UNITED STATESUNITED STATES
SECURITIES AND EXCHANGE COMMISSIONSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant x☒ Filed by a Party other than the Registrant ¨☐
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Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to §240.14a-12 |
ULTA SALON, COSMETICS & FRAGRANCE,BEAUTY, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 20151, 2017
TO THE STOCKHOLDERS OF ULTA SALON, COSMETICS & FRAGRANCE,BEAUTY, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ulta Salon, Cosmetics & Fragrance,Beauty, Inc. (“Ulta”Ulta Beauty” or the “Company”), a Delaware corporation, will be held on Wednesday,Thursday, June 3, 2015,1, 2017, at 10:00 A.M. local time, at Ulta’sUlta Beauty’s headquarters located at 1000 Remington Blvd., Suite 120, Bolingbrook, Illinois 60440, for the following purposes:
1. | To elect |
2. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year |
3. | To vote on an advisory resolution to approve the Company’s executive compensation; |
4. | To vote on the frequency of future advisory votes on the Company’s executive compensation; and |
To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 6, 2015,3, 2017, as the record date for the determination of stockholders entitled to notice of and to vote on the items listed above at the Annual Meeting of Stockholders and at any adjournment or postponement thereof.
By Order of the Board of Directors |
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Jodi J. Caro
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April 22, 201519, 2017
INTERNET AVAILABILITY OF PROXY MATERIALS
We are furnishing proxy materials to our stockholders primarily via the internet. On April 22, 2015,19, 2017, we mailed most of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our Proxy Statement and our 20142016 Annual Report on Form10-K. The Notice of Internet Availability of Proxy Materials also instructs you on how to vote via the internet. Other stockholders, in accordance with their prior requests, receivede-mail notification of how to access our proxy materials and vote via the internet or have been mailed paper copies of our proxy materials and a proxy card or voting form.
Internet distribution of our proxy materials is designed to expedite receipt by stockholders, lower the cost of the annual meeting and conserve natural resources. However, if you would prefer to receive paper copies of proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials.
Important notice regarding availability of proxy materials
for Ulta’s 2015Ulta Beauty’s 2017 Annual Meeting of Stockholders to be held on June 3, 2015:1, 2017:
The Proxy Statement and Annual Report to Stockholders on Form10-K
for the year ended January 31, 201528, 2017 are available athttp://ir.ulta.com.
Brokers cannot vote for Proposals 1, 3 or 34 without your instructions.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE ENCOURAGE YOU TO READ THIS PROXY STATEMENT AND SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. FOR SPECIFIC INSTRUCTIONS ON HOW TO VOTE YOUR SHARES, PLEASE REFER TO THE INSTRUCTIONS ON THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS YOU RECEIVED IN THE MAIL. IF YOU RECEIVED PAPER COPIES OF THE PROXY MATERIALS, KINDLY MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE (WHICH IS POSTAGE PREPAID, IF MAILED IN THE UNITED STATES). EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES OF RECORD ARE HELD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN, FROM YOUR BROKER, BANK OR OTHER NOMINEE, THE RECORD HOLDER, A PROXY ISSUED IN YOUR NAME.
i
1000 Remington Blvd., Suite 120
Bolingbrook, IL 60440
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 20151, 2017
ARTICLE I. PROXY MATERIALS AND ANNUAL MEETING
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
“non-discretionary”items. The election of |
ARTICLE II. CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
Over the course of Ulta’sUlta Beauty’s history, the Board of Directors has developed corporate governance policies, practices and guidelines consistent with its duties of good faith, due care and loyalty, to help fulfill its responsibilities to our stockholders.
Board of Directors Meetings and Committees
During the fiscal year ended January 31, 2015,28, 2017 (“fiscal year 2016” or “fiscal 2016”), the Board of Directors (sometimes referred to as the “Board”) held 8seven meetings. Commencing with our 20142015 Annual Meeting of Stockholders, Mr. Philippin became ourNon-Executive Chairman and typically presides over meetings of the full Board as well as executive sessions. The Board of Directors has an audit committee, a nominating and corporate governance committee and a compensation committee. During fiscal year 2014,2016, no Directordirector attended fewer than 87%94 percent of the aggregate meetings of the Board of Directors and of the committees on which he or she served that were held during the period for which he or she was a Directordirector or committee member, respectively. Directors are invited and are expected to attend the Annual Meeting of Stockholders, and all of our Directorsdirectors then in office attended our 20142016 Annual Meeting of Stockholders.
Committee Composition:Composition: Unless otherwise noted, the following table provides the composition of each of our committees as of January 31, 2015:28, 2017:
Director | Audit Committee (1) | Nominating and Corporate Governance Committee (2) |
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Charles J. Philippin* | ||||||||||
Michelle L. Collins | ||||||||||
Mary N. Dillon | ||||||||||
Robert F. DiRomualdo | † | |||||||||
Dennis K. Eck | ||||||||||
Catherine A. Halligan | † | |||||||||
Charles Heilbronn | ||||||||||
Michael R. MacDonald | ||||||||||
George R. Mrkonic | ✓ | |||||||||
Lorna E. Nagler | ||||||||||
Vanessa A. Wittman |
(1) | Additional information regarding the audit committee can be found starting on page |
(2) | Additional information regarding the nominating and corporate governance committee can be found starting on page 7. |
(3) | Additional information regarding the compensation committee can be found starting on page |
* | Non-Executive Chairperson of the Board. |
† | Committee Chairperson. |
Board Leadership Structure
The Ulta Beauty Corporate Governance Guidelines (the “Corporate Governance Guidelines”) provide that the offices of the Chief Executive Officer and the Chairperson of the Board of Directors may be either combined or
separated at the discretion of the Board of Directors. We currently separate the roles of Chief Executive Officer and Chairperson of the Board. Our Board is led by an independent,non-executive Chairperson. We believe that this leadership structure enhances the accountability of the Chief Executive Officer to the Board, strengthens the Board’s independence from management and ensures a greater role for the independent Directorsdirectors in the oversight of ourthe Company. In addition, separating these roles allows our Chief Executive Officer to focus her efforts on running our business and managing our Company in the best interests of our stockholders, while the Chairperson provides guidance to the Chief Executive Officer and, in consultation with management, helps to set the agenda for Board meetings and establishes priorities and procedures for the work of the full Board. The Chairperson
presides over meetings of the full Board as well as executive sessions (without management), which the Board generally holds several times a year, both telephonically and in conjunction with eachin-person meeting of the full Board.
Our Corporate Governance Guidelines also provide that from time to time, the independent directors may determine that the Board of Directors should havewill select a lead director.director when the Chairperson does not qualify as an independent director (which is not the situation currently since the Chairperson qualifies as an independent director). In the event that the independent directors make such a determination, a majority of the independent directors will appoint a lead director. In the event that a lead director is designated, his or her duties would include: assisting the Chairperson of the Board and Board of Directors in assuring compliance with and implementation of the Company’s Corporate Governance Guidelines, coordinating the agenda for and moderating sessions of the Board of Directors’ Board’snon-management directors and facilitating communications between thenon-management directors and the other members of the Board and the management of the Company. The Company currently has nineten independent directors and to date they have not determined that the Board of Directors should have a lead director in addition to our independent Chairperson.
The Board believes that the current boardBoard leadership structure is in the best interests of the Company and its stockholders at this time. The Board recognizes that no single leadership model is right for all companies and at all times and that, depending on the circumstances, other leadership models, such as combining the Chairperson and Chief Executive Officer roles, might be appropriate. Accordingly, the Board periodically reviews its leadership structure. Our Corporate Governance Guidelines provide the flexibility for the Board to modify or continue ourits leadership structure in the future, as it deems appropriate.
Independence
Board member independence is an essential element of Ulta Beauty corporate governance. The Board of Directors has determined that each of the currentnon-employee Directors directors and each nominee for Directordirector is free of any relationship that would interfere with his or her individual exercise of independent judgment with regard to Ulta.Ulta Beauty. Mary N. Dillon, Chief Executive Officer, is currently the sole member of the Board of Directors thatwho is not independent due to her officeexecutive position with Ulta.Ulta Beauty. Each member of the nominating and corporate governance committee, compensation committee and audit committee satisfysatisfies the current independence requirements of The NASDAQ Stock Market (“NASDAQ”) and the SEC.
Board Role in Risk Oversight
Our Board of Directors oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. Management is responsible for the Company’sday-to-day risk management activities and processes, and our Board’s role is to engage in informed oversight of and provide direction with respect to such risk management activities and processes. The Board recognizes that a fundamental part of risk management is not only understanding the risks our Company faces and the steps management is taking to manage those risks, but also understanding what level of risk is appropriate for our Company. As such, the Board focuses on understanding the nature of our enterprise risks, including operational, financial, legal and regulatory, strategic and reputational risks, as well as the adequacy of our risk assessment and risk management processes. To facilitate such an understanding, the Board and its committees receive management updates on our business operations, financial results and strategy, and the Board discusses and provides direction with respect to risks related to those topics.
While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. The audit committee oversees risks associated with financial accounting and audits, as well as internal control over financial reporting. The audit committee assists the Board in its oversight by discussing with management ourthe Company’s risk assessment and management policies, the Company’s significant financial risk exposures and the actions taken by management to limit, monitor or control such exposures. The compensation committee oversees the risks relating to the
Company’s compensation policies and practices. In setting compensation, the compensation committee strives to create incentives that encourage a level of risk-taking behavior consistent with the Company’s business strategy. The compensation committee also oversees the risks relating to the Company’s management development and leadership succession. The nominating and corporate governance committee oversees the implementation of the Company’s Code of Business Conduct and monitors compliance therewith.
Director Age Limit
Our Corporate Governance Guidelines provide that any director who reaches the age of 75 years in his or her first year of his or her three-year term will not be eligible to stand for election unless the nominating and corporate governance committee, after evaluation of the continued appropriateness of Board membership in light of all of the circumstances, decides to recommend to the Board that an exception be made. In addition, any director who reaches the age of 75 years in his or her second or third year of his or her three-year term will, promptly following such director’s 75th birthday, submit to the Board his or her resignation from the Board. In this situation, the nominating and corporate governance committee will consider the resignation submitted, evaluate the continued appropriateness of Board membership in light of all of the circumstances and recommend to the Board whether to accept such director’s resignation or request that the director continue to serve. If such resignation is accepted by the Board, it will be effective at the next annual meeting following the resignation.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee acts under a written charter that is reviewed regularly and that was approved by the Board of Directors and has been published under “Corporate Governance” in the Investor Relations section of the Ulta Beauty website athttp://ir.ulta.com. The primary responsibility of the nominating and corporate governance committee is to recommend to the Board of Directors candidates for nomination as Directorsdirectors and membership on committees of the Board. The committee reviews the performance and independence of each Director,director, and in appropriate circumstances, may recommend the removal of a Director.director. The committee oversees the evaluation of the Board of Directors and the committees of the Board and makes recommendations to improve performance. The committee also recommends to the Board of Directors policies with respect to corporate governance. During fiscal year 2014,2016, the nominating and corporate governance committee was composed of the following independent Directors: Messrs.directors: Ms. Collins, Mr. Eck, Ms. Halligan, Mr. Heilbronn and Ms. Collins (since October 13, 2014),Nagler. Ms. Halligan (since June 5, 2014) and Ms. Nagler. Mr. EckCollins serves as the current Chairperson of the committee. The Board of Directors has determined that each committee member qualifies as a “non-employee“non-employee director” under rules and regulations of the SEC, as well as the independence requirements of NASDAQ. The nominating and corporate governance committee met 5five times during fiscal year 2014.2016.
Nominating and Corporate Governance Committee Charter
The nominating and corporate governance committee charter identifies the roles and responsibilities that govern the nominating and corporate governance committee, such as:
Nomination Process — Qualifications
The nominating and corporate governance committee is responsible for reviewing the appropriate skills and characteristics required of Directorsdirectors in the context of prevailing business conditions and, in its nominating committee capacity, for making recommendations regarding the size, composition and desired complementary skill sets of the Board of Directors. The objective of the nominating and corporate governance committee is to create and sustain a Board of Directors that brings to Ulta Beauty a variety of perspectives and skills derived from high-quality business and professional experience. Pursuant to its charter, the nominating and corporate governance committee annually assesses the experience, expertise, capabilities, skills and diversity of the members of the Board, individually and collectively, and considers these factors when evaluating Directordirector candidates. In this regard, both the Board and the nominating and corporate governance committee believe that it is essential for Board members to represent diverse viewpoints based upon differences in professional experience, education,
skill and other individual qualities and attributes that contribute to an active, effective Board. Although there are no specific minimum qualifications that a Directordirector candidate must possess, the nominating and corporate governance committee recommends those candidates who possess the highest personal and professional integrity, have prior experience in corporate management and the industry, maintain academic or operational expertise in an area of our business and demonstrate practical and mature business judgment.
We will consider all stockholder recommendations for candidates for the Board of Directors and, to date, we have not received any Directordirector nominees from a stockholder. Stockholders who want to suggest a candidate for consideration should send a written notice, addressed to the Corporate Secretary, atto our principal executive offices at 1000 Remington Blvd., Suite 120, Bolingbrook, IL 60440. Further details about the nomination process may be found in the answer to Question 15 above entitled “Nomination of Directors — How do I submit a proposed Directordirector nominee to the Board of Directors for consideration?”
This notice must include the following information for each candidate the stockholder proposes to nominate: (i) name, age, business address and residence address, (ii) principal occupation or employment, (iii) class and number of shares of capital stock beneficially owned by such candidate and (iv) and any other information relating to the candidate that is required to be disclosed in solicitations for proxies for the election of Directorsdirectors pursuant to applicable SEC rules. In addition, the stockholder giving such notice must include his or her (i) name and record address and (ii) the class and number of shares such stockholder beneficially owns.
We have engaged the services of search firms to provide us with candidates, especially when we are looking for a candidate with a particular expertise, quality, skill or background. We also consider potential Directordirector candidates recommended by current Directors,directors, officers, employees and others. The nominating and corporate governance committee screens all potential candidates in the same manner, regardless of the source of the recommendation. Our review is typically based on any written materials provided with respect to potential candidates, and we review such materials to determine the qualifications, experience and background of the candidates. Final candidates are typically interviewed by members of the committee and other members of the Board, as appropriate. In making its determinations, the committee evaluates each individual in the context of our Board of Directors as a whole with the objective of assembling a group that can best perpetuate the success of our
Company and represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the committee makes a recommendation to the full Board of Directors regarding whomwho should be nominated by the Board of Directors.
Code of Business Conduct
All Ulta Beauty employees, officers and members of the Board of Directors must act ethically at all times and in accordance with the policies comprising the Ulta Beauty Code of Business Conduct. All corporate employees, officers and members of the Board of Directors have signed a certificate acknowledging that they have read, understand and will continue to comply with the policy, and all corporate employees and officers are required to read and acknowledge this policy on an annual basis. Ulta Beauty includes the Code of Business Conduct in new hire materials for all corporate employees. The policy is published and any amendments or waivers thereto will be published under “Corporate Governance” in the Investor Relations section of the Ulta Beauty website located athttp://ir.ulta.com.
Corporate Governance Guidelines
Our Board of Directors adopted the Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities. The Corporate Governance Guidelines have been published under “Corporate Governance” in the Investor Relations section of the Ulta Beauty website located athttp://ir.ulta.com.
