UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.  )

 

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

FRANCESCA’S HOLDINGS CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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Francesca’s Holdings Corporation
3480 W. 12^th Street8760 Clay Road
Houston, Texas 7700877080

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
  
To Be Held On July 10, 20129, 2013
1010:00 a.m., Central Time

To the Stockholders of Francesca’s Holding Corporation:

Notice is hereby given that the 20122013 annual meeting of stockholders (the “Annual Meeting”) of Francesca’s Holding Corporation (the “Company”) will be held at The Houstonian, 111 North Post Oak Lane,8760 Clay Road, Houston, Texas 7702477080 on Tuesday, July 10, 2012,9, 2013, at 1010:00 a.m., Central Time, for the following purposes:

(1)

To elect to the Board of Directors of the Company the one (1) nomineethree (3) nominees named in the attached Proxy Statement to serve until the Company’s 20152016 annual meeting of stockholders and until her successor istheir successors are duly elected and qualified;

(2)

To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending February 2, 2013;1, 2014; and

(3)

To hold an advisory vote to approve the Company’s executive compensation;

(4)

To hold an advisory vote on the frequency of future advisory votes to approve executive compensation; and

(5)

To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

Only stockholders of record of the Company’s common stock as of the close of business on May 11, 201210, 2013 are entitled to notice of, and to vote at, the Annual Meeting and any postponements or adjournments thereof.

You are cordially invited to attend the Annual Meeting in person.Your vote is important to us. Whether or not you expect to attend the Annual Meeting, please date, sign and mail the enclosed proxy card or submit your proxy using the internet or telephone as soon as possible. If you attend the Annual Meeting and vote in person, your proxy will not be used.

		By Order of the Board of Directors,
		Greg BrennemanKal Malik Non-Executive ChairmanSecretary
Houston, Texas May 25, 201224, 2013

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 10, 2012.9, 2013.
The Proxy Statement and the Annual Report to Stockholders are available at
http://materials.proxyvote.com/351793

		Page
Proxy Statement			1
Important Notice Regarding Internet Availability of Proxy Materials			1
Company Overview			1
General Information About the Proxy Materials and the Annual Meeting			2
Security Ownership of Principal Stockholders and Management			7
Board of Directors and Executive Officers			9
Corporate Governance			12
Director Compensation			18
Executive Compensation			20
Compensation Discussion and Analysis			20
Compensation Committee Report			30
Compensation of Named Executive Officers			31
All Other Compensation During Fiscal Year 2012			32
Narrative Disclosure to Summary Compensation table and Grants of Plan-Based Awards Table			33
Certain Relationships and Related Party Transactions			41
Section 16(a) Beneficial Ownership Reporting Compliance			43
Audit Information			45
Election of Directors (Proposal No. 1)			46
Ratification of Appointment of Independent Registered Public Accounting Firm (Proposal No. 2)			47
Other Matters			48
Stockholder Proposals and Director Nominations for 2014 Annual Meeting of Stockholders			48
Annual Report to Stockholders			48
Delivery of Documents to Stockholders Sharing an Address			49

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FRANCESCA’S HOLDINGS CORPORATION
3480 W. 12^th Street8760 Clay Road
Houston, Texas 7700877080

 

PROXY STATEMENT
FOR 20122013 ANNUAL MEETING OF STOCKHOLDERS

 

IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS

We encourage you to vote by internet or telephone, or complete, sign and return your proxy prior to the meeting even if you plan to attend. After you vote, you may confirm that your shares were voted in accordance with your instructions. Immediately following the below company overview is a question and answer section that provides information about how to vote your shares and how to confirm your vote.

This Proxy Statement and our annual report to stockholders (the “2011“2012 Annual Report”) are first being mailed to the Company’s stockholders and will be made available on the internet athttp://investors.francescascollections.cominvestors.francescas.com or athttp://materials.proxyvote.com/351793 on or about May 25, 2012.24, 2013.

COMPANY OVERVIEW

The Annual MeetingFrancesca’s Holdings Corporation (the “Company”) is the Company’s first annual meeting of stockholders as a publicly traded company. We are a holding company and all of our business operations are conducted through our wholly-owned indirect subsidiary, Francesca’s Collections, Inc., a corporation formed and existing under the laws of the State of Texas. Until the completion of our initial public offering (“IPO”) on July 27, 2011, we were

francesca’s® is a private company. On July 27, 2011, we completed our IPO and on February 1, 2012 and April 23, 2012, we completed follow-on offerings to our IPO. As of May 11, 2012, the CCMP Capital Funds (as hereinafter defined) owned approximately 17% of our outstanding common stock.

francesca’s collections® is one of the fastest growing specialty retailers in the United States. Ourretailer with retail locations are designed and merchandised to feel like independently owned, upscale boutiques and provide ourproviding customers with an inviting, intimatea fun and differentiated shopping experience. By offeringThe merchandise assortment is a differentiated shopping experiencediverse and high-quality merchandise at a compelling value, ourbalanced mix of apparel, jewelry, accessories and gifts. Today francesca’s® operates 421 boutiques have been successful across a wide variety of geographic marketsin 44 states and shopping venues.also serves its customers throughwww.francescas.com.

We believe that through the strength of our business model and our disciplined operating philosophy, we have achieved strong financial performance and growth that is among the best in the specialty retail sector:

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GENERAL INFORMATION ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

We believe the delivery options that we have chosen will allow us to provide our stockholders with the proxy materials they need, while minimizing the cost of the delivery of the materials and the environmental impact of printing and mailing printed copies.

We will also consider any other business that properly comes before the Annual Meeting or any adjournments or postponements thereof. See “—How will voting on any other business be conducted?” below.

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Street Name Holders.  If you hold your shares in an account at a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name.” The Notice of Internet Availability or proxy materials were forwarded to you by your bank or broker, who is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account.

You may vote via the Internet.

You may vote via the telephone.

You may vote in person at the meeting.

You may vote by mail.mail.  If you received a printed set of the proxy materials, you can submit your proxy or voting instructions by completing and signing the separate proxy card or voting instruction form you received and mailing it in the accompanying prepaid and addressed envelope.

You may vote in person at the meeting.  All stockholders of record may vote in person at the Annual Meeting. Written ballots will be passed out to anyone who wants to vote at the meeting. However, if you are the beneficial owner of shares held in street name through a bank, broker or other nominee, you may not vote your shares at the Annual Meeting unless you obtain a “legal proxy” from the bank, broker or nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting.

Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions in advance to authorize the voting of your shares at the Annual Meeting to ensure that your vote will be counted if you later are unable to attend.

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For shares held in street name, you may revoke any previous voting instructions by submitting new voting instructions to the bank, broker or nominee holding your shares by the deadline for voting specified in the voting instructions provided by your bank, broker or nominee. Alternatively, if your shares are held in street name and you have obtained a legal proxy from the bank, broker or nominee, giving you the right to vote the shares at the Annual Meeting, you may revoke any previous voting instructions by attending the Annual Meeting and voting in person.

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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of May 11, 201210, 2013 for the following: (i) each of the Company’s directors and each executive officer of the Company identified as a “named executive officer” in this Proxy Statement, (ii) all persons who are directors and executive officers of the Company as a group and (iii) any person who is known by the Company to be the beneficial owner of more than 5% of the Company’s outstanding common stock. ThisExcept as set forth in the footnotes below, this table is based on information supplied to us by our executive officers, directors and principal stockholders or included in a Schedule 13G filed with the SEC.

To our knowledge, except as set forth in the footnotes below, each stockholder identified in the table possesses sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by that stockholder. Unless otherwise indicated, the address for each person named in the table below is c/o Francesca’s Holdings Corporation, 3480 W. 12^th Street,8760 Clay Road, Houston, Texas 77008.77080.

