INFORMATION
No fee required.
You are cordially invited to attend the Annual Meeting in person.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON July 27, 2020. The Proxy Statement and the 2019 Annual Report to Stockholders are available at http://materials.proxyvote.com/351793 | | |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALSFOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 8, 2016.The Proxy Statement and the 2015 Annual Report to Stockholders are available athttp://materials.proxyvote.com/351793
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Appendix A: Stockholder Rights Plan | | | | | | | |
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Q: Why did I receive a Notice of Internet Availability of Proxy Materials? A: We have elected to furnish to most of our stockholders this Proxy Statement, Notice of Annual Meeting of Stockholders and our 2019 Annual Report (collectively, the “proxy materials”) through the internet. You will receive a “Notice of Internet Availability of Proxy Materials” (the “Notice”) by mail or e-mail, and you will not receive a printed copy of the |
The proxy materials, are first being made availableunless you specifically request one or have previously requested one. The Notice contains instructions on how stockholders can access and review the proxy materials via the internet and vote their shares. The Notice also contains instructions on how to receive, free of charge, paper copies of the proxy materials for our stockholders onAnnual Meeting or about April 25, 2016.
for all future meetings of stockholders. Stockholders who did not receive a Notice will receive printed copies of the proxy materials and a proxy card or voting instruction form by mail.
You may vote via the telephone. You can submit your vote by proxy over the telephone by following the instructions provided in the Notice, on the separate proxy card if you received a printed set of the proxy materials, or on the voting instruction form if you hold your shares in street name.
nominee.
Q: Who can attend the Annual Meeting? A: Subject to space availability, all holders of our common stock as of May 28, 2020, or their duly appointed proxies, may attend the Annual Meeting. Admission to the meeting will be on a first-come, first-served basis. Registration will begin at 9:30 a.m. Central Time. If you attend, please note that you may be asked to present valid photo identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. Please also note that if you hold your shares in “street name” (that is, through a broker, bank or other nominee), you will need to obtain a “legal proxy” from the bank, broker or other nominee that holds your shares giving you the right to vote your shares in person at the Annual Meeting, as well as a copy of a brokerage statement reflecting your stock ownership as of the record date. All attendees at the Annual Meeting must check-in at the registration desk at the Annual Meeting. 4 Q: What constitutes a quorum? A: The representation, in person or by proxy, of holders of a majority in voting power of the total shares of our common stock entitled to vote at the Annual Meeting constitutes a quorum at the meeting. Abstentions and broker non-votes will be counted as present for purposes of determining whether a quorum exists for the Annual Meeting. Pursuant to our Bylaws, if a quorum is not present at the Annual Meeting, the Chairman of the Annual Meeting has the power to adjourn the meeting without a vote of stockholders. Q: What is required to approve each proposal at the Annual Meeting? A: Election of Directors |
Ratification of Appointment of Independent Registered Public Accounting Firm (Proposal No. 2)1). The Bylaws provide for a plurality voting standard for the election of directors. Under this voting standard, once a quorum has been established, the two nominees receiving the highest number of affirmative votes of the shares entitled to be voted for directors will be elected as Class III directors to serve until the 2023 annual meeting of stockholders and until their respective successors are duly elected and qualified or until their earlier death, resignation or removal. Stockholders are not permitted to cumulate their shares for the purpose of electing directors. See “— What happens if a director receives a greater number of WITHHOLD votes than FOR votes at the Annual Meeting?” below.
Note on “Abstentions” and “broker non-votes.” With respect to Proposal No. 1, votes withheld and broker non-votes will not be counted as a vote cast on the election of anyeither of the director nominees and therefore will not be counted in determining the outcome of any of the directors’ election. See “— What happens if a director receives a greater number of WITHHOLD votes than FOR votes at the Annual Meeting?” below. With respect to Proposal No.Nos. 2, abstentions have the same effectand 3, only shares voted “FOR” or “AGAINST” are counted. Absentions and broker non-votes are not treated as votes AGAINST the matter.
If you hold your shares in street name through a brokerage account and you do not submit voting instructions to your broker, your broker may generally vote your shares, in its discretion, on routine matters. However, a broker cannot vote shares held in street name on non-routine matters unless the broker receives voting instructions from the beneficial holder. Proposal No. 2 is considered routine under applicable rules, while Proposal No. 1 is considered non-routine. Accordingly, if you hold your shares in street name through a brokerage account and you do not submit voting instructions to your broker, your broker may exercise its discretion to vote your shares on Proposal No. 2, but will not be permitted to vote your shares on Proposal No. 1. If your broker exercises this discretion with respect to Proposal No. 2, your shares will be counted as present for the purpose of determining the presence of a quorum at the Annual Meeting and will be voted on Proposal No. 2 in the manner directed by your broker, but your shares will constitute a “broker non-vote” for purposes of Proposal No. 1 at the Annual Meeting. Broker non-votes will not be counted as a vote cast with respect to Proposal No. 1 and therefore will not be counted in determining the outcome of such proposal.
Name of Beneficial Owner | | | Shares Beneficially Owned(1) | | | Percent of Shares(1) | | ||||||
Directors and Named Executive Officers: | | | | | | | | | | | | | |
Andrew Clarke(2) | | | | | — | | | | | | * | | |
Michael Prendergast(3) | | | | | — | | | | | | * | | |
Kelly M. Dilts(4) | | | | | 854 | | | | | | * | | |
Marc G. Schuback(5) | | | | | — | | | | | | * | | |
Cynthia Thomassee(2) | | | | | 223 | | | | | | * | | |
Patricia Bender(2) | | | | | 28,754 | | | | | | * | | |
Philip F. Bleser(2) | | | | | 18,979 | | | | | | * | | |
Richard Emmett(2) | | | | | 31,294 | | | | | | 1% | | |
Susan McGalla(2) | | | | | — | | | | | | * | | |
Joseph O’Leary(2) | | | | | 22,238 | | | | | | * | | |
Martyn Redgrave(2) | | | | | 26,029 | | | | | | * | | |
Marie Toulantis(2) | | | | | 23,377 | | | | | | * | | |
All current directors and executive officers of the Company as a group (10 persons)(2) | | | | | 150,894 | | | | | | 5% | | |
5% Stockholders: | | | | | | | | | | | | | |
Cross River Capital Management LLC(6) 31 Bailey Avenue, Unit D Ridgefield, Connecticut 06877 | | | | | 643,664 | | | | | | 21.2% | | |
Prescott Group Capital Management LLC(7) 1924 South Utica, Suite 1120 Tulsa, Oaklahoma 74104 | | | | | 218,149 | | | | | | 7.2% | | |
Name of Beneficial Owner | Shares Beneficially Owned(1) | Percent of Shares(1) | ||||||
Directors and Named Executive Officers: | ||||||||
Michael Barnes | 26,000 | * | ||||||
Kal Malik(2) | 196,242 | * | ||||||
Laurie Hummel | — | — | ||||||
Cynthia Thomassee(3) | 45,000 | * | ||||||
Sei Jin Alt(4) | 64,000 | * | ||||||
Mark Vendetti(5) | 8,000 | * | ||||||
Patricia Bender(6) | 24,939 | * | ||||||
Richard Emmett(7) | 59,315 | * | ||||||
Richard Kunes(8) | 12,449 | * | ||||||
Laurie Ann Goldman(9) | 11,369 | * | ||||||
Joseph O’Leary(10) | 11,369 | * | ||||||
Martyn Redgrave | 21,000 | * | ||||||
Marie Toulantis(11) | 20,315 | * | ||||||
All persons who are directors and executive officers of the Company as a group (11 persons)(12) | 454,998 | * | ||||||
5% Stockholders: | ||||||||
T. Rowe Price Associates, Inc.(13) 100 E. Pratt Street Baltimore, MD 21202 | 7,509,685 | 18.0 | % | |||||
BlackRock, Inc.(14) 55 East 52nd Street New York, New York 10055 | 3,997,759 | 9.6 | % | |||||
The Vanguard Group, Inc.(15) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 3,263,033 | 7.8 | % | |||||
Daruma Capital Management LLC(16) 1120 Avenue of the Americas, 21st Floor New York, New York 10036 | 3,116,997 | 7.5 | % | |||||
National Rural Electric Cooperative Association(17) 4301 Wilson Boulevard Arlington, VA 22203 | 2,295,063 | 5.5 | % |
Name | | | Stock Options | | | Restricted Stock | | ||||||
Andrew Clarke | | | | | — | | | | | | — | | |
Cynthia Thomassee | | | | | — | | | | | | — | | |
Patricia Bender | | | | | 3,722 | | | | | | 16,845 | | |
Philip F. Bleser | | | | | — | | | | | | 16,845 | | |
Richard Emmett | | | | | 2,420 | | | | | | 16,845 | | |
Susan McGalla | | | | | — | | | | | | — | | |
Joseph O’Leary | | | | | 2,531 | | | | | | 16,845 | | |
Martyn Redgrave | | | | | 822 | | | | | | 16,845 | | |
Marie Toulantis | | | | | 3,253 | | | | | | 16,845 | | |
All current directors and executive officers of the Company as a group | | | | | 12,748 | | | | | | 101,070 | | |
Michael Barnes. Mr. Barnes, 55,
Richard Kunes. Mr. Kunes, 63, has served as a member of our Board since March 2020. Mr. Clarke previously served as EVP/President at LOFT, a women’s specialty apparel retail brand owned by Ascena Retail Group, from July 2018 to July 2019 and was EVP/Chief Merchandising Officer at Justice, also owned by Ascena Retail Group, from August 2017 to July 2018. Prior to joining Ascena Retail Group, Mr. Clarke served as President of Kmart Apparel from September 2014 to July 2017. Mr. Clarke also previously held various merchandising leadership positions at Pimkie, a women’s fashion brand owned by French retail conglomerate, Mulliez, Marks & Spencer, and New Look Retailers, a fast fashion apparel retailer based in Europe. Mr. Clarke brings a wealth of knowledge gained over 25 years of specialty retail experience in different areas of the business, including, transformation initiatives, merchandising, sourcing, planning and allocation, and consumer insights, which makes him well-suited to serve on our Board of Directors since February 2013, as Chairman ofand to lead our Audit Committee since July 2013 and as our Lead Director since July 2015. Mr. Kunes served as Executive Vice President & Senior Advisor to the Chief Executive Officer at The Estée Lauder Companies, Inc.Company.