Director Ownership Guidelines
Disclosure Committee
The disclosure committee is a management committee that acts under a written charter approved by the audit committee. Its primary responsibility is to assist our Chief Executive Officer and Chief Financial Officer in fulfilling their responsibility for oversight of the accuracy and timeliness of our disclosures. Management and the disclosure committee have established disclosure controls and procedures designed to ensure that disclosures required by the SEC and other written information to be disclosed to the investment community are recorded, processed, summarized and reported accurately on a timely basis. These disclosure controls and procedures are monitored and evaluated for their effectiveness on a regular basis. The disclosure committee, in conjunction with management, reviews and approves the preparation of SEC filings and various documents distributed to the investment community containing financial information or other material information. The disclosure committee discusses all relevant information with our Chief Executive Officer and Chief Financial Officer and, if needed, the Chairperson of the disclosure committee then discusses all relevant information with theOur Board of Directors andhas adopted share ownership guidelines that apply to all of ournon-executive directors. Pursuant to these guidelines, eachnon-executive director should hold shares of our common stock, restricted stock, restricted stock units, stock options and/or stock appreciation rights with a value equal to five times the audit committee.annual cash retainer paid tonon-executive directors by the fifth anniversary of the date the guidelines became effective for each director.
Stockholder Communication
Any stockholder is free to communicate in writing with the Board of Directors on matters pertaining to Ulta Beauty by addressing their comments to the Board of Directors, c/o General Counsel, Ulta Salon, Cosmetics & Fragrance,Beauty, Inc., 1000 Remington Blvd., Suite 120, Bolingbrook, IL 60440, or bye-mail at InvestorRelations@ulta.com. Our General Counsel will review all correspondence addressed to our Board of Directors, or any individual Director,director, for any inappropriate correspondence and correspondence more suitably directed to management. Our General Counsel will forward appropriate stockholder communications to our Board of Directors prior to the next regularly scheduled meeting of our Board of Directors following the receipt of thesuch communication. Our General Counsel will summarize all correspondence not forwarded to our Board of Directors and make the correspondence available to our Board of Directors for its review upon our Board of Directors’Board’s request.
Our Amended and Restated Certificate of Incorporation provides that our Board of Directors be divided into three classes designated Class I, Class II and Class III, with each class consisting, as nearly as possible, ofone-third of the total number of Directors.directors. Each class serves a three-year term with one class being elected at each year’s annual meeting of stockholders. Vacancies on our Board of Directors may be filled by persons elected by a majority of the remaining Directors.directors. A Directordirector elected by our Board of Directors to fill a vacancy, including a vacancy created by an increase in size of our Board of Directors, will serve for the remainder of the full term of the class of Directorsdirectors in which the vacancy occurred and until that Director’sdirector’s successor is elected and qualified.
The Board of Directors is presently composed of teneleven members, nineten of whom arenon-employee, independent Directors.directors. Each Directordirector was elected to the Board of Directors to serve until a successor is duly elected and qualified or until his or her death, resignation or removal. Ms. Collins, Mr. DiRomualdo, Ms. HalliganEck, Mr. Philippin and Ms. NaglerWittman are the Class III Directors whose terms expire in 20152017 and are nominees forre-election. If elected at the Annual Meeting, Mr. DiRomualdo, Ms. HalliganCollins, Messrs. Eck and Philippin and Ms. NaglerWittman would serve until the 20182020 Annual Meeting of Stockholders and until their successors are elected and qualified or until their death, resignation or removal. Mr. DiRomualdo, Ms. Collins is a Class I Director nominee for election to the Board of Directors who is standing for election by the stockholders at the 2015 Annual Meeting for the first time, and was first identified by our Chief Executive Officer as a director candidate. Ms. Collins was initially appointed as Class I Director by our Board on October 13, 2014. Messrs. Eck and PhilippinHalligan, Mr. Mrkonic and Ms. WittmanNagler are the Class III Directors whose terms expire in 2017.2018. Ms. Dillon Mr.and Messrs. Heilbronn and Mr. MacDonald are the Class III Directors withwhose terms expiringexpire in 2016.2019.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to approve the nominees for election and re-election.election. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Brokernon-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether this matter hasthe nominees have been ratified.elected.
Set forth below is biographical information for each Class II nominee for election for a three-year term expiring at the 2018 Annual Meeting:
Name
| Age
| Positions with Us / Principal Occupations / Business Experience
| Director
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Robert F. DiRomualdo | 70 | Mr. DiRomualdo is Chairperson and Chief Executive Officer of Naples Ventures, LLC, a private investment company that he formed in 2002. Prior to 2002, Mr. DiRomualdo served in various roles at Borders Group, Inc. and its predecessor companies, including as Chairperson of the Board and Chief Executive Officer, and as President and Chief Executive Officer of Hickory Farms. Mr. DiRomualdo currently serves as a director of Gordon Brothers Group and Securus, Inc. and was previously a director of Bill Me Later, Inc., where he served as Chairperson of the compensation committee and as a member of the audit committee. Mr. DiRomualdo has lectured frequently at the Wharton School of the University of Pennsylvania and Harvard Business School, in addition to other educational institutions, on a pro bono basis. He holds a master’s degree in business administration from Harvard Business School.
Mr. DiRomualdo’s qualifications for the Board include his ability to provide the insight and perspectives of a successful and long-serving Chairperson and Chief Executive Officer of a major retail company, during which time he was instrumental in the development and implementation of a growth strategy that led to the company’s expansion into major domestic and international markets. He also oversaw a public stock offering and listing on the New York Stock Exchange by Borders Group as well as its birth into the Fortune 500. Due to his experience supervising the principal financial officer of Borders Group as well as his previous committee experience, Mr. DiRomualdo provides valuable insight as the Chairperson of our audit committee.
| 2004 | |||||||
Catherine A. Halligan | 52 | Ms. Halligan has served as an Advisor/Consultant to Narvar Inc. since February 2013 and previously served as Senior Vice President, Sales & Marketing of PowerReviews Inc. from July 2010 to December 2011. Prior to joining PowerReviews Inc., Ms. Halligan held several executive level positions with prominent retailers. From 2005 to 2010, Ms. Halligan served in various executive positions with Walmart, including Chief Marketing Officer of Walmart.com from 2007 to 2009 and Vice President Market Development, Global eCommerce of Walmart.com from 2009 to 2010. From 1996 to 1999, Ms. Halligan held retail management positions with Williams Sonoma Inc., including Vice President and General Manager, Internet and Vice President, Marketing. Ms. Halligan also has previous retail experience with Blue Nile, Inc. and the Gymboree Corporation. Ms. Halligan began
| 2012 |
Name Age Positions with Us / Principal Occupations / Business Experience Director her career as a Marketing and Planning analyst for Lands’ End from 1987 to 1991. Ms. Halligan has served as a member of the board of directors of FLIR Systems, Inc. since March 2014, including as a member of its audit committee. With over 20 years of experience in marketing and e-commerce within the retail industry, Ms. Halligan provides valuable insight and expertise on strategic marketing issues, Internet technology and multichannel business capabilities. In addition, Ms. Halligan’s business experience with large retail companies makes her a valued member of our nominating and corporate governance committee and Chairperson of our compensation committee. Lorna E. Nagler Ms. Nagler is President of Bealls Department Stores, Inc. and has served in this position since January 2011. She served as President and Chief Executive Officer of Christopher & Banks Corporation, a specialty retailer of women’s clothing, from August 2007 to October 2010. She also served as a director of Christopher & Banks. From 2004 to 2007, Ms. Nagler was President of Lane Bryant, a division of Charming Shoppes, Inc., a women’s apparel company. From 2002 to 2004, she was President of Catherines’ Stores, also a division of Charming Shoppes, Inc. From 1996 to 2002, Ms. Nagler held various retail management positions with Kmart Corporation, including Senior Vice President, General Merchandise Manager of Apparel and Jewelry from 2000 to 2002 and Divisional Vice President, General Merchandise Manager of Kids and Menswear from 1998 to 2000. From 1994 to 1996, Ms. Nagler was a Vice President, Divisional Merchandise Manager for Kids R Us. Ms. Nagler also has previous retail experience with Montgomery Ward and Main Street Department Stores. With years of experience as a senior-level executive in a wide variety of retail companies, including as the President and Chief Executive Officer of a public retail company, Ms. Nagler provides considerable expertise on strategic, management and operational issues facing a multi-state retailer. Running a public company gave Ms. Nagler front-line exposure to many of the issues facing public retail companies, particularly on the operational, financial and corporate governance fronts. The Board also benefits from Ms. Nagler’s extensive experience in the retail industry and the informed perspectives such experience facilitates. Additionally, her past role as President and Chief Executive Officer positions her well to serve as a member of our compensation committee and nominating and corporate governance committee.
Since 58 2009
Set forth below is biographical information for each Class I nominee for election for a three-year term expiring at the 20172020 Annual Meeting:
Name
| Age
| Positions with Us / Principal Occupations / Business Experience
| Director
| Age as of 4/19/17 | Positions with Us / Principal Occupations / Business Experience | Director Since | ||||||||||
Michelle L. Collins | 55 | Ms. Collins has been President of Cambium LLC, a business and financial advisory firm, since 2007. Ms. Collins was a co-founder of Svoboda Collins LLC, a private equity firm, where she served as Managing Director from 1998 to 2007. From 1992 to 1997, Ms. Collins was a principal at William Blair & Company, LLC, where she focused on specialty retail, catalog and distribution businesses in corporate finance. Ms. Collins has served as a director of Integrys Energy Group, Inc. since May 2011 and currently serves as a member of its audit committee and Chairperson of its governance committee. Additionally, Ms. Collins has served as a director of PrivateBancorp, Inc. since November 2014 and currently serves as a member of its corporate governance committee. Ms. Collins’ prior public company director experience includes Molex, Inc. from 2003 to 2013, including as a member of its audit committee and nominating and corporate governance committee, and Bucyrus International, Inc. from 2009 to 2011, including as a member of its audit committee.
The Board benefits from Ms. Collins’ extensive experience serving on both private and public company boards and her prior committee experience makes her a valued member of the Board and member of our audit and nominating and corporate governance committees.
| 2014 | 57 | Ms. Collins has been President of Cambium LLC, a business and financial advisory firm serving small andmedium-sized business, since 2007. In 1997, Ms. Collinsco-founded Svoboda Collins LLC, a private equity firm, where she served as Managing Director from 1998 to 2007. From 1992 to 1997, Ms. Collins was a principal at William Blair & Company, LLC, where she focused on specialty retail, catalog and distribution businesses in corporate finance. Ms. Collins served as a director of Integrys Energy Group, Inc. from May 2011 to June 2015 and as a member of its audit committee and Chairperson of its governance committee. Additionally, Ms. Collins has served as a director of PrivateBancorp, Inc. since November 2014 and currently serves as a member of its audit and compensation committees. Ms. Collins’ prior public company director experience includes Molex, Inc. from 2003 to 2013, including as a member of its audit committee and nominating and corporate governance committee, and Bucyrus International, Inc. from 2009 to 2011, including as a member of its audit committee.
The Board benefits from Ms. Collins’ extensive experience serving on both private and public company boards and her prior committee experience makes her a valued member of the Board and member of our audit and Chairperson of our nominating and corporate governance committees. Ms. Collins’ experience evaluating, investing in, monitoring and exiting private equity investments as well as advising growth companies as an investment banker also enhances her value to the Company’s Board. | 2014 |
Mr. Eck served as theNon-Executive Chairperson of our Board from October 2003 to June 2013 and as our Interim Chief Executive Officer from February 2013 to July 2013. From November 1997 to September 2001, Mr. Eck served as Chief Executive Officer and a director of Coles Myer LTD Australia, one of Australia’s largest retailers. Prior to that, Mr. Eck served in various other executive roles with Coles Myer, from 1994 to 1997. Mr. Eck was previously a director of Securus, Inc. The Board benefits from Mr. Eck’s ability to provide the perspective of an experienced Chief Executive Officer based upon his leadership at a large international corporation with operations worldwide. Running a public company exposed Mr. Eck to many of the issues facing public companies, including on the operational, financial and corporate governance fronts. His years of executive and managerial experience also enable him to bring demonstrated management ability at senior levels to the Board. Additionally, his experience leading complex retail organizations with large employee bases has given him expertise in executive compensation programs, making him a valued member of our compensation committee and nominating and corporate governance committee. Mr. Philippin has served as theNon-Executive Chairperson of the Board since the June 2014 annual meeting. Mr. Philippin currently serves as Chief Executive Officer of Sbarbs, LLC, a private food service company and was previously a principal of GarMark Advisors, LLC, a mezzanine investment fund, from 2002 until his retirement in February 2008. From 2000 to 2002, Mr. Philippin served as Chief Executive Officer of Online Retail Partners. From 1994 to 2000, Mr. Philippin was a member of the Management Committee of Investcorp International Inc., a global investment group. Prior to 1994, Mr. Philippin was a partner of PricewaterhouseCoopers, where he served as National Director of Mergers & Acquisitions. Mr. Philippin served as a director and Chairperson of the audit committee of Alliance Laundry Systems through August 2015. Mr. Philippin also previously served as a director and Chairperson of the audit committee of CSK Auto, Inc.; as a director, audit committee member and compensation committee member of Competitive Technologies; as a director and audit committee member of Aquilex; and as a director of both Samsonite Corporation and Saks Fifth Avenue. Mr. Philippin is a Certified Public Accountant and brings to the Board a wealth of experience dealing with and overseeing the implementation of accounting principles and financial reporting rules and regulations. With his extensive experience chairing public company audit committees and in various senior management positions in the financial services sector, Mr. Philippin provides relevant expertise on investment and financial matters. His accounting experience, together with his knowledge of financial reporting rules and regulations, makes him well-positioned to serve as the Chairperson of our Board.Name Age as
of
4/19/17 Positions with Us / Principal Occupations / Business Experience Director
SinceDennis K. Eck 73 2003 Charles J. Philippin 67 2008
Ms. Wittman was the Chief Financial Officer of Dropbox, Inc., a cloud based storage and collaboration company, from March 2015 to October 2016 and served as an advisor to the company until April 2017. Ms. Wittman is currently a private investor. Ms. Wittman was the Senior Vice President and Chief Financial Officer of Motorola Mobility, a subsidiary of Google, from May 2012 through February 2015, after joining Google in March of 2012. From September 2008 to March 2012, she served as Executive Vice President and Chief Financial Officer of Marsh & McLennan Companies, Inc., a professional services company providing advice and solutions in the areas of risk, strategy and human capital. Prior to joining Marsh & McLennan, Ms. Wittman was Chief Financial Officer and Executive Vice President of Adelphia Communications Corp., a cable television company, from 2003 to 2007. Prior to Adelphia, Ms. Wittman served as Chief Financial Officer of 360networks, a wholesale provider of telecommunications services. Ms. Wittman has served as a director of Sirius XM Holdings Inc. since April 2011, including as a member of its audit committee. Ms. Wittman’s experience as Chief Financial Officer of various public companies provides the Board valuable insights relating to financial reporting rules and regulations and accounting principles. In addition, her experience as a director at several companies, including serving as audit committee Chairperson for a public company, makes her a valued member of the Board and of our audit committee.Name Age as
of
4/19/17 Positions with Us / Principal Occupations / Business Experience Director
SinceVanessa A. Wittman 50 2014
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH ABOVE NAMED
NOMINEE
INFORMATION ABOUT OUR BOARD OF DIRECTORS CONTINUING IN OFFICE
Class III Directors continuing in office until the 20172018 Annual Meeting:
Name
| Age
| Positions with Us / Principal Occupations / Business Experience
| Director
| Age as of 4/19/17 | Positions with Us / Principal Occupations / Business Experience | Director Since | ||||||||||
Dennis K. Eck | 71 | Mr. Eck served as the Non-Executive Chairperson of our Board from October 2003 to June 2013 and as our Interim Chief Executive Officer from February 2013 to July 2013. From November 1997 to September 2001, Mr. Eck served as Chief Executive Officer and a director of Coles Myer LTD Australia, one of Australia’s largest retailers. Prior to that, Mr. Eck served in various other executive roles with Coles Myer, including as Chief Operating Officer and a director from April 1997 to November 1997, Managing Director of Basic Needs from November 1996 to April 1997, and Managing Director of Supermarkets from May 1994 to November 1996. Prior to 1994, Mr. Eck served as President, Chief Operating Officer and a director of The Vons Companies Inc., as the Vice Chairperson of the Board and Executive Vice President of American Stores, Inc., as Chairperson and Chief Executive Officer of American Food and Drug, as President, Chief Executive Officer and a director of American Food and Drug, and as President and Chief Operating Officer of Acme Markets, Inc. He also served in executive roles of
| 2003 | |||||||||||||
Robert F. DiRomualdo | 72 | Mr. DiRomualdo is Chairperson and Chief Executive Officer of Naples Ventures, LLC, a private investment company that he formed in 2002. Prior to 2002, Mr. DiRomualdo served in various roles at Borders Group, Inc. and its predecessor companies, including as Chairperson of the Board and Chief Executive Officer. Prior to 1989, he also served as President and Chief Executive Officer of Hickory Farms. Mr. DiRomualdo currently serves as a Director of 4R Systems and was previously a director of Gordon Brothers Group, where he served on the audit committee, Securus, Inc. and Bill Me Later, Inc., where he served as Chairperson of the compensation committee and as a member of the audit committee.
