year ended February 1, 2020 and met with both management and our independent auditors to discuss the financial statements. Management has represented to us that the financial statements were prepared in accordance with generally accepted accounting principles. We have reviewed with the internal auditors and independent auditors the overall scope and plans for their respective audits. We also met with the internal auditors and independent auditors, with and without management present, to discuss the results of their examinations and their evaluations of the Company’s internal controls.
We have also discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the Commission. The Company’s independent auditors also provided to us the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit committee concerning independence, and we discussed with the independent auditors their independence from the Company. We considered whether the provision of non-audit services by the independent auditors to the Company is compatible with maintaining their independence.
Based on the reviews and discussions summarized in this Report, and subject to the limitations on our role and responsibilities, certain of which are referred to above and in the Audit Committee charter, we recommended to the Board that L Brands’ audited financial statements be included in our annual report on Form 10-Kproxy statement for the year ended February 1, 20202024 annual meeting of stockholders pursuant to the proxy access provisions in Section 2.05 of our Bylaws must be received by the Company’s Corporate Secretary at our principal executive offices no earlier than November 20, 2023, and no later than December 20, 2023. The notice must contain the information required by our Bylaws.Other Stockholder Proposals If a stockholder intends to present a proposal or nominate a person for filingelection as a director at the 2024 annual meeting other than as described above, the stockholder must comply with the Commission. We have appointed Ernst & Young LLP as L Brands’ independent registered public accountants.
Audit Committee
Donna A. James, Chair
Sarah E. Nash
Allan R. Tessler
Raymond Zimmerman
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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTSDuringrequirements set forth in Section 2.04 of our 2019 fiscal year, Ernst & Young LLP served asBylaws. The Bylaws require, among other things, that the Company’s independent registered public accountantsCorporate Secretary receive written notice of the intent to present a proposal or nomination no earlier than March 10, 2024, and no later than April 9, 2024. The notice must contain the information required by our Bylaws. In addition, stockholders who intend to solicit proxies in that capacity rendered an opinion on our consolidated financial statements assupport of and for the fiscal year ended February 1, 2020. The Audit Committee has selected Ernst & Young LLP asdirector nominees other than the Company’s independent registered public accountants for the current fiscal year.
Audit Fees
The aggregate audit fees payable to Ernst & Young LLP for the fiscal years ended 2019 and 2018 were approximately $5,080,000 and $5,611,000, respectively. These amounts include fees for professional services rendered by Ernst & Young LLP in connectionnominees must comply with the auditadditional requirements of our consolidated financial statements and reviews of our unaudited consolidated interim financial statements as well as fees for services that generally onlyRule 14a-19(b) under the independent auditor can reasonably be expected to provide, including comfort letters and consultation regarding financial accounting and/or reporting standards. These amounts also include fees for services rendered in connection with the audit of our internal control over financial reporting and fees for services rendered in connection with statutory audits of our international subsidiaries’ financial statements.
Audit Related Fees
The aggregate fees for assurance and related services rendered by Ernst & Young LLP that were reasonably related to the audit of our consolidated financial statements for the fiscal years ended 2019 and 2018 were approximately $319,000 and $304,000, respectively. The fees under this category are for assurance and related services that are traditionally performed by the independent auditor and include audits of employee benefit plans, agreed upon procedures and other attest engagements.
Tax Fees
The aggregate fees for tax services rendered by Ernst & Young LLP for the fiscal years ended 2019 and 2018 were approximately $199,000 and $138,000, respectively. Tax fees include tax compliance and advisory services.
All Other Fees
No fees for other services were paid to Ernst & Young LLP for the fiscal years ended 2019 and 2018.
Pre-approval Policies and Procedures
The Audit Committee pre-approves all audit and non-audit services to be provided by Ernst & Young LLP in a given fiscal year.
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The Board knows of no other matters to be brought before the annual meeting. However, if other matters should come before the meeting, each of the persons named as a proxy intends to vote in accordance with his or hersuch person’s judgment on such matters. STOCKHOLDER PROPOSALS FOR NEXT YEARStockholder Proposals Pursuant to Rule 14a-8
Proposals submitted for inclusion in the proxy statement for the 2021 annual meeting must be received by the Secretary of the Company at our principal executive offices on or before December 4, 2020.
Stockholder Director Nominations for Inclusion in 2021 Proxy Statement
Written notice of stockholder nominations of persons for election as a director at the 2021 annual meeting that are to be included in our proxy statement for the 2021 annual meeting pursuant to the proxy access provisions in Section 2.05 of our Bylaws must be received by the Secretary of the Company at our principal executive offices no earlier than November 4, 2020 and no later than December 4, 2020. The notice must contain the information required by our Bylaws.
Other Stockholder Proposals
If a stockholder intends to present a proposal or nominate a person for election as a director at the 2021 annual meeting other than as described above, the stockholder must comply with the requirements set forth in Section 2.04 of our Bylaws. The Bylaws require, among other things, that the Secretary receive written notice of the intent to present a proposal or nomination no earlier than February 13, 2021 and no later than March 15, 2021. The notice must contain the information required by our Bylaws.
We are soliciting this proxy on behalfproxies primarily by the use of our Board and will bear the solicitation expenses. Our directors or employeesmail. However, we may also solicit proxies by telephone, facsimile, email and personal solicitation, in addition to the use of the mail. To the extent our directors or associates participate in this solicitation, they will not receive compensation for their participation, other than their normal compensation. Innisfree M&A Incorporated (“Innisfree”) assists us with the solicitation for a fee of $25,000 plus reasonable out-of-pocket expenses. We will, upon request, reimburse banks, brokerage houses and other institutions, nominees and fiduciaries for their expenses in forwarding proxy materials to beneficial owners. We bear all costs associated with this proxy solicitation. 2023 Proxy Statement | Bath & Body Works, Inc. 67
Appendix A | | | By Order of the Board of Directors,
| | | | Non-GAAP Financial Measure | | | | | | /s/ Leslie H. Wexner
| | | | | | | | Leslie H. Wexner
Chairman of the Board
|
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L BRANDS, INC.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO REMOVE SUPERMAJORITY VOTING REQUIREMENTS
Articles EIGHTH and THIRTEENTH and Section 2 of Article FIFTH and Section 1 of Article ELEVENTH are hereby removed in their entirety, and the remaining articles of the Charter are hereby renumbered accordingly. Articles EIGHTH and THIRTEENTH and Section 2 of Article FIFTH and Section 1 of Article ELEVENTH, which are hereby repealed, are shown below:
FIFTH. Section 2. Amendment of Bylaws by the Stockholders. The bylaws shall not be made, repealed, altered, amended or rescinded by the stockholders of the Corporation except by the vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon. Any amendment to the Certificate of Incorporation which shall contravene any bylaw in existence on the record date of the stockholders meeting at which such amendment is to be voted upon by the stockholders shall require the vote of the holders of not less than 75 percent of the outstanding shares entitled to vote thereon.
EIGHTH. The affirmative vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon shall be required for the approval of any proposal that (1) the Corporation merge or consolidate with any other corporation or any affiliate of such other corporation if such other corporation and its affiliates singly or in the aggregate are directly or indirectly the beneficial owners of more than five percent of the outstanding shares of any class of stock of the Corporation entitled to vote in the election of directors (such other corporation and any affiliate thereof being herein referred to as a “Related Corporation”), or (2) the Corporation sell, lease or exchange all or substantially all of its assets or business to or with such Related Corporation, or (3) the Corporation issue or deliver any stock or other securities of its issue in exchange or payment for any properties or assets of any such Related Corporation or securities issued by any such Related Corporation or in a merger of any affiliate of the Corporation with or into any such Related Corporation, or (4) the Corporation dissolve, and to effect such transaction the approval of stockholders of the Corporation is required by law or by any agreement between the Corporation and any national securities exchange; provided, however, that the foregoing clauses (1), (2), (3) and (4) shall not apply (i) to any such merger, consolidation, sale, lease, or exchange, or issuance or delivery of assets or other securities which was approved by resolution of the Board of Directors of the Corporation prior to the acquisition of the beneficial ownership of more than five percent of the outstanding Common Stock by the Related Corporation, (ii) to any such transaction solely between the Corporation and another corporation 50 percent or more of the voting power of which is owned by the Corporation provided that the Certificate of Incorporation of the surviving corporation contains provisions substantially similar to those provided in Articles FIFTH, SIXTH, Section 1, SEVENTH, EIGHTH, NINTH, TENTH, and ELEVENTH, (iii) to any transaction between this Corporation and either (a) any stockholder who owned in excess of 10 percent of the Common Stock of the Corporation immediately after the merger of Limited Interim Ohio, Inc., an Ohio corporation, into The Limited Stores, Inc. an Ohio corporation or (b) any affiliate from time to time organized, established, or incorporated of a stockholder referred to in (iii) (a) above. For the purposes hereof, an “affiliate” is any person (including a corporation, partnership, association, trust, business entity, estate or individual) who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified; “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise; and in computing the percentage of outstanding Common Stock beneficially owned by any person, the shares outstanding and the shares owned shall be determined as of the record date fixed to determine the stockholders entitled to vote or express consent with respect to such proposal. The stockholder vote, if any, required for mergers, consolidations, sales, leases, or exchanges of assets or issuances of stock or other securities not expressly provided for in this Article, shall be such as may be required by applicable law.
ELEVENTH. Section 1. Amendment of Certain Articles. The provisions set forth in this Article ELEVENTH and in Article FIFTH (dealing with the amendment of bylaws), SIXTH, Section 1 (dealing with the classified Board), SEVENTH (dealing with the prohibition against stockholder action without meetings), EIGHTH (dealing with the 75 percent vote of stockholders required for certain reorganizations), NINTH (dealing with certain matters to be considered by the Board in evaluating certain offers), and
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TENTH (dealing with the removal of any director) may not be amended, altered, changed, or repealed in any respect unless such repeal or amendment is approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon.
THIRTEENTH. The provisions set forth in Article TWELFTH and in this Article THIRTEENTH may not be amended, altered, changed or repealed in any respect unless such action is approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of Voting Stock (as defined in Article TWELFTH) of the Corporation at a meeting of the stockholders duly called for the consideration of such amendment, alteration, change or repeal; provided, however, that if there is an Interested Person (as defined in Article TWELFTH), such action must also be approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of Voting Stock held by the stockholders other than the Interested Person.
Articles TENTH and TWELFTH, and Section 2 of Article ELEVENTH are hereby amended as shown below (with deletions highlighted in strike-through text and additions highlighted in underlined text):
TENTH. Any director may be removed at any annual or special stockholders’ meeting upon the affirmative vote of the holders of not less than a majority 75 percent of the outstanding shares of voting stock of the Corporation at that time entitled to vote thereon; provided, however, that such director may be removed only for cause and shall receive a copy of the charges against him, delivered to him personally or by mail at his last known address at least 10 days prior to the date of the stockholders’ meeting; provided further, that directors who shall have been elected by the holders of a series or class of Preferred Stock, voting separately as a class, shall be removed only pursuant to the provisions establishing the rights of such series or class to elect such directors.