Patricia Bender. Ms. Bender, 62,66, has served as a member of our Board of Directors since October 2011.2011 and as the Chair of our Compensation Committee since September 2019. Ms. Bender is currently a partner in Vista Private Equity LLP, a privately held shopping center development and private equity company, a position she has held since May 2016. Ms. Bender served as Executive Vice President and Director of Leasing at Weingarten Realty Investors (“Weingarten”) from 2005 to April 2015. During her 33-year tenure at Weingarten, Ms. Bender directed the development and operations of approximately 300 shopping centers and spearheaded various initiatives, including corporate rebranding and sales-focused marketing and training. Ms. Bender currently serves on the Board of North Texas Gulf States Leukemia and Lymphoma Society. Also, Ms. Bender iswas an adjunct professor in the Jones School at Rice University from 2009 to 2015 and is a National Association of Corporate Directors (“NACD”) fellow. Ms. Bender brings commercial real estate expertise and a perspective on successful growth of specialty retail concepts to the Board of Directors.
of the board of directors of the International Franchise Association. HeMr. Emmett has over twenty years of experience serving as in-house legal counsel for various large publicly-traded corporations allowing him to provide valuable insights and advice to the Board of Directors on a variety of legal and business matters, particularly in the areas of transactions, corporate governance and human resources.
Laurie Ann Goldman.
Kal Malik. Mr. Malik, 55,
Laurie Hummel. Ms. Hummel, 47, hassuch time, she served as ourthe Company’s Senior Vice President, Accounting and Chief MerchandisingAccounting Officer since November 2015.April 2016, as Vice President of Accounting and Controller from December 2007 to April 2016, and as Director of Finance from December 2007 to May 2010. Additionally, Ms. Thomassee also previously served as the Company’s Interim Chief Financial Officer from December 2015 to April 2016 and May 2012 to March 2013. Prior to joining the Company, Ms. HummelThomassee served as Senior Vice President, Divisional Merchandise ManagerController at Kohl's from April 2013 to November 2015. During her tenure at Kohl’s, Ms. Hummel oversaw merchandisingLRG Furniture, LLC, a retail subsidiary of Bassett Furniture Industries, for jewelry, watches, footwear, accessories and beauty businesses. From May 2007 to April 2013, Ms. Hummel was a Vice President, Divisional Merchandise Manager at Stage Stores where she was responsible for the junior sportswear business.
Kelly Dilts. Ms. Dilts, 47, has served as our Chief Financial Officer since April 2016. Prior to joining us, she served as Senior Vice President of Finance and Investor Relations at Tailored Brands, Inc., (“Tailored Brands” and formerly Men’s Wearhouse, Inc.) since June 2014 to April 2016. She also held various positions at Tailored Brands', including Senior Vice President, Chief Accounting Officer and Principal Accounting Officer from August 2012 to June 2014 and Vice President of Finance & Accounting from March 2003 to August 2012. She joined Tailored Brands in 1998 as Assistant Controller. Ms. Dilts has significant experience in leading various finance teams and has worked closely with merchandising, store operations, distribution and other operational groups. Prior to joining Tailored Brands, Ms. Dilts worked at Olympia Enterprises and Deloitte & Touche.
There are no family relationships among any of our directors or executive officers.
Our certificate of incorporationIncorporation 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:
| Class I directors terms expiring at the 2021 annual meeting of stockholders | | | Class II directors terms expiring at the 2022 annual meeting of stockholders | | | Class III directors terms expiring at the Annual Meeting | |
| Patricia Bender | | | Richard Emmett | | | Philip F. Bleser | |
| Joseph O’Leary | | | Andrew Clarke | | | Martyn Redgrave | |
| Marie Toulantis | | | Susan McGalla | | | | |
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.
resignation on January 31, 2020.
Our General Counsel regularly attends meetings of the committees of our Board of Directors when they are not in executive session, and to report on matters that are not addressed by other officers. Our Chief Financial Officer regularly attends 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.
Director | | | Audit Committee | | | Compensation Committee | | | Nominating and Corporate Governance Committee | |
Patricia Bender | | | | | | | | | ||
Philip F. Bleser | | | | | | | | | ||
Andrew Clarke | | | | | | | | | | |
Richard Emmett | | | | | | | | | ||
Susan McGalla | | | | | | | | | | |
Joseph O’Leary | | | | | | | | | ||
Martyn Redgrave | | | | | | | | | ||
Marie Toulantis | | | | | | | | |
| | | Chair | | | | | Member | |
The Audit Committee currently consists of Mr. Kunes (Chair), Mr. Emmett, Ms. Goldman, Mr. Redgrave and Ms. Toulantis.
The Compensation Committee currently consists of Mr. Emmett (Chair), Ms. Bender, Ms. Goldman, Mr. Kunes and Mr. O’Leary.
The Nominating and Corporate Governance Committee currently consists of Ms. Toulantis (Chair), Ms. Bender, Mr. Kunes, Mr. O’Leary, and Mr. Redgrave.
The
Ms. Bender, Mr. Brenneman, Mr. Emmett, Ms. Goldman, Mr. Kunes, Mr. O’Leary and Mr. Zannino each served on the Compensation Committee during all or part of fiscal 2015. None of these directors is or has been a former or current executive officer or employee of the Company or had any relationships requiring disclosure by the Company under Item 404 of Regulation S-K promulgated by the SEC. None of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, whose executive officers served as a Director of the Company or a member of the Compensation Committee during fiscal 2015.
In connection with the appointment of Mr. Barnes as Chairman of the Board of Directors,positions should be held by the Board of Directors also createdsame person, or if the position of Lead Independent Director. Mr. Kunes currently serves as our Lead Independent Director.
Our Board of Directors adopted a Lead Independent Director Charter, which provides that the duties and responsibilities of the Lead Independent Director include, but are not limited to, the following:
Although we have in the past separated the roles of Chairman of the Board of Directors and Chief Executive Officer,is a director that does not otherwise qualify as an independent director, the independent directors on the Board of Directors believes that having Mr. Barnes serve in both these roles, coupled with strongwill appoint from amongst themselves an independent director leadership, further enhanced by theto serve as Lead Independent Director, is the most appropriate and effective board leadership structure for us at this time.
functions, including reviewing functions. As part of this role, the Board of Directors reviews our financial and execution risks and exposures associated with our short and long term plans, cybersecurity, major exposureslitigation, management succession planning and other matters that may present material risks to the Company’s operations, plans, prospects, and the steps management has taken to monitor and control those exposures.these risks. Our Board of Directors has delegated this oversight responsibility to our Audit Committee through its charter. Our Board of Directors has determined that this oversight responsibility can be most efficiently performed by our Audit Committee as part of its overall responsibility for providing independent, objective oversight with respect to our accounting and financial reporting functions, internal and external audit functions and systems of internal controls over financial reporting and legal, ethical and regulatory compliance. Our Audit Committee regularly reports to our Board of Directors with respect to its oversight of these important areas.
A substantial portion of compensation provided to our executive officers is in the form of equity awards that we believe further align executives’ interests with those of our stockholders. 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 Share Ownership Guidelines discussed underin the “Executive Compensation”
service from the grant date through the retirement date.
In March 2016, the Board of Directors amended our Director Compensation Policy to provide that, beginning with our 2016 annual meeting, the annual grants to our non-employee directors would be made in the form of restricted stock as opposed to options, with the number of shares subject to each award being determined by dividing $100,000 by the closing price of our common stock on the grant date. Each award
will vest in full on28, 2020, the first anniversary of the grant date, subject to the director’s continued service on our Board of Directors through the applicable vesting date. Both changes were implemented to better align with evolving market practices.