Name of Beneficial Owner		Shares Beneficially Owned(1)				Percent of Shares(1)
Directors and Named Executive Officers:
John De Meritt(2)			1,318,000				3.0	%
Gene Morphis(3)			66,885				*
Theresa Backes(4)			359,100				*
Kyong Gill			1,096,945				2.5
Kal Malik(5)			46,842				*
Patricia Bender			—				—
Greg Brenneman(6)			7,247,731				16.6
Neill Davis(7)			40,000				*
Richard Emmett(8)			16,000				*
Joseph Scharfenberger(6)(10)			—				*
Richard Zannino(6)			7,247,731				16.6
All persons who are directors and executive officers of the Company as a group (11 persons, each of whom is named above)(9)			10,156,618				23.3
5% Stockholders:
CCMP Capital, LLC and Related Funds(6)			7,247,731				16.6	%

Name of Beneficial Owner		Shares Beneficially Owned(1)				Percent of Shares(1)
Directors and Named Executive Officers:
Sei Jin Alt(2)			32,000				*
Theresa Backes(3)			181,031				*
Neill Davis			68,000				*
Kal Malik(4)			102,175				*
Mark Vendetti			—				—
John De Meritt(5)			1,459,583				3.3	%
Gene Morphis(6)			17,626				*
Cynthia Thomassee(7)			36,000				*
Patricia Bender			3,906				*
Greg Brenneman			—				—
Richard Emmett(8)			34,000				*
Richard Kunes			—				—
Laurie Ann Goldman			—				—
Joseph O’Leary			—				—
Marie Toulantis			2,000				*
Richard Zannino			—				—
All persons who are directors and executive officers of the Company as a group (13 persons, each of whom is named above)(9)			459,112				*
5% Stockholders:
FMR LLC(10) 89 Devonshire Street Boston, Massachusetts 02109			5,722,823				13.05	%
Wellington Company Management, LLP(11) 280 Congress Street Boston, Massachusetts 02210			3,589,729				8.19	%
AllianceBernstein LP(12) 1345 Avenue of the Americas New York, New York 10105			3,499,014				8.00	%
T. Rowe Price Associates, Inc.(13) 1345 Avenue of the Americas New York, New York 10105			4,638,859				10.50	%

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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Directors of the Company

Set forth below is a brief biographical description of each of our directors who we expect to continue to serve on our Board of Directors following the Annual Meeting, of which Ms. Bender hasMr. Emmett, Mr. Kunes and Mr. Zannino have been nominated for election to the Board of Directors as Class II directors at the Annual Meeting. The key experience, qualifications and skills that are important for persons who serve on the Company’s Board of Directors in light of its business and structure include: independence (with respect to independent directors); adherence to ethical standards; the ability to exercise sound business judgment; substantial business or professional experience and the ability to offer our management meaningful advice and guidance based on that experience; ability to devote sufficient time and effort to his or her duties as a director; and any other criteria established by our Board of Directors together with any core competencies or technical expertise necessary for our committees. We believe that each director possesses these qualities and has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to us and to our Board of Directors. The specific experiences, qualifications and skills that led to the conclusion that each of our directors is qualified to serve on the Board of Directors is also included in the biographical description for each director provided below.

John De Meritt.  Mr. De Meritt, 41, is one of the Founders (as hereinafter defined) of the Company and has served as our President and Chief Executive Officer since March 2007 and has been a member of our Board of Directors since the inception of the Company. Prior to becoming President and Chief Executive Officer of the Company, Mr. De Meritt worked for many years in the real estate investment industry, most recently as Vice President, Director of Leasing in the Eastern United States for Weingarten Realty Investors, a shopping center REIT, from 2001 to 2006. Mr. De Meritt holds a Bachelor of Arts degree in Political Science and a minor in Economics from the University of Houston and a Juris Doctorate from the South Texas College of Law. Mr. De Meritt’s many years of professional management, commercial real estate experience and extensive experience as our President and Chief Executive Officer allow him to provide invaluable insight to the Board of Directors, particularly as it relates to our real estate strategy and trends in the women’s retail apparel industry.

Kyong Gill.  Ms. Gill, 47, is one of the Founders of the Company and has served as a member of our Board of Directors since the inception of the Company and has served as the Executive Vice Chairperson of our Board of Directors since March 2010. Ms. Gill previously served as our Chief Merchandising Officer from 2003 until March 2011 and continues to oversee our merchandising operations in her capacity as Executive Vice Chairperson. Prior to founding the Company, Ms. Gill worked in the finance departments of Continental Airlines and Northwest Airlines. Ms. Gill holds a Bachelor of Arts degree from the University of Houston and a Master of Business Administration degree from the University of Georgia. Ms. Gill was previously licensed as a Certified Public Accountant. Ms. Gill’s many years of experience at the Company and her extensive work as our primary merchandising strategist allow her to provide significant business advice to our Board of Directors, particularly as it relates to our merchandising strategy and customer demographics.

Greg Brenneman.  Mr. Brenneman, 50,51, has served as a member of our Board of Directors since February 2010 and is the Chairman of our Board of Directors. Mr. Brenneman is the Chairman of CCMP and a member of its investment committee. Prior to joining CCMP in October 2008, Mr. Brenneman served as Chief Executive Officer of Quiznos from January 2007 until September 2008 and as President of Quiznos from January 2007 until November 2007. He also served as Executive Chairman of Quiznos from 2008 to 2009. Prior to joining Quiznos, from 2004 to 2006, Mr. Brenneman was Chairman and Chief Executive Officer of Burger King Corporation. In 2002, Mr. Brenneman was named President and Chief Executive Officer of PwC Consulting, where he restructured the business which led to a strategic sale to IBM. From 1995 to 2001, Mr. Brenneman was with Continental Airlines as President, Chief Operating Officer and a member of its Board of Directors. In 1994, Mr. Brenneman founded Turnworks, Inc., his personal investment firm that focuses on corporate turnarounds. Prior to founding Turnworks in 1994, Mr. Brenneman was a Vice President for Bain and Company. Mr. Brenneman holds a Bachelors Administration of Business in Accounting and Finance from Washburn University of Topeka, Kansas and a Master of Business Administration degree with distinction from Harvard Business School. He was also awarded an honorary Doctor of Commerce degree from Washburn University. Mr. Brenneman currently serves on the board of directors of Edwards Group PLC, The Home Depot, Inc. and Automatic Data Processing, Inc.

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Laurie Ann Goldman.  Laurie Ann Goldman, 51, has served as a member of our Board of Directors since April 2013. Ms. Goldman currently serves as Chief Executive Officer of Spanx, Inc., a position that she has held since 2002 Ms. Goldman currently serves on the Advisory Board of Suntrust Banks, Inc. Ms. Goldman brings significant brand management and multi-channel experience to the Board of Directors.

Richard Kunes.  Mr. Kunes, 60, has served as a member of our Board of Directors since February 2013. Mr. Kunes has served as Executive Vice President & Senior Advisor to the Chief Executive Officer at The Estée Lauder Companies, Inc. (“Estée Lauder”) since August 2012. Prior to such time, Mr. Kunes served for twelve years as Executive Vice President and Chief Financial Officer at Estée Lauder, as well as holding several other financial management positions with Estée Lauder, including Corporate Controller. Mr. Kunes brings extensive financial, statistic and operative leadership experience to the Board of Directors.

Joseph O’Leary.  Mr. O’Leary, 54, has served as a member of our Board of Directors since April 2013. Mr. O’Leary has served as Executive Vice President, Merchandising, Marketing, Supply Chain and Strategic Planning at PetSmart, Inc. since January 2011, and served as Senior Vice President, Merchandising and Supply Chain from October 2008 through January 2011 and as Senior Vice President, Supply Chain from 2006 through September 2008. Before joining PetSmart, Mr. O’Leary served as Chief Operating Officer of Human Touch, LLC from 2005 to 2006. Mr. O’Leary brings extensive supply chain and logistics experience to the Board of Directors.

Marie Toulantis.  Ms. Toulantis, 59, has served as a member of our Board of Directors since July 2012. Ms. Toulantis served as Interim Vice President of University Relations of Pace University from November 2011 to August 2012. Prior to joining Pace University in November 2011, Ms. Toulantis was Chief Executive Officer of Barnes & Noble.com from February 2002 to August 2008, and Chief Financial Officer from April 1999 to February 2002. Ms. Toulantis currently serves on the Board of Trustees of Pace University. Ms. Toulantis brings significant e-commerce, marketing and finance experience and perspective to our Board of Directors.