TWELFTH. Section 1. Vote Required for Certain Business Combinations. The affirmative vote of the holders of not less than 75 percent a majority of the outstanding shares of “Voting Stock” (as hereinafter defined) held by stockholders other than an “Interested Person” (as hereinafter defined) shall be required for the approval or authorization of any “Business Combination” (as hereinafter defined) of the Corporation with any Interested Person; provided, however, that the 75 percent voting requirement restrictions contained in this Article TWELFTH shall not be applicable if:
(a) the “Continuing Directors” (as hereinafter defined) of the Corporation by at least a two-thirds vote (i) have expressly approved in advance the acquisition of the outstanding shares of Voting Stock that caused such Interested Person to become an Interested Person, or (ii) have expressly approved such Business Combination either in advance of or subsequent to such Interested Person’s having become an Interested Person; or
(b) the cash or fair market value (as determined by at least two-thirds of the Continuing Directors) of the property, securities or “Other Consideration to be Received” (as hereinafter defined) per share by holders of Voting Stock of the Corporation in the Business Combination is not less than the “Fair Price” (as hereinafter defined) paid by the Interested Person in acquiring any of its holdings of the Corporation’s Voting Stock.
Section 2. Definitions. Certain words and terms asAs used in this Article TWELFTH shall haveproxy statement, adjusted operating income means the meanings given to them by the definitions and descriptions in this Section.
2.1. Business Combination. The term “Business Combination” shall mean (a) any merger or consolidation of the Corporation or a subsidiary of the Corporation with or into an Interested Person, (b) any sale, lease, exchange, transfer or other disposition, including without limitation, a mortgage or any other security device, of all or any “Substantial Part” (as hereinafter defined) of the assets either of the Corporation (including without limitation, any voting securities of a subsidiary) or of a subsidiary of the Corporation to an Interested Person, (c) any merger or consolidation of an Interested Person with or into the Corporation or a subsidiary of the Corporation, (d) any sale, lease, exchange, transfer or other disposition, including without limitation, a mortgage or other security device, of all or any Substantial Part of the assets of an Interested Person to the Corporation or a subsidiary of the Corporation, (e) the issuance or transfer by the Corporation or any subsidiary of any securities of the Corporation or a subsidiary of the Corporation to an Interested Person, (f) any reclassification of securities, recapitalization or other comparable transaction involving the Corporation that would have the effect of increasing the Voting power of any Interested Person with respect to Voting Stock of the Corporation, and (g) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination.
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2.2. Interested Person. The term “Interested Person” shall mean and include any individual, corporation, partnership or other person or entity which, together with its “Affiliates” and “Associates” (as defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of the adoption of this Article TWELFTH by the stockholders of the Corporation), “Beneficially Owns” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of the adoption of this Article TWELFTH by the stockholders of the Corporation) in the aggregate 20 percent or more of the outstanding Voting Stock of the Corporation, and any Affiliate or Associate of any such individual, corporation, partnership or other person or entity. Without limitation, any share of Voting Stock of the Corporation that any Interested Person has the right to acquire at any time (notwithstanding that Rule 13d-3 deems such shares to be beneficially owned only if such right may be exercised within 60 days) pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed to be Beneficially Owned by the Interested Person and to be outstanding for purposes of this definition. An Interested Person shall be deemed to have acquired a share of the Voting Stock of the Corporation at the time when such Interested Person became the Beneficial Owner thereof. With respect to the shares owned by Affiliates, Associates or other persons whose ownership is attributed to an Interested Person under the foregoing definition of Interested Person, if the price paid by such Interested Person for such shares is not determinable by two-thirds of the Continuing Directors, the price so paid shall be deemed to be the higher of (a) the price paid upon the acquisition thereof by the Affiliate, Associate or other person or (b) the market price of the shares in question at the time when the Interested Person became the Beneficial Owner thereof.
2.3 Voting Stock. The term “Voting Stock” shall mean all of the outstanding shares of Common Stock of the Corporation and any outstanding shares of Preferred Stock entitled to vote on each matter on which the holders of record of Common Stock shall be entitled to vote, and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares.
2.4 Continuing Director. The term “Continuing Director” shall mean a Director who was a member of the Board of Directors of the Corporation immediately prior to the time that the Interested Person involved in a Business Combination became an Interested Person, or a Director who was elected or appointed to fill a vacancy after the date the Interested Person became an Interested Person by a majority of the then-current Continuing Directors.
2.5 Fair Price. The term “Fair Price” shall mean the following: If there is only one class of capital stock of the Corporation issued and outstanding, the Fair Price shall mean the highest price that can be determined by a majority of the Continuing Directors to have been paid at any time by the Interested Person for any share or shares of that class of capital stock. If there is more than one class of capital stock of the Corporation issued and outstanding, the Fair Price shall mean with respect to each class and series of capital stock of the Corporation, the amount determined by a majority of the Continuing Directors to be the highest per share price equivalent of the highest price that can be determined to have been paid at any time by the Interested Person for any share or shares of any class or series of capital stock of the Corporation. In determining the Fair Price, all purchases by the Interested Person shall be taken into account regardless of whether the shares were purchased before or after the Interested Person became an Interested Person. Also, the Fair Price shall include any brokerage commissions, transfer taxes and soliciting dealers’ fees paid by the Interested Person with respect to the shares of capital stock of the Corporation acquired by the Interested Person. In the case of any Business Combination with an Interested Person, a majority of the Continuing Directors shall determine the Fair Price for each class and series of the capital stock of the Corporation. The Fair Price shall also include interest compounded annually from the date an Interested Person became an Interested Person through the date the Business Combination is consummated at the publicly announced base rate of interest of Morgan Guaranty Trust Company of New York less the aggregate amount of any cash dividends paid, and the fair market value of any dividends paid in other than cash, on each share of capital stock in the same time period, in an amount up to but not exceeding the amount of interest so payable per share of capital stock.
2.6. Substantial Part. The term “Substantial Part” shall mean more than 20 percent of the fair market value as determined by two-thirds of the Continuing Directors of the total consolidated assets of the Corporation and its subsidiaries taken as a whole as of the end of its most recent fiscal year ended prior to the time the determination is being made.
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2.7. Other Consideration to be Received. The term “Other Consideration to be Received” shall include, without limitation, Common Stock or other capital stock of the Corporation retained by its existing stockholders other than Interested Persons or other parties to such Business Combination in the event of a Business Combination in which the Corporation is the surviving corporation.
Section 3. Determinations by the Continuing Directors. In making any determinations, the Continuing Directors may engage such persons, including investment banking firms and the independent accountants who have reported on the most recent financial statements of the Corporation, and utilize employees and agents of the Corporation, who will, in the judgment of the Continuing Directors, be of assistance to the Continuing Directors. Any determinations made by the Continuing Directors, acting in good faith on the basis of such information and assistance as was then reasonably available for such purposes, shall be conclusive and binding upon the Corporation and its stockholders, including any Interested Person.
ELEVENTH. Section 2. Amendments Generally. Subject to the provisions of Section 1 of this Article ELEVENTH, tThe Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
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L BRANDS, INC.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS
Section 1 of Article SIXTH is hereby amended as shown below (with deletions highlighted in strike-through text and additions highlighted in underlined text):
SIXTH. Section 1. Election of Directors. Subject to the right of the holders of any class or series of Preferred Stock to elect one or more directors of the Corporation, commencing with the 2021 annual meeting, each director shall be elected for a term expiring at the next annual meeting, and shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.Classified Board. Effective immediately upon the issuance of more than 1,000 shares of Common Stock of the Corporation, the Board of Directors (exclusive of directors to be elected by the holders of any one or more series of Preferred Stock voting separately as a class or classes) shall be divided into three classes, Class A, Class B, and Class C. The number of directors in each class shall be the whole number contained in the quotient arrived at by dividing the authorized number of directors by three, and if a fraction is also contained in such quotient, then if such fraction is one-third, the extra director shall be a member of Class A and if the fraction is two-thirds, one of the extra directors shall be a member of Class A and the other shall be a member of Class B. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to Class A shall serve for a term ending on the date of the annual meeting next following the end of the calendar year 1982, the directors first elected to Class B shall serve for a term ending on the date of the second annual meeting next following the end of the calendar year 1982, and the directors first elected to Class C shall serve for a term ending on the date of the third annual meeting next following the end of the calendar year 1982. Notwithstanding the foregoing formula provisions, in the event that, as a result of any change in the authorized number of directors, the number of directors in any class would differ from the number allocated to that class under the formula provided in this Article immediately prior to such change, the following rules shall govern:
(a) each director then serving as such shall nevertheless continue as a director of the class of which he is a member until the expiration of his current term, or his prior death, resignation or removal;
(b) at each subsequent election of directors, even if the number of directors in the class whose term of office then expires is less than the number then allocated to that class under said formula, the number of directors then elected for membership in that class shall not be greater than the number of directors in that class whose term of office then expires, unless and to the extent that the aggregate number of directors then elected plus the number of directors in all classes then duly continuing in office does not exceed the then authorized number of directors of the Corporation;
(c) at each subsequent election of directors, if the number of directors in the class whose term of office then expires exceeds the number then allocated to that class under said formula, the Board of Directors shall designate one or more of the directorships then being elected as directors of another class or classes in which the number of directors then serving is less than the number then allocated to such other class or classes under said formula;
(d) in the event of the death, resignation or removal of any director who is a member of a class in which the number of directors serving immediately preceding the creation of such vacancy exceeded the number then allocated to that class under said formula, the Board of Directors shall designate the vacancy thus created as a vacancy in another class in which the number of directors then serving is less than the number then allocated to such other class under said formula;
(e) in the event of any increase in the authorized number of directors, the newly created directorships resulting from such increase shall be apportioned by the Board of Directors to such class or classes as shall, so far as possible, bring the composition of each of the classes into conformity with the formula in this Article, as it applies to the number of directors authorized immediately following such increase; and
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(f) designation of directorships or vacancies into other classes and apportionments of newly created directorships to classes by the Board of Directors under the foregoing items (c), (d) and (e) shall, so far as possible, be effected so that the class whose term of office is due to expire next following such designation or apportionment shall contain the full number of directors then allocated to said class under said formula.
Notwithstanding any of the foregoing provisions of this Article, each director shall serve until this successor is elected and qualified or until his death, resignation or removal.
Article TENTH is hereby amended as shown below (with deletions highlighted in strike-through text and additions highlighted in underlined text):
TENTH. Any director may be removed at any annual or special stockholders’ meeting, with or without cause, upon the affirmative vote of the holders of not less than a majority 75 percent of the outstanding shares of voting stock of the Corporation at that time entitled to vote thereon; provided, however, that such director may be removed only for cause and shall receive a copy of the charges against him, delivered to him personally or by mail at his last known address at least 10 days prior to the date of the stockholders’ meeting; provided further, that directors who shall have been elected by the holders of a series or class of Preferred Stock, voting separately as a class, shall be removed only pursuant to the provisions establishing the rights of such series or class to elect such directors.
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L BRANDS, INC.
2020 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
EFFECTIVE MAY 14, 2020
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01. Establishment and Effective Date. Effective on May 26, 2011, L Brands, Inc. (formerly known as Limited Brands, Inc.), a Delaware corporation (including any successor in name or interest thereto, the “Company”), established the stock incentive plan known as the “L Brands, Inc. 2011 Stock Option and Performance Incentive Plan,” (the “2011 Plan”), which was amended and restated, effective May 21, 2015 (the “2015 Plan”). Subject to stockholder approval, the 2015 Plan was amended and restated, effective May 14, 2020 (the “Plan”).