As described inUnder our Director Compensation Policy, those members of our Board of Directors who are currently employed by us do not receive additional compensation in connection with their service on our Board of Directors. Accordingly, Mr. Barnes, our current Chairman, President and Chief Executive Officer did not receive compensation for his service on our Board of Directors during fiscal year 2015. The compensation paid to him is presented in the “Executive Compensation” disclosures beginning on page
2019
Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1)(2) | | | Total ($) | | |||||||||
Patricia Bender | | | | | 37,851 | | | | | | 100,059 | | | | | | 137,910 | | |
Philip F. Bleser | | | | | 36,775 | | | | | | 100,059 | | | | | | 136,834 | | |
Richard Emmett | | | | | 44,377 | | | | | | 100,059 | | | | | | 144,436 | | |
Richard Kunes(3) | | | | | 43,956 | | | | | | 100,059 | | | | | | 144,015 | | |
Joseph O’Leary | | | | | 33,547 | | | | | | 100,059 | | | | | | 133,606 | | |
Martyn Redgrave | | | | | 37,155 | | | | | | 100,059 | | | | | | 137,214 | | |
Marie Toulantis | | | | | 41,807 | | | | | | 100,059 | | | | | | 141,866 | | |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1)(2) | All Other Compensation ($) | Total ($) | ||||||||||||
Patricia Bender | 50,000 | 100,006 | — | 150,006 | ||||||||||||
Greg Brenneman(3) | — | — | — | — | ||||||||||||
Richard Emmett | 60,000 | 100,006 | — | 160,006 | ||||||||||||
Laurie Ann Goldman | 50,000 | 100,006 | — | 150,006 | ||||||||||||
Richard Kunes | 82,500 | 100,006 | — | 182,506 | ||||||||||||
Joe O’Leary | 50,000 | 100,006 | — | 150,006 | ||||||||||||
Martyn Redgrave(4) | 43,750 | 87,525 | — | 131,275 | ||||||||||||
Marie Toulantis | 57,500 | 100,006 | — | 157,506 | ||||||||||||
Richard Zannino(3) | — | — | — | — |
Director | | | Aggregate Number of Outstanding Restricted Shares as of February 1, 2020 | | | Aggregate Number of Outstanding Stock Options as of February 1, 2020 | | ||||||
Patricia Bender | | | | | 16,845 | | | | | | 3,722 | | |
Philip F. Bleser | | | | | 16,845 | | | | | | — | | |
Richard Emmett | | | | | 16,845 | | | | | | 5,753 | | |
Richard Kunes(3) | | | | | — | | | | | | 5,814 | | |
Joseph O’Leary | | | | | 16,845 | | | | | | 2,531 | | |
Martyn Redgrave | | | | | 16,845 | | | | | | 1,028 | | |
Marie Toulantis | | | | | 16,845 | | | | | | 3,253 | | |
The Board is to further align the interests of Directors established share ownership guidelines covering our non-employeemanagement and our directors (the “Director Share Ownership Guidelines”).with those of our stockholders. Under the Director Share Ownership Guidelines, each Senior Officer shall hold “qualifying stock” with a value equal to a certain multiple of the officer’s base salary. The multiples to be applied are as follows: (1) five times the base salary for our Chief Executive Officer and our President; (2) three times the base salary for any Executive Vice President; and (3) two times the base salary for any Senior Vice President. Each non-employee director is required to hold “qualifying stock” with a value equal to five times the cash-portion of the base annual cash retainer paid to such non-employee director. A non-employee director may not dispose of more than 25% of his or herAs defined by the Share Ownership Guidelines, “qualifying stock” unless the requirement has been met onof a Senior Officer or before the date of any such disposition and, after giving effect to such disposition, the non-employee director will not fail to continue to meet the guidelines. For these purposes, “qualifying stock” includes (1) shares of our common stock held by the individual in a brokerage account for the director’sindividual’s benefit, in trust or through a tax qualified retirement plan, (2) shares of our common stock held by the director’sindividual’s spouse, (3) awards of restricted sharesstock or restricted stock units with respect to shares of our common stock held by the individual, and (4) the “in the money” value of vested stock options to purchase our common stock held by the director,individual, determined as of each October 31 and calculated based on the preceding 30-day average per share trading price of our common stock.
Name | | | Title | |
Michael | | Former Interim Chief Executive Officer | ||
| ||||
Cynthia Thomassee | | Executive Vice President and Chief Financial Officer | | |
| | Former Executive Vice President, Chief | | |
| | Former Senior Vice President, | |
The Compensation Committee conducts an annual review of our executive compensation program to help ensure that: (1) the program is designed to align the interests of our named executive officers with our stockholders’ interests by rewarding performance that is tied to creating stockholder value; and (2) the program provides a total compensation package for each of our named executive officers that we believe is competitive.
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. We believe that in order to attract and retain top executives, we need to provide them with compensation levels that reward their continued service. Some of the elements, such as base salaries, are paid out on a short-term or current basis. Other elements, such as benefits provided upon certain terminations of employment and the equity awards that are subject to multi-year vesting schedules, are paid out on a long-term basis. We believe this mix of short- and long-term elements allows us to achieve our goals of attracting, retaining and motivating our top executives. We also, in certain cases, provide our named executive officers with certain relocation and other benefits in connection with their joining the Company.
In structuring executive compensation packages, the Compensation Committee considers how each component promotes retention and motivates performance. Base salaries, severance and other termination benefits are primarily intended to attract and retain highly qualified executives. These elements of our executive compensation program are generally not dependent on performance. Annual cash bonus and long-term equity incentive opportunities provide further incentives to achieve performance goals specified by the Compensation Committee, to enhance alignment with stockholder interests and/or to continue employment with us through specified vesting dates.
We believe that by providing a significant portion of our named executive officers’ total compensation package in the form of equity-based awards, we are able to create an incentive to build stockholder value over the long-term and closely align the interests of our named executive officers to those of our stockholders by incentivizing our named executive officers to produce stockholder value. In addition, our annual equity awards to the named executive officers for fiscal year 2015 consisted of restricted stock awards that vest only if specified performance goals established by the Compensation Committee for the particular performance period are met and only if the executive remains employed with us through the end of the entire three-year period covered by the award. In order to attract and retain Ms. Hummel’s services, we granted a restricted stock award to her in connection with her joining the Company in November 2015 that vests over a two-year period. For additional information regarding equity-based awards granted to our named executive officers during fiscal year 2015, see “— Current Executive Compensation Program Elements — Equity-Based Awards”, below.
Our annual performance-based cash awards, while a less significant portion (relative to our equity-based awards) of our total compensation package, are also contingent upon the achievement of financial performance metrics. The amount of compensation ultimately received for these awards vary with our annual financial performance, thereby providing additional incentives to achieve short-term or annual goals that we believe will maximize stockholder value over the long-term.
Our executive compensation program is determined and approved by our Compensation Committee. During fiscal year 2015, 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 considers the recommendations of our Chief Executive Officer, President; (2) three times the base salary for any Executive Vice President; and (3) two times the base salary for any Senior Vice President.
Historically, our compensation has been highly individualized, the result of arm’s-length negotiations and based on a variety of factors including, our financial condition and available resources, our need for a particular position to be filled and the compensation levels of our other executive officers. As discussed below, we informally consider the competitive market for corresponding positions within the specialty retail apparel industry generally based on the experience and general knowledge possessed by members of our Compensation Committee and our Chief Executive Officer regarding the compensation levels provided to executive officers of other companies in our industry generally. However, we do not set executive compensation levels at any specific level or “benchmark” against other companies. Except as otherwise noted, our Compensation Committee’s executive compensation determinations are subjective and are generally based on the experience and general knowledge possessed by members of our Compensation Committee taking into account the executive’s responsibilities and experience, our performance and the individual performance of the executive, as well as market information provided by an independent compensation consultant of the Compensation Committee as discussed below.
For fiscal 2015, our Compensation Committee retained Pearl Meyer to serve as its independent compensation consultant.consultant for fiscal year 2019 and sought Pearl Meyer’s advice in setting the Company’s executive compensation policies. Other than its engagement by the Compensation Committee, Pearl Meyer provides no other services to us or any of our subsidiaries. The Compensation Committee has assessed the independence of Pearl Meyer and concluded that Pearl Meyer is independent and its engagement of Pearl Meyer does not raise any conflict of interest with us or any of our directors or executive officers.
Pearl Meyer assisted the Compensation Committee in selecting the following peer group of companies in our industry to assist the committee in making its compensation decisions for fiscal 2015.
These companies were the same peer companies used for the evaluation of our
against the peer group data. The peer company data is only one point of information taken into account by the Compensation Committee in making compensation decisions.
At the annual meeting of our stockholders held in June 2015, our stockholders were provided with an opportunity to cast an advisory vote on our executive compensation program through a say-on-pay proposal. Approximately 87 percent of votes cast were in favor of our executive compensation program. The Compensation Committee believes that our compensation program includes a number of features (noted above) that reflect best practices in the market and that this voting result affirms stockholders’ support of the Company’s approach in compensating its executive officers. Our Compensation Committee will continue to consider the outcome of the Company’s say-on-pay proposals when making future compensation decisions for our named executive officers.
The Company’s current policy is to provide stockholders with an opportunity to approve the compensation of the named executive officers every three years at the annual meeting of stockholders. It is expected that the next such vote will occur at the 2018 annual meeting of stockholders.
The current elements of our executive compensation program are:
We strive to achieve an appropriate mix between the various elements of our compensation program to meet our compensation objectives and philosophy; however, we do not apply any rigid allocation formula in setting our named executive officers’ compensation, and we may make adjustments to this approach for various positions after giving due consideration to prevailing circumstances.
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 with a value directly linked to our stock price and, as to a substantial portion of such awards, the achievement of specified performance goals and (ii) annual performance-based cash awards contingent upon achievement of measurable financial objectives.
We provide an annual base salary to our named executive officers to induce talented executives to join or remain with the Company, to compensate them for their services during the fiscal year and to provide them with a stable source of income. For fiscal year 2015, each of our named executive officers, other than Ms. Thomassee, had an employment letter agreement which set forth his or her minimum level of annual base salary.
The base salary levels of continuing named executive officers are reviewed annually by our Compensation Committee to determine whether an adjustment is warranted. The Compensation Committee may take into account numerous factors in making its determination, none of which are dispositive or individually weighted, including our financial performance, the state of our industry and local economies in which we operate, the executive officer’s relative importance and responsibilities, the executive officer’s performance and periodic reference to salaries paid to similarly situated executives with our peer companies, based on our expertise and knowledge of general industry practices.