Mr. DiRomualdo’s qualifications for the Board include his ability to provide the insight and perspectives of an experienced Chairperson and Chief Executive Officer of a major retail | 2004 |
Name Age Positions with Us / Principal Occupations / Business Experience Director increasing responsibility at Savon Drug Inc. and Jewel Food Stores. Mr. Eck is currently a director of Securus, Inc. In 2000, Mr. Eck was named the Astute Business Leader of the Year in Australia by the Association of Chartered Accountants. The Board benefits from Mr. Eck’s ability to provide the perspective of an experienced Chief Executive Officer based upon his leadership at a large international corporation with operations worldwide. Running a public company exposed Mr. Eck to many of the issues facing public companies, including on the operational, financial and corporate governance fronts. His years of executive and managerial experience also enable him to bring demonstrated management ability at senior levels to the Board. Additionally, his experience leading complex retail organizations with large employee bases has given him expertise in executive compensation programs, making him a valued member of our compensation committee and Chairperson of our nominating and corporate governance committee. Charles J. Philippin Mr. Philippin has served as the Non-Executive Chairperson of the Board since the June 2014 annual meeting. Mr. Philippin currently serves as CEO of a private food service company and was previously a principal of Garmark Advisors, a mezzanine investment fund, from 2002 until his retirement in February 2008. From 2000 to 2002, Mr. Philippin served as Chief Executive Officer of Online Retail Partners. From 1994 to 2000, Mr. Philippin was a member of the Management Committee of Investcorp International Inc., a global investment group. Prior to 1994, Mr. Philippin was a partner of PricewaterhouseCoopers, where he served as National Director of Mergers & Acquisitions. Mr. Philippin is a director and Chairperson of the audit committee of Alliance Laundry Systems. Mr. Philippin previously served as a director and Chairperson of the audit committee of CSK Auto, Inc., as a director, audit committee member and compensation committee member of Competitive Technologies, as a director and audit committee member of Aquilex, and as a director of Samsonite Corporation and Saks Fifth Avenue. Mr. Philippin is a Certified Public Accountant and brings to the Board a wealth of experience dealing with and overseeing the implementation of accounting principles and financial reporting rules and regulations. With his extensive experience chairing public company audit committees and in various senior management positions in the financial services sector, Mr. Philippin provides relevant expertise on investment and financial matters. His accounting experience, together with his knowledge of financial reporting rules and regulations, makes him well-positioned to serve as the Chairperson of our Board and as a member of our audit committee. Vanessa A. Wittman In March 2015 Ms. Wittman joined Dropbox, Inc. as its Chief Financial Officer. Dropbox is a cloud based storage and collaboration company. Ms. Wittman was the Senior Vice President Ms. Halligan serves as an Advisor/Consultant to Chanel Parfums Beaute since January 2014 and Narvar Inc. since February 2013 and previously served as an Advisor from January to April 2012 and Senior Vice President, Sales & Marketing from July 2010 to December 2011 of PowerReviews Inc. Prior to joining PowerReviews Inc., Ms. Halligan held several executive level positions with prominent retailers. From 2005 to 2010, Ms. Halligan served in various executive positions with Walmart, including Chief Marketing Officer of Walmart.com from 2007 to 2009 and Vice President Market Development, Global eCommerce of Walmart.com from 2009 to 2010. From 2000 to 2005, Ms. Halligan served as an associate partner at Prophet, a global strategy consultancy. From 1996 to 1999, Ms. Halligan held retail management positions with Williams Sonoma Inc., including Vice President and General Manager, Internet and Vice President, Marketing. Ms. Halligan also has previous retail experience with Blue Nile, Inc. and the Gymboree Corporation. Ms. Halligan began her career as a Marketing and Planning analyst for Lands’ End from 1987 to 1991. Ms. Halligan has served as a member of the board of directors of FLIR Systems, Inc. since March 2014, including as a member of its audit committee. With over 20 years of experience in marketing, digital ande-commerce within the retail industry, Ms. Halligan provides valuable insight and expertise on strategic marketing issues, Digital technology and omnichannel business capabilities. In addition, Ms. Halligan’s business experience with large retail companies makes her a valued member of our nominating and corporate governance committee and Chairperson of our compensation committee.
Since 65 2008 47 2014 Name Age as
of
4/19/17 Positions with Us / Principal Occupations / Business Experience Director
Since company, during which time he was instrumental in the development and implementation of a growth strategy that led to the company’s expansion into major domestic and international markets. He also oversaw a public stock offering and listing on the New York Stock Exchange by Borders Group as well as its inclusion into the Fortune 500. Due to his experience supervising the principal financial officer of Borders Group as well as his previous committee experience, Mr. DiRomualdo provides valuable insight as the Chairperson of our audit committee. Catherine A. Halligan 53 2012 George R. Mrkonic 64 Mr. Mrkonic is the Non-Executive Chairman of Maru Group, a UK and North America-based market research company unifying deep sector expertise with cloud-based customer insight communities. He is also the retired Non-Executive Chairman of Paperchase Products Limited, London, UK, a retailer of cards, stationery, wraps and gifts. He is also the retired President and Vice Chairman of Borders Group, Inc. having served as Director from 1994 to 2004, Vice Chairman from 1994 to 2002 and President from 1994 to 1997. Mr. Mrkonic began his retail career in 1978 and has led 2015
several retail companies including Herman’s Sporting Goods, Eyelab, Kmart’s Specialty Retailing Group and Borders. In addition to being Non-Executive Chairman of Maru and a member of its audit committee, he serves as a director and member of the audit and compensation committees of two other public companies: Brinker International (NYSE) and AutoZone, Inc. (NYSE). In the last five years he has also served on the board of directors of Syntel and Pacific Sunwear. Mr. Mrkonic’s more than 30 years of experience in the retail industry as well as his knowledge and skills as a senior executive and director of large public companies brings to our Board and audit committee a broad understanding of the complex strategic, governance and financial issues facing large public companies in the current economic environment. Ms. Nagler was President of Bealls Department Stores, Inc. from January 2011 to January 2016. She served as President, Chief Executive Officer and director of Christopher & Banks Corporation, a specialty retailer of women’s clothing, from August 2007 to October 2010. From 2004 to 2007, Ms. Nagler was President of Lane Bryant, a division of Charming Shoppes, Inc., a women’s apparel company. From 2002 to 2004, she was President of Catherines’ Stores, also a division of Charming Shoppes, Inc. From 1996 to 2002, Ms. Nagler held various retail management positions with Kmart Corporation, including Senior Vice President, General Merchandise Manager of Apparel and Jewelry, Divisional Vice President and General Merchandise Manager of Kids and Menswear. From 1994 to 1996, Ms. Nagler was a Vice President, Divisional Merchandise Manager for Kids “R” Us. Ms. Nagler also has previous retail experience with Montgomery Ward and Main Street Department Stores. With years of experience as a senior-level executive in a wide variety of retail companies, including as the President and Chief Executive Officer of a public retail company, Ms. Nagler provides considerable expertise on strategic, management and operational issues facing a multi-state retailer. Running a public company gave Ms. Nagler front-line exposure to many of the issues facing public retail companies, particularly on the operational, financial and corporate governance fronts. The Board also benefits from Ms. Nagler’s extensive experience in the retail industry and the informed perspectives such experience facilitates. Additionally, her past role as President and Chief Executive Officer positions her well to serve as a member of our compensation committee and nominating and corporate governance committee. |
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Class III Directors continuing in office until the 20162019 Annual Meeting:
Name
| Age
| Positions with Us / Principal Occupations / Business Experience
| Director
| Age as of 4/19/17 | Positions with Us / Principal Occupations / Business Experience | Director Since | ||||||||||
Mary N. Dillon | 53 | Ms. Dillon has been our Chief Executive Officer since July 2013. Prior to joining Ulta, she served as President and Chief Executive Officer and a member of the board of directors of United States Cellular Corporation (“U.S. Cellular”) beginning in June 2010. Prior to joining U.S. Cellular, Ms. Dillon served as Global Chief Marketing Officer and Executive Vice President of McDonald’s Corporation from 2005 to 2010, where she led the company’s worldwide marketing efforts and global brand strategy. Prior to joining McDonald’s, Ms. Dillon held several positions of increasing responsibility at PepsiCo Corporation, including as President of the Quaker Foods division from 2004 to 2005 and as Vice President of Marketing for Gatorade and Quaker Foods from 2002 to 2004. Ms. Dillon previously served as a director of Target Corporation from 2007 to 2013 and as a member of its compensation committee from 2009 to 2013.
As the Chief Executive Officer of the Company, Ms. Dillon is able to provide the Board with valuable insight regarding the Company’s operations, its management team and associates as a result of her day-to-day involvement in the operations of the business.
| 2013 | 55 | Ms. Dillon has been our Chief Executive Officer since July 2013. Prior to joining Ulta Beauty, she served as President and Chief Executive Officer and a member of the board of directors of United States Cellular Corporation (“U.S. Cellular”), a provider of wireless telecommunication services, beginning in June 2010. Prior to joining U.S. Cellular, Ms. Dillon served as Global Chief Marketing Officer and Executive Vice President of McDonald’s Corporation from 2005 to 2010, where she led the company’s worldwide marketing efforts and global brand strategy. Prior to joining McDonald’s, Ms. Dillon held several positions of increasing responsibility at PepsiCo Corporation, including as President of the Quaker Foods division from 2004 to 2005 and as Vice President of Marketing for Gatorade and Quaker Foods from 2002 to 2004. Ms. Dillon previously served as a director of Target Corporation from 2007 to 2013 and as a member of its compensation committee from 2009 to 2013. Ms. Dillon joined the Board of Directors of Starbucks in January 2016 and serves on its compensation and management development committee.
As the Chief Executive Officer of the Company, Ms. Dillon is able to provide the Board with valuable insight regarding the Company’s operations, its management team and associates as a result of herday-to-day involvement in the operations of the business. Additionally, the Board benefits from Ms. Dillon’s demonstrated leadership skills and the extensive senior management and executive operational experience she has acquired in various businesses across the retail industry. With more than 30 years of experience in consumer-driven businesses, Ms. Dillon lends her extensive operational and marketing expertise to the Board, as well as her insights into the management of complex organizations, and she contributes an understanding of operational and marketing strategy in today’s challenging environment. | 2013 | ||||||||||
Charles Heilbronn | 62 | Mr. Heilbronn has been Executive Vice President and Secretary of Chanel, Inc. since 1998. Since December 2004, he has served as Executive Vice President of Chanel Limited, a privately-held international luxury goods company selling fragrances and cosmetics, women’s clothing, shoes and accessories, leather goods, fine jewelry and watches. From 1987 to 2004, Mr. Heilbronn was Vice President and General Counsel of Chanel Limited and is currently a Director, Executive Vice President and Secretary of Chanel, Inc. Mr. Heilbronn is currently a Director of Mousseless, Inc., Chanel, Inc. (U.S.) and various other Chanel companies and affiliates in the U.S. and worldwide.
Mr. Heilbronn has more than 30 years of experience at one of the world’s leading luxury goods companies and brings a broad domestic and international perspective to issues considered by the | 1995 |
Name
| Age
| Positions with Us / Principal Occupations / Business Experience
| Director
| Age as of 4/19/17 | Positions with Us / Principal Occupations / Business Experience | Director Since | ||||||||||
Additionally, the Board benefits from Ms. Dillon’s demonstrated leadership skills and the extensive senior management and executive operational experience she has acquired in various businesses across the retail industry. With 30 years of experience with consumer-driven businesses, Ms. Dillon lends her extensive operational and marketing expertise to the Board, as well as her insights into the management of complex organizations, and she contributes an understanding of operational and marketing strategy in today’s challenging environment.
| Board. His business background and industry experience enable him to provide substantial expertise on relevant business matters and in the governance of publicly held corporations as a member of our compensation committee and nominating and corporate governance committee. | |||||||||||||||
Charles Heilbronn | 60 | Mr. Heilbronn has been Executive Vice President and Secretary of Chanel, Inc. since 1998. Since December 2004, he has served as Executive Vice President of Chanel Limited, a privately-held international luxury goods company selling fragrance and cosmetics, women’s clothing, shoes and accessories, leather goods, fine jewelry and watches. From 1987 to the present, Mr. Heilbronn has been Vice President and General Counsel of Chanel Limited, and a Director, Senior Vice President, General Counsel, and Secretary of Chanel, Inc. Mr. Heilbronn is currently a Director of Mousseless, Inc., Chanel, Inc. (U.S.) and various other Chanel companies and affiliates in the U.S. and worldwide.
Mr. Heilbronn has more than 30 years of experience at one of the world’s leading luxury goods companies and brings a broad domestic and international perspective to issues considered by the Board. His business background and industry experience enable him to provide substantial expertise on relevant business matters and in the governance of publicly held corporations as a member of our compensation committee and nominating and corporate governance committee.
| 1995 | |||||||||||||
Michael R. MacDonald | 63 | Mr. MacDonald has been the President and Chief Executive Officer and member of the Board of Directors of DSW Inc. since April 2009. Prior to joining DSW Inc., Mr. MacDonald served as Chairperson and Chief Executive Officer of Shopko Stores, a retail company, from May 2006 to March 2009. Prior to that time, Mr. MacDonald held executive positions at Saks Incorporated from 1998 to 2006, most recently as Chairperson and Chief Executive Officer of the Northern Department Stores Group for six years. Prior to serving in that capacity, Mr. MacDonald held executive positions at Carson Pirie Scott, including the position of Chairperson and Chief Executive Officer.
With over 30 years of business experience in all phases of retail, including managing merchandising, marketing, stores, operations and finance functions, Mr. MacDonald brings strong leadership abilities and in-depth retail knowledge to our Board. Additionally, his current role as President and Chief Executive Officer of another public company provides him with expertise in executive compensation programs which positions him well to serve as a member of our compensation committee.
| 2012 | 65 | Mr. MacDonald served as the President and Chief Executive Officer and member of the Board of Directors of DSW Inc. from April 2009 through December 2015. Prior to joining DSW Inc., Mr. MacDonald served as Chairperson and Chief Executive Officer of Shopko Stores, a retail company, from May 2006 to March 2009. Prior to that time, Mr. MacDonald held executive positions at Saks Incorporated from 1998 to 2006, including as Chairperson and Chief Executive Officer of the Northern Department Stores Group for six years. Prior to serving in that capacity, Mr. MacDonald held executive positions at Carson Pirie Scott, including the position of Chairperson and Chief Executive Officer.