1.02. Purpose. The Company desires to attract and retain the best available executive and key management associates, consultants and other advisors, for itself and its subsidiaries and affiliates and to encourage the highest level of performance by such individuals in order to serve the best interestsoperating income of the Company excluding certain special items. The HCC Committee uses adjusted operating income because it is a performance measure over which the Company’s executives can have significant impact and its stockholders. The Plan is expected to contributealso directly linked to the attainment of these objectives by offering eligible associates, consultantsCompany’s long-term growth plan and other advisors the opportunity to acquire stock ownership interests inperformance that drive stockholder value. The special items were excluded because the Company believes they are not indicative of the Company’s ongoing operations due to their size and nature. Adjusted operating income should not be construed as an alternative to the Company’s operating income calculated in accordance with GAAP. The Company’s definition of adjusted operating income may differ from similarly titled measures used by other rights with respect to stockcompanies. The table below reconciles the adjusted operating income of the Company for fiscal 2022, 2021, 2020 and 2019 to thereby provide them with incentives to put forth maximum effort for the success ofCompany’s operating income, the most comparable GAAP financial measure. For fiscal 2022 and 2019, the Company and its subsidiaries.
1.03. Definitions. Unless otherwise defined elsewhere in the Plan, all capitalized terms used in the Plan shall have the meanings set forth in Article XX.
ARTICLE II
AWARDS
2.01. Form of Awards. Awards under the Plan may be granted in any one or all of the following forms: (i) incentive stock options (“Incentive Stock Options”) meeting the requirements of Code Section 422; (ii) nonstatutory stock options (“Nonstatutory Stock Options”) (unless otherwise indicated, references in the Plan to Options shall include both Incentive Stock Options and Nonstatutory Stock Options); (iii) stock appreciation rights (“Stock Appreciation Rights”), as described in Article VII, which may be awarded either in tandem with Options (“Tandem Stock Appreciation Rights”) or on a stand-alone basis (“Nontandem Stock Appreciation Rights”); (iv) shares of Common Stock which are subject to certain restrictions as provided in Article X (“Restricted Shares”); (v) units representing shares of Common Stock which are restricted as provided in Article XI (“Restricted Share Units” or “RSUs”); (vi) units representing shares of Common Stock, as described in Article XII (“Performance Units”) and (vii) shares of unrestricted Common Stock (“Unrestricted Shares”), as described in Article XIII. In addition, awards may be granted as “Substitute Awards,” which are awards granted in assumption of, or in substitution for, any outstanding awards previously granted by a company acquired by the Company (or a subsidiary or affiliate thereof) or with which the Company (or a subsidiary or affiliate thereof) combines. Substitute Awards shall be granted in accordance with procedures complying with Section 409A of the Code and the regulations thereunder.
2.02. Maximum Shares Available. The maximum aggregate number of shares of Common Stock available for award under this Plan as of the Plan’s effective date is 6,400,000 plus shares of Common Stock previously authorized under the 2015 Plan at the Company's 2015 Annual Meeting, subject to adjustment pursuant to Article XV, plus shares of Common Stock issuable upon the exercise of Substitute Awards. All shares available for award under the Plan may be awarded in the form of Incentive Stock Options. Shares of Common Stock issued pursuant to the Plan may be either authorized but unissued shares or issued shares reacquired by the Company. In the event that any award granted under the Plan, the 2015 Plan, the 2011 Plan or any Preexisting Plan expires unexercised or is terminated, surrendered or canceled without being exercised or settled for shares for any reason, or any Restricted stock award under such plans are forfeited, then the shares to which any such award relates may, at the discretion of the Committee, be made available for subsequent awards under the Plan, upon such terms as the Committee may determine; provided, however, that the foregoing shalldid not apply to or in respect of Substitute Awards. The following
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shares of Common Stock may not again be made available for issuance as awards under the Plan: (i) shares of Common Stock not issued or delivered as a result of the net settlement of an outstanding Stock Appreciation Right or Option, or (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to settlement of an outstanding award under the Plan.
ARTICLE III
ADMINISTRATION
3.01. Committee. The Plan shall be administered by the Compensation Committee appointed by the Board and consisting of not less than two (2) members of the Board. Each member of the Committee shall be a “non-employee director” (within the meaning of Rule 16b-3(b)(3)(i) under the Act) and “independent” to the extent required by applicable law or rules of the New York Stock Exchange.
3.02. Powers of Committee. Subject to the express provisions of the Plan, the Committee shall have the power and authority (i) to grant Options and to determine the purchase price of the Common Stock covered by each Option, the term of each Option, the number of shares of Common Stock to be covered by each Option and any performance objectives or vesting standards applicable to each Option; (ii) to designate Options as Incentive Stock Options or Nonstatutory Stock Options and to determine which Options, if any, shall be accompanied by Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation Rights and Nontandem Stock Appreciation Rights and to determine the terms and conditions of such rights; (iv) to grant Restricted Shares and Restricted Share Units and to determine the term of the Restricted Period (as described in Section 11.02) and other conditions and restrictions applicable to such grants; (v) to grant Performance Units and to determine the performance objectives, performance periods and other conditions applicable to such units; (vi) to grant Unrestricted Shares (subject to the limitation contained in this plan) and (vii) to determine the associates to whom, and the time or times at which, Options, Stock Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Units and Unrestricted Shares shall be granted.
3.03. Delegation. The Committee may delegate to one or more of its members or to any other person or persons such ministerial duties as it may deem advisable; provided, however, that the Committee may not delegate any of its responsibilities hereunder if such delegation will cause transactions under the Plan to fail to comply with any intended exemption under Section 16 of the Act. The Committee may also employ attorneys, consultants, accountants or other professional advisors and shall be entitled to rely upon the advice, opinions or valuations of any such advisors.
3.04. Interpretations. The Committee shall have sole discretionary authority to interpret the terms of the Plan, to adopt and revise rules, regulations and policies to administer the Plan and to make any other factual determinations which it believesadjustments to be necessary or advisableoperating income; therefore, for the administration of the Plan. All actions takenfiscal 2022 and interpretations and determinations made by the Committee in good faith shall be final and binding upon the Company, all associates who have received awards under the Plan and all other interested persons.
3.05. Liability; Indemnification. No member of the Committee, nor any person to whom duties have been delegated, shall be personally liable for any action, interpretation or determination made with respect to the Plan or awards made thereunder, and each member of the Committee shall be fully indemnified and protected by the Company with respect to any liability he or she may incur with respect to any such action, interpretation or determination, to the extent permitted by applicable law and to the extent provided in the Company’s Certificate of Incorporation and Bylaws, as amended from time to time.
ARTICLE IV
ELIGIBILITY
4.01. Eligibility. Any associate, consultant, director or other advisor of, or any other individual who provides services to (x) the Company or any subsidiary or affiliate or (y) any joint venture in which the Company or any subsidiary or affiliate holds at least a 20% interest, shall be eligible to be selected to receive a compensatory award under or to be a “participant” in the Plan. In determining the individuals to whom awards shall be granted and the number of shares to be covered by each award, the Committee shall take into account the nature of the services rendered by such individuals, their present and potential contributions to the success of the Company and its subsidiaries and such other factors as the Committee in its sole discretion shall deem relevant. The Committee shall ensure that Common Stock underlying any award hereunder qualifies as “service recipient stock,” within the
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meaning of Code Section 409A and the regulations thereunder. No non-employee director of the Company may be granted in any calendar year awards covering more than 50,000 shares of Common Stock (unless the grant of any award in excess of this limitfiscal 2019, adjusted operating income is approved by disinterested directors).
4.02. Certain Limitations. Awards granted under the Plan shall be subject to a minimum one year vesting period following the grant date of such award; provided that the following actions and awards shall not be subject to the foregoing minimum vesting requirement: (i) the acceleration of awards pursuant to Section 18.01, (ii) the grant of Substitute Awards or (iii) the grant of awards relating to 5% of the shares available for issuance under this Plan pursuant to Section 2.02; and, provided further, that the foregoing restriction does not apply to the provision for accelerated exercisability or vesting of an award in cases of involuntary termination without Cause, Retirement, death or Disability.
ARTICLE V
STOCK OPTIONS
5.01. Grant of Options. Options may be granted under the Plan for the purchase of shares of Common Stock. Options shall be granted in such form and upon such terms and conditions, including the satisfaction of corporate or individual performance objectives and other vesting standards, as the Committee shall from time to time determine. On or before the date of grant of an Option, the Committee shall designate the number of shares of Common Stock covered by such Option, the option price of such Option, and the recipient of the Option.
5.02. Option Price. The option price of each Option to purchase Common Stock shall be determined by the Committee not later than the date of the grant, but (except in the case of Substitute Awards) shall not be less than 100 percent of the Fair Market Value of the Common Stock subject to such Option on the date of grant. The option price so determined shall also be applicable in connection with the exercise of any Tandem Stock Appreciation Right granted with respect to such Option.
5.03. Term of Options. The term of each Option granted under the Plan shall not exceed ten (10) years from the date of grant, subject to earlier termination as provided in Articles IX and X, except as otherwise provided in Section 6.01 with respect to ten (10) percent stockholders of the Company.
5.04. Exercise of Options. Subject to the provisions of Article XIX, an Option may be exercised, in whole or in part, at such time or times as the Committee shall determine; provided, however, that, except to the extent provided in Sections 4.02 and 18.01, each Option granted under the Plan shall have a minimum vesting period of one year. Subject to the forgoing, the Committee may, in its discretion, accelerate the exercisability of any Option at any time. Options may be exercised by a Participant by giving notice in such manner as the Committee may permit, stating the number of shares of Common Stock with respect to which the Option is being exercised and tendering payment therefor. Payment for the shares of Common Stock issuable upon exercise of the Option shall be made in full in cash or by certified check or, if the Committee, in its sole discretion, permits, in shares of Common Stock (valued at Fair Market Value on the date of exercise). As soon as reasonably practicable following such exercise, a certificate representing the shares of Common Stock purchased, registered in the name of the Participant, shall be delivered to the Participant. Until the issuance of the shares of Common Stock upon the exercise of the Option, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the shares of Common Stock that are subject to the Option.
5.05. Cancellation of Stock Appreciation Rights. Upon exercise of all or a portion of an Option, the related Tandem Stock Appreciation Rights shall be canceled with respect to an equal number of shares of Common Stock.
ARTICLE VI
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
6.01. Ten Percent Stockholder. Notwithstanding any other provision of this Plan to the contrary, any associates who are full-time employees of the Company and its present and future subsidiaries, shall be eligible for awards of Incentive Stock Options. However, no such associate may receive an Incentive Stock Option under the Plan if such associate, at the time the award is granted, owns (after application of the rules contained in Code Section 424(d)) stock possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company
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or its subsidiaries, unless (i) the option price for such Incentive Stock Option is at least 110 percent of the Fair Market Value of the Common Stock subject to such Incentive Stock Option on the date of grant and (ii) such Option is not exercisable after the date five (5) years from the date such Incentive Stock Option is granted.