In March 2015, our Compensation Committee considered the annual base salaries of our named executive officers then employed with us and approved increases in the base salaries of each of Mr. Malik and Ms. Alt from $375,000 to $382,500, in the base salary of Mr. Vendetti from $360,500 to $372,500 and in the base salary of Ms. Thomassee from $190,550 to $200,000. Mr. Barnes’ base salary was established upon his appointment as Chief Executive Officer in December 2014 and was not reviewed in fiscal year 2015. Ms. Hummel’s base salary was negotiated with her in connection with her joining the Company in November 2015. Effective January 1, 2016, we entered into a new employment letter agreement with Mr. Malik which provided for an increase in his base salary from $382,500 to $402,500 while eliminating the annual benefit allowance in the same amount ($20,000). The Compensation Committee determined in each case, based on its judgment, that these increases were appropriate after taking into account the base salaries of similarly situated officers with our peer companies, the executive’s experience and the importance of the executive’s services to us, and the general knowledge and expertise possessed by the members of our Compensation Committee.
The annual base salary levels in effect as of January 30, 2016, the last day of fiscal year 2015, for each of our named executive officers who were employed by us as of that date are as follows:
Name | Annual Base Salary | |||
Michael W. Barnes | $ | 875,000 | ||
Kal Malik | $ | 402,500 | ||
Laurie Hummel | $ | 460,000 | ||
Cynthia Thomassee | $ | 200,000 |
The base salaries paid to our named executive officers for fiscal year 2015 are reported in the “Summary Compensation Table” below.
We maintain the Francesca’s Holdings Corporation Executive Bonus Plan (the “Executive Bonus Plan”) to provide eligible employees of the Company and our subsidiaries with annual performance-based cash award opportunities linked to our annual financial performance and the qualitative assessment of each executive’s individual performance. The Executive Bonus Plan was adopted under our equity incentive plan, which has been approved by more than 80% of the votes cast by our stockholders and includes provisions for a cash bonus feature that is designed to qualify as deductible performance-based compensation under Section 162(m)on our annual say-on-pay proposal in each of the U.S. Internal Revenue Code (“Section 162(m)”). The purposes of the Executive Bonus Plan are: (1) to promote the interests of the Company and its stockholders by providing compensation opportunities that are competitive with other companies; and (2) to provide performance-based cash awards to those individuals who contribute to the long-term performance and growth of the Company.
The target annual performance-based cash award opportunity for each eligible executive is set at a percentage of the executive’s base salary. Pursuant to their employment letter agreements (other than for Ms. Thomassee), the target award amounts for fiscal year 2015 were 150% of base salary for Mr. Barnes and 50% of base salary for Messrs. Vendetti and Malik and Ms. Alt. last five years.
Under the Executive Bonus Plan, we must achieve a threshold performance goal for any bonuses to be payable for the fiscal year as set forth in the table below. For fiscal year 2015, the threshold goal was achievement of $36 million net income, which was approved by the Board of Directors and adopted by the Compensation Committee at the beginning of the fiscal year. The Compensation Committee chose net income because this metric represents an objectively determinable financial target that we believe indicates our growth and overall success. No bonuses would be payable under the Executive Bonus Plan for fiscal year 2015 if the threshold net income goal was not achieved.
For Mr. Barnes, the payout percentages for performance at the threshold, target and maximum levels set forth above would be 33%, 100% and 133%, respectively, of this target bonus amount (or 50%, 150% and 200% of his base pay at threshold, target and maximum levels, respectively). For the other named executive officers, the payout percentages for performance at the threshold, target and maximum levels set forth above would be 75%, 100% and 150%, respectively, of the executive’s target bonus amount. If our net income is between the threshold and target levels, or between the target and maximum levels, the payout percentage would be determined by linear interpolation between the payout levels applicable to each executive officer. The Compensation Committee established performance targets at challenging yet attainable levels. The threshold and target net income levels were set above our actual performance level for fiscal year 2014.
If the threshold net income goal was achieved, each participant’s bonus would be based on (a) 75% on the level of net income achieved for fiscal year 2015 (“net income component”), and (b) 25% based on the participant’s individual performance (“individual performance component”). The bonus for the net income component would be determined by multiplying the 75% weighting for this component by a payout percentage applicable to each of our named executive officer. The remaining 25% of each participant’s bonus opportunity would be based on the Compensation Committee’s qualitative assessment of each executive’s individual performance during the year. For fiscal year 2015, the qualitative assessment of each named executive officer’s individual performance metric was intended to measure the executive’s performance of the duties, tasks and activities the executive was asked to perform in his or her respective role with the Company during the year. The Compensation Committee retains the discretion to reduce, but not increase, the amount of any bonus otherwise payablerecover certain performance-based compensation previously paid to our executive officers based on such factors as it deems appropriate.
In March 2016, the Compensation Committee determined that, for fiscal year 2015, we achieved net income of approximately $38.2 million, exceeding the threshold level and resulting inif a payout percentage of approximately 86% of his target bonus for Mr. Barnes and approximately 94% of their target bonuses for other named executive officers determined under the chart above.
As discussed throughout this Compensation Discussion and Analysis, in order to further align the interestsmaterial restatement of our named executive officers with those of the Company’s stockholders, the Compensation Committee has determinedfinancial statements occurs, as well as policies that a significant portion of each named executive officer’s compensation opportunities should be in the form of equity-based awards. Equity-based awards are made under, and subject to the terms of, our stockholder-approved equity incentive plan. In general, all equity-based awards to our named executive officers are determined at the discretion of our Compensation Committee after consideration of the factors noted above. In addition, our Compensation Committee considers the named executive officer’s current position with the Company, the size of his or her total compensation package and the executive’s existing vested and unvested equity-based awards.
Historically, 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 exercise price of the option is generally equal to the closing price of a share of our common stock on the date of grant).
Beginning with the fiscal year 2014 grants, however, the Compensation Committee, with input from Pearl Meyer, revised its approach and granted performance-based equity-based awards in the form of restricted stock toprohibit our executive officers and thedirectors from pledging our stock or engaging in certain hedging transactions.
In addition, as described in detail below, the Company’s annual equity awards are entirely performance-based, with the vesting of the award contingent on the achievement of pre-established performance goals. Each award consists of a three-year performance period, with a portion of the award being eligible to vest based on the Company’s performance during each fiscal year covered by the award against the goals established by the Compensation Committee for that fiscal year. In addition to this performance-based vesting, the awards also provide an additional retention incentive as the executive is generally required to remain employed with the Company through the entire three-year performance period in order for any portion of the award to vest. The Compensation Committee currently expects to continue to grant equity-based awards in the form of performance-based restricted stock on an annual basis. However, the Compensation Committee retains the flexibility to consider Company and individual performance and any other factors it considers appropriate in determining the type, level and design of any equity award grant.
2015 Performance Share Awards. In March 2015, we granted each of our named executive officers then employed by us a performance stock award expressed as a dollar value. Such dollar value was converted into a target number of shares of performance-based restricted stock by reference to the fair market value of our common stock at the date of grant. Each performance-based restricted stock award has no voting rights attached to the award but is entitled to dividend rights, provided that any cash dividends paid on any unvested and forfeited shares must be repaid to the Company. The performance-based restricted stock awards are subject to both time-based and performance-based vesting requirements, where the executive can earn between 0% and 150% of the target number of shares subject to the award based upon achievement of the earnings per share (“EPS”) and net sales growth (“Net Sales Growth”) goals described below. Fifty percent of the target number of shares subject to the award will become eligible to vest based upon achievement of the EPS goal (the “Target EPS Shares”), and 50% of the target number of shares subject to the award will become eligible to vest based upon achievement of the Net Sales Growth goal (the “Target Net Sales Growth Shares”). For purposes of each performance-based restricted stock award, “EPS” means the Company’s earnings per share for a particular fiscal year as determined by the Company and did not receive any compensation from the Company or participate in any of the Company’s employee benefit plans. Instead, as described below under “
The total target number of shares subject to each award is divided into three substantially equal tranches with respect to each of fiscal year 2015, 2016 and 2017 (each, a “vesting tranche”). Each vesting tranche will become eligible to vest based upon achievement of the EPS and Net Sales Growth goals for each of those three fiscal years (each, a “performance year”). The portion of each vesting tranche that will become eligible to vest with respect to the applicable performance year will be determined by the Compensation Committee following the end of the performance year as follows: (1) the Target EPS Shares in the vesting tranche corresponding to a performance year will be multiplied by a percentage (the “EPS Percentage”), between 0% and 150%, determined based on the Company’s EPS for that performance year against a pre-established target; and (2) the Target Net Sales Growth Shares in the vesting tranche corresponding to a performance year will be multiplied by a percentage (the “Net Sales Growth Percentage”), between 0% and 150%, determined based on the Company’s Net Sales Growth for that performance year against a pre-established target.
The following table presents the percentage of the Target EPS Shares and Target Net Sales Growth Shares, as applicable, in the vesting tranche for a particular performance year that will become eligible to vest based upon the level of achievement of pre-established threshold, target and maximum levels of EPS and Net Sales Growth for that performance year.