Richard Zannino.  Mr. Zannino, 53,54, has served as a member of our Board of Directors since February 2010. Mr. Zannino is a managing director of CCMP and a member of its investment committee. Prior to joining CCMP in 2009, Mr. Zannino was Chief Executive Officer and a member of the board of directors of Dow Jones & Company. He joined Dow Jones as Executive Vice President and Chief Financial Officer in February 2001 and was promoted to Chief Operating Officer in July 2002 and then to Chief Executive Officer and Director in February 2006. Prior to joining Dow Jones, Mr. Zannino was Executive Vice President in charge of strategy, finance, M&A, technology, and a number of operating units at Liz Claiborne. He originally joined Liz Claiborne in 1998 as Chief Financial Officer. In 1998, he served as Executive Vice President and Chief Financial Officer of General Signal, where he led the sale of that company. From 1993 until early 1998, he was at Saks Fifth Avenue, ultimately serving as Executive Vice President and Chief Financial Officer, where he oversaw the company’s strategy, finance, business development, merchandise planning and technology and helped lead its successful initial public offering. Mr. Zannino is currently a member of the board of directors of IAC, Estee Lauder and Infogroup and is a trustee of Pace University. He holds a Bachelor of Science degree in finance and economics from Bentley College and a Masters of Business Administration in finance from Pace University. Mr. Zannino’s past leadership experience, knowledge of operations, as well as his extensive operating and financial experience in the retail industry, allow him to provide valuable business and leadership advice to the Board of Directors.

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Cynthia Thomassee.Sei Jin Alt.  Ms. Thomassee, 40,Alt, 41, has served as our Interim Chief FinancialMerchandising Officer since May 13,January 2012. From June 2010 to December 2011, Ms. Thomassee has alsoAlt served as the Company’s Vice President of Accounting since MayMerchandising. Prior to joining the Company, from 2006 to 2010, and Controller since December 2007. Previously, Ms. ThomasseeAlt served as Divisional Vice President of Accessories at JC Penney.

Mark Vendetti.  Mr. Vendetti, 51, has served as our Chief Financial Officer since March 2013. Prior to joining the Company’s DirectorCompany, Mr. Vendetti served as Vice President of Finance for Abercrombie and Fitch from December 2007October 2009 to May 2010. Since priorJanuary 2013, where his duties included serving as Chief Financial Officer of the Direct-to-Consumer business and managing the business’s financial planning and analysis. Prior to 2007 to December 2007, Ms. Thomasseesuch time, Mr. Vendetti served as the controller at LRG Furniture, LLC (“LRG”), a retail subsidiary of Bassett Furniture Industries. As controller, Ms. ThomasseeSenior Vice President, Corporate Finance for XM Satellite Radio, where he was responsible for all accounting, payroll,finance, planning and benefit administration functions of LRG. Ms. Thomassee is a Certified Public Accountant licensed in the State of Texasanalysis, and holds a Bachelor of Science degreetreasury, from University of Houston — Clear Lake.May 2005 to September 2008.

There are no family relationships among any of our directors or executive officers.

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CORPORATE GOVERNANCE

Board Composition

Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors currently consists of eightnine members. Our Bylaws provide that, subject to any rights applicable to any then outstanding preferred stock, our Board of Directors will consist of a number of directors to be fixed from time to time by resolution adopted by the affirmative vote of a majority of the total directors then in office.

Our certificate of incorporation and Bylaws provide for a staggered, or classified, Board of Directors consisting of three classes of directors, each serving a staggered three-year term and with one class being elected at each year’s annual meeting of stockholders as follows:

Mr. Scharfenberger’s term as a member of our Board of Directors will expire effective as of the adjournment of the Annual Meeting.

Upon the expiration of the term of a class of directors, directors for that class will be elected for a three-year term at the annual meeting of stockholders in the year in which the term expires. Each director’s term is subject to the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Subject to any rights applicable to any then outstanding preferred stock, any vacancies on our Board of Directors may be filled only by the affirmative vote of a majority of the directors then in office. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

Director Independence

A majorityExcept for Mr. Davis, all members of our Board of Directors are “independent directors” and our Board of Director’s Compensation Committee and Nominating and Corporate Governance Committee areis composed entirely of “independent directors,” as defined under the rules of the NASDAQ Global Select Market (the “NASDAQ”(“NASDAQ”). Our Audit Committee also isand Compensation Committee are composed entirely of directors that meet the independence requirements of both the Sarbanes-Oxley Act of 2002 and the NASDAQ. TheNASDAQ rules.

Our Board of Directors hasconsidered each of the transactions described below in making its affirmative determination that each non-employee director is independent pursuant to the NASDAQ rules and the additional standards established by NASDAQ and the SEC for members of the Audit Committee. In each case, our Board of Directors affirmatively determined that, Messrs. Brenneman, Davis, Emmett, and Zannino andbecause of the nature of the director’s relationship with the entity and/or the amount involved, the relationship did not, or would not, interfere with the director’s exercise of independent judgment in carrying out his or her responsibilities as a director.

Committees of the Board of Directors

The standing committees of our Board of Directors include: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The composition and responsibilities of each standing committee isare described below. Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors. In the future, our Board of Directors may establish other committees, as it deems appropriate, to assist with its responsibilities. Current copies of the charters for each of these committees are posted on the About Francesca’s — Investor Relations Corporate Governance section of our website atwww.francescascollection.com www.francescas.com..

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Our General Counsel expects to regularly attend meetings of our Board of Directors committees when they are not in executive session, and to report on matters that are not addressed by other officers, and our Chief Financial Officer expects to regularly attendsattend the meetings of the Audit Committee when they are not in executive session. In addition, our directors are encouraged to communicate directly with members of management regarding matters of interest, including matters related to risk, at times when meetings are not being held.

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The Compensation Committee is solely responsible for making the final decisions on compensation for our executive officers. However, the Compensation Committee takes into account recommendations of our Chief Executive Officer in determining the compensation (including stock awards) of executive officers other than the Chief Executive Officer. The terms of the compensation for our Chief Executive Officer are recommended by our Compensation Committee and ultimately approved by our Board of Directors. Otherwise, our officers do not have any role in determining the form or amount of compensation paid to our executive officers.

Pursuant to its charter, the Compensation Committee is authorized to retain compensation consultants to assist in the evaluation of compensation to our executive officers. As further described under “Executive Compensation — Compensation Discussion and Analysis” below, in connection with our IPO, the Compensation Committee retained Pearl Meyer & Partners, LLC (“Pearl Meyer”), an independent compensation consultant, and reviewed with Pearl Meyer a report Pearl Meyer prepared for the Compensation Committee concerning recommendations for our executive compensation program, including recommended base salary, target bonus and equity awards for certain of our executive officers. Pearl Meyer also advised on other aspects of executive compensation as requested by the Compensation Committee following our IPO. Pearl Meyer received $45,650 in fees during fiscal 2011 for services related to executive and director compensation provided on behalf of the Compensation Committee. Pearl Meyer reports only to the Compensation Committee and does not perform services for us, except for executive compensation-related services on behalf of, and as instructed by, the Compensation Committee. All compensation decisions were made solely by our Compensation Committee or Board of Directors. The Compensation Committee has assessed the independence of Pearl Meyer pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Pearl Meyer from serving as an independent consultant to the Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee currently consists of Mr. Zannino (Chair), Mr. Brenneman and Ms. Bender. Mr. Davis. The compositionDavis served as a member of the Nominating and Corporate Governance Committee will remainuntil August 2012, when Ms. Bender was appointed to the same following the Annual Meeting.Nominating and Corporate Governance Committee. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is an “independent director” under the applicable NASDAQ rules. The Nominating and Corporate Governance Committee is responsible for, among other things:

Meetings and Attendance

During fiscal 2011,2012, there were eightten meetings of the Board of Directors, foursix meetings of the Audit Committee, threefive meetings of the Compensation Committee and twothree meetings of the Nominating and Corporate Governance Committee. Each of our directors attended at least 75% of the aggregate meetings of the Board of Directors and the committees of the Board of Directors on which he or she served during fiscal 2011, except for2012. Ms. BenderToulantis, who was appointed to the Board of Directors in July 2012, attended at least 75% of the aggregate meetings of the Board of Directors, and the committees of the Board of Directors on which she served, that were held during the period that she served as a member of the Board of the Directors in fiscal 2012. Messrs. Kunes and O’Leary and Ms. Goldman did not attend any meetings of the Board of Directors in fiscal 2012, as they were not appointed to the Board of Directors until October 2011February 25, 2013, April 17, 2013 and Ms. Gill.April 17, 2013, respectively. In addition, the independent directors meet regularly in executive session without the presence of management. Mr. Brenneman, our Non-Executive Chairman, chairs these executive sessions of the independent directors.