The Board benefits from Mr. MacDonald’s experience serving as a director for a public company board and his prior experience makes him a valued member of the Board and member of our compensation committee. With more than 30 years of business experience in all phases of retail, including managing merchandising, marketing, stores, operations and finance functions, Mr. MacDonald brings strong leadership abilities andin-depth retail knowledge to our Board. | 2012 |
NON-EXECUTIVE DIRECTOR COMPENSATION FOR FISCAL 20142016
We strive to promote an ownership mentality among our key leadership and Board of Directors. As such, the Company utilizes equity compensation to encourage our directors to maintain a stock ownership investment in the Company under appropriate circumstances. As a result, an annual equity retainer totaling $125,000 is granted to eachnon-employee director in the form of restricted stock units valued based on the share price of our common stock on the date of grant. During fiscal year 2016, eachnon-employee director, received a grant of 529 restricted stock units that will vest on June 1, 2017. Ms. Nagler and Mr. Philippin were granted options upon joining our Board, all of which are currently vested and exercisable.
In addition, eachnon-employee director is paid an annual cash retainer and theNon-Executive Chairperson and each committee Chairperson receive an additional cash retainer for serving in those roles. Cash payments are paidpro-rata in quarterly installments made at the end of each fiscal quarter. In June 2016, the Board of Directors approved increases to the retainers paid to eachnon-employee director, theNon-Executive Chairperson and committee Chairpersons. The following table sets forth the cash retainers for services rendered before and after June 2016:
Role | Cash Retainer Before June 1, 2016 ($) | Cash Retainer After June 1, 2016 ($) | Percentage Increase | |||||||||
Non-employee Director | 90,000 | 105,000 | 17 | % | ||||||||
Non-Executive Chairperson | 100,000 | 125,000 | 25 | % | ||||||||
Audit Committee Chairperson | 20,000 | 25,000 | 25 | % | ||||||||
Compensation Committee Chairperson | 15,000 | 20,000 | 33 | % | ||||||||
Nominating and Corporate Governance Committee Chairperson | 8,500 | 15,000 | 76 | % |
The following table provides information related to the compensation of ournon-employee Directors directors earned for fiscal 2014:2016:
Name | Fees Earned or Paid in Cash ($) | Stock Awards (1)(2) ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards (1)(2) ($) | Total ($) | ||||||||||||||||||
Charles J. Philippin | 157,637 | 110,042 | 267,679 | 216,593 | 125,204 | 341,797 | ||||||||||||||||||
Michelle L. Collins | 27,198 | 70,844 | 98,042 | 112,794 | 125,204 | 237,998 | ||||||||||||||||||
Robert F. DiRomualdo | 98,077 | 110,042 | 208,119 | 123,297 | 125,204 | 248,501 | ||||||||||||||||||
Dennis K. Eck | 93,390 | 110,042 | 203,432 | 99,973 | 125,204 | 225,177 | ||||||||||||||||||
Catherine A. Halligan | 94,780 | 110,042 | 204,822 | 118,297 | 125,204 | 243,501 | ||||||||||||||||||
Charles Heilbronn | 84,890 | 110,042 | 194,932 | 99,973 | 125,204 | 225,177 | ||||||||||||||||||
Michael R. MacDonald | 84,890 | 110,042 | 194,932 | 99,973 | 125,204 | 225,177 | ||||||||||||||||||
George R. Mrkonic | 99,973 | 125,204 | 225,177 | |||||||||||||||||||||
Lorna E. Nagler | 84,890 | 110,042 | 194,932 | 99,973 | 125,204 | 225,177 | ||||||||||||||||||
Kenneth T. Stevens (4) | 59,286 | — | 59,286 | |||||||||||||||||||||
Vanessa A. Wittman | 59,341 | 110,042 | 169,383 | 99,973 | 125,204 | 225,177 |
(1) | Amounts shown represent the grant date fair value as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,Compensation — Stock Compensation |
(2) | The grant date fair value of the restricted stock |
The following table sets forth the outstanding options and restricted stock units held by ournon-employee Directors directors as of January 31, 2015:28, 2017:
Name | Options | Restricted Stock | ||||||
Charles J. Philippin | 50,000 | 1,157 | ||||||
Michelle L. Collins | — | 626 | ||||||
Robert F. DiRomualdo | — | 1,157 | ||||||
Dennis K. Eck | — | 1,157 | ||||||
Catherine A. Halligan | — | 1,157 | ||||||
Charles Heilbronn | — | 1,157 | ||||||
Michael R. MacDonald | — | 1,157 | ||||||
Lorna E. Nagler | 50,000 | 1,157 | ||||||
Vanessa A. Wittman | — | 1,157 |
We strive to promote an ownership mentality among our key leadership and Board of Directors. As such, the Company utilizes equity compensation to encourage our Directors to maintain a stock ownership investment in the Company under appropriate circumstances. As a result, an annual equity retainer totaling $110,000 is granted to each non-employee Director in the form of restricted stock valued based on the share price of our common stock on the date of grant. During fiscal year 2014, each non-employee Director received a grant of 1,157 shares of restricted stock that will vest on June 5, 2015. The grant of restricted shares to Ms. Collins in fiscal year 2014 was prorated based on the appointment date to our Board. Upon joining our Board, Ms. Nagler
was awarded options to purchase 50,000 shares of our common stock, to be granted in three annual installments beginning in 2009, with each installment vesting equally over four years. During fiscal 2008, upon joining our Board, Mr. Philippin was granted an option to purchase 50,000 shares of our common stock which vested equally over four years.
In addition, (i) each non-employee Director is granted an annual cash retainer totaling $90,000, with quarterly payments made at the end of each fiscal quarter and (ii) an annual cash retainer of $100,000 is granted to the Non-Executive Chairperson of the Board, $20,000 is granted to the audit committee Chairperson, $15,000 is granted to the compensation committee Chairperson, and $8,500 is granted to the nominating and corporate governance committee Chairperson. The foregoing cash retainers are pro-rated as applicable based on partial year service.
Name | Options (#) | Restricted Stock Units (#) | ||||||
Charles J. Philippin | 50,000 | 529 | ||||||
Michelle L. Collins | — | 529 | ||||||
Robert F. DiRomualdo | — | 529 | ||||||
Dennis K. Eck | — | 529 | ||||||
Catherine A. Halligan | — | 529 | ||||||
Charles Heilbronn | — | 529 | ||||||
Michael R. MacDonald | — | 529 | ||||||
George R. Mrkonic | — | 529 | ||||||
Lorna E. Nagler | 37,500 | 529 | ||||||
Vanessa A. Wittman | — | 529 |
ARTICLE III. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AND AUDIT COMMITTEE
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of the Board of Directors has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year 2015,2017, ending January 30, 2016.February 3, 2018. Services provided to Ulta Beauty by Ernst & Young LLP in fiscal year 20142016 are described under “Fees to Independent Registered Public Accounting Firm” below. Additional information regarding the audit committee is provided on page 19.
20. Ernst & Young LLP has audited the financial statements of Ulta Beauty since 1997. Representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions and to make such statements as they may desire.
Stockholder ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, the Board of Directors is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate governance practice. If the stockholders fail to ratify the selection, the audit committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the audit committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Ulta Beauty and our stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Brokernon-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether this matterproposal has been ratified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL TWO
FEES TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table sets forth the aggregate fees billed by Ernst & Young LLP for professional services rendered for fiscal years 20142016 and 2013:2015:
2014 | 2013 | 2016 | 2015 | |||||||||||||
Audit Fees (1) | $ | 979,500 | $ | 979,800 | $ | 1,402,000 | $ | 1,197,700 | ||||||||
Audit-Related Fees | — | — | — | — | ||||||||||||
Tax Fees | — | — | 934,000 | 498,000 | ||||||||||||
All Other Fees | 1,995 | 1,995 | 1,995 | 1,995 | ||||||||||||
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Total | $ | 981,495 | $ | 981,795 | $ | 2,337,995 | $ | 1,697,695 | ||||||||
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(1) | Represents fees and expenses billed for professional services rendered for audits of our annual financial statements, including reviews of the financial statements included in our quarterly reports on Form10-Q. |
(2) | Represents fees and expenses fortax-related services; primarily for tax consulting and tax planning. |
(3) | Represents fees relating to online research software. |
The audit committee has approved all professional fees paid to Ernst & Young LLP.
The audit committee has established procedures for thepre-approval of all audit and permittednon-audit-related services provided by our independent registered public accounting firm. The procedures include, in part, that: (i) the audit committee, on an annual basis, shallpre-approve the independent registered public accounting firm’s engagement letter/annual service plan; (ii) the audit committee mustpre-approve any permitted service not included in the annual service plan; (iii) the audit committee Chairperson has the ability topre-approve any permitted service up to apre-determined amount between regularly scheduled meetings, as applicable, and a report of such services and related fees are to be disclosed to the full audit committee at the next scheduled meeting; and (iv) the audit committee will review a summary of the services provided and the fees paid on an annual basis.
The audit committee provides assistance to the Board of Directors in fulfilling its responsibility to our stockholders, potential stockholders, the investment community and other stakeholders relating to corporatethe Company’s accounting and financial management and reporting practices, the system of internal controlsprocess and the auditing process.audits of the Company’s financial statements. Specifically, the audit committee assists the Board of Directors in monitoring the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence, the performance of our internal audit function and independent registered public accounting firm, our compliance with legal and regulatory requirements and our policies with respect to risk assessment and risk management. The audit committee annually reviewsevaluates its own performance and reports its findings and action plans to the Board. The audit committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent registered public accounting firm, and our independent registered public accounting firm reports directly to the audit committee.
During fiscal year 2014,2016, the audit committee was composed of the following independent Directors:directors: Ms. Collins, Messrs. DiRomualdo and PhilippinMrkonic and Ms. Halligan (through June 5, 2014), Ms. Wittman (since June 5, 2014) and Ms. Collins (since October 13, 2014).Wittman. Mr. DiRomualdo serves as the current Chairperson of the audit committee. Each of Messrs. DiRomualdo and PhilippinMrkonic and Ms. Collins and Ms. Wittman hashave been designated by the Board of Directors as an “audit committee financial expert” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of each member’s level of knowledge and experience based on a number of factors, including education and work, management and director experience. The Board of Directors has determined that each committee member qualifies as a “non-employee“non-employee director” under SEC rules and regulations, as well as the independence requirements of NASDAQ. All members of our audit committee are financially literate and are independent, as independence is defined in Rule 5605(a)(2) of the NASDAQ listing standards and Section 10A(m)(3) of the Exchange Act. The audit committee met 712 times during fiscal year 2014,2016, and its report is presented below. The audit committee acts under a written charter that was adopted by the Board of Directors and has been published under “Corporate Governance” in the Investor Relations section of the Ulta Beauty website locatedathttp://ir.ulta.com.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS1
The audit committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting process and practices of Ulta.Ulta Beauty.
The audit committee oversees Ulta’sUlta Beauty’s financial process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. Ulta Beauty has an Internal Audit Department that is actively involved in examining and evaluating Ulta’sUlta Beauty’s financial, operational and information systems activities and reports functionally to the audit committee and administratively to management. In fulfilling its oversight responsibilities, the audit committee reviewed and discussed with management the periodic reports, including the audited financial statements in our Annual Report on Form10-K. This included a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The audit committee reviewed with the independent registered public accounting firm, whowhich is responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, its judgments as to the quality, not just the acceptability, of Ulta’sUlta Beauty’s accounting principles and such other matters as are required to be discussed with the audit committee under generally accepted auditing standards, including the Public Company Accounting Oversight Board Standard No. 16,Communications with Audit Committees (AS 16)1301). In addition, the audit committee has discussed with the independent registered public accounting firm the firm’s independence from management and Ulta Beauty, including the matters in the written disclosures and the Letter from the Independent Registered Public Accounting Firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the audit committee concerning independence.
The audit committee discussed with Ulta’sUlta Beauty’s independent registered public accounting firm the overall scope and plans for their audit and developed apre-approval process for all independent registered public accounting firm services. The audit committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of Ulta’sUlta Beauty’s internal and disclosure controls and the overall quality of Ulta’sUlta Beauty’s financial reporting. As noted, the audit committee held 7twelve meetings during fiscal year 2014.2016.
In reliance on the reviews and discussions referred to above, the audit committee recommended to the Board of Directors, and the Board of Directors approved, that the audited financial statements be included in Ulta’sUlta Beauty’s Annual Report on Form10-K for the fiscal year 2014,2016, ended January 31, 2015,28, 2017, for filing with the SEC. The audit committee has appointed Ernst & Young LLP to be Ulta’sUlta Beauty’s independent registered public accounting firm for the fiscal year 2015,2017, ending January 30, 2016.February 3, 2018.
Audit Committee of the Board of Directors |
Robert F. DiRomualdo (Chairperson) |
Michelle L. Collins |
George R. Mrkonic |
Vanessa A. Wittman |
1 | This report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any Ulta Beauty filing under the Securities Act of 1933 (as amended, the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing. |
ARTICLE IV. COMPENSATION COMMITTEE REPORT AND
COMPENSATION DISCUSSION AND ANALYSIS
The compensation committee met 10seven times during fiscal year 2014,2016, and its report is presented below. During fiscal year 2014,2016, the compensation committee was composed of the following Directors,directors, all of whom satisfy the independence requirements of NASDAQ: Ms. Halligan, Messrs. Stevens (through June 5, 2014), Eck, Heilbronn and MacDonald and Ms. Nagler andNagler. Ms. Halligan (since June 5, 2014). Ms. Halligan currently serves as the current Chairperson of the compensation committee. The Board of Directors has determined that each current committee member qualifies as a “non-employee“non-employee director” under the rules and regulations of the SEC. Due to Mr. Eck’s service as Interim Chief Executive Officer during a portion of fiscal year 2013, he does not qualify as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and therefore mayhas not approveapproved any compensation that is intended to be “qualified performance based compensation” within the meaning of Section 162(m). of the Code. The compensation committee acts under a written charter that was adopted by the Board of Directors and has been published under “Corporate Governance” in the Investor Relations section of the Ulta Beauty website located athttp://ir.ulta.com. Under this charter, the compensation committee is responsible for:
The compensation committee may under its charter delegate any of its responsibilities to a subcommittee, but only to the extent consistent with our Bylaws, ArticlesCertificate of Incorporation, Section 162(m) of the Code and NASDAQ rules.
Compensation Consultant
During fiscal 2014year 2016 the compensation committee engaged Pay Governance as its outside consultant to assist the compensation committee with executive compensation program design, to advise and consult with the committee on general compensation issues and to keep the committee apprised of regulatory, legislative and accounting developments and competitive practices related to executive compensation. In those capacities, Pay Governance was engaged directly by the compensation committee. Pay Governance is an independent executive compensation consulting firm and does not determine or recommend the exact amount or form of executive compensation for any executive officers. Pay Governance reports directly to the compensation committee, and a representative of Pay Governance, when requested, attends meetings of the committee, is available to participate in executive sessions and communicates directly with the Chairperson of the compensation committee or its members outside of meetings. Pay Governance does no other work for the Company. The compensation committee has reviewed the nature of and extent of the relationship between the compensation committee, the Company and Pay Governance with respect to any potential conflicts of interest or similar concerns. Based on that review, the compensation committee believes that there are no conflicts of interest or potential conflicts of interest that would unduly influence Pay Governance’s provision of advice that is independent of management to the compensation committee.
Compensation Risk
The Company reviewed its compensation plans, practices and policies and determined that it does not have any such plans, practices and policies that create risks that are reasonably likely to have a material adverse effect on the Company based on the following:
Compensation Committee Interlocks and Insider Participation
During the 20142016 fiscal year, none of the members of our compensation committee had at any time been one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers serving on our Board of Directors or compensation committee.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS2
The compensation committee has reviewed and discussed the following Compensation Discussion and Analysis (“CD&A”) with management. Based on this review and discussion, the compensation committee recommended to the Board of Directors, and the Board of Directors approved, that the CD&A be included in Ulta’sUlta Beauty’s fiscal 20142016 Annual Report on Form10-K and this Proxy Statement.