Level of Achievement for the Performance Year | ||||||||||||||||||||
Weight | Below Threshold(1) | Threshold(2)(3) | Target(2)(3) | Maximum(2)(3) | ||||||||||||||||
EPS Percentage | 50 | % | 0 | % | 75 | % | 100 | % | 150 | % | ||||||||||
Net Sales Growth Percentage | 50 | % | 0 | % | 75 | % | 100 | % | 150 | % |
Shares of performance-based restricted stock subject to the award that become eligible to vest based on EPS or Net Sales Growth performance during the applicable performance year will generally vest in one installment on the third anniversary of the date of grant of the award, subject to the executive’s continued employment through that date.
The Compensation Committee believes that these performance-based restricted stock awards further link the interests of our executives with those of our stockholders (as the ultimate value of the award depends on our stock price since the award is denominated in shares of our common stock), as well as create a significant performance incentive over multiple performance periods (as vesting of the restricted stock depends on our EPS and Net Sales Growth for each of the three fiscal years covered by the award) and a long-term retention incentive (as the entire award is subject to a three-year time-based vesting period).
The following table sets forth the dollar value of the target number of shares of restricted stock granted by the Company to the named executive officers in March 2015:
Name | Restricted Stock Award(1) | |||
Michael Barnes | $ | 2,500,000 | ||
Kal Malik | $ | 500,000 | ||
Sei Jin Alt | $ | 300,000 | (2) | |
Mark Vendetti | $ | 300,000 | (2) | |
Cynthia Thomassee | $ | 25,000 | (3) |
For the vesting tranche of each performance stock award that relates to fiscal year 2015, the Compensation Committee established the following performance goals:
Performance Level | EPS | Net Sales Growth | Vesting Percentage | |||||||||
Below Threshold | Less than $0.84 | Less than 9% | 0 | % | ||||||||
Threshold | $0.84 | 9% | 75 | % | ||||||||
Target | $0.91 | 12% | 100 | % | ||||||||
Maximum | $0.98 or more | 15% or more | 150 | % |
The Compensation Committee established performance targets for these metrics at challenging yet attainable levels. The threshold and target EPS levels, and the target Net Sales Growth level, were set above our actual performance levels for these metrics in fiscal year 2014.
Under applicable SEC and accounting rules, these performance-based awards are considered to be “granted” at the time the performance goals for the particular fiscal year are established. Accordingly, only the vesting tranche of each award that relates to performance for fiscal year 2015 is treated as granted during fiscal year 2015 and is reflected in the compensation tables below in this proxy statement. The vesting tranches of each award that relate to fiscal years 2016 and 2017 will be considered granted for accounting purposes in the fiscal year in which the applicable performance goals are established and will be reported in the tables as compensation for each executive for that fiscal year.
In March 2016, the Compensation Committee determined that our EPS for fiscal year 2015 was $0.91 (resulting in a vesting percentage for this component of 100%) and that our Net Sales Growth for fiscal year 2015 was 16% (resulting in a vesting percentage for this component of 150%). Accordingly, the fiscal year 2015 vesting tranche of these performance-based awards is eligible to vest as to 125% of the target number of shares, with vesting of these shares being subject to the executive’s continued employment through the third anniversary of the grant date.
2014 Performance Share Awards. As noted above, the annual grants to our executive officers and certain other key employees for fiscal year 2014 were made in form of performance stock with a structure similar to that described above for the fiscal year 2015 grants. These grants were made in April 2014, including grants to Mr. Malik and Ms. Thomassee and consisted of three vesting tranches corresponding to fiscal years 2014, 2015 and 2016. The fiscal year 2015 vesting tranche of these awards was subject to the same performance goals set forth above for the fiscal year 2015 awards. In March 2016, the Compensation Committee determined the fiscal year 2015 performance levels as described above, and based on this performance, the fiscal year 2015 tranche of these awards is eligible to vest as to 125% of the target number of shares, with vesting of these shares being subject to the executive’s continued employment through the third anniversary of the grant date.
Retention Stock Grants. In November 2015, the Compensation Committee approved a grant of 17,832 shares of restricted stock to Ms. Hummel, which is scheduled to vest in two annual installments, subject to her continued employment with us through each vesting date. This grant was negotiated with Ms. Hummel in connection with her commencing employment with the Company and approved by the Compensation Committee in order to attract and retain Ms. Hummel’s services.
In August 2015, the Compensation Committee approved a grant of 12,000 shares of restricted stock to Ms. Alt in connection with her agreement to provide consulting services to the Company for one year following her resignation in November 2015. The grant is eligible to vest in two installments over the one year consulting period, subject to Ms. Alt’s continued service to the Company as provided in her transition agreement, and was approved by the Compensation Committee to provide an additional incentive for Ms. Alt to continue to serve the Company in a consulting role and assist with the transition of her duties.
Although these grants are not subject to performance-based vesting requirements, we believe they serve to further align the interests of the recipients with those of our stockholders since the ultimate value of the grant is directly linked to our stock price.
Additional information regarding the material terms of the equity awards granted to our named executive officers for fiscal year 2015 is set forth in the “Grants of Plan-Based Awards During Fiscal Year 2015” table and under the heading, “— Equity Incentive Plan Awards”, below. Information regarding the material terms of the equity awards granted to our named executive officers following fiscal year 2015 is set forth below in this Compensation Discussion and Analysis under the heading, “— Actions Taken Subsequent to Fiscal Year 2015.”
We provide our named executive officers with benefits on the same terms available to our employees generally, as well as relocation and other benefits in certain cases in connection with the hiring of new executives as described below.
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 401(k) plan is generally 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 tax laws. We currently provide a 100% matching contribution on the first 3% of employee contributions and an additional 50% matching contribution on the next 2% of employee contributions. Employees’ contributions and Company matching contributions vest immediately.
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.
Relocation Assistance. The Company’s business needs require, on occasion, to relocate certain employees. To meet this need, we may, on a case by case basis, cover certain expenses, including temporary housing, relocation, living and travel expenses. As noted in the “Summary Compensation Table” below, we reimbursed Mr. Barnes and Ms. Hummel for certain moving and other relocation expenses in connection with them joining the Company. Ms. Hummel’s relocation benefits are subject to repayment to the Company if she voluntarily terminates her employment within the first 12 months after her hire date.
Other Benefits. Under our employment letter agreements with certain named executive officers entered into prior to 2014, we provided an annual fixed dollar amount to apply towards the purchase of additional benefits of their choosing. The annual dollar amount of this benefit for each executive was based on the executive’s position within the Company and the Compensation Committee’s subjective assessment of industry practices. As of the end of fiscal year 2015, this benefit is no longer provided to the Company’s executive officers other than for Ms. Thomassee, who is serving as Chief Financial Officer on an interim basis.
In addition to the relocation benefits provided to Ms. Hummel noted above, she is also entitled to a payment not to exceed $50,000 (on an after-tax basis) to compensate her for certain awards by her former employer that were forfeited upon her joining the Company. As with her relocation benefits, Ms. Hummel will be required to repay this amount to the Company if she voluntarily terminates her employment within the first 12 months after her hire date. The Compensation Committee believed it was appropriate to provide these benefits to Ms. Hummel as an additional inducement to her accepting employment with the Company and as an additional retention incentive.
Amounts paid to our named executive officers in fiscal year 2015 were based on employment letter agreements in place with each executive, except that we did not have an employment letter agreement with Ms. Thomassee. Each employment letter agreement specifies the executive’s initial annual base salary and target bonus, as well as the executive’s eligibility to participate in the Company’s benefit plans. We believe that it is in the best interests of the Company to enter into employment agreements with our executives to help foster long-term retention, and promote stability among the management team, while still allowing the Compensation Committee to exercise considerable discretion in designing our incentive compensation program
and rewarding performance. The employment letter agreements we have entered into with our named executive officers are described in further detail in the narrative following the “Summary Compensation Table” below.
The employment letter agreements we have entered into with our named executive officers also generally provide for severance and other benefits which are designed to provide economic protection so that an executive can remain focused on our business without undue personal concern in the event that his or her position is eliminated or, in some cases, significantly altered by the Company, which we believe is particularly important in light of the executives’ leadership roles at the Company. The Compensation Committee believes that providing severance or similar benefits is common among similarly situated executives in the specialty retail industry generally and remains important in recruiting and retaining key executives. 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 the last business day of fiscal year 2015, please see “— Potential Payments upon Termination or Change in Control”, below.
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, awards granted pursuant to our stock incentive plans may vest, at the discretion of the plan administrator, in certain circumstances upon a change in control (as defined in the plan or the applicable award agreement).
In addition, in approving Ms. Hummel’s new-hire restricted stock grant described above, the Compensation Committee determined that it would be appropriate to provide for accelerated vesting of the award if Ms. Hummel’s employment were involuntarily terminated in connection with a change in control of the Company.
We do not provide our executives with tax “gross-up” payments in connection with a termination of their employment and/or a change in control of the Company.
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 the last business day of fiscal year 2015, please see “— Potential Payments upon Termination or Change in Control”, below.
Ms. Alt resigned as our Executive Vice President, Chief Merchandising Officer effective November 20, 2015. In connection with the termination of her employment, the Company entered into a transition agreement with Ms. Alt that provides for her to continue with the Company in a consulting role through November 20, 2016 and to receive a monthly consulting fee and award of restricted stock that vests based on her continued services. The transition agreement was negotiated with Ms. Alt and includes her release of claims against the Company and certain non-competition, non-solicitation and other covenants in favor of the Company as specified in the agreement. For more information regarding Ms. Alt’s transition agreement, please see “— Potential Payments upon Termination or Change in Control”, below. Upon the termination of Ms. Alt’s employment, each of her then-outstanding and unvested equity awards (other than the new restricted stock award granted under the transition agreement) were forfeited.