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Our Board of Directors encourages each director to attend the annual meeting of stockholders. We did not have anAll of our directors attended the 2012 annual meeting of stockholders, in 2011.with the exception of Messrs. Kunes and O’Leary and Ms. Goldman, none of whom were members of our Board of Directors at the time of the 2012 annual meeting of stockholders.

Compensation Committee Interlocks and Insider Participation

During the past fiscal year, Mr.Messrs. De Meritt and Davis and Ms. Gill, each an executive officer of the Company during fiscal 2012, served as members of our Board of Directors. Mr. De Meritt and Ms. Gill retired from the Company and as members of the Board of Directors in December 2012 and July 2012, respectively. Mr. Davis, a member of our Board of Directors since May 2007, was appointed as an executive officer of the Company in August 2012. However, none of the executive officers of the Company during fiscal 2012, served on the Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who served as members of our Board of Directors or our Compensation Committee. None of the members of our Compensation Committee is an officer or employee of the Company, nor have they ever been an officer or employee of the Company.

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putting an undue emphasis on a single performance measure. Base salaries are fixed in amount and thus do not encourage risk taking. While annual incentive bonuses focus on achievement of annual goals, executives’ annual bonuses are based on both Company and individual performance criteria as described below and our Compensation Committee retains discretion to reduce bonus amounts otherwise payable based on any factors it deems appropriate. Our Compensation Committee believes that the annual bonus opportunity appropriately balances risk and the desire to focus executives on specific annual goals important to the Company’s success.

A substantial portion of compensation provided to our executive officers is in the form of equity awards that further align executives’ interests with those of our stockholders. As further described under “Executive Compensation — Compensation Discussion and Analysis” below, the majority of the total compensation package opportunity for each of our named executive officers is in the form of stock options that have value only if our stock price appreciates after the date of grant of the award. Our Compensation Committee believes that these equity awards do not encourage unnecessary or excessive risk taking because the ultimate value of the awards is tied to the Company’s stock price, and, because grants are subject to long-term vesting schedules and our executives are subject to our stock ownership guidelines outlined above,below, we believe our executives will have significant value tied to long-term stock price performance.

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DIRECTOR COMPENSATION

Director Compensation for Fiscal 2012

Messrs. DavisCompensation for our non-executive directors during fiscal 2012 consisted of an annual retainer, an additional retainer for acting as a Chair of the Audit Committee of our Board of Directors, and were eligible to receive discretionary equity awards. No director is provided any additional fees based on the number of meetings they attend.

For fiscal 2012, Mr. Emmett and Ms.Mses. Bender currently receiveand Toulantis received a $40,000 annual retainer from us for their services as members of our Board of Directors. We increasedMs. Toulantis also received an additional $10,000 annual retainer in consideration of her service as the amountChair of the annual retainer paid to Mr. Davis from $20,000 to $40,000, effective April 1, 2011, to align his annual retainer withAudit Committee of the annual retainer provided to Mr. Emmett.Board of Directors. Ms. BenderToulantis joined our Board of Directors in October 2011.July 2012 and both of her annual retainers described above were prorated accordingly during her first year of service. In fiscal 2012, Mr. Davis received a prorated portion of his $40,000 annual retainer for his service as a member of our Board of Directors until such time that he became an employee of the Company in August 2012, as further described below.

In connection with her appointment to our Board of Directors, on October 4, 2011July 10, 2012 we granted Ms. Bender aToulantis stock optionoptions, under the 2011 Francesca’s Holdings Equity Incentive Plan (the “2011 Plan”), to purchase 19,53010,000 shares of our common stock.stock at a per-share exercise price of $29.19, the closing price of our common stock on the date of grant. Subject to her continued service through the applicable vesting date, the grant will vest in substantially equal annual installments on each anniversaryof the first five anniversaries of the award date over a five-year period commencing with the first anniversary of the grant date. The terms and conditions of the stock option grant are similar to the terms and conditions of the stock options granted to employees generally. For a discussion of the 2011 Plan and the terms and conditions of stock options granted thereunder, please see the narrative following the “Grants of Plan-Based Awards During Fiscal Year 2011”2012” table under the heading, “— Equity Incentive Plan Awards”, below. Our current expectation is that these awards will not necessarily be made on an annual basis. Any equityEquity grants to members of our Board of Directors will beduring fiscal 2012 were determined at the discretion of our Board of Directors.

We entered into indemnification agreements with all our directors effective upon completion of our IPO.initial public offering (“IPO”) or upon their initial appointment to our Board of Directors, as applicable. See “Certain Relationships and Related Party Transactions — Certain Relationships — Indemnification of Officers and Directors” for more information. All members of our Board of Directors receive reimbursement of reasonable and documented costs and expenses incurred by directors in connection with attending any meetings of our Board of Directors or any of our committees.committees of our Board of Directors.

ThoseDuring fiscal 2012 and under our New Director Compensation Policy described below, those members of our Board of Directors who are either employed by us or are employees of our largest stockholder, CCMP do not receive additional compensation from us in connection with their service on our Board of Directors. Accordingly, Messrs. De Meritt, Brenneman, Scharfenberger and Zannino and Ms. Gill havedid not received compensation from us for their service on our Board of Directors. Only those directors who are neither our employees nor the employees of our largest stockholder, CCMP, receive compensation from us for their service on our Board of Directors. No director is provided any additional fees based on the committees on which they serve or the number of meetings they attend.Directors during fiscal 2012.

The following table sets forth information regarding the compensation of our non-executive directors for their service on our Board of Directors for fiscal 2011:2012. Mr. Davis was a non-executive director for a portion of fiscal 2012 until his appointment as President of the Company in August 2012. Mr. Davis is not entitled to receive additional compensation for his service as a member of our Board Directors while he is employed by the Company. In accordance with applicable SEC rules, the compensation paid to Mr. Davis for the portion of fiscal 2012 that he served as a non-executive director of the Company is included in the “All Other Compensation” column of the “Summary Compensation Table” included on page 31 of this Proxy Statement.

Name		Fees Earned or Paid in Cash ($)				Option Awards ($)(1)				All Other Compensation ($)				Total ($)
Rich Emmett			40,000				—				—				40,000
Neill Davis			35,000				—				—				35,000
Patricia Bender(2)			10,000				250,104				—				260,104

Name		Fees Earned or Paid in Cash ($)				Option Awards ($)(1)				All Other Compensation ($)				Total ($)
Richard Emmett			40,000				—				—				40,000
Patricia Bender			40,000				—				—				40,000
Marie Toulantis(2)			23,641				182,851				—				206,492

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Director Compensation Program Commencing in Fiscal 2013

In March 2013, the Compensation Committee approved a new compensation program for our non-executive directors, the terms of which became effective as of February 25, 2013 (the “New Director Policy”). Under the terms of the New Director Policy, commencing with fiscal 2013, annual compensation for our non-executive directors will consist of an annual retainer, an additional retainer for acting as Chair of the Audit Committee, and an annual equity award. Our Board of Directors reserves the right to modify the New Director Policy from time to time.

Pursuant to the terms of the New Director Policy, the annual retainer is $50,000, and the additional annual retainer for the Chair of the Audit Committee is $10,000. Each such retainer will be paid at the Company’s annual meeting of stockholders each year. Our non-executive directors will not receive any additional fees based on the number of meetings they attend under the New Director Policy.

On the date of each annual meeting of our stockholders held after the effective date of the New Director Policy, each non-executive director who is serving on our Board of Directors after such annual meeting will receive an award of stock options. The number of shares subject to these stock option awards will be determined by our Board of Directors at the time of grant, provided that each such stock option grant will have a grant date fair value of approximately $100,000 (determined using a Black-Scholes or similar valuation method based on the assumptions generally used by the Company in valuing its stock options for financial reporting purposes) and will have a per-share exercise price equal to the closing price of our common stock on the date of grant. Additionally, these stock option awards will vest in substantially equal annual installments on each of the first five anniversaries of the grant date (or, as to any year in which the annual meeting of our stockholders occurs prior to the applicable anniversary of the date of grant, such installment will vest on the date of the annual meeting) and are subject to forfeiture if the director’s membership terminates prior to vesting. Each such option will be subject to the terms and conditions of a stock option agreement in the form then used by the Company to evidence grants of stock options to our non-executive directors.