Compensation Committee of the Board of Directors |
Catherine A. Halligan (Chairperson) |
Dennis K. Eck |
Charles Heilbronn |
Michael R. MacDonald |
Lorna E. Nagler |
2 | This report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any Ulta Beauty filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing. |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the Company’s executive compensation program and explains how the Compensation Committee made compensation decisions for the following Named Executive Officers (the “NEOs”) related to fiscal 2016:
Named Executive Officer | Title | |
Mary N. Dillon | Chief Executive Officer | |
Scott M. Settersten | Chief Financial Officer, Treasurer and Assistant Secretary | |
Jodi J. Caro | General Counsel and Corporate Secretary | |
Jeffrey J. Childs | Chief Human Resources Officer | |
David C. Kimbell | Chief Merchandising and Marketing Officer |
Executive Summary
Ulta’sUlta Beauty’s executive compensation programs are designed to be aligned with stockholder interests and are heavily weighted toward long-term incentive awards and annual performance-based awards. The compensation program design provides for compensation, other than base salary, to be variable and based on actual performance results.
Fiscal year 20142016 was a strong year for us. We:
The combination of the above financial highlights contributed to stock price growth of 49.8% over last fiscal year and contributed to our stock price growth of 174% since July 1, 2013 when Ms. Dillon became our Chief Executive Officer. Additionally, during 2016 the Company was added to the S&P 500, a reflection of our growth and strong market position.
Our five-year top line and bottom line performance, store growth and active loyalty memberships are shown below:
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form10-K filed on April l, 2015March 28, 2017 for a more detailed description of our fiscal year 20142016 financial results.
The alignment of performance and pay in fiscal 20142016 reflects our compensation philosophy, delivered through a performance-based compensation program that provides the opportunity to earn meaningful compensation upon achievement of superior performance. Annual incentive opportunity is directly tied to one quantifiable objective performance target: earnings before income taxes (“EBT”), adjusted for certain accounting charges and credits (“EBT”).credits. The use of EBT is designed to focus on profitable growth which is a key indicator of our operating performance. No awards are paid under this formulaprogram if a threshold level of earnings areis not achieved. Based on our strong operating performance, we exceeded our EBT target for 2014,2016, resulting in a payout under our annual incentive plan of 169.3%. 194.57% of target.
Our long-term incentive award opportunityprogram (“LTIP”) is delivered primarily in the form ofdesigned to balance annual incentive focus on operating performance and support our long-range plan to drive long-term profitable growth. The LTIP includesnon-qualified stock options such(“NQSOs”) with four-year vesting, performance-based restricted stock units (“PBSs”) that our share price must increase for executives to be able to realize any value. The balanceare earned after atwo-year performance period, based on achievement against multi-year revenue and EBT goals and with a third year of our long-term incentive awards is delivered intime vesting, and time based restricted stock units (“RSUs”), which with three-year cliff vest after three years, in order to encourage retention of our team and emphasize long-term alignment with shareholder value. We employ policies prohibiting hedging and pledging of our shares by executives and directors.vesting.
At our 20142016 Annual Meeting of Stockholders, 92.8%91.8% of stockholders indicated their approval of the compensation paid to our named executive officers (“NEOs”)NEOs through the advisory vote to approve executive compensation(“say-on-pay”). We also received approval from our shareholders for the Amended and Restated Ulta Beauty 2011 Incentive
Award Plan with 96.5% voting in favor of the plan. The compensation committeeCompensation Committee believes that this vote thereby affirmsthese votes affirm stockholder support of the Company’s approach to executive compensation, and did not change the design of our executive compensation programs in 2014.compensation. The compensation committeeCompensation Committee will continue to consider the outcome of the Company’ssay-on-pay votes when making future compensation decisions for our NEOs. We continue to review and assess our compensation programs to ensure that they are aligned with our business strategies and the type and mix of short-term and long-term incentive vehicles used are appropriate to continue to align management with shareholders’ interests and to reward for high performance.
Philosophy
Our executive compensation philosophy is to provide compensation opportunities that attract, retain and motivate talented key executives. We accomplish this by:
Overview of 20142016 Compensation
Our 20142016 fiscal year compensation program generally consisted of a fixed base salary, variable cash incentive, stock option awards,options, PBSs and RSUs, with a significant portion weighted towards the variable components.RSUs. This mix of compensation is intended to ensure that total compensation reflects our overall intent to motivate executive officers to meet appropriate performance measures and to align management with shareholders’ long-term interests.
Components of Compensation
The material components of our executive compensation program and their purposes and key characteristics are summarized in the following chart:
Our NEOs have the majority of target compensation delivered in variable, performance-based elements.
As part of our continued emphasis on creating shareholder value, we utilize a single goal of performance against budget for earnings before taxes as reported to shareholdersEBT for the corporate annual incentive for all officers. This focus on a single performance objective reflects the Company’s strong linkage between shareholder value creation and management incentives. For the 20142016 fiscal year, we achieved performance above target resulting in bonuses for the officersNEOs payable at 169.3%194.57% of their target annual incentives.
We continued to use stock options, PBSs and restricted stock unitsRSUs as our primarya means of providing long-term incentives for our NEOs. PBS awards are tied to the attainment of two separatetwo-year performance goals with a third year of vesting.
26
REWARD ELEMENT FORM PURPOSE FIXED Base Salary Cash Provide a fixed level of competitive base pay to help us attract and retain strong executive talent AT RISK Annual Incentive Plan Cash Rewards NEOs for achievement of company wide EBT goal Long-Term Incentive Plan (LTIP) Stock Options (50% of award value) Performance-Based Shares (30% of award value) Restricted Stock Units (20% of award value) Rewards creation of long-term stockholder value and made grants in accordanceachievement of key operating metrics over a longer term period
The charts below show the percentage of our NEOs’ 2016 target compensation that was performance-based.
The weighting of our long-term incentives more heavily to stock options and PBSs emphasizes long-term alignment with shareholder value, as the stock options will not have any value unless our share price rises and the PBSs will not vest unless the performance goals are met.
Executive Compensation Policies and Practices
The Compensation Committee and management seek to ensure that our executive compensation and benefits program align with our normal 2014 fiscal year annual program.core compensation philosophy. We maintain the following policies and practices that drive our NEOs compensation program:
What We Do | What We Don’t Do | |||||
✓ | Pay-for-Performance: Majority of pay is performance-based and not guaranteed | X | No Excise TaxGross-Ups: The Company does not provide any excise taxgross-up payments in connection with a change in control | |||
✓ | Multiple Performance Metrics and Time Horizon: Use multiple performance metrics focusing ontop-line and bottom-line growth and multi-year vesting and measurement periods for long-term incentives | X | No Repricing or Buyouts of Stock Options: The Company’s equity plan prohibits repricing or buyouts of underwater stock options | |||
✓ | Annual Compensation Risk Review: Annually assess risk in compensation programs | X | No TaxGross-ups for Perquisites: The Company does not provide taxgross-ups to NEOs for the limited perquisites we provide | |||
✓ | Double-Trigger Change in Control Equity Vesting: Include “double-trigger” change in control provisions for equity awards | X | No Hedging, Derivatives, Pledging or Margin Accounts: NEOs are prohibited from engaging in derivatives and hedging transactions and from holding Company stock in a margin account or pledging Company stock as collateral | |||
✓ | Share Ownership Guidelines: NEOs must comply with share ownership requirements | X | No Dividends on Unearned PBSs and RSUs: No dividends or dividend equivalents are paid on PBSs or RSUs until such PBSs and RSUs become vested and earned |
What We Do | What We Don’t Do | |||||
✓ | Limited Perquisites: Provide limited perquisites | X | No Contracts: No contracts with multi-year guaranteed salary increases ornon-performance bonus arrangements | |||
✓ | Challenging Performance Objectives: Set challenging performance objectives for Annual Incentive and LTIP | |||||
✓ | Use of Independent Consultant: The Compensation Committee has retained an independent compensation consultant that performs no other consulting services for the Company and has no conflicts of interest | |||||
✓ | Peer Groups: Use appropriate peer groups when establishing compensation |
Competitive Market Data2016 Executive Compensation
In determining executive compensation levels for our NEOs, the Compensation Committee considers:
In considering NEO pay levels for fiscal year 2014,2016, the compensation committeeCompensation Committee reviewed competitive marketpay levels among a peer group of retailers with revenues similar to Ulta Beauty, compensation survey data for similarly sized retail companies from two survey sources: the Willis Towers Watson 20132015 Retail / Wholesale Executive Compensation Survey Report, and 2013compensation survey data for similarly sized general industry companies from the Willis Towers Watson 2015 CDB General Industry Executive Compensation Survey report. We rely
Compensation decisions in March 2016 were made, in part, based on these survey data to provide context regarding executivethe pay levels and practices. In setting 2014 compensation, we did not use a definedpractices of the following peer group of 17 companies: Big Lots, Inc.; Cabela’s Incorporated; Carter’s, Inc.; Dick’s Sporting Goods, Inc.; Dollar Tree, Inc.; DSW Inc.; Foot Locker, Inc.; GNC Holdings, Inc.; L Brands, Inc.; The Michaels Companies, Inc.; Michael Kors Holdings Limited; Ralph Lauren Corporation; Sally Beauty Holdings, Inc.; Signet Jewelers Limited; Tractor Supply Company; Tailored Brands, Inc. (previously known as The Men’s Wearhouse); and Under Armour, Inc. The committee conducted a review prior to March 2016 of the peer group to ensure that the companies for compensation benchmarking as we did not believecomprising the group remained appropriate from both a sufficient numbersize and industry perspective. As a result of relevant peers nor comparable companies in terms of business orientation and dynamic existed. the review, no changes were made.
The determination of 2014our NEOs compensation, other than that of the Chief Executive Officer, was made based on the recommendation of ourto the committee from the Chief Executive Officer takingOfficer. This determination takes into account such factors as total compensation philosophy, individual performance, and the desire to align annual base salaries closer to market place median compensation levels. General industry surveys were used as reference for setting the overall salary increase pool. Changes inpositioning of Ulta Beauty’s executive total compensation levels were supported by survey data.relative to market.
The compensation committeeCompensation Committee does not rely solely on market data or peer group compensation data in making its individual compensation determinations, but rather the compensation committeeCompensation Committee considers our Chief Executive Officer’s input as to an executive’s performance and internal pay equity among current executives and newly hired executives. The compensation committee also considers the accounting and tax impact of each element of compensation.
Compensation Components
Base Salary
Base salaries are reviewed annually and are set based on individual arrangements and hiring negotiation,on: competitiveness versus the external market, andtalent planning, internal merit increase budgets. Based on a review of marketplace salary increases contained inbudgets, individual and Company performance and internal equity considerations. The Compensation Committee and management discuss the surveys described above, as well as the compensation committee’s assessment of current economic and other market conditions, each year management proposes a merit baseline percentage increase in salaries. Ourwhich impact compensation decisions. After these thorough reviews, our Chief Executive Officer then recommends to the compensation committeemakes individual adjustments based on an assessment of an individual’s performance, andrecommendations with input from the human resources department regarding competitive position to the market. Ms. Dillon was not involved in the discussion of her own compensation. The NEO increases made effectiveapproved for fiscal year 20142016 were: 5%
Named Executive Officer | 2016 Base Salary ($) | Percentage Increase | ||||
Mary N. Dillon | 1,000,000 | — | ||||
Scott M. Settersten | 580,030 | 12% | ||||
Jodi J. Caro | 436,815 | 4% | ||||
Jeffrey J. Childs | 499,326 | 4% | ||||
David C. Kimbell | 580,374 | 13% |
These base salary levels are competitive with our market. The salary increases for Ms. Dillon, 12.5% for Mr.Messrs. Settersten 2% for Mr. Childs and 8% for Ms. Taake. Ms. Dillon’s, Mr. Settersten’s and Ms. Taake’s increases were reflective of CompanyKimbell reflect continued company and individual performance and were, in part, made to bring their compensation in line with the competitive market and in consideration of internal equity.market. Mr. Childs’ increase wasand Ms. Caro’s increases were reflective of a standard merit baseline percentagethe general salary increase applicable to other employees and, also reflectingreflect the competitive positioning of histheir current compensation. Mr. Kimbell’s salary was negotiated as part of his hiring in February of 2014.
Annual Incentives
The target annual incentives, shown as a percentage of their base salaries, for the NEOs were as follows:
Named Executive Officer | 2016 Annual Incentive Target | |||
Mary N. Dillon | 150 | % | ||
Scott M. Settersten | 65 | % | ||
Jodi J. Caro | 50 | % | ||
Jeffrey J. Childs | 65 | % | ||
David C. Kimbell | 65 | % |
Ms. Dillon’s annual incentive for Ms. Dillon, Messrs. Settersten, Kimbell2016 was increased from 130% to 150% to improve the competitiveness of her total compensation and Childs, and Ms. Taake was 100%, 50%, 50%, 66%, and 50% of their respective base salary.better align her compensation relative to market.
In fiscal year 2014,2016, the annual incentives awards for our NEOs were based solely on achievement of an EBT target of $384,653,000.$599 million. This was based on a rigorous goal setting process in which management and the Compensation Committee worked collaboratively to set stretch targets. No annual incentive was payable unless performance under the EBT goal exceeded 85%92% of the target and 100% of targeted incentive was payable, if the target goal was met. A maximum annual incentive opportunity of 200% of her base salary could be earned by Ms. Dillon under her employment agreement and 250%for performance of their respective individual targets could be earned by Messrs. Settersten, Kimbell and Childs and Ms. Taake.110% of the EBT target.
Based on the company’s EBT performance of $655.7 million, the annual incentives paid out at 194.57% based on an EBT performance of approximately 109% to target. The compensation committeeCompensation Committee can use negative discretion to reduce calculated awards, based on below target individualbut did not apply any discretion to the awards for 2016 performance. However, for the annual incentive earned for fiscal year 2014 no such discretion was applied.
Actual EBT for fiscal 2014 was $411,309,000 resulting in a payout of 169.3% of the NEO’s target annual incentive. Mr. Kimbell’s annual incentive for 2014 was pro-rated based on the duration of his employment during the fiscal year.
Mr. Childs and Mr. Kimbell received cash sign-on bonuses in the amount of $250,000 and $280,000 respectively, in part to offset compensation they were forfeiting by leaving their prior employer.
LTIPLong-Term Incentive Plan
During 2014,2016, we provided long-term incentivesincentive awards through annual grants of stock options, PBSs and RSUs to our executivesNEOs and certain other employees, which we refer to as our “LTIP”.employees. Under the LTIP, each eligible employee may receive an LTIP award with a value that is targeted to a percentage of base salary. The compensation committeeCompensation Committee approved awards in 20142016 at the targeted percentage of base salary for LTIP of 260%as follows:
Named Executive Officer | 2016 LTIP Target Percentages | |||
Mary N. Dillon | 385 | % | ||
Scott M. Settersten | 170 | % | ||
Jodi J. Caro | 85 | % | ||
Jeffrey J. Childs | 85 | % | ||
David C. Kimbell | 170 | % |
The Compensation Committee increased the annual long-term incentive award for Ms. Dillon as provided for in her employment agreement and 65% for Messrs. Settersten and Kimbell to further align their compensation opportunities with shareholders for long-term value creation and Childs and Ms. Taake, consistent with the prior year. provide market competitive long-term compensation awards.
Consistent with our pay for performance orientation, the compensation committeeCompensation Committee granted the annual LTIP award with 85% of the targeted value delivered in options and 15% in RSUs.following mix:
In addition, a separate RSU award pool may be funded each year if EBT performance for the year is deemed superior. If an RSU pool is funded, based on actual EBT performance for the year and approval by the compensation committee, the Chief Executive Officer may recommend RSU awards to specific individuals based on her assessment of their individual performance and contribution to the success of the Company. The Chief Executive Officer recommends these individual awards to the compensation committee for approval. For fiscal year 2014, a separate RSU award pool was created and in 2015 Mr. Kimbell received $150,000 award of RSUs from that pool due to his performance for fiscal 2014. This award, because it was
Options granted in equity, is required to be disclosed in the fiscal 2015 Summary Compensation and Grants of Plan Based Awards tables and does not appear in this year’s tables.