In March 2016, the Compensation Committee approved the compensation program for fiscal year 2016 for each of our named executive officers (other than Ms. Alt and Mr. Vendetti). Each executive was granted a bonus opportunity under the Executive Bonus Plan, with 75% of the bonus relating to Company performance and 25% of the bonus relating to individual performance. The Company’s performance will be measured against pre-established goals based on operating income and net sales growth achieved for the fiscal year, with each of these two metrics weighted equally. Bonuses under the Executive Bonus Plan for fiscal year 2016 are contingent on achievement of minimum performance levels established for each metric (so that 37.5% of the total bonus opportunity will be payable only if the threshold level for operating income is achieved and 37.5% of the total bonus opportunity will be payable only if the threshold level for net sales growth is achieved). The target bonus for each named executive officer is the same as his or her target bonus for fiscal year 2015 identified above.
Each of these executives was also granted a performance stock award that covers a three-year performance period consisting of fiscal years 2016, 2017 and 2018. Vesting of the award will be determined based on the Company’s net sales compound annual growth rate (“CAGR”) for the performance period (weighted 40% and subject to a modifier based on comparable sales growth for that period), the Company’s earnings per share CAGR for that period (weighted 40%), and the Company’s return on invested capital (“ROIC”) for that period (weighted 20%), in each case as measured against performance targets established by the Compensation Committee. Vesting of these awards is also contingent on the executive’s continued employment with us through the entire three-year period covered by the award. Each award may vest as to between 0% and 150% of the target number of shares subject to the award.
The following table sets forth the dollar value of the target number of performance shares granted to each of these named executive officers in March 2016:
Name | Performance Stock Award | |||
Michael Barnes | $ | 2,500,000 | ||
Kal Malik | $ | 500,000 | ||
Laurie Hummel | $ | 500,000 | ||
Cynthia Thomassee | $ | 66,000 |
In approving these performance stock awards, the Compensation Committee also determined that if, during the performance period and in connection with or within 12 months following a change in control of the Company, the executive’s employment is terminated by the Company without cause or by the executive for good reason, the award will fully vest with respect to 100% of the target number of shares subject to the award (or, as to any fiscal year completed prior to the change in control, the Company’s performance during that fiscal year and for any remaining periods at higher of: (x) actual performance for the completed fiscal year, or (y) 100% of target number).
In determining which elements of compensation are to be paid, and how they are weighted, we take into account whether a particular form of compensation will be deductible under Section 162(m). Section 162(m) generally limits the deductibility of compensation paid to our Chief Executive Officer and certain other executive officers to $1 million during any fiscal year unless such compensation is “performance-based” under Section 162(m). Our intent generally is to design and administer our executive compensation program in a manner that will preserve the deductibility of compensation paid to our executive officers. However, we reserve the right to design programs that we believe best satisfy the objective of our executive compensation program, even where the compensation paid under such programs may not be deductible. In any event, there can be no assurance that compensation intended to qualify for deductibility under Section 162(m) awarded or paid by the Company will be fully deductible.
In September 2015, our Compensation Committee adopted the Amended Share Ownership Guidelines (the “Share Ownership Guidelines”) applicable to each of our Chief Executive Officer, President, Chief Operating Officer, Chief Administrative Officer, Chief Financial Officer, Chief Merchandising Officer, any Executive Vice President, any Senior Vice President and any Vice President who is awarded equity-based compensation (collectively, “Senior Officers”). The purpose of the Share Ownership Guidelines is to further align the interests of our management with those of our stockholders. Under the Share Ownership Guidelines, each Senior Officer shall hold “qualifying stock” with a value equal to a certain multiple of the participant’s base salary. The multiples to be applied are as follows: (1) five times the base salary for our Chief Executive Officer; (2) three times the base salary for our President, Chief Operating Officer, Chief Administrative Officer, Chief Financial Officer, Chief Merchandising Officer and any Executive Vice President, (3) two times the base salary for any Senior Vice President; and (4) one times base salary for any Vice President. No Senior Officer may dispose of his or her “qualifying stock” unless the guidelines have been met on or before the date of such disposition and, after giving effect to such disposition, the participant will continue to satisfy the guidelines. “Qualifying stock”, as defined by the Share Ownership Guidelines, includes (1) shares of our common stock held by the Senior Officer in a brokerage account for the individual’s benefit, in trust or through a tax qualified retirement plan, (2) shares of our common stock held by the Senior Officer’s spouse, (3) vested restricted stock, and (4) “in the money” value of vested stock options to purchase our common stock held by such participant, determined as of each October 31 and calculated based on the preceding 30-day average per share trading price of our common stock.
The Compensation Committee has certain duties and powers as described in its charter. The Compensation Committee currently consists of Mr. Emmett (Chair), Ms. Bender, Ms. Goldman, Mr. Kunes and Mr. O’Leary, 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. 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.
Compensation Committee of the Board of DirectorsRichard Emmett (Chair)Patricia Bender Laurie Ann GoldmanRichard KunesJoseph O’Leary
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.
2018 to 2019
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(6)(7) | Option Awards ($)(6) | Non-Equity Incentive Plan Compensation ($)(8) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(9) | Total ($) | |||||||||||||||||||||||||||
Michael W. Barnes Chairman, President and Chief Executive Officer(1) | 2015 | 875,000 | — | 833,336 | — | 1,131,375 | — | — | 2,839,711 | |||||||||||||||||||||||||||
2014 | 67,308 | — | — | 5,885,000 | — | — | 22,715 | 5,975,023 | ||||||||||||||||||||||||||||
Kal Malik Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary | 2015 | 383,798 | — | 323,453 | — | 181,415 | — | 25,083 | 913,749 | |||||||||||||||||||||||||||
2014 | 371,443 | — | 166,668 | — | — | — | 30,231 | 568,342 | ||||||||||||||||||||||||||||
2013 | 350,000 | — | — | — | 133,000 | — | 30,200 | 513,200 | ||||||||||||||||||||||||||||
Laurie Hummel Executive Vice President, Chief Merchandising Officer(2) | 2015 | 88,462 | — | 263,022 | — | — | — | 89,417 | 440,901 | |||||||||||||||||||||||||||
Cynthia Thomassee Interim Chief Financial Officer(3) | 2015 | 198,728 | — | 16,174 | — | 56,537 | — | 28,749 | 300,188 | |||||||||||||||||||||||||||
Sei Jin Alt Former Executive Vice President, Chief Merchandising Officer(4) | 2015 | 310,875 | — | 330,395 | — | — | — | 100,544 | 741,814 | |||||||||||||||||||||||||||
2014 | 371,443 | — | 449,992 | — | — | — | 30,231 | 851,666 | ||||||||||||||||||||||||||||
2013 | 350,000 | — | — | — | 124,750 | — | 28,538 | 503,288 | ||||||||||||||||||||||||||||
Mark Vendetti Former Senior Vice President, Chief Financial Officer(5) | 2015 | 322,173 | — | 194,075 | — | — | — | 25,632 | 541,880 | |||||||||||||||||||||||||||
2014 | 358,846 | — | 99,991 | — | — | — | 35,160 | 493,997 | ||||||||||||||||||||||||||||
2013 | 316,346 | — | — | 732,071 | 129,750 | — | 26,058 | 1,204,225 | ||||||||||||||||||||||||||||
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(5)(6) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($)(7) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($)(8) | | | Total ($) | | ||||||||||||||||||||||||
Michael Prendergast, Interim Chief Executive Officer(1) | | | 2019 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,571,625 | | | | | | 1,571,625 | | |
Cynthia Thomassee Executive Vice President and Chief Financial Officer(2) | | | 2019 | | | | | 290,057 | | | | | | — | | | | | | 200,000 | | | | | | — | | | | | | 85,699 | | | | | | — | | | | | | 8,102 | | | | | | 583,858 | | |
Kelly M. Dilts | | | 2019 | | | | | 183,052 | | | | | | — | | | | | | 500,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 28,489 | | | | | | 711,541 | | |
Former Executive Vice President, Chief Financial Officer(3) | | | 2018 | | | | | 380,000 | | | | | | — | | | | | | 499,996 | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,577 | | | | | | 891,573 | | |
Marc G. Schuback | | | 2019 | | | | | 78,462 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,431 | | | | | | 93,893 | | |
Former Senior Vice President, General Counsel and Corporate Secretary(4) | | | 2018 | | | | | 292,923 | | | | | | — | | | | | | 329,998 | | | | | | — | | | | | | — | | | | | | — | | | | | | 79,708 | | | | | | 702,629 | | |
(2) Ms. Thomassee was appointed as Executive Vice President and Chief Financial Officer effective July 19, 2019. (3) Ms. Dilts resigned as Executive Vice President and Chief Financial Officer effective July 19, 2019. (4) Mr. Schuback was appointed Senior Vice President, General Counsel and Corporate Secretary effective March 20, 2018. He resigned from these positions effective April 20, 2019. (5) The amounts reported (6) A portion of the amounts reported in the “Stock Awards” column reflects the grant-date fair value of performance-based restricted stock units in 2019 and performance stock awards in 2018 granted to the executives in each of those years |
Fiscal Year 2014 | Fiscal Year 2015 | |||||||||||||||
Name | Based on Probable Outcome as of the Grant Date | Based on Maximum Performance | Based on Probable Outcome as of the Grant Date | Based on Maximum Performance | ||||||||||||
Michael W. Barnes | $ | — | $ | — | $ | 833,336 | $ | 1,250,003 | ||||||||
Kal Malik | $ | 166,668 | $ | 249,994 | $ | 323,453 | $ | 485,180 | ||||||||
Laurie Hummel | $ | — | $ | — | $ | — | $ | — | ||||||||
Cynthia Thomassee | $ | N/A | $ | N/A | $ | 16,174 | $ | 24,253 | ||||||||
Sei Jin Alt | $ | 99,991 | $ | 149,986 | $ | 194,075 | $ | 291,105 | ||||||||
Mark Vendetti | $ | 99,991 | $ | 149,986 | $ | 194,075 | $ | 291,105 |
Name | Annual Benefits Allowance ($) | 401(k) Matching Contributions ($) | Relocation and Other Benefits(1) ($) | Consulting Fee(2) ($) | Total ($) | |||||||||||||||
Kal Malik | 17,693 | 7,390 | — | — | 25,083 | |||||||||||||||
Laurie Hummel | — | — | 89,417 | — | 89,417 | |||||||||||||||
Cynthia Thomassee | 20,000 | 8,749 | — | — | 28,749 | |||||||||||||||
Sei Jin Alt | 15,385 | 7,390 | — | 77,769 | 100,544 | |||||||||||||||
Mark Vendetti | 20,192 | 5,440 | — | — | 25,632 |
The following table presents information regarding the non-equity incentive awards and equity-basedaggregate grant-date fair value of these performance-based awards granted toin fiscal years 2018 and 2019 included in the “Stock Awards” column for these fiscal years and the aggregate grant-date fair value of these awards assuming that the highest level of performance conditions was achieved.