In the case of a non-executive director who is initially elected or appointed to our Board of Directors on a date other than the date of an annual meeting of our stockholders, the director may be eligible to receive a prorated cash retainer and an equity award on the date of such initial election or appointment, the amount and terms of which will be determined by our Board of Directors (or a committee thereof) in its discretion.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis describes the material compensation arrangements we have with our named executive officers as required under the rules of the SEC. The SEC rules require disclosure for our principal executive officer, or PEO (our current and former Chief Executive Officer), and our principal financial officer, or PFO (our current and former Chief Financial Officer), regardless of compensation level, and our three most highly compensated executive officers in our last completed fiscal year, other than the PEO and PFO. All of these executive officers are referred to in this Compensation Discussion and Analysis as our “named executive officers.”

We operate on a fiscal calendar which in a given fiscal year consists of a 52- or 53-week period ending on the Saturday closest to January 31^st. We refer to the period from January 30, 201129, 2012 to January 28, 2012,February 2, 2013, our previous fiscal year, as “fiscal year 2011.2012.” For fiscal year 2011,2012, our named executive officers were:

Table 554px Font 10ptCell 269pxNameTitleNeill DavisChief Executive Officer (PEO) (Mr. Davis was appointed as our PEO effective January 1, 2013.)John De MerittFormer President, Chief Executive Officer (PEO) (Mr. De Meritt served as our PEO until his retirement on December 31, 2012.)Cynthia ThomasseeFormer Interim Chief Financial Officer (PFO), Vice President of Accounting and Controller (Ms. Thomassee served as our Interim PFO from May 13, 2012 until March 4, 2013 and continues to serve as our Vice President of Accounting and Controller.)Gene MorphisFormer Executive Vice President, Chief Financial Officer (PFO) (Mr. Morphis served as our PFO until his employment terminated on May 13, 2012.)Theresa BackesPresident, Chief Operating OfficerKal MalikExecutive Vice President, Chief Administrative Officer and General CounselSei Jin AltChief Merchandising Officer (PEO)

Name		Title
John De Meritt
Gene Morphis		Former Executive Vice President, Chief Financial Officer (PFO) (Mr. Morphis served as our PFO until his employment terminated on May 13, 2012.)
Theresa Backes		Executive Vice President, Chief Operating Officer
Kyong Gill		Executive Vice Chairperson (who, until March 8, 2011, served as our Chief Merchandising Officer)
Kal Malik		Executive Vice President, General Counsel and Corporate Secretary

Our executive compensation programs are determined and approved by our Compensation Committee. During fiscal year 2011,2012, the Compensation Committee was responsible for the oversight, implementation and administration of all of our executive compensation plans and programs. None of the named executive officers are members of the Compensation Committee or otherwise had any role in determining the compensation of the other named executive officers, although the Compensation Committee does consider the recommendations of our Chief Executive Officer in setting compensation levels for our executive officers other than our Chief Executive Officer. The Compensation Committee determined all of the components of compensation of our Chief Executive Officer. Our Board of Directors reviewed the Compensation Committee’s recommendations for the compensation of our Chief Executive Officer and approved his final compensation.

Executive Compensation Program Objectives and Overview

The Compensation Committee conducts an annual review of our executive compensation program to help ensure that:

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We seek to accomplish these objectives by providing a total compensation package which includes three main components: base salary, annual performance-based cash awards and long-term equity-based awards. Of these components, base salary and annual performance-based cash awards have been historically, and we currently expect will continue to be, at or below-market when compared to the specialty retail industry generally, based on our experience and knowledge of general industry practices. However, our long-term equity-based awards, which have been in the form of stock options that have value only if our stock price appreciates after the date of grant of the award, have been significantly above-market when compared to the specialty retail industry generally, based on our experience and knowledge of general industry practices. As a result, the total compensation package for each of our named executive officers is generally above the median when compared to the specialty retail industry generally, with the majority of the total compensation package

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Compensation Consultant; Review of Relevant Compensation Data

Historically, we have not used a third-party consultant to assist us with determining compensation levels. Additionally, ourOur Compensation Committee has not historically “benchmarked” our compensation levels and their decisions with regard to compensation levels have been subjective. However, in conjunction with our IPO, in 2011In fiscal 2012, our Compensation Committee conducted a review of our compensation program, which included the engagement of Pearl Meyer to compile a report of compensation data which made reference to broad-based retail surveys, compensation information for fast-growinga select group of companies in the retail companies with less than $1 billion in revenue and retail companies which had recently conducted an IPO,apparel industry, and founders equity ownership information at a wide range of companies.

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Current Executive Compensation Program Elements

As discussed throughout this Compensation Discussion and Analysis, the compensation policies and programs applicable to our named executive officers are reflective of our objective of aligning the interests of our executive officers with our stockholders’ interests in enhancing stockholder value over the long term. Applying this philosophy, a significant portion of overall compensation opportunities offered to our named executive officers is in the form of (i) equity-based compensation linked to enhanced stockholder value and (ii) annual performance-based cash awards contingent upon achievement of measurable financial objectives.

The current elements of our executive compensation program are:

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Name		Annual Salary				Annual Base Salary
John De Meritt		$	375,000
Gene Morphis		$	325,000
Neill Davis						$	550,000
Cynthia Thomassee						$	175,100
Theresa Backes		$	250,000			$	400,000
Kyong Gill		$	350,000
Kal Malik		$	225,000			$	350,000
Sei Jin Alt						$	350,000

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The awards payable for fiscal year 20112012 were based 75% on the achievement of a Company goal and 25% based on a qualitative assessment of each executive’s individual performance during the year. The weighting of the assessment of individual performance versus the Company goalsgoal, as well as the qualitative assessment of each executive’s individual performance, were based on the recommendations of our Chief Executive Officer and 25%were approved by our Compensation Committee. For fiscal year 2012, the Company goal was based on the achievement of individual goals.a level of net income equal to $36.5 million. The weightingfiscal year 2012 bonus pool would be increased or decreased above or below the targeted amount by 2% for every 1% achievement above or below the net income goal for the fiscal year, provided that, in the event the Company did not achieve at least 75% of its net income goal for fiscal year 2012, no portion of the individual goals versusfiscal year 2012 bonus pool would be funded and no eligible executives would be eligible for a bonus payment under the Company goals, as well asExecutive Bonus Plan for that year, and provided further that the determinationmaximum level to which the fiscal year 2012 bonus pool would be increased would in all events be equal to 150% of the individual goals, were recommended by our Chief Executive Officer and approved by our Compensation Committee. The goals we established for fiscal 2011, each of which is equally weighted, are: increased boutique count by at least 75 boutiques, increased net sales to $190 million and achievement of target EBITDA of $45 million.bonus pool. The Compensation Committee chose the increased boutique count and increased net sales goalsincome goal because these metrics representthis metric represents objectively determinable financial targets indicating our growth and overall success. The Compensation Committee chose EBITDA as oneFor fiscal year 2012, the qualitative assessment of the objective financial incentive target goal as this metric tracks both the Company earnings and cash flow and is indicative of our overall market value. For purposes of determining award amounts payable to our named executive officers, budgeted EBITDA means the targeted consolidated earnings of the Company and its subsidiaries before interest, taxes, depreciation and amortization, established at the beginning of each accounting period.

Each named executive officer’s individual goals wereperformance metric was intended to measure the executive’s performance of the duties, tasks and activities eachthe executive iswas asked to perform in theirhis or her respective roles. For fiscal 2011,role with the individual goals for Mr. De Meritt included successful completion of our IPO, successful launch ofCompany during the first phase of planned technological enhancements and continued enhancement of boutique infrastructure. Individual goals for Mr. Morphis included oversight and completion of fiscal year 2010 year-end audits, timely delivery of financial information for our IPO and enhancement of our financial reporting platform. Individual goals for Ms. Backes included review of our staffing and incentive program, delivery of $3 million in net sales from our web boutique and achievement of 3% same-boutique sales. Individual goals for Mr. Malik included completion of diligence and work product for our IPO, successful delivery of 75 signed leases for new boutiques and successfully securing internal and external legal resources to meet our growth plans. Finally, individual goals for Ms. Gill included development and oversight of our Head Merchant and Buying Team, enhancement of the strength of our buying team and successful completion of her functions and duties as a member of our Board of Directors.year. The target annual performance-based cash award opportunities of our named executive officers for fiscal year 20112012 are set forth in the “Grants of Plan-Based Awards During Fiscal Year 2011”2012” table, below.