Option grants under the LTIP generally have the following characteristics:
RSU grantsPBSs granted under the LTIP have the following characteristics:
RSUs granted under the LTIP generally have the following characteristics:
PBS awards made in 2015 were earned based ontwo-year cumulative revenue and EBT targets as follows:
Revenue – 33% | EBT – 67% | |||||||||||||||
Percent to Target | Payout | Percent to Target | Payout | |||||||||||||
Threshold | 95 | % | 50 | % | 85 | % | 50 | % | ||||||||
Target | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Maximum | 105 | % | 200 | % | 110 | % | 200 | % |
Thetwo-year cumulative revenue and EBT targets were $8.32 billion and $1.04 billion and we achieved $8.78 billion and $1.16 billion, respectively, resulting in a maximum 200% earning of the PBS award. Although the performance period is complete, the awards have a one year time vesting remaining.
Share Ownership Guidelines
The Compensation Committee has adopted the following share ownership guidelines to strengthen the focus of our senior officers on our long-term goals and further align their interests with stockholders:
Position | Required Amount | |
CEO | 6X Base Salary | |
Other NEOs | 3X Base Salary | |
SVPs | 2X Base Salary |
Shares of common stock held in a brokerage account, or for the executives’ benefit in trust, or through a tax qualified retirement plan, or RSUs, and the gain in value (i.e.,“in-the-money value”) of vested and unvested stock options and SARs held are included in determining whether the ownership requirement has been met and sustained. Each executive has five years following appointment to meet the applicable stock ownership requirements of their position.
Clawback Provisions
The Company has a clawback provision that applies to the PBSs, and any shares issued upon settlement of the PBSs are subject to forfeiture, or repayment pursuant to the terms of any policy that the Company may implement in compliance with the requirements of applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Policy on Ulta Beauty Stock Investments
WeOur insider trading policy prohibits trading in puts, calls and other derivative securities on our stock and also prohibits the purchase of financial instruments (including prepaid variable forward contracts, equity swaps,
collars and exchange funds) or otherwise engaging in transactions that are designed to or have adopted an investment policy for all employees to guide appropriate employee activity with respect to Company stock. This policy expressly prohibits activity that could be deemedthe effect of hedging or offsetting any decrease in the market value of Companyour stock by officers, directors and employees. In addition, our insider trading policy prohibits activity that could be deemed hedging of Company stock byour executive officers, directors and employees and our 2011 Incentive Award Plan prohibits activity that could be deemed pledging ofother designated insiders from holding Company stock by all plan participants, which include all officers, directors and employees.in a margin account or pledging our stock as collateral for a loan, with certain limited exceptions.
Long-termLong-Term Incentive Granting Policy
We have adopted a general policy of making LTIP grants (options and RSUs) for new executive officers and NEOs once our trading window opens on the third business day following the date our earnings announcement is made for each fiscal quarter. The window generally remains open until two weeks before the next quarter close. The annual LTIP grant is generally made in the open window following our fourth quarter earnings announcement. This timing of option, PBS and RSU grants is thus generally consistent with when our executives and directors would be allowed to trade in our common stock under our insider trading policy. The compensation committeeCompensation Committee determined that setting the exercise price for stock options at this time was prudent in that it allowed for the market to process all reported public information prior to doing so.establishing the price. Such a practice thereby eliminates any potential manipulation regarding the timing of stock option grants. All stock option, PBS and RSU grants for executives and NEOs are approved in advance by the compensation committee.Compensation Committee.
Benefits Perquisites and Tax Gross-upsPerquisites
Executives are allowed to defer compensation under ournon-qualified deferred compensation plan with matching contributions equal to 100% of contributions made up to 3.0%3% of eligible deferred compensation, which is more fully described in the narrative to the 2014 2016Non-Qualified Deferred Compensation Table below. For all eligible employees, we offer a 401(k) plan with matching contributions equal to 100% of contributions made up to 3.0%3% of eligible salary. In addition, we offer to eligible employees group health, life, accident and disability insurance. Also,insurance to eligible employees. In 2016, the Company enhanced the long-term disability (“LTD Plan”) benefits for all NEOs and Officers by offering a supplemental LTD Plan that provides a benefit equal to 60% of salary and annual incentive. Our employees are also entitled to a discount on purchases at our stores.
Accounting and Tax Considerations
Our incentive compensation programs have been designed and administered in a manner generally intended to preserve federal income tax deductions. However, the compensation committeeCompensation Committee considers the tax and accounting consequences of utilizing various forms of compensation and retains the discretion to pay compensation that is not tax deductible or could have adverse accounting consequences for Ulta.Ulta Beauty.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of our NEOs for the fiscal year ending January 31, 2015.28, 2017:
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||||||||
Mary N. Dillon | 2014 | 971,250 | — | 1,378,881 | 2,146,477 | 1,644,326 | 54,729 | 6,195,663 | ||||||||||||||||||||||||
Chief Executive Officer and Director (Principal Executive Officer) | 2013 | 548,901 | 320,000 | 2,179,408 | 2,400,027 | 548,901 | 43,577 | 6,040,814 | ||||||||||||||||||||||||
Scott M. Settersten | 2014 | 450,006 | — | 43,953 | 248,639 | 380,930 | 13,765 | 1,137,293 | ||||||||||||||||||||||||
Chief Financial Officer | 2013 | 392,216 | 60,000 | 439,048 | 146,847 | 144,002 | — | 1,182,113 | ||||||||||||||||||||||||
(Principal Financial Officer) | 2012 | 249,444 | 150,000 | 108,780 | 59,137 | 132,600 | — | 699,961 | ||||||||||||||||||||||||
Jeffrey J. Childs | 2014 | 466,140 | 250,000 | 45,519 | 257,554 | 520,856 | 14,613 | 1,554,682 | ||||||||||||||||||||||||
Chief Human Resources Officer | 2013 | 156,434 | 202,833 | 651,552 | 252,500 | 73,980 | — | 1,337,299 | ||||||||||||||||||||||||
David Kimbell (4) | 2014 | 457,000 | 280,000 | 550,464 | 635,050 | 385,788 | 8,491 | 2,316,793 | ||||||||||||||||||||||||
Chief Merchandising and | ||||||||||||||||||||||||||||||||
Janet Taake (5) | 2014 | 493,692 | — | 48,162 | 272,787 | 417,910 | 738 | 1,233,289 | ||||||||||||||||||||||||
Chief Merchandising Officer | 2013 | 452,851 | 65,000 | 501,672 | 167,799 | 164,564 | — | 1,351,886 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||||||||
Mary N. Dillon | 2016 | 1,000,000 | — | 1,925,270 | 1,925,012 | 2,918,550 | 73,189 | 7,842,021 | ||||||||||||||||||||||||
Chief Executive Officer and Director (Principal Executive Officer) | 2015 | 1,000,000 | 158,000 | 1,550,102 | 13,940,025 | 1,865,215 | 49,646 | 18,562,988 | ||||||||||||||||||||||||
| 2014
|
|
| 971,250
|
|
| —
|
|
| 1,378,881
|
|
| 2,146,477
|
|
| 1,644,326
|
|
| 54,729
|
|
| 6,195,663
|
| |||||||||
Scott M. Settersten | 2016 | 580,030 | — | 493,207 | 493,077 | 733,567 | 29,203 | 2,329,084 | ||||||||||||||||||||||||
Chief Financial Officer (Principal Financial Officer) | 2015 | 518,956 | 38,000 | 162,540 | 162,540 | 449,363 | 15,826 | 1,347,225 | ||||||||||||||||||||||||
| 2014
|
|
| 450,006
|
|
| —
|
|
| 43,953
|
|
| 248,639
|
|
| 380,930
|
|
| 13,765
|
|
| 1,137,293
|
| |||||||||
Jodi J. Caro (4) | 2016 | 436,815 | — | 185,816 | 185,659 | 424,955 | 20,445 | 1,253,690 | ||||||||||||||||||||||||
General Counsel and Corporate Secretary | 2015 | 208,831 | 14,000 | 50,077 | 150,035 | 161,391 | 212 | 585,546 | ||||||||||||||||||||||||
Jeffrey J. Childs | 2016 | 499,326 | — | 212,470 | 212,249 | 631,500 | 31,021 | 1,586,566 | ||||||||||||||||||||||||
Chief Human Resources Officer | 2015 | 480,124 | 42,000 | 156,190 | 156,060 | 486,928 | 22,282 | 1,343,584 | ||||||||||||||||||||||||
2014 | 466,140 | 250,000 | 45,519 | 257,554 | 520,856 | 14,613 | 1,554,682 | |||||||||||||||||||||||||
David C. Kimbell | 2016 | 580,374 | — | 493,590 | 493,339 | 734,002 | 29,202 | 2,330,507 | ||||||||||||||||||||||||
Chief Merchandising and Marketing Officer | 2015 | 514,987 | 38,000 | 313,741 | 163,395 | 446,562 | 22,289 | 1,498,974 | ||||||||||||||||||||||||
2014 | 457,000 | 280,000 | 550,464 | 635,050 | 385,788 | 8,491 | 2,316,793 |
(1) | The grant date fair value of the |
(2) | Amounts shown represent the grant date fair value of options granted in the year indicated as computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation reflected in these columns, see Note 10 to the Financial Statements for fiscal |
(3) | All other compensation includes |
Name | 401(k) Match | Deferred Compensation Match | Club Memberships | Car Service | Life Insurance Premiums | |||||||||||||||
Mary N. Dillon | — | 28,764 | 7,047 | 17,910 | 1,008 | |||||||||||||||
Scott M. Settersten | — | 13,096 | — | — | 669 | |||||||||||||||
Jeffrey J. Childs | — | 13,910 | — | — | 703 | |||||||||||||||
David Kimbell | 7,800 | — | — | — | 691 | |||||||||||||||
Janet Taake | — | — | — | — | 738 |
Name | 401(k) Match ($) | Deferred Compensation Match ($) | Life Insurance/Supplemental LTD Premiums ($) | |||||||||
Mary N. Dillon | 3,189 | 30,000 | 32,848 | |||||||||
Scott M. Settersten | — | 17,158 | 12,045 | |||||||||
Jodi J. Caro | 3,189 | 12,969 | 4,287 | |||||||||
Jeffrey J. Childs | 3,189 | 14,824 | 13,008 | |||||||||
David C. Kimbell | 3,189 | 17,190 | 8,823 |
GRANTS OFOF PLAN-BASED AWARDS
The following table sets forth certain information with respect to grants of plan-based awards for fiscal 20142016 to the NEOs.
Name | Grant Date | Board or Compensation Committee Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Number of Shares of Stock | Number of Securities Underlying Options | Exercise or Base Price of Option Awards $ | Grant Date Fair Value of Stock and Option Awards $ (2) | |||||||||||||||||||||||||||||
Threshold $ (1) | Target $ | Maximum $ | ||||||||||||||||||||||||||||||||||
Mary N. Dillon | 485,625 | 971,250 | 1,942,500 | |||||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | — | 66,931 | 97.89 | 2,146,477 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | 3,870 | — | — | 378,834 | |||||||||||||||||||||||||||||||
7/1/2014 | 6/20/2013 | 10,706 | — | — | 1,000,047 | |||||||||||||||||||||||||||||||
Scott M. Settersten | 112,502 | 225,003 | 562,508 | |||||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | — | 7,753 | 97.89 | 248,639 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | 449 | — | — | 43,953 | |||||||||||||||||||||||||||||||
Jeffrey J. Childs | 153,826 | 307,652 | 769,130 | |||||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | — | 8,031 | 97.89 | 257,554 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | 465 | — | — | 45,519 | |||||||||||||||||||||||||||||||
David Kimbell | 113,936 | 227,872 | 569,680 | |||||||||||||||||||||||||||||||||
3/18/2014 | 12/18/2013 | — | 11,241 | 98.64 | 382,531 | |||||||||||||||||||||||||||||||
3/18/2014 | 12/18/2013 | 5,128 | — | — | 505,826 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | — | 7,874 | 97.89 | 252,519 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | 456 | — | — | 44,638 | |||||||||||||||||||||||||||||||
Janet Taake | 123,423 | 246,846 | 617,115 | |||||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | — | 8,506 | 97.89 | 272,787 | |||||||||||||||||||||||||||||||
3/28/2014 | 3/26/2014 | 492 | — | — | 48,162 |
Board of Directors Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | Number of Shares of Stock (#) | Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($) (6) | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) (1) | Target ($) | Maximum ($) (2) | Threshold (#) (4) | Target (#) | Maximum (#) (5) | |||||||||||||||||||||||||||||||||||||||||||
Mary N. Dillon |
| 750,000 | 1,500,000 | 3,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 3,012 | 6,024 | 12,048 | 1,155,162 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | — | 36,632 | 191.76 | 1,925,012 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 4,016 | — | — | 770,108 | |||||||||||||||||||||||||||||||||||||||||||||
Scott M. Settersten |
| 188,510 | 377,020 | 754,040 | ||||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 772 | 1,543 | 3,086 | 295,886 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | — | 9,383 | 191.76 | 493,077 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 1,029 | — | — | 197,321 | |||||||||||||||||||||||||||||||||||||||||||||
Jodi J. Caro |
| 109,204 | 218,408 | 436,816 | ||||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 291 | 581 | 1,162 | 111,413 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | — | 3,533 | 191.76 | 185,659 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 388 | — | — | 74,403 | |||||||||||||||||||||||||||||||||||||||||||||
Jeffrey J. Childs |
| 162,281 | 324,562 | 649,124 | ||||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 333 | 665 | 1,330 | 127,520 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | — | 4,039 | 191.76 | 212,249 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 443 | — | — | 84,950 | |||||||||||||||||||||||||||||||||||||||||||||
David C. Kimbell |
| 188,622 | 377,243 | 754,486 | ||||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 772 | 1,544 | 3,088 | 296,077 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | — | 9,388 | 191.76 | 493,339 | |||||||||||||||||||||||||||||||||||||||||||||
3/25/2016 | 3/25/2016 | 1,030 | — | — | 197,513 |
(1) | Threshold assumes performance exceeds |
(2) | Maximum assumes performance exceeds 110% of the EBT performance target, resulting in a payout of 200% of the EBT target bonus. |
(3) | Amounts represent the PBSs granted in which 33% of the grant value is tied to attainment of a revenue target and 67% of the grant value is tied to attainment of an EBT target. |
(4) | Threshold assumes performance exceeds 95% of the revenue performance target and 85% of the EBT performance target, resulting in a payout of 50% of the target performance-based units. |
(5) | Maximum assumes performance exceeds 105% of the revenue performance target and 110% of the EBT performance target, resulting in a payout of 200% of the target performance-based units. |
(6) | Represents the grant date fair value of stock and stock options granted as computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation reflected in these columns, see Note 10 to the Financial Statements for fiscal |
OUTSTANDING EEQUITYQUITY AAWARDSWARDSASOF JANUARY 31, 201528, 2017
The following table presents information concerning restricted stockNQSOs, PBSs and options to purchase shares of our common stockRSUs held by the NEOs as of January 31, 2015.28, 2017.