| | | Aggregate Grant Date Fair Value of Performance Awards | | |||||||||||||||||||||
| | | Fiscal Year 2018 | | | Fiscal Year 2019 | | ||||||||||||||||||
Name | | | Based on Probable Outcome as of the Grant Date | | | Based on Maximum Performance | | | Based on Probable Outcome as of the Grant Date | | | Based on Maximum Performance | | ||||||||||||
Cynthia Thomassee | | | | $ | — | | | | | $ | — | | | | | $ | 100,000 | | | | | $ | 150,000 | | |
Kelly M. Dilts | | | | $ | 249,996 | | | | | $ | 374,994 | | | | | $ | 250,000 | | | | | $ | 375,000 | | |
Marc G. Schuback | | | | $ | 164,999 | | | | | $ | 247,496 | | | | | $ | — | | | | | $ | — | | |
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 (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||
Michael Barnes | N/A | 437,500 | 1,312,500 | 1,750,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 38,989 | 51,986 | 77,979 | — | — | — | 833,336 | ||||||||||||||||||||||||||||||||||
Kal Malik | N/A | 143,438 | 191,250 | 286,875 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 7,335 | 9,781 | 14,671 | — | — | — | 156,789 | ||||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 7,797 | 10,397 | 15,595 | — | — | — | 166,664 | ||||||||||||||||||||||||||||||||||
Laurie Hummel | 11/23/2015 | — | — | — | — | — | — | 17,832 | 263,022 | |||||||||||||||||||||||||||||||||||
Cynthia Thomassee | N/A | 45,000 | 60,000 | 90,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 366 | 489 | 733 | — | — | — | 7,839 | ||||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 390 | 520 | 780 | — | — | — | 8,335 | ||||||||||||||||||||||||||||||||||
Sei Jin Alt(4) | N/A | 143,438 | 191,250 | 286,875 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 4,401 | 5,869 | 8,803 | — | — | — | 94,080 | ||||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 4,678 | 6,238 | 9,357 | — | — | — | 99,995 | ||||||||||||||||||||||||||||||||||
8/14/2015 | — | — | — | — | — | — | 12,000 | — | — | 136,320 | ||||||||||||||||||||||||||||||||||
Mark Vendetti(4) | N/A | 139,688 | 186,250 | 279,375 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 4,401 | 5,869 | 8,803 | — | — | — | 94,080 | ||||||||||||||||||||||||||||||||||
3/18/2015 | — | — | — | 4,678 | 6,238 | 9,357 | — | — | — | 99,995 |
Name | | | 401(k) Matching Contributions ($) | | | Payment of Accrued Paid Time Off Upon Resignation ($) | | | Total ($) | | |||||||||
Michael Prendergast | | | | | — | | | | | | — | | | | | | — | | |
Cynthia Thomassee | | | | | 8,102 | | | | | | — | | | | | | 8,102 | | |
Kelly M. Dilts | | | | | 7,015 | | | | | | 21,474 | | | | | | 28,489 | | |
Marc G. Schuback | | | | | 3,611 | | | | | | 11,820 | | | | | | 15,431 | | |
Mr. Barnes hasSchuback entered into an employment letter agreement with the Company providing for his employment as our Chairman,Senior Vice President, General Counsel and Chief Executive Officer, the terms of which became effective December 4, 2014.
Corporate Secretary. The letter agreement has an indefinite term and provides thatfor Mr. Barnes’ employment with us is at-will. PursuantSchuback to the terms of the letter agreement, Mr. Barnes will receive an initial annual base salary of $875,000$340,000 and commencing with fiscal year 2015, will participate in our annual bonus plan, with his threshold, target and maximum annual incentive bonus levels to be set at 50%, 150% and 200% of his base salary, respectively. The letter agreement also provides for Mr. Barneseligible to participate in our employee savings and welfare benefit plans made available to our employees generally.
The letter agreement also provides for Mr. Barnes to be granted a performance-based restricted stock award for fiscal year 2015 and each year thereafter, with the value of the target number of shares subject to the award to equal $2,500,000 as of the grant date.
Effective January 1, 2016, Mr. Malik entered into an amended and restated employment letter agreement with the Company providing for his employment as our Executive Vice President, Chief Administrative Officer and General Counsel. The letter agreement does not have a specified term and provides that Mr. Malik will receive an initial annual base salary of $402,500. Pursuant to the letter agreement, Mr. Malik is eligible to receive an annual incentive bonus pursuant to ourCompany’s annual bonus plan as in effect from time to time, with hisa target annual incentive bonus to be set at 50%opportunity of 40% of his base salary.salary for the applicable fiscal year. In addition, the letter agreement provides for Mr. Schuback to receive a payment of $75,000 to help cover his relocation expenses, which Mr. Schuback will be required to repay to the Company if he voluntarily resigns within 12 months after his start date. The letter agreement also provides for Mr. MalikSchuback to participate in ourthe Company’s employee savings and welfare benefit plans made available to ourthe Company’s employees generally.
generally, in accordance with the provisions of such programs as in effect from time to time. The letter agreement also provides that Mr. Schuback is eligible for annual equity awards, with the target annual equity award value to initially be set at $330,000.
In connection with her joining the Company in November 2015, Ms. Hummel entered into an employment letter agreement with Francesca’s Services Corporation providing for her employment as Executive Vice President and Chief Merchandising Officer. The letter agreement does
The letter agreement also provides for Ms. Hummel to receive an initial grant of the Company’s restricted stock with a value of $250,000, subject to a two-year vesting schedule, and to receive a grant of performance stock during fiscal year 2016 with a value of $500,000, with the vesting of such grant to be subject to achievement of performance metrics to be established by the Compensation Committee.
The letter agreement also includes certain restrictive covenants, including provision that, during the period of Ms. Hummel’s employment and for a period of 12 months following a termination of her employment for any reason, Ms. Hummel will not compete with the Company or its affiliates or solicit any Company employees or customers.
On December 28, 2012, Ms. Alt entered into an employment letter agreement with the Company providing for her employment as our Chief Merchandising Officer, the terms of which became effective January 1, 2013. The letter agreement had a term of three years, subject to earlier termination under the terms of the agreement. Pursuant to the letter agreement Ms. Alt’s initial annual base salary was $350,000, and she was eligible to receive an annual incentive bonus pursuant to our annual bonus plan as in effect from time to time, with her target annual incentive bonus to be set at 50% of her base salary. The letter agreement also provided for Ms. Alt to participate in our employee savings and welfare benefit plans made 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 included certain restrictive covenants, including provision 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 would not compete with the Company or its affiliates or solicit any Company employees or customers.
Ms. Alt resigned as an officer and employee of the Company effective November 20, 2015 and continues to provide services as a consultant to the Company. The terms of her consulting arrangement are described below under “— Potential Payments Upon Termination or Change in Control.”
On February 6, 2013, Mr. Vendetti entered into an employment letter agreement with the Company providing for his employment as our Chief Financial Officer, the terms of which became effective March 4, 2013. The letter agreement had an initial term of three years, subject to earlier termination under the terms of the agreement. Pursuant to the letter agreement, Mr. Vendetti’s initial annual base salary was $350,000, and he was 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 50% of his base salary. The letter agreement also provided for Mr. Vendetti to participate in our employee savings and welfare benefit plans made available to our employees generally, and an annual allowance equal to $25,000 that he may apply towards the purchase of additional benefits of his choosing.
The letter agreement also included certain restrictive covenants, including provision that, during the period of Mr. Vendetti’s employment and for a period of 12 months following a termination of his employment for any reason, Mr. Vendetti would not compete with the Company or its affiliates or solicit any Company employees or customers.
Mr. Vendetti resigned as Chief Financial Officer effective December 4, 2015.
For a description of the material terms of the non-equity incentive plan awards reported in the table above, see “Compensation Discussion and Analysis — Current Executive Compensation Program Elements — Annual Performance-Based Cash Awards”, above.