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Discretionary Cash Bonuses

During fiscal year 2012, the Compensation Committee awarded a discretionary cash bonus to each of Mses. Thomassee and Backes to recognize their extraordinary contributions to the Company during fiscal year 2012 following Mr. Morphis’ termination of employment as our Executive Vice President, Chief Financial Officer in May 2012. In determining the discretionary bonus amounts for Mses. Thomassee and Backes, the Compensation Committee considered each executive’s assumption of additional responsibilities and duties to the Company during fiscal year 2012 following Mr. Morphis’ termination of employment. These discretionary cash bonuses, $50,213 for Ms. Thomassee and $40,308 for Ms. Backes, are reported in the “Summary Compensation Table” below.

Equity-Based Awards

As discussed throughout this Compensation Discussion and Analysis, in order to align the interests of our named executive officers with those of the Company and its stockholders, the Compensation Committee has determined that a significant portion of each named executive officer’s compensation opportunities should be in the form of equity-based awards. Prior to the February 2010, acquisition by CCMP of an approximately 84% controlling interest in us from the Founders and Bear Growth Capital Partners, LP (the “CCMP Acquisition”),equity-based awards were granted under the Francesca’s Holdings Corporation 2007 Stock Incentive Plan (the “2007 Plan”) in the form of options to acquire our common stock.. In conjunction with the CCMP Acquisition,March 2011, the Company adopted the Francesca’s Holdings Corporation Stock Incentive Plan (the “2010 Plan”). In conjunction with our IPO,July 2011, we adopted the 2011 Plan, and awards following our IPO will beits adoption have been granted under the 2011 Plan, as we no longer have authority to grant new awards under the 2007 Plan or the 2010 Plan.

In general, all stock option grants under the 2011 Plan to our named executive officers are determined at the discretion of our Compensation Committee and are based on the committee’s expertise and knowledge of general industry practices. Our Compensation Committee has chosen to make equity-based awards in the form of stock options as opposed to other forms of equity-based awards because stock options have value only when we have created additional stockholder value following the date of grant of the option (because the

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Additional information regarding the material terms of the equity awards granted to our named executive officers for fiscal year 20112012 under the 2011 Plan is set forth in the “Grants of Plan-Based Awards During Fiscal Year 2011”2012” table under the heading, “— Equity Incentive Plan Awards”, below.

Additional Executive Benefits and Perquisites

We provide our named executive officers with certain executive benefits that the Compensation Committee believes are reasonable and in the best interests of the Company and our stockholders. Consistent with our compensation philosophy, and subject to any revisions discussed below, we currently intend to continue to maintain our current benefits for our named executive officers, including retirement plans, housing relocation benefits, paid vacation and other benefits described below. The Compensation Committee, in its discretion, may revise, amend or add to an officer’s executive benefits if it deems it advisable. We believe these benefits are generally equivalent to benefits provided by comparable companies based on our expertise and knowledge of general industry practices.

Retirement Plan Benefits

We do not sponsor a defined benefit retirement plan as we do not believe that such a plan best serves the needs of our employees or the business at this time. However, we do sponsor a defined contribution (401(k)) retirement plan. The qualified plan is available to all eligible employees, including our named executive officers, and allows them to elect to make contributions up to the maximum limits allowable under the Code. For fiscal years 2010 and 2011, in January of the following year we madeWe currently provide a discretionary100% matching contribution to employees’ accounts based upon their deferral elections foron the previous fiscal year.first 3% of employee contributions and an additional 50% matching contribution on the next 2% of employee contributions. We currently expect to continue making such matching contributions going forward. Employees’ contributions and Company matching contributions vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service.

Health and Welfare Benefits

Our named executive officers have the option to participate in various employee welfare benefit programs, including medical, dental and life insurance benefits. These benefit programs are generally available to all employees.

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further detail in the narrative following the “Summary Compensation Table”. For more information regarding the potential payments and benefits that would be provided to our named executive officers in connection with certain terminations of their employment or a change in control on January 28, 2012,February 2, 2013, please see “— Potential Payments upon Termination or Change in Control,” below.

Change in Control Provisions

The prospect of a change in control of the Company can cause significant distraction and uncertainty for executive officers and, accordingly, the Compensation Committee believes that appropriate change in control provisions in employment agreements and/or equity award agreements are important tools for aligning executives’ interests in change in control transactions with those of our stockholders by allowing our executive officers to focus on strategic transactions that may be in the best interest of our stockholders without undue concern regarding the effect of such transactions on their continued employment.

Accordingly, as described in “— Potential Payments upon Termination or Change in Control,” below,” upon a change in control (as defined in the plan or the applicable award agreement), awards granted pursuant to the 2007 Plan, the 2010 Plan and the 2011 Plan may, at the discretion of the plan administrator, have their vesting accelerated in connection with such a transaction. We do not provide our executives with tax “gross-up” payments in connection with a termination of their employment, a change in control of the Company or otherwise.

For more information regarding the potential payments and benefits that would be provided to our continuing named executive officers in connection with a change in control on January 28, 2012,February 2, 2013, please see “— Potential Payments upon Termination or Change in Control,” below.

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held in an initial public offering, compensation paid under a plan or agreement that existed prior to the initial public offering will not be subject to Section 162(m) until the earliest of (1) the expiration of the plan or agreement, (2) a material modification of the plan or agreement, (3) the issuance of all employer stock and other compensation that has been allocated under the plan, or (4) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the year of the IPO (the “Transition Date”). After the Transition Date, rights or awards granted under the plan, other than options and stock appreciation rights, will not qualify as “performance-based compensation” for purposes of Section 162(m) unless such rights or awards are granted or vest upon pre-established objective performance goals.

Going forward, our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive program (including the stock options and annual bonuses granted under the Executive Bonus Plan granted to our named executive officers as described above) will satisfy the requirements for exemption from the $1 million deduction limitation. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance-based and consistent with the goals of the Company and its stockholders.

Stock Ownership Guidelines

In March 2012, our Compensation Committee adopted share ownership guidelines in an effort to further align the interests of our management with those of its stockholders. Under the share ownership guidelines, the amount of our eligible securities each executive officer and certain of our employees will be targeted to own, which is stated as a multiple of the executive’s base salary, reflects each executive’s role and level of responsibility at the Company. The multiples to be applied to our executive officers are as follows: (1) five times for our Chief Executive Officer;Officer and President; (2) three times for our Chief Financial Officer, Chief Operating Officer, General Counsel and other executive officers with the title of Executive Vice President and above (other than our Chief Executive Officer); and (3) one times for any additional employees who hold stock option awards. For purposes of the share ownership guidelines, eligible securities include the individual’s common stock and unvested stock awards. The equity ownership of our named executive officers is set forth in the beneficial ownership table in “Security Ownership of Principal Stockholder and Management.”

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Compensation Committee Report

The Compensation Committee has certain duties and powers as described in its charter. The Compensation Committee currently consists of Mr. Brenneman (Chair), Mr. Scharfenberger,Zannino, and Mr. Emmett, each of whom our Board of Directors has determined is independent under the applicable NASDAQ rules.

The Compensation Committee has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this proxy statement.Proxy Statement. Based upon this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement.Proxy Statement.

		Compensation Committee of the Board of Directors
		Greg Brenneman (Chair) Richard Emmett Joseph ScharfenbergerRichard Zannino

The foregoing report of the Compensation Committee does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.

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Compensation of Named Executive Officers

The “Summary Compensation Table” below quantifies the value of the different forms of compensation earned by or awarded to our named executive officers for fiscal year 2011.2012. The primary elements of each named executive officer’s total compensation reported in the table are base salary, an annual bonus, and long-term equity incentives consisting of nonqualified stock options. Our named executive officers also received the other benefits listed in the “All Other Compensation” column of the “Summary Compensation Table”, as further described in the footnotes to the table.