6.02. Limitation on Grants. The aggregate Fair Market Value (determined with respect to each Incentive Stock Option at the time such Incentive Stock Option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an associate during any calendar year (under this Plan or any other plan of the Company or a subsidiary) shall not exceed $100,000.
6.03. Limitations on Time of Grant. No grant of an Incentive Stock Option shall be made under this Plan more than ten (10) years after the earlier of the date of adoption of the Plan by the Board or the date the Plan is approved by stockholders.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.01. Grants of Stock Appreciation Rights. Tandem Stock Appreciation Rights may be awarded by the Committee in connection with any Option granted under the Plan, at the time the Option is granted, and shall be subject to the same terms and conditions as the related Option, except that the medium of payment may differ. Nontandem Stock Appreciation Rights may be granted by the Committee at any time. On or before the date of grant of a Nontandem Stock Appreciation Right, the Committee shall specify the number of shares of Common Stock covered by such right, the base price of shares of Common Stock to be used in connection with the calculation described in Section 7.05 below, and the recipient of the award. Except in the case of a Substitute Award, the base price of a Nontandem Stock Appreciation Right shall be not less than 100 percent of the Fair Market Value of a share of Common Stock on the date of grant. Stock Appreciation Rights shall be subject to such terms and conditions not inconsistent with the other provisions of this Plan as the Committee shall determine. Until the issuance of shares of Common Stock upon the surrender or exchange of Tandem Stock Appreciation Rights or exercise of Nontandem Stock Appreciation Right, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the shares of Common Stock that are subject to the Tandem or Nontandem Stock Appreciation Right.
7.02. Limitations on Exercise. Subject to the provisions of Articles IX, X and XIX, a Tandem Stock Appreciation Right shall be exercisable only to the extent that the related Option is exercisable and shall be subject to the same exercise period as the related Option, which shall be set forth in the applicable agreement on or before the date of grant. Upon the exercise of all or a portion of Tandem Stock Appreciation Rights, the related Option shall be canceled with respect to an equal number of shares of Common Stock. Shares of Common Stock subject to Options, or portions thereof, surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be available for subsequent awards under the Plan. Subject to the provisions of Article XIX, a Nontandem Stock Appreciation Right shall be exercisable during such period as the Committee shall determine, which shall be set forth in the applicable agreement on or before the date of grant.
7.03. Term of Stock Appreciation Rights. The term of each Stock Appreciation Right granted under the Plan shall not exceed ten (10) years from the date of grant, subject to earlier termination as provided in Articles IX and X.
7.04. Surrender or Exchange of Tandem Stock Appreciation Rights. A Tandem Stock Appreciation Right shall entitle the Participant to surrender to the Company unexercised the related option, or any portion thereof, and to receive from the Company in exchange therefor that number of shares of Common Stock having an aggregate Fair Market Value equal to (A) the excess of (i) the Fair Market Value of one (1) share of Common Stock as of the date the Tandem Stock Appreciation Right is exercised over (ii) the option price per share specified in such Option, multiplied by (B) the number of shares of Common Stock subject to the Option, or portion thereof, which is surrendered. Cash shall be delivered in lieu of any fractional shares.
7.05. Exercise of Nontandem Stock Appreciation Rights. The exercise of a Nontandem Stock Appreciation Right shall entitle the Participant to receive from the Company that number of shares of Common Stock having an aggregate Fair Market Value equal to (A) the excess of (i) the Fair Market Value of one (1) share of Common Stock as of the date on which the Nontandem Stock Appreciation Right is exercised over (ii) the base price of the shares covered by the Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of Common Stock covered by the Nontandem Stock Appreciation Right, or the portion thereof being exercised. Cash shall be delivered in lieu of any fractional shares.
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7.06. Settlement of Stock Appreciation Rights. As soon as is reasonably practicable after the exercise of a Stock Appreciation Right, the Company shall (i) issue, in the name of the Participant, stock certificates representing the total number of full shares of Common Stock to which the Participant is entitled pursuant to Section 7.04 or 7.05 hereof, and cash in an amount equal to the Fair Market Value, as of the date of exercise, of any resulting fractional sharesCompany’s fiscal 2022 and (ii) if the Committee causes the Company to elect to settle all or part of its obligations arising out of the exercise of the Stock Appreciation Right in cash pursuant to Section 7.07, deliver to the Participant an amount in cash equal to the Fair Market Value, as of the date of exercise, of the shares of Common Stock it would otherwise be obligated to deliver.
7.07. Cash Settlement. The Committee, in its discretion, may cause the Company to settle all or any part of its obligation arising out of the exercise of a Stock Appreciation Right by the payment of cash in lieu of all or part of the shares of Common Stock it would otherwise be obligated to deliver in an amount equal to the Fair Market Value of such shares on the date of exercise.
ARTICLE VIII
NONTRANSFERABILITY OF AWARDS
8.01. Nontransferability of Awards. Except to the extent permitted under Section 8.02, no Award may be transferred, assigned, pledged or hypothecated (whether by operation of law or otherwise), except as provided by will or the applicable laws of descent and distribution, and no Award shall be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of an Award not specifically permitted herein shall be null and void and without effect. An Award may be exercised by a Participant, or otherwise settle, only during the Participant’s lifetime, or following the Participant’s death, pursuant to Article X.
8.02. Limited Exception to Nontransferability. Notwithstanding Section 8.01, the Committee may determine that a Nonstatutory Stock Option may be transferred by a Participant to one or more members of such Participant’s immediate family, to a partnership of which the only partners are members of such Participant’s immediate family, or to a trust established by a Participant for the benefit of one or more members of such Participant’s immediate family. For this purpose, immediate family means a Participant’s spouse, parents, children, grandchildren and the spouses of such parents, children and grandchildren. A transferee described in this Section 8.02 may not further transfer such Nonstatutory Stock Option. A trust described in this Section 8.02 may not be amended to benefit any person other than a member of the Participant’s immediate family. A Nonstatutory Stock Option transferred pursuant to this Section 8.02 shall remain subject to the provisions of the Plan, including, but not limited to, the provisions of Articles 9 and 10 relating to the effect on the Nonstatutory Stock Option of the Termination of Employment, Total Disability or death of the Participant, and shall be subject to such other rules as the Committee shall determine.
ARTICLE IX
TERMINATION OF EMPLOYMENT
9.01. Exercise after Termination of Employment. Except as the Committee may at any time provide, in the event that the employment of a Participant shall be terminated either by the Participant or by the Participant’s employer (for reasons other than death, Total Disability or Cause), any Option or Stock Appreciation Right granted to such Participant may be exercised (to the extent that the Participant was entitled to do so at the time of Participant’s Termination of Employment) at any time within one (1) year after such Termination of Employment, but in no case later than the date of expiration of the original term of the Option or Stock Appreciation Right; provided, however, that if an Incentive Stock Option is not exercised within three (3) months following Termination of Employment, it shall be treated as a Nonstatutory Stock Option. If the Participant’s employment is terminated by the Participant’s employer for Cause, except as the Committee may at any time provide, any Option or Stock Appreciation Right may be exercised (to the extent that the Participant was entitled to do so at the time of the Termination of Employment) at any time within thirty (30) days after such Termination of Employment, but in no case later than the date of expiration of the original term of the Option or Stock Appreciation Right. Except to the extent otherwise set forth herein, any Options or Stock Appreciation Rights that are not exercisable on the date of a Termination of Employment for any reason shall lapse. In no event may an Option or Stock Appreciation Right be exercised after the expiration of the original term of the Option or Stock Appreciation Right.
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9.02. Total Disability. If a Participant to whom an Option or Stock Appreciation Right has been granted under the Plan shall have incurred a Total Disability, such Option or Stock Appreciation Right, to the extent not vested on the date of such Participant’s Termination of Employment due to Total Disability (it being understood that such termination occurs after nine (9) months of absence from work due to the Total Disability), shall continue to vest during the period of such Participant’s Total Disability, and, upon becoming vested, such award shall be exercisable within the one (1) year period after the applicable vesting date, but in no event later than the date of expiration of the original term of the Option or Stock Appreciation Right. To the extent that an Option or Stock Appreciation Right held by a Participant is vested on the date of such Participant’s Termination of Employment due to Total Disability, such Option or Stock Appreciation Right shall be exercisable within the one (1) year period after the date of such Termination of Employment, but in no event later than the date of expiration of the original term of the Option or Stock Appreciation Right. In the event of the death of a Participant following such Participant’s Termination of Employment due to Total Disability, any unvested Option or Stock Appreciation Right shall be fully vested on the date of such Participant’s death and shall be exercisable within the one (1) year period after the date of such Participant’s death, but in no event later than the expiration of the original term of the Option or Stock Appreciation Right.
Notwithstanding the foregoing, for purposes of exercising Incentive Stock Options, a Participant shall be deemed to have a Termination of Employment if the Participant is absent from work for three (3) months due to Total Disability, where the date of such Termination of Employment shall be the last date of active employment before the three (3) month period; in this event, if such Participant fails to exercise his or her Incentive Stock Option within three (3) months following such deemed Termination of Employment, such Incentive Stock Option shall be treated as a Nonstatutory Stock Option.
ARTICLE X
DEATH OF PARTICIPANT
10.01. Death of Participant While Employed. If a Participant to whom an Option or Stock Appreciation Right has been granted under the Plan shall die while employed by or otherwise providing services to the Company or one of its subsidiaries or affiliates, such Option or Stock Appreciation Right shall become fully exercisable by the Participant’s beneficiary (as designated by the Participant on the appropriate form provided by the Company), or if no beneficiary is so designated, then by the estate or person who acquires the right to exercise such Option or Stock Appreciation Right upon the Participant’s death by bequest or inheritance. Such exercise may occur at any time within one (1) year after the date of the Participant’s death (or such other period as the Committee may at any time provide), but in no case later than the date of expiration of the original term of the Option or Stock Appreciation Right.
10.02. Death of Participant Following Termination of Employment. Except in the case of death during the period of Total Disability, which shall be governed by Section 9.02, if a Participant to whom an Option or Stock Appreciation Right has been granted under the Plan shall die after the date of the Participant’s Termination of Employment, but before the end of the period provided under the Plan by which a terminated Participant may exercise such Option or Stock Appreciation Right, such Option or Stock Appreciation Right may be exercised, to the extent that the Participant was entitled to do so at the time of the Participant’s death, by the Participant’s beneficiary (as designated by the Participant on the appropriate form provided by the Company), or if no beneficiary is so designated, then by the estate or person who acquires the right to exercise such Option or Stock Appreciation Right upon the Participant’s death by bequest or inheritance. Such exercise may occur at any time within the period in which the terminated Participant could have exercised such Option or Stock Appreciation Right if the Participant had not died (or such other period as the Committee may at any time provide), but in no case later than the date of expiration of the original term of the Option or Stock Appreciation Right.
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ARTICLE XI
RESTRICTED SHARES
and
RESTRICTED SHARE UNITS
11.01. Grant of Restricted Shares and Restricted Share Units. The Committee may from time to time cause the Company to grant Restricted Shares and RSUs under the Plan to Participants, subject to such restrictions, conditions and other terms as the Committee may determine. Restricted Shares are shares of Common Stock which are subject to such conditions and restrictions as determined by the Committee, including conditions and restrictions relating to transferability. RSU awards represent an unfunded promise to pay the Participant a specified number of shares of Common Stock (or cash equivalent, as applicable) in the future if the conditions of the RSU award are satisfied and the RSU award is not otherwise forfeited prior to the stated date of delivery, under the terms and conditions applicable to such award.