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price Per Share ($) | Option Expiration Date | Number of Shares of Stock that have not Vested | Market Value of Shares that have not Vested ($) | ||||||||||||||||||
Mary N. Dillon (1) | 24,280 | 3,203,503 | ||||||||||||||||||||||
11,172 | 38,518 | 99.01 | 7/1/2023 | |||||||||||||||||||||
— | 66,931 | 97.89 | 3/28/2024 | |||||||||||||||||||||
Scott M. Settersten (2) | 6,941 | 915,796 | ||||||||||||||||||||||
750 | — | 14.41 | 9/9/2019 | |||||||||||||||||||||
12,500 | — | 24.53 | 6/14/2020 | |||||||||||||||||||||
3,750 | 1,250 | 69.96 | 9/13/2021 | |||||||||||||||||||||
674 | 674 | 86.06 | 5/10/2022 | |||||||||||||||||||||
1,426 | 4,279 | 74.91 | 3/19/2023 | |||||||||||||||||||||
— | 7,753 | 97.89 | 3/28/2024 | |||||||||||||||||||||
Jeffrey J. Childs (3) | 3,075 | 405,716 | ||||||||||||||||||||||
1,664 | 4,993 | 121.74 | 10/1/2023 | |||||||||||||||||||||
— | 8,031 | 97.89 | 3/28/2024 | |||||||||||||||||||||
David Kimbell (4) | 3,511 | 463,241 | ||||||||||||||||||||||
— | 11,241 | 98.64 | 3/18/2024 | |||||||||||||||||||||
— | 7,874 | 97.89 | 3/28/2024 | |||||||||||||||||||||
Janet Taake (5) | 7,915 | 1,044,305 | ||||||||||||||||||||||
10,000 | — | 26.71 | 9/8/2020 | |||||||||||||||||||||
5,000 | 2,500 | 69.96 | 9/13/2021 | |||||||||||||||||||||
2,318 | �� | 2,318 | 86.06 | 5/10/2022 | ||||||||||||||||||||
1,629 | 4,890 | 74.91 | 3/19/2023 | |||||||||||||||||||||
— | 8,506 | 97.89 | 3/28/2024 |
Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price Per Share ($) | Option Expiration Date | Equity Incentive Plan Awards: Number of Shares of Performance- based Stock that have not Vested (1)(#) | Equity Incentive Plan Awards: Market Value of Performance- based Stock that have not Vested ($) | Number of Shares of Stock that have not Vested (#) | Market Value of Shares that have not Vested ($) | |||||||||||||||||||||||||
Mary N. Dillon (2) | 12,048 | 3,270,309 | 40,626 | 11,027,521 | ||||||||||||||||||||||||||||
— | 21,173 | 99.01 | 7/1/2023 | |||||||||||||||||||||||||||||
— | 33,466 | 97.89 | 3/28/2024 | |||||||||||||||||||||||||||||
8,611 | 25,834 | 151.20 | 3/27/2025 | |||||||||||||||||||||||||||||
— | 200,000 | 164.06 | 9/15/2025 | |||||||||||||||||||||||||||||
— | 36,632 | 191.76 | 3/25/2026 | |||||||||||||||||||||||||||||
Scott M. Settersten (3) | 3,086 | 837,664 | 3,198 | 868,065 | ||||||||||||||||||||||||||||
2,760 | — | 24.53 | 6/14/2020 | |||||||||||||||||||||||||||||
5,000 | — | 69.96 | 9/13/2021 | |||||||||||||||||||||||||||||
1,348 | — | 86.06 | 5/10/2022 | |||||||||||||||||||||||||||||
4,278 | 1,427 | 74.91 | 3/19/2023 | |||||||||||||||||||||||||||||
3,876 | 3,877 | 97.89 | 3/28/2024 | |||||||||||||||||||||||||||||
903 | 2,709 | 151.20 | 3/27/2025 | |||||||||||||||||||||||||||||
— | 9,383 | 191.76 | 3/25/2026 | |||||||||||||||||||||||||||||
Jodi J. Caro (4) | 1,162 | 315,413 | 691 | 187,565 | ||||||||||||||||||||||||||||
837 | 2,512 | 165.27 | 8/3/2025 | |||||||||||||||||||||||||||||
— | 3,533 | 191.76 | 3/25/2026 | |||||||||||||||||||||||||||||
Jeffrey J. Childs (5) | 1,330 | 361,015 | 2,561 | 695,158 | ||||||||||||||||||||||||||||
4,992 | 1,665 | 121.74 | 10/1/2023 | |||||||||||||||||||||||||||||
4,015 | 4,016 | 97.89 | 3/28/2024 | |||||||||||||||||||||||||||||
867 | 2,601 | 151.20 | 3/27/2025 | |||||||||||||||||||||||||||||
— | 4,039 | 191.76 | 3/25/2026 | |||||||||||||||||||||||||||||
David C. Kimbell (6) | 3,088 | 838,207 | 4,647 | 1,261,382 | ||||||||||||||||||||||||||||
5,620 | 5,621 | 98.64 | 3/18/2024 | |||||||||||||||||||||||||||||
3,937 | 3,937 | 97.89 | 3/28/2024 | |||||||||||||||||||||||||||||
907 | 2,724 | 151.20 | 3/27/2025 | |||||||||||||||||||||||||||||
— | 9,388 | 191.76 | 3/25/2026 |
(1) |
(2) |
Name | Type of | Expiration date | 3/15/17 | 3/16/17 | 7/1/17 | 3/15/18 | 3/16/18 | 7/1/18 | 9/15/18 | 3/15/19 | 9/15/19 | 3/15/20 | 9/15/20 | 9/15/21 | ||||||||||||||||||||||||||||||||||||||
Mary N. Dillon (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
NQ | 7/1/2023 | 6,173 | 15,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
NQ | 3/28/2024 | 16,733 | 16,733 | |||||||||||||||||||||||||||||||||||||||||||||||||
NQ | 3/27/2025 | 8,611 | 8,611 | 8,612 | ||||||||||||||||||||||||||||||||||||||||||||||||
NQ | 9/15/2025 | 50,000 | 50,000 | 50,000 | 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||
NQ | 3/25/2026 | 9,158 | 9,158 | 9,158 | 9,158 | |||||||||||||||||||||||||||||||||||||||||||||||
PBS | 12,302 | 12,048 | ||||||||||||||||||||||||||||||||||||||||||||||||||
RSU | 3,870 | 10,706 | 4,101 | 5,631 | 4,016 |
(3) | The vesting schedule for Mr. |
Name | Type of Award | Expiration date | 3/15/17 | 3/16/17 | 3/19/17 | 3/15/18 | 3/16/18 | 3/15/19 | 3/15/20 | |||||||||||||||||||||||||||
Scott M. Settersten (3) | ||||||||||||||||||||||||||||||||||||
NQ | 3/19/2023 | 1,427 | ||||||||||||||||||||||||||||||||||
NQ | 3/28/2024 | 1,938 | 1,939 | |||||||||||||||||||||||||||||||||
NQ | 3/27/2025 | 903 | 903 | 903 | ||||||||||||||||||||||||||||||||
NQ | 3/25/2026 | 2,345 | 2,346 | 2,346 | 2,346 | |||||||||||||||||||||||||||||||
PBS | 1,290 | 3,086 | ||||||||||||||||||||||||||||||||||
RSU | 449 | 430 | 1,029 |
(4) |
Name | Type of Award | Expiration date | 3/15/17 | 8/3/17 | 3/15/18 | 8/3/18 | 3/15/19 | 8/3/19 | 3/15/20 | |||||||||||||||||||||||||||
Jodi J. Caro (4) | ||||||||||||||||||||||||||||||||||||
NQ | 8/3/2025 | 837 | 837 | 838 | ||||||||||||||||||||||||||||||||
NQ | 3/25/2026 | 883 | 883 | 883 | 884 | |||||||||||||||||||||||||||||||
PBS | 1,162 | |||||||||||||||||||||||||||||||||||
RSU | 303 | 388 |
(5) |
Name | Type of Award | Expiration date | 3/15/17 | 3/16/17 | 3/19/17 | 3/15/18 | 3/16/18 | 3/15/19 | 3/15/20 | |||||||||||||||||||||||||||
Jeffrey J. Childs (5) | ||||||||||||||||||||||||||||||||||||
NQ | 10/1/2023 | 1,665 | ||||||||||||||||||||||||||||||||||
NQ | 3/28/2024 | 2,008 | 2,008 | |||||||||||||||||||||||||||||||||
NQ | 3/27/2025 | 867 | 867 | 867 | ||||||||||||||||||||||||||||||||
NQ | 3/25/2026 | 1,009 | 1,010 | 1,010 | 1,010 | |||||||||||||||||||||||||||||||
PBS | 1,240 | 1,330 | ||||||||||||||||||||||||||||||||||
RSU | 465 | 413 | 443 |
(6) | The vesting schedule for Mr. Kimbell’s outstanding options, PBSs and |
Name | Type of Award | Expiration date | 3/15/17 | 3/16/17 | 3/18/17 | 3/15/18 | 3/16/18 | 3/18/18 | 3/15/19 | 3/15/20 | ||||||||||||||||||||||||||||||
David C. Kimbell (6) | ||||||||||||||||||||||||||||||||||||||||
NQ | 3/18/2024 | 2,810 | 2,811 | |||||||||||||||||||||||||||||||||||||
NQ | 3/28/2024 | 1,968 | 1,969 | |||||||||||||||||||||||||||||||||||||
NQ | 3/27/2025 | 908 | 908 | 908 | ||||||||||||||||||||||||||||||||||||
NQ | 3/25/2026 | 2,347 | 2,347 | 2,347 | 2,347 | |||||||||||||||||||||||||||||||||||
PBS | 1,298 | 3,088 | ||||||||||||||||||||||||||||||||||||||
RSU | 248 | 456 | 685 | 681 | 1,279 |
OPTION EXERCISESAND STOCK VESTED
The following table presents information concerning exercises of stock options and vesting of restricted stock held by the NEOs as ofRSUs during fiscal year ending January 31, 2015.28, 2017.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) (2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||||||||||||||
Mary N. Dillon | — | — | 12,308 | 1,207,785 | 61,982 | 9,158,432 | 4,073 | 992,753 | ||||||||||||||||||||||||
Scott M. Settersten | — | — | 374 | 37,714 | 10,490 | 2,320,006 | 6,119 | 1,172,390 | ||||||||||||||||||||||||
Jodi J. Caro | — | — | — | — | ||||||||||||||||||||||||||||
Jeffrey J. Childs | — | — | 2,742 | 271,403 | — | — | 367 | 70,240 | ||||||||||||||||||||||||
David Kimbell | — | — | 2,073 | 205,186 | ||||||||||||||||||||||||||||
Janet Taake | 10,000 | 870,200 | 468 | 47,193 | ||||||||||||||||||||||||||||
David C. Kimbell | — | — | 248 | 46,592 |
(1) | The value realized on exercise and sale or exercise and hold of options is based on the closing sales price of our common stock on the transaction date |
(2) | The value realized on vesting of stock awards is based on the closing sales price of our common stock on the vesting date as reported on the NASDAQ Global Select Market. The value realized was determined without considering any taxes that may have been owed or withheld. |
20142016 NON--QQUALIFIEDUALIFIED DEFERRED COMPENSATION
The Ulta NonqualifiedBeautyNon-qualified Deferred Compensation Plan allows participants to defer up to 75% of their base salary and 100% of their annual cash bonus. We match 100% of the contributions on the firstup to 3% of salary on deferrals.deferred. We do not match or make any other contributions to the plan with regards to bonus or long-term compensation. Participants may direct the investment of their contributions to the plan among several mutual funds, similar to those available under our 401(k) plan.
The table below sets forth certain information as of January 31, 201528, 2017 with respect to thenon-qualified deferred compensation plans in which our NEOs may participate.
Name | Executive Contributions in Last Fiscal Year ($) (1)(2) | Registrant Contributions in Last Fiscal Year | Aggregate Earnings (Losses) in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | Executive Contributions in Last Fiscal Year ($) (1)(2) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | ||||||||||||||||||||||||||||||
Mary N. Dillon (3) | 405,790 | 28,764 | 810 | — | 438,832 | 783,484 | 30,000 | 112,227 | — | 1,841,752 | ||||||||||||||||||||||||||||||
Scott M. Settersten (4) | 56,954 | 13,096 | 20,072 | — | 184,284 | 30,944 | 17,158 | 33,341 | — | 280,002 | ||||||||||||||||||||||||||||||
Jodi J. Caro | 40,716 | 12,969 | 1,161 | — | 54,846 | |||||||||||||||||||||||||||||||||||
Jeffrey J. Childs (5) | 27,859 | 13,910 | 193 | — | 42,980 | 14,869 | 14,824 | 12,519 | — | 98,580 | ||||||||||||||||||||||||||||||
David Kimbell | 2,109 | — | (43 | ) | — | 2,066 | ||||||||||||||||||||||||||||||||||
Janet Taake | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
David C. Kimbell (6) | 109,247 | 17,190 | 14,676 | — | 232,105 |
(1) | Included in the amount listed under the “Salary”, “Bonus” and |
(2) | Contributions include salary and bonus deferrals, including bonuses earned in fiscal |
(3) | $ |
(4) | $ |
(5) | $ |
(6) | $90,992 was previously reported as compensation to Mr. Kimbell in the Summary Compensation Table for prior years. |
Severance and Change in Control Benefits
Pursuant to the terms of Ms. Dillon’s written offer of employment, in the event that her employment is terminated without Cause (as defined below), she will be entitled to the following as severance subject to her providing a general release of claims:
For this purpose “Cause” shall mean Ms. Dillon’s:
Any act or failure to act shall be considered “willful” only if done or omitted to be done without a good faith, reasonable belief that such act or failure to act was in our best interests.interest. Ms. Dillon will have ten business days to cure any curable act after written notice from the Company of cause. Ms. Dillon’s employment may be terminated for cause retroactively, if such reasons are later discovered after her termination.
In connection with her written offer of employment, Ms. Dillon entered into an agreement not to disclose or use our confidential information at any time. She also agreed not to work for, or otherwise be involved with, any competitor for a period of 18 months following her termination for any reason.
In March 2013, Mr.Although Messrs. Settersten, Childs and Kimbell and Ms. Taake each entered into a retention and severance agreement which provides for a grant of restricted stock units with a value equal to his or her base salary, which cliff vest on March 12, 2016, provided that he or she remains employed with the Company on such date (the “Retention Grant”); and if his or her employment is terminated without cause or he or she terminates for good reason prior to the earlier of March 12, 2015 or the 18 month anniversary of July 1, 2013 (the start date of the Company’s Chief Executive Officer), he or she is entitled to severance equal to 18 months base salary, full vesting of his or her Retention Grant, and 18 months of continued health benefits. These retention and severance agreements replaced all other severance arrangements.
Although Messrs. Kimbell and ChildsCaro do not have a contractual rights to severance, we would likely pay each at least six months’ severance and continued health benefits in connection with a termination without cause in exchange for a general release of claims. In addition, if eitherany of them were terminated without cause within 12 months following a change in control, all of their outstanding options willand RSUs would vest and become exercisable regardless of when granted. Upon a change in control, the PBSs would vest either at the target or the number of PBSs that would have been earned based on actual performance through the date of the change in control.
Ms. Taake has indicated that she will retire effective May 1, 2015. Upon her retirement she will no longer be entitled to any severance.
The following chart sets forth the amounts that Ms. Dillon, Messrs. Settersten, Childs and Kimbell and Ms. Caro would receive in the event of a change of control or that their employment werewas terminated without cause, for good reason, or due to death or disability, or in connection with a change in control, on the last day of the 20142016 fiscal year, January 31, 2015, and assuming the exercise of all options and RSUs, the vesting of which is accelerated upon such event.28, 2017. These amounts do not include any value for amounts payable under retirement plans or insurance policies applicable to employees in general.