The “Summary Compensation Table” should be read in conjunction with the tables and narrative descriptions that follow. A description of the material terms of each named executive officer’s base salary and annual bonus is provided immediately following the “Summary Compensation Table”. The Grants“Grants of Plan-Based Awards During Fiscal Year 20112012” table, and the accompanying description of the material terms of the stock options granted in fiscal year 2011,2012, provides information regarding the long-term equity incentives awarded to our named executive officers in fiscal year 2011.2012. The Outstanding“Outstanding Equity Awards at Fiscal Year-EndYear-End” and Option“Option Exercises and Stock Vested During Fiscal Year 20112012” tables provide further information on our named executive officers’ potential realizable value and actual value realized with respect to their equity awards.

Summary Compensation Table

The following table presents information regarding compensation earned by each individual who served as our principal executive officer and our principal financial officer, regardless of compensation level, and our three other most highly compensated executive officers for services rendered during fiscal years 2012, 2011 and 2010. These individuals are referred to as our “named executive officers” in this Proxy Statement.

Name and Principal Position		Year				Salary ($)				Bonus ($)(3)				Stock Awards ($)				Option Awards ($)(4)				Non-Equity Incentive Plan Compensation ($)(5)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)(6)				Total ($)
John De Meritt President, Chief Executive Officer			2011				375,000				175,000				—				6,079,144				375,000				—				45,711				7,049,855
			2010				375,000				75,000				—				3,345,620				375,000				—				1,964,140				6,134,760
Gene Morphis Executive Vice President, Chief Financial Officer(1)			2011				325,000				—				—				—				195,000				—				46,720				566,720
			2010				93,750				—				—				1,087,943				—				—				23,286				1,204,979
Theresa Backes Executive Vice President, Chief Operating Officer			2011				250,000				—				—				1,013,194				100,000				—				28,868				1,392,062
			2010				235,000				11,000				—				168,000				94,000				—				960,256				1,468,256
Kyong Gill Executive Vice Chairperson(2)			2011				307,884				—				—				944,720				262,500				—				12,312				1,527,416
			2010				275,000				—				—				—				206,250				—				3,740				484,990
Kal Malik Executive Vice President, General Counsel and Corporate Secretary			2011				225,000				—				—				—				90,000				—				23,071				338,071
			2010				225,000				—				—				686,784				90,000				—				1,168				1,002,952

Name and Principal Position		Year				Salary ($)				Bonus ($)(8)				Stock Awards ($)				Option Awards ($)(9)				Non-Equity Incentive Plan Compensation ($)(10)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)(11)				Total ($)
Neill Davis Chief Executive Officer(1)			2012				223,654				162,500				—				5,618,908				349,038				—				45,000				6,399,100
John De Meritt Former President, Chief Executive Officer(2)			2012				336,058				—				—				240,382				—				—				46,260				622,700
			2011				375,000				175,000				—				6,079,144				375,000				—				45,711				7,049,855
			2010				375,000				75,000				—				3,345,620				375,000				—				1,964,140				6,134,760
Cynthia Thomassee Vice President of Accounting and Controller, Former Interim Chief Financial Officer(3)			2012				175,100				50,213				—				—				65,663				—				30,020				320,996
			2011				169,615				—				—				—				59,500				—				27,915				257,030
			2010				160,000				30,000				—				276,000				55,000				—				10,017				531,017
Gene Morphis Former Executive Vice President, Chief Financial Officer(4)			2012				100,425				—				—				—				—				—				14,000				114,425
			2011				325,000				—				—				—				195,000				—				46,720				566,720
			2010				93,750				—				—				1,087,943				—				—				23,286				1,204,979
Theresa Backes President, Chief Operating Officer(5)			2012				267,914				40,308				—				1,316,677				177,231				—				30,517				1,832,647
			2011				249,423				—				—				1,013,194				100,000				—				28,868				1,391,485
			2010				235,000				11,000				—				168,000				94,000				—				960,256				1,468,256
Kal Malik Executive Vice President, Chief Administrative Officer and General Counsel(6)			2012				240,391				—				—				1,316,677				148,546				—				30,398				1,736,012
			2011				225,000				—				—				—				90,000				—				23,071				338,071
			2010				225,000				—				—				686,784				90,000				—				1,168				1,002,952
Sei Jin Alt Chief Merchandising Officer(7)			2012				288,128				—				—				1,316,677				137,850				—				20,000				1,762,655

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Grants of Plan-Based Awards During Fiscal Year 20112012

The following table presents information regarding the non-equity incentive awards and equity-based awards granted to each of our named executive officers during fiscal year 2011.2012.

		Grant Date				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards												All Other Stock Awards: Number of Shares of Stock or Units (#)				All Other Option Awards: Number of Securities Underlying Options (#)(2)				Exercise or Base Price of Option Awards ($/Sh)				Grant Date Fair Value of Stock and Option Awards ($)(3)				Grant Date				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards												All Other Stock Awards: Number of Shares of Stock or Units (#)				All Other Option Awards: Number of Securities Underlying Options (#)(2)				Exercise or Base Price of Option Awards ($/Sh)				Grant Date Fair Value of Stock and Option Awards ($)(3)
Name						Threshold ($)				Target ($)				Maximum ($)				Threshold ($)				Target ($)				Maximum ($)																								Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)
Neill Davis																																															8/6/12				—				—				—				—				—				—				—				375,000				30.75				5,618,908
																																															—				—				232,692				349,038				—				—				—				—				—				—				—
John De Meritt			7/22/11				—				—				—				—				—				—				—				657,916				17.00				6,079,144				—				—				375,000				562,500				—				—				—				—				—				—				—
			—				—				375,000				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				240,382
Cynthia Thomassee																																															—				—				43,775				65,663				—				—				—				—				—				—				—
Gene Morphis			—				—				195,000				—				—				—				—				—				—				—				—				—				—				200,850				301,275				—				—				—				—				—				—				—
Theresa Backes			7/22/11				—				—				—				—				—				—				—				109,653				17.00				1,013,194				11/21/12				—				—				—				—				—				—				—				100,000				26.58				1,316,677
			—				—				100,000				—				—				—				—				—				—				—				—				—				—				118,154				177,231				—				—				—				—				—				—				—
Kyong Gill			10/4/11				—				—				—				—				—				—				—				75,000				20.29				944,720
Kal Malik																																															11/21/12				—				—				—				—				—				—				—				100,000				26.58				1,316,677
			—				—				262,500				—				—				—				—				—				—				—				—				—				—				99,031				148,546				—				—				—				—				—				—				—
Kal Malik			—				—				90,000				—				—				—				—				—				—				—				—
Sei Jin Alt																																															11/21/12				—				—				—				—				—				—				—				100,000				26.58				1,316,677
																																															—				—				91,900				137,850				—				—				—				—				—				—				—

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Mr. Davis

On December 28, 2012, Mr. Davis entered into an amended and restated employment letter agreement with the Company providing for his employment as our Chief Executive Officer, the terms of which became effective January 1, 2013.

The letter agreement has an initial term of three years, subject to earlier termination under the terms of the agreement. Pursuant to the terms of the letter agreement, Mr. Davis will receive an annual base salary of $550,000 and is eligible to receive an annual incentive bonus pursuant to our annual bonus plan as in effect from time to time, with his target annual incentive bonus to be set at 100% of his base salary. The letter agreement also provides for Mr. Davis to participate in our employee savings and welfare benefit plans made available to our employees generally, and an annual allowance equal to $50,000 that he may apply towards the purchase of additional benefits of his choosing.

The letter agreement also provides, subject to certain exceptions, that, during the period of Mr. Davis’ employment and for a period of 12 months following a termination of his employment for any reason, Mr. Davis will not (i) compete with the Company or its affiliates, (ii) solicit any Company employees or consultants or (iii) solicit any customer of the Company.

Mr. De Meritt

On July 14, 2011, Mr. De Meritt entered into an amended and restated employment agreement with the Company providing for his employment as of such date as our President and Chief Executive Officer. Effective December 31, 2012, Mr. De Meritt retired from his position as our Chief Executive Officer and as a member of our Board of Directors and is no longer employed by us. Although Mr. De Meritt is no longer entitled to the benefits pursuant to his employment agreement due to his termination of employment due to his retirement, a description of the benefits under his agreement that he was eligible to receive prior to his termination is included below.