11.02. Restrictions. At the time a grant of Restricted Shares or RSUs is made, the Committee shall establish the Restricted Period applicable to such Restricted Shares or RSUs. Each grant of Restricted Shares or RSUs may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a grant is made, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual service or performance objectives, which shall be applicable to all or any portion of the Restricted Shares or RSUs. The Committee may also, in its sole discretion, waive any performance-based restrictions applicable to all or a portion of such Restricted Shares or RSUs, provided that the applicable terms and conditions are set forth on or before the date of grant of the award to the extent required to comply with Code Section 409A and the regulations thereunder. In the event of a Participant’s Termination of Employment for Total Disability, Restricted Shares or RSUs held by such Participant shall continue to vest during the period of Total Disability. Unless otherwise provided under the terms of the award, upon the death of a Participant, including during a Participant’s Total Disability, any performance conditions applicable to Restricted Shares or RSUs which have been granted to such Participant will be deemed to have been satisfied at target, if applicable, and the Restricted Period, if any, applicable to Restricted Shares or RSUs held by such Participant, will be deemed to have expired. Unless otherwise provided under the terms of the award, upon the Retirement of a Participant, the service restrictions and conditions, if any, applicable to any Restricted Shares or RSUs which have been granted to such Participant will be deemed to have been satisfied with respect to that percentage of the Restricted Shares or RSUs equal to (i) the number of complete months between the first day of the Restricted Period and the date of the Participant’s Retirement, divided by (ii) the number of complete months in the Restricted Period. Any Restricted Shares or RSUs granted to a Participant for which the restrictions and conditions are not deemed to have expired pursuant to the preceding sentence shall be forfeited in accordance with Section 11.05. Subject to Sections 4.02 and 18.01, an award may also provide for full or pro-rata vesting upon other events, such as upon a Change in Control or for other reasons, provided that any such applicable terms and conditions are set forth on or before the date of grant of the award.
11.03. Rights of Holders of Restricted Shares. Participants to whom Restricted Shares have been granted shall not have the right to vote such shares or the right to receive any dividends with respect to such Restricted Shares. In the event of the payment of a dividend or other distribution in connection with the shares of Common Stock, Participants may, at the discretion of the Committee, receive such dividend or distribution equivalent subject to the same restrictions and vesting conditions as the underlying Restricted Shares. The Committee may, in its discretion, specify in the applicable award agreement that any or all dividend or other distribution equivalents paid on Restricted Shares prior to vesting be credited to the Participant in cash or in a number of additional Restricted Shares having an aggregate Fair Market Value equal to the dividend per share paid on the Common Stock multiplied by the number of Restricted Shares credited to the Participant’s account at the time the dividend was declared, subject to such terms and conditions, including such restrictions, of the applicable Restricted Shares. Such cash right or additional Restricted Shares credited to a Participant in relation to dividend or other distribution equivalents with respect to a Restricted Share shall be subject to the same restrictions as such Restricted Share. All distributions or credits in respect of such distributions, if any, received by a Participant with respect to Restricted Shares as a result of any stock split-up, stock distribution, a combination of shares, or other similar transaction shall be subject to the restrictions of this Article XI and the adjustment provisions of Article XV.
11.04. Rights of Holders of Restricted Share Units. Participants to whom RSUs have been granted shall not have the right to vote the shares subject to such RSUs or the right to receive any dividends with respect to the shares subject to such RSUs. In the event of the payment of a dividend or other distribution in connection with the shares
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of Common Stock, Participants may, at the discretion of the Committee, receive such dividend or distribution equivalent subject to the same restrictions and vesting conditions as the underlying RSUs. The Committee may, in its discretion, specify in the applicable award agreement that any or all dividend or other distribution equivalents paid on the shares of Common Stock underlying a Participant’s RSUs prior to the vesting of the Participant’s RSUs be credited to the Participant in cash or in a number of additional RSUs having an aggregate Fair Market Value equal to the dividend per share paid on the Common Stock multiplied by the number of RSUs credited to the Participant’s account at the time the dividend was declared. Such cash right or additional RSUs credited to the Participant in relation to dividend or other distribution equivalents paid with respect to an RSU shall be subject to the same restrictions as such RSU. All distributions or credits in respect of such distributions, if any, received by a Participant with respect to RSUs as a result of any stock split-up, stock distribution, a combination of shares, or other similar transaction shall be subject to the restrictions of this Article XI and the adjustment provisions of Article XV.
11.05. Forfeiture Upon Termination of Employment. Except as provided in Section 11.02 and Section 18.01, and as the Committee may at any time provide, any Restricted Shares or RSUs granted to a Participant pursuant to the Plan shall be forfeited if the Participant experiences a Termination of Employment either by the Participant or by the Participant’s employer for reasons other than death or Total Disability prior to the expiration of the Restricted Period and the satisfaction of any other conditions applicable to such Restricted Shares or RSUs. In addition, if the Participant’s Termination of Employment occurs as a result of Retirement, any Restricted Shares or RSUs which do not vest in accordance with Section 11.02 shall be forfeited.
11.06. Delivery of Shares. Delivery of shares of Common Stock in respect of Restricted Shares shall be made promptly following lapse or termination of the Restricted Period and satisfaction of any related conditions. Unless, in the case of RSUs, an election is made under Section 11.08 to defer the settlement of RSUs, and unless otherwise provided in the terms of any award, upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, RSUs shall be settled by delivery of a stock certificate for the number of shares of Common Stock associated with the award with respect to which the restrictions have expired or the terms and conditions have been satisfied to the Participant or the Participant’s beneficiary or estate, as the case may be. Such payment in settlement of RSUs shall be made promptly, but in any event not later than (i) the end of the year in which the Restricted Period ended and the conditions were satisfied or (ii) if later, the 15th day of the third calendar month following the date on which the Restricted Period ended, provided that the award holder will not be permitted, directly or indirectly, to designate the taxable year of settlement. The Participant may be required to execute a release of claims against the Company and its subsidiaries in this event. If an election is made under Section 11.08 to defer the settlement of RSUs, delivery shall occur as described here but upon the date or dates of delivery in accordance with Section 11.09 and the deferral election. Notwithstanding the above, if the Participant is a Specified Employee, and is entitled to receive a payment in respect of RSUs upon Termination of Employment or on a date determinable based on the date of Termination of Employment (and not a pre-determined fixed date or schedule), then, except in the event of the Participant’s death after such Termination of Employment, such payment shall be delayed by at least six (6) months after the date of such Participant’s Termination of Employment to the extent required by Code Section 409A and the regulations thereunder.
11.07. Performance-Based Objectives. At the time of the grant of Restricted Shares or RSUs to a Participant, and prior to the beginning of the performance period to which performance objectives relate, the Committee may establish performance objectives based on criteria selected by the Committee, including any one or more of the following, which may be expressed with respect to the Company or one or more operating units or groups, as the Committee may determine: price of Common Stock, or the common stock of any affiliate, shareholder return, return on equity, return on investment, return on capital, sales productivity, comparable store sales growth, economic profit, economic value added, net income,fiscal 2019 GAAP operating income, gross margin, sales, free cash flow, earnings per share, operating company contribution or market share. These factors shall have a minimum performance standard below which, and a maximum performance standard above which, no payments will be made. These performance goals may be based on an analysisrespectively.Reconciliations of historical performance and growth expectations for the business, financial results of other comparable businesses, and progress towards achieving the long-range strategic plan for the business. These performance goals and determination of results shall be based entirely on financial measures. The Committee shall specify how any performance objectives shall be adjustedReported Operating Income to the extent necessary to prevent dilution or enlargement of any award as a result of extraordinary events or circumstances, as determined by the Committee, or to exclude the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; asset impairment; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture,Adjusted Operating Income (in millions) | | | | | | | | | | | | | | | | | | | 2022 | | | 2021 | | | 2020 | | | 2019 | | | | | | | Reported Operating Income | | $ | 1,376 | | | $ | 2,009 | | | $ | 1,604 | | | $ | 1,040 | | | | | | | Plus: Write-off of Inventory due to Tornado(1) | | | — | | | | 9 | | | | — | | | | — | | | | | | | Plus: Restructuring Charges(2) | | | — | | | | — | | | | 30 | | | | — | | | | | | | Adjusted Operating Income | | $ | 1,376 | | | $ | 2,019 | | | $ | 1,634 | | | $ | 1,040 | |
(1) | In the fourth quarter of 2021, the Company recognized a pre-tax loss of $9 million related to the write-off of inventory that was destroyed by a tornado at a vendor’s facility. |
(2) | In the second quarter of 2020, the Company recognized pre-tax severance charges of $30 million related to restructuring activities. |
2023 Proxy Statement | Bath & Body Works, Inc. A-1
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consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporation transaction. To the extent that the award is subject to Code Section 409A, and to the extent intended and necessary to comply with change in control payment or toggle rules under Code Section 409A, payment in connection with a Change in Control must be made in respect of a Change in Control that satisfies the definition of “change in control event” in Code Section 409A and the regulations thereunder, unless otherwise permitted in satisfaction of the alternative payment rules under Code Section 409A and the regulations thereunder.
11.08. Deferred Restricted Share Units. The Committee may permit a Participant who has been designated to receive an RSU award to elect to defer the receipt of the shares in settlement of such RSU award as well as the form of payment of such deferred RSUs.
All elections under this Section 11.08 to defer the settlement of an RSU award must be made in accordance with the requirements of Code Section 409A and the regulations thereunder. Any election not in compliance with such requirements shall be treated as invalid and the deferral election shall be disregarded and distribution of the shares upon settlement of the awards shall be made as though the Participant did not elect to defer. For this purpose, an invalid deferral election shall include (but is not limited to) a deferral election that (i) is not executed (regardless of when received), (ii) is executed but received after the applicable irrevocable date or (iii) cannot otherwise become effective under applicable rules. If a valid deferral election is incomplete, the deferral election shall be honored and distribution of the shares attributable to the awards shall be made as though the Participant elected a deferred lump sum payment. For this purpose, a valid but incomplete deferral election is one that has been received and executed on or before the applicable irrevocable date, but does not indicate the form of payment (lump sum versus installments), or indicates an election for installment payments but not the number of installment payments. Unless the award agreement and terms and conditions accompanying specific awards indicate otherwise, or as otherwise provided in the Plan, the deferred RSUs shall be subject to the same restrictions, conditions and forfeiture provisions as the associated nondeferred RSUs.
During the Restricted Period with respect to RSUs, Participants shall not have the right to receive any dividends. After the end of the Restricted Period and prior to the time that shares of Common Stock are transferred to the Participant, within sixty (60) days after the date of payment of a dividend by the Company on its shares of Common Stock, the Participant shall be credited with “dividend equivalents” with respect to each outstanding RSU in an amount equal to the amount the Participant would have received as dividends if the RSUs were actual shares of Common Stock. Such dividend equivalents will be converted into additional RSUs based on the Fair Market Value of the Common Stock on the dividend payment date, in accordance with the procedures established by the Committee, and paid at the same time and in the same manner as the underlying RSUs.