Each of the equity incentive awards reported in the “Grants of Plan-Based Awards During Fiscal Year 2015” table above was granted under, and is subject to, the terms of the 2011 Plan, except that the grants made to Ms. Alt in August 2015 and Ms. Hummel in November 2015 were granted under, and subject to, the terms of the 2015 Plan. These plans are 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 and 2015 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 these plans may, at the administrator’s discretion, become fully vested and, in the case of options, exercisable, and will terminate or be terminated in
the Company’ ROIC, in each case as measured over the three-year performance period, and to Ms. Thomassee’s continued employment through the third anniversary of the grant date.
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 ($) | ||||||||||||
Michael Barnes | — | — | — | — | ||||||||||||
Kal Malik | — | — | — | — | ||||||||||||
Laurie Hummel | — | — | — | — | ||||||||||||
Cindy Thomassee | 15,000 | 208,050 | — | — | ||||||||||||
Sei Jin Alt | 16,000 | 204,960 | — | — | ||||||||||||
Mark Vendetti | — | — | — | — | ||||||||||||
Neill Davis | — | — | — | — |
Mr. Barnes’ employment letter agreement provides that, in the event we terminate hisMs. Thomassee’s employment without “cause”, he“cause,” she will be entitled to severance pay in an amount equal to one and one-half times the sumher annual rate of (1) his annual base salary (at the annualized rate in effect at the time of termination (or one times her annual rate of base salary in effect at the time of termination if the severance date occurs on or after six months after the effective date of termination) and (2) his target
annual incentive bonus for the year of termination,letter agreement), payable over 18 months following his termination anda 6-month period (or a 12-month period, as applicable), subject to the execution of a general release of claims in favor of the Company which may include non-competition, non-solicitation, non-disparagement and other restrictive covenants. In addition, Mr. Barnes will be entitled to receive any accrued but unused vacation and any benefitscompliance with her covenants under our 401(k) plan.the employment letter. For purposes of Mr. Barnes’these letter agreement,agreements, “cause” generally means that Mr. Barnes hasis defined as (i) committedcommission of a felony, (ii) engagedengaging in acts of fraud, dishonesty or other acts of material willful misconduct in the course of histhe executive’s duties, (iii) engaged in abuse of narcotics or alcohol that has or may reasonably harm the Company, (iv) violatedviolation of the Company’s written policies, (v) failedfailure to perform or uphold histhe executive��s duties and/or failedfailure to comply with reasonable directives of ourthe Company’s Chief Executive Officer or Board of Directors, or (vi) breachedbreach of any of the protective covenants in the letter agreement or material breach of the letter agreement or otherwise materially breached any other agreement he has entered into with us.
The employment letter agreements with each of our other named executive officers currently employed by us (other than Ms. Thomassee) provide that, in the event we terminate the executive’s employment without “cause,” the executive will be entitled to severance pay in an amount equal to one times his or her annual base salary (at the annualized rate in effect on the date of termination) payable over a 12-month period, subject to the execution of a general release of claims in favor of the Company. In addition, the executive will be entitled to receive any accrued but unused vacation and any benefits under our 401(k) plan. In the event the executive’sMs. Thomassee’s benefits are subject to the excise tax imposed under Sections 280G and 4999 of the Code, the benefits will be reduced (but not below zero) so that the maximum amount of the benefits (after reduction) will be an amount that is $1.00 less than the amount that would cause the benefits to be subject to such excise tax. For purposes
As described in the Compensation Discussion and Analysis above, each of the named executive officers (otherother than Ms. Hummel) wasMr. Prendergast has been granted a performance-based restricted stock awards each year that cover a performance period consisting of three consecutive fiscal years beginning with the fiscal year in which the award during fiscal 2015.was granted. Under the terms of these awards, if, prior to the third anniversary of the award grant date, (1) there occurs a change in control of the Company or (2) the executive’s employment with the Company is terminated without “cause,” or by the executive for “good reason” (as these terms are defined in the award agreement evidencing the award) or due to the executive’s death, the following shallrules apply:
Asdetermined (1) with respect to the portion of the award allocable to the shortened performance period, based on actual performance for that period against performance goals pro-rated to reflect the shortened period as described above; and (2) with respect to the remainder of the award, by applying the greater of the vesting percentage determined for the shortened performance period as described in clause (1) above or 100% to the Compensation Discussion and Analysis that appears intarget number of shares allocable to the proxy statement for the Company’s 2015 annual meeting of stockholders, Mr. Barnes was granted a performance-based stock option in December 2014 in connection with his appointment as our Chairman, President and Chief Executive Officer. This stock option is eligible to vest in connection with a change in controlremaining fiscal years of the Company if our stock price in the transaction exceeds approximately $16.18 per share and either Mr. Barnes remains employed with us through the last day of fiscal year 2019 or if his employment is terminated by the Company without cause or by Mr. Barnes for good reason after the change in control and prior to the end of fiscal year 2019. original performance period.
As noted above under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
The following tables present
Executive | Cash Severance ($)(1) | Equity Vesting ($)(2) | Total ($) | |||||||||
Michael Barnes | 3,281,250 | 1,184,622 | 4,465,872 | |||||||||
Kal Malik | 402,500 | 459,797 | 862,297 | |||||||||
Laurie Hummel | 460,000 | — | 460,000 | |||||||||
Cynthia Thomassee | — | 22,989 | 22,989 |
Ms. Alt’s resigned employment with us effective November 20, 2015. In connection with her resignation, the Company and Ms. Alt entered into a transition agreement, dated August 14, 2015 (the “Transition Agreement”). The Transition Agreement includes a release by Ms. Alt of claims against the Company, as well as noncompetition and other restrictive covenants in favor of the Company. In addition, for a 12-month period following her resignation, Ms. Alt has agreed to provide consulting services to the Company for up to 20 hours a month. In consideration for her consulting services, Ms. Alt is entitled to receive a monthly fee of $33,025, as well as a grant of 12,000 restricted shares under the 2015 Plan that will vest in two equal installments on May 20, 2016 and November 20, 2016, respectively, subject to her continued service to the Company and compliance with her obligations under the Transition Agreement through the applicable vesting date. Each of Ms. Alt’s other equity awards granted by the Company that were then unvested terminated on her resignation date.
Plan Category | | | Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) | | |||||||||
Equity compensation plans approved by stockholders | | | | | 176,778(1) | | | | | $ | 170.82(2) | | | | | | 60,058(3) | | |
Equity compensation plans not approved by stockholders | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 176,778 | | | | | $ | 170.82 | | | | | | 60,058 | | |
Plan Category | Number of shares of Common Stock to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of shares of Common Stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) | |||||||||
Equity compensation plans approved by stockholders | 1,519,413 | (1) | $ | 13.55 | 1,288,316 | (2)(3) | ||||||
Equity compensation plans not approved by stockholders | — | — | — |
In fiscal year 2015, there were no transactions nor
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership and reports of changes in ownership of our equity securities. These persons are required by SEC regulations to furnish us with copies of all of these reports that they file. To our knowledge, based solely on our review of the copies of such reports, including any amendments thereto, furnished to us and written responses to annual directors’ and officers’ questionnaires that no other reports were required and all Section 16(a) reports required to be filed during fiscal 2015 were timely filed, except for a Form 3 for Ms. Thomassee which was filed late.
| | | | Audit Committee of the Board of Directors | |
| | | | Marie Toulantis (Chair) Susan McGalla* Patricia Bender Philip F. Bleser Joseph O’Leary | |
foregoing report.
| | | Fiscal year ended | | |||||||||
| | | February 1, 2020 | | | February 2, 2019 | | ||||||
Audit Fees(1) | | | | $ | 1,029,500 | | | | | $ | 1,004,800 | | |
Audit-Related Fees | | | | | — | | | | | | — | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | — | | | | | | — | | |
Total | | | | $ | 1,029,500 | | | | | $ | 1,004,800 | | |
Fiscal year ended | ||||||||
January 30, 2016 | January 31, 2015 | |||||||
Audit Fees(1) | $ | 778,700 | $ | 761,184 | ||||
Audit-Related Fees(2) | 16,000 | 16,382 | ||||||
Tax Fees(3) | 145,000 | 80,000 | ||||||
All Other Fees | — | — | ||||||
Total | $ | 939,700 | $ | 857,566 |
77080.
| |||||
| | By Order of the Board of Directors, | |||
| Houston, Texas | | | ||
| | | | Andrew Clarke | |
Stockholder Rights Plan
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| | | | FRANCESCA’S HOLDINGS CORPORATION | |
| | | | By: /s/ Cindy Thomassee Name: Cindy Thomassee Title: Executive Vice President and Chief Financial Officer | |
| | | | COMPUTERSHARE TRUST COMPANY, N.A., as Rights Agent | |
| | | | By: /s/ Megan M. King Name: Megan M. King Title: VP & Manager, Relationship Management | |
| | | | FRANCESCA’S HOLDINGS CORPORATION | | |||
| | | | By: | | | | |
| | | | | | | Name: | |
| | | | | | | Title: | |
| | | | FRANCESCA’S HOLDINGS CORPORATION | | |||
| | | | By: | | | [Title] | |
| ATTEST: | | | | ||||
| [Title] | | | |
| Countersigned: | | ||||||
| COMPUTERSHARE TRUST COMPANY, N.A., as Rights Agent | | ||||||
| By | | | [Title] | | |
| | | | Signature | |
| (To be completed) | | | | |
| | | | Signature | |
| | | | Signature | |
| | | | Signature | |