The employment agreement hashad an initial term of three years, which commenced on February 26, 2010 and renewsrenewed automatically for successive one-year periods thereafter, unless either party providesprovided 90 days’ written notice of nonrenewal prior to the expiration of the initial term or each successive renewal term. The employment agreement providesprovided for a minimum base salary of $375,000 and that our Board of Directors willwould review Mr. De Meritt’s base salary no less frequently than annually and hashad discretion to increase (but not reduce) his base salary level. The employment agreement also providesprovided for Mr. De Meritt’s eligibility to receive an annual incentive bonus pursuant to our annual bonus plan as in effect from time to time, with his target annual incentive bonus to be set at 100% of his base salary. The agreement also providesprovided for Mr. De Meritt to participate in our employee pension and welfare benefit plans made available to our employees generally, reimbursement of business expenses, eligibility for equity awards, and an annual allowance equal to $50,000 that he maywas able to apply towards the purchase of additional benefits of his choosing.

The employment agreement also provides,provided, subject to certain exceptions, that, during the period of Mr. De Meritt’s employment and (i) in the event we terminate his employment without “cause” or if he resigns for “good reason,” a period of 24 months following termination, or (ii) in the event his employment with us terminates for any other reason, a period of 12 months following his termination of employment, Mr. De Meritt will not (x) compete with the Company or its affiliates, (y) solicit any Company employees or consultants or (z) solicit any customer of the Company.

Mr. Morphis

The terms and conditions of Mr. Morphis’ employment as our Chief Financial Officer arewere set forth in aan employment letter agreement dated September 9, 2010, which was subsequently amended on July 14, 2011. On May 13, 2012, Mr. Morphis’sMorphis’ employment as our Chief Financial Officer was terminated. Although Mr. Morphis is no longer entitled to the benefits pursuant to his letter agreement due to his termination of employment, a description of the benefits under his agreement that he was eligible to receive prior to his termination is included below.

The letter agreement provided for an at-will employment relationship, terminable by the Company or Mr. Morphis at any time. The letter agreement provided that, prior to his termination of employment,

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Mr. Morphis was entitled to receive an annual base salary of $325,000 and was eligible to receive a discretionary annual cash incentive bonus of up to 60% of his annual base salary, beginning in fiscal 2011, based upon the achievement of goals and objectives determined by our Chief Executive Officer. Additionally, Mr. Morphis was eligible for reimbursement of certain relocation and temporary housing expenses in connection with Mr. Morphis’ relocation to Texas, and an annual allowance equal to $20,000 that he could have applied towards the purchase of additional benefits of his choosing.

The letter agreement also provided, subject to certain exceptions, that, during the period of Mr. Morphis’ employment and for a period of 12 months following a termination of his employment for any reason, Mr. Morphis will not solicit any Company employees or consultants.

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available to our employees generally, and an annual allowance equal to $20,000 that she may apply towards the purchase of additional benefits of her choosing.

The letter agreement also provides, subject to certain exceptions, that, during the period of Ms. Alt’s employment and for a period of 12 months following a termination of her employment for any reason, Ms. Alt will not (i) compete with the Company or its affiliates, (ii) solicit any Company employees or consultants or (iii) solicit any customer of the Company.

Non-Equity Incentive Plan Awards

For a description of the material terms of the non-equity incentive plan awards reported in the table above, see “— Compensation“Compensation Discussion and Analysis — Current Executive Compensation Program Elements — Annual Performance-Based Cash Awards,” above.

Equity Incentive Plan Awards

Each of the equity incentive awards reported in the “Grants of Plan-Based Awards During Fiscal Year 2012” table above was granted under, and is subject to, the terms of the 2011 Plan. The 2011 Plan is administered by the Compensation Committee. The Compensation Committee has authority to interpret the plan provisions and make all required determinations under the plan. Awards granted under the plan are generally not transferable other than by will or the laws of descent and distribution, except that the plan administrator may authorize certain transfers.

Generally, and subject to limited exceptions set forth in the 2011 Plan, if we dissolve or undergo certain corporate transactions such as a merger, business combination, or other reorganization, or a sale of substantially all of our assets, all awards then-outstanding under the 2011 Plan may, at the administrator’s discretion, become fully vested and, in the case of options, exercisable, and will terminate or be terminated in such circumstances, unless the plan administrator provides for the assumption, substitution or other continuation of the award. The plan administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2011 Plan.

Each option reported in the “Grants of Plan-Based Awards During Fiscal Year 2012” table above was granted with a per-share exercise price equal to the fair market value of a share of our common stock on the grant date. For these purposes, and in accordance with our 2011 Plan and our option grant practices, the fair market value is equal to the closing price of a share of our common stock on the applicable grant date.

The stock options granted to Mr. De Meritt and Ms. BackesDavis in fiscal 20112012 are subject to a three-year vesting schedule, with one-third of the option vesting on each of the first three anniversaries of the grant date. The stock options granted to Mses. Backes and Alt and Mr. Malik in fiscal 2012 are subject to a five-year vesting schedule, with one-fifth of the option vesting on each of the first five anniversaries of the grant date. The option granted to Ms. Gill in fiscal 2011 is subject to a three-year vesting schedule, with one-third of the option vesting on each of the first three anniversaries of the grant date. Once vested, each option will generally remain exercisable until its normal expiration date. Each of the options granted to our named executive officers in fiscal 20112012 has a term of ten years. However, vested options may terminate earlier in connection with a change in control transaction or a termination of the named executive officer’s employment. Subject to any accelerated vesting that may apply in the circumstances, the unvested portion of the option will immediately terminate upon a termination of the named executive officer’s employment, including upon a termination of his or her employment by us for cause. In the event the named executive officer’s termination of employment was the result of his or her death or total and permanent disability, the named executive officer will generally have 12 months to exercise the vested portion of the option. In the event the named executive officer’s employment is terminated by us for cause, the option, whether vested or unvested, will immediately terminate. The named executive officer will generally have three months to exercise the vested portion of the option for all other terminations of employment.

In connection with Mr. De Meritt’s retirement effective as of December 31, 2012, we entered into a letter agreement with Mr. De Meritt pursuant to which, among other things, effective as of December 14, 2012 and subject to certain limited exceptions set forth therein, the period during which Mr. De Meritt may exercise his stock options with respect to shares of our common stock that were vested and outstanding as of December 31, 2012 was extended from March 31, 2013 to December 31, 2013. See “Compensation Discussion and Analysis — Letter Agreement with Mr. De Meritt in Connection with his Retirement” for more details.

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Outstanding Equity Awards at Fiscal Year-End

The following table presents information regarding the outstanding equity awards held by our named executive officers as of January 28, 2012,February 2, 2013, including the vesting schedule for each of these awards that had not vested as of that date.

		Option Awards																				Stock Awards																Option Awards																				Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)				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 ($)				Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
John De Meritt			818,000				—				—				6.13				3/25/2020				—				—				—				—
Neill Davis																																							—				375,000	(2)			—				30.75				8/5/2022				—				—				—				—
John De Meritt(1)																																							818,000				—				—				6.13				12/31/2013				—				—				—				—
			—				657,916	(1)			—				17.00				7/21/2021				—				—				—				—				131,583				—				—				17.00				12/31/2013				—				—				—				—
Cynthia Thomassee																																							7,500				48,000	(3)			—				3.74				4/30/2020				—				—				—				—
Gene Morphis			33,241				144,163	(2)			—				10.19				11/30/2020				—				—				—				—				—				—				—				—				—				—				—				—				—
Theresa Backes			359,100				—				—				1.43				12/1/2017				—				—				—				—				359,100				—				—				1.43				12/1/2017				—				—				—				—
			—				109,653	(1)			—				17.00				7/21/2021				—				—				—				—				21,931				87,722	(4)			—				17.00				7/21/2021				—				—				—				—
Kyong Gill			—				75,000	(3)			—				20.29				10/3/2021				—				—				—				—
																																							—				100,000	(5)			—				26.58				11/20/2022				—				—				—				—
Kal Malik			25,551				106,458	(4)			—				3.74				3/25/2020				—				—				—				—				21,292				55,358	(7)			—				3.74				3/25/2020				—				—				—				—
																																							—				100,000	(5)			—				26.58				11/20/2022				—				—				—				—
Sei Jin Alt																																							—				48,000	(6)			—				3.74				6/30/2020				—				—				—				—
																																							—				100,000	(5)			—				26.58				11/20/2022				—				—				—				—