At no time shall any assets of the Company be segregated for payment of RSUs hereunder. Participants who have elected to defer the settlement of RSUs shall at all times have the status of general unsecured creditors of the Company and shall not have any rights in or against specific assets of the Company. The Plan constitutes a mere promise by the Company to make payments attributable to RSUs in the future, in accordance with the applicable terms and conditions.
11.09. Payment of Deferred Restricted Share Units. RSUs are payable solely in shares of unrestricted Common Stock, and shall be paid in accordance with the terms of delivery under Section 11.06 and this Section 11.09. Shares attributable to deferred RSUs that are vested in accordance with the terms and conditions applicable to such awards shall be transferred to the Participant at the time and in the form as elected by the Participant and as set forth in the terms and conditions applicable to such awards, which shall be either in a single payment or in up to ten (10) installment payments.
If a lump sum distribution is elected, the payment shall be made on the date provided in, and in accordance with, the terms and conditions applicable to the award. If installment distributions are elected, the initial installment shall be paid on the date provided in, and in accordance with, the terms and conditions applicable to the award. Subsequent installments shall be made on each anniversary of the initial installment and shall continue for the duration of the selected distribution period. If the Participant dies prior to the time all shares have been distributed, distribution shall be made to the Participant’s beneficiary or estate on the payment date provided in, and in accordance with, the terms and conditions applicable to the RSU award. If Termination of Employment occurs during the Restricted Period, the terms and conditions shall set forth the rights of the Participant to payment, as well as the time and form of distribution of such awards, if any, to the Participant. A participant shall have no rights as a shareholder with respect to deferred RSUs until such time, if any, as shares of Common Stock are transferred to the Participant (or the
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Participant’s beneficiary or estate, if applicable). Notwithstanding the above, if the Participant is a Specified Employee and is entitled to receive payment upon Termination of Employment or on a date determinable based on the date of Termination of Employment (and not a pre-determined fixed date or schedule), then, except in the event of the Participant’s death after such Termination of Employment, such payment (or in the case of installments, the first payment) shall be delayed by at least six (6) months after the date of such Participant’s Termination of Employment, to the extent required by Code Section 409A and the regulations thereunder; in this event, subsequent installment payments shall occur on the anniversary of the first delayed installment payment.
Provided that the terms and conditions applicable to a deferred RSU award permit it, a Participant may change the Participant’s distribution election, provided such change in distribution election is made not less than 12 months before the date the payment (or in the case of installments, the first payment) is scheduled to be made, and is irrevocable after this date. Such an election may be made to change payment(s) from a single lump sum payment to installment payments, from installment payments to a single lump sum payment, or from one number of installment payments to another number of installment payments, by submitting such election to the Company; provided, (i) such election does not become effective until at least twelve (12) months after the date on which the election is made and (ii) except in the case of payment permissible upon the Participant’s death, the payment (or in the case of installments the first payment) must be deferred for a period of not less than five (5) years from the date such payment would have been made or commenced if there had been no election to change the form of payment. For this purpose, all installment payments are treated as a single payment. Any election not made in accordance with such procedures shall be treated as invalid, and the change in distribution election shall be disregarded and distribution of the shares of Common Stock attributable to the awards shall be made as though the Participant did not elect to change the time and form of distribution. For this purpose, an invalid change in distribution election shall include (but is not limited to) an election that (i) is not executed (regardless of when received), (ii) is executed but received after the applicable irrevocable date or (iii) cannot otherwise become effective under applicable rules. If a valid change in distribution election is incomplete, the change in distribution election shall be honored and distribution of the shares attributable to the awards shall be made as though the Participant elected a change in distribution to a deferred lump sum payment. For this purpose, a valid but incomplete change in distribution election is one that has been received and executed on or before the applicable irrevocable date, but does not indicate the form of payment (lump sum versus installments), or indicates an election for installment payments but not the number of installment payments.
ARTICLE XII
PERFORMANCE UNITS
12.01. Award of Performance Units. For each Performance Period, Performance Units may be granted under the Plan to such Participants as the Committee shall determine. The award agreement covering such Performance Units shall specify the Ending Value. If necessary to make the calculation of the amount to be paid to the Participant pursuant to Sections 12.03 and 12.04, the Committee shall also state in the award agreement the Initial Value. The award agreement may also specify that each Performance Unit is deemed to be equivalent to one (1) share of Common Stock. Performance Units granted to a Participant shall be credited to a Performance Unit Account established and maintained for such Participant.
12.02. Performance Period. Different Performance Periods may be established for different Participants receiving Performance Units. Performance Periods may run consecutively or concurrently.
12.03. Right to Payment of Performance Units. All applicable terms and conditions shall be set forth in the award agreement and/or in accompanying terms and conditions on or before the date of grant of Performance Units. With respect to each award of Performance Units under this Plan, the Committee shall specify the Performance Objectives. If the Performance Objectives established for a Participant for the Performance Period are partially but not fully met, the Committee may, nonetheless, in its sole discretion, determine that all or a portion of the Performance Units have vested but such determination shall not change the date of payment of the awards. If the Performance Objectives for a Performance Period are exceeded, the Committee may, in its sole discretion, grant additional, fully vested Performance Units to the Participant. Except as provided in Section 18.01, on or before the date of grant, the Committee may also determine, in its sole discretion, that Performance Units awarded to a Participant shall become partially or fully vested upon the Participant’s death, Total Disability or Retirement, or upon the Participant’s Termination of Employment prior to the end of the Performance Period but such determination shall not change the date of payment of the awards. Performance Unit awards represent an unfunded promise to pay the
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Participant the value specified in the award agreement and/or applicable terms and conditions in the future if the conditions associated with the Performance Unit award are satisfied and the Performance Units are not otherwise forfeited prior to the stated date of payment, under the terms and conditions applicable to such award.
12.04. Payment for Performance Units. As soon as practicable following the end of a Performance Period but not later than 90 days after the end of a Performance Period, the Committee shall determine whether the Performance Objectives for the Performance Period have been achieved (or partially achieved to the extent necessary to permit partial vesting at the discretion of the Committee pursuant to Section 12.03). If the Performance Objectives for the Performance Period have been exceeded, the Committee shall determine whether additional Performance Units shall be granted to the Participant pursuant to Section 12.03. Within 90 days after the end of a Performance Period, provided the Committee determines the Performance Objectives have been achieved or partially achieved pursuant to Section 12.03, if the award agreement specifies that each Performance Unit is deemed to be equivalent to one (1) share of Common Stock, the Company shall pay to the Participant an amount with respect to each vested Performance Unit equal to the Fair Market Value of a share of Common Stock on such payment date or, if the Committee shall so specify at the time of grant, an amount equal to (i) the Fair Market Value of a share of Common Stock on the payment date less (ii) the Fair Market Value of a share of Common Stock on the date of grant of the Performance Unit. If the award agreement specifies a value for each Performance Unit or sets forth a formula for determining the value of each Performance Unit at the time of payment, then within 90 days after the end of a Performance Period, provided the Committee determines the Performance Objectives have been achieved or partially achieved pursuant to Section 12.03, the Company shall pay to the Participant an amount with respect to each vested Performance Unit equal to the Ending Value of the Performance Unit or, if the Committee shall so specify at the time of grant, an amount equal to (i) the Ending Value of the Performance Unit less (ii) the Initial Value of the Performance Unit. Payment shall be made entirely in cash, entirely in Common Stock or in such combination of cash and Common Stock as the Committee shall determine. The Committee may, in its discretion, permit the deferral of settlement of vested Performance Units pursuant to procedures consistent with those applicable to the deferral of settlement of RSUs under Sections 11.08 and 11.09 above, subject to any exceptions or requirements under Section 409A of the Code and the regulations thereunder.
12.05. Voting and Dividend Rights. No Participant shall be entitled to any voting rights, to receive any dividends, or to have his or her Performance Unit Account credited or increased as a result of any dividends or other distribution with respect to Common Stock. In the event of the payment of a dividend or other distribution in connection with the shares of Common Stock, Participants may, at the discretion of the Committee, receive such dividend or distribution equivalent subject to the same restrictions and vesting conditions as the underlying Performance Units. The Committee may, in its discretion, specify in the applicable award agreement that any or all dividend or other distribution equivalents paid on the shares of Common Stock underlying a Participant’s Performance Units prior to the vesting of the Participant’s Performance Units be credited to the Participant in cash or in a number of additional Performance Units having an aggregate Fair Market Value equal to the dividend per share paid on the Common Stock multiplied by the number of Performance Units credited to the Participant’s account at the time the dividend was declared. Such cash right or additional Performance Units credited to the Participant in relation to dividend or other distribution equivalents paid with respect to a Performance Unit shall be subject to the same restrictions and satisfaction of the same Performance Objectives as applicable to such Performance Unit. All distributions or credits in respect of distributions, if any, received by a Participant with respect to Performance Units as a result of any stock split-up, stock distribution, a combination of shares, or other similar transaction shall be subject to the restrictions of this Article XII and the adjustment provisions of Article XV.
ARTICLE XIII
UNRESTRICTED SHARES
13.01. Award of Unrestricted Shares. The Committee may cause the Company to grant Unrestricted Shares to associates at such time or times, in such amounts and for such reasons as the Committee, in its sole discretion, shall determine. Except to the extent required by applicable law, no payment shall be required for Unrestricted Shares.
13.02. Delivery of Unrestricted Shares. The Company shall issue, in the name of each Participant to whom Unrestricted Shares have been granted, stock certificates representing the total number of Unrestricted Shares granted to the Participant, and shall deliver such certificates to the Participant on a fixed or objectively determinable date of payment, which shall be set forth at the time of grant.
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13.03. Deferred Share Units. The Committee may permit a Participant who has been designated to receive an Unrestricted Share award to elect to receive such Unrestricted Share award in the form of Deferred Share Units.
Any such election must be made on or before December 31 of the calendar year prior to the year the compensation attributable to such award (or any portion of such award) is earned, and shall be irrevocable after such date, and further shall comply with the rules set forth in Section 11.08, which apply to deferral elections, including such rules relating to invalid and valid but incomplete deferral elections. At no time shall any assets of the Company be segregated for payment of Deferred Share Units hereunder. Participants who have elected to receive Unrestricted Shares in the form of Deferred Share Units shall at all times have the status of general unsecured creditors of the Company and shall not have any rights in or against specific assets of the Company. The Plan constitutes a mere promise by the Company to make payments on Deferred Share Units in the future.
After the award of Deferred Share Units to the Participant and prior to the time that shares of Common Stock are transferred to the Participant pursuant to Section 13.04, within sixty (60) days after the date of payment of a dividend by the Company on its shares of Common Stock, the Participant shall be credited with “dividend equivalents” with respect to each outstanding Deferred Share Unit in an amount equal to the amount the Participant would have received as dividends if the Deferred Share Units were actual shares of Common Stock. Such dividend equivalents will be converted into additional Deferred Share Units based on the Fair Market Value of the Common Stock on the dividend payment date, in accordance with the procedures established by the Committee, and paid at the same time and in the same manner as the underlying Deferred Share Units.
13.04. Payment of Deferred Share Units. Deferred Share Units are payable solely in shares of unrestricted Common Stock, and shall be paid in accordance with the terms of delivery under Section 13.03 and this Section 13.04. Shares applicable to such awards shall be transferred to the Participant at the time and in the form as elected by the Participant and as set forth in the terms and conditions applicable to such awards, which shall be either in a single payment or in up to ten (10) installment payments.
If a lump sum distribution is elected, the payment shall be made on the date provided in, and in accordance with, the terms and conditions applicable to the award. If installment distributions are elected, the initial installment shall be paid on the date provided in, and in accordance with, the terms and conditions applicable to the award. Subsequent installments shall be made on each anniversary of the initial installment and shall continue for the duration of the selected distribution period. If the Participant dies prior to the time all shares have been distributed, distribution shall be made to the Participant’s beneficiary or estate on the payment date provided in, and in accordance with, the terms and conditions applicable to the award. A Participant shall have no rights as a shareholder with respect to Deferred Share Units until such time, if any, as shares of Common Stock are transferred to the Participant (or the Participant’s beneficiary or estate, if applicable). Notwithstanding the above, if the Participant is a Specified Employee and is entitled to receive payment upon Termination of Employment or on a date determinable based on the date of Termination of Employment (and not a pre-determined fixed date or schedule), then, except in the event of the Participant’s death after such Termination of Employment, such payment (or in the case of installments, the first payment) shall be delayed by at least six (6) months after the date of such Participant’s Termination of Employment, to the extent required by Code Section 409A and the regulations thereunder; in this event, subsequent installment payments shall occur on the anniversary of the first delayed installment payment.
Provided that the terms and conditions applicable to a Deferred Share Unit award permit it, a Participant may change the Participant’s distribution election, provided such change in distribution election shall comply with the procedures and rules set forth in Section 11.09 which apply to change in distribution elections, including such rules relating to invalid and valid but incomplete change in distribution elections.
ARTICLE XIV
CLAWBACK
14.01. Clawback. If the Committee determines in good faith either that: (i) if required by applicable law with respect to a Participant or (ii) (x) a Participant engaged in fraudulent conduct or activities relating to the Company, (y) a Participant has knowledge of such conduct or activities or (z) a Participant, based upon the Participant’s position, duties or responsibilities, should have had knowledge of such conduct or activities, the Committee shall have the power and authority under the Plan to terminate without payment all outstanding awards under the Plan. If required by applicable law with respect to a Participant or if a Participant described in (ii) above has received any
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compensation pursuant to an award granted under the Plan that is based on or results from such conduct or activities, such Participant shall promptly reimburse to the Company a sum equal to either an amount required by such law or the amount of such compensation paid in respect of the year in which such conduct or activities occurred, as applicable.
ARTICLE XV
ADJUSTMENTS; REPRICING
15.01. Adjustments. Notwithstanding any other provision of the Plan, the Committee shall make or provide for such adjustments to the Plan, to the number and class of shares available thereunder or to any outstanding Options, Stock Appreciation Rights, Restricted Shares, RSUs, Performance Units or other awards as it shall deem appropriate to prevent dilution or enlargement of rights, including adjustments in the event of changes in the number of shares of outstanding Common Stock by reason of stock dividends, extraordinary cash dividends, split-ups, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations, liquidations and the like. However, any such adjustment with respect to Options and Stock Appreciation Rights shall satisfy the requirements of Reg. §1.409A-1(b)(5)(v)(D) and shall otherwise ensure that such awards continue to be exempt from Code Section 409A, and any such adjustment to awards that are subject to Code Section 409A, including RSUs and Performance Units, shall be made to the extent compliant with Code Section 409A and the regulations thereunder.
15.02. Repricing. Except as provided above in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options or Stock Appreciation Rights without stockholder approval.
ARTICLE XVI
AMENDMENT AND TERMINATION
16.01. Amendment and Termination. The Board may suspend, terminate, modify or amend the Plan, provided that any amendment that would constitute a “material revision” of the Plan within the meaning of New York Stock Exchange Rule 303A(8) shall be subject to the approval of the Company’s stockholders. If the Plan is terminated, the terms of the Plan shall, notwithstanding such termination, continue to apply to awards granted prior to such termination. No suspension, termination, modification or amendment of the Plan may, without the consent of the Participant to whom an award shall theretofore have been granted, materially adversely affect the rights of such Participant under such award, except to the extent any such action is undertaken to cause the Plan to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations.
ARTICLE XVII
WRITTEN AGREEMENT
17.01. Written Agreements. Each award of Options, Stock Appreciation Rights, Restricted Shares, RSUs, Performance Units and Unrestricted Shares shall be evidenced by a written agreement, executed by the Participant and the Company, and containing such restrictions, terms and conditions, if any, as the Committee may require. In the event of any conflict between a written agreement and the Plan, the terms of the Plan shall govern.
ARTICLE XVIII
CHANGE IN CONTROL
18.01. Effect of Change in Control. In the event that a Participant’s employment or service is terminated by the Company other than for Cause or, to the extent provided in an employment agreement between the Company and a Participant, a Participant resigns for Good Reason, in either case during the 24-month period beginning on the date of a Change in Control, (i) Options and Stock Appreciation Rights granted to such Participant which are not yet exercisable shall become fully exercisable; (ii) any restrictions applicable to any Restricted Shares and RSUs awarded
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to such Participant shall be deemed to have been satisfied at target and the Restricted Period, if any, as applicable to such Restricted Shares and RSUs held by such Participant shall be deemed to have expired; and (iii) any Performance Objectives applicable to any Performance Units awarded to such Participant shall be deemed to have been satisfied at target and the Performance Period, if any, as applicable to such Performance Units held by such Participant shall be deemed to have expired. Notwithstanding the foregoing, or the provisions of Sections 11.06 or 12.04, if the accelerated settlement of any RSU or Performance Unit would cause the application of additional taxes under Code Section 409A, such RSU or Performance Unit will be settled on the date it would otherwise have been settled in the absence of a Change in Control, unless the transaction constituting the Change in Control falls within the definition of a Change in Control Event within the meaning of Code Section 409A and the regulations thereunder. Notwithstanding the foregoing, for the avoidance of doubt, the Committee in place prior to a Change in Control may in its discretion provide for alternative treatment of awards in connection with the Change in Control.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
19.01 Awards to Participants Outside the United States. The Committee may modify the terms of any outstanding or new award under the Plan granted to a Participant who is, at the time of grant or during the term of the award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such award shall conform to laws, regulations and customs of the country in which the Participant is then resident or primarily employed. An award may be modified under this Section 19.01 in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation
19.02. Tax Withholding. The Company shall have the right to require Participants or their beneficiaries or legal representatives to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements, or to deduct from all payments under this Plan amounts sufficient to satisfy all withholding tax requirements. Whenever payments under the Plan are to be made to a Participant in cash, such payments shall be net of any amounts sufficient to satisfy all federal, state and local withholding tax requirements. The Committee may, in its discretion, permit a Participant to satisfy the Participant’s tax withholding obligation either by (i) surrendering shares of Common Stock owned by the Participant or (ii) having the Company withhold from shares of Common Stock otherwise deliverable to the Participant. Shares of Common Stock surrendered or withheld shall be valued at their Fair Market Value as of the date on which income is required to be recognized for income tax purposes. In the case of an award of Incentive Stock Options, the foregoing right shall be deemed to be provided to the Participant at the time of such award.
19.03. Compliance With Section 16(b). In the case of Participants who are or may be subject to Section 16 of the Act, it is the intent of the Company that the Plan and any award granted hereunder satisfy and be interpreted in a manner that satisfies the applicable requirements of Rule 16b-3 under the Act, so that such persons will be entitled to the benefits of Rule 16b-3 under the Act or other exemptive rules under Section 16 of the Act and will not be subjected to liability thereunder. If any provision of the Plan or any award would otherwise conflict with the intent expressed herein, that provision, to the extent possible, shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Participants who are or may be subject to Section 16 of the Act.
19.04. Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and businesses of the Company. In the event of any of the foregoing, the Committee may, at its discretion prior to the consummation of the transaction, cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at such time and in such manner as the Committee deems appropriate and in accordance with applicable law and the provisions of Article XV.
19.05. General Creditor Status. Participants shall have no right, title or interest whatsoever in or to any investments which the Participant may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant or beneficiary or legal representative of such Participant. To the extent that any person acquires a right to receive payments from the Company under the Plan, such
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right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.
19.06. No Right to Employment. Nothing in the Plan or in any written agreement entered into pursuant to Article XVII, nor the grant of any award, shall confer upon any Participant any right to continue in the employ of the Company or a subsidiary or to be entitled to any remuneration or benefits not set forth in the Plan or such written agreement or interfere with or limit the right of the Company or a subsidiary to modify the terms of or terminate such Participant’s employment at any time.
19.07. No Rights to Awards; No Rights to Additional Payments. No Participant shall have any claim to be granted any award under the Plan, and there is no obligation for uniformity of treatment of Participants. All grants of awards and deliveries of Common Stock, cash or other property under the Plan shall constitute a special discretionary incentive payment to the Participant and shall not be required to be taken into account in computing any contributions to or any benefits under any retirement, profit-sharing, severance or other benefit plan of the Company or any subsidiary or affiliate, unless the Committee expressly provides otherwise in writing.
19.08. Notices. Notices required or permitted to be made under the Plan shall be sufficiently made if sent by registered or certified mail addressed (a) to the Participant at the Participant’s address set forth in the books and records of the Company or its subsidiaries or (b) to the Company or the Committee at the principal office of the Company.
19.09. Severability. In the event that any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
19.10. Governing Law. To the extent not preempted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
19.11. Term of Plan. Unless earlier terminated pursuant to Article XVI hereof, the Plan shall terminate on May 14, 2030.
ARTICLE XX
DEFINITIONS
20.01 As used in the Plan, the following terms shall have the respective meanings indicated:
(a) “Act” means the Securities Exchange Act of 1934, as amended.
(b) “Board” means the Company’s Board of Directors.
(c) “Cause” means that the Participant (1) was grossly negligent in the performance of the Participant’s duties with the Company (other than a failure resulting from the Participant’s incapacity due to physical or mental illness); (2) has plead “guilty” or “no contest” to or has been convicted of an act which is defined as a felony under federal or state law; or (3) engaged in misconduct in bad faith which could reasonably be expected to materially harm the Company’s business or its reputation. The Participant shall be given written notice by the Company of a termination for Cause, which shall state in detail the particular act or acts or failures to act that constitute the grounds on which the termination for Cause is based.
(d) “Change in Control” means, and shall be deemed to have occurred upon, the occurrence of any of the following events:
1) Any Person (other than an Excluded Person) becomes, together with all “affiliates” and “associates” (each as defined under Rule 12b-2 of the Act) the “beneficial owner” (as defined under Rule 13d-3 of the Act) of securities representing 33% or more of the combined voting power of the Voting Stock of the Company then outstanding, unless such Person becomes the “beneficial owner” of 33% or more of the combined voting power of such Voting Stock then outstanding solely as a result of an acquisition of such Voting Stock by the Company which, by reducing the Voting Stock of the Company outstanding, increases the proportionate Voting Stock beneficially owned by such Person (together with all “affiliates” and “associates” of such Person) to 33% or more of the combined voting power of the Voting
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Stock of the Company then outstanding; provided that if a Person shall become the “beneficial owner” of 33% or more of the combined voting power of the Voting Stock of the Company then outstanding by reason of such Voting Stock acquisition by the Company and shall thereafter become the “beneficial owner” of any additional Voting Stock of the Company which causes the proportionate voting power of Voting Stock beneficially owned by such Person to increase to 33% or more of the combined voting power of the Voting Stock of the Company then outstanding, such Person shall, upon becoming the “beneficial owner” of such additional Voting Stock of the Company, be deemed to have become the “beneficial owner” of 33% or more of the combined voting power of the Voting Stock then outstanding other than solely as a result of such Voting Stock acquisition by the Company;
2) During any period of 24 consecutive months, individuals who at the beginning of such period constitute the Board of Directors of the Company (and any new Director, whose election by such Board or nomination for election by the stockholders of the Company was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority of Directors then constituting such Board;
3) A reorganization, merger or consolidation of the Company is consummated, in each case, unless, immediately following such reorganization, merger or consolidation, (i) more than 50% of, respectively, the then-outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the “beneficial owners” of the Voting Stock of the Company outstanding immediately prior to such reorganization, merger or consolidation, (ii) no Person (but excluding for this purpose any Excluded Person and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 33% or more of the voting power of the outstanding Voting Stock of the Company) beneficially owns, directly or indirectly, 33% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Board of Directors of the Company at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or
4) The consummation of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to any corporation with respect to which, immediately following such sale or other disposition, (A) more than 50% of, respectively, the then-outstanding shares of common stock of such corporation and the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the “beneficial owners” of the Voting Stock of the Company outstanding immediately prior to such sale or other disposition of assets, (B) no Person (but excluding for this purpose any Excluded Person and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 33% or more of the voting power of the outstanding Voting Stock of the Company) beneficially owns, directly or indirectly, 33% or more of, respectively, the then-outstanding shares of common stock of such corporation or the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of such corporation were members of the Board of Directors of the Company at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.
Notwithstanding the foregoing, in no event shall a “Change in Control” be deemed to have occurred (i) as a result of the formation of a Holding Company or (ii) with respect to a Participant, if the Participant is part of a “group,” within the meaning of Section 13(d)(3) of the Act as in effect on the Plan’s effective date, which consummates the Change in Control transaction. In addition, for purposes of the definition of “Change in
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Control” a Person engaged in business as an underwriter of securities shall not be deemed to be the “beneficial owner” of, or to “beneficially own,” any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition.
(e) “Change in Control Event” has the meaning set forth in Code Section 409A.
(f) “Code” means the Internal Revenue Code of 1986, as amended.
(g) “Committee” means the Compensation Committee of the Board.
(h) “Common Stock” means shares of the Company’s common stock.
(i) “Deferred Share Unit” means the right to receive a share of Common Stock in the future.
(j) “Ending Value” means the value for each Performance Unit or formula for determining the value of each Performance Unit at the time of payment, in each case as provided for in the applicable award agreement.
(k) “Excluded Person” means (i) the Company; (ii) any of the Company’s subsidiaries; (iii) any Holding Company; (iv) any employee benefit plan of the Company, any of its subsidiaries or a Holding Company; or (v) any Person organized, appointed or established by the Company, any of its subsidiaries or a Holding Company for or pursuant to the terms of any plan described in clause (iv).
(l) “Fair Market Value” means the closing price of the Common Stock as reported on the principal exchange on which the shares are listed for the date on which the grant, exercise or other transaction occurs, or if there were no sales on such date, the most recent prior date on which there were sales.
(m) “Good Reason” has the meaning set forth in a Participant’s employment agreement.
(n) “Holding Company” means an entity that becomes a holding company for the Company or its businesses as a part of any reorganization, merger, consolidation or other transaction, provided that the outstanding shares of common stock of such entity and the combined voting power of the then-outstanding voting securities of such entity entitled to vote generally in the election of directors is, immediately after such reorganization, merger, consolidation or other transaction, beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the “beneficial owners,” respectively, of the Voting Stock of the Company outstanding immediately prior to such reorganization, merger, consolidation or other transaction in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, consolidation or other transaction, of such outstanding Voting Stock of the Company.
(o) “Incentive Stock Option” has the meaning set forth in Section 2.01 of the Plan.
(p) “Initial Value” means the initial value for each Performance Unit as provided for in the applicable award agreement and as necessary to make the calculation of the amount to be paid to a Participant pursuant to Sections 12.03 and 12.04 of the Plan.
(q) “Nonstatutory Stock Option” has the meaning set forth in Section 2.01 of the Plan.
(r) “Nontandem Stock Appreciation Right” has the meaning set forth in Section 2.01 of the Plan.
(s) “Participant” means any individual who receives an award pursuant to Section 4.01 of the Plan.
(t) “Performance Objectives” means the performance objectives, as specified by the Committee, which must be satisfied in order for the Participant to vest in the Performance Units which have been awarded to the Participant for the Performance Period.
(u) “Performance Period” means the period of time, as established by the Committee in its sole discretion, applicable to Performance Units.
(v) “Performance Unit Account” means an account established and maintained for a Participant who is granted Performance Units.
(w) “Performance Units” has the meaning set forth in Section 2.01 of the Plan.
(x) “Person” means any individual composition, partnership, limited liability company, associations, trust or other entity or organization.
(y) “Preexisting Plan” means the 1993 Stock Option and Performance Plan.
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(z) “Restricted Period” means the period of time, as established by the Committee, applicable to Restricted Shares and RSUs.
(aa) “Restricted Share Unit” or “RSU” has the meaning set forth in Section 2.01 of the Plan.
(bb) “Restricted Share” has the meaning set forth in Section 2.01 of the Plan.
(cc) “Retirement” means, for purposes of Article XI of the Plan, a Participant’s Termination of Employment following the date on which a Participant has attained age 55 and completed seven years of service with the Company.
(dd) “Specified Employee” has the meaning set forth in Code Section 409A and the regulations thereunder.
(ee) “Stock Appreciation Rights” has the meaning set forth in Section 2.01 of the Plan.
(ff) “Tandem Stock Appreciation Rights” has the meaning set forth in Section 2.01 of the Plan.
(gg) “Termination of Employment” means a “separation from service” as that term is defined in Code Section 409A and the regulations thereunder.
(hh) “Total Disability” has the meaning set forth in the L Brands, Inc. Long-Term Disability Plan or any successor thereto.
(ii) “Unrestricted Shares” has the meaning set forth in Section 2.01 of the Plan.
(jj) “Voting Stock” means securities of the Company entitled to vote generally in the election of the Company’s Board.
TABLE OF CONTENTS
ADMITTANCE SLIP 20202023 ANNUAL MEETING OF STOCKHOLDERS Date, Time and Place of Meeting: Date: | | June 8, 2023 | | | Time:
| | 8:30 a.m., Eastern Time |
Place:
| | Place: | | Three Limited Parkway
Columbus, OhioOH 43230 |
Attending the Meeting: Meeting:Stockholders who plan to attend the meeting in person must bring this admittance slip and a photo identification to gain access.and this Admittance Slip. In addition, if your shares are held in the name of your broker, bank or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the shares at the close of business on April 10, 2023. Because of necessary security precautions, bags, purses and briefcases maywill be subject to inspection. To speed the admissions process, stockholders are encouraged to bring only essential items. Cameras, camcordersThe use of cameras, video and audio recording devices and other electronic devices at the annual meeting is prohibited, and such devices will not be permitted in the annual meeting. We realize that many mobile phones have built-in digital cameras and recording functions, and while you may bring these phones into the annual meeting, you may not use the camera or videotaping equipment are not allowed.recording functions at any time. Photographs or videos taken by the CompanyBath & Body Works at the meeting may be used by the Company. By attending the meeting, you waive any claim or rights to these photographs. For more information about attending the annual meeting, please visit theour website at www.lb.comwww.bbwinc.com or contact Investor Relations at (614) 415-7585.investorrelations@bbw.com. Bath & Body Works, Inc. | 2023 Proxy Statement
| | | | | P.O. BOX 8016, CARY, NC 27512-9903 | | YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: | | | | INTERNET | | | | Go To: www.proxydocs.com/BBWI | | ● Cast your vote online | | ●Have your Proxy Card ready | | ● Follow the simple instructions to record your vote | | | | PHONE Call 1-866-647-1630 | | | | ● Use any touch-tone telephone | | ●Have your Proxy Card ready | | ● Follow the simple recorded instructions | | | | MAIL | | | | ● Mark, sign and date your Proxy Card ● Fold and return your Proxy Card in the postage-paid envelope provided |
Annual Meeting of Stockholders For Stockholders of Record as of April 10, 2023 | | | TIME: | | Thursday, June 8, 2023 at 8:30 AM Eastern Time | PLACE: | | Bath & Body Works, Inc. | | | Three Limited Parkway | | | Columbus, Ohio 43230 |
This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Gina R. Boswell and Michael C. Wu (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Bath & Body Works, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters on which Bath & Body Works, Inc. did not have notice in accordance with Securities and Exchange Commission rules that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendations. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Bath & Body Works, Inc. Annual Meeting of Stockholders | | | Please make your marks like this: | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 1 YEAR ON PROPOSAL 4 AGAINST ON PROPOSAL 5 | | | | | | | | | | | | | | | | | | | | | | | | | BOARD OF | | | | | | | | | | | | | DIRECTORS | | | PROPOSAL | | | | YOUR VOTE | | | | RECOMMENDS | | | | | | | | 1. | | Elect the 13 nominees proposed by the Board of Directors as directors. | | | | | | | | | | | | | | | FOR | | AGAINST | | ABSTAIN | | | | | 1.01 Patricia S. Bellinger | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.02 Alessandro Bogliolo | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.03 Gina R. Boswell | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.04 Lucy O. Brady | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.05 Francis A. Hondal | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.06 Thomas J. Kuhn | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.07 Danielle M. Lee | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.08 Michael G. Morris | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.09 Sarah E. Nash | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.10 Juan Rajlin | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.11 Stephen D. Steinour | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.12 J.K. Symancyk | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | 1.13 Steven E. Voskuil | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | | | FOR | | AGAINST | | ABSTAIN | | | | | 2. | | Ratification of the appointment of our independent registered public accountants. | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | 3. | | Advisory vote to approve named executive officer compensation. | | ☐ | | ☐ | | ☐ | | | | FOR | | | | | | | | | | | | 1YR | | 2YR | | 3YR | | ABSTAIN | | | 4. | | Advisory vote on the frequency of future advisory votes on named executive officer compensation. | | ☐ | | ☐ | | ☐ | | ☐ | | 1 YEAR | | | | | | | | | | | | FOR | | AGAINST | | ABSTAIN | | | | | 5. | | Stockholder proposal regarding an independent board chairman, if properly presented at the meeting. | | ☐ | | ☐ | | ☐ | | | | AGAINST | | | | | | | | | | NOTE: Transact such other business as may properly come before the meeting. | | | | | | | | | | |
Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. | | | | | | | | | | | | | | | | | | | Signature (and Title if applicable) | | | Date | | | | | | | | | | | Signature (if held jointly) | | | Date | |
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