Name | Involuntary Not for Cause Termination / Good Reason ($) (1) | Death / Disability ($) (2) | Involuntary Termination in Connection with Change in Control ($) (3) | Change in Control ($) (1) | Involuntary Not for Cause Termination / Good Reason ($) (2) | Death / Disability ($) (3) | Involuntary Termination in Connection with Change in Control ($) (4) | |||||||||||||||||||||
Mary N. Dillon | 3,127,919 | 7,118,795 | 10,246,714 | 1,635,155 | 4,448,214 | 50,658,066 | 53,471,125 | |||||||||||||||||||||
Scott M. Settersten | 1,396,179 | 3,307,660 | 3,999,280 | 418,832 | 299,777 | 6,874,342 | 6,755,287 | |||||||||||||||||||||
Jodi J. Caro | 157,707 | 218,408 | 982,344 | 1,043,045 | ||||||||||||||||||||||||
Jeffrey J. Childs | 239,223 | 747,072 | 986,295 | 180,508 | 256,491 | 4,004,819 | 4,080,802 | |||||||||||||||||||||
David Kimbell | 237,354 | 1,105,676 | 1,343,030 | |||||||||||||||||||||||||
David C. Kimbell | 419,103 | 300,021 | 6,174,090 | 6,055,008 |
(1) | Includes the market value of all unvested PBSs, for which the performance period has not ended, at target value. |
(2) | Includes amounts related to severance, health care costs, andpro-rated bonus payouts (as applicable) |
(3) | Includes the market value of all exercisable and unexercisable options, all unvested PBSs at target value unless the |
Includes amounts related to severance, health care costs,pro-rated bonus payouts (as applicable), the market value of all exercisable and unexercisable options and all unvested |
ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
The Board of Directors is committed to excellence in governance. As part of that commitment, Ulta Beauty is asking stockholders to vote on a resolution to approve the compensation of our named executive officersNEOs as disclosed in this Proxy Statement. This advisory resolution, commonly referred to as a “say-on-pay”“say-on-pay” resolution, isnon-binding on the Company and the Board of Directors. However, the Board and the compensation committee value the opinions of the stockholders and will carefully consider the outcome of the vote when making future compensation decisions. In accordance with the results of thenon-binding advisory vote at our 2011 Annual Meeting of Stockholders concerning the frequency of an advisory vote on the compensation paid to our named executive officers,NEOs, thisnon-binding advisory vote will be held on an annual basis unless the stockholders select a different frequency of the advisory vote on the compensation of our NEOs at the Annual Meeting or until the Board elects to implement a different frequency, or until the next required non-binding advisory vote on frequency. Following this year’s non-binding advisory vote, the next scheduled advisory vote will take place at the 2016 Annual Meeting of Stockholders.
As described more fully in the Compensation Discussion and Analysis (“CD&A”) section of this Proxy Statement, our executive compensation program is structured to provide compensation opportunities that: (i) reflect the competitive marketplace in which the Company operates; (ii) link annual incentive compensation to Company performance goals that support stockholder value; (iii) focus a significant portion of an executive’s compensation on equity-based incentives to align interests closely with stockholders; and (iv) attract, motivate and retain key executives who are critical to our long-term success. A significant portion of the Company’s executive compensation is performance-based, and we emphasize such incentives to ensure that total compensation reflects our overall success or failure and to motivate executive officers to meet appropriate performance measures.
We believe that the fiscal 20142016 compensation of our named executive officersNEOs was appropriate and aligned with the Company’s performance. We urge stockholders to read the CD&A section of this Proxy Statement, as well as the Summary Compensation Table and the related tables and disclosures, for a more complete understanding of how our executive compensation policies and procedures operate.
The Company is asking stockholders to approve the following advisory resolution at the 2015 Annual Meeting:
RESOLVED, that the stockholders of Ulta Salon, Cosmetics & Fragrance,Beauty, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officersNEOs as disclosed in this Proxy Statement pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion thereto.
Because the vote is advisory, it will not be binding upon the Board or the compensation committee. However, the compensation committee will consider the outcome of the vote in determining future compensation policies and decisions.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to approve the advisory resolution on executive compensation. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Brokernon-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether this matterproposal has been ratified.approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL THREE
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
In addition to providing stockholders with the opportunity to cast an advisory “say on pay” vote on executive compensation, Ulta Beauty is also asking stockholders to vote on whether future advisory votes on the Company’s executive compensation should be held every one, two or three years.
The Board recommends that stockholders select a frequency of every year, because it believes that an annual vote will promote best governance practices and facilitate our compensation committee’s and our management’s consideration of the views of our stockholders in structuring our compensation programs for our NEOs. We believe than an annual vote will provide our compensation committee and our management with more direct input on, and reactions to, our current compensation practices, and better allow our compensation committee and our management to measure how they respond to the prior year’s vote.
When voting on this advisory vote, stockholders should understand that they are not voting “for” or “against” the Board’s recommendation to hold the advisory vote every year. Rather, stockholders have the option to recommend that such advisory vote on the Company’s executive compensation be held every one, two or three years, or to abstain entirely from voting on the proposal. Please mark on the enclosed proxy your preference as to how frequently stockholders will vote on future stockholder advisory votes on the Company’s executive compensation, as either every year, every two years or every three years, or you may abstain from voting.
We will consider the frequency indicated by the highest number of votes of those shares present in person or represented by proxy and entitled to vote at the Annual Meeting as the preference of our stockholders on the frequency on which we should seek an advisory vote on the compensation of our named executive officers. Abstentions and brokernon-votes will be counted towards a quorum, but will not be counted for any other purpose with respect to this matter.
This advisory vote isnon-binding on the Company and the Board. While the Board and the compensation committee value the opinions of the stockholders and will consider the outcome of the vote when determining the frequency of future say on pay votes, the Board may decide that it is in the best interest of the Company and the stockholders to hold an advisory vote on executive compensation more or less frequently than the option preferred by the stockholders.
We intend to hold our next advisory vote on the frequency of future stockholder advisory votes on the Company’s executive compensation at our annual meeting in 2023.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF “EVERY YEAR” WITH RESPECT TO PROPOSAL FOUR
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information concerning the beneficial ownership of the shares of our common stock as of April 6, 2015 by3, 2017 by:
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned by them, subject to community property laws where applicable. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of April 6, 20153, 2017 are deemed to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
The following table lists applicable percentage ownership based on 64,230,31662,137,799 shares of common stock outstanding as of March 26, 2015, as reported in our Annual Report on Form 10-K filed with the SEC on April 1, 2015.3, 2017. Unless otherwise indicated, the address for each of the beneficial owners in the table below is c/o Ulta Salon, Cosmetics & Fragrance,Beauty, Inc., 1000 Remington Blvd., Suite 120, Bolingbrook, IL 60440.
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
5% stockholders: | ||||||||
Lone Pine Capital LLC (1) Two Greenwich Plaza Greenwich, Connecticut 06830 | 3,344,991 | 5.2 | % | |||||
The Vanguard Group (2) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 3,623,630 | 5.6 | % |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
NEOs, Directors and nominees: | ||||||||
Mary N. Dillon (3) | 44,540 | * | ||||||
Scott M. Settersten (4) | 23,887 | * | ||||||
Jeffrey J. Childs (5) | 11,446 | * | ||||||
David Kimbell (6) | 7,817 | * | ||||||
Janet Taake (7) | 14,674 | * | ||||||
Michelle L. Collins | 626 | * | ||||||
Robert F. DiRomualdo | 446,113 | * | ||||||
Dennis K. Eck | 496,297 | * | ||||||
Catherine Halligan | 3,088 | * | ||||||
Charles Heilbronn (8) | 3,085,058 | 4.8 | % | |||||
Michael R. MacDonald | 2,583 | * | ||||||
Lorna E. Nagler (9) | 49,529 | * | ||||||
Charles J. Philippin (10) | 138,695 | * | ||||||
Vanessa A. Wittman | 1,157 | * | ||||||
All current Directors and executive officers as a group | 4,328,429 | 6.7 | % |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
5% stockholders: | ||||||||
The Vanguard Group (1) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 5,400,593 | 8.7 | % | |||||
Capital World Investors (2) 333 South Hope Street Los Angeles, California 90071 | 4,905,700 | 7.9 | % | |||||
BlackRock Inc. (3) 55 East 52nd Street New York, New York 10055 | 4,004,209 | 6.4 | % | |||||
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage Beneficially Owned | ||||||
NEOs, directors and nominees: | ||||||||
Mary N. Dillon (4) | 40,593 | * | ||||||
Scott M. Settersten (5) | 19,153 | * | ||||||
Jodi J. Caro (6) | 1,720 | * | ||||||
Jeffrey J. Childs (7) | 22,107 | * | ||||||
David C. Kimbell (8) | 8,331 | * | ||||||
Michelle L. Collins | 1,859 | * | ||||||
Robert F. DiRomualdo (9) | 344,846 | * | ||||||
Dennis K. Eck | 472,029 | * |
Name of Beneficial Owner NEOs, directors and nominees: Catherine A. Halligan Charles Heilbronn (10) Michael R. MacDonald George R. Mrkonic Lorna E. Nagler (11) Charles J. Philippin (12) Vanessa A. Wittman All current directors and executive officers as a group (15 persons) Number of Shares
Beneficially Owned Percentage
Beneficially Owned 3,921 * 2,161,291 3.5 % 3,816 * 3,011 * 38,261 * 139,928 * 2,390 * 3,263,256 5.2 %
* | Less than 1% |
(1) |
Based solely on the Schedule 13G/A filed by The Vanguard Group on February |
(2) | Based solely on the Schedule 13G filed by Capital World Investors, a division of Capital Research and Management Company, on February 13, 2017. This holder reports sole voting and dispositive power with respect to all of these shares. |
(3) |
(4) | Includes options to purchase |
(5) | Includes options to purchase |
(6) | Includes options to purchase 837 shares of common stock exercisable at $165.27 per share and options to purchase |
(7) | Includes options to purchase 6,657 shares of common stock exercisable at $121.74 per share, options to purchase 6,023 shares of common stock exercisable at $97.89 per share, options to purchase 1,734 shares of common stock exercisable at $151.20 and options to purchase 1,009 shares of common stock exercisable at $191.76. |
(8) | Includes options to purchase 1,815 shares of common stock exercisable at $151.20 and options to purchase 2,347 shares of common stock exercisable at $191.76. |
(9) | Mr. |
(10) | Mr. Heilbronn holds 58,928 shares directly and is deemed to beneficially own all 2,102,363 shares of common stock held by Mousseluxe SARL. Mr. Heilbronn has sole voting power and sole investment power with respect to the |
Includes |
Includes options to purchase 50,000 shares of common stock exercisable at $13.44 per share. |
Total percentage equals the quotient of total holdings over the sum of shares outstanding and the options referenced in the footnotes above. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our Directorsdirectors and executive officers and persons who own more than 10% of a registered class of our equity securities to file reports of beneficial ownership and changes in beneficial ownership with the SEC. To our knowledge, based solely on a review of the copies of such forms furnished to us and written representations that no other forms were required during the fiscal year ended January 31, 2015, all Section 16(a) filing requirements applicable to28, 2017, our Directors,directors, executive officers and greater than 10% beneficial owners were complied with.with all applicable Section 16(a) filing requirements, except for one transaction for Mr. Childs which was filed two days late.
ARTICLE VI. CERTAIN RELATIONSHIPS AND TRANSACTIONS
Related Party Transaction Approval Policy
Our Board of Directors has adopted written policies and procedures for the approval or ratification of any “related party transaction,” defined as any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000 and one of our executive officers, Directors, Directordirectors, director nominees, 5% stockholders (or their immediate family members) or any entity with which any of the foregoing persons is an employee, general partner, principal or 5% stockholder, each of whom we refer to as a “related person,” has a direct or indirect interest as set forth in Item 404 of RegulationS-K. The policy provides that management must present to the audit committee for review and approval each proposed related party transaction (other than related party transactions involving compensation matters, certain ordinary course transactions, transactions involving competitive bids or rates fixed by law, and transactions involving services as a bank depository, transfer agent or similar services). The audit committee must review the relevant facts and circumstances of the transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related party’s interest in the transaction, take into account the conflicts of interest and corporate opportunity provisions of our Code of Business Conduct, and either approve or disapprove the related party transaction. If advance approval of a related party transaction requiring the audit committee’s approval is not feasible, the transaction may be preliminarily entered into by management upon prior approval of the transaction by the Chairperson of the audit committee subject to ratification of the transaction by the audit committee at its next regularly scheduled meeting. No Directordirector may participate in approval of a related party transaction for which he or she is a related party.
Related Party Transactions and Relationships
Since the beginning of fiscal 2014,year 2016, we have engaged in the following related party transactions with our Directors,directors, executive officers and holders of 5% or more of our common stock.
Transactions with Vendors
Charles Heilbronn, one of our Directors,directors, is Executive Vice President and Secretary, as well as a director, of Chanel, Inc. In fiscal 2014,year 2016, Chanel, Inc. sold to Ulta Beauty approximately $16.6$16.9 million of fragrancefragrances on an arm’s length basis pursuant to Chanel’s standard wholesale terms and is expected to continue to sell fragrancefragrances to Ulta Beauty during fiscal 2015.year 2017.
Other Matters
The Board of Directors knows of no other matters that will be presented for consideration at the 20152017 Annual Meeting of Stockholders. If any other matters are properly brought before the Annual Meeting, it is the intention of the proxy holders, Mary N. Dillon, our Chief Executive Officer, and Robert S. Guttman,Jodi J. Caro, our Senior Vice President, General Counsel and Corporate Secretary, to vote on such matters in accordance with their best judgment.
Your vote is important. Whether or not you plan to attend the Annual Meeting in person, we hope you will vote as soon as possible. You may vote over the internet, as well as by telephone, or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in this Proxy Statement, as well as in the Notice you received in the mail.
By Order of the Board of Directors |
Jodi J. Caro
|
April 22, 201519, 2017
A COPY OF ULTA’SULTA BEAUTY’S ANNUAL REPORT TO THE SEC ON FORM10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 201528, 2017 IS AVAILABLE WITHOUT CHARGE THROUGH THE INVESTOR RELATIONS SECTION OF OUR WEBSITE ATHTTP://IR.ULTA.COM, AND UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, ULTA SALON, COSMETICS & FRAGRANCE,BEAUTY, INC., 1000 REMINGTON BLVD., SUITE 120, BOLINGBROOK, IL 60440.
ULTA 1000 REMINGTON BLVD. SUITE 120 BOLINGBROOK, IL 60440 | VOTE BY INTERNET -www.proxyvote.com | |||||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on | ||||||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||||
VOTE BY PHONE -1-800-690-6903 | ||||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on | ||||||
VOTE BY MAIL | ||||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||||||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||||||||||||||||
The Board of Directors recommends you vote | ||||||||||||||||||||||||||||||
1. Election of Directors | ||||||||||||||||||||||||||||||
Nominees | ||||||||||||||||||||||||||||||
01 Michelle L. Collins 02 Dennis K. Eck 03 Charles J. Philippin 04 Vanessa A. Wittman | ||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2 and 3. | For | Against | Abstain | |||||||||||||||||||||||||||
2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, for our fiscal year 2017, ending February 3, 2018 | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
3 Advisory resolution to approve the Company’s executive compensation | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
The Board of Directors recommends you vote 1 YEAR on the following proposal: | 1 year | 2 years | 3 years | Abstain | ||||||||||||||||||||||||||
4 Advisory vote on the frequency of future advisory votes on the Company’s executive compensation | ☐ | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||
NOTE:Such other business as may properly come before the meeting or any adjournment or postponement thereof | ||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting | | ☐ | ||||||||||||||||||||||||||||
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | |||||||||||||||||||||||||
Signature (Joint Owners) |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Proxy Statement, and Annual Report on Form10-K is/are available atwww.proxyvote.com or at the Investor Relations section of the Company’s website athttp://ir.ulta.com.
M91402-P65744
ULTA SALON, COSMETICS & FRAGRANCE,
| ULTA BEAUTY, INC. Annual Meeting of Stockholders June This proxy is solicited on behalf of the Board of Directors The undersigned hereby appoints Mary N. Dillon and This